Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 12, 2019 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 0-6233 | |
Entity Incorporation, State or Country Code | IN | |
Entity Tax Identification Number | 35-1068133 | |
Entity Address, Address Line One | 100 North Michigan Street | |
Entity Address, City or Town | South Bend, | |
Entity Address, State or Province | IN | |
Entity Address, Postal Zip Code | 46601 | |
City Area Code | 574 | |
Local Phone Number | 235-2000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock - without par value | |
Trading Symbol | SRCE | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 25,535,212 | |
Entity Registrant Name | 1st Source Corp | |
Entity Central Index Key | 0000034782 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF FINA
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash and due from banks | $ 71,910 | $ 94,907 |
Federal funds sold and interest bearing deposits with other banks | 24,578 | 4,172 |
Investment securities available-for-sale | 1,021,786 | 990,129 |
Other investments | 28,404 | 28,404 |
Mortgages held for sale | 19,178 | 11,290 |
Loans and leases - net of unearned discount | ||
Loans and leases | 5,109,337 | 4,835,464 |
Reserve for loan and lease losses | (104,911) | (100,469) |
Net loans and leases | 5,004,426 | 4,734,995 |
Equipment owned under operating leases, net | 126,502 | 134,440 |
Net premises and equipment | 51,570 | 52,139 |
Goodwill and intangible assets | 83,985 | 83,998 |
Accrued income and other assets | 217,766 | 159,271 |
Total assets | 6,650,105 | 6,293,745 |
Deposits: | ||
Noninterest-bearing demand | 1,238,604 | 1,217,120 |
Interest-bearing deposits: | ||
Interest-bearing demand | 1,665,456 | 1,614,959 |
Savings | 810,122 | 822,477 |
Time | 1,689,663 | 1,467,766 |
Total interest-bearing deposits | 4,165,241 | 3,905,202 |
Total deposits | 5,403,845 | 5,122,322 |
Short-term borrowings: | ||
Federal funds purchased and securities sold under agreements to repurchase | 119,781 | 113,627 |
Other short-term borrowings | 66,228 | 85,717 |
Total short-term borrowings | 186,009 | 199,344 |
Long-term debt and mandatorily redeemable securities | 71,542 | 71,123 |
Subordinated notes | 58,764 | 58,764 |
Accrued expenses and other liabilities | 125,259 | 78,602 |
Total liabilities | 5,845,419 | 5,530,155 |
SHAREHOLDERS' EQUITY | ||
Preferred stock; no par value Authorized 10,000,000 shares; none issued or outstanding | 0 | 0 |
Common stock; no par value Authorized 40,000,000 shares; issued 28,205,674 at June 30, 2019 and December 31, 2018 | 436,538 | 436,538 |
Retained earnings | 431,091 | 398,980 |
Cost of common stock in treasury (2,670,462 shares at June 30, 2019 and 2,421,946 shares at December 31, 2018) | (75,380) | (62,760) |
Accumulated other comprehensive income (loss) | 2,413 | (10,676) |
Total shareholders' equity | 794,662 | 762,082 |
Noncontrolling interests | 10,024 | 1,508 |
Total equity | 804,686 | 763,590 |
Total liabilities and equity | 6,650,105 | 6,293,745 |
Commercial and agricultural | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 1,173,000 | 1,073,205 |
Reserve for loan and lease losses | (19,052) | (17,063) |
Auto and light truck | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 635,100 | 559,987 |
Reserve for loan and lease losses | (16,341) | (14,689) |
Medium and heavy duty truck | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 300,042 | 283,544 |
Reserve for loan and lease losses | (4,671) | (4,303) |
Aircraft | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 811,163 | 803,111 |
Reserve for loan and lease losses | (31,918) | (33,047) |
Construction equipment | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 686,633 | 645,239 |
Reserve for loan and lease losses | (12,284) | (10,922) |
Commercial real estate | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 835,919 | 809,886 |
Reserve for loan and lease losses | (15,757) | (15,705) |
Residential real estate and home equity | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 529,749 | 523,855 |
Reserve for loan and lease losses | (3,518) | (3,425) |
Consumer | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 137,731 | 136,637 |
Reserve for loan and lease losses | $ (1,370) | $ (1,315) |
CONSOLIDATED STATEMENTS OF FI_2
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock; no par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, Authorized shares | 10,000,000 | 10,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock; no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, Authorized shares | 40,000,000 | 40,000,000 |
Common stock, issued shares | 28,205,674 | 28,205,674 |
Cost of common stock in treasury, shares | 2,670,462 | 2,421,946 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Interest income: | ||||
Loans and leases | $ 65,599 | $ 58,520 | $ 128,282 | $ 112,211 |
Investment securities, taxable | 5,186 | 4,473 | 10,701 | 9,081 |
Investment securities, tax-exempt | 353 | 475 | 738 | 1,006 |
Other | 499 | 397 | 937 | 805 |
Total interest income | 71,637 | 63,865 | 140,658 | 123,103 |
Interest expense: | ||||
Deposits | 12,978 | 8,319 | 24,448 | 14,881 |
Short-term borrowings | 540 | 826 | 1,471 | 1,602 |
Subordinated notes | 928 | 908 | 1,856 | 1,791 |
Long-term debt and mandatorily redeemable securities | 764 | 643 | 1,508 | 1,128 |
Total interest expense | 15,210 | 10,696 | 29,283 | 19,402 |
Net interest income | 56,427 | 53,169 | 111,375 | 103,701 |
Provision for loan and lease losses | 4,247 | 4,817 | 9,165 | 8,603 |
Net interest income after provision for loan and lease losses | 52,180 | 48,352 | 102,210 | 95,098 |
Noninterest income: | ||||
Mortgage banking | 999 | 1,073 | 1,935 | 1,957 |
Insurance commissions | 1,518 | 1,487 | 3,692 | 3,445 |
Income related to lease payments | 7,809 | 8,104 | 15,791 | 15,859 |
Losses on investment securities available-for-sale | 0 | 0 | 0 | (345) |
Other | 3,301 | 2,507 | 5,757 | 5,287 |
Total noninterest income | 25,664 | 25,023 | 49,788 | 48,830 |
Noninterest expense: | ||||
Salaries and employee benefits | 23,787 | 23,696 | 47,282 | 46,227 |
Net occupancy | 2,481 | 2,115 | 5,253 | 4,981 |
Furniture and equipment | 6,289 | 5,718 | 12,313 | 11,173 |
Professional fees | 1,706 | 1,728 | 3,304 | 3,745 |
Supplies and communication | 1,608 | 1,499 | 3,101 | 3,052 |
FDIC and other insurance | 608 | 714 | 1,253 | 1,412 |
Business development and marketing | 1,678 | 1,725 | 2,627 | 3,258 |
Loan and lease collection and repossession | 230 | 565 | 1,591 | 1,516 |
Other | 2,566 | 1,433 | 2,909 | 2,958 |
Total noninterest expense | 47,353 | 45,877 | 92,557 | 91,434 |
Income before income taxes | 30,491 | 27,498 | 59,441 | 52,494 |
Income tax expense | 7,074 | 5,534 | 13,828 | 11,414 |
Net income | 23,417 | 21,964 | 45,613 | 41,080 |
Net (income) loss attributable to noncontrolling interests | (32) | 0 | (32) | 0 |
Net income available to common shareholders | $ 23,385 | $ 21,964 | $ 45,581 | $ 41,080 |
Per common share: | ||||
Basic net income per common share (in dollars per share) | $ 0.91 | $ 0.84 | $ 1.76 | $ 1.57 |
Diluted net income per common share (in dollars per share) | 0.91 | 0.84 | 1.76 | 1.57 |
Cash dividends (in dollars per share) | $ 0.27 | $ 0.24 | $ 0.54 | $ 0.46 |
Basic weighted average common shares outstanding (in shares) | 25,615,718 | 25,958,128 | 25,687,056 | 25,954,278 |
Diluted weighted average common shares outstanding (in shares) | 25,615,718 | 25,958,128 | 25,687,056 | 25,954,278 |
Trust and wealth advisory | ||||
Noninterest income: | ||||
Trust and wealth advisory, service charges on deposit accounts, and debit card income | $ 5,583 | $ 5,800 | $ 10,441 | $ 10,988 |
Service charges on deposit accounts | ||||
Noninterest income: | ||||
Trust and wealth advisory, service charges on deposit accounts, and debit card income | 2,785 | 2,625 | 5,283 | 5,109 |
Debit card | ||||
Noninterest income: | ||||
Trust and wealth advisory, service charges on deposit accounts, and debit card income | 3,669 | 3,427 | 6,889 | 6,530 |
Assets Leased to Others | ||||
Noninterest expense: | ||||
Depreciation – leased equipment | $ 6,400 | $ 6,684 | $ 12,924 | $ 13,112 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 23,417 | $ 21,964 | $ 45,613 | $ 41,080 |
Other comprehensive income (loss): | ||||
Unrealized appreciation (depreciation) of available-for-sale securities | 7,668 | (1,949) | 17,241 | (11,363) |
Reclassification adjustment for realized losses included in net income | 0 | 0 | 0 | 345 |
Income tax effect | (1,847) | 469 | (4,152) | 2,653 |
Other comprehensive income (loss), net of tax | 5,821 | (1,480) | 13,089 | (8,365) |
Comprehensive income | 29,238 | 20,484 | 58,702 | 32,715 |
Comprehensive (income) loss attributable to noncontrolling interests | (32) | 0 | (32) | 0 |
Comprehensive income available to common shareholders | $ 29,206 | $ 20,484 | $ 58,670 | $ 32,715 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Retained Earnings | Cost of Common Stock in Treasury | Accumulated Other Comprehensive Income (Loss), Net | Total Shareholders' Equity | Noncontrolling Interests |
Increase (Decrease) in Shareholders' Equity | |||||||
Balance | $ 718,537 | $ 436,538 | $ 339,959 | $ (54,628) | $ (3,332) | $ 718,537 | |
Cumulative-effect adjustment at Dec. 31, 2017 | 0 | 718 | (718) | 0 | |||
Balance, adjusted at Dec. 31, 2017 | 718,537 | 436,538 | 340,677 | (54,628) | (4,050) | 718,537 | |
Increase (Decrease) in Shareholders' Equity | |||||||
Net income | 41,080 | 41,080 | 41,080 | ||||
Net income (loss) attributable to noncontrolling interest | 0 | ||||||
Other comprehensive (loss) income | (8,365) | (8,365) | (8,365) | ||||
Issuance of 8,906 and 9,911 common shares under stock based compensation awards for the three months ended June 30, 2019 and 2018, respectively and 47,271 and 44,102 common shares under stock based compensation awards for the six months ended on June 30, 2019 and 2018, respectively | 1,770 | 723 | 1,047 | 1,770 | |||
Cost of 141,627 and 5 shares of common stock acquired for treasury for the three months ended June 30, 2019 and 2018, respectively and 295,787 and 15,789 shares of common stock acquired for treasury for the six months ended on June 30, 2019 and 2018, respectively | (786) | (786) | (786) | ||||
Common stock dividend ($0.27 and $0.24 per share for the three months ended June 30, 2019 and 2018, respectively and $0.54 and $0.46 per share for the six months ended June 30, 2019 and 2018, respectively) | (11,959) | (11,959) | (11,959) | ||||
Balance | 725,609 | 436,538 | 354,608 | (54,602) | (10,935) | 725,609 | |
Net income | 21,964 | 21,964 | 21,964 | ||||
Net income (loss) attributable to noncontrolling interest | 0 | ||||||
Other comprehensive (loss) income | (1,480) | (1,480) | (1,480) | ||||
Issuance of 8,906 and 9,911 common shares under stock based compensation awards for the three months ended June 30, 2019 and 2018, respectively and 47,271 and 44,102 common shares under stock based compensation awards for the six months ended on June 30, 2019 and 2018, respectively | 424 | 188 | 236 | 424 | |||
Cost of 141,627 and 5 shares of common stock acquired for treasury for the three months ended June 30, 2019 and 2018, respectively and 295,787 and 15,789 shares of common stock acquired for treasury for the six months ended on June 30, 2019 and 2018, respectively | (1) | (1) | (1) | ||||
Common stock dividend ($0.27 and $0.24 per share for the three months ended June 30, 2019 and 2018, respectively and $0.54 and $0.46 per share for the six months ended June 30, 2019 and 2018, respectively) | (6,239) | (6,239) | (6,239) | ||||
Balance | 740,277 | 436,538 | 370,521 | (54,367) | (12,415) | 740,277 | |
Balance | 763,590 | 436,538 | 398,980 | (62,760) | (10,676) | 762,082 | $ 1,508 |
Cumulative-effect adjustment at Dec. 31, 2018 | (301) | (301) | (301) | ||||
Balance, adjusted at Dec. 31, 2018 | 763,289 | 436,538 | 398,679 | (62,760) | (10,676) | 761,781 | 1,508 |
Increase (Decrease) in Shareholders' Equity | |||||||
Net income | 45,613 | 45,581 | 45,581 | ||||
Net income (loss) attributable to noncontrolling interest | 32 | ||||||
Other comprehensive (loss) income | 13,089 | 13,089 | 13,089 | ||||
Issuance of 8,906 and 9,911 common shares under stock based compensation awards for the three months ended June 30, 2019 and 2018, respectively and 47,271 and 44,102 common shares under stock based compensation awards for the six months ended on June 30, 2019 and 2018, respectively | 1,809 | 750 | 1,059 | 1,809 | |||
Cost of 141,627 and 5 shares of common stock acquired for treasury for the three months ended June 30, 2019 and 2018, respectively and 295,787 and 15,789 shares of common stock acquired for treasury for the six months ended on June 30, 2019 and 2018, respectively | (13,679) | (13,679) | (13,679) | ||||
Common stock dividend ($0.27 and $0.24 per share for the three months ended June 30, 2019 and 2018, respectively and $0.54 and $0.46 per share for the six months ended June 30, 2019 and 2018, respectively) | (13,919) | (13,919) | (13,919) | ||||
Issuance of noncontrolling interests | 8,484 | 0 | 8,484 | ||||
Balance | 781,101 | 436,538 | 414,428 | (69,136) | (3,408) | 778,422 | 2,679 |
Net income | 23,417 | 23,385 | 23,385 | ||||
Net income (loss) attributable to noncontrolling interest | 32 | ||||||
Other comprehensive (loss) income | 5,821 | 5,821 | 5,821 | ||||
Issuance of 8,906 and 9,911 common shares under stock based compensation awards for the three months ended June 30, 2019 and 2018, respectively and 47,271 and 44,102 common shares under stock based compensation awards for the six months ended on June 30, 2019 and 2018, respectively | 394 | 217 | 177 | 394 | |||
Cost of 141,627 and 5 shares of common stock acquired for treasury for the three months ended June 30, 2019 and 2018, respectively and 295,787 and 15,789 shares of common stock acquired for treasury for the six months ended on June 30, 2019 and 2018, respectively | (6,421) | (6,421) | (6,421) | ||||
Common stock dividend ($0.27 and $0.24 per share for the three months ended June 30, 2019 and 2018, respectively and $0.54 and $0.46 per share for the six months ended June 30, 2019 and 2018, respectively) | (6,939) | (6,939) | (6,939) | ||||
Issuance of noncontrolling interests | 7,313 | 0 | 7,313 | ||||
Balance | $ 804,686 | $ 436,538 | $ 431,091 | $ (75,380) | $ 2,413 | $ 794,662 | $ 10,024 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||||
Issuance of common shares under stock based compensation awards | 8,906 | 9,911 | 47,271 | 44,102 |
Common stock acquired for treasury | 141,627 | 5 | 295,787 | 15,789 |
Common stock dividend (in dollars per share) | $ 0.27 | $ 0.24 | $ 0.54 | $ 0.46 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Cash Flows [Abstract] | ||
Net income | $ 45,613 | $ 41,080 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for loan and lease losses | 9,165 | 8,603 |
Depreciation of premises and equipment | 2,957 | 2,648 |
Depreciation of equipment owned and leased to others | 12,924 | 13,112 |
Stock-based compensation | 1,341 | 1,850 |
Amortization of investment securities premiums and accretion of discounts, net | 1,737 | 1,967 |
Amortization of mortgage servicing rights | 527 | 471 |
Deferred income taxes | (1,677) | (3,495) |
Losses on investment securities available-for-sale | 0 | 345 |
Originations of loans held for sale, net of principal collected | (52,505) | (34,035) |
Proceeds from the sales of loans held for sale | 45,610 | 39,953 |
Net gain on sale of loans held for sale | (993) | (1,030) |
Net gain on sale of other real estate and repossessions | (470) | (57) |
Net gain on sale of premises and equipment | (1,289) | (9) |
Change in interest receivable | (2,234) | (2,086) |
Change in interest payable | 3,953 | 2,462 |
Change in other assets | (9,413) | (3,951) |
Change in other liabilities | (367) | 1,581 |
Other | 1,106 | 277 |
Net change in operating activities | 55,985 | 69,686 |
Investing activities: | ||
Proceeds from sales of investment securities available-for-sale | 0 | 11,739 |
Proceeds from maturities and paydowns of investment securities available-for-sale | 59,683 | 84,033 |
Purchases of investment securities available-for-sale | (76,137) | (173,416) |
Proceeds from liquidation of partnership investment | 0 | 1,868 |
Net change in other investments | 0 | (2,206) |
Loans sold or participated to others | 16,740 | 14,310 |
Net change in loans and leases | (305,297) | (327,802) |
Net change in equipment owned under operating leases | (5,109) | (16,555) |
Purchases of premises and equipment | (4,526) | (1,332) |
Proceeds from disposal of premises and equipment | 3,427 | 74 |
Proceeds from sales of other real estate and repossessions | 5,964 | 1,900 |
Net change in investing activities | (305,255) | (407,387) |
Financing activities: | ||
Net change in demand deposits and savings accounts | 59,626 | 118,829 |
Net change in time deposits | 221,897 | 236,880 |
Net change in short-term borrowings | (13,335) | 62,499 |
Payments on long-term debt | (2,052) | (1,108) |
Stock issued under stock purchase plans | 49 | 145 |
Acquisition of treasury stock | (13,679) | (786) |
Contributions from noncontrolling interests | 8,484 | 0 |
Cash dividends paid on common stock | (14,311) | (12,331) |
Net change in financing activities | 246,679 | 404,128 |
Net change in cash and cash equivalents | (2,591) | 66,427 |
Cash and cash equivalents, beginning of year | 99,079 | 78,033 |
Cash and cash equivalents, end of period | 96,488 | 144,460 |
Non-cash transactions: | ||
Loans transferred to other real estate and repossessed assets | 9,961 | 868 |
Common stock matching contribution to Employee Stock Ownership and Profit Sharing Plan | 300 | 583 |
Right of use asset obtained in exchange for operating lease obligations | $ 1,383 | $ 0 |
Accounting Policies
Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Accounting Policies | Accounting Policies 1st Source Corporation is a bank holding company headquartered in South Bend, Indiana that provides, through its subsidiaries (collectively referred to as “1st Source” or “the Company”), a broad array of financial products and services. Basis of Presentation – The accompanying unaudited consolidated financial statements reflect all adjustments (all of which are normal and recurring in nature) which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position, the results of operations, changes in comprehensive income, changes in shareholders’ equity, and cash flows for the periods presented. These unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission (SEC) and, therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been omitted. The Notes to the Consolidated Financial Statements appearing in 1st Source Corporation’s Annual Report on Form 10-K ( 2018 Annual Report), which include descriptions of significant accounting policies, should be read in conjunction with these interim financial statements. The Consolidated Statement of Financial Condition at December 31, 2018 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation. Use of Estimates in the Preparation of Financial Statements – Financial statements prepared in accordance with GAAP require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates. Loans and Leases – Loans are stated at the principal amount outstanding, net of unamortized deferred loan origination fees and costs and net of unearned income. Interest income is accrued as earned based on unpaid principal balances. Origination fees and direct loan and lease origination costs are deferred, and the net amount amortized to interest income over the estimated life of the related loan or lease. Loan commitment fees are deferred and amortized into other income over the commitment period. Direct financing leases are carried at the aggregate of lease payments plus estimated residual value of the leased property, net of unamortized deferred lease origination fees and costs and unearned income. Interest income on direct financing leases is recognized over the term of the lease to achieve a constant periodic rate of return on the outstanding investment. Effective January 1, 2019, as part of the new leasing standard, only those costs incurred as a direct result of closing a lease transaction can be capitalized. All existing deferrals will continue to be amortized over the estimated life of the lease while all new incremental direct costs will be expensed immediately. The accrual of interest on loans and leases is discontinued when a loan or lease becomes contractually delinquent for 90 days, or when an individual analysis of a borrower’s credit worthiness indicates a credit should be placed on nonperforming status, except for residential mortgage loans and consumer loans that are well secured and in the process of collection. Residential mortgage loans are placed on nonaccrual at the time the loan is placed in foreclosure. When interest accruals are discontinued, interest credited to income in the current year is reversed and interest accrued in the prior year is charged to the reserve for loan and lease losses. However, in some cases, the Company may elect to continue the accrual of interest when the net realizable value of collateral is sufficient to cover the principal and accrued interest. When a loan or lease is classified as nonaccrual and the future collectability of the recorded loan or lease balance is doubtful, collections on interest and principal are applied as a reduction to principal outstanding. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured, which is typically evidenced by a sustained repayment performance of at least six months . A loan or lease is considered impaired, based on current information and events, if it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan or lease agreement. Interest on impaired loans and leases, which are not classified as nonaccrual, is recognized on the accrual basis. The Company evaluates loans and leases exceeding $100,000 for impairment and establishes a specific reserve as a component of the reserve for loan and lease losses when it is probable all amounts due will not be collected pursuant to the contractual terms of the loan or lease and the recorded investment in the loan or lease exceeds its fair value. Loans and leases that have been modified and economic concessions have been granted to borrowers who have experienced financial difficulties are considered a troubled debt restructuring (TDR) and, by definition, are deemed an impaired loan. These concessions typically result from the Company’s loss mitigation activities and may include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructuring and typically are returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period of at least six months. When the Company modifies loans and leases in a TDR, it evaluates any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan or lease agreement, or uses the current fair value of the collateral, less selling costs for collateral dependent loans. If the Company determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through a reserve for loan and lease losses estimate or a charge-off to the reserve for loan and lease losses. In periods subsequent to modification, the Company evaluates all TDRs, including those that have payment defaults, for possible impairment and recognizes impairment through the reserve for loan and lease losses. Equipment Owned Under Operating Leases – As a lessor, the Company finances various types of construction equipment, medium and heavy duty trucks, automobiles and other equipment under leases classified as operating leases. The equipment underlying the operating leases is reported at cost, net of accumulated depreciation, in the Consolidated Statements of Financial Condition. These operating lease arrangements require the lessee to make a fixed monthly rental payment over a specified lease term generally ranging from three years to seven years . Revenue consists of the contractual lease payments and is recognized on a straight-line basis over the lease term and reported in Noninterest Income on the Consolidated Statements of Income. Leased assets are being depreciated on a straight-line method over the lease term to the estimate of the equipment’s fair market value at lease termination, also referred to as “residual” value. The depreciation of these operating lease assets is reported in Noninterest Expense on the Consolidated Statements of Income. For automobile leases, fair value is based upon published industry market guides. For other equipment leases, fair value may be based upon observable market prices, third-party valuations, or prices received on sales of similar assets at the end of the lease term. These residual values are reviewed annually to ensure the recorded amount does not exceed the fair market value at the lease termination. At the end of the lease, the operating lease asset is either purchased by the lessee or returned to the Company. The Company is responsible for the payment of personal property taxes which is reported in Other Expense on the Consolidated Statements of Income. The lessee is responsible for reimbursing the Company for personal property taxes which is reported in Other Income on the Consolidated Statements of Income. The Company excludes sales taxes and other similar taxes from being reported as lease revenue with an associated expense. Lease Commitments – The Company leases certain banking center locations, office space, land and billboards. In determining whether a contract contains a lease, the Company examines the contract to ensure an asset was specifically identified and that the Company has control of use over the asset. To determine whether a lease is classified as operating or finance, the Company performs an economic life test on all building leases with greater than a twenty year term. Further, the Company performs a fair value test to identify any leases that have a present value of future lease payments over the lease term that is greater than 90% of the fair value of the building. The Company only capitalizes leases with an initial lease liability of $2,000 or greater. At lease inception, the Company determines the lease term by adding together the minimum lease term and all optional renewal periods that it is reasonably certain to renew. The Company determines this on each lease by considering all relevant contract-based, asset-based, market-based, and entity-based economic factors. Generally, the exercise of lease renewal options is at the Company’s sole discretion. The lease term is used to determine whether a lease is operating or finance and is used to calculate straight-line rent expense. Additionally, the depreciable life of leasehold improvements is limited by the expected lease term. Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the date the Company takes possession of the property. Rent expense and variable lease costs are included in Net Occupancy Expense on the Company’s Consolidated Statements of Income. Included in variable lease costs are leases with rent escalations based on recent financial indices, such as the Consumer Price Index, where the Company estimates future rent increases and records the actual difference to variable costs. Certain leases require the Company to pay common area maintenance, real estate taxes, insurance and other operating expenses associated with the leases premises. These expenses are classified in Net Occupancy Expense, consistent with similar costs for owned locations. There are no residual value guarantees, restrictions or covenants imposed by leases. The Company accounts for lease and nonlease components together as a single lease component by class of underlying asset. Operating lease obligations with an initial term longer than 12 months are recorded with a right of use asset and a lease liability in the Consolidated Statements of Financial Condition. The discount rate used in determining the lease liability and related right of use asset is based upon what would be obtained by the Company for similar loans as an incremental rate as of the date of origination or renewal. Revenue Recognition – The Company recognizes revenues as they are earned based on contractual terms, as transactions occur, or as services are provided and collectability is reasonably assured. The Company’s principal source of revenue is interest income from loans and leases and investment securities. The Company also earns noninterest income from various banking and financial services offered primarily through 1st Source Bank (Bank) and its subsidiaries. Interest Income – The largest source of revenue for the Company is interest income which is primarily recognized on an accrual basis according to nondiscretionary formulas in written contracts, such as loan and lease agreements or investment securities contracts. Noninterest Income – |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Leases: In March 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-01 “Leases (Topic 842): Codification Improvements.” These amendments align the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance. The ASU also requires lessors within the scope of Topic 842, Financial Services-Depository Lending, to present all “principal payments received under leases” within investing activities on the Consolidated Statements of Cash Flows. Finally, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early application is permitted. An entity should apply the amendments as of the date that it first applied Topic 842, using the same transition methodology in accordance with paragraph 842-10-65-1(c). The Company adopted Topic 842 on January 1, 2019 and applied the amendments in ASU 2019-01 as of the same date and it did not have a material impact on its accounting and disclosures. Intangibles - Internal-Use Software: In August 2018, the FASB issued ASU No. 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.” These amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contact with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. The guidance is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. The Company is assessing ASU 2018-15 and the impact on its accounting and disclosures. Disclosure Requirements for Fair Value Measurement: In August 2018, the FASB issued ASU No. 2018-13 “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” These amendments modify the disclosure requirements in Topic 820 as follows: Removals: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. Modifications: 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 the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. Additions: 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; and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The guidance is effective for all entities 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 all be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU No. 2018-13 and delay adoption of the additional disclosures until their effective date. The Company is assessing ASU 2018-13 but does not expect it to have a material impact on its accounting and disclosures. Premium Amortization: In March 2017, the FASB issued ASU No. 2017-08 “ Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities.” These amendments shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments should be applied on a modified retrospective basis, with a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company adopted ASU 2017-08 on January 1, 2019 and recognized a cumulative-effect adjustment to retained earnings of $0.30 million . Simplifying the Test for Goodwill Impairment: In January 2017, the FASB issued ASU No. 2017-04 “ Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” These amendments eliminate Step 2 from the goodwill impairment test. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 should be adopted on a prospective basis. The Company has assessed ASU 2017-04 and does not expect it to have a material impact on its accounting and disclosures. Measurement of Credit Losses on Financial Instruments: In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 were issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 eliminate the probable incurred loss recognition in current GAAP and reflect an entity’s current estimate of all expected credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the financial assets. In May 2019, the FASB issued final amendments (ASU No. 2019-05) to provide entities that have certain instruments measured at amortized cost within the scope Topic 326 with an option to irrevocably elect the fair value option in Topic 825 on an instrument-by-instrument basis for eligible instruments, upon adoption of Topic 326. The fair value option election does not apply to held-to-maturity debt securities. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. ASU 2016-13 and 2019-05 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company’s cross-functional team continues to work through its implementation plan including the assessment and documentation of processes, internal controls and data as well as model development. The Company implemented a third-party software solution to assist in the application of the new standard and is currently refining portfolio segmentation according to shared characteristics and modeling methodologies. The Company is also focused on running a parallel analysis to its current allowance for loan loss model prior to implementation. While a one-time cumulative-effect adjustment to retained earnings will be recorded as of the beginning of the first reporting period in which the guidance is effective, the impact of adopting ASU 2016-13 cannot be reasonably estimated at this point and could be significantly influenced by the composition, characteristics and quality of the loan and lease portfolio as well as the prevailing economic conditions and forecasts as of the adoption date. |
Investment Securities
Investment Securities | 6 Months Ended |
Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment Securities | Investment Securities Available-For-Sale The following table shows investment securities available-for-sale. (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value June 30, 2019 U.S. Treasury and Federal agencies securities $ 540,392 $ 2,011 $ (927 ) $ 541,476 U.S. States and political subdivisions securities 90,211 932 (71 ) 91,072 Mortgage-backed securities — Federal agencies 338,142 2,711 (2,029 ) 338,824 Corporate debt securities 49,162 637 (85 ) 49,714 Foreign government and other securities 700 — — 700 Total debt securities available-for-sale $ 1,018,607 $ 6,291 $ (3,112 ) $ 1,021,786 December 31, 2018 U.S. Treasury and Federal agencies securities $ 537,913 $ 196 $ (6,886 ) $ 531,223 U.S. States and political subdivisions securities 95,346 172 (936 ) 94,582 Mortgage-backed securities — Federal agencies 324,390 718 (6,875 ) 318,233 Corporate debt securities 45,843 — (451 ) 45,392 Foreign government and other securities 700 — (1 ) 699 Total debt securities available-for-sale $ 1,004,192 $ 1,086 $ (15,149 ) $ 990,129 At June 30, 2019 and December 31, 2018 , the residential mortgage-backed securities held by the Company consisted primarily of GNMA, FNMA and FHLMC pass-through certificates which are guaranteed by those respective agencies of the United States government (Government Sponsored Enterprise, GSEs). The following table shows the contractual maturities of investments in debt securities available-for-sale at June 30, 2019 . Expected maturities will differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. (Dollars in thousands) Amortized Cost Fair Value Due in one year or less $ 185,240 $ 185,272 Due after one year through five years 485,935 488,222 Due after five years through ten years 9,290 9,468 Due after ten years — — Mortgage-backed securities 338,142 338,824 Total debt securities available-for-sale $ 1,018,607 $ 1,021,786 The following table summarizes gross unrealized losses and fair value by investment category and age. At June 30, 2019 , the Company’s available-for-sale securities portfolio consisted of 626 securities, 197 of which were in an unrealized loss position. Less than 12 Months 12 months or Longer Total (Dollars in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses June 30, 2019 U.S. Treasury and Federal agencies securities $ — $ — $ 259,376 $ (927 ) $ 259,376 $ (927 ) U.S. States and political subdivisions securities 651 (2 ) 15,437 (69 ) 16,088 (71 ) Mortgage-backed securities - Federal agencies 20,304 (100 ) 145,564 (1,929 ) 165,868 (2,029 ) Corporate debt securities — — 10,565 (85 ) 10,565 (85 ) Foreign government and other securities 700 — — — 700 — Total debt securities available-for-sale $ 21,655 $ (102 ) $ 430,942 $ (3,010 ) $ 452,597 $ (3,112 ) December 31, 2018 U.S. Treasury and Federal agencies securities $ 55,491 $ (177 ) $ 424,269 $ (6,709 ) $ 479,760 $ (6,886 ) U.S. States and political subdivisions securities 21,059 (61 ) 45,365 (875 ) 66,424 (936 ) Mortgage-backed securities - Federal agencies 65,554 (511 ) 198,221 (6,364 ) 263,775 (6,875 ) Corporate debt securities 21,496 (143 ) 23,896 (308 ) 45,392 (451 ) Foreign government and other securities 699 (1 ) — — 699 (1 ) Total debt securities available-for-sale $ 164,299 $ (893 ) $ 691,751 $ (14,256 ) $ 856,050 $ (15,149 ) The initial indication of potential other-than-temporary-impairment (OTTI) for debt securities is a decline in fair value below amortized cost. Quarterly, the impaired securities are analyzed on a qualitative and quantitative basis in determining OTTI. Declines in the fair value of debt securities available-for-sale below their cost that are deemed to be other-than-temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of impairment related to other factors is recognized in other comprehensive income. In estimating OTTI losses, the Company considers among other things, (i) the length of time and the extent to which fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) whether it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. At June 30, 2019 , the Company does not have the intent to sell any of the debt securities available-for-sale in the table above and believes that it is more likely than not, that it will not have to sell any such securities before an anticipated recovery of cost. Primarily the unrealized losses on debt securities are due to increases in market rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover on all debt securities as they approach their maturity date or re-pricing date or if market yields for such investments decline. The Company does not believe any of the securities are impaired due to reasons of credit quality. The following table shows the gross realized gains and losses from the available-for-sale debt securities portfolio. Realized gains and losses of all securities are computed using the specific identification cost basis. Three Months Ended Six Months Ended (Dollars in thousands) 2019 2018 2019 2018 Gross realized gains $ — $ — $ — $ 2 Gross realized losses — — — (347 ) OTTI losses — — — — Net realized gains (losses) $ — $ — $ — $ (345 ) At June 30, 2019 and December 31, 2018 , investment securities available-for-sale with carrying values of $273.67 million and $242.31 million , respectively, were pledged as collateral for security repurchase agreements and for other purposes. |
Loan and Lease Financings
Loan and Lease Financings | 6 Months Ended |
Jun. 30, 2019 | |
Receivables [Abstract] | |
Loan and Lease Financings | Loan and Lease Financings The Company evaluates loans and leases for credit quality at least annually but more frequently if certain circumstances occur (such as material new information which becomes available and indicates a potential change in credit risk). The Company uses two methods to assess credit risk: loan or lease credit quality grades and credit risk classifications. The purpose of the loan or lease credit quality grade is to document the degree of risk associated with individual credits as well as inform management of the degree of risk in the portfolio taken as a whole. Credit risk classifications are used to categorize loans by degree of risk and to designate individual or committee approval authorities for higher risk credits at the time of origination. Credit risk classifications include categories for: Acceptable, Marginal, Special Attention, Special Risk, Restricted by Policy, Regulated and Prohibited by Law. All loans and leases, except residential real estate and home equity loans and consumer loans, are assigned credit quality grades on a scale from 1 to 12 with grade 1 representing superior credit quality. The criteria used to assign grades to extensions of credit that exhibit potential problems or well-defined weaknesses are primarily based upon the degree of risk and the likelihood of orderly repayment, and their effect on the Company’s safety and soundness. Loans or leases graded 7 or weaker are considered “special attention” credits and, as such, relationships in excess of $100,000 are reviewed quarterly as part of management’s evaluation of the appropriateness of the reserve for loan and lease losses. Grade 7 credits are defined as “watch” and contain greater than average credit risk and are monitored to limit the exposure to increased risk; grade 8 credits are “special mention” and, following regulatory guidelines, are defined as having potential weaknesses that deserve management’s close attention. Credits that exhibit well-defined weaknesses and a distinct possibility of loss are considered “classified” and are graded 9 through 12 corresponding to the regulatory definitions of “substandard” (grades 9 and 10) and the more severe “doubtful” (grade 11) and “loss” (grade 12). The following table shows the credit quality grades of the recorded investment in loans and leases, segregated by class. Credit Quality Grades (Dollars in thousands) 1-6 7-12 Total June 30, 2019 Commercial and agricultural $ 1,142,945 $ 30,055 $ 1,173,000 Auto and light truck 611,185 23,915 635,100 Medium and heavy duty truck 298,748 1,294 300,042 Aircraft 790,736 20,427 811,163 Construction equipment 660,888 25,745 686,633 Commercial real estate 823,700 12,219 835,919 Total $ 4,328,202 $ 113,655 $ 4,441,857 December 31, 2018 Commercial and agricultural $ 1,043,019 $ 30,186 $ 1,073,205 Auto and light truck 528,174 31,813 559,987 Medium and heavy duty truck 281,834 1,710 283,544 Aircraft 768,442 34,669 803,111 Construction equipment 625,579 19,660 645,239 Commercial real estate 787,376 22,510 809,886 Total $ 4,034,424 $ 140,548 $ 4,174,972 For residential real estate and home equity and consumer loans, credit quality is based on the aging status of the loan and by payment activity. The following table shows the recorded investment in residential real estate and home equity and consumer loans by performing or nonperforming status. Nonperforming loans are those loans which are on nonaccrual status or are 90 days or more past due. (Dollars in thousands) Performing Nonperforming Total June 30, 2019 Residential real estate and home equity $ 527,873 $ 1,876 $ 529,749 Consumer 137,494 237 137,731 Total $ 665,367 $ 2,113 $ 667,480 December 31, 2018 Residential real estate and home equity $ 521,846 $ 2,009 $ 523,855 Consumer 136,423 214 136,637 Total $ 658,269 $ 2,223 $ 660,492 The following table shows the recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status. (Dollars in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due and Accruing Total Accruing Loans Nonaccrual Total Financing Receivables June 30, 2019 Commercial and agricultural $ 1,170,085 $ 86 $ 26 $ — $ 1,170,197 $ 2,803 $ 1,173,000 Auto and light truck 632,056 671 — — 632,727 2,373 635,100 Medium and heavy duty truck 299,998 — — — 299,998 44 300,042 Aircraft 796,757 12,964 331 — 810,052 1,111 811,163 Construction equipment 681,608 3,015 — — 684,623 2,010 686,633 Commercial real estate 833,985 19 — — 834,004 1,915 835,919 Residential real estate and home equity 526,990 753 130 154 528,027 1,722 529,749 Consumer 136,965 422 107 3 137,497 234 137,731 Total $ 5,078,444 $ 17,930 $ 594 $ 157 $ 5,097,125 $ 12,212 $ 5,109,337 December 31, 2018 Commercial and agricultural $ 1,070,530 $ 22 $ — $ — $ 1,070,552 $ 2,653 $ 1,073,205 Auto and light truck 544,022 3,154 1,437 — 548,613 11,374 559,987 Medium and heavy duty truck 283,284 154 — — 283,438 106 283,544 Aircraft 790,233 4,149 1,168 — 795,550 7,561 803,111 Construction equipment 641,270 1,643 — — 642,913 2,326 645,239 Commercial real estate 807,793 109 — — 807,902 1,984 809,886 Residential real estate and home equity 520,124 1,267 455 295 522,141 1,714 523,855 Consumer 135,591 682 150 73 136,496 141 136,637 Total $ 4,792,847 $ 11,180 $ 3,210 $ 368 $ 4,807,605 $ 27,859 $ 4,835,464 The following table shows impaired loans and leases, segregated by class, and the corresponding reserve for impaired loan and lease losses. (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Reserve June 30, 2019 With no related reserve recorded: Commercial and agricultural $ 2,176 $ 2,176 $ — Auto and light truck 1,805 1,805 — Medium and heavy duty truck — — — Aircraft 1,064 1,064 — Construction equipment 729 729 — Commercial real estate 1,139 1,139 — Residential real estate and home equity — — — Consumer — — — Total with no related reserve recorded 6,913 6,913 — With a reserve recorded: Commercial and agricultural 486 486 39 Auto and light truck 414 414 281 Medium and heavy duty truck — — — Aircraft — — — Construction equipment 1,266 1,266 104 Commercial real estate 695 695 9 Residential real estate and home equity 341 343 123 Consumer — — — Total with a reserve recorded 3,202 3,204 556 Total impaired loans $ 10,115 $ 10,117 $ 556 December 31, 2018 With no related reserve recorded: Commercial and agricultural $ 2,471 $ 2,471 $ — Auto and light truck 7,504 7,504 — Medium and heavy duty truck 106 106 — Aircraft 556 556 — Construction equipment 905 905 — Commercial real estate 1,131 1,131 — Residential real estate and home equity — — — Consumer — — — Total with no related reserve recorded 12,673 12,673 — With a reserve recorded: Commercial and agricultural — — — Auto and light truck 3,840 3,840 372 Medium and heavy duty truck — — — Aircraft 7,004 7,004 1,255 Construction equipment 1,340 1,340 279 Commercial real estate 759 759 51 Residential real estate and home equity 344 346 126 Consumer — — — Total with a reserve recorded 13,287 13,289 2,083 Total impaired loans $ 25,960 $ 25,962 $ 2,083 The following table shows average recorded investment and interest income recognized on impaired loans and leases, segregated by class. Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (Dollars in thousands) Average Recorded Investment Interest Income Average Recorded Investment Interest Income Average Recorded Investment Interest Income Average Recorded Investment Interest Income Commercial and agricultural $ 4,080 $ 13 $ 2,998 $ — $ 3,450 $ 13 $ 2,921 $ — Auto and light truck 2,791 — 7,066 — 3,898 — 7,446 — Medium and heavy duty truck 562 — 319 — 308 — 334 — Aircraft 1,589 — 9,126 20 3,517 — 6,097 20 Construction equipment 1,417 — 942 — 1,673 — 1,136 — Commercial real estate 1,834 — 2,259 — 1,846 — 2,978 — Residential real estate and home equity 341 5 349 4 342 10 349 8 Consumer — — — — — — — — Total $ 12,614 $ 18 $ 23,059 $ 24 $ 15,034 $ 23 $ 21,261 $ 28 There was one nonperforming loan and lease modification classified as a troubled debt restructuring (TDR) during the three and six months ended June 30, 2019 and no loan or lease modifications classified as TDR during the three and six months ended June 30, 2018 . The classification between nonperforming and performing is determined at the time of modification. Modification programs focus on extending maturity dates or modifying payment patterns with most TDRs experiencing a combination of concessions. Modifications do not result in the contractual forgiveness of principal or interest. There were no modifications during the three and six months ended June 30, 2019 and 2018 that resulted in an interest rate reduction below market rate. Consequently, the financial impact of the modification was immaterial. There were no TDRs which had payment defaults within the twelve months following modification during the three months ended June 30, 2019 and one TDR which had a payment default within the twelve months following modification during the six months ended June 30, 2019 . There were no TDRs which had payment defaults within the twelve months following modification during the three and six months ended June 30, 2018 . Default occurs when a loan or lease is 90 days or more past due under the modified terms or transferred to nonaccrual. The following table shows the recorded investment of loans and leases classified as troubled debt restructurings as of June 30, 2019 and December 31, 2018 . (Dollars in thousands) June 30, December 31, Performing TDRs $ 341 $ 344 Nonperforming TDRs 512 316 Total TDRs $ 853 $ 660 |
Reserve for Loan and Lease Loss
Reserve for Loan and Lease Losses | 6 Months Ended |
Jun. 30, 2019 | |
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract] | |
Reserve for Loan and Lease Losses | Reserve for Loan and Lease Losses The reserve for loan and lease loss methodology has been consistently applied for several years, with enhancements instituted periodically. Reserve ratios are reviewed quarterly and revised periodically to reflect recent loss history and to incorporate current risks and trends which may not be recognized in historical data. As the historical charge-off analysis is updated, the Company reviews the look-back periods for each business loan portfolio. Furthermore, a thorough analysis of charge-offs, non-performing asset levels, special attention outstandings and delinquency is performed in order to review portfolio trends and other factors, including specific industry risks and economic conditions, which may have an impact on the reserves and reserve ratios applied to various portfolios. The Company adjusts the calculated historical based ratio as a result of the analysis of environmental factors, principally economic risk and concentration risk. Key economic factors affecting the portfolios are growth in gross domestic product, unemployment rates, housing market trends, commodity prices, inflation and global economic and political issues. Concentration risk is impacted primarily by geographic concentration in Northern Indiana and Southwestern Lower Michigan in the business banking and commercial real estate portfolios and by collateral concentration in the specialty finance portfolios and exposure to foreign markets by geographic risk. The reserve for loan and lease losses is maintained at a level believed to be appropriate by the Company to absorb probable losses inherent in the loan and lease portfolio. The determination of the reserve requires significant judgment reflecting the Company’s best estimate of probable loan and lease losses related to specifically identified impaired loans and leases as well as probable losses in the remainder of the various loan and lease portfolios. For purposes of determining the reserve, the Company has segmented loans and leases into classes based on the associated risk within these segments. The Company has determined that eight classes exist within the loan and lease portfolio. The methodology for assessing the appropriateness of the reserve consists of several key elements, which include: specific reserves for impaired loans, formula reserves for each business lending division portfolio including percentage allocations for special attention loans and leases not deemed impaired, and reserves for pooled homogeneous loans and leases. The Company’s evaluation is based upon a continuing review of these portfolios, estimates of customer performance, collateral values and dispositions, and assessments of economic and geopolitical events, all of which are subject to judgment and will change. The following table shows the changes in the reserve for loan and lease losses, segregated by class, for the three months ended June 30, 2019 and 2018 . (Dollars in thousands) Commercial and agricultural Auto and light truck Medium and heavy duty truck Aircraft Construction Commercial real estate Residential real estate and home equity Consumer Total June 30, 2019 Balance, beginning of period $ 18,307 $ 14,259 $ 4,409 $ 33,440 $ 10,883 $ 15,834 $ 3,386 $ 1,334 $ 101,852 Charge-offs 9 57 1,132 1 1 — — 313 1,513 Recoveries 28 20 — 117 15 51 3 91 325 Net charge-offs (recoveries) (19 ) 37 1,132 (116 ) (14 ) (51 ) (3 ) 222 1,188 Provision (recovery of provision) 726 2,119 1,394 (1,638 ) 1,387 (128 ) 129 258 4,247 Balance, end of period $ 19,052 $ 16,341 $ 4,671 $ 31,918 $ 12,284 $ 15,757 $ 3,518 $ 1,370 $ 104,911 June 30, 2018 Balance, beginning of period $ 17,609 $ 10,810 $ 4,493 $ 34,836 $ 10,917 $ 14,770 $ 3,565 $ 1,331 $ 98,331 Charge-offs — 84 — — — — — 221 305 Recoveries 41 13 — 5 26 4 7 68 164 Net charge-offs (recoveries) (41 ) 71 — (5 ) (26 ) (4 ) (7 ) 153 141 Provision (recovery of provision) 981 1,337 (151 ) 1,931 193 366 (8 ) 168 4,817 Balance, end of period $ 18,631 $ 12,076 $ 4,342 $ 36,772 $ 11,136 $ 15,140 $ 3,564 $ 1,346 $ 103,007 The following table shows the changes in the reserve for loan and lease losses, segregated by class, for the six months ended June 30, 2019 and 2018 . (Dollars in thousands) Commercial and agricultural loans Auto and light truck Medium and heavy duty truck Aircraft Construction Commercial real estate Residential real estate and home equity Consumer loans Total June 30, 2019 Balance, beginning of period $ 17,063 $ 14,689 $ 4,303 $ 33,047 $ 10,922 $ 15,705 $ 3,425 $ 1,315 $ 100,469 Charge-offs 88 466 1,132 3,001 196 — 21 563 5,467 Recoveries 62 29 — 302 119 60 6 166 744 Net charge-offs (recoveries) 26 437 1,132 2,699 77 (60 ) 15 397 4,723 Provision (recovery of provision) 2,015 2,089 1,500 1,570 1,439 (8 ) 108 452 9,165 Balance, end of period $ 19,052 $ 16,341 $ 4,671 $ 31,918 $ 12,284 $ 15,757 $ 3,518 $ 1,370 $ 104,911 June 30, 2018 Balance, beginning of period $ 16,228 $ 10,103 $ 4,844 $ 34,619 $ 9,343 $ 14,792 $ 3,666 $ 1,288 $ 94,883 Charge-offs 25 400 — 29 5 7 11 384 861 Recoveries 90 19 — 49 45 25 13 141 382 Net charge-offs (recoveries) (65 ) 381 — (20 ) (40 ) (18 ) (2 ) 243 479 Provision (recovery of provision) 2,338 2,354 (502 ) 2,133 1,753 330 (104 ) 301 8,603 Balance, end of period $ 18,631 $ 12,076 $ 4,342 $ 36,772 $ 11,136 $ 15,140 $ 3,564 $ 1,346 $ 103,007 The following table shows the reserve for loan and lease losses and recorded investment in loans and leases, segregated by class, separated between individually and collectively evaluated for impairment as of June 30, 2019 and December 31, 2018 . (Dollars in thousands) Commercial and agricultural loans Auto and light truck Medium and heavy duty truck Aircraft Construction Commercial real estate Residential real estate and home equity Consumer loans Total June 30, 2019 Reserve for loan and lease losses Ending balance, individually evaluated for impairment $ 39 $ 281 $ — $ — $ 104 $ 9 $ 123 $ — $ 556 Ending balance, collectively evaluated for impairment 19,013 16,060 4,671 31,918 12,180 15,748 3,395 1,370 104,355 Total reserve for loan and lease losses $ 19,052 $ 16,341 $ 4,671 $ 31,918 $ 12,284 $ 15,757 $ 3,518 $ 1,370 $ 104,911 Recorded investment in loans Ending balance, individually evaluated for impairment $ 2,662 $ 2,219 $ — $ 1,064 $ 1,995 $ 1,834 $ 341 $ — $ 10,115 Ending balance, collectively evaluated for impairment 1,170,338 632,881 300,042 810,099 684,638 834,085 529,408 137,731 5,099,222 Total recorded investment in loans $ 1,173,000 $ 635,100 $ 300,042 $ 811,163 $ 686,633 $ 835,919 $ 529,749 $ 137,731 $ 5,109,337 December 31, 2018 Reserve for loan and lease losses Ending balance, individually evaluated for impairment $ — $ 372 $ — $ 1,255 $ 279 $ 51 $ 126 $ — $ 2,083 Ending balance, collectively evaluated for impairment 17,063 14,317 4,303 31,792 10,643 15,654 3,299 1,315 98,386 Total reserve for loan and lease losses $ 17,063 $ 14,689 $ 4,303 $ 33,047 $ 10,922 $ 15,705 $ 3,425 $ 1,315 $ 100,469 Recorded investment in loans Ending balance, individually evaluated for impairment $ 2,471 $ 11,344 $ 106 $ 7,560 $ 2,245 $ 1,890 $ 344 $ — $ 25,960 Ending balance, collectively evaluated for impairment 1,070,734 548,643 283,438 795,551 642,994 807,996 523,511 136,637 4,809,504 Total recorded investment in loans $ 1,073,205 $ 559,987 $ 283,544 $ 803,111 $ 645,239 $ 809,886 $ 523,855 $ 136,637 $ 4,835,464 |
Lease Investments
Lease Investments | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Lease Investments | Lease Investments As a lessor, the Company’s loan and lease portfolio includes direct finance leases, which are included in commercial and agricultural, auto and light truck, medium and heavy duty truck, aircraft, and construction equipment on the Consolidated Statements of Financial Condition. The Company also finances various types of construction equipment, medium and heavy duty trucks, automobiles and other equipment under leases classified as operating leases, which are included in Equipment Owned Under Operating Leases, net, on the Consolidated Statements of Financial Condition. The following table shows the components of the investment in direct finance and operating leases. (Dollars in thousands) June 30, December 31, Direct finance leases: Minimum lease payments $ 236,701 $ 257,398 Estimated unguaranteed residual values 41 41 Less: Unearned income (41,979 ) (46,709 ) Net investment in direct finance leases $ 194,763 $ 210,730 Operating leases: Gross investment in operating leases $ 196,147 $ 199,954 Accumulated depreciation (69,645 ) (65,514 ) Net investment in operating leases $ 126,502 $ 134,440 The following table shows future minimum lease payments due from clients on direct finance and operating leases at June 30, 2019 . (Dollars in thousands) Direct Finance Leases Operating Leases Remainder of 2019 $ 27,361 $ 15,830 2020 46,285 34,120 2021 38,822 20,091 2022 36,562 12,027 2023 31,618 6,470 Thereafter 56,053 3,020 Total $ 236,701 $ 91,558 To mitigate the risk of loss, the Company seeks to diversify both the type of equipment leased and the industries in which the lessees participate. In addition, a portion of our leases are terminal rental adjustment clause or “TRAC” leases where the lessee effectively guarantees the full residual value through a rental adjustment at the end of term or those where partial value is guaranteed (“split-TRAC”), which has a limited residual risk. Under a split-TRAC structure, the limited residual risk would be satisfied first by the net sale proceeds of the leased asset. The lessee’s at-risk portion, or top risk, is satisfied last and is subject to repayment as additional rent, if the TRAC amount is not satisfied by the net sale proceeds. The carrying amount of residual assets covered by residual value guarantees was $79.65 million and $87.61 million at June 30, 2019 and December 31, 2018 , respectively. The following table shows interest income recognized from direct finance lease payments and operating lease equipment rental income and related depreciation expense. Three Months Ended Six Months Ended (Dollars in thousands) 2019 2018 2019 2018 Direct finance leases: Interest income on lease receivable $ 3,241 $ 3,684 $ 6,419 $ 6,669 Operating leases: Income related to lease payments $ 7,809 $ 8,104 $ 15,791 $ 15,859 Depreciation expense 6,400 6,684 12,924 13,112 Income related to reimbursements from lessees for personal property tax on operating leased equipment for the three and six months ended June 30, 2019 was $0.11 million and $0.35 million , respectively. Expense related to personal property tax payments on operating leased equipment for the three and six months ended June 30, 2019 was $0.11 million and $0.35 million , respectively. |
Mortgage Servicing Rights
Mortgage Servicing Rights | 6 Months Ended |
Jun. 30, 2019 | |
Transfers and Servicing of Financial Assets [Abstract] | |
Mortgage Servicing Rights | Mortgage Servicing Rights The Company recognizes the rights to service residential mortgage loans for others as separate assets, whether the servicing rights are acquired through a separate purchase or through the sale of originated loans with servicing rights retained. The Company allocates a portion of the total proceeds of a mortgage loan to servicing rights based on the relative fair value. The unpaid principal balance of residential mortgage loans serviced for third parties was $731.02 million and $734.30 million at June 30, 2019 and December 31, 2018 , respectively. Mortgage servicing rights (MSRs) are evaluated for impairment at each reporting date. For purposes of impairment measurement, MSRs are stratified based on the predominant risk characteristics of the underlying servicing, principally by loan type. If temporary impairment exists within a tranche, a valuation allowance is established through a charge to income equal to the amount by which the carrying value exceeds the fair value. If it is later determined all or a portion of the temporary impairment no longer exists for a particular tranche, the valuation allowance is reduced through a recovery of income. The following table shows changes in the carrying value of MSRs and the associated valuation allowance. Three Months Ended Six Months Ended (Dollars in thousands) 2019 2018 2019 2018 Mortgage servicing rights: Balance at beginning of period $ 4,247 $ 4,356 $ 4,283 $ 4,349 Additions 188 202 385 445 Amortization (294 ) (235 ) (527 ) (471 ) Sales — — — — Carrying value before valuation allowance at end of period 4,141 4,323 4,141 4,323 Valuation allowance: Balance at beginning of period — — — — Impairment recoveries — — — — Balance at end of period $ — $ — $ — $ — Net carrying value of mortgage servicing rights at end of period $ 4,141 $ 4,323 $ 4,141 $ 4,323 Fair value of mortgage servicing rights at end of period $ 5,987 $ 7,536 $ 5,987 $ 7,536 At June 30, 2019 and 2018 , the fair value of MSRs exceeded the carrying value reported in the Consolidated Statements of Financial Condition by $1.85 million and $3.21 million , respectively. This difference represents increases in the fair value of certain MSRs that could not be recorded above cost basis. Mortgage loan contractual servicing fees, including late fees and ancillary income, were $0.63 million and $0.64 million for the three months ended June 30, 2019 and 2018 , respectively. Mortgage loan contractual servicing fees, including late fees and ancillary income, were $1.25 million and $1.30 million for the six months ended June 30, 2019 and 2018 , respectively. Mortgage loan contractual servicing fees are included in Mortgage Banking on the Consolidated Statements of Income. |
Commitments and Financial Instr
Commitments and Financial Instruments with Off-Balance-Sheet Risk | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Financial Instruments with Off-Balance-Sheet Risk | Commitments and Financial Instruments with Off-Balance-Sheet Risk Lease Commitments — The Company and its subsidiaries are obligated under operating leases for certain office premises and equipment. The following table shows operating lease right of use assets and operating lease liabilities as of June 30, 2019 . (Dollars in thousands) Statement of Financial Condition classification June 30, Operating lease right of use assets Accrued income and other assets $ 9,930 Operating lease liabilities Accrued expenses and other liabilities $ 10,253 The following table shows the components of operating leases expense for the three and six months ended June 30, 2019 . (Dollars in thousands) Statement of Income classification Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Operating lease cost Net occupancy expense $ 883 $ 1,761 Short-term lease cost Net occupancy expense 7 10 Variable lease cost Net occupancy expense — — Total operating lease cost $ 890 $ 1,771 Gross rental expense for the three and six months ended June 30, 2018 was $0.77 million and $1.71 million , respectively. The following table shows future minimum rental commitments for all noncancellable operating leases with an initial term longer than 12 months for the next five years and thereafter. (Dollars in thousands) Remainder of 2019 $ 1,564 2020 3,648 2021 2,459 2022 1,203 2023 497 Thereafter 1,736 Total lease payments 11,107 Less: imputed interest (854 ) Present value of operating lease liabilities $ 10,253 The following table shows the weighted average remaining operating lease term, the weighted average discount rate and supplemental Consolidated Statement of Cash Flows information for operating leases at June 30, 2019 . (Dollars in thousands) June 30, Weighted average remaining lease term 4.81 years Weighted average discount rate 3.00 % Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 947 During the six months ended June 30, 2019 , the Company recognized a net gain on the sale of an office building in the amount of $1.32 million . The Company commenced an operating lease with the buyer of the building to lease a portion of it for office space resulting in a new right of use asset and operating lease liability. There are no new significant leases that have not yet commenced as of June 30, 2019 . Financial Instruments with Off-Balance-Sheet Risk — 1st Source and its subsidiaries are parties to financial instruments with off-balance-sheet risk in the normal course of business. These off-balance-sheet financial instruments include commitments to originate and sell loans and standby letters of credit. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Statements of Financial Condition. The following table shows financial instruments whose contract amounts represent credit risk. (Dollars in thousands) June 30, 2019 December 31, 2018 Amounts of commitments: Loan commitments to extend credit $ 1,107,331 $ 1,095,053 Standby letters of credit $ 27,881 $ 31,133 Commercial and similar letters of credit $ 2,849 $ 2,500 The exposure to credit loss in the event of nonperformance by the other party to the financial instruments for loan commitments and standby letters of credit is represented by the dollar amount of those instruments. The Company uses the same credit policies and collateral requirements in making commitments and conditional obligations as it does for on-balance-sheet instruments. The Bank grants mortgage loan commitments to borrowers, subject to normal loan underwriting standards. The interest rate risk associated with these loan commitments is managed by entering into contracts for future deliveries of loans. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Standby letters of credit are conditional commitments that guarantee the performance of a client to a third party. The credit risk involved in and collateral obtained when issuing standby letters of credit is essentially the same as that involved in extending loan commitments to clients. Standby letters of credit generally have terms ranging from six months to one year . Commercial letters of credit are issued specifically to facilitate commerce and typically result in the commitment being drawn on when the underlying transaction is consummated between the customer and the third party. Commercial letters of credit generally have terms ranging from three months to six months . |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments Commitments to originate residential mortgage loans held for sale and forward commitments to sell residential mortgage loans are considered derivative instruments. See Note 8 for further information. The Company has certain interest rate derivative positions that are not designated as hedging instruments. Derivative assets and liabilities are recorded at fair value on the Consolidated Statements of Financial Condition and do not take into account the effects of master netting agreements. Master netting agreements allow the Company to settle all derivative contracts held with a single counterparty on a net basis, and to offset net derivative positions with related collateral, where applicable. These derivative positions relate to transactions in which the Company enters into an interest rate swap with a client while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each transaction, the Company agrees to pay interest to the client on a notional amount at a variable interest rate and receive interest from the client on the same notional amount at a fixed interest rate. At the same time, the Company agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the client to effectively convert a variable rate loan to a fixed rate. Because the terms of the swaps with the customers and the other financial institutions offset each other, with the only difference being counterparty credit risk, changes in the fair value of the underlying derivative contracts are not materially different and do not significantly impact the Company’s results of operations. The following table shows the amounts of non-hedging derivative financial instruments. Asset derivatives Liability derivatives (Dollars in thousands) Notional or contractual amount Statement of Financial Condition classification Fair value Statement of Financial Condition classification Fair value June 30, 2019 Interest rate swap contracts $ 992,453 Other assets $ 21,397 Other liabilities $ 21,772 Loan commitments 15,756 Mortgages held for sale 204 N/A — Forward contracts - mortgage loan 27,722 N/A — Mortgages held for sale 174 Total $ 1,035,931 $ 21,601 $ 21,946 December 31, 2018 Interest rate swap contracts $ 855,848 Other assets $ 7,124 Other liabilities $ 7,250 Loan commitments 5,871 Mortgages held for sale 112 N/A — Forward contracts - mortgage loan 14,087 N/A — Mortgages held for sale 135 Total $ 875,806 $ 7,236 $ 7,385 The following table shows the amounts included in the Statements of Income for non-hedging derivative financial instruments. Gain (loss) Three Months Ended Six Months Ended (Dollars in thousands) Statement of Income classification 2019 2018 2019 2018 Interest rate swap contracts Other expense $ (192 ) $ (35 ) $ (249 ) $ (36 ) Interest rate swap contracts Other income 505 246 784 579 Loan commitments Mortgage banking 15 61 92 57 Forward contracts - mortgage loan Mortgage banking (49 ) (40 ) (39 ) (37 ) Total $ 279 $ 232 $ 588 $ 563 The following table shows the offsetting of financial assets and derivative assets. Gross Amounts Not Offset in the Statement of Financial Condition (Dollars in thousands) Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Assets Presented in the Statement of Financial Condition Financial Instruments Cash Collateral Received Net Amount June 30, 2019 Interest rate swaps $ 21,397 $ — $ 21,397 $ — $ — $ 21,397 December 31, 2018 Interest rate swaps $ 7,128 $ 4 $ 7,124 $ 177 $ 610 $ 6,337 The following table shows the offsetting of financial liabilities and derivative liabilities. Gross Amounts Not Offset in the Statement of Financial Condition (Dollars in thousands) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Liabilities Presented in the Statement of Financial Condition Financial Instruments Cash Collateral Pledged Net Amount June 30, 2019 Interest rate swaps $ 21,772 $ — $ 21,772 $ 21,390 $ — $ 382 Repurchase agreements 119,781 — 119,781 119,781 — — Total $ 141,553 $ — $ 141,553 $ 141,171 $ — $ 382 December 31, 2018 Interest rate swaps $ 7,254 $ 4 $ 7,250 $ 1,700 $ — $ 5,550 Repurchase agreements 103,627 — 103,627 103,627 — — Total $ 110,881 $ 4 $ 110,877 $ 105,327 $ — $ 5,550 If a default in performance of any obligation of a repurchase agreement occurs, each party will set-off property held in respect of transactions against obligations owing in respect of any other transactions. At June 30, 2019 and December 31, 2018 , repurchase agreements had a remaining contractual maturity of $117.53 million and $102.34 million in overnight and $2.25 million and $1.29 million in up to 30 days, respectively and were collateralized by U.S. Treasury and Federal agencies securities. |
Variable Interest Entities
Variable Interest Entities | 6 Months Ended |
Jun. 30, 2019 | |
Variable Interest Entities [Abstract] | |
Variable Interest Entities Disclosure | Variable Interest Entities A variable interest entity (VIE) is a partnership, limited liability company, trust or other legal entity that meets any one of the following criteria: • The entity does not have sufficient equity to conduct its activities without additional subordinated financial support from another party. • The entity’s investors lack the power to direct the activities that most significantly affect the entity’s economic performance. • The entity’s at-risk holders do not have the obligation to absorb the losses or the right to receive residual returns. • The voting rights of some investors are not proportional to their economic interests in the entity, and substantially all of the entity’s activities involve, or are conducted on behalf of, investors with disproportionately few voting rights. The Company is involved in various entities that are considered to be VIEs. The Company’s investments in VIEs are primarily related to investments promoting affordable housing, community development and renewable energy sources. Some of these tax-advantaged investments support the Company’s regulatory compliance with the Community Reinvestment Act. The Company’s investments in these entities generate a return primarily through the realization of federal and state income tax credits, and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods. These tax credits are recognized as a reduction of tax expense or, for investments qualifying as investment tax credits, as a reduction to the related investment asset. The Company recognized federal income tax credits related to its affordable housing and community development tax-advantaged investments in tax expense of $0.35 million and $0.32 million for the three months ended June 30, 2019 and 2018 , respectively and $0.70 million and $0.64 million for the six months ended June 30, 2019 and 2018 , respectively. The Company also recognized $3.95 million and $(0.21) million of investment tax credits for the three months ended June 30, 2019 and 2018 , respectively and $5.55 million and $7.94 million for the six months ended June 30, 2019 and 2018 , respectively. The Company is not required to consolidate VIEs in which it has concluded it does not have a controlling financial interest, and thus is not the primary beneficiary. In such cases, the Company does not have both the power to direct the entities’ most significant activities and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIEs. As a limited partner in these operating partnerships, we are allocated credits and deductions associated with the underlying properties. The Company has determined that it is not the primary beneficiary of these investments because the general partners have the power to direct activities that most significantly influence the economic performance of their respective partnerships. The Company’s investments in these unconsolidated VIEs are carried in Other Assets on the Consolidated Statements of Financial Condition. The Company’s unfunded capital and other commitments related to these unconsolidated VIEs are generally carried in Other Liabilities on the Consolidated Statements of Financial Condition. The Company’s maximum exposure to loss from these unconsolidated VIEs include the investment recorded on the Company’s Consolidated Statements of Financial Condition, net of unfunded capital commitments, and previously recorded tax credits which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level. While the Company believes potential losses from these investments are remote, the maximum exposure was determined by assuming a scenario where the community-based business, housing projects and renewable energy projects completely fail and do not meet certain taxing authority compliance requirements resulting in recapture of the related tax credits. The following table provides a summary of investments in affordable housing, community development and renewable energy VIEs that the Company has not consolidated. (Dollars in thousands) June 30, 2019 December 31, 2018 Investment carrying amount $ 17,397 $ 15,083 Unfunded capital and other commitments 12,306 6,449 Maximum exposure to loss 35,949 40,705 The Company is required to consolidate VIEs in which it has concluded it has significant involvement in and the ability to direct the activities that impact the entity’s economic performance. The Company is the managing general partner of entities to which it shares interest in tax-advantaged investments with third parties. At June 30, 2019 and December 31, 2018 , approximately $41.09 million and $8.38 million of the Company’s assets and $29.99 million and $6.70 million of its liabilities included on the Consolidated Statements of Financial Condition were related to tax-advantaged investment VIEs which the Company has consolidated, respectively. The assets of the consolidated VIEs are reported in Other Assets, the liabilities are reported in Other Liabilities and the non-controlling interest is reported in Equity on the Consolidated Statements of Financial Condition. The assets of a particular VIE are the primary source of funds to settle its obligations. The creditors of the VIE do not have recourse to the general credit of the Company. The Company’s exposure to the consolidated VIE is generally limited to the carrying value of its variable interest plus any related tax credits previously recognized. Additionally, the Company sponsors one trust, 1st Source Master Trust (Capital Trust) of which 100% of the common equity is owned by the Company. The Capital Trust was formed in 2007 for the purpose of issuing corporation-obligated mandatorily redeemable capital securities (the capital securities) to third-party investors and investing the proceeds from the sale of the capital securities solely in junior subordinated debenture securities of the Company (the subordinated notes). The subordinated notes held by the Capital Trust are the sole assets of the Capital Trust. The Capital Trust qualifies as a variable interest entity for which the Company is not the primary beneficiary and therefore reported in the financial statements as an unconsolidated subsidiary. The junior subordinated debentures are reflected as subordinated notes in the Statements of Financial Condition with the corresponding interest distributions reflected as Interest Expense in the Statements of Income. The common shares issued by the Capital Trust are included in Other Assets in the Statements of Financial Condition. Distributions on the capital securities issued by the Capital Trust are payable quarterly at a rate per annum equal to the interest rate being earned by the Capital Trust on the subordinated notes held by the Capital Trust. The capital securities are subject to mandatory redemption, in whole or in part, upon repayment of the subordinated notes. The Company has entered into agreements which, taken collectively, fully and unconditionally guarantee the capital securities subject to the terms of each of the guarantees. The capital securities held by the Capital Trust qualify as Tier 1 capital under Federal Reserve Board guidelines. The following table shows subordinated notes at June 30, 2019 . (Dollars in thousands) Amount of Subordinated Notes Interest Rate Maturity Date June 2007 issuance (1) $ 41,238 7.22 % 6/15/2037 August 2007 issuance (2) 17,526 3.89 % 9/15/2037 Total $ 58,764 (1) Fixed rate through life of debt. (2) 3-Month LIBOR + 1.48% through remaining life of debt. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Earnings per common share is computed using the two-class method. Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the applicable period, excluding outstanding participating securities. Participating securities include non-vested restricted stock awards. Non-vested restricted stock awards are considered participating securities to the extent the holders of these securities receive non-forfeitable dividends at the same rate as holders of common stock. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method. Stock options, where the exercise price was greater than the average market price of the common shares, were excluded from the computation of diluted earnings per common share because the result would have been antidilutive. There were no stock options outstanding as of June 30, 2019 and 2018 . The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share. Three Months Ended Six Months Ended (Dollars in thousands - except per share amounts) 2019 2018 2019 2018 Distributed earnings allocated to common stock $ 6,930 $ 6,225 $ 13,896 $ 11,929 Undistributed earnings allocated to common stock 16,323 15,591 31,425 28,869 Net earnings allocated to common stock 23,253 21,816 45,321 40,798 Net earnings allocated to participating securities 132 148 260 282 Net income allocated to common stock and participating securities $ 23,385 $ 21,964 $ 45,581 $ 41,080 Weighted average shares outstanding for basic earnings per common share 25,615,718 25,958,128 25,687,056 25,954,278 Dilutive effect of stock compensation — — — — Weighted average shares outstanding for diluted earnings per common share 25,615,718 25,958,128 25,687,056 25,954,278 Basic earnings per common share $ 0.91 $ 0.84 $ 1.76 $ 1.57 Diluted earnings per common share $ 0.91 $ 0.84 $ 1.76 $ 1.57 |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Based Compensation | Stock Based Compensation As of June 30, 2019 , the Company had four active stock-based employee compensation plans, which are more fully described in Note 16 of the Consolidated Financial Statements in 1st Source’s Annual Report on Form 10-K for the year ended December 31, 2018 . These plans include three executive stock award plans, the Executive Incentive Plan, the Restricted Stock Award Plan, the Strategic Deployment Incentive Plan; and the Employee Stock Purchase Plan. The 2011 Stock Option Plan was approved by the shareholders on April 21, 2011 but the Company had not made any grants through June 30, 2019 . Stock-based compensation expense for all stock-based compensation awards granted is based on the grant-date fair value. For all awards except stock option awards, the grant date fair value is either the fair market value per share or book value per share (corresponding to the type of stock awarded) as of the grant date. For stock option awards, the grant date fair value is estimated using the Black-Scholes option pricing model. For all awards the Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, for which the Company uses the related vesting term. Total fair value of options vested and expensed was zero for the six months ended June 30, 2019 and 2018 . As of June 30, 2019 and 2018 there were no outstanding stock options. There were no stock options exercised during the six months ended June 30, 2019 and 2018 . All shares issued in connection with stock option exercises are issued from available treasury stock. As of June 30, 2019 , there was $6.03 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 3.21 years . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 6 Months Ended |
Jun. 30, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income (Loss) The following table presents reclassifications out of accumulated other comprehensive income (loss) related to unrealized gains and losses on available-for-sale securities. Three Months Ended June 30, Six Months Ended June 30, Affected Line Item in the Statements of Income (Dollars in thousands) 2019 2018 2019 2018 Realized losses included in net income $ — $ — $ — $ (345 ) Losses on investment securities available-for-sale — — — (345 ) Income before income taxes Tax effect — — — 83 Income tax expense Net of tax $ — $ — $ — $ (262 ) Net income |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The total amount of unrecognized tax benefits that would affect the effective tax rate if recognized was zero at June 30, 2019 and December 31, 2018 . Interest and penalties are recognized through the income tax provision. For the three months ended June 30, 2019 and 2018, the Company recognized $0.00 million and $(0.10) million in interest and penalties, respectively. For the six months ended June 30, 2019 and 2018 , the Company recognized $0.00 million and $(0.09) million in interest or penalties, respectively. There was no accrued interest and penalties at June 30, 2019 and December 31, 2018 . Tax years that remain open and subject to audit include the federal 2015-2018 years and the Indiana 2015-2018 years. The Company does not anticipate a significant change in the amount of uncertain tax positions within the next 12 months. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company records certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are also utilized to determine the initial value of certain assets and liabilities, to perform impairment assessments, and for disclosure purposes. The Company uses quoted market prices and observable inputs to the maximum extent possible when measuring fair value. In the absence of quoted market prices, various valuation techniques are utilized to measure fair value. When possible, observable market data for identical or similar financial instruments is used in the valuation. When market data is not available, fair value is determined using valuation models that incorporate management’s estimates of the assumptions a market participant would use in pricing the asset or liability. Fair value measurements are classified within one of three levels based on the observability of the inputs used to determine fair value, as follows: • Level 1 — The valuation is based on quoted prices in active markets for identical instruments. • Level 2 — The valuation is based on observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. • Level 3 — The valuation is based on unobservable inputs that are supported by minimal or no market activity and that are significant to the fair value of the instrument. Level 3 valuations are typically performed using pricing models, discounted cash flow methodologies, or similar techniques that incorporate management’s own estimates of assumptions that market participants would use in pricing the instrument, or valuations that require significant management judgment or estimation. 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. The Company elected fair value accounting for mortgages held for sale. The Company believes the election for mortgages held for sale (which are economically hedged with free-standing derivatives) will reduce certain timing differences and better match changes in the value of these assets with changes in the value of derivatives used as economic hedges for these assets. At June 30, 2019 and December 31, 2018 , all mortgages held for sale were carried at fair value. The following table shows the differences between the fair value carrying amount of mortgages held for sale measured at fair value and the aggregate unpaid principal amount the Company is contractually entitled to receive at maturity. (Dollars in thousands) Fair value carrying amount Aggregate unpaid principal Excess of fair value carrying amount over (under) unpaid principal June 30, 2019 Mortgages held for sale reported at fair value $ 19,178 $ 18,808 $ 370 (1) December 31, 2018 Mortgages held for sale reported at fair value $ 11,290 $ 11,076 $ 214 (1) (1) The excess of fair value carrying amount over (under) unpaid principal is included in mortgage banking income and includes changes in fair value at and subsequent to funding and gains and losses on the related loan commitment prior to funding. Financial Instruments on Recurring Basis: The following is a description of the valuation methodologies used for financial instruments measured at fair value on a recurring basis: Investment securities available-for-sale are valued primarily by a third party pricing agent. Prices supplied by the independent pricing agent, as well as their pricing methodologies and assumptions, are reviewed by the Company for reasonableness and to ensure such prices are aligned with market levels. In general, the Company’s investment securities do not possess a complex structure that could introduce greater valuation risk. The portfolio mainly consists of traditional investments including U.S. Treasury and Federal agencies securities, Federal agency mortgage pass-through securities, and general obligation and revenue municipal bonds. Pricing for such instruments is fairly generic and is easily obtained. On a quarterly basis, prices supplied by the pricing agent are validated by comparison to prices obtained from other third party sources for a material portion of the portfolio. The valuation policy and procedures for Level 3 fair value measurements of available-for-sale debt securities are decided through collaboration between management of the Corporate Accounting and Funds Management departments. The changes in fair value measurement for Level 3 securities are analyzed on a periodic basis under a collaborative framework with the aforementioned departments. The methodology and variables used for input are derived from the combination of observable and unobservable inputs. The unobservable inputs are determined through internal assumptions that may vary from period to period due to external factors, such as market movement and credit rating adjustments. Both the market and income valuation approaches are implemented using the following types of inputs: • U.S. treasuries are priced using the market approach and utilizing live data feeds from active market exchanges for identical securities. • Government-sponsored agency debt securities and corporate bonds are primarily priced using available market information through processes such as benchmark curves, market valuations of like securities, sector groupings and matrix pricing. • Other government-sponsored agency securities, mortgage-backed securities and some of the actively traded REMICs and CMOs, are primarily priced using available market information including benchmark yields, prepayment speeds, spreads and volatility of similar securities. • State and political subdivisions are largely grouped by characteristics, i.e., geographical data and source of revenue in trade dissemination systems. Since some securities are not traded daily and due to other grouping limitations, active market quotes are often obtained using benchmarking for like securities. Local direct placement municipal securities, with very little market activity, are priced using an appropriate market yield curve, which includes a credit spread assumption. Mortgages held for sale and the related loan commitments and forward contracts (hedges) are valued using a market value approach and utilizing an appropriate current market yield and a loan commitment closing rate based on historical analysis. Interest rate swap positions, both assets and liabilities, are valued by a third-party pricing agent using an income approach and utilizing models that use as their basis readily observable market parameters. This valuation process considers various factors including interest rate yield curves, time value and volatility factors. Validation of third party agent valuations is accomplished by comparing those values to the Company’s swap counterparty valuations. Management believes an adjustment is required to “mid-market” valuations for derivatives tied to its performing loan portfolio to recognize the imprecision and related exposure inherent in the process of estimating expected credit losses as well as velocity of deterioration evident with systemic risks embedded in these portfolios. Any change in the mid-market derivative valuation adjustment will be recognized immediately through the Consolidated Statements of Income. The following table shows the balance of assets and liabilities measured at fair value on a recurring basis. (Dollars in thousands) Level 1 Level 2 Level 3 Total June 30, 2019 Assets: Investment securities available-for-sale: U.S. Treasury and Federal agencies securities $ 34,081 $ 507,395 $ — $ 541,476 U.S. States and political subdivisions securities — 86,011 5,061 91,072 Mortgage-backed securities — Federal agencies — 338,824 — 338,824 Corporate debt securities — 49,714 — 49,714 Foreign government and other securities — 700 — 700 Total debt securities available-for-sale 34,081 982,644 5,061 1,021,786 Mortgages held for sale — 19,178 — 19,178 Accrued income and other assets (interest rate swap agreements) — 21,397 — 21,397 Total $ 34,081 $ 1,023,219 $ 5,061 $ 1,062,361 Liabilities: Accrued expenses and other liabilities (interest rate swap agreements) $ — $ 21,772 $ — $ 21,772 Total $ — $ 21,772 $ — $ 21,772 December 31, 2018 Assets: Investment securities available-for-sale: U.S. Treasury and Federal agencies securities $ 33,746 $ 497,477 $ — $ 531,223 U.S. States and political subdivisions securities — 93,557 1,025 94,582 Mortgage-backed securities — Federal agencies — 318,233 — 318,233 Corporate debt securities — 45,392 — 45,392 Foreign government and other securities — 699 — 699 Total debt securities available-for-sale 33,746 955,358 1,025 990,129 Mortgages held for sale — 11,290 — 11,290 Accrued income and other assets (interest rate swap agreements) — 7,124 — 7,124 Total $ 33,746 $ 973,772 $ 1,025 $ 1,008,543 Liabilities: Accrued expenses and other liabilities (interest rate swap agreements) $ — $ 7,250 $ — $ 7,250 Total $ — $ 7,250 $ — $ 7,250 The following table shows changes in Level 3 assets measured at fair value on a recurring basis for the quarter ended June 30, 2019 and 2018 . (Dollars in thousands) U.S. States and political subdivisions securities Foreign government and other securities Investment securities available-for-sale Beginning balance April 1, 2019 $ 5,064 $ — $ 5,064 Total gains or losses (realized/unrealized): Included in earnings — — — Included in other comprehensive income 16 — 16 Purchases — — — Issuances — — — Sales — — — Settlements — — — Maturities (19 ) — (19 ) Transfers into Level 3 — — — Transfers out of Level 3 — — — Ending balance June 30, 2019 $ 5,061 $ — $ 5,061 Beginning balance April 1, 2018 $ 2,155 $ 708 $ 2,863 Total gains or losses (realized/unrealized): Included in earnings — — — Included in other comprehensive income 4 (1 ) 3 Purchases — — — Issuances — — — Sales — — — Settlements — — — Maturities (518 ) — (518 ) Transfers into Level 3 — — — Transfers out of Level 3 — — — Ending balance June 30, 2018 $ 1,641 $ 707 $ 2,348 There were no gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at June 30, 2019 or 2018 . No transfers between levels occurred during the three months ended June 30, 2019 or 2018 . The following table shows the valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a recurring basis. (Dollars in thousands) Fair Value Valuation Methodology Unobservable Inputs Range of Inputs June 30, 2019 Debt securities available-for sale Direct placement municipal securities $ 5,061 Discounted cash flows Credit spread assumption 0.13% - 2.19% December 31, 2018 Debt securities available-for sale Direct placement municipal securities $ 1,025 Discounted cash flows Credit spread assumption 0.17% - 3.02% The sensitivity to changes in the unobservable inputs and their impact on the fair value measurement can be significant. The significant unobservable input for direct placement municipal securities are the credit spread assumptions used to determine the fair value measure. An increase (decrease) in the estimated spread assumption of the market will decrease (increase) the fair value measure of the securities. Financial Instruments on Non-recurring Basis: The Company may be required, from time to time, to measure certain other financial assets at fair value on a non-recurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower of cost or market accounting or impairment charges of individual assets. The Credit Policy Committee (CPC), a management committee, is responsible for overseeing the valuation processes and procedures for Level 3 measurements of impaired loans, other real estate and repossessions. The CPC reviews these assets on a quarterly basis to determine the accuracy of the observable inputs, generally third party appraisals, auction values, values derived from trade publications and data submitted by the borrower, and the appropriateness of the unobservable inputs, generally discounts due to current market conditions and collection issues. The CPC establishes discounts based on asset type and valuation source; deviations from the standard are documented. The discounts are reviewed periodically, annually at a minimum, to determine they remain appropriate. Consideration is given to current trends in market values for the asset categories and gains and losses on sales of similar assets. The Loan and Funds Management Committee of the Board of Directors is responsible for overseeing the CPC. Discounts vary depending on the nature of the assets and the source of value. Aircraft are generally valued using quarterly trade publications adjusted for engine time, condition, maintenance programs, discounted by 10% . Likewise, autos are valued using current auction values, discounted by 10% ; medium and heavy duty trucks are valued using trade publications and auction values, discounted by 15% . Construction equipment is generally valued using trade publications and auction values, discounted by 20% . Real estate is valued based on appraisals or evaluations, discounted by 20% with higher discounts for property in poor condition or property with characteristics which may make it more difficult to market. Commercial loans subject to borrowing base certificates are generally discounted by 20% for receivables and 40% - 75% for inventory with higher discounts when monthly borrowing base certificates are not required or received. Impaired loans and related write-downs are based on the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are reviewed quarterly and estimated using customized discounting criteria, appraisals and dealer and trade magazine quotes which are used in a market valuation approach. In accordance with fair value measurements, only impaired loans for which a reserve for loan loss has been established based on the fair value of collateral require classification in the fair value hierarchy. As a result, only a portion of the Company’s impaired loans are classified in the fair value hierarchy. The Company has established MSRs valuation policies and procedures based on industry standards and to ensure valuation methodologies are consistent and verifiable. MSRs and related adjustments to fair value result from application of lower of cost or fair value accounting. For purposes of impairment, MSRs are stratified based on the predominant risk characteristics of the underlying servicing, principally by loan type. The fair value of each tranche of the servicing portfolio is estimated by calculating the present value of estimated future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates, servicing costs, and other economic factors. Prepayment rates and discount rates are derived through a third party pricing agent. Changes in the most significant inputs, including prepayment rates and discount rates, are compared to the changes in the fair value measurements and appropriate resolution is made. A fair value analysis is also obtained from an independent third party agent and compared to the internal valuation for reasonableness. MSRs do not trade in an active, open market with readily observable prices and though sales of MSRs do occur, precise terms and conditions typically are not readily available and the characteristics of the Company’s servicing portfolio may differ from those of any servicing portfolios that do trade. Other real estate is based on the fair value of the underlying collateral less expected selling costs. Collateral values are estimated primarily using appraisals and reflect a market value approach. Fair values are reviewed quarterly, and new appraisals are obtained annually. Repossessions are similarly valued. For assets measured at fair value on a nonrecurring basis the following represents impairment charges (recoveries) recognized on these assets during the quarter ended June 30, 2019 : impaired loans - $0.00 million ; mortgage servicing rights - $0.00 million ; repossessions - $0.01 million ; and other real estate - $0.00 million . The following table shows the carrying value of assets measured at fair value on a non-recurring basis. (Dollars in thousands) Level 1 Level 2 Level 3 Total June 30, 2019 Impaired loans - collateral based $ — $ — $ 1,962 $ 1,962 Accrued income and other assets (mortgage servicing rights) — — 4,141 4,141 Accrued income and other assets (repossessions) — — 8,799 8,799 Accrued income and other assets (other real estate) — — 543 543 Total $ — $ — $ 15,445 $ 15,445 December 31, 2018 Impaired loans - collateral based $ — $ — $ 7,306 $ 7,306 Accrued income and other assets (mortgage servicing rights) — — 4,283 4,283 Accrued income and other assets (repossessions) — — 6,666 6,666 Accrued income and other assets (other real estate) — — 299 299 Total $ — $ — $ 18,554 $ 18,554 The following table below shows the valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a non-recurring basis. (Dollars in thousands) Carrying Value Fair Value Valuation Methodology Unobservable Inputs Range of Inputs June 30, 2019 Impaired loans $ 1,962 $ 1,962 Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions 20% - 100% Mortgage servicing rights 4,141 5,987 Discounted cash flows Constant prepayment rate (CPR) 11.3% - 24.5% Discount rate 9.3% - 12.1% Repossessions 8,799 9,184 Appraisals, trade publications and auction values Discount for lack of marketability 2% - 10% Other real estate 543 550 Appraisals Discount for lack of marketability 0% - 9% December 31, 2018 Impaired loans $ 7,306 $ 7,306 Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions 20% - 35% Mortgage servicing rights 4,283 7,238 Discounted cash flows Constant prepayment rate (CPR) 7.2% - 24.8% Discount rate 10.3 % - 13.1% Repossessions 6,666 6,991 Appraisals, trade publications and auction values Discount for lack of marketability 4% - 6% Other real estate 299 305 Appraisals Discount for lack of marketability 0% - 10% GAAP requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring or non-recurring basis. The following table shows the fair values of the Company’s financial instruments. (Dollars in thousands) Carrying or Contract Value Fair Value Level 1 Level 2 Level 3 June 30, 2019 Assets: Cash and due from banks $ 71,910 $ 71,910 $ 71,910 $ — $ — Federal funds sold and interest bearing deposits with other banks 24,578 24,578 24,578 — — Investment securities, available-for-sale 1,021,786 1,021,786 34,081 982,644 5,061 Other investments 28,404 28,404 28,404 — — Mortgages held for sale 19,178 19,178 — 19,178 — Loans and leases, net of reserve for loan and lease losses 5,004,426 4,994,307 — — 4,994,307 Mortgage servicing rights 4,141 5,987 — — 5,987 Accrued interest receivable 21,114 21,114 — 21,114 — Interest rate swaps 21,397 21,397 — 21,397 — Liabilities: Deposits $ 5,403,845 $ 5,409,315 $ 3,714,182 $ 1,695,133 $ — Short-term borrowings 186,009 186,009 119,188 66,821 — Long-term debt and mandatorily redeemable securities 71,542 70,547 — 70,547 — Subordinated notes 58,764 59,978 — 59,978 — Accrued interest payable 12,903 12,903 — 12,903 — Interest rate swaps 21,772 21,772 — 21,772 — Off-balance-sheet instruments * — 251 — 251 — December 31, 2018 Assets: Cash and due from banks $ 94,907 $ 94,907 $ 94,907 $ — $ — Federal funds sold and interest bearing deposits with other banks 4,172 4,172 4,172 — — Investment securities, available-for-sale 990,129 990,129 33,746 955,358 1,025 Other investments 28,404 28,404 28,404 — — Mortgages held for sale 11,290 11,290 — 11,290 — Loans and leases, net of reserve for loan and lease losses 4,734,995 4,689,267 — — 4,689,267 Mortgage servicing rights 4,283 7,238 — — 7,238 Accrued interest receivable 18,880 18,880 — 18,880 — Interest rate swaps 7,124 7,124 — 7,124 — Liabilities: Deposits $ 5,122,322 $ 5,111,711 $ 3,654,556 $ 1,457,155 $ — Short-term borrowings 199,344 199,344 113,734 85,610 — Long-term debt and mandatorily redeemable securities 71,123 68,751 — 68,751 — Subordinated notes 58,764 45,874 — 45,874 — Accrued interest payable 8,950 8,950 — 8,950 — Interest rate swaps 7,250 7,250 — 7,250 — Off-balance-sheet instruments * — 259 — 259 — * Represents estimated cash outflows required to currently settle the obligations at current market rates. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. These estimates are subjective in nature and require considerable judgment to interpret market data. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange, nor are they intended to represent the fair value of the Company as a whole. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The fair value estimates presented herein are based on pertinent information available to management as of the respective balance sheet date. Although the Company is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amounts presented herein. Other significant assets, such as premises and equipment, other assets, and liabilities not defined as financial instruments, are not included in the above disclosures. Also, the fair value estimates for deposits do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation – The accompanying unaudited consolidated financial statements reflect all adjustments (all of which are normal and recurring in nature) which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position, the results of operations, changes in comprehensive income, changes in shareholders’ equity, and cash flows for the periods presented. These unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission (SEC) and, therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been omitted. The Notes to the Consolidated Financial Statements appearing in 1st Source Corporation’s Annual Report on Form 10-K ( 2018 Annual Report), which include descriptions of significant accounting policies, should be read in conjunction with these interim financial statements. The Consolidated Statement of Financial Condition at December 31, 2018 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements – Financial statements prepared in accordance with GAAP require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates. |
Loans and Leases | Loans and Leases – Loans are stated at the principal amount outstanding, net of unamortized deferred loan origination fees and costs and net of unearned income. Interest income is accrued as earned based on unpaid principal balances. Origination fees and direct loan and lease origination costs are deferred, and the net amount amortized to interest income over the estimated life of the related loan or lease. Loan commitment fees are deferred and amortized into other income over the commitment period. Direct financing leases are carried at the aggregate of lease payments plus estimated residual value of the leased property, net of unamortized deferred lease origination fees and costs and unearned income. Interest income on direct financing leases is recognized over the term of the lease to achieve a constant periodic rate of return on the outstanding investment. Effective January 1, 2019, as part of the new leasing standard, only those costs incurred as a direct result of closing a lease transaction can be capitalized. All existing deferrals will continue to be amortized over the estimated life of the lease while all new incremental direct costs will be expensed immediately. The accrual of interest on loans and leases is discontinued when a loan or lease becomes contractually delinquent for 90 days, or when an individual analysis of a borrower’s credit worthiness indicates a credit should be placed on nonperforming status, except for residential mortgage loans and consumer loans that are well secured and in the process of collection. Residential mortgage loans are placed on nonaccrual at the time the loan is placed in foreclosure. When interest accruals are discontinued, interest credited to income in the current year is reversed and interest accrued in the prior year is charged to the reserve for loan and lease losses. However, in some cases, the Company may elect to continue the accrual of interest when the net realizable value of collateral is sufficient to cover the principal and accrued interest. When a loan or lease is classified as nonaccrual and the future collectability of the recorded loan or lease balance is doubtful, collections on interest and principal are applied as a reduction to principal outstanding. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured, which is typically evidenced by a sustained repayment performance of at least six months . A loan or lease is considered impaired, based on current information and events, if it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan or lease agreement. Interest on impaired loans and leases, which are not classified as nonaccrual, is recognized on the accrual basis. The Company evaluates loans and leases exceeding $100,000 for impairment and establishes a specific reserve as a component of the reserve for loan and lease losses when it is probable all amounts due will not be collected pursuant to the contractual terms of the loan or lease and the recorded investment in the loan or lease exceeds its fair value. Loans and leases that have been modified and economic concessions have been granted to borrowers who have experienced financial difficulties are considered a troubled debt restructuring (TDR) and, by definition, are deemed an impaired loan. These concessions typically result from the Company’s loss mitigation activities and may include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructuring and typically are returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period of at least six months. When the Company modifies loans and leases in a TDR, it evaluates any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan or lease agreement, or uses the current fair value of the collateral, less selling costs for collateral dependent loans. If the Company determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through a reserve for loan and lease losses estimate or a charge-off to the reserve for loan and lease losses. In periods subsequent to modification, the Company evaluates all TDRs, including those that have payment defaults, for possible impairment and recognizes impairment through the reserve for loan and lease losses. |
Equipment Owned Under Operating Leases | Equipment Owned Under Operating Leases – As a lessor, the Company finances various types of construction equipment, medium and heavy duty trucks, automobiles and other equipment under leases classified as operating leases. The equipment underlying the operating leases is reported at cost, net of accumulated depreciation, in the Consolidated Statements of Financial Condition. These operating lease arrangements require the lessee to make a fixed monthly rental payment over a specified lease term generally ranging from three years to seven years . Revenue consists of the contractual lease payments and is recognized on a straight-line basis over the lease term and reported in Noninterest Income on the Consolidated Statements of Income. Leased assets are being depreciated on a straight-line method over the lease term to the estimate of the equipment’s fair market value at lease termination, also referred to as “residual” value. The depreciation of these operating lease assets is reported in Noninterest Expense on the Consolidated Statements of Income. For automobile leases, fair value is based upon published industry market guides. For other equipment leases, fair value may be based upon observable market prices, third-party valuations, or prices received on sales of similar assets at the end of the lease term. These residual values are reviewed annually to ensure the recorded amount does not exceed the fair market value at the lease termination. At the end of the lease, the operating lease asset is either purchased by the lessee or returned to the Company. The Company is responsible for the payment of personal property taxes which is reported in Other Expense on the Consolidated Statements of Income. The lessee is responsible for reimbursing the Company for personal property taxes which is reported in Other Income on the Consolidated Statements of Income. The Company excludes sales taxes and other similar taxes from being reported as lease revenue with an associated expense. |
Lease Commitments | Lease Commitments – The Company leases certain banking center locations, office space, land and billboards. In determining whether a contract contains a lease, the Company examines the contract to ensure an asset was specifically identified and that the Company has control of use over the asset. To determine whether a lease is classified as operating or finance, the Company performs an economic life test on all building leases with greater than a twenty year term. Further, the Company performs a fair value test to identify any leases that have a present value of future lease payments over the lease term that is greater than 90% of the fair value of the building. The Company only capitalizes leases with an initial lease liability of $2,000 or greater. At lease inception, the Company determines the lease term by adding together the minimum lease term and all optional renewal periods that it is reasonably certain to renew. The Company determines this on each lease by considering all relevant contract-based, asset-based, market-based, and entity-based economic factors. Generally, the exercise of lease renewal options is at the Company’s sole discretion. The lease term is used to determine whether a lease is operating or finance and is used to calculate straight-line rent expense. Additionally, the depreciable life of leasehold improvements is limited by the expected lease term. Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the date the Company takes possession of the property. Rent expense and variable lease costs are included in Net Occupancy Expense on the Company’s Consolidated Statements of Income. Included in variable lease costs are leases with rent escalations based on recent financial indices, such as the Consumer Price Index, where the Company estimates future rent increases and records the actual difference to variable costs. Certain leases require the Company to pay common area maintenance, real estate taxes, insurance and other operating expenses associated with the leases premises. These expenses are classified in Net Occupancy Expense, consistent with similar costs for owned locations. There are no residual value guarantees, restrictions or covenants imposed by leases. The Company accounts for lease and nonlease components together as a single lease component by class of underlying asset. Operating lease obligations with an initial term longer than 12 months are recorded with a right of use asset and a lease liability in the Consolidated Statements of Financial Condition. The discount rate used in determining the lease liability and related right of use asset is based upon what would be obtained by the Company for similar loans as an incremental rate as of the date of origination or renewal. |
Revenue Recognition | Revenue Recognition – The Company recognizes revenues as they are earned based on contractual terms, as transactions occur, or as services are provided and collectability is reasonably assured. The Company’s principal source of revenue is interest income from loans and leases and investment securities. The Company also earns noninterest income from various banking and financial services offered primarily through 1st Source Bank (Bank) and its subsidiaries. Interest Income – The largest source of revenue for the Company is interest income which is primarily recognized on an accrual basis according to nondiscretionary formulas in written contracts, such as loan and lease agreements or investment securities contracts. Noninterest Income – The Company earns noninterest income through a variety of financial and transaction services provided to corporate and consumer clients such as trust and wealth advisory, deposit account, debit card, mortgage banking, insurance, and equipment rental services. Revenue is recorded for noninterest income based on the contractual terms for the service or transaction performed. In certain circumstances, noninterest income is reported net of associated expenses. |
Investment Securities (Tables)
Investment Securities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of investment securities available-for-sale | The following table shows investment securities available-for-sale. (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value June 30, 2019 U.S. Treasury and Federal agencies securities $ 540,392 $ 2,011 $ (927 ) $ 541,476 U.S. States and political subdivisions securities 90,211 932 (71 ) 91,072 Mortgage-backed securities — Federal agencies 338,142 2,711 (2,029 ) 338,824 Corporate debt securities 49,162 637 (85 ) 49,714 Foreign government and other securities 700 — — 700 Total debt securities available-for-sale $ 1,018,607 $ 6,291 $ (3,112 ) $ 1,021,786 December 31, 2018 U.S. Treasury and Federal agencies securities $ 537,913 $ 196 $ (6,886 ) $ 531,223 U.S. States and political subdivisions securities 95,346 172 (936 ) 94,582 Mortgage-backed securities — Federal agencies 324,390 718 (6,875 ) 318,233 Corporate debt securities 45,843 — (451 ) 45,392 Foreign government and other securities 700 — (1 ) 699 Total debt securities available-for-sale $ 1,004,192 $ 1,086 $ (15,149 ) $ 990,129 |
Schedule of contractual maturities of investments in debt securities available-for-sale | The following table shows the contractual maturities of investments in debt securities available-for-sale at June 30, 2019 . Expected maturities will differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. (Dollars in thousands) Amortized Cost Fair Value Due in one year or less $ 185,240 $ 185,272 Due after one year through five years 485,935 488,222 Due after five years through ten years 9,290 9,468 Due after ten years — — Mortgage-backed securities 338,142 338,824 Total debt securities available-for-sale $ 1,018,607 $ 1,021,786 |
Schedule of gross unrealized losses and fair value by investment category and age | The following table summarizes gross unrealized losses and fair value by investment category and age. At June 30, 2019 , the Company’s available-for-sale securities portfolio consisted of 626 securities, 197 of which were in an unrealized loss position. Less than 12 Months 12 months or Longer Total (Dollars in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses June 30, 2019 U.S. Treasury and Federal agencies securities $ — $ — $ 259,376 $ (927 ) $ 259,376 $ (927 ) U.S. States and political subdivisions securities 651 (2 ) 15,437 (69 ) 16,088 (71 ) Mortgage-backed securities - Federal agencies 20,304 (100 ) 145,564 (1,929 ) 165,868 (2,029 ) Corporate debt securities — — 10,565 (85 ) 10,565 (85 ) Foreign government and other securities 700 — — — 700 — Total debt securities available-for-sale $ 21,655 $ (102 ) $ 430,942 $ (3,010 ) $ 452,597 $ (3,112 ) December 31, 2018 U.S. Treasury and Federal agencies securities $ 55,491 $ (177 ) $ 424,269 $ (6,709 ) $ 479,760 $ (6,886 ) U.S. States and political subdivisions securities 21,059 (61 ) 45,365 (875 ) 66,424 (936 ) Mortgage-backed securities - Federal agencies 65,554 (511 ) 198,221 (6,364 ) 263,775 (6,875 ) Corporate debt securities 21,496 (143 ) 23,896 (308 ) 45,392 (451 ) Foreign government and other securities 699 (1 ) — — 699 (1 ) Total debt securities available-for-sale $ 164,299 $ (893 ) $ 691,751 $ (14,256 ) $ 856,050 $ (15,149 ) |
Schedule of gross realized gains and losses from securities available-for-sale portfolio | The following table shows the gross realized gains and losses from the available-for-sale debt securities portfolio. Realized gains and losses of all securities are computed using the specific identification cost basis. Three Months Ended Six Months Ended (Dollars in thousands) 2019 2018 2019 2018 Gross realized gains $ — $ — $ — $ 2 Gross realized losses — — — (347 ) OTTI losses — — — — Net realized gains (losses) $ — $ — $ — $ (345 ) |
Loan and Lease Financings (Tabl
Loan and Lease Financings (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Receivables [Abstract] | |
Schedule of credit quality grades of the recorded investment in loans and leases, segregated by class | The following table shows the credit quality grades of the recorded investment in loans and leases, segregated by class. Credit Quality Grades (Dollars in thousands) 1-6 7-12 Total June 30, 2019 Commercial and agricultural $ 1,142,945 $ 30,055 $ 1,173,000 Auto and light truck 611,185 23,915 635,100 Medium and heavy duty truck 298,748 1,294 300,042 Aircraft 790,736 20,427 811,163 Construction equipment 660,888 25,745 686,633 Commercial real estate 823,700 12,219 835,919 Total $ 4,328,202 $ 113,655 $ 4,441,857 December 31, 2018 Commercial and agricultural $ 1,043,019 $ 30,186 $ 1,073,205 Auto and light truck 528,174 31,813 559,987 Medium and heavy duty truck 281,834 1,710 283,544 Aircraft 768,442 34,669 803,111 Construction equipment 625,579 19,660 645,239 Commercial real estate 787,376 22,510 809,886 Total $ 4,034,424 $ 140,548 $ 4,174,972 |
Schedule of recorded investment in residential real estate and home equity and consumer loans by performing or nonperforming status | The following table shows the recorded investment in residential real estate and home equity and consumer loans by performing or nonperforming status. Nonperforming loans are those loans which are on nonaccrual status or are 90 days or more past due. (Dollars in thousands) Performing Nonperforming Total June 30, 2019 Residential real estate and home equity $ 527,873 $ 1,876 $ 529,749 Consumer 137,494 237 137,731 Total $ 665,367 $ 2,113 $ 667,480 December 31, 2018 Residential real estate and home equity $ 521,846 $ 2,009 $ 523,855 Consumer 136,423 214 136,637 Total $ 658,269 $ 2,223 $ 660,492 |
Schedule of recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | The following table shows the recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status. (Dollars in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due and Accruing Total Accruing Loans Nonaccrual Total Financing Receivables June 30, 2019 Commercial and agricultural $ 1,170,085 $ 86 $ 26 $ — $ 1,170,197 $ 2,803 $ 1,173,000 Auto and light truck 632,056 671 — — 632,727 2,373 635,100 Medium and heavy duty truck 299,998 — — — 299,998 44 300,042 Aircraft 796,757 12,964 331 — 810,052 1,111 811,163 Construction equipment 681,608 3,015 — — 684,623 2,010 686,633 Commercial real estate 833,985 19 — — 834,004 1,915 835,919 Residential real estate and home equity 526,990 753 130 154 528,027 1,722 529,749 Consumer 136,965 422 107 3 137,497 234 137,731 Total $ 5,078,444 $ 17,930 $ 594 $ 157 $ 5,097,125 $ 12,212 $ 5,109,337 December 31, 2018 Commercial and agricultural $ 1,070,530 $ 22 $ — $ — $ 1,070,552 $ 2,653 $ 1,073,205 Auto and light truck 544,022 3,154 1,437 — 548,613 11,374 559,987 Medium and heavy duty truck 283,284 154 — — 283,438 106 283,544 Aircraft 790,233 4,149 1,168 — 795,550 7,561 803,111 Construction equipment 641,270 1,643 — — 642,913 2,326 645,239 Commercial real estate 807,793 109 — — 807,902 1,984 809,886 Residential real estate and home equity 520,124 1,267 455 295 522,141 1,714 523,855 Consumer 135,591 682 150 73 136,496 141 136,637 Total $ 4,792,847 $ 11,180 $ 3,210 $ 368 $ 4,807,605 $ 27,859 $ 4,835,464 |
Schedule of impaired loans and leases, segregated by class, and the corresponding reserve for impaired loan and lease losses | The following table shows impaired loans and leases, segregated by class, and the corresponding reserve for impaired loan and lease losses. (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Reserve June 30, 2019 With no related reserve recorded: Commercial and agricultural $ 2,176 $ 2,176 $ — Auto and light truck 1,805 1,805 — Medium and heavy duty truck — — — Aircraft 1,064 1,064 — Construction equipment 729 729 — Commercial real estate 1,139 1,139 — Residential real estate and home equity — — — Consumer — — — Total with no related reserve recorded 6,913 6,913 — With a reserve recorded: Commercial and agricultural 486 486 39 Auto and light truck 414 414 281 Medium and heavy duty truck — — — Aircraft — — — Construction equipment 1,266 1,266 104 Commercial real estate 695 695 9 Residential real estate and home equity 341 343 123 Consumer — — — Total with a reserve recorded 3,202 3,204 556 Total impaired loans $ 10,115 $ 10,117 $ 556 December 31, 2018 With no related reserve recorded: Commercial and agricultural $ 2,471 $ 2,471 $ — Auto and light truck 7,504 7,504 — Medium and heavy duty truck 106 106 — Aircraft 556 556 — Construction equipment 905 905 — Commercial real estate 1,131 1,131 — Residential real estate and home equity — — — Consumer — — — Total with no related reserve recorded 12,673 12,673 — With a reserve recorded: Commercial and agricultural — — — Auto and light truck 3,840 3,840 372 Medium and heavy duty truck — — — Aircraft 7,004 7,004 1,255 Construction equipment 1,340 1,340 279 Commercial real estate 759 759 51 Residential real estate and home equity 344 346 126 Consumer — — — Total with a reserve recorded 13,287 13,289 2,083 Total impaired loans $ 25,960 $ 25,962 $ 2,083 |
Schedule of average recorded investment and interest income recognized on impaired loans and leases, segregated by class | The following table shows average recorded investment and interest income recognized on impaired loans and leases, segregated by class. Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (Dollars in thousands) Average Recorded Investment Interest Income Average Recorded Investment Interest Income Average Recorded Investment Interest Income Average Recorded Investment Interest Income Commercial and agricultural $ 4,080 $ 13 $ 2,998 $ — $ 3,450 $ 13 $ 2,921 $ — Auto and light truck 2,791 — 7,066 — 3,898 — 7,446 — Medium and heavy duty truck 562 — 319 — 308 — 334 — Aircraft 1,589 — 9,126 20 3,517 — 6,097 20 Construction equipment 1,417 — 942 — 1,673 — 1,136 — Commercial real estate 1,834 — 2,259 — 1,846 — 2,978 — Residential real estate and home equity 341 5 349 4 342 10 349 8 Consumer — — — — — — — — Total $ 12,614 $ 18 $ 23,059 $ 24 $ 15,034 $ 23 $ 21,261 $ 28 |
Schedule of recorded investment in loans and leases classified as troubled debt restructuring | The following table shows the recorded investment of loans and leases classified as troubled debt restructurings as of June 30, 2019 and December 31, 2018 . (Dollars in thousands) June 30, December 31, Performing TDRs $ 341 $ 344 Nonperforming TDRs 512 316 Total TDRs $ 853 $ 660 |
Reserve for Loan and Lease Lo_2
Reserve for Loan and Lease Losses (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract] | |
Schedule of changes in reserve for loan and lease losses, segregated by class | The following table shows the changes in the reserve for loan and lease losses, segregated by class, for the three months ended June 30, 2019 and 2018 . (Dollars in thousands) Commercial and agricultural Auto and light truck Medium and heavy duty truck Aircraft Construction Commercial real estate Residential real estate and home equity Consumer Total June 30, 2019 Balance, beginning of period $ 18,307 $ 14,259 $ 4,409 $ 33,440 $ 10,883 $ 15,834 $ 3,386 $ 1,334 $ 101,852 Charge-offs 9 57 1,132 1 1 — — 313 1,513 Recoveries 28 20 — 117 15 51 3 91 325 Net charge-offs (recoveries) (19 ) 37 1,132 (116 ) (14 ) (51 ) (3 ) 222 1,188 Provision (recovery of provision) 726 2,119 1,394 (1,638 ) 1,387 (128 ) 129 258 4,247 Balance, end of period $ 19,052 $ 16,341 $ 4,671 $ 31,918 $ 12,284 $ 15,757 $ 3,518 $ 1,370 $ 104,911 June 30, 2018 Balance, beginning of period $ 17,609 $ 10,810 $ 4,493 $ 34,836 $ 10,917 $ 14,770 $ 3,565 $ 1,331 $ 98,331 Charge-offs — 84 — — — — — 221 305 Recoveries 41 13 — 5 26 4 7 68 164 Net charge-offs (recoveries) (41 ) 71 — (5 ) (26 ) (4 ) (7 ) 153 141 Provision (recovery of provision) 981 1,337 (151 ) 1,931 193 366 (8 ) 168 4,817 Balance, end of period $ 18,631 $ 12,076 $ 4,342 $ 36,772 $ 11,136 $ 15,140 $ 3,564 $ 1,346 $ 103,007 The following table shows the changes in the reserve for loan and lease losses, segregated by class, for the six months ended June 30, 2019 and 2018 . (Dollars in thousands) Commercial and agricultural loans Auto and light truck Medium and heavy duty truck Aircraft Construction Commercial real estate Residential real estate and home equity Consumer loans Total June 30, 2019 Balance, beginning of period $ 17,063 $ 14,689 $ 4,303 $ 33,047 $ 10,922 $ 15,705 $ 3,425 $ 1,315 $ 100,469 Charge-offs 88 466 1,132 3,001 196 — 21 563 5,467 Recoveries 62 29 — 302 119 60 6 166 744 Net charge-offs (recoveries) 26 437 1,132 2,699 77 (60 ) 15 397 4,723 Provision (recovery of provision) 2,015 2,089 1,500 1,570 1,439 (8 ) 108 452 9,165 Balance, end of period $ 19,052 $ 16,341 $ 4,671 $ 31,918 $ 12,284 $ 15,757 $ 3,518 $ 1,370 $ 104,911 June 30, 2018 Balance, beginning of period $ 16,228 $ 10,103 $ 4,844 $ 34,619 $ 9,343 $ 14,792 $ 3,666 $ 1,288 $ 94,883 Charge-offs 25 400 — 29 5 7 11 384 861 Recoveries 90 19 — 49 45 25 13 141 382 Net charge-offs (recoveries) (65 ) 381 — (20 ) (40 ) (18 ) (2 ) 243 479 Provision (recovery of provision) 2,338 2,354 (502 ) 2,133 1,753 330 (104 ) 301 8,603 Balance, end of period $ 18,631 $ 12,076 $ 4,342 $ 36,772 $ 11,136 $ 15,140 $ 3,564 $ 1,346 $ 103,007 The following table shows the reserve for loan and lease losses and recorded investment in loans and leases, segregated by class, separated between individually and collectively evaluated for impairment as of June 30, 2019 and December 31, 2018 . (Dollars in thousands) Commercial and agricultural loans Auto and light truck Medium and heavy duty truck Aircraft Construction Commercial real estate Residential real estate and home equity Consumer loans Total June 30, 2019 Reserve for loan and lease losses Ending balance, individually evaluated for impairment $ 39 $ 281 $ — $ — $ 104 $ 9 $ 123 $ — $ 556 Ending balance, collectively evaluated for impairment 19,013 16,060 4,671 31,918 12,180 15,748 3,395 1,370 104,355 Total reserve for loan and lease losses $ 19,052 $ 16,341 $ 4,671 $ 31,918 $ 12,284 $ 15,757 $ 3,518 $ 1,370 $ 104,911 Recorded investment in loans Ending balance, individually evaluated for impairment $ 2,662 $ 2,219 $ — $ 1,064 $ 1,995 $ 1,834 $ 341 $ — $ 10,115 Ending balance, collectively evaluated for impairment 1,170,338 632,881 300,042 810,099 684,638 834,085 529,408 137,731 5,099,222 Total recorded investment in loans $ 1,173,000 $ 635,100 $ 300,042 $ 811,163 $ 686,633 $ 835,919 $ 529,749 $ 137,731 $ 5,109,337 December 31, 2018 Reserve for loan and lease losses Ending balance, individually evaluated for impairment $ — $ 372 $ — $ 1,255 $ 279 $ 51 $ 126 $ — $ 2,083 Ending balance, collectively evaluated for impairment 17,063 14,317 4,303 31,792 10,643 15,654 3,299 1,315 98,386 Total reserve for loan and lease losses $ 17,063 $ 14,689 $ 4,303 $ 33,047 $ 10,922 $ 15,705 $ 3,425 $ 1,315 $ 100,469 Recorded investment in loans Ending balance, individually evaluated for impairment $ 2,471 $ 11,344 $ 106 $ 7,560 $ 2,245 $ 1,890 $ 344 $ — $ 25,960 Ending balance, collectively evaluated for impairment 1,070,734 548,643 283,438 795,551 642,994 807,996 523,511 136,637 4,809,504 Total recorded investment in loans $ 1,073,205 $ 559,987 $ 283,544 $ 803,111 $ 645,239 $ 809,886 $ 523,855 $ 136,637 $ 4,835,464 |
Lease Investments (Tables)
Lease Investments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Schedule of components of lease investments by category | The following table shows the components of the investment in direct finance and operating leases. (Dollars in thousands) June 30, December 31, Direct finance leases: Minimum lease payments $ 236,701 $ 257,398 Estimated unguaranteed residual values 41 41 Less: Unearned income (41,979 ) (46,709 ) Net investment in direct finance leases $ 194,763 $ 210,730 Operating leases: Gross investment in operating leases $ 196,147 $ 199,954 Accumulated depreciation (69,645 ) (65,514 ) Net investment in operating leases $ 126,502 $ 134,440 |
Minimum future lease payments due from clients | The following table shows future minimum lease payments due from clients on direct finance and operating leases at June 30, 2019 . (Dollars in thousands) Direct Finance Leases Operating Leases Remainder of 2019 $ 27,361 $ 15,830 2020 46,285 34,120 2021 38,822 20,091 2022 36,562 12,027 2023 31,618 6,470 Thereafter 56,053 3,020 Total $ 236,701 $ 91,558 |
Schedule of the components of income from direct finance and operating lease equipment | The following table shows interest income recognized from direct finance lease payments and operating lease equipment rental income and related depreciation expense. Three Months Ended Six Months Ended (Dollars in thousands) 2019 2018 2019 2018 Direct finance leases: Interest income on lease receivable $ 3,241 $ 3,684 $ 6,419 $ 6,669 Operating leases: Income related to lease payments $ 7,809 $ 8,104 $ 15,791 $ 15,859 Depreciation expense 6,400 6,684 12,924 13,112 |
Mortgage Servicing Rights (Tabl
Mortgage Servicing Rights (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Transfers and Servicing of Financial Assets [Abstract] | |
Schedule of changes in carrying value of mortgage servicing rights and associated valuation allowance | The following table shows changes in the carrying value of MSRs and the associated valuation allowance. Three Months Ended Six Months Ended (Dollars in thousands) 2019 2018 2019 2018 Mortgage servicing rights: Balance at beginning of period $ 4,247 $ 4,356 $ 4,283 $ 4,349 Additions 188 202 385 445 Amortization (294 ) (235 ) (527 ) (471 ) Sales — — — — Carrying value before valuation allowance at end of period 4,141 4,323 4,141 4,323 Valuation allowance: Balance at beginning of period — — — — Impairment recoveries — — — — Balance at end of period $ — $ — $ — $ — Net carrying value of mortgage servicing rights at end of period $ 4,141 $ 4,323 $ 4,141 $ 4,323 Fair value of mortgage servicing rights at end of period $ 5,987 $ 7,536 $ 5,987 $ 7,536 |
Commitments and Financial Ins_2
Commitments and Financial Instruments with Off-Balance-Sheet Risk (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease right of use assets and operating lease liabilities | The following table shows operating lease right of use assets and operating lease liabilities as of June 30, 2019 . (Dollars in thousands) Statement of Financial Condition classification June 30, Operating lease right of use assets Accrued income and other assets $ 9,930 Operating lease liabilities Accrued expenses and other liabilities $ 10,253 |
Components of operating lease expense | The following table shows the components of operating leases expense for the three and six months ended June 30, 2019 . (Dollars in thousands) Statement of Income classification Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Operating lease cost Net occupancy expense $ 883 $ 1,761 Short-term lease cost Net occupancy expense 7 10 Variable lease cost Net occupancy expense — — Total operating lease cost $ 890 $ 1,771 |
Future minimum rental commitments for noncancellable operating leases | The following table shows future minimum rental commitments for all noncancellable operating leases with an initial term longer than 12 months for the next five years and thereafter. (Dollars in thousands) Remainder of 2019 $ 1,564 2020 3,648 2021 2,459 2022 1,203 2023 497 Thereafter 1,736 Total lease payments 11,107 Less: imputed interest (854 ) Present value of operating lease liabilities $ 10,253 |
Operating lease weighted average remaining term, discount rate, and supplemental cash flows information | The following table shows the weighted average remaining operating lease term, the weighted average discount rate and supplemental Consolidated Statement of Cash Flows information for operating leases at June 30, 2019 . (Dollars in thousands) June 30, Weighted average remaining lease term 4.81 years Weighted average discount rate 3.00 % Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 947 |
Schedule of financial instruments whose contract amounts represent credit risk | The following table shows financial instruments whose contract amounts represent credit risk. (Dollars in thousands) June 30, 2019 December 31, 2018 Amounts of commitments: Loan commitments to extend credit $ 1,107,331 $ 1,095,053 Standby letters of credit $ 27,881 $ 31,133 Commercial and similar letters of credit $ 2,849 $ 2,500 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of amounts of non-hedging derivative financial instruments | The following table shows the amounts of non-hedging derivative financial instruments. Asset derivatives Liability derivatives (Dollars in thousands) Notional or contractual amount Statement of Financial Condition classification Fair value Statement of Financial Condition classification Fair value June 30, 2019 Interest rate swap contracts $ 992,453 Other assets $ 21,397 Other liabilities $ 21,772 Loan commitments 15,756 Mortgages held for sale 204 N/A — Forward contracts - mortgage loan 27,722 N/A — Mortgages held for sale 174 Total $ 1,035,931 $ 21,601 $ 21,946 December 31, 2018 Interest rate swap contracts $ 855,848 Other assets $ 7,124 Other liabilities $ 7,250 Loan commitments 5,871 Mortgages held for sale 112 N/A — Forward contracts - mortgage loan 14,087 N/A — Mortgages held for sale 135 Total $ 875,806 $ 7,236 $ 7,385 |
Schedule of amounts included in the consolidated statements of income for non-hedging derivative financial instruments | The following table shows the amounts included in the Statements of Income for non-hedging derivative financial instruments. Gain (loss) Three Months Ended Six Months Ended (Dollars in thousands) Statement of Income classification 2019 2018 2019 2018 Interest rate swap contracts Other expense $ (192 ) $ (35 ) $ (249 ) $ (36 ) Interest rate swap contracts Other income 505 246 784 579 Loan commitments Mortgage banking 15 61 92 57 Forward contracts - mortgage loan Mortgage banking (49 ) (40 ) (39 ) (37 ) Total $ 279 $ 232 $ 588 $ 563 |
Schedule of offsetting of financial assets and derivative assets | The following table shows the offsetting of financial assets and derivative assets. Gross Amounts Not Offset in the Statement of Financial Condition (Dollars in thousands) Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Assets Presented in the Statement of Financial Condition Financial Instruments Cash Collateral Received Net Amount June 30, 2019 Interest rate swaps $ 21,397 $ — $ 21,397 $ — $ — $ 21,397 December 31, 2018 Interest rate swaps $ 7,128 $ 4 $ 7,124 $ 177 $ 610 $ 6,337 |
Schedule of offsetting of financial liabilities and derivative liabilities | The following table shows the offsetting of financial liabilities and derivative liabilities. Gross Amounts Not Offset in the Statement of Financial Condition (Dollars in thousands) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Liabilities Presented in the Statement of Financial Condition Financial Instruments Cash Collateral Pledged Net Amount June 30, 2019 Interest rate swaps $ 21,772 $ — $ 21,772 $ 21,390 $ — $ 382 Repurchase agreements 119,781 — 119,781 119,781 — — Total $ 141,553 $ — $ 141,553 $ 141,171 $ — $ 382 December 31, 2018 Interest rate swaps $ 7,254 $ 4 $ 7,250 $ 1,700 $ — $ 5,550 Repurchase agreements 103,627 — 103,627 103,627 — — Total $ 110,881 $ 4 $ 110,877 $ 105,327 $ — $ 5,550 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Variable Interest Entities [Abstract] | |
Schedule of unconsolidated variable interest entities | The following table provides a summary of investments in affordable housing, community development and renewable energy VIEs that the Company has not consolidated. (Dollars in thousands) June 30, 2019 December 31, 2018 Investment carrying amount $ 17,397 $ 15,083 Unfunded capital and other commitments 12,306 6,449 Maximum exposure to loss 35,949 40,705 |
Summary of subordinated notes | The following table shows subordinated notes at June 30, 2019 . (Dollars in thousands) Amount of Subordinated Notes Interest Rate Maturity Date June 2007 issuance (1) $ 41,238 7.22 % 6/15/2037 August 2007 issuance (2) 17,526 3.89 % 9/15/2037 Total $ 58,764 (1) Fixed rate through life of debt. (2) 3-Month LIBOR + 1.48% through remaining life of debt. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share | The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share. Three Months Ended Six Months Ended (Dollars in thousands - except per share amounts) 2019 2018 2019 2018 Distributed earnings allocated to common stock $ 6,930 $ 6,225 $ 13,896 $ 11,929 Undistributed earnings allocated to common stock 16,323 15,591 31,425 28,869 Net earnings allocated to common stock 23,253 21,816 45,321 40,798 Net earnings allocated to participating securities 132 148 260 282 Net income allocated to common stock and participating securities $ 23,385 $ 21,964 $ 45,581 $ 41,080 Weighted average shares outstanding for basic earnings per common share 25,615,718 25,958,128 25,687,056 25,954,278 Dilutive effect of stock compensation — — — — Weighted average shares outstanding for diluted earnings per common share 25,615,718 25,958,128 25,687,056 25,954,278 Basic earnings per common share $ 0.91 $ 0.84 $ 1.76 $ 1.57 Diluted earnings per common share $ 0.91 $ 0.84 $ 1.76 $ 1.57 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of reclassifications out of accumulated other comprehensive income | The following table presents reclassifications out of accumulated other comprehensive income (loss) related to unrealized gains and losses on available-for-sale securities. Three Months Ended June 30, Six Months Ended June 30, Affected Line Item in the Statements of Income (Dollars in thousands) 2019 2018 2019 2018 Realized losses included in net income $ — $ — $ — $ (345 ) Losses on investment securities available-for-sale — — — (345 ) Income before income taxes Tax effect — — — 83 Income tax expense Net of tax $ — $ — $ — $ (262 ) Net income |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair value measurements | |
Schedule of differences between the fair value carrying amount of mortgages held for sale measured at fair value and the aggregate unpaid principal amount | The following table shows the differences between the fair value carrying amount of mortgages held for sale measured at fair value and the aggregate unpaid principal amount the Company is contractually entitled to receive at maturity. (Dollars in thousands) Fair value carrying amount Aggregate unpaid principal Excess of fair value carrying amount over (under) unpaid principal June 30, 2019 Mortgages held for sale reported at fair value $ 19,178 $ 18,808 $ 370 (1) December 31, 2018 Mortgages held for sale reported at fair value $ 11,290 $ 11,076 $ 214 (1) (1) The excess of fair value carrying amount over (under) unpaid principal is included in mortgage banking income and includes changes in fair value at and subsequent to funding and gains and losses on the related loan commitment prior to funding. |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following table shows the balance of assets and liabilities measured at fair value on a recurring basis. (Dollars in thousands) Level 1 Level 2 Level 3 Total June 30, 2019 Assets: Investment securities available-for-sale: U.S. Treasury and Federal agencies securities $ 34,081 $ 507,395 $ — $ 541,476 U.S. States and political subdivisions securities — 86,011 5,061 91,072 Mortgage-backed securities — Federal agencies — 338,824 — 338,824 Corporate debt securities — 49,714 — 49,714 Foreign government and other securities — 700 — 700 Total debt securities available-for-sale 34,081 982,644 5,061 1,021,786 Mortgages held for sale — 19,178 — 19,178 Accrued income and other assets (interest rate swap agreements) — 21,397 — 21,397 Total $ 34,081 $ 1,023,219 $ 5,061 $ 1,062,361 Liabilities: Accrued expenses and other liabilities (interest rate swap agreements) $ — $ 21,772 $ — $ 21,772 Total $ — $ 21,772 $ — $ 21,772 December 31, 2018 Assets: Investment securities available-for-sale: U.S. Treasury and Federal agencies securities $ 33,746 $ 497,477 $ — $ 531,223 U.S. States and political subdivisions securities — 93,557 1,025 94,582 Mortgage-backed securities — Federal agencies — 318,233 — 318,233 Corporate debt securities — 45,392 — 45,392 Foreign government and other securities — 699 — 699 Total debt securities available-for-sale 33,746 955,358 1,025 990,129 Mortgages held for sale — 11,290 — 11,290 Accrued income and other assets (interest rate swap agreements) — 7,124 — 7,124 Total $ 33,746 $ 973,772 $ 1,025 $ 1,008,543 Liabilities: Accrued expenses and other liabilities (interest rate swap agreements) $ — $ 7,250 $ — $ 7,250 Total $ — $ 7,250 $ — $ 7,250 |
Schedule of changes in investment securities available-for-sale Level 3 assets measured at fair value on a recurring basis | The following table shows changes in Level 3 assets measured at fair value on a recurring basis for the quarter ended June 30, 2019 and 2018 . (Dollars in thousands) U.S. States and political subdivisions securities Foreign government and other securities Investment securities available-for-sale Beginning balance April 1, 2019 $ 5,064 $ — $ 5,064 Total gains or losses (realized/unrealized): Included in earnings — — — Included in other comprehensive income 16 — 16 Purchases — — — Issuances — — — Sales — — — Settlements — — — Maturities (19 ) — (19 ) Transfers into Level 3 — — — Transfers out of Level 3 — — — Ending balance June 30, 2019 $ 5,061 $ — $ 5,061 Beginning balance April 1, 2018 $ 2,155 $ 708 $ 2,863 Total gains or losses (realized/unrealized): Included in earnings — — — Included in other comprehensive income 4 (1 ) 3 Purchases — — — Issuances — — — Sales — — — Settlements — — — Maturities (518 ) — (518 ) Transfers into Level 3 — — — Transfers out of Level 3 — — — Ending balance June 30, 2018 $ 1,641 $ 707 $ 2,348 |
Schedule of carrying value of assets measured at fair value on a non-recurring basis | The following table shows the carrying value of assets measured at fair value on a non-recurring basis. (Dollars in thousands) Level 1 Level 2 Level 3 Total June 30, 2019 Impaired loans - collateral based $ — $ — $ 1,962 $ 1,962 Accrued income and other assets (mortgage servicing rights) — — 4,141 4,141 Accrued income and other assets (repossessions) — — 8,799 8,799 Accrued income and other assets (other real estate) — — 543 543 Total $ — $ — $ 15,445 $ 15,445 December 31, 2018 Impaired loans - collateral based $ — $ — $ 7,306 $ 7,306 Accrued income and other assets (mortgage servicing rights) — — 4,283 4,283 Accrued income and other assets (repossessions) — — 6,666 6,666 Accrued income and other assets (other real estate) — — 299 299 Total $ — $ — $ 18,554 $ 18,554 |
Schedule of fair values of financial instruments | The following table shows the fair values of the Company’s financial instruments. (Dollars in thousands) Carrying or Contract Value Fair Value Level 1 Level 2 Level 3 June 30, 2019 Assets: Cash and due from banks $ 71,910 $ 71,910 $ 71,910 $ — $ — Federal funds sold and interest bearing deposits with other banks 24,578 24,578 24,578 — — Investment securities, available-for-sale 1,021,786 1,021,786 34,081 982,644 5,061 Other investments 28,404 28,404 28,404 — — Mortgages held for sale 19,178 19,178 — 19,178 — Loans and leases, net of reserve for loan and lease losses 5,004,426 4,994,307 — — 4,994,307 Mortgage servicing rights 4,141 5,987 — — 5,987 Accrued interest receivable 21,114 21,114 — 21,114 — Interest rate swaps 21,397 21,397 — 21,397 — Liabilities: Deposits $ 5,403,845 $ 5,409,315 $ 3,714,182 $ 1,695,133 $ — Short-term borrowings 186,009 186,009 119,188 66,821 — Long-term debt and mandatorily redeemable securities 71,542 70,547 — 70,547 — Subordinated notes 58,764 59,978 — 59,978 — Accrued interest payable 12,903 12,903 — 12,903 — Interest rate swaps 21,772 21,772 — 21,772 — Off-balance-sheet instruments * — 251 — 251 — December 31, 2018 Assets: Cash and due from banks $ 94,907 $ 94,907 $ 94,907 $ — $ — Federal funds sold and interest bearing deposits with other banks 4,172 4,172 4,172 — — Investment securities, available-for-sale 990,129 990,129 33,746 955,358 1,025 Other investments 28,404 28,404 28,404 — — Mortgages held for sale 11,290 11,290 — 11,290 — Loans and leases, net of reserve for loan and lease losses 4,734,995 4,689,267 — — 4,689,267 Mortgage servicing rights 4,283 7,238 — — 7,238 Accrued interest receivable 18,880 18,880 — 18,880 — Interest rate swaps 7,124 7,124 — 7,124 — Liabilities: Deposits $ 5,122,322 $ 5,111,711 $ 3,654,556 $ 1,457,155 $ — Short-term borrowings 199,344 199,344 113,734 85,610 — Long-term debt and mandatorily redeemable securities 71,123 68,751 — 68,751 — Subordinated notes 58,764 45,874 — 45,874 — Accrued interest payable 8,950 8,950 — 8,950 — Interest rate swaps 7,250 7,250 — 7,250 — Off-balance-sheet instruments * — 259 — 259 — * Represents estimated cash outflows required to currently settle the obligations at current market rates. |
Recurring | |
Fair value measurements | |
Schedule of valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis | The following table shows the valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a recurring basis. (Dollars in thousands) Fair Value Valuation Methodology Unobservable Inputs Range of Inputs June 30, 2019 Debt securities available-for sale Direct placement municipal securities $ 5,061 Discounted cash flows Credit spread assumption 0.13% - 2.19% December 31, 2018 Debt securities available-for sale Direct placement municipal securities $ 1,025 Discounted cash flows Credit spread assumption 0.17% - 3.02% |
Non-recurring | |
Fair value measurements | |
Schedule of valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis | The following table below shows the valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a non-recurring basis. (Dollars in thousands) Carrying Value Fair Value Valuation Methodology Unobservable Inputs Range of Inputs June 30, 2019 Impaired loans $ 1,962 $ 1,962 Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions 20% - 100% Mortgage servicing rights 4,141 5,987 Discounted cash flows Constant prepayment rate (CPR) 11.3% - 24.5% Discount rate 9.3% - 12.1% Repossessions 8,799 9,184 Appraisals, trade publications and auction values Discount for lack of marketability 2% - 10% Other real estate 543 550 Appraisals Discount for lack of marketability 0% - 9% December 31, 2018 Impaired loans $ 7,306 $ 7,306 Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions 20% - 35% Mortgage servicing rights 4,283 7,238 Discounted cash flows Constant prepayment rate (CPR) 7.2% - 24.8% Discount rate 10.3 % - 13.1% Repossessions 6,666 6,991 Appraisals, trade publications and auction values Discount for lack of marketability 4% - 6% Other real estate 299 305 Appraisals Discount for lack of marketability 0% - 10% |
Accounting Policies (Details)
Accounting Policies (Details) | 6 Months Ended |
Jun. 30, 2019USD ($)Rate | |
Summary of Significant Accounting Policies [Line Items] | |
Minimum lease liability for capitalization | $ 2,000 |
Residual value guarantees or restriction or covenants imposed by leases | no |
Minimum Initial Lease Term for Recording Right of Use Asset and Lease Liability | 12 months |
Minimum | |
Summary of Significant Accounting Policies [Line Items] | |
Period of sustained performance required to change from non-performing to performing status | 6 months |
Amount necessary for impairment evaluation | $ 100,000 |
Lessor operating lease term | 3 years |
Economic life test to determine lease classification | P20Y |
Fair value test percentage of the fair value of the asset | Rate | 90.00% |
Maximum | |
Summary of Significant Accounting Policies [Line Items] | |
Lessor operating lease term | 7 years |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | $ (431,091) | $ (398,980) | |
Accounting Standards Update 2017-08 [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | $ (300) |
Investment Securities (Details)
Investment Securities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Contractual maturities of investments in debt securities available-for-sale, Amortized Cost | ||
Due in one year or less | $ 185,240 | |
Due after one year through five years | 485,935 | |
Due after five years through ten years | 9,290 | |
Due after ten years | 0 | |
Mortgage-backed securities | 338,142 | |
Total debt securities available-for-sale | 1,018,607 | $ 1,004,192 |
Contractual maturities of investments in debt securities available-for-sale, Fair Value | ||
Due in one year or less | 185,272 | |
Due after one year through five years | 488,222 | |
Due after five years through ten years | 9,468 | |
Due after ten years | 0 | |
Mortgage-backed securities | 338,824 | |
Total debt securities available-for-sale | 1,021,786 | 990,129 |
U.S. Treasury and Federal agencies securities | ||
Contractual maturities of investments in debt securities available-for-sale, Amortized Cost | ||
Total debt securities available-for-sale | 540,392 | 537,913 |
Contractual maturities of investments in debt securities available-for-sale, Fair Value | ||
Total debt securities available-for-sale | 541,476 | 531,223 |
U.S. States and political subdivisions securities | ||
Contractual maturities of investments in debt securities available-for-sale, Amortized Cost | ||
Total debt securities available-for-sale | 90,211 | 95,346 |
Contractual maturities of investments in debt securities available-for-sale, Fair Value | ||
Total debt securities available-for-sale | 91,072 | 94,582 |
Mortgage-backed securities - Federal agencies | ||
Contractual maturities of investments in debt securities available-for-sale, Amortized Cost | ||
Total debt securities available-for-sale | 338,142 | 324,390 |
Contractual maturities of investments in debt securities available-for-sale, Fair Value | ||
Total debt securities available-for-sale | 338,824 | 318,233 |
Corporate debt securities | ||
Contractual maturities of investments in debt securities available-for-sale, Amortized Cost | ||
Total debt securities available-for-sale | 49,162 | 45,843 |
Contractual maturities of investments in debt securities available-for-sale, Fair Value | ||
Total debt securities available-for-sale | 49,714 | 45,392 |
Foreign government and other securities | ||
Contractual maturities of investments in debt securities available-for-sale, Amortized Cost | ||
Total debt securities available-for-sale | 700 | 700 |
Contractual maturities of investments in debt securities available-for-sale, Fair Value | ||
Total debt securities available-for-sale | $ 700 | $ 699 |
Investment Securities (Details
Investment Securities (Details 2) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Schedule Of Available For Sale Debt Securities [Line Items] | |||||
Total debt securities available-for-sale | $ 1,018,607 | $ 1,018,607 | $ 1,004,192 | ||
Gross Unrealized Gains | 6,291 | 6,291 | 1,086 | ||
Gross Unrealized Losses | (3,112) | (3,112) | (15,149) | ||
Investment securities available-for-sale | 1,021,786 | 1,021,786 | 990,129 | ||
Fair Value | |||||
Less than 12 Months | 21,655 | 21,655 | 164,299 | ||
12 months or Longer | 430,942 | 430,942 | 691,751 | ||
Total fair value | 452,597 | 452,597 | 856,050 | ||
Unrealized Losses | |||||
Less than 12 Months | (102) | (102) | (893) | ||
12 months or Longer | (3,010) | (3,010) | (14,256) | ||
Total unrealized losses | (3,112) | (3,112) | (15,149) | ||
Gross realized gains and losses | |||||
Gross realized gains | 0 | $ 0 | 0 | $ 2 | |
Gross realized losses | 0 | 0 | 0 | (347) | |
OTTI losses | 0 | 0 | 0 | 0 | |
Net realized gains (losses) | 0 | $ 0 | 0 | $ (345) | |
Investment securities pledged as collateral | $ 273,670 | $ 273,670 | 242,310 | ||
Number of available-for-sale debt securities | 626 | 626 | |||
Number of available-for-sale debt securities in an unrealized loss position | 197 | 197 | |||
U.S. Treasury and Federal agencies securities | |||||
Schedule Of Available For Sale Debt Securities [Line Items] | |||||
Total debt securities available-for-sale | $ 540,392 | $ 540,392 | 537,913 | ||
Gross Unrealized Gains | 2,011 | 2,011 | 196 | ||
Gross Unrealized Losses | (927) | (927) | (6,886) | ||
Investment securities available-for-sale | 541,476 | 541,476 | 531,223 | ||
Fair Value | |||||
Less than 12 Months | 0 | 0 | 55,491 | ||
12 months or Longer | 259,376 | 259,376 | 424,269 | ||
Total fair value | 259,376 | 259,376 | 479,760 | ||
Unrealized Losses | |||||
Less than 12 Months | 0 | 0 | (177) | ||
12 months or Longer | (927) | (927) | (6,709) | ||
Total unrealized losses | (927) | (927) | (6,886) | ||
U.S. States and political subdivisions securities | |||||
Schedule Of Available For Sale Debt Securities [Line Items] | |||||
Total debt securities available-for-sale | 90,211 | 90,211 | 95,346 | ||
Gross Unrealized Gains | 932 | 932 | 172 | ||
Gross Unrealized Losses | (71) | (71) | (936) | ||
Investment securities available-for-sale | 91,072 | 91,072 | 94,582 | ||
Fair Value | |||||
Less than 12 Months | 651 | 651 | 21,059 | ||
12 months or Longer | 15,437 | 15,437 | 45,365 | ||
Total fair value | 16,088 | 16,088 | 66,424 | ||
Unrealized Losses | |||||
Less than 12 Months | (2) | (2) | (61) | ||
12 months or Longer | (69) | (69) | (875) | ||
Total unrealized losses | (71) | (71) | (936) | ||
Mortgage-backed securities - Federal agencies | |||||
Schedule Of Available For Sale Debt Securities [Line Items] | |||||
Total debt securities available-for-sale | 338,142 | 338,142 | 324,390 | ||
Gross Unrealized Gains | 2,711 | 2,711 | 718 | ||
Gross Unrealized Losses | (2,029) | (2,029) | (6,875) | ||
Investment securities available-for-sale | 338,824 | 338,824 | 318,233 | ||
Fair Value | |||||
Less than 12 Months | 20,304 | 20,304 | 65,554 | ||
12 months or Longer | 145,564 | 145,564 | 198,221 | ||
Total fair value | 165,868 | 165,868 | 263,775 | ||
Unrealized Losses | |||||
Less than 12 Months | (100) | (100) | (511) | ||
12 months or Longer | (1,929) | (1,929) | (6,364) | ||
Total unrealized losses | (2,029) | (2,029) | (6,875) | ||
Corporate debt securities | |||||
Schedule Of Available For Sale Debt Securities [Line Items] | |||||
Total debt securities available-for-sale | 49,162 | 49,162 | 45,843 | ||
Gross Unrealized Gains | 637 | 637 | 0 | ||
Gross Unrealized Losses | (85) | (85) | (451) | ||
Investment securities available-for-sale | 49,714 | 49,714 | 45,392 | ||
Fair Value | |||||
Less than 12 Months | 0 | 0 | 21,496 | ||
12 months or Longer | 10,565 | 10,565 | 23,896 | ||
Total fair value | 10,565 | 10,565 | 45,392 | ||
Unrealized Losses | |||||
Less than 12 Months | 0 | 0 | (143) | ||
12 months or Longer | (85) | (85) | (308) | ||
Total unrealized losses | (85) | (85) | (451) | ||
Foreign government and other securities | |||||
Schedule Of Available For Sale Debt Securities [Line Items] | |||||
Total debt securities available-for-sale | 700 | 700 | 700 | ||
Gross Unrealized Gains | 0 | 0 | 0 | ||
Gross Unrealized Losses | 0 | 0 | (1) | ||
Investment securities available-for-sale | 700 | 700 | 699 | ||
Fair Value | |||||
Less than 12 Months | 700 | 700 | 699 | ||
12 months or Longer | 0 | 0 | 0 | ||
Total fair value | 700 | 700 | 699 | ||
Unrealized Losses | |||||
Less than 12 Months | 0 | 0 | (1) | ||
12 months or Longer | 0 | 0 | 0 | ||
Total unrealized losses | $ 0 | $ 0 | $ (1) |
Loan and Lease Financings (Deta
Loan and Lease Financings (Details) | 6 Months Ended | |
Jun. 30, 2019USD ($)item | Dec. 31, 2018USD ($) | |
Receivables [Abstract] | ||
Number of methods to assess credit risk | item | 2 | |
Loan and Lease Financings | ||
Recorded investment in loans and leases | $ 5,109,337,000 | $ 4,835,464,000 |
Loan and lease financings excluding residential real estate and consumer loans | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 4,441,857,000 | 4,174,972,000 |
Commercial and agricultural | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 1,173,000,000 | 1,073,205,000 |
Auto and light truck | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 635,100,000 | 559,987,000 |
Medium and heavy duty truck | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 300,042,000 | 283,544,000 |
Aircraft | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 811,163,000 | 803,111,000 |
Construction equipment | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 686,633,000 | 645,239,000 |
Commercial real estate | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 835,919,000 | 809,886,000 |
Credit Quality Grades 1-6 | Loan and lease financings excluding residential real estate and consumer loans | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 4,328,202,000 | 4,034,424,000 |
Credit Quality Grades 1-6 | Commercial and agricultural | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 1,142,945,000 | 1,043,019,000 |
Credit Quality Grades 1-6 | Auto and light truck | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 611,185,000 | 528,174,000 |
Credit Quality Grades 1-6 | Medium and heavy duty truck | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 298,748,000 | 281,834,000 |
Credit Quality Grades 1-6 | Aircraft | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 790,736,000 | 768,442,000 |
Credit Quality Grades 1-6 | Construction equipment | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 660,888,000 | 625,579,000 |
Credit Quality Grades 1-6 | Commercial real estate | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 823,700,000 | 787,376,000 |
Credit Quality Grades 7-12 | ||
Loan and Lease Financings | ||
Relationships reviewed quarterly as part of management's evaluation of the appropriateness of the reserve for loan and lease losses | 100,000 | |
Credit Quality Grades 7-12 | Loan and lease financings excluding residential real estate and consumer loans | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 113,655,000 | 140,548,000 |
Credit Quality Grades 7-12 | Commercial and agricultural | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 30,055,000 | 30,186,000 |
Credit Quality Grades 7-12 | Auto and light truck | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 23,915,000 | 31,813,000 |
Credit Quality Grades 7-12 | Medium and heavy duty truck | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 1,294,000 | 1,710,000 |
Credit Quality Grades 7-12 | Aircraft | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 20,427,000 | 34,669,000 |
Credit Quality Grades 7-12 | Construction equipment | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 25,745,000 | 19,660,000 |
Credit Quality Grades 7-12 | Commercial real estate | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | $ 12,219,000 | $ 22,510,000 |
Loan and Lease Financings (De_2
Loan and Lease Financings (Details 2) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Loan and Lease Financings | ||
Recorded investment in loans and leases | $ 5,109,337 | $ 4,835,464 |
Residential real estate and home equity and consumer loans | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 667,480 | 660,492 |
Residential real estate and home equity | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 529,749 | 523,855 |
Consumer | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 137,731 | 136,637 |
Performing | Residential real estate and home equity and consumer loans | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 665,367 | 658,269 |
Performing | Residential real estate and home equity | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 527,873 | 521,846 |
Performing | Consumer | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | $ 137,494 | 136,423 |
Nonperforming | ||
Loan and Lease Financings | ||
Classification of nonperforming loans, threshold period past due | 90 days | |
Nonperforming | Residential real estate and home equity and consumer loans | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | $ 2,113 | 2,223 |
Nonperforming | Residential real estate and home equity | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 1,876 | 2,009 |
Nonperforming | Consumer | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | $ 237 | $ 214 |
Loan and Lease Financings (De_3
Loan and Lease Financings (Details 3) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | $ 5,078,444 | $ 4,792,847 |
90 Days or More Past Due and Accruing | 157 | 368 |
Total Accruing Loans | 5,097,125 | 4,807,605 |
Nonaccrual | 12,212 | 27,859 |
Total loans and leases | 5,109,337 | 4,835,464 |
30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 17,930 | 11,180 |
60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 594 | 3,210 |
Commercial and agricultural | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 1,170,085 | 1,070,530 |
Total Accruing Loans | 1,170,197 | 1,070,552 |
Nonaccrual | 2,803 | 2,653 |
Total loans and leases | 1,173,000 | 1,073,205 |
Commercial and agricultural | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 86 | 22 |
Commercial and agricultural | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 26 | 0 |
Auto and light truck | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 632,056 | 544,022 |
Total Accruing Loans | 632,727 | 548,613 |
Nonaccrual | 2,373 | 11,374 |
Total loans and leases | 635,100 | 559,987 |
Auto and light truck | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 671 | 3,154 |
Auto and light truck | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 0 | 1,437 |
Medium and heavy duty truck | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 299,998 | 283,284 |
Total Accruing Loans | 299,998 | 283,438 |
Nonaccrual | 44 | 106 |
Total loans and leases | 300,042 | 283,544 |
Medium and heavy duty truck | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 0 | 154 |
Medium and heavy duty truck | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 0 | 0 |
Aircraft | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 796,757 | 790,233 |
Total Accruing Loans | 810,052 | 795,550 |
Nonaccrual | 1,111 | 7,561 |
Total loans and leases | 811,163 | 803,111 |
Aircraft | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 12,964 | 4,149 |
Aircraft | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 331 | 1,168 |
Construction equipment | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 681,608 | 641,270 |
Total Accruing Loans | 684,623 | 642,913 |
Nonaccrual | 2,010 | 2,326 |
Total loans and leases | 686,633 | 645,239 |
Construction equipment | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 3,015 | 1,643 |
Construction equipment | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 0 | 0 |
Commercial real estate | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 833,985 | 807,793 |
Total Accruing Loans | 834,004 | 807,902 |
Nonaccrual | 1,915 | 1,984 |
Total loans and leases | 835,919 | 809,886 |
Commercial real estate | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 19 | 109 |
Commercial real estate | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 0 | 0 |
Residential real estate and home equity | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 526,990 | 520,124 |
90 Days or More Past Due and Accruing | 154 | 295 |
Total Accruing Loans | 528,027 | 522,141 |
Nonaccrual | 1,722 | 1,714 |
Total loans and leases | 529,749 | 523,855 |
Residential real estate and home equity | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 753 | 1,267 |
Residential real estate and home equity | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 130 | 455 |
Consumer | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 136,965 | 135,591 |
90 Days or More Past Due and Accruing | 3 | 73 |
Total Accruing Loans | 137,497 | 136,496 |
Nonaccrual | 234 | 141 |
Total loans and leases | 137,731 | 136,637 |
Consumer | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 422 | 682 |
Consumer | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | $ 107 | $ 150 |
Loan and Lease Financings (De_4
Loan and Lease Financings (Details 4) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | $ 6,913 | $ 6,913 | $ 12,673 | ||
Unpaid Principal Balance, With no related allowance recorded | 6,913 | 6,913 | 12,673 | ||
Recorded Investment, With an allowance recorded | 3,202 | 3,202 | 13,287 | ||
Unpaid Principal Balance, With an allowance recorded | 3,204 | 3,204 | 13,289 | ||
Total Recorded Investment | 10,115 | 10,115 | 25,960 | ||
Total Unpaid Principal Balance | 10,117 | 10,117 | 25,962 | ||
Total Related Allowance | 556 | 556 | 2,083 | ||
Average Recorded Investment | 12,614 | $ 23,059 | 15,034 | $ 21,261 | |
Interest Income | 18 | 24 | 23 | 28 | |
Commercial and agricultural | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 2,176 | 2,176 | 2,471 | ||
Unpaid Principal Balance, With no related allowance recorded | 2,176 | 2,176 | 2,471 | ||
Recorded Investment, With an allowance recorded | 486 | 486 | 0 | ||
Unpaid Principal Balance, With an allowance recorded | 486 | 486 | 0 | ||
Total Related Allowance | 39 | 39 | 0 | ||
Average Recorded Investment | 4,080 | 2,998 | 3,450 | 2,921 | |
Interest Income | 13 | 0 | 13 | 0 | |
Auto and light truck | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 1,805 | 1,805 | 7,504 | ||
Unpaid Principal Balance, With no related allowance recorded | 1,805 | 1,805 | 7,504 | ||
Recorded Investment, With an allowance recorded | 414 | 414 | 3,840 | ||
Unpaid Principal Balance, With an allowance recorded | 414 | 414 | 3,840 | ||
Total Related Allowance | 281 | 281 | 372 | ||
Average Recorded Investment | 2,791 | 7,066 | 3,898 | 7,446 | |
Interest Income | 0 | 0 | 0 | 0 | |
Medium and heavy duty truck | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 0 | 0 | 106 | ||
Unpaid Principal Balance, With no related allowance recorded | 0 | 0 | 106 | ||
Recorded Investment, With an allowance recorded | 0 | 0 | 0 | ||
Unpaid Principal Balance, With an allowance recorded | 0 | 0 | 0 | ||
Total Related Allowance | 0 | 0 | 0 | ||
Average Recorded Investment | 562 | 319 | 308 | 334 | |
Interest Income | 0 | 0 | 0 | 0 | |
Aircraft | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 1,064 | 1,064 | 556 | ||
Unpaid Principal Balance, With no related allowance recorded | 1,064 | 1,064 | 556 | ||
Recorded Investment, With an allowance recorded | 0 | 0 | 7,004 | ||
Unpaid Principal Balance, With an allowance recorded | 0 | 0 | 7,004 | ||
Total Related Allowance | 0 | 0 | 1,255 | ||
Average Recorded Investment | 1,589 | 9,126 | 3,517 | 6,097 | |
Interest Income | 0 | 20 | 0 | 20 | |
Construction equipment | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 729 | 729 | 905 | ||
Unpaid Principal Balance, With no related allowance recorded | 729 | 729 | 905 | ||
Recorded Investment, With an allowance recorded | 1,266 | 1,266 | 1,340 | ||
Unpaid Principal Balance, With an allowance recorded | 1,266 | 1,266 | 1,340 | ||
Total Related Allowance | 104 | 104 | 279 | ||
Average Recorded Investment | 1,417 | 942 | 1,673 | 1,136 | |
Interest Income | 0 | 0 | 0 | 0 | |
Commercial real estate | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 1,139 | 1,139 | 1,131 | ||
Unpaid Principal Balance, With no related allowance recorded | 1,139 | 1,139 | 1,131 | ||
Recorded Investment, With an allowance recorded | 695 | 695 | 759 | ||
Unpaid Principal Balance, With an allowance recorded | 695 | 695 | 759 | ||
Total Related Allowance | 9 | 9 | 51 | ||
Average Recorded Investment | 1,834 | 2,259 | 1,846 | 2,978 | |
Interest Income | 0 | 0 | 0 | 0 | |
Residential real estate and home equity | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 0 | 0 | 0 | ||
Unpaid Principal Balance, With no related allowance recorded | 0 | 0 | 0 | ||
Recorded Investment, With an allowance recorded | 341 | 341 | 344 | ||
Unpaid Principal Balance, With an allowance recorded | 343 | 343 | 346 | ||
Total Related Allowance | 123 | 123 | 126 | ||
Average Recorded Investment | 341 | 349 | 342 | 349 | |
Interest Income | 5 | 4 | 10 | 8 | |
Consumer | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 0 | 0 | 0 | ||
Unpaid Principal Balance, With no related allowance recorded | 0 | 0 | 0 | ||
Recorded Investment, With an allowance recorded | 0 | 0 | 0 | ||
Unpaid Principal Balance, With an allowance recorded | 0 | 0 | 0 | ||
Total Related Allowance | 0 | 0 | $ 0 | ||
Average Recorded Investment | 0 | 0 | 0 | 0 | |
Interest Income | $ 0 | $ 0 | $ 0 | $ 0 |
Loan and Lease Financings (De_5
Loan and Lease Financings (Details 5) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019USD ($)item | Jun. 30, 2018item | Jun. 30, 2019USD ($)itemmodification | Jun. 30, 2018itemmodification | Dec. 31, 2018USD ($) | |
Loans and leases classified as TDR | |||||
Number of Modifications | item | 1 | 0 | 1 | 0 | |
Number of Defaults | item | 0 | 0 | 1 | 0 | |
Loans and leases classified as troubled debt restructuring | $ 853 | $ 853 | $ 660 | ||
Troubled debt restructured loans and leases which had payment defaults within twelve months following modification | |||||
Default threshold | 90 days | ||||
Performing | |||||
Loans and leases classified as TDR | |||||
Loans and leases classified as troubled debt restructuring | 341 | $ 341 | 344 | ||
Nonperforming | |||||
Loans and leases classified as TDR | |||||
Loans and leases classified as troubled debt restructuring | $ 512 | $ 512 | $ 316 | ||
Interest Rate Below Market Reduction [Member] | |||||
Loans and leases classified as TDR | |||||
Number of Modifications | 0 | 0 | 0 | 0 |
Reserve for Loan and Lease Lo_3
Reserve for Loan and Lease Losses (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)item | Dec. 31, 2018USD ($) | |
Reserve for loan and lease losses | ||||||
Number of classes existing in loan and lease portfolio | item | 8 | |||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | $ 101,852 | $ 98,331 | $ 100,469 | $ 94,883 | ||
Charge-offs | 1,513 | 305 | 5,467 | 861 | ||
Recoveries | 325 | 164 | 744 | 382 | ||
Net charge-offs (recoveries) | 1,188 | 141 | 4,723 | 479 | ||
Provision (recovery of provision) | 4,247 | 4,817 | 9,165 | 8,603 | ||
Balance at the end of the period | 104,911 | 103,007 | 104,911 | 103,007 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | $ 556 | $ 2,083 | ||||
Ending balance, collectively evaluated for impairment | 104,355 | 98,386 | ||||
Total reserve for loan and lease losses | 101,852 | 98,331 | 104,911 | 94,883 | 104,911 | 100,469 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 10,115 | 25,960 | ||||
Ending balance, collectively evaluated for impairment | 5,099,222 | 4,809,504 | ||||
Total loans and leases | 5,109,337 | 4,835,464 | ||||
Commercial and agricultural | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 18,307 | 17,609 | 17,063 | 16,228 | ||
Charge-offs | 9 | 0 | 88 | 25 | ||
Recoveries | 28 | 41 | 62 | 90 | ||
Net charge-offs (recoveries) | (19) | (41) | 26 | (65) | ||
Provision (recovery of provision) | 726 | 981 | 2,015 | 2,338 | ||
Balance at the end of the period | 19,052 | 18,631 | 19,052 | 18,631 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 39 | 0 | ||||
Ending balance, collectively evaluated for impairment | 19,013 | 17,063 | ||||
Total reserve for loan and lease losses | 18,307 | 17,609 | 17,063 | 16,228 | 19,052 | 17,063 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 2,662 | 2,471 | ||||
Ending balance, collectively evaluated for impairment | 1,170,338 | 1,070,734 | ||||
Total loans and leases | 1,173,000 | 1,073,205 | ||||
Auto and light truck | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 14,259 | 10,810 | 14,689 | 10,103 | ||
Charge-offs | 57 | 84 | 466 | 400 | ||
Recoveries | 20 | 13 | 29 | 19 | ||
Net charge-offs (recoveries) | 37 | 71 | 437 | 381 | ||
Provision (recovery of provision) | 2,119 | 1,337 | 2,089 | 2,354 | ||
Balance at the end of the period | 16,341 | 12,076 | 16,341 | 12,076 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 281 | 372 | ||||
Ending balance, collectively evaluated for impairment | 16,060 | 14,317 | ||||
Total reserve for loan and lease losses | 14,259 | 10,810 | 16,341 | 10,103 | 16,341 | 14,689 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 2,219 | 11,344 | ||||
Ending balance, collectively evaluated for impairment | 632,881 | 548,643 | ||||
Total loans and leases | 635,100 | 559,987 | ||||
Medium and heavy duty truck | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 4,409 | 4,493 | 4,303 | 4,844 | ||
Charge-offs | 1,132 | 0 | 1,132 | 0 | ||
Recoveries | 0 | 0 | 0 | 0 | ||
Net charge-offs (recoveries) | 1,132 | 0 | 1,132 | 0 | ||
Provision (recovery of provision) | 1,394 | (151) | 1,500 | (502) | ||
Balance at the end of the period | 4,671 | 4,342 | 4,671 | 4,342 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 0 | 0 | ||||
Ending balance, collectively evaluated for impairment | 4,671 | 4,303 | ||||
Total reserve for loan and lease losses | 4,409 | 4,493 | 4,671 | 4,342 | 4,671 | 4,303 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 0 | 106 | ||||
Ending balance, collectively evaluated for impairment | 300,042 | 283,438 | ||||
Total loans and leases | 300,042 | 283,544 | ||||
Aircraft | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 33,440 | 34,836 | 33,047 | 34,619 | ||
Charge-offs | 1 | 0 | 3,001 | 29 | ||
Recoveries | 117 | 5 | 302 | 49 | ||
Net charge-offs (recoveries) | (116) | (5) | 2,699 | (20) | ||
Provision (recovery of provision) | (1,638) | 1,931 | 1,570 | 2,133 | ||
Balance at the end of the period | 31,918 | 36,772 | 31,918 | 36,772 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 0 | 1,255 | ||||
Ending balance, collectively evaluated for impairment | 31,918 | 31,792 | ||||
Total reserve for loan and lease losses | 33,440 | 34,836 | 33,047 | 34,619 | 31,918 | 33,047 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 1,064 | 7,560 | ||||
Ending balance, collectively evaluated for impairment | 810,099 | 795,551 | ||||
Total loans and leases | 811,163 | 803,111 | ||||
Construction equipment | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 10,883 | 10,917 | 10,922 | 9,343 | ||
Charge-offs | 1 | 0 | 196 | 5 | ||
Recoveries | 15 | 26 | 119 | 45 | ||
Net charge-offs (recoveries) | (14) | (26) | 77 | (40) | ||
Provision (recovery of provision) | 1,387 | 193 | 1,439 | 1,753 | ||
Balance at the end of the period | 12,284 | 11,136 | 12,284 | 11,136 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 104 | 279 | ||||
Ending balance, collectively evaluated for impairment | 12,180 | 10,643 | ||||
Total reserve for loan and lease losses | 10,883 | 10,917 | 10,922 | 11,136 | 12,284 | 10,922 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 1,995 | 2,245 | ||||
Ending balance, collectively evaluated for impairment | 684,638 | 642,994 | ||||
Total loans and leases | 686,633 | 645,239 | ||||
Commercial real estate | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 15,834 | 14,770 | 15,705 | 14,792 | ||
Charge-offs | 0 | 0 | 0 | 7 | ||
Recoveries | 51 | 4 | 60 | 25 | ||
Net charge-offs (recoveries) | (51) | (4) | (60) | (18) | ||
Provision (recovery of provision) | (128) | 366 | (8) | 330 | ||
Balance at the end of the period | 15,757 | 15,140 | 15,757 | 15,140 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 9 | 51 | ||||
Ending balance, collectively evaluated for impairment | 15,748 | 15,654 | ||||
Total reserve for loan and lease losses | 15,834 | 14,770 | 15,705 | 14,792 | 15,757 | 15,705 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 1,834 | 1,890 | ||||
Ending balance, collectively evaluated for impairment | 834,085 | 807,996 | ||||
Total loans and leases | 835,919 | 809,886 | ||||
Residential real estate and home equity | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 3,386 | 3,565 | 3,425 | 3,666 | ||
Charge-offs | 0 | 0 | 21 | 11 | ||
Recoveries | 3 | 7 | 6 | 13 | ||
Net charge-offs (recoveries) | (3) | (7) | 15 | (2) | ||
Provision (recovery of provision) | 129 | (8) | 108 | (104) | ||
Balance at the end of the period | 3,518 | 3,564 | 3,518 | 3,564 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 123 | 126 | ||||
Ending balance, collectively evaluated for impairment | 3,395 | 3,299 | ||||
Total reserve for loan and lease losses | 3,386 | 3,565 | 3,518 | 3,564 | 3,518 | 3,425 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 341 | 344 | ||||
Ending balance, collectively evaluated for impairment | 529,408 | 523,511 | ||||
Total loans and leases | 529,749 | 523,855 | ||||
Consumer | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 1,334 | 1,331 | 1,315 | 1,288 | ||
Charge-offs | 313 | 221 | 563 | 384 | ||
Recoveries | 91 | 68 | 166 | 141 | ||
Net charge-offs (recoveries) | 222 | 153 | 397 | 243 | ||
Provision (recovery of provision) | 258 | 168 | 452 | 301 | ||
Balance at the end of the period | 1,370 | 1,346 | 1,370 | 1,346 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 0 | 0 | ||||
Ending balance, collectively evaluated for impairment | 1,370 | 1,315 | ||||
Total reserve for loan and lease losses | $ 1,334 | $ 1,331 | $ 1,315 | $ 1,288 | 1,370 | 1,315 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 0 | 0 | ||||
Ending balance, collectively evaluated for impairment | 137,731 | 136,637 | ||||
Total loans and leases | $ 137,731 | $ 136,637 |
Lease Investments (Details)
Lease Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Schedule of the Components of Income from Direct Finance and Operating Lease Equipment [Line Items] | |||||
Interest income on lease receivable | $ 3,241 | $ 3,684 | $ 6,419 | $ 6,669 | |
Income related to lease payments | 7,809 | 8,104 | 15,791 | 15,859 | |
Minimum lease payments | 236,701 | 236,701 | $ 257,398 | ||
Estimated unguaranteed residual values | 41 | 41 | 41 | ||
Less: unearned income | (41,979) | (41,979) | (46,709) | ||
Net investment in direct finance lease financing | 194,763 | 194,763 | 210,730 | ||
Gross investment in operating lease financing | 196,147 | 196,147 | 199,954 | ||
Accumulated depreciation | (69,645) | (69,645) | (65,514) | ||
Net investment in operating lease financings | 126,502 | 126,502 | 134,440 | ||
Carrying amount of residual assets covered by residual value guarantees | 79,650 | 79,650 | $ 87,610 | ||
Income from reimbursements for personal property tax payments on operating leased equipment | 110 | 350 | |||
Expense for payments of personal property taxes on operating leased equipment | 110 | 350 | |||
Assets Leased to Others | |||||
Schedule of the Components of Income from Direct Finance and Operating Lease Equipment [Line Items] | |||||
Depreciation expense | $ 6,400 | $ 6,684 | $ 12,924 | $ 13,112 |
Lease Investments (Details 2)
Lease Investments (Details 2) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Direct financing minimum lease payments receivable | ||
Remainder of 2019 | $ 27,361 | |
2020 | 46,285 | |
2021 | 38,822 | |
2022 | 36,562 | |
2023 | 31,618 | |
Thereafter | 56,053 | |
Total | 236,701 | $ 257,398 |
Operating minimum lease payments receivable | ||
Remainder of 2019 | 15,830 | |
2020 | 34,120 | |
2021 | 20,091 | |
2022 | 12,027 | |
2023 | 6,470 | |
Thereafter | 3,020 | |
Total | $ 91,558 |
Mortgage Servicing Rights (Deta
Mortgage Servicing Rights (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Residential mortgage loans | ||
Mortgage Servicing Rights | ||
Unpaid principal balance | $ 731,020 | $ 734,300 |
Mortgage Servicing Rights (De_2
Mortgage Servicing Rights (Details 2) - Residential mortgage loans - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Changes in mortgage servicing assets | ||||
Balance at the beginning of the period | $ 4,247 | $ 4,356 | $ 4,283 | $ 4,349 |
Additions | 188 | 202 | 385 | 445 |
Amortization | (294) | (235) | (527) | (471) |
Sales | 0 | 0 | 0 | 0 |
Carrying value before valuation allowance at end of period | 4,141 | 4,323 | 4,141 | 4,323 |
Changes in valuation allowance | ||||
Balance at the beginning of the period | 0 | 0 | 0 | 0 |
Impairment recoveries | 0 | 0 | 0 | 0 |
Balance at the end of the period | 0 | 0 | 0 | 0 |
Net carrying value of mortgage servicing rights at end of period | 4,141 | 4,323 | 4,141 | 4,323 |
Fair value of mortgage servicing rights at end of period | 5,987 | 7,536 | 5,987 | 7,536 |
Fair value of mortgage servicing rights exceeding the carrying value | 1,850 | 3,210 | 1,850 | 3,210 |
Mortgage loan contractual servicing fees, including late fees and ancillary income | $ 630 | $ 640 | $ 1,250 | $ 1,300 |
Commitments and Financial Ins_3
Commitments and Financial Instruments with Off-Balance-Sheet Risk (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease right of use assets | $ 9,930 |
Operating lease liabilities | $ 10,253 |
Commitments and Financial Ins_4
Commitments and Financial Instruments with Off-Balance-Sheet Risk (Details 2) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019USD ($)Rate | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)Rate | Jun. 30, 2018USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Operating lease cost | $ 883 | $ 1,761 | ||
Short-term lease cost | 7 | 10 | ||
Variable lease cost | 0 | 0 | ||
Total operating lease cost | 890 | 1,771 | ||
Operating Leases, Rent Expense, Net [Abstract] | ||||
Gross rental expense | $ 770 | $ 1,710 | ||
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||||
Remainder of 2019 | 1,564 | 1,564 | ||
2020 | 3,648 | 3,648 | ||
2021 | 2,459 | 2,459 | ||
2022 | 1,203 | 1,203 | ||
2023 | 497 | 497 | ||
Thereafter | 1,736 | 1,736 | ||
Total lease payments | 11,107 | 11,107 | ||
Imputed interest | (854) | (854) | ||
Operating lease liabilities | $ 10,253 | $ 10,253 | ||
Weighted average remaining lease term | 4 years 9 months 21 days | 4 years 9 months 21 days | ||
Weighted average discount rate | Rate | 3.00% | 3.00% | ||
Operating cash flows from operating leases | $ 947 | |||
Net gain on sale of building with a subsequent operating lease | $ 1,320 | |||
Number of significant lessee leases that have not yet commenced | 0 | 0 |
Commitments and Financial Ins_5
Commitments and Financial Instruments with Off-Balance-Sheet Risk (Details 3) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Loan commitments to extend credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance-sheet instruments | $ 1,107,331 | $ 1,095,053 |
Standby letters of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance-sheet instruments | $ 27,881 | 31,133 |
Standby letters of credit | Minimum | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Letter of credit term | 6 months | |
Standby letters of credit | Maximum | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Letter of credit term | 1 year | |
Commercial and similar letters of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance-sheet instruments | $ 2,849 | $ 2,500 |
Commercial and similar letters of credit | Minimum | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Letter of credit term | 3 months | |
Commercial and similar letters of credit | Maximum | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Letter of credit term | 6 months |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Non-hedging derivative financial instruments | ||
Derivative Financial Instruments | ||
Notional or contractual amount | $ 1,035,931 | $ 875,806 |
Asset derivatives, Fair value | 21,601 | 7,236 |
Liability derivatives, Fair value | 21,946 | 7,385 |
Interest rate swap contracts | ||
Derivative Financial Instruments | ||
Asset derivatives, Fair value | 21,397 | 7,128 |
Interest rate swap contracts | Non-hedging derivative financial instruments | ||
Derivative Financial Instruments | ||
Notional or contractual amount | 992,453 | 855,848 |
Asset derivatives, Fair value | 21,397 | 7,124 |
Liability derivatives, Fair value | 21,772 | 7,250 |
Loan commitments | Non-hedging derivative financial instruments | ||
Derivative Financial Instruments | ||
Notional or contractual amount | 15,756 | 5,871 |
Asset derivatives, Fair value | 204 | 112 |
Liability derivatives, Fair value | 0 | 0 |
Forward contracts - mortgage loan | Non-hedging derivative financial instruments | ||
Derivative Financial Instruments | ||
Notional or contractual amount | 27,722 | 14,087 |
Asset derivatives, Fair value | 0 | 0 |
Liability derivatives, Fair value | $ 174 | $ 135 |
Derivative Financial Instrume_4
Derivative Financial Instruments (Details 2) - Non-hedging derivative financial instruments - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Derivative Financial Instruments | ||||
Gain (loss) | $ 279 | $ 232 | $ 588 | $ 563 |
Interest rate swap contracts | Other expense | ||||
Derivative Financial Instruments | ||||
Gain (loss) | (192) | (35) | (249) | (36) |
Interest rate swap contracts | Other income | ||||
Derivative Financial Instruments | ||||
Gain (loss) | 505 | 246 | 784 | 579 |
Loan commitments | Mortgage banking income | ||||
Derivative Financial Instruments | ||||
Gain (loss) | 15 | 61 | 92 | 57 |
Forward contracts - mortgage loan | Mortgage banking income | ||||
Derivative Financial Instruments | ||||
Gain (loss) | $ (49) | $ (40) | $ (39) | $ (37) |
Derivative Financial Instrume_5
Derivative Financial Instruments (Details 3) - Interest rate swaps - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Offsetting Assets | ||
Gross Amounts of Recognized Assets | $ 21,397 | $ 7,128 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 4 |
Net Amounts of Assets Presented in the Statement of Financial Position | 21,397 | 7,124 |
Derivative Asset, Fair Value, Amount Offset Against Collateral [Abstract] | ||
Financial instruments | 0 | 177 |
Cash collateral received | 0 | 610 |
Net Amount | $ 21,397 | $ 6,337 |
Derivative Financial Instrume_6
Derivative Financial Instruments (Details 4) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Offsetting of financial liabilities and derivative liabilities | ||
Gross Amounts of Recognized Liabilities | $ 141,553 | $ 110,881 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 4 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 141,553 | 110,877 |
Gross amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 141,171 | 105,327 |
Cash Collateral Pledged | 0 | 0 |
Net Amount | 382 | 5,550 |
Interest rate swaps | ||
Offsetting of financial liabilities and derivative liabilities | ||
Gross Amounts of Recognized Liabilities | 21,772 | 7,254 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 4 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 21,772 | 7,250 |
Derivative, Collateral, Right to Reclaim Securities | 21,390 | 1,700 |
Gross amounts Not Offset in the Statement of Financial Position | ||
Cash Collateral Pledged | 0 | 0 |
Net Amount | 382 | 5,550 |
Repurchase agreements | ||
Offsetting of financial liabilities and derivative liabilities | ||
Gross Amounts of Recognized Liabilities | 119,781 | 103,627 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 119,781 | 103,627 |
Gross amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | $ 119,781 | $ 103,627 |
Derivative Financial Instrume_7
Derivative Financial Instruments (Details 5) - U.S. Treasury and Federal agencies securities - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Overnight and Continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Repurchase agreements | $ 117,530 | $ 102,340 |
Up to 30 Days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Repurchase agreements | $ 2,250 | $ 1,290 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Variable Interest Entities [Abstract] | |||||
Federal tax credits recognized in tax expense | $ 350 | $ 320 | $ 700 | $ 640 | |
Investment tax credits | 3,950 | 5,550 | $ 7,940 | ||
Investment Tax Credit, Adjusted | $ (210) | ||||
Investment carrying amount, unconsolidated VIEs | 17,397 | 17,397 | $ 15,083 | ||
Capital and other commitments, unconsolidated VIEs | 12,306 | 12,306 | 6,449 | ||
Maximum exposure to loss, unconsolidated VIEs | 35,949 | 35,949 | 40,705 | ||
Investment carrying amount, consolidated VIEs | 41,090 | 41,090 | 8,380 | ||
Unfunded capital and other commitments, consolidated VIEs | $ 29,990 | $ 29,990 | $ 6,700 |
Variable Interest Entities (D_2
Variable Interest Entities (Details 2) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019USD ($)trust | Dec. 31, 2018USD ($) | |
Variable Interest Entities [Abstract] | ||
Number of trusts sponsored | trust | 1 | |
Percentage of ownership interest | 100.00% | |
Subordinated Borrowing [Line Items] | ||
Amount of subordinated notes | $ 58,764 | $ 58,764 |
June 2007 issuance | ||
Subordinated Borrowing [Line Items] | ||
Amount of subordinated notes | $ 41,238 | |
Interest rate (as a percent) | 7.22% | |
Maturity date of subordinated notes | Jun. 15, 2037 | |
August 2007 issuance | ||
Subordinated Borrowing [Line Items] | ||
Amount of subordinated notes | $ 17,526 | |
Interest rate (as a percent) | 3.89% | |
Maturity date of subordinated notes | Sep. 15, 2037 | |
London Interbank Offered Rate (LIBOR) | August 2007 issuance | ||
Subordinated Borrowing [Line Items] | ||
Basis spread on variable rate (as a percent) | 1.48% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Outstanding stock options (in shares) | 0 | 0 | 0 | 0 |
Distributed earnings allocated to common stock | $ 6,930 | $ 6,225 | $ 13,896 | $ 11,929 |
Undistributed earnings allocated to common stock | 16,323 | 15,591 | 31,425 | 28,869 |
Net earnings allocated to common stock | 23,253 | 21,816 | 45,321 | 40,798 |
Net earnings allocated to participating securities | 132 | 148 | 260 | 282 |
Net income available to common shareholders | $ 23,385 | $ 21,964 | $ 45,581 | $ 41,080 |
Weighted average shares outstanding for basic earnings per common share | 25,615,718 | 25,958,128 | 25,687,056 | 25,954,278 |
Dilutive effect of stock compensation (in shares) | 0 | 0 | 0 | 0 |
Weighted average shares outstanding for diluted earnings per common share | 25,615,718 | 25,958,128 | 25,687,056 | 25,954,278 |
Basic earnings per common share (in dollars per share) | $ 0.91 | $ 0.84 | $ 1.76 | $ 1.57 |
Diluted earnings per common share (in dollars per share) | $ 0.91 | $ 0.84 | $ 1.76 | $ 1.57 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019USD ($)itemshares | Jun. 30, 2018USD ($)shares | |
Stock-based compensation | ||
Number of stock-based employee compensation plans | item | 4 | |
Number of executive stock award plans | item | 3 | |
Outstanding stock options (in shares) | 0 | 0 |
Total unrecognized compensation cost related to non-vested share-based compensation arrangements | $ | $ 6,030 | |
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 3 years 2 months 15 days | |
Stock options | ||
Stock-based compensation | ||
Total fair value of options vested and expensed | $ | $ 0 | $ 0 |
Outstanding stock options (in shares) | 0 | 0 |
Stock options exercised (in shares) | 0 | 0 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Reclassifications out of accumulated other comprehensive income | ||||
Losses on investment securities available-for-sale | $ 0 | $ 0 | $ 0 | $ (345) |
Income before income taxes | 30,491 | 27,498 | 59,441 | 52,494 |
Income tax expense | (7,074) | (5,534) | (13,828) | (11,414) |
Unrealized gains and losses on available-for-sale securities | Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Reclassifications out of accumulated other comprehensive income | ||||
Losses on investment securities available-for-sale | 0 | 0 | 0 | (345) |
Income before income taxes | 0 | 0 | 0 | (345) |
Income tax expense | 0 | 0 | 0 | 83 |
Net income | $ 0 | $ 0 | $ 0 | $ (262) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||||
Unrecognized tax benefits that would affect the effective tax rate if recognized | $ 0 | $ 0 | $ 0 | ||
Interest and penalties net of tax recognized | 0 | $ (100) | 0 | $ (90) | |
Accrued interest and penalties | $ 0 | $ 0 | $ 0 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | |
Fair value measurements | |||
Fair value carrying amount | $ 19,178 | $ 11,290 | |
Mortgages held for sale reported at fair value | |||
Fair value measurements | |||
Fair value carrying amount | 19,178 | 11,290 | |
Aggregate unpaid principal | 18,808 | 11,076 | |
Excess of fair value carrying amount over (under) unpaid principal | [1] | $ 370 | $ 214 |
[1] | The excess of fair value carrying amount over (under) unpaid principal is included in mortgage banking income and includes changes in fair value at and subsequent to funding and gains and losses on the related loan commitment prior to funding. |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details 2) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Fair value measurements | ||
Investment securities available-for-sale | $ 1,021,786 | $ 990,129 |
Assets: | ||
Mortgages held for sale | 19,178 | 11,290 |
U.S. Treasury and Federal agencies securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 541,476 | 531,223 |
U.S. States and political subdivisions securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 91,072 | 94,582 |
Mortgage-backed securities - Federal agencies | ||
Fair value measurements | ||
Investment securities available-for-sale | 338,824 | 318,233 |
Corporate debt securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 49,714 | 45,392 |
Foreign government and other securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 700 | 699 |
Total | ||
Fair value measurements | ||
Investment securities available-for-sale | 1,021,786 | 990,129 |
Assets: | ||
Mortgages held for sale | 19,178 | 11,290 |
Level 1 | ||
Fair value measurements | ||
Investment securities available-for-sale | 34,081 | 33,746 |
Assets: | ||
Mortgages held for sale | 0 | 0 |
Level 2 | ||
Fair value measurements | ||
Investment securities available-for-sale | 982,644 | 955,358 |
Assets: | ||
Mortgages held for sale | 19,178 | 11,290 |
Level 3 | ||
Fair value measurements | ||
Investment securities available-for-sale | 5,061 | 1,025 |
Assets: | ||
Mortgages held for sale | 0 | 0 |
Recurring basis | Total | ||
Fair value measurements | ||
Investment securities available-for-sale | 1,021,786 | 990,129 |
Assets: | ||
Mortgages held for sale | 19,178 | 11,290 |
Total | 1,062,361 | 1,008,543 |
Liabilities: | ||
Total | 21,772 | 7,250 |
Recurring basis | Total | Interest rate swap contracts | ||
Assets: | ||
Accrued income and other assets | 21,397 | 7,124 |
Liabilities: | ||
Accrued expenses and other liabilities | 21,772 | 7,250 |
Recurring basis | Total | U.S. Treasury and Federal agencies securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 541,476 | 531,223 |
Recurring basis | Total | U.S. States and political subdivisions securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 91,072 | 94,582 |
Recurring basis | Total | Mortgage-backed securities - Federal agencies | ||
Fair value measurements | ||
Investment securities available-for-sale | 338,824 | 318,233 |
Recurring basis | Total | Corporate debt securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 49,714 | 45,392 |
Recurring basis | Total | Foreign government and other securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 700 | 699 |
Recurring basis | Level 1 | ||
Fair value measurements | ||
Investment securities available-for-sale | 34,081 | 33,746 |
Assets: | ||
Mortgages held for sale | 0 | 0 |
Total | 34,081 | 33,746 |
Liabilities: | ||
Total | 0 | 0 |
Recurring basis | Level 1 | Interest rate swap contracts | ||
Assets: | ||
Accrued income and other assets | 0 | 0 |
Liabilities: | ||
Accrued expenses and other liabilities | 0 | 0 |
Recurring basis | Level 1 | U.S. Treasury and Federal agencies securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 34,081 | 33,746 |
Recurring basis | Level 1 | U.S. States and political subdivisions securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 0 | 0 |
Recurring basis | Level 1 | Mortgage-backed securities - Federal agencies | ||
Fair value measurements | ||
Investment securities available-for-sale | 0 | 0 |
Recurring basis | Level 1 | Corporate debt securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 0 | 0 |
Recurring basis | Level 1 | Foreign government and other securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 0 | 0 |
Recurring basis | Level 2 | ||
Fair value measurements | ||
Investment securities available-for-sale | 982,644 | 955,358 |
Assets: | ||
Mortgages held for sale | 19,178 | 11,290 |
Total | 1,023,219 | 973,772 |
Liabilities: | ||
Total | 21,772 | 7,250 |
Recurring basis | Level 2 | Interest rate swap contracts | ||
Assets: | ||
Accrued income and other assets | 21,397 | 7,124 |
Liabilities: | ||
Accrued expenses and other liabilities | 21,772 | 7,250 |
Recurring basis | Level 2 | U.S. Treasury and Federal agencies securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 507,395 | 497,477 |
Recurring basis | Level 2 | U.S. States and political subdivisions securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 86,011 | 93,557 |
Recurring basis | Level 2 | Mortgage-backed securities - Federal agencies | ||
Fair value measurements | ||
Investment securities available-for-sale | 338,824 | 318,233 |
Recurring basis | Level 2 | Corporate debt securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 49,714 | 45,392 |
Recurring basis | Level 2 | Foreign government and other securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 700 | 699 |
Recurring basis | Level 3 | ||
Fair value measurements | ||
Investment securities available-for-sale | 5,061 | 1,025 |
Assets: | ||
Mortgages held for sale | 0 | 0 |
Total | 5,061 | 1,025 |
Liabilities: | ||
Total | 0 | 0 |
Recurring basis | Level 3 | Interest rate swap contracts | ||
Assets: | ||
Accrued income and other assets | 0 | 0 |
Liabilities: | ||
Accrued expenses and other liabilities | 0 | 0 |
Recurring basis | Level 3 | U.S. Treasury and Federal agencies securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 0 | 0 |
Recurring basis | Level 3 | U.S. States and political subdivisions securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 5,061 | 1,025 |
Recurring basis | Level 3 | Mortgage-backed securities - Federal agencies | ||
Fair value measurements | ||
Investment securities available-for-sale | 0 | 0 |
Recurring basis | Level 3 | Corporate debt securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 0 | 0 |
Recurring basis | Level 3 | Foreign government and other securities | ||
Fair value measurements | ||
Investment securities available-for-sale | $ 0 | $ 0 |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details 3) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($)item | |
Changes in the fair value of Level 3 assets measured on a recurring basis | ||
Total gains or losses (unrealized): included in earnings | $ 0 | $ 0 |
Number of transfers between levels | item | 0 | 0 |
U.S. States and political subdivisions securities | ||
Changes in the fair value of Level 3 assets measured on a recurring basis | ||
Balance at the beginning of the period | $ 5,064 | $ 2,155 |
Total gains or losses (realized/unrealized): included in earnings | 0 | 0 |
Total gains or losses (realized/unrealized): included in other comprehensive income | 16 | 4 |
Purchases | 0 | 0 |
Issuances | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Maturities | (19) | (518) |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Balance at the end of the period | 5,061 | 1,641 |
Foreign government and other securities | ||
Changes in the fair value of Level 3 assets measured on a recurring basis | ||
Balance at the beginning of the period | 0 | 708 |
Total gains or losses (realized/unrealized): included in earnings | 0 | 0 |
Total gains or losses (realized/unrealized): included in other comprehensive income | 0 | (1) |
Purchases | 0 | 0 |
Issuances | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Maturities | 0 | 0 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Balance at the end of the period | 0 | 707 |
Investment securities available-for-sale | ||
Changes in the fair value of Level 3 assets measured on a recurring basis | ||
Balance at the beginning of the period | 5,064 | 2,863 |
Total gains or losses (realized/unrealized): included in earnings | 0 | 0 |
Total gains or losses (realized/unrealized): included in other comprehensive income | 16 | 3 |
Purchases | 0 | 0 |
Issuances | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Maturities | (19) | (518) |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Balance at the end of the period | $ 5,061 | $ 2,348 |
Fair Value Measurements (Deta_4
Fair Value Measurements (Details 4) $ in Thousands | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Valuation Methodology | ||
Investment securities, available-for-sale | $ 1,021,786 | $ 990,129 |
Level 3 | ||
Valuation Methodology | ||
Investment securities, available-for-sale | 5,061 | 1,025 |
Recurring | Level 3 | ||
Valuation Methodology | ||
Investment securities, available-for-sale | 5,061 | 1,025 |
Recurring | Level 3 | Discounted cash flows | Direct placement municipal securities | ||
Valuation Methodology | ||
Investment securities, available-for-sale | $ 5,061 | $ 1,025 |
Discount for lack of marketability | Non-recurring | Level 3 | Trade publications | Aircraft | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.10 | |
Discount for lack of marketability | Non-recurring | Level 3 | Auction values | Autos | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.10 | |
Discount for lack of marketability | Non-recurring | Level 3 | Trade publications and auction values | Medium and heavy duty trucks | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.15 | |
Discount for lack of marketability | Non-recurring | Level 3 | Trade publications and auction values | Construction equipment | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.20 | |
Discount for lack of marketability | Non-recurring | Level 3 | Appraisals | Real estate | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.20 | |
Credit spread assumption | Recurring | Level 3 | Discounted cash flows | Direct placement municipal securities | Minimum | ||
Unobservable Inputs | ||
Debt securities available-for-sale unobservable inputs (as a percent) | 0.0013 | 0.0017 |
Credit spread assumption | Recurring | Level 3 | Discounted cash flows | Direct placement municipal securities | Maximum | ||
Unobservable Inputs | ||
Debt securities available-for-sale unobservable inputs (as a percent) | 0.0219 | 0.0302 |
Receivables | Discount for lack of marketability | Non-recurring | Level 3 | Commercial loans | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.20 | |
Inventory | Discount for lack of marketability | Non-recurring | Level 3 | Minimum | Commercial loans | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.40 | |
Inventory | Discount for lack of marketability | Non-recurring | Level 3 | Maximum | Commercial loans | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.75 |
Fair Value Measurements (Deta_5
Fair Value Measurements (Details 5) - Non-recurring - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Impaired loans | ||
Fair value measurements | ||
Impairment charges (recoveries) | $ 0 | |
Mortgage servicing rights | ||
Fair value measurements | ||
Impairment charges (recoveries) | 0 | |
Repossessions | ||
Fair value measurements | ||
Impairment charges (recoveries) | 10 | |
Other real estate | ||
Fair value measurements | ||
Impairment charges (recoveries) | 0 | |
Total | ||
Fair value measurements | ||
Impaired loans - collateral based | 1,962 | $ 7,306 |
Assets measured at fair value | 15,445 | 18,554 |
Total | Mortgage servicing rights | ||
Fair value measurements | ||
Accrued income and other assets | 4,141 | 4,283 |
Total | Repossessions | ||
Fair value measurements | ||
Accrued income and other assets | 8,799 | 6,666 |
Total | Other real estate | ||
Fair value measurements | ||
Accrued income and other assets | 543 | 299 |
Level 3 | ||
Fair value measurements | ||
Impaired loans - collateral based | 1,962 | 7,306 |
Assets measured at fair value | 15,445 | 18,554 |
Level 3 | Mortgage servicing rights | ||
Fair value measurements | ||
Accrued income and other assets | 4,141 | 4,283 |
Level 3 | Repossessions | ||
Fair value measurements | ||
Accrued income and other assets | 8,799 | 6,666 |
Level 3 | Other real estate | ||
Fair value measurements | ||
Accrued income and other assets | $ 543 | $ 299 |
Fair Value Measurements (Deta_6
Fair Value Measurements (Details 6) - Non-recurring $ in Thousands | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Level 3 | ||
Valuation Methodology | ||
Assets measured at fair value | $ 15,445 | $ 18,554 |
Carrying Value | Level 3 | Collateral based measurements | Impaired loans | ||
Valuation Methodology | ||
Assets measured at fair value | 1,962 | 7,306 |
Carrying Value | Level 3 | Discounted cash flows | Mortgage servicing rights | ||
Valuation Methodology | ||
Assets measured at fair value | 4,141 | 4,283 |
Carrying Value | Level 3 | Appraisals trade publications and auction values | Repossessions | ||
Valuation Methodology | ||
Assets measured at fair value | 8,799 | 6,666 |
Carrying Value | Level 3 | Appraisals | Other real estate | ||
Valuation Methodology | ||
Assets measured at fair value | 543 | 299 |
Fair Value | ||
Valuation Methodology | ||
Assets measured at fair value | 15,445 | 18,554 |
Fair Value | Level 3 | Collateral based measurements | Impaired loans | ||
Valuation Methodology | ||
Assets measured at fair value | 1,962 | 7,306 |
Fair Value | Level 3 | Discounted cash flows | Mortgage servicing rights | ||
Valuation Methodology | ||
Assets measured at fair value | 5,987 | 7,238 |
Fair Value | Level 3 | Appraisals trade publications and auction values | Repossessions | ||
Valuation Methodology | ||
Assets measured at fair value | 9,184 | 6,991 |
Fair Value | Level 3 | Appraisals | Other real estate | ||
Valuation Methodology | ||
Assets measured at fair value | $ 550 | $ 305 |
Discount for lack of marketability and current conditions | Level 3 | Collateral based measurements | Impaired loans | Minimum | ||
Unobservable Inputs | ||
Impaired loans unobservable inputs (as a percent) | 0.2000 | 0.2000 |
Discount for lack of marketability and current conditions | Level 3 | Collateral based measurements | Impaired loans | Maximum | ||
Unobservable Inputs | ||
Impaired loans unobservable inputs (as a percent) | 1 | 0.3500 |
Constant prepayment rate (CPR) | Level 3 | Discounted cash flows | Mortgage servicing rights | Minimum | ||
Unobservable Inputs | ||
Mortgage servicing rights unobservable inputs (as a percent) | 0.1130 | 0.0720 |
Constant prepayment rate (CPR) | Level 3 | Discounted cash flows | Mortgage servicing rights | Maximum | ||
Unobservable Inputs | ||
Mortgage servicing rights unobservable inputs (as a percent) | 0.2450 | 0.2480 |
Discount rate | Level 3 | Discounted cash flows | Mortgage servicing rights | Minimum | ||
Unobservable Inputs | ||
Mortgage servicing rights unobservable inputs (as a percent) | 0.0930 | 0.1030 |
Discount rate | Level 3 | Discounted cash flows | Mortgage servicing rights | Maximum | ||
Unobservable Inputs | ||
Mortgage servicing rights unobservable inputs (as a percent) | 0.1210 | 0.1310 |
Discount for lack of marketability | Level 3 | Appraisals trade publications and auction values | Repossessions | Minimum | ||
Unobservable Inputs | ||
Repossessions unobservable inputs (as a percent) | 0.02 | 0.04 |
Discount for lack of marketability | Level 3 | Appraisals trade publications and auction values | Repossessions | Maximum | ||
Unobservable Inputs | ||
Repossessions unobservable inputs (as a percent) | 0.10 | 0.06 |
Discount for lack of marketability | Level 3 | Appraisals | Other real estate | Minimum | ||
Unobservable Inputs | ||
Other real estate unobservable inputs (as a percent) | 0 | 0 |
Discount for lack of marketability | Level 3 | Appraisals | Other real estate | Maximum | ||
Unobservable Inputs | ||
Other real estate unobservable inputs (as a percent) | 0.09 | 0.10 |
Fair Value Measurements (Deta_7
Fair Value Measurements (Details 7) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Assets: | ||
Cash and due from banks | $ 71,910 | $ 94,907 |
Federal funds sold and interest bearing deposits with other banks | 24,578 | 4,172 |
Investment securities available-for-sale | 1,021,786 | 990,129 |
Other investments | 28,404 | 28,404 |
Mortgages held for sale | 19,178 | 11,290 |
Loans and leases, net of reserve for loan and lease losses | 5,004,426 | 4,734,995 |
Liabilities: | ||
Long-term debt and mandatorily redeemable securities | 71,542 | 71,123 |
Subordinated notes | 58,764 | 58,764 |
Carrying or Contract Value | ||
Assets: | ||
Cash and due from banks | 71,910 | 94,907 |
Federal funds sold and interest bearing deposits with other banks | 24,578 | 4,172 |
Investment securities available-for-sale | 1,021,786 | 990,129 |
Other investments | 28,404 | 28,404 |
Mortgages held for sale | 19,178 | 11,290 |
Loans and leases, net of reserve for loan and lease losses | 5,004,426 | 4,734,995 |
Mortgage servicing rights | 4,141 | 4,283 |
Accrued interest receivable | 21,114 | 18,880 |
Interest rate swaps | 21,397 | 7,124 |
Liabilities: | ||
Deposits | 5,403,845 | 5,122,322 |
Short-term borrowings | 186,009 | 199,344 |
Long-term debt and mandatorily redeemable securities | 71,542 | 71,123 |
Subordinated notes | 58,764 | 58,764 |
Accrued interest payable | 12,903 | 8,950 |
Interest rate swaps | 21,772 | 7,250 |
Off-balance-sheet instruments | 0 | 0 |
Fair Value | ||
Assets: | ||
Cash and due from banks | 71,910 | 94,907 |
Federal funds sold and interest bearing deposits with other banks | 24,578 | 4,172 |
Investment securities available-for-sale | 1,021,786 | 990,129 |
Other investments | 28,404 | 28,404 |
Mortgages held for sale | 19,178 | 11,290 |
Loans and leases, net of reserve for loan and lease losses | 4,994,307 | 4,689,267 |
Mortgage servicing rights | 5,987 | 7,238 |
Accrued interest receivable | 21,114 | 18,880 |
Interest rate swaps | 21,397 | 7,124 |
Liabilities: | ||
Deposits | 5,409,315 | 5,111,711 |
Short-term borrowings | 186,009 | 199,344 |
Long-term debt and mandatorily redeemable securities | 70,547 | 68,751 |
Subordinated notes | 59,978 | 45,874 |
Accrued interest payable | 12,903 | 8,950 |
Interest rate swaps | 21,772 | 7,250 |
Off-balance-sheet instruments | 251 | 259 |
Level 1 | ||
Assets: | ||
Cash and due from banks | 71,910 | 94,907 |
Federal funds sold and interest bearing deposits with other banks | 24,578 | 4,172 |
Investment securities available-for-sale | 34,081 | 33,746 |
Other investments | 28,404 | 28,404 |
Mortgages held for sale | 0 | 0 |
Loans and leases, net of reserve for loan and lease losses | 0 | 0 |
Mortgage servicing rights | 0 | 0 |
Accrued interest receivable | 0 | 0 |
Interest rate swaps | 0 | 0 |
Liabilities: | ||
Deposits | 3,714,182 | 3,654,556 |
Short-term borrowings | 119,188 | 113,734 |
Long-term debt and mandatorily redeemable securities | 0 | 0 |
Subordinated notes | 0 | 0 |
Accrued interest payable | 0 | 0 |
Interest rate swaps | 0 | 0 |
Off-balance-sheet instruments | 0 | 0 |
Level 2 | ||
Assets: | ||
Cash and due from banks | 0 | 0 |
Federal funds sold and interest bearing deposits with other banks | 0 | 0 |
Investment securities available-for-sale | 982,644 | 955,358 |
Other investments | 0 | 0 |
Mortgages held for sale | 19,178 | 11,290 |
Loans and leases, net of reserve for loan and lease losses | 0 | 0 |
Mortgage servicing rights | 0 | 0 |
Accrued interest receivable | 21,114 | 18,880 |
Interest rate swaps | 21,397 | 7,124 |
Liabilities: | ||
Deposits | 1,695,133 | 1,457,155 |
Short-term borrowings | 66,821 | 85,610 |
Long-term debt and mandatorily redeemable securities | 70,547 | 68,751 |
Subordinated notes | 59,978 | 45,874 |
Accrued interest payable | 12,903 | 8,950 |
Interest rate swaps | 21,772 | 7,250 |
Off-balance-sheet instruments | 251 | 259 |
Level 3 | ||
Assets: | ||
Cash and due from banks | 0 | 0 |
Federal funds sold and interest bearing deposits with other banks | 0 | 0 |
Investment securities available-for-sale | 5,061 | 1,025 |
Other investments | 0 | 0 |
Mortgages held for sale | 0 | 0 |
Loans and leases, net of reserve for loan and lease losses | 4,994,307 | 4,689,267 |
Mortgage servicing rights | 5,987 | 7,238 |
Accrued interest receivable | 0 | 0 |
Interest rate swaps | 0 | 0 |
Liabilities: | ||
Deposits | 0 | 0 |
Short-term borrowings | 0 | 0 |
Long-term debt and mandatorily redeemable securities | 0 | 0 |
Subordinated notes | 0 | 0 |
Accrued interest payable | 0 | 0 |
Interest rate swaps | 0 | 0 |
Off-balance-sheet instruments | $ 0 | $ 0 |