[X] | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2018. | |
[ ] | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______ to ______ | |
Commission file number 001-15373 |
Large accelerated filer [X] | Accelerated filer [ ] | |||
Non-accelerated filer [ ] | (Do not check if a smaller reporting company) | Smaller reporting company [ ] | ||
Emerging growth company [ ] |
Page | ||
PART I - FINANCIAL INFORMATION | ||
Item 1. Financial Statements | ||
Condensed Consolidated Balance Sheets (Unaudited) | ||
Condensed Consolidated Statements of Operations (Unaudited) | ||
Condensed Consolidated Statements of Comprehensive Income (Unaudited) | ||
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) | ||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||
Notes to Condensed Consolidated Financial Statements (Unaudited) | ||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | ||
Item 4. Controls and Procedures | ||
PART II - OTHER INFORMATION | ||
Item 1. Legal Proceedings | ||
Item 1A. Risk Factors | ||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | ||
Item 6. Exhibits | ||
Signatures | ||
(in thousands, except share and per share data) | June 30, 2018 | December 31, 2017 | |||||
Assets | |||||||
Cash and due from banks | $ | 91,851 | $ | 91,084 | |||
Federal funds sold | 1,445 | 1,223 | |||||
Interest-bearing deposits (including $1,295 and $1,365 pledged as collateral, respectively) | 83,961 | 61,016 | |||||
Total cash and cash equivalents | 177,257 | 153,323 | |||||
Interest-bearing deposits greater than 90 days | 2,180 | 2,645 | |||||
Securities available for sale | 651,140 | 641,382 | |||||
Securities held to maturity | 68,931 | 73,749 | |||||
Loans held for sale | 1,388 | 3,155 | |||||
Loans | 4,275,761 | 4,097,050 | |||||
Less: Allowance for loan losses | 44,370 | 42,577 | |||||
Total loans, net | 4,231,391 | 4,054,473 | |||||
Other real estate | 454 | 498 | |||||
Other investments, at cost | 36,132 | 26,661 | |||||
Fixed assets, net | 32,814 | 32,618 | |||||
Accrued interest receivable | 17,808 | 14,069 | |||||
State tax credits held for sale (including $299 and $400 carried at fair value, respectively) | 46,481 | 43,468 | |||||
Goodwill | 117,345 | 117,345 | |||||
Intangible assets, net | 9,768 | 11,056 | |||||
Other assets | 116,835 | 114,783 | |||||
Total assets | $ | 5,509,924 | $ | 5,289,225 | |||
Liabilities and Shareholders' Equity | |||||||
Demand deposits | $ | 1,050,969 | $ | 1,123,907 | |||
Interest-bearing transaction accounts | 754,819 | 915,653 | |||||
Money market accounts | 1,558,923 | 1,342,931 | |||||
Savings | 209,870 | 195,150 | |||||
Certificates of deposit: | |||||||
Brokered | 224,192 | 115,306 | |||||
Other | 449,139 | 463,467 | |||||
Total deposits | 4,247,912 | 4,156,414 | |||||
Subordinated debentures and notes (net of debt issuance cost of $1,071 and $1,136, respectively) | 118,131 | 118,105 | |||||
Federal Home Loan Bank advances | 361,534 | 172,743 | |||||
Other borrowings | 167,216 | 253,674 | |||||
Accrued interest payable | 1,884 | 1,730 | |||||
Other liabilities | 39,163 | 37,986 | |||||
Total liabilities | 4,935,840 | 4,740,652 | |||||
Shareholders' equity: | |||||||
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 0 shares issued and outstanding | — | — | |||||
Common stock, $0.01 par value; 30,000,000 shares authorized; 23,900,669 and 23,781,112 shares issued, respectively | 239 | 238 | |||||
Treasury stock, at cost; 756,588 and 691,673 shares, respectively | (26,326 | ) | (23,268 | ) | |||
Additional paid in capital | 348,471 | 350,061 | |||||
Retained earnings | 264,280 | 225,360 | |||||
Accumulated other comprehensive loss | (12,580 | ) | (3,818 | ) | |||
Total shareholders' equity | 574,084 | 548,573 | |||||
Total liabilities and shareholders' equity | $ | 5,509,924 | $ | 5,289,225 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in thousands, except per share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Interest income: | |||||||||||||||
Interest and fees on loans | $ | 52,948 | $ | 47,307 | $ | 103,398 | $ | 87,233 | |||||||
Interest on debt securities: | |||||||||||||||
Taxable | 4,228 | 3,585 | 8,215 | 6,815 | |||||||||||
Nontaxable | 271 | 304 | 553 | 690 | |||||||||||
Interest on interest-bearing deposits | 231 | 234 | 471 | 364 | |||||||||||
Dividends on equity securities | 201 | 112 | 406 | 180 | |||||||||||
Total interest income | 57,879 | 51,542 | 113,043 | 95,282 | |||||||||||
Interest expense: | |||||||||||||||
Interest-bearing transaction accounts | 817 | 523 | 1,623 | 1,198 | |||||||||||
Money market accounts | 4,445 | 1,938 | 7,798 | 3,431 | |||||||||||
Savings accounts | 147 | 125 | 272 | 207 | |||||||||||
Certificates of deposit | 2,338 | 1,373 | 4,237 | 2,588 | |||||||||||
Subordinated debentures and notes | 1,454 | 1,288 | 2,822 | 2,452 | |||||||||||
Federal Home Loan Bank advances | 1,448 | 522 | 2,706 | 852 | |||||||||||
Notes payable and other borrowings | 182 | 140 | 366 | 279 | |||||||||||
Total interest expense | 10,831 | 5,909 | 19,824 | 11,007 | |||||||||||
Net interest income | 47,048 | 45,633 | 93,219 | 84,275 | |||||||||||
Provision for portfolio loan losses | 2,385 | 3,623 | 4,256 | 5,156 | |||||||||||
Provision reversal for purchased credit impaired loan losses | (1,995 | ) | (207 | ) | (1,995 | ) | (355 | ) | |||||||
Net interest income after provision for loan losses | 46,658 | 42,217 | 90,958 | 79,474 | |||||||||||
Noninterest income: | |||||||||||||||
Service charges on deposit accounts | 3,007 | 2,816 | 5,858 | 5,326 | |||||||||||
Wealth management revenue | 2,141 | 2,054 | 4,255 | 3,887 | |||||||||||
Card services revenue | 1,650 | 1,392 | 3,166 | 2,429 | |||||||||||
Gain on sale of other real estate | — | 17 | — | 17 | |||||||||||
Gain on state tax credits, net | 64 | 9 | 316 | 255 | |||||||||||
Gain on sale of investment securities | — | — | 9 | — | |||||||||||
Miscellaneous income | 2,831 | 1,646 | 5,631 | 2,996 | |||||||||||
Total noninterest income | 9,693 | 7,934 | 19,235 | 14,910 | |||||||||||
Noninterest expense: | |||||||||||||||
Employee compensation and benefits | 16,582 | 15,798 | 33,073 | 31,006 | |||||||||||
Occupancy | 2,342 | 2,265 | 4,748 | 4,194 | |||||||||||
Data processing | 1,533 | 1,806 | 3,000 | 3,439 | |||||||||||
Professional fees | 747 | 1,079 | 1,596 | 1,916 | |||||||||||
FDIC and other insurance | 920 | 650 | 1,837 | 1,474 | |||||||||||
Loan legal and other real estate expense | (23 | ) | 613 | 276 | 958 | ||||||||||
Merger related expenses | — | 4,480 | — | 6,147 | |||||||||||
Other | 7,118 | 5,960 | 13,832 | 10,253 | |||||||||||
Total noninterest expense | 29,219 | 32,651 | 58,362 | 59,387 | |||||||||||
Income before income tax expense | 27,132 | 17,500 | 51,831 | 34,997 | |||||||||||
Income tax expense | 4,881 | 5,545 | 8,659 | 10,651 | |||||||||||
Net income | $ | 22,251 | $ | 11,955 | $ | 43,172 | $ | 24,346 | |||||||
Earnings per common share | |||||||||||||||
Basic | $ | 0.96 | $ | 0.51 | $ | 1.87 | $ | 1.07 | |||||||
Diluted | 0.95 | 0.50 | 1.85 | 1.06 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net income | $ | 22,251 | $ | 11,955 | $ | 43,172 | $ | 24,346 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Unrealized gains (losses) on investment securities arising during the period, net of income tax expense (benefit) for three months of $(333) and $921, and for six months of $($2,598) and $1,268, respectively | (1,017 | ) | 1,502 | (7,921 | ) | 2,070 | |||||||||
Less: Reclassification adjustment for realized gains on sale of securities available for sale included in net income, net of income tax expense for the six months of $2 and $0, respectively | — | — | (7 | ) | — | ||||||||||
Total other comprehensive income (loss) | (1,017 | ) | 1,502 | (7,928 | ) | 2,070 | |||||||||
Total comprehensive income | $ | 21,234 | $ | 13,457 | $ | 35,244 | $ | 26,416 |
(in thousands, except per share data) | Common Stock | Treasury Stock | Additional paid in capital | Retained earnings | Accumulated other comprehensive income (loss) | Total shareholders' equity | ||||||||||||||||||
Balance December 31, 2017 | $ | 238 | $ | (23,268 | ) | $ | 350,061 | $ | 225,360 | $ | (3,818 | ) | $ | 548,573 | ||||||||||
Net income | — | — | — | 43,172 | — | 43,172 | ||||||||||||||||||
Other comprehensive income | — | — | — | — | (7,928 | ) | (7,928 | ) | ||||||||||||||||
Total comprehensive income | — | — | — | 43,172 | (7,928 | ) | 35,244 | |||||||||||||||||
Cash dividends paid on common shares, $0.22 per share | — | — | — | (5,086 | ) | — | (5,086 | ) | ||||||||||||||||
Repurchase of common shares | — | (3,058 | ) | — | — | — | (3,058 | ) | ||||||||||||||||
Issuance under equity compensation plans, 119,557 shares, net | 1 | — | (3,221 | ) | — | — | (3,220 | ) | ||||||||||||||||
Share-based compensation | — | — | 1,631 | — | — | 1,631 | ||||||||||||||||||
Reclassification adjustments for change in accounting policies | — | — | — | — | 834 | (834 | ) | — | ||||||||||||||||
Balance June 30, 2018 | $ | 239 | $ | (26,326 | ) | $ | 348,471 | $ | 264,280 | $ | (12,580 | ) | $ | 574,084 | ||||||||||
(in thousands, except per share data) | Common Stock | Treasury Stock | Additional paid in capital | Retained earnings | Accumulated other comprehensive income (loss) | Total shareholders' equity | ||||||||||||||||||
Balance December 31, 2016 | $ | 203 | $ | (6,632 | ) | $ | 213,078 | $ | 182,190 | $ | (1,741 | ) | $ | 387,098 | ||||||||||
Net income | — | — | — | 24,346 | — | 24,346 | ||||||||||||||||||
Other comprehensive income | — | — | — | — | 2,070 | 2,070 | ||||||||||||||||||
Total comprehensive income | — | — | — | 24,346 | 2,070 | 26,416 | ||||||||||||||||||
Cash dividends paid on common shares, $0.22 per share | — | — | — | (5,163 | ) | — | (5,163 | ) | ||||||||||||||||
Issuance under equity compensation plans, 140,531 shares, net | 1 | — | (2,904 | ) | — | — | (2,903 | ) | ||||||||||||||||
Share-based compensation | — | — | 1,576 | — | — | 1,576 | ||||||||||||||||||
Shares issued in connection with acquisition of Jefferson County Bancshares, Inc., 3,299,865 shares, net | 33 | — | 141,696 | — | — | 141,729 | ||||||||||||||||||
Reclassification for the adoption of share-based payment guidance | — | — | (5,229 | ) | 5,229 | — | — | |||||||||||||||||
Balance June 30, 2017 | $ | 237 | $ | (6,632 | ) | $ | 348,217 | $ | 206,602 | $ | 329 | $ | 548,753 |
Six months ended June 30, | |||||||
(in thousands, except share data) | 2018 | 2017 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 43,172 | $ | 24,346 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Depreciation | 1,707 | 1,583 | |||||
Provision for loan losses | 2,261 | 4,800 | |||||
Deferred income taxes | 3,156 | 4,166 | |||||
Net amortization of debt securities | 956 | 1,708 | |||||
Amortization of intangible assets | 1,288 | 1,207 | |||||
Gain on sale of investment securities | (9 | ) | — | ||||
Mortgage loans originated for sale | (25,064 | ) | (80,697 | ) | |||
Proceeds from mortgage loans sold | 27,070 | 86,127 | |||||
Gain on sale of other real estate | — | (17 | ) | ||||
Gain on state tax credits, net | (316 | ) | (255 | ) | |||
Share-based compensation | 1,631 | 1,576 | |||||
Net accretion of loan discount | (793 | ) | (3,001 | ) | |||
Changes in: | |||||||
Accrued interest receivable | (3,739 | ) | 1,988 | ||||
Accrued interest payable | 154 | (299 | ) | ||||
Other assets | (809 | ) | 483 | ||||
Other liabilities | 1,203 | (51,359 | ) | ||||
Net cash provided by (used in) operating activities | 51,868 | (7,644 | ) | ||||
Cash flows from investing activities: | |||||||
Proceeds from JCB acquisition, net of cash purchase price | — | 4,456 | |||||
Net increase in loans | (178,386 | ) | (65,592 | ) | |||
Proceeds from the sale of securities, available for sale | 1,451 | 143,554 | |||||
Proceeds from the paydown or maturity of securities, available for sale | 40,743 | 107,603 | |||||
Proceeds from the paydown or maturity of securities, held to maturity | 3,239 | 2,722 | |||||
Proceeds from the redemption of other investments | 22,728 | 23,390 | |||||
Proceeds from the sale of state tax credits held for sale | 1,940 | 4,286 | |||||
Proceeds from the sale of other real estate | — | 2,513 | |||||
Payments for the purchase/origination of: | |||||||
Available for sale debt securities | (62,055 | ) | (263,453 | ) | |||
Other investments | (33,719 | ) | (30,977 | ) | |||
State tax credits held for sale | (4,636 | ) | — | ||||
Fixed assets, net | (1,915 | ) | (1,140 | ) | |||
Net cash used in investing activities | (210,610 | ) | (72,638 | ) | |||
Cash flows from financing activities: | |||||||
Net decrease in noninterest-bearing deposit accounts | (72,938 | ) | (8,162 | ) | |||
Net increase (decrease) in interest-bearing deposit accounts | 164,436 | (69,117 | ) | ||||
Proceeds from Federal Home Loan Bank advances | 907,500 | 1,141,181 | |||||
Repayments of Federal Home Loan Bank advances | (718,500 | ) | (940,681 | ) | |||
Net decrease in other borrowings | (86,458 | ) | (115,911 | ) | |||
Cash dividends paid on common stock | (5,086 | ) | (5,163 | ) | |||
Payments for the repurchase of common stock | (3,058 | ) | — | ||||
Payments for the issuance of equity instruments, net | (3,220 | ) | (2,903 | ) | |||
Net cash provided by (used in) financing activities | 182,676 | (756 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 23,934 | (81,038 | ) | ||||
Cash and cash equivalents, beginning of period | 153,323 | 198,802 | |||||
Cash and cash equivalents, end of period | $ | 177,257 | $ | 117,764 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid during the period for: | |||||||
Interest | $ | 19,670 | $ | 10,653 | |||
Income taxes | 780 | 6,386 | |||||
Noncash transactions: | |||||||
Transfer to other real estate owned in settlement of loans | $ | — | $ | 289 | |||
Common shares issued in connection with JCB acquisition | — | 141,729 |
• | Service charges on deposit accounts - represents fees generated from a variety of deposit products and services provided to customers under a day-to-day contract. These fees are recognized on a daily or monthly basis. |
• | Wealth management revenue - represents monthly fees earned from directing, holding, and managing customers’ assets. Revenue is recognized over regular intervals, either monthly or quarterly. |
• | Card services revenue - represents revenue earned from merchant, debit and credit cards as incurred and includes a contra revenue account for rebates. |
• | Gain on sale of other real estate - represents income recognized at delivery of control of a property at the time of a real estate closing. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in thousands, except per share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net income as reported | $ | 22,251 | $ | 11,955 | $ | 43,172 | $ | 24,346 | |||||||
Weighted average common shares outstanding | 23,124 | 23,475 | 23,119 | 22,706 | |||||||||||
Additional dilutive common stock equivalents | 194 | 257 | 213 | 314 | |||||||||||
Weighted average diluted common shares outstanding | 23,318 | 23,732 | 23,332 | 23,020 | |||||||||||
Basic earnings per common share: | $ | 0.96 | $ | 0.51 | $ | 1.87 | $ | 1.07 | |||||||
Diluted earnings per common share: | $ | 0.95 | $ | 0.50 | $ | 1.85 | $ | 1.06 |
June 30, 2018 | |||||||||||||||
(in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Available for sale securities: | |||||||||||||||
Obligations of U.S. Government-sponsored enterprises | $ | 99,902 | $ | — | $ | (1,858 | ) | $ | 98,044 | ||||||
Obligations of states and political subdivisions | 31,750 | 348 | (154 | ) | 31,944 | ||||||||||
Agency mortgage-backed securities | 525,810 | 369 | (14,890 | ) | 511,289 | ||||||||||
U.S. Treasury bills | 9,957 | — | (94 | ) | 9,863 | ||||||||||
Total securities available for sale | $ | 667,419 | $ | 717 | $ | (16,996 | ) | $ | 651,140 | ||||||
Held to maturity securities: | |||||||||||||||
Obligations of states and political subdivisions | $ | 12,537 | $ | 7 | $ | (240 | ) | $ | 12,304 | ||||||
Agency mortgage-backed securities | 56,394 | — | (1,789 | ) | 54,605 | ||||||||||
Total securities held to maturity | $ | 68,931 | $ | 7 | $ | (2,029 | ) | $ | 66,909 |
December 31, 2017 | |||||||||||||||
(in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Available for sale securities: | |||||||||||||||
Obligations of U.S. Government-sponsored enterprises | $ | 99,878 | $ | 6 | $ | (660 | ) | $ | 99,224 | ||||||
Obligations of states and political subdivisions | 34,181 | 674 | (213 | ) | 34,642 | ||||||||||
Agency mortgage-backed securities | 513,082 | 727 | (6,293 | ) | 507,516 | ||||||||||
Total securities available for sale | $ | 647,141 | $ | 1,407 | $ | (7,166 | ) | $ | 641,382 | ||||||
Held to maturity securities: | |||||||||||||||
Obligations of states and political subdivisions | $ | 14,031 | $ | 69 | $ | (46 | ) | $ | 14,054 | ||||||
Agency mortgage-backed securities | 59,718 | 16 | (330 | ) | 59,404 | ||||||||||
Total securities held to maturity | $ | 73,749 | $ | 85 | $ | (376 | ) | $ | 73,458 |
Available for sale | Held to maturity | ||||||||||||||
(in thousands) | Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | |||||||||||
Due in one year or less | $ | 2,675 | $ | 2,690 | $ | — | $ | — | |||||||
Due after one year through five years | 121,187 | 119,369 | 867 | 866 | |||||||||||
Due after five years through ten years | 12,703 | 12,804 | 10,804 | 10,603 | |||||||||||
Due after ten years | 5,044 | 4,988 | 866 | 835 | |||||||||||
Agency mortgage-backed securities | 525,810 | 511,289 | 56,394 | 54,605 | |||||||||||
$ | 667,419 | $ | 651,140 | $ | 68,931 | $ | 66,909 |
June 30, 2018 | |||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
(in thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Obligations of U.S. Government-sponsored enterprises | $ | 98,044 | $ | 1,858 | $ | — | $ | — | $ | 98,044 | $ | 1,858 | |||||||||||
Obligations of states and political subdivisions | 24,883 | 369 | 364 | 25 | 25,247 | 394 | |||||||||||||||||
Agency mortgage-backed securities | 392,242 | 10,617 | 134,128 | 6,062 | 526,370 | 16,679 | |||||||||||||||||
U.S. Treasury bills | 9,863 | 94 | — | — | 9,863 | 94 | |||||||||||||||||
$ | 525,032 | $ | 12,938 | $ | 134,492 | $ | 6,087 | $ | 659,524 | $ | 19,025 | ||||||||||||
December 31, 2017 | |||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
(in thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Obligations of U.S. Government-sponsored enterprises | $ | 89,309 | $ | 660 | $ | — | $ | — | $ | 89,309 | $ | 660 | |||||||||||
Obligations of states and political subdivisions | 13,951 | 259 | — | — | 13,951 | 259 | |||||||||||||||||
Agency mortgage-backed securities | 469,655 | 6,034 | 12,229 | 589 | 481,884 | 6,623 | |||||||||||||||||
$ | 572,915 | $ | 6,953 | $ | 12,229 | $ | 589 | $ | 585,144 | $ | 7,542 |
(in thousands) | June 30, 2018 | December 31, 2017 | |||||
Loans accounted for at amortized cost | $ | 4,214,996 | $ | 4,022,896 | |||
Loans accounted for as PCI | 60,765 | 74,154 | |||||
Total loans | $ | 4,275,761 | $ | 4,097,050 |
(in thousands) | June 30, 2018 | December 31, 2017 | |||||
Commercial and industrial | $ | 2,038,040 | $ | 1,918,720 | |||
Real estate: | |||||||
Commercial - investor owned | 819,427 | 769,275 | |||||
Commercial - owner occupied | 593,138 | 554,589 | |||||
Construction and land development | 300,117 | 303,091 | |||||
Residential | 318,055 | 341,312 | |||||
Total real estate loans | 2,030,737 | 1,968,267 | |||||
Consumer and other | 147,304 | 137,234 | |||||
Loans, before unearned loan fees | 4,216,081 | 4,024,221 | |||||
Unearned loan fees, net | (1,085 | ) | (1,325 | ) | |||
Loans, including unearned loan fees | $ | 4,214,996 | $ | 4,022,896 |
(in thousands) | Commercial and industrial | CRE - investor owned | CRE - owner occupied | Construction and land development | Residential real estate | Consumer and other | Total | |||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||
Balance at December 31, 2017 | $ | 26,406 | $ | 3,890 | $ | 3,308 | $ | 1,487 | $ | 2,237 | $ | 838 | $ | 38,166 | ||||||||||||||
Provision (provision reversal) for loan losses | 780 | 648 | 190 | 35 | 259 | (41 | ) | 1,871 | ||||||||||||||||||||
Losses charged off | (732 | ) | — | — | — | (254 | ) | (49 | ) | (1,035 | ) | |||||||||||||||||
Recoveries | 956 | 8 | 4 | 206 | 73 | 14 | 1,261 | |||||||||||||||||||||
Balance at March 31, 2018 | $ | 27,410 | $ | 4,546 | $ | 3,502 | $ | 1,728 | $ | 2,315 | $ | 762 | $ | 40,263 | ||||||||||||||
Provision (provision reversal) for loan losses | 2,852 | 5 | 340 | (206 | ) | (573 | ) | (33 | ) | 2,385 | ||||||||||||||||||
Losses charged off | (956 | ) | — | — | — | (38 | ) | (33 | ) | (1,027 | ) | |||||||||||||||||
Recoveries | 118 | 10 | 3 | 168 | 59 | 28 | 386 | |||||||||||||||||||||
Balance at June 30, 2018 | $ | 29,424 | $ | 4,561 | $ | 3,845 | $ | 1,690 | $ | 1,763 | $ | 724 | — | $ | 42,007 |
(in thousands) | Commercial and industrial | CRE - investor owned | CRE - owner occupied | Construction and land development | Residential real estate | Consumer and other | Total | ||||||||||||||||||||
Balance June 30, 2018 | |||||||||||||||||||||||||||
Allowance for loan losses - Ending balance: | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 3,667 | $ | — | $ | 219 | $ | — | $ | — | $ | — | $ | 3,886 | |||||||||||||
Collectively evaluated for impairment | 25,757 | 4,561 | 3,626 | 1,690 | 1,763 | 724 | 38,121 | ||||||||||||||||||||
Total | $ | 29,424 | $ | 4,561 | $ | 3,845 | $ | 1,690 | $ | 1,763 | $ | 724 | $ | 42,007 | |||||||||||||
Loans - Ending balance: | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 11,226 | $ | 410 | $ | 2,150 | $ | 435 | $ | 1,669 | $ | 318 | $ | 16,208 | |||||||||||||
Collectively evaluated for impairment | 2,026,814 | 819,017 | 590,988 | 299,682 | 316,386 | 145,901 | 4,198,788 | ||||||||||||||||||||
Total | $ | 2,038,040 | $ | 819,427 | $ | 593,138 | $ | 300,117 | $ | 318,055 | $ | 146,219 | $ | 4,214,996 | |||||||||||||
Balance December 31, 2017 | |||||||||||||||||||||||||||
Allowance for loan losses - Ending balance: | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 2,508 | $ | — | $ | 71 | $ | — | $ | — | $ | — | $ | 2,579 | |||||||||||||
Collectively evaluated for impairment | 23,898 | 3,890 | 3,237 | 1,487 | 2,237 | 838 | 35,587 | ||||||||||||||||||||
Total | $ | 26,406 | $ | 3,890 | $ | 3,308 | $ | 1,487 | $ | 2,237 | $ | 838 | $ | 38,166 | |||||||||||||
Loans - Ending balance: | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 12,665 | $ | 422 | $ | 1,975 | $ | 136 | $ | 1,602 | $ | 375 | $ | 17,175 | |||||||||||||
Collectively evaluated for impairment | 1,906,055 | 768,853 | 552,614 | 302,955 | 339,710 | 135,534 | 4,005,721 | ||||||||||||||||||||
Total | $ | 1,918,720 | $ | 769,275 | $ | 554,589 | $ | 303,091 | $ | 341,312 | $ | 135,909 | $ | 4,022,896 |
June 30, 2018 | |||||||||||||||||||||||
(in thousands) | Unpaid Contractual Principal Balance | Recorded Investment With No Allowance | Recorded Investment With Allowance | Total Recorded Investment | Related Allowance | Average Recorded Investment | |||||||||||||||||
Commercial and industrial | $ | 20,915 | $ | 1,900 | $ | 9,326 | $ | 11,226 | $ | 3,667 | $ | 12,591 | |||||||||||
Real estate: | |||||||||||||||||||||||
Commercial - investor owned | 557 | 410 | — | 410 | — | 415 | |||||||||||||||||
Commercial - owner occupied | 751 | 259 | 484 | 743 | 219 | 750 | |||||||||||||||||
Construction and land development | 444 | 435 | — | 435 | — | 494 | |||||||||||||||||
Residential | 1,835 | 1,669 | — | 1,669 | — | 1,688 | |||||||||||||||||
Consumer and other | 332 | 318 | — | 318 | — | 333 | |||||||||||||||||
Total | $ | 24,834 | $ | 4,991 | $ | 9,810 | $ | 14,801 | $ | 3,886 | $ | 16,271 |
December 31, 2017 | |||||||||||||||||||||||
(in thousands) | Unpaid Contractual Principal Balance | Recorded Investment With No Allowance | Recorded Investment With Allowance | Total Recorded Investment | Related Allowance | Average Recorded Investment | |||||||||||||||||
Commercial and industrial | $ | 20,750 | $ | 2,321 | $ | 10,344 | $ | 12,665 | $ | 2,508 | $ | 16,270 | |||||||||||
Real estate: | |||||||||||||||||||||||
Commercial - investor owned | 560 | 422 | — | 422 | — | 521 | |||||||||||||||||
Commercial - owner occupied | 487 | — | 487 | 487 | 71 | 490 | |||||||||||||||||
Construction and land development | 441 | 136 | — | 136 | — | 331 | |||||||||||||||||
Residential | 1,730 | 1,602 | — | 1,602 | — | 1,735 | |||||||||||||||||
Consumer and other | 375 | 375 | — | 375 | — | 375 | |||||||||||||||||
Total | $ | 24,343 | $ | 4,856 | $ | 10,831 | $ | 15,687 | $ | 2,579 | $ | 19,722 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Total interest income that would have been recognized under original terms | $ | 467 | $ | 340 | $ | 1,001 | $ | 655 | |||||||
Total cash received and recognized as interest income on non-accrual loans | 78 | 16 | 89 | 39 | |||||||||||
Total interest income recognized on accruing, impaired loans | 13 | 14 | 23 | 47 |
June 30, 2018 | |||||||||||
(in thousands) | Non-accrual | Restructured, not on non-accrual | Total | ||||||||
Commercial and industrial | $ | 10,593 | $ | 633 | $ | 11,226 | |||||
Real estate: | |||||||||||
Commercial - investor owned | 410 | — | 410 | ||||||||
Commercial - owner occupied | 743 | — | 743 | ||||||||
Construction and land development | 435 | — | 435 | ||||||||
Residential | 1,669 | — | 1,669 | ||||||||
Consumer and other | 318 | — | 318 | ||||||||
Total | $ | 14,168 | $ | 633 | $ | 14,801 |
December 31, 2017 | |||||||||||
(in thousands) | Non-accrual | Restructured, not on non-accrual | Total | ||||||||
Commercial and industrial | $ | 11,946 | $ | 719 | $ | 12,665 | |||||
Real estate: | |||||||||||
Commercial - investor owned | 422 | — | 422 | ||||||||
Commercial - owner occupied | 487 | — | 487 | ||||||||
Construction and land development | 136 | — | 136 | ||||||||
Residential | 1,602 | — | 1,602 | ||||||||
Consumer and other | 375 | — | 375 | ||||||||
Total | $ | 14,968 | $ | 719 | $ | 15,687 |
June 30, 2018 | |||||||||||||||||||
(in thousands) | 30-89 Days Past Due | 90 or More Days Past Due | Total Past Due | Current | Total | ||||||||||||||
Commercial and industrial | $ | 2,180 | $ | 8,070 | $ | 10,250 | $ | 2,027,790 | $ | 2,038,040 | |||||||||
Real estate: | |||||||||||||||||||
Commercial - investor owned | 1,141 | — | 1,141 | 818,286 | 819,427 | ||||||||||||||
Commercial - owner occupied | 958 | 484 | 1,442 | 591,696 | 593,138 | ||||||||||||||
Construction and land development | — | — | — | 300,117 | 300,117 | ||||||||||||||
Residential | 895 | 1,031 | 1,926 | 316,129 | 318,055 | ||||||||||||||
Consumer and other | — | — | — | 146,219 | 146,219 | ||||||||||||||
Total | $ | 5,174 | $ | 9,585 | $ | 14,759 | $ | 4,200,237 | $ | 4,214,996 |
December 31, 2017 | |||||||||||||||||||
(in thousands) | 30-89 Days Past Due | 90 or More Days Past Due | Total Past Due | Current | Total | ||||||||||||||
Commercial and industrial | $ | 7,882 | $ | 1,770 | $ | 9,652 | $ | 1,909,068 | $ | 1,918,720 | |||||||||
Real estate: | |||||||||||||||||||
Commercial - investor owned | 934 | — | 934 | 768,341 | 769,275 | ||||||||||||||
Commercial - owner occupied | — | — | — | 554,589 | 554,589 | ||||||||||||||
Construction and land development | 76 | — | 76 | 303,015 | 303,091 | ||||||||||||||
Residential | 1,529 | 945 | 2,474 | 338,838 | 341,312 | ||||||||||||||
Consumer and other | 407 | — | 407 | 135,502 | 135,909 | ||||||||||||||
Total | $ | 10,828 | $ | 2,715 | $ | 13,543 | $ | 4,009,353 | $ | 4,022,896 |
• | Grades 1, 2, and 3 – Includes loans to borrowers with a continuous record of strong earnings, sound balance sheet condition and capitalization, ample liquidity with solid cash flow, and whose management team has experience and depth within their industry. |
• | Grade 4 – Includes loans to borrowers with positive trends in profitability, satisfactory capitalization and balance sheet condition, and sufficient liquidity and cash flow. |
• | Grade 5 – Includes loans to borrowers that may display fluctuating trends in sales, profitability, capitalization, liquidity, and cash flow. |
• | Grade 6 – Includes loans to borrowers where an adverse change or perceived weakness has occurred, but may be correctable in the near future. Alternatively, this rating category may also include circumstances where the borrower is starting to reverse a negative trend or condition, or has recently been upgraded from a 7, 8, or 9 rating. |
• | Grade 7 – Watch credits are borrowers that have experienced financial setback of a nature that is not determined to be severe or influence ‘ongoing concern’ expectations. Although possible, no loss is anticipated, due to strong collateral and/or guarantor support. |
• | Grade 8 – Substandard credits will include those borrowers characterized by significant losses and sustained downward trends in balance sheet condition, liquidity, and cash flow. Repayment reliance may have shifted to secondary sources. Collateral exposure may exist and additional reserves may be warranted. |
• | Grade 9 – Doubtful credits include borrowers that may show deteriorating trends that are unlikely to be corrected. Collateral values may appear insufficient for full recovery, therefore requiring a partial charge-off, or debt renegotiation with the borrower. The borrower may have declared bankruptcy or bankruptcy is likely in the near term. All doubtful rated credits will be on non-accrual. |
June 30, 2018 | |||||||||||||||
(in thousands) | Pass (1-6) | Watch (7) | Substandard (8) | Total | |||||||||||
Commercial and industrial | $ | 1,853,440 | $ | 128,087 | $ | 56,513 | $ | 2,038,040 | |||||||
Real estate: | |||||||||||||||
Commercial - investor owned | 785,920 | 28,442 | 5,065 | 819,427 | |||||||||||
Commercial - owner occupied | 537,740 | 49,926 | 5,472 | 593,138 | |||||||||||
Construction and land development | 289,263 | 10,301 | 553 | 300,117 | |||||||||||
Residential | 307,727 | 2,859 | 7,469 | 318,055 | |||||||||||
Consumer and other | 145,289 | 612 | 318 | 146,219 | |||||||||||
Total | $ | 3,919,379 | $ | 220,227 | $ | 75,390 | $ | 4,214,996 |
December 31, 2017 | |||||||||||||||
(in thousands) | Pass (1-6) | Watch (7) | Substandard (8) | Total | |||||||||||
Commercial and industrial | $ | 1,769,102 | $ | 94,002 | $ | 55,616 | $ | 1,918,720 | |||||||
Real estate: | |||||||||||||||
Commercial - investor owned | 754,010 | 10,840 | 4,425 | 769,275 | |||||||||||
Commercial - owner occupied | 514,616 | 34,440 | 5,533 | 554,589 | |||||||||||
Construction and land development | 292,766 | 9,983 | 342 | 303,091 | |||||||||||
Residential | 329,742 | 3,648 | 7,922 | 341,312 | |||||||||||
Consumer and other | 134,704 | 10 | 1,195 | 135,909 | |||||||||||
Total | $ | 3,794,940 | $ | 152,923 | $ | 75,033 | $ | 4,022,896 |
June 30, 2018 | December 31, 2017 | ||||||||
(in thousands) | Weighted- Average Risk Rating1 | Recorded Investment PCI Loans | Weighted- Average Risk Rating1 | Recorded Investment PCI Loans | |||||
Commercial and industrial | 6.47 | $ | 2,711 | 6.38 | $ | 3,212 | |||
Real estate: | |||||||||
Commercial - investor owned | 7.37 | 30,539 | 7.36 | 42,887 | |||||
Commercial - owner occupied | 7.02 | 13,269 | 6.48 | 11,332 | |||||
Construction and land development | 6.02 | 5,121 | 5.99 | 5,883 | |||||
Residential | 6.05 | 9,102 | 5.99 | 10,781 | |||||
Consumer and other | 5.20 | 23 | 2.84 | 59 | |||||
Total | $ | 60,765 | $ | 74,154 | |||||
1Risk ratings are based on the borrower's contractual obligation, which is not reflective of the purchase discount. |
June 30, 2018 | |||||||||||||||||||
(in thousands) | 30-89 Days Past Due | 90 or More Days Past Due | Total Past Due | Current | Total | ||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | 2,711 | $ | 2,711 | |||||||||
Real estate: | |||||||||||||||||||
Commercial - investor owned | 685 | — | 685 | 29,854 | 30,539 | ||||||||||||||
Commercial - owner occupied | 735 | 728 | 1,463 | 11,806 | 13,269 | ||||||||||||||
Construction and land development | 149 | — | 149 | 4,972 | 5,121 | ||||||||||||||
Residential | 37 | 275 | 312 | 8,790 | 9,102 | ||||||||||||||
Consumer and other | 1 | — | 1 | 22 | 23 | ||||||||||||||
Total | $ | 1,607 | $ | 1,003 | $ | 2,610 | $ | 58,155 | $ | 60,765 |
December 31, 2017 | |||||||||||||||||||
(in thousands) | 30-89 Days Past Due | 90 or More Days Past Due | Total Past Due | Current | Total | ||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | 3,212 | $ | 3,212 | |||||||||
Real estate: | |||||||||||||||||||
Commercial - investor owned | — | 3,034 | 3,034 | 39,853 | 42,887 | ||||||||||||||
Commercial - owner occupied | — | 673 | 673 | 10,659 | 11,332 | ||||||||||||||
Construction and land development | — | — | — | 5,883 | 5,883 | ||||||||||||||
Residential | 328 | 255 | 583 | 10,198 | 10,781 | ||||||||||||||
Consumer and other | — | — | — | 59 | 59 | ||||||||||||||
Total | $ | 328 | $ | 3,962 | $ | 4,290 | $ | 69,864 | $ | 74,154 |
(in thousands) | Contractual Cashflows | Non-accretable Difference | Accretable Yield | Carrying Amount | |||||||||||
Balance December 31, 2017 | $ | 112,710 | $ | 29,005 | $ | 13,964 | $ | 69,741 | |||||||
Principal reductions and interest payments | (22,667 | ) | — | — | (22,667 | ) | |||||||||
Accretion of loan discount | — | — | (3,400 | ) | 3,400 | ||||||||||
Changes in contractual and expected cash flows due to remeasurement | 3,281 | (8,771 | ) | 4,124 | 7,928 | ||||||||||
Balance June 30, 2018 | $ | 93,324 | $ | 20,234 | $ | 14,688 | $ | 58,402 | |||||||
Balance December 31, 2016 | $ | 66,003 | $ | 18,902 | $ | 13,176 | $ | 33,925 | |||||||
Acquisitions | 68,763 | 14,296 | 5,312 | 49,155 | |||||||||||
Principal reductions and interest payments | (10,781 | ) | — | — | (10,781 | ) | |||||||||
Accretion of loan discount | — | — | (3,534 | ) | 3,534 | ||||||||||
Changes in contractual and expected cash flows due to remeasurement | 5,641 | (1,383 | ) | 1,328 | 5,696 | ||||||||||
Reductions due to disposals | (5,070 | ) | (1,317 | ) | (1,398 | ) | (2,355 | ) | |||||||
Balance June 30, 2017 | $ | 124,556 | $ | 30,498 | $ | 14,884 | $ | 79,174 |
(in thousands) | June 30, 2018 | December 31, 2017 | |||||
Commitments to extend credit | $ | 1,272,570 | $ | 1,298,423 | |||
Letters of credit | 54,647 | 73,790 |
Asset Derivatives (Other Assets) | Liability Derivatives (Other Liabilities) | ||||||||||||||||||||||
Notional Amount | Fair Value | Fair Value | |||||||||||||||||||||
(in thousands) | June 30, 2018 | December 31, 2017 | June 30, 2018 | December 31, 2017 | June 30, 2018 | December 31, 2017 | |||||||||||||||||
Non-designated hedging instruments | |||||||||||||||||||||||
Interest rate swap contracts | $ | 404,643 | $ | 394,852 | $ | 4,016 | $ | 2,061 | $ | 4,016 | $ | 2,061 | |||||||||||
Foreign exchange forward contracts | 1,342 | 1,528 | 1,342 | 1,528 | 1,342 | 1,528 |
June 30, 2018 | |||||||||||||||
(in thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | |||||||||||
Assets | |||||||||||||||
Securities available for sale | |||||||||||||||
Obligations of U.S. Government-sponsored enterprises | $ | — | $ | 98,044 | $ | — | $ | 98,044 | |||||||
Obligations of states and political subdivisions | — | 31,944 | — | 31,944 | |||||||||||
Residential mortgage-backed securities | — | 511,289 | — | 511,289 | |||||||||||
U.S. Treasury bills | — | 9,863 | — | 9,863 | |||||||||||
Total securities available for sale | $ | — | $ | 651,140 | $ | — | $ | 651,140 | |||||||
Other investments | 179 | — | — | 179 | |||||||||||
State tax credits held for sale | — | — | 299 | 299 | |||||||||||
Derivative financial instruments | — | 5,358 | — | 5,358 | |||||||||||
Total assets | $ | 179 | $ | 656,498 | $ | 299 | $ | 656,976 | |||||||
Liabilities | |||||||||||||||
Derivative financial instruments | $ | — | $ | 5,358 | $ | — | $ | 5,358 | |||||||
Total liabilities | $ | — | $ | 5,358 | $ | — | $ | 5,358 |
December 31, 2017 | |||||||||||||||
(in thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | |||||||||||
Assets | |||||||||||||||
Securities available for sale | |||||||||||||||
Obligations of U.S. Government-sponsored enterprises | $ | — | $ | 99,224 | $ | — | $ | 99,224 | |||||||
Obligations of states and political subdivisions | — | 34,642 | — | 34,642 | |||||||||||
Residential mortgage-backed securities | — | 507,516 | — | 507,516 | |||||||||||
Total securities available for sale | $ | — | $ | 641,382 | $ | — | $ | 641,382 | |||||||
State tax credits held for sale | — | — | 400 | 400 | |||||||||||
Derivative financial instruments | — | 3,589 | — | 3,589 | |||||||||||
Total assets | $ | — | $ | 644,971 | $ | 400 | $ | 645,371 | |||||||
Liabilities | |||||||||||||||
Derivative financial instruments | $ | — | $ | 3,589 | $ | — | $ | 3,589 | |||||||
Total liabilities | $ | — | $ | 3,589 | $ | — | $ | 3,589 |
• | Securities available for sale. Securities classified as available for sale are reported at fair value utilizing Level 2 and Level 3 inputs. Fair values for Level 2 securities are based upon dealer quotes, market spreads, the U.S. |
• | Other investments. At June 30, 2018, of the $36.1 million of other investments on the condensed consolidated balance sheet, approximately $0.2 million were carried at fair value. The remaining $35.9 million of other investments were accounted for at cost. Other investments reported at fair value represent equity securities with quoted market prices (Level 1). |
• | State tax credits held for sale. At June 30, 2018, of the $46.5 million of state tax credits held for sale on the condensed consolidated balance sheet, approximately $0.3 million were carried at fair value. The remaining $46.2 million of state tax credits were accounted for at cost. |
• | Derivatives. Derivatives are reported at fair value utilizing Level 2 inputs. The Company obtains counterparty quotations to value its interest rate swaps. In addition, the Company validates the counterparty quotations with third party valuation sources. Derivatives with negative fair values are included in Other liabilities in the consolidated balance sheets. Derivatives with positive fair value are included in Other assets in the consolidated balance sheets. |
• | Purchases, sales, issuances and settlements. There were no Level 3 purchases during the quarters ended June 30, 2018 or 2017. |
• | Transfers in and/or out of Level 3. There were no Level 3 transfers during the quarter ended June 30, 2018. There was $3.1 million in Level 3 transfers to Level 2 during the quarter ended June 30, 2017. |
Securities available for sale, at fair value | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Beginning balance | $ | — | $ | 3,093 | $ | — | $ | 3,089 | |||||||
Total gains: | |||||||||||||||
Included in other comprehensive income | — | — | — | 4 | |||||||||||
Purchases, sales, issuances and settlements: | |||||||||||||||
Purchases | — | — | — | — | |||||||||||
Transfer in and/or out of Level 3 | — | (3,093 | ) | — | (3,093 | ) | |||||||||
Ending balance | $ | — | $ | — | $ | — | $ | — | |||||||
Change in unrealized gains relating to assets still held at the reporting date | $ | — | $ | — | $ | — | $ | — |
State tax credits held for sale | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Beginning balance | $ | 350 | $ | 1,458 | $ | 400 | $ | 3,585 | |||||||
Total gains: | |||||||||||||||
Included in earnings | 3 | 9 | 6 | 49 | |||||||||||
Purchases, sales, issuances and settlements: | |||||||||||||||
Sales | (54 | ) | (193 | ) | (107 | ) | (2,360 | ) | |||||||
Ending balance | $ | 299 | $ | 1,274 | $ | 299 | $ | 1,274 | |||||||
Change in unrealized gains (losses) relating to assets still held at the reporting date | $ | (13 | ) | $ | (49 | ) | $ | (26 | ) | $ | (655 | ) |
(1) | (1) | (1) | (1) | ||||||||||||||||||||
(in thousands) | Total Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total losses for the three months ended June 30, 2018 | Total losses for the six months ended June 30, 2018 | |||||||||||||||||
Impaired loans | $ | 1,486 | $ | — | $ | — | $ | 1,486 | $ | 900 | $ | 1,609 | |||||||||||
Other real estate | 454 | — | — | 454 | 1 | 44 | |||||||||||||||||
Total | $ | 1,940 | $ | — | $ | — | $ | 1,940 | $ | 901 | $ | 1,653 |
June 30, 2018 | December 31, 2017 | ||||||||||||||
(in thousands) | Carrying Amount | Estimated fair value | Carrying Amount | Estimated fair value | |||||||||||
Balance sheet assets | |||||||||||||||
Cash and due from banks | $ | 91,851 | $ | 91,851 | $ | 91,084 | $ | 91,084 | |||||||
Federal funds sold | 1,445 | 1,445 | 1,223 | 1,223 | |||||||||||
Interest-bearing deposits | 86,141 | 86,141 | 63,661 | 63,661 | |||||||||||
Securities available for sale | 651,140 | 651,140 | 641,382 | 641,382 | |||||||||||
Securities held to maturity | 68,931 | 66,909 | 73,749 | 73,458 | |||||||||||
Other investments, at cost | 36,132 | 36,132 | 26,661 | 26,661 | |||||||||||
Loans held for sale | 1,388 | 1,388 | 3,155 | 3,155 | |||||||||||
Derivative financial instruments | 5,358 | 5,358 | 3,589 | 3,589 | |||||||||||
Portfolio loans, net | 4,231,391 | 4,252,679 | 4,054,473 | 4,096,741 | |||||||||||
State tax credits, held for sale | 46,481 | 45,069 | 43,468 | 44,271 | |||||||||||
Accrued interest receivable | 17,808 | 17,808 | 14,069 | 14,069 | |||||||||||
Balance sheet liabilities | |||||||||||||||
Deposits | 4,247,912 | 4,242,061 | 4,156,414 | 4,153,323 | |||||||||||
Subordinated debentures and notes | 118,131 | 105,889 | 118,105 | 105,031 | |||||||||||
Federal Home Loan Bank advances | 361,534 | 361,531 | 172,743 | 172,893 | |||||||||||
Other borrowings | 167,216 | 167,086 | 253,674 | 253,530 | |||||||||||
Derivative financial instruments | 5,358 | 5,358 | 3,589 | 3,589 | |||||||||||
Accrued interest payable | 1,884 | 1,884 | 1,730 | 1,730 |
Estimated Fair Value Measurement at Reporting Date Using | Balance at June 30, 2018 | ||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | ||||||||||||
Financial Assets: | |||||||||||||||
Securities held to maturity | $ | — | $ | 66,909 | $ | — | $ | 66,909 | |||||||
Portfolio loans, net | — | — | 4,252,679 | 4,252,679 | |||||||||||
State tax credits, held for sale | — | — | 44,770 | 44,770 | |||||||||||
Financial Liabilities: | |||||||||||||||
Deposits | 3,574,581 | — | 667,480 | 4,242,061 | |||||||||||
Subordinated debentures and notes | — | 105,889 | — | 105,889 | |||||||||||
Federal Home Loan Bank advances | — | 361,531 | — | 361,531 | |||||||||||
Other borrowings | — | 167,086 | — | 167,086 | |||||||||||
Estimated Fair Value Measurement at Reporting Date Using | Balance at December 31, 2017 | ||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | ||||||||||||
Financial Assets: | |||||||||||||||
Securities held to maturity | $ | — | $ | 73,458 | $ | — | $ | 73,458 | |||||||
Portfolio loans, net | — | — | 4,096,741 | 4,096,741 | |||||||||||
State tax credits, held for sale | — | — | 43,871 | 43,871 | |||||||||||
Financial Liabilities: | |||||||||||||||
Deposits | 3,577,641 | — | 575,682 | 4,153,323 | |||||||||||
Subordinated debentures and notes | — | 105,031 | — | 105,031 | |||||||||||
Federal Home Loan Bank advances | — | 172,893 | — | 172,893 | |||||||||||
Other borrowings | — | 253,530 | — | 253,530 |
(in thousands, except per share data) | For the Three Months ended/At | For the Six Months ended | |||||||||||||||||
June 30, 2018 | March 31, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | |||||||||||||||
EARNINGS | |||||||||||||||||||
Total interest income | $ | 57,879 | $ | 55,164 | $ | 51,542 | $ | 113,043 | $ | 95,282 | |||||||||
Total interest expense | 10,831 | 8,993 | 5,909 | 19,824 | 11,007 | ||||||||||||||
Net interest income | 47,048 | 46,171 | 45,633 | 93,219 | 84,275 | ||||||||||||||
Provision for portfolio loans | 2,385 | 1,871 | 3,623 | 4,256 | 5,156 | ||||||||||||||
Provision reversal for PCI loans | (1,995 | ) | — | (207 | ) | (1,995 | ) | (355 | ) | ||||||||||
Net interest income after provision for loan losses | 46,658 | 44,300 | 42,217 | 90,958 | 79,474 | ||||||||||||||
Total noninterest income | 9,693 | 9,542 | 7,934 | 19,235 | 14,910 | ||||||||||||||
Total noninterest expense | 29,219 | 29,143 | 32,651 | 58,362 | 59,387 | ||||||||||||||
Income before income tax expense | 27,132 | 24,699 | 17,500 | 51,831 | 34,997 | ||||||||||||||
Income tax expense | 4,881 | 3,778 | 5,545 | 8,659 | 10,651 | ||||||||||||||
Net income | $ | 22,251 | $ | 20,921 | $ | 11,955 | $ | 43,172 | $ | 24,346 | |||||||||
Basic earnings per share | $ | 0.96 | $ | 0.91 | $ | 0.51 | $ | 1.87 | $ | 1.07 | |||||||||
Diluted earnings per share | 0.95 | 0.90 | 0.50 | 1.85 | 1.06 | ||||||||||||||
Return on average assets | 1.65 | % | 1.59 | % | 0.96 | % | 1.62 | % | 1.02 | % | |||||||||
Return on average common equity | 15.70 | % | 15.31 | % | 8.78 | % | 15.51 | % | 9.64 | % | |||||||||
Return on average tangible common equity | 20.23 | % | 19.92 | % | 11.49 | % | 20.08 | % | 12.20 | % | |||||||||
Net interest margin (fully tax equivalent) | 3.77 | % | 3.80 | % | 3.98 | % | 3.79 | % | 3.86 | % | |||||||||
Efficiency ratio | 51.50 | % | 52.31 | % | 60.95 | % | 51.90 | % | 59.87 | % | |||||||||
Tangible book value per common share | $ | 19.32 | $ | 18.49 | $ | 17.89 | |||||||||||||
ASSET QUALITY (1) | |||||||||||||||||||
Net charge-offs (recoveries) | $ | 641 | $ | (226 | ) | $ | 6,104 | $ | 415 | $ | 6,048 | ||||||||
Nonperforming loans | 14,801 | 15,582 | 13,081 | ||||||||||||||||
Classified assets | 74,001 | 77,195 | 93,795 | ||||||||||||||||
Nonperforming loans to portfolio loans | 0.35 | % | 0.38 | % | 0.34 | % | |||||||||||||
Nonperforming assets to total assets (1) | 0.28 | % | 0.30 | % | 0.27 | % | |||||||||||||
Allowance for loan losses to portfolio loans | 1.00 | % | 0.98 | % | 0.96 | % | |||||||||||||
Net charge-offs to average loans (annualized) | 0.06 | % | (0.02 | )% | 0.64 | % | 0.01 | % | 0.33 | % | |||||||||
(1) Excludes purchased credit impaired loans and related assets, except for their inclusion in total assets. |
For the Three Months ended | For the Six Months ended | ||||||||||||||||||
(in thousands) | June 30, 2018 | March 31, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | ||||||||||||||
CORE PERFORMANCE MEASURES (1) | |||||||||||||||||||
Net interest income | $ | 46,757 | $ | 45,405 | $ | 43,049 | $ | 92,162 | $ | 80,616 | |||||||||
Provision for portfolio loans | 2,385 | 1,871 | 3,623 | 4,256 | 5,156 | ||||||||||||||
Noninterest income | 9,026 | 8,520 | 7,934 | 17,546 | 14,910 | ||||||||||||||
Noninterest expense | 29,209 | 29,129 | 27,798 | 58,338 | 52,744 | ||||||||||||||
Income before income tax expense | 24,189 | 22,925 | 19,562 | 47,114 | 37,626 | ||||||||||||||
Income tax expense | 4,145 | 3,340 | 6,329 | 7,485 | 11,245 | ||||||||||||||
Net income | $ | 20,044 | $ | 19,585 | $ | 13,233 | $ | 39,629 | $ | 26,381 | |||||||||
Earnings per share | $ | 0.86 | $ | 0.84 | $ | 0.56 | $ | 1.70 | $ | 1.15 | |||||||||
Return on average assets | 1.48 | % | 1.49 | % | 1.06 | % | 1.49 | % | 1.11 | % | |||||||||
Return on average common equity | 14.14 | % | 14.34 | % | 9.72 | % | 14.24 | % | 10.44 | % | |||||||||
Return on average tangible common equity | 18.22 | % | 18.64 | % | 12.72 | % | 18.43 | % | 13.22 | % | |||||||||
Net interest margin (fully tax equivalent) | 3.75 | % | 3.74 | % | 3.76 | % | 3.74 | % | 3.70 | % | |||||||||
Efficiency ratio | 52.36 | % | 54.02 | % | 54.52 | % | 53.18 | % | 55.21 | % | |||||||||
(1) A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial Measures." |
• | The Company reported net income of $43.2 million, or $1.85 per diluted share, for the six months ended June 30, 2018, compared to $24.3 million, or $1.06 per diluted share, for the same period in 2017. The $0.79 increase in earnings per share primarily increased from growth in the balance sheet resulting from organic loan and deposit growth, fee income growth, and corporate tax reform. |
• | On a core basis1, net income grew 50% to $39.6 million, or $1.70 per diluted share, for the six months ended June 30, 2018, compared to $26.4 million, or $1.15 per diluted share, in the prior year period. The diluted core earnings per share1 increase of $0.55 continues to be driven by revenue growth, which expanded $14.2 million, or 15%. |
• | Net interest income for the first six months of 2018 increased $8.9 million or 11%, from the prior year period due to strong portfolio loan growth and a higher average yield partially offset by an increase in cost of funds and a reduction in incremental accretion on non-core acquired loans. |
• | Net interest margin for the first six months of 2018 decreased seven basis points to 3.79% when compared to the prior year period of 3.86%. Core net interest margin1, which excludes incremental accretion on non-core acquired loans, increased four basis points to 3.74% for the first six months of 2018 from the prior year period primarily due to the impact of interest rate increases on portfolio loans out-pacing the increase in deposit and borrowing costs. |
• | Noninterest income for the first six months of 2018 increased $4.3 million or 29%, compared to the prior year period primarily due to $2.0 million of nonrecurring revenue along with higher income from deposit service charges and card services from growth in the client base. |
• | Noninterest expenses were $58.4 million for the six months ended June 30, 2018, compared to $59.4 million for the comparable period in 2017. Noninterest expenses for the 2017 period included $6.1 million of merger related expenses. Core noninterest expenses1 were $58.3 million for the six months ended June 30, 2018, compared to $52.7 million for the prior year period primarily due to increases in compensation and benefit expense from investments in revenue producing personnel, tax credit amortization of $1.6 million, and other operating expenses from the acquisition of JCB. |
• | Loans – Portfolio loans increased to $4.3 billion at June 30, 2018, increasing $186 million when compared to December 31, 2017 primarily in the commercial and industrial, and commercial real estate categories. |
• | Deposits – Total deposits at June 30, 2018 were $4.2 billion, an increase of $91 million, or 2% from December 31, 2017. Core deposits, defined as total deposits excluding time deposits, were $3.6 billion at June 30, 2018, a decrease of $58 million, or 1.61% from the linked quarter, but an increase of $246 million, or 7.40%, when compared to the prior year period. |
• | Asset quality – Nonperforming loans were $14.8 million at June 30, 2018, compared to $14.9 million at December 31, 2017. Nonperforming loans represented 0.35% and 0.38% of portfolio loans at June 30, 2018 and December 31, 2017, respectively. |
Three months ended June 30, | |||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||
(in thousands) | Average Balance | Interest Income/Expense | Average Yield/ Rate | Average Balance | Interest Income/Expense | Average Yield/ Rate | |||||||||||||||
Assets | |||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Taxable portfolio loans (1) | $ | 4,162,720 | $ | 51,783 | 4.99 | % | $ | 3,802,103 | $ | 43,678 | 4.61 | % | |||||||||
Tax-exempt portfolio loans (2) | 35,117 | 474 | 5.41 | 42,157 | 712 | 6.77 | |||||||||||||||
Non-core acquired loans - contractual | 26,179 | 517 | 7.92 | 36,767 | 605 | 6.60 | |||||||||||||||
Non-core acquired loans - incremental accretion | 291 | 4.46 | 2,584 | 28.19 | |||||||||||||||||
Total loans | 4,224,016 | 53,065 | 5.04 | 3,881,027 | 47,579 | 4.92 | |||||||||||||||
Taxable investments in debt and equity securities | 703,185 | 4,429 | 2.53 | 623,305 | 3,697 | 2.38 | |||||||||||||||
Non-taxable investments in debt and equity securities (2) | 40,349 | 360 | 3.58 | 44,476 | 489 | 4.41 | |||||||||||||||
Short-term investments | 56,057 | 231 | 1.65 | 92,390 | 234 | 1.02 | |||||||||||||||
Total securities and short-term investments | 799,591 | 5,020 | 2.52 | 760,171 | 4,420 | 2.33 | |||||||||||||||
Total interest-earning assets | 5,023,607 | 58,085 | 4.64 | 4,641,198 | 51,999 | 4.49 | |||||||||||||||
Noninterest-earning assets: | |||||||||||||||||||||
Cash and due from banks | 88,731 | 76,355 | |||||||||||||||||||
Other assets | 348,223 | 345,167 | |||||||||||||||||||
Allowance for loan losses | (45,410 | ) | (45,507 | ) | |||||||||||||||||
Total assets | $ | 5,415,151 | $ | 5,017,213 | |||||||||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Interest-bearing transaction accounts | $ | 823,650 | $ | 817 | 0.40 | % | $ | 789,922 | $ | 523 | 0.27 | % | |||||||||
Money market accounts | 1,494,194 | 4,445 | 1.19 | 1,309,864 | 1,938 | 0.59 | |||||||||||||||
Savings | 208,662 | 147 | 0.28 | 200,405 | 125 | 0.25 | |||||||||||||||
Certificates of deposit | 633,897 | 2,338 | 1.48 | 600,709 | 1,373 | 0.92 | |||||||||||||||
Total interest-bearing deposits | 3,160,403 | 7,747 | 0.98 | 2,900,900 | 3,959 | 0.55 | |||||||||||||||
Subordinated debentures | 118,124 | 1,454 | 4.94 | 118,072 | 1,288 | 4.37 | |||||||||||||||
FHLB advances | 294,643 | 1,448 | 1.97 | 182,472 | 522 | 1.14 | |||||||||||||||
Other borrowed funds | 167,661 | 182 | 0.44 | 233,401 | 140 | 0.24 | |||||||||||||||
Total interest-bearing liabilities | 3,740,831 | 10,831 | 1.16 | 3,434,845 | 5,909 | 0.69 | |||||||||||||||
Noninterest bearing liabilities: | |||||||||||||||||||||
Demand deposits | 1,069,888 | 1,008,700 | |||||||||||||||||||
Other liabilities | 35,877 | 27,386 | |||||||||||||||||||
Total liabilities | 4,846,596 | 4,470,931 | |||||||||||||||||||
Shareholders' equity | 568,555 | 546,282 | |||||||||||||||||||
Total liabilities & shareholders' equity | $ | 5,415,151 | $ | 5,017,213 | |||||||||||||||||
Net interest income | $ | 47,254 | $ | 46,090 | |||||||||||||||||
Net interest spread | 3.48 | % | 3.80 | % | |||||||||||||||||
Net interest margin | 3.77 | % | 3.98 | % | |||||||||||||||||
Core net interest margin (3) | 3.75 | % | 3.76 | % |
(1) | Average balances include non-accrual loans. The income on such loans is included in interest but is recognized only upon receipt. Loan fees, net of amortization of deferred loan origination fees and costs, included in interest income are approximately $1.0 million and $0.8 million for the three months ended June 30, 2018 and 2017 respectively. |
(2) | Non-taxable income is presented on a fully tax-equivalent basis using a 24.7% and 38.0% tax rate in 2018 and 2017, respectively. The tax-equivalent adjustments were $0.2 million and $0.5 million for the three months ended June 30, 2018 and 2017, respectively. |
(3) | A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial measures." |
Six months ended June 30, | |||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||
(in thousands) | Average Balance | Interest Income/Expense | Average Yield/ Rate | Average Balance | Interest Income/Expense | Average Yield/ Rate | |||||||||||||||
Assets | |||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Taxable portfolio loans (1) | $ | 4,117,928 | $ | 100,675 | 4.93 | % | $ | 3,635,296 | $ | 81,505 | 4.52 | % | |||||||||
Tax-exempt portfolio loans (2) | 36,156 | 963 | 5.37 | 43,482 | 1,405 | 6.52 | |||||||||||||||
Non-core acquired loans - contractual | 27,644 | 942 | 6.87 | 38,020 | 1,200 | 6.36 | |||||||||||||||
Non-core acquired loans - incremental accretion | 1,057 | 7.71 | 3,659 | 19.41 | |||||||||||||||||
Total loans | 4,181,728 | 103,637 | 5.00 | 3,716,798 | 87,769 | 4.76 | |||||||||||||||
Taxable investments in debt and equity securities | 700,835 | 8,621 | 2.48 | 602,070 | 6,995 | 2.34 | |||||||||||||||
Non-taxable investments in debt and equity securities (2) | 41,233 | 735 | 3.59 | 50,518 | 1,111 | 4.43 | |||||||||||||||
Short-term investments | 62,651 | 471 | 1.52 | 81,867 | 364 | 0.90 | |||||||||||||||
Total securities and short-term investments | 804,719 | 9,827 | 2.46 | 734,455 | 8,470 | 2.33 | |||||||||||||||
Total interest-earning assets | 4,986,447 | 113,464 | 4.59 | 4,451,253 | 96,239 | 4.36 | |||||||||||||||
Noninterest-earning assets: | |||||||||||||||||||||
Cash and due from banks | 88,681 | 75,794 | |||||||||||||||||||
Other assets | 347,305 | 314,478 | |||||||||||||||||||
Allowance for loan losses | (44,594 | ) | (44,899 | ) | |||||||||||||||||
Total assets | $ | 5,377,839 | $ | 4,796,626 | |||||||||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Interest-bearing transaction accounts | $ | 843,172 | $ | 1,623 | 0.39 | % | $ | 777,731 | $ | 1,198 | 0.31 | % | |||||||||
Money market accounts | 1,442,910 | 7,798 | 1.09 | 1,251,929 | 3,431 | 0.55 | |||||||||||||||
Savings | 205,276 | 272 | 0.27 | 177,504 | 207 | 0.24 | |||||||||||||||
Certificates of deposit | 618,900 | 4,237 | 1.38 | 574,850 | 2,588 | 0.91 | |||||||||||||||
Total interest-bearing deposits | 3,110,258 | 13,930 | 0.90 | 2,782,014 | 7,424 | 0.54 | |||||||||||||||
Subordinated debentures | 118,117 | 2,822 | 4.82 | 115,300 | 2,452 | 4.29 | |||||||||||||||
FHLB advances | 298,573 | 2,706 | 1.83 | 163,791 | 852 | 1.05 | |||||||||||||||
Other borrowed funds | 187,442 | 366 | 0.39 | 239,687 | 279 | 0.23 | |||||||||||||||
Total interest-bearing liabilities | 3,714,390 | 19,824 | 1.08 | 3,300,792 | 11,007 | 0.67 | |||||||||||||||
Noninterest bearing liabilities: | |||||||||||||||||||||
Demand deposits | 1,067,343 | 958,107 | |||||||||||||||||||
Other liabilities | 34,755 | 28,343 | |||||||||||||||||||
Total liabilities | 4,816,488 | 4,287,242 | |||||||||||||||||||
Shareholders' equity | 561,351 | 509,384 | |||||||||||||||||||
Total liabilities & shareholders' equity | $ | 5,377,839 | $ | 4,796,626 | |||||||||||||||||
Net interest income | $ | 93,640 | $ | 85,232 | |||||||||||||||||
Net interest spread | 3.51 | % | 3.69 | % | |||||||||||||||||
Net interest margin | 3.79 | % | 3.86 | % | |||||||||||||||||
Core net interest margin (3) | 3.74 | % | 3.70 | % |
(1) | Average balances include non-accrual loans. The income on such loans is included in interest but is recognized only upon receipt. Loan fees, net of amortization of deferred loan origination fees and costs, included in interest income are approximately $1.9 million and $1.6 million for the six months ended June 30, 2018 and 2017 respectively. |
(2) | Non-taxable income is presented on a fully tax-equivalent basis using a 24.7% and 38.0% tax rate in 2018 and 2017, respectively. The tax-equivalent adjustments were $0.4 million and $1.0 million for the six months ended June 30, 2018 and 2017, respectively. |
(3) | A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial measures." |
2018 compared to 2017 | |||||||||||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
Increase (decrease) due to | Increase (decrease) due to | ||||||||||||||||||||||
(in thousands) | Volume(1) | Rate(2) | Net | Volume(1) | Rate(2) | Net | |||||||||||||||||
Interest earned on: | |||||||||||||||||||||||
Taxable portfolio loans | $ | 4,337 | $ | 3,768 | $ | 8,105 | $ | 11,403 | $ | 7,767 | $ | 19,170 | |||||||||||
Tax-exempt portfolio loans (3) | (108 | ) | (130 | ) | (238 | ) | (216 | ) | (226 | ) | (442 | ) | |||||||||||
Non-core acquired loans | (735 | ) | (1,646 | ) | (2,381 | ) | (1,104 | ) | (1,756 | ) | (2,860 | ) | |||||||||||
Taxable investments in debt and equity securities | 491 | 241 | 732 | 1,197 | 429 | 1,626 | |||||||||||||||||
Non-taxable investments in debt and equity securities (3) | (42 | ) | (87 | ) | (129 | ) | (185 | ) | (191 | ) | (376 | ) | |||||||||||
Short-term investments | (114 | ) | 111 | (3 | ) | (100 | ) | 207 | 107 | ||||||||||||||
Total interest-earning assets | $ | 3,829 | $ | 2,257 | $ | 6,086 | $ | 10,995 | $ | 6,230 | $ | 17,225 | |||||||||||
Interest paid on: | |||||||||||||||||||||||
Interest-bearing transaction accounts | $ | 24 | $ | 270 | $ | 294 | $ | 107 | $ | 318 | $ | 425 | |||||||||||
Money market accounts | 305 | 2,202 | 2,507 | 592 | 3,775 | 4,367 | |||||||||||||||||
Savings | 6 | 16 | 22 | 35 | 30 | 65 | |||||||||||||||||
Certificates of deposit | 80 | 885 | 965 | 211 | 1,438 | 1,649 | |||||||||||||||||
Subordinated debentures | 1 | 165 | 166 | 61 | 309 | 370 | |||||||||||||||||
FHLB advances | 424 | 502 | 926 | 975 | 879 | 1,854 | |||||||||||||||||
Borrowed funds | (48 | ) | 90 | 42 | (71 | ) | 158 | 87 | |||||||||||||||
Total interest-bearing liabilities | 792 | 4,130 | 4,922 | 1,910 | 6,907 | 8,817 | |||||||||||||||||
Net interest income | $ | 3,037 | $ | (1,873 | ) | $ | 1,164 | $ | 9,085 | $ | (677 | ) | $ | 8,408 |
For the Three Months ended | For the Six Months ended | ||||||||||||||
(in thousands) | June 30, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | |||||||||||
Accelerated cash flows and other incremental accretion | $ | 291 | $ | 2,584 | $ | 1,057 | $ | 3,659 | |||||||
Provision reversal for non-core acquired loan losses | 1,995 | 207 | 1,995 | 355 | |||||||||||
Other income | 18 | — | 1,031 | — | |||||||||||
Less: Other expenses (credits) | (229 | ) | (16 | ) | (215 | ) | 107 | ||||||||
Non-core acquired assets income before income tax expense | $ | 2,533 | $ | 2,807 | $ | 4,298 | $ | 3,907 |
Three months ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | Increase (decrease) | |||||||||||
Service charges on deposit accounts | $ | 3,007 | $ | 2,816 | $ | 191 | 7 | % | ||||||
Wealth management revenue | 2,141 | 2,054 | 87 | 4 | % | |||||||||
Card services revenue | 1,650 | 1,392 | 258 | 19 | % | |||||||||
Gain on state tax credits, net | 64 | 9 | 55 | 611 | % | |||||||||
Miscellaneous income - core | 2,164 | 1,646 | 518 | 31 | % | |||||||||
Core noninterest income (1) | 9,026 | 7,934 | 1,092 | 14 | % | |||||||||
Gain on sale of investment securities | — | — | — | NM | ||||||||||
Other income from non-core acquired assets | 18 | — | 18 | NM | ||||||||||
Other | 649 | — | 649 | NM | ||||||||||
Total noninterest income | $ | 9,693 | $ | 7,934 | $ | 1,110 | 14 | % | ||||||
(1) A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial Measures." |
Six months ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | Increase (decrease) | |||||||||||
Service charges on deposit accounts | $ | 5,858 | $ | 5,326 | $ | 532 | 10 | % | ||||||
Wealth management revenue | 4,255 | 3,887 | 368 | 9 | % | |||||||||
Card services revenue | 3,166 | 2,429 | 737 | 30 | % | |||||||||
Gain on state tax credits, net | 316 | 255 | 61 | 24 | % | |||||||||
Gain on sale of other real estate | — | 17 | (17 | ) | (100 | )% | ||||||||
Miscellaneous income - core | 3,951 | 2,996 | 955 | 32 | % | |||||||||
Core noninterest income (1) | 17,546 | 14,910 | 2,636 | 18 | % | |||||||||
Gain on sale of investment securities | 9 | — | 9 | NM | ||||||||||
Other income from non-core acquired assets | 1,031 | — | 1,031 | NM | ||||||||||
Other | 649 | — | 649 | NM | ||||||||||
Total noninterest income | $ | 19,235 | $ | 14,910 | $ | 4,325 | 29 | % | ||||||
(1) A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial Measures." |
Three months ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | Increase (decrease) | |||||||||||
Core expenses (1): | ||||||||||||||
Employee compensation and benefits | $ | 16,582 | $ | 15,798 | $ | 784 | 5 | % | ||||||
Occupancy | 2,342 | 2,265 | 77 | 3 | % | |||||||||
Data processing | 1,533 | 1,806 | (273 | ) | (15 | )% | ||||||||
FDIC and other insurance | 920 | 650 | 270 | 42 | % | |||||||||
Professional fees | 747 | 1,079 | (332 | ) | (31 | )% | ||||||||
Loan, legal and other real estate expense | 206 | 629 | (423 | ) | (67 | )% | ||||||||
Other | 6,879 | 5,571 | 1,308 | 23 | % | |||||||||
Core noninterest expense (1) | 29,209 | 27,798 | 1,411 | 5 | % | |||||||||
Merger related expenses | — | 4,480 | (4,480 | ) | (100 | )% | ||||||||
Other non-core | 239 | 389 | (150 | ) | (39 | )% | ||||||||
Other expenses related to non-core acquired loans | (229 | ) | (16 | ) | (213 | ) | 1,331 | % | ||||||
Total noninterest expense | $ | 29,219 | $ | 32,651 | $ | (3,432 | ) | (11 | )% | |||||
(1) A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial Measures." |
Six months ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | Increase (decrease) | |||||||||||
Core expenses (1): | ||||||||||||||
Employee compensation and benefits | $ | 33,073 | $ | 31,006 | $ | 2,067 | 7 | % | ||||||
Occupancy | 4,748 | 4,194 | 554 | 13 | % | |||||||||
Data processing | 3,000 | 3,439 | (439 | ) | (13 | )% | ||||||||
FDIC and other insurance | 1,837 | 1,474 | 363 | 25 | % | |||||||||
Professional fees | 1,596 | 1,916 | (320 | ) | (17 | )% | ||||||||
Loan, legal and other real estate expense | 491 | 851 | (360 | ) | (42 | )% | ||||||||
Other | 13,593 | 9,864 | 3,729 | 38 | % | |||||||||
Core noninterest expense (1) | 58,338 | 52,744 | 5,594 | 11 | % | |||||||||
Merger related expenses | — | 6,147 | (6,147 | ) | (100 | )% | ||||||||
Other non-core | 239 | 389 | (150 | ) | (39 | )% | ||||||||
Other expenses related to non-core acquired loans | (215 | ) | 107 | (322 | ) | (301 | )% | |||||||
Total noninterest expense | $ | 58,362 | $ | 59,387 | $ | (1,025 | ) | (2 | )% | |||||
(1) A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial Measures." |
(in thousands) | June 30, 2018 | December 31, 2017 | Increase (decrease) | ||||||||||
Total cash and cash equivalents | $ | 177,257 | $ | 153,323 | $ | 23,934 | 15.6 | % | |||||
Securities | 720,071 | 715,131 | 4,940 | 0.7 | % | ||||||||
Portfolio loans | 4,252,336 | 4,066,659 | 185,677 | 4.6 | % | ||||||||
Non-core acquired loans | 23,425 | 30,391 | (6,966 | ) | (22.9 | )% | |||||||
Total assets | 5,509,924 | 5,289,225 | 220,699 | 4.2 | % | ||||||||
Deposits | 4,247,912 | 4,156,414 | 91,498 | 2.2 | % | ||||||||
Total liabilities | 4,935,840 | 4,740,652 | 195,188 | 4.1 | % | ||||||||
Total shareholders' equity | 574,084 | 548,573 | 25,511 | 4.7 | % |
(in thousands) | June 30, 2018 | December 31, 2017 | Increase (decrease) | |||||||||||
Commercial and industrial | $ | 2,038,400 | $ | 1,919,145 | $ | 119,255 | 6.2 | % | ||||||
Commercial real estate - investor owned | 844,895 | 769,275 | 75,620 | 9.8 | % | |||||||||
Commercial real estate - owner occupied | 601,086 | 554,589 | 46,497 | 8.4 | % | |||||||||
Construction and land development | 302,514 | 345,209 | (42,695 | ) | (12.4 | )% | ||||||||
Residential real estate | 319,208 | 342,518 | (23,310 | ) | (6.8 | )% | ||||||||
Consumer and other | 146,233 | 135,923 | 10,310 | 7.6 | % | |||||||||
Portfolio loans | 4,252,336 | 4,066,659 | 185,677 | 4.6 | % | |||||||||
Non-core acquired loans | 23,425 | 30,391 | (6,966 | ) | (22.9 | )% | ||||||||
Total loans | $ | 4,275,761 | $ | 4,097,050 | $ | 178,711 | 4.4 | % |
At the quarter ended | ||||||||||||||
(in thousands) | June 30, 2018 | December 31, 2017 | Increase (decrease) | |||||||||||
C&I - general | $ | 990,153 | $ | 936,588 | $ | 53,565 | 5.7 | % | ||||||
CRE investor owned - general | 836,516 | 801,156 | 35,360 | 4.4 | % | |||||||||
CRE owner occupied - general | 493,589 | 468,151 | 25,438 | 5.4 | % | |||||||||
Enterprise value lending1 | 442,877 | 407,644 | 35,233 | 8.6 | % | |||||||||
Life insurance premium financing1 | 358,787 | 364,876 | (6,089 | ) | (1.7 | )% | ||||||||
Residential real estate - general | 318,841 | 342,140 | (23,299 | ) | (6.8 | )% | ||||||||
Construction and land development - general | 286,482 | 294,123 | (7,641 | ) | (2.6 | )% | ||||||||
Tax credits1 | 260,595 | 234,835 | 25,760 | 11.0 | % | |||||||||
Agriculture loans1 | 127,849 | 91,031 | 36,818 | 40.4 | % | |||||||||
Consumer and other - general | 136,647 | 126,115 | 10,532 | 8.4 | % | |||||||||
Portfolio loans | $ | 4,252,336 | $ | 4,066,659 | $ | 185,677 | 4.6 | % | ||||||
Note: Certain prior period amounts have been reclassified among the categories to conform to the current period presentation. | ||||||||||||||
1Specialized categories may include a mix of C&I, CRE, construction and land development, or consumer and other loans. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Allowance at beginning of period, for portfolio loans | $ | 40,263 | $ | 39,148 | $ | 38,166 | $ | 37,565 | |||||||
Loans charged off: | |||||||||||||||
Commercial and industrial | (956 | ) | (6,035 | ) | (1,688 | ) | (6,168 | ) | |||||||
Real estate: | |||||||||||||||
Commercial | — | (45 | ) | — | (45 | ) | |||||||||
Construction and land development | — | (5 | ) | — | (5 | ) | |||||||||
Residential | (38 | ) | (265 | ) | (292 | ) | (274 | ) | |||||||
Consumer and other | (33 | ) | (39 | ) | (82 | ) | (68 | ) | |||||||
Total loans charged off | (1,027 | ) | (6,389 | ) | (2,062 | ) | (6,560 | ) | |||||||
Recoveries of loans previously charged off: | |||||||||||||||
Commercial and industrial | 118 | 57 | 1,074 | 137 | |||||||||||
Real estate: | |||||||||||||||
Commercial | 13 | 103 | 25 | 201 | |||||||||||
Construction and land development | 168 | 49 | 374 | 58 | |||||||||||
Residential | 59 | 62 | 132 | 87 | |||||||||||
Consumer and other | 28 | 20 | 42 | 29 | |||||||||||
Total recoveries of loans | 386 | 291 | 1,647 | 512 | |||||||||||
Net loan charge-offs | (641 | ) | (6,098 | ) | (415 | ) | (6,048 | ) | |||||||
Provision for loan losses | 2,385 | 3,623 | 4,256 | 5,156 | |||||||||||
Allowance at end of period, for portfolio loans (1) | $ | 42,007 | $ | 36,673 | $ | 42,007 | $ | 36,673 | |||||||
Allowance at beginning of period, for purchased credit impaired loans | $ | 4,387 | $ | 5,477 | $ | 4,411 | $ | 5,844 | |||||||
Loans charged off | — | (48 | ) | — | (48 | ) | |||||||||
Recoveries of loans | — | — | — | — | |||||||||||
Other | (29 | ) | (96 | ) | (53 | ) | (315 | ) | |||||||
Net loan charge-offs | (29 | ) | (144 | ) | (53 | ) | (363 | ) | |||||||
Provision reversal for purchased credit impaired loan losses | (1,995 | ) | (207 | ) | (1,995 | ) | (355 | ) | |||||||
Allowance at end of period, for purchased credit impaired loans | $ | 2,363 | $ | 5,126 | $ | 2,363 | $ | 5,126 | |||||||
Total allowance at end of period | $ | 44,370 | $ | 41,799 | $ | 44,370 | $ | 41,799 | |||||||
Portfolio loans, average | $ | 4,196,875 | $ | 3,839,266 | $ | 4,152,882 | $ | 3,673,012 | |||||||
Portfolio loans, ending (1) | 4,214,996 | 3,810,470 | 4,214,996 | 3,810,470 | |||||||||||
Net charge-offs to average portfolio loans (1) | 0.06 | % | 0.64 | % | 0.01 | % | 0.33 | % | |||||||
Allowance for portfolio loan losses to loans (1) | 1.00 | % | 0.96 | % | 1.00 | % | 0.96 | % | |||||||
(1) Excludes PCI loans. |
(in thousands) | June 30, 2018 | December 31, 2017 | June 30, 2017 | ||||||||
Non-accrual loans | $ | 14,168 | $ | 14,968 | $ | 12,405 | |||||
Restructured loans | 633 | 719 | 676 | ||||||||
Total nonperforming loans (1) | 14,801 | 15,687 | 13,081 | ||||||||
Other real estate | 454 | 498 | 529 | ||||||||
Total nonperforming assets (1) | $ | 15,255 | $ | 16,185 | $ | 13,610 | |||||
Total assets | $ | 5,509,924 | $ | 5,289,225 | $ | 5,038,696 | |||||
Portfolio loans (1) | 4,214,996 | 4,022,896 | 3,810,470 | ||||||||
Portfolio loans plus other real estate (1) | 4,215,450 | 4,023,394 | 3,810,999 | ||||||||
Nonperforming loans to portfolio loans (1) | 0.35 | % | 0.39 | % | 0.34 | % | |||||
Nonperforming assets to total loans plus other real estate (1) | 0.36 | 0.40 | 0.36 | ||||||||
Nonperforming assets to total assets (1) | 0.28 | 0.31 | 0.27 | ||||||||
Allowance for loans to nonperforming loans (1) | 284 | % | 243 | % | 280 | % | |||||
(1) Excludes PCI loans, except for their inclusion in total assets. |
(in thousands) | June 30, 2018 | December 31, 2017 | June 30, 2017 | ||||||||
Commercial and industrial | $ | 11,227 | $ | 12,665 | $ | 10,003 | |||||
Commercial real estate | 1,153 | 909 | 287 | ||||||||
Construction and land development | 435 | 136 | 1,489 | ||||||||
Residential real estate | 1,669 | 1,602 | 1,293 | ||||||||
Consumer and other | 317 | 375 | 9 | ||||||||
Total | $ | 14,801 | $ | 15,687 | $ | 13,081 |
Six months ended June 30, | |||||||
(in thousands) | 2018 | 2017 | |||||
Nonperforming loans beginning of period | $ | 15,687 | $ | 14,905 | |||
Additions to nonaccrual loans | 2,176 | 6,111 | |||||
Additions to restructured loans | 10 | 676 | |||||
Charge-offs | (1,997 | ) | (6,508 | ) | |||
Other principal reductions | (1,075 | ) | (1,820 | ) | |||
Moved to other real estate | — | (283 | ) | ||||
Nonperforming loans end of period | $ | 14,801 | $ | 13,081 |
Six months ended June 30, | |||||||
(in thousands) | 2018 | 2017 | |||||
Other real estate beginning of period | $ | 498 | $ | 980 | |||
Additions and expenses capitalized to prepare property for sale | — | 383 | |||||
Additions from acquisition | — | 1,680 | |||||
Writedowns in value | (44 | ) | (18 | ) | |||
Other real estate end of period | $ | 454 | $ | 529 |
(in thousands) | June 30, 2018 | December 31, 2017 | Increase (decrease) | |||||||||||
Demand deposits | $ | 1,050,969 | $ | 1,123,907 | $ | (72,938 | ) | (6.5 | )% | |||||
Interest-bearing transaction accounts | 754,819 | 915,653 | (160,834 | ) | (17.6 | )% | ||||||||
Money market accounts | 1,558,923 | 1,342,931 | 215,992 | 16.1 | % | |||||||||
Savings | 209,870 | 195,150 | 14,720 | 7.5 | % | |||||||||
Certificates of deposit: | ||||||||||||||
Brokered | 224,192 | 115,306 | 108,886 | 94.4 | % | |||||||||
Other | 449,139 | 463,467 | (14,328 | ) | (3.1 | )% | ||||||||
Total deposits | $ | 4,247,912 | $ | 4,156,414 | $ | 91,498 | 2.2 | % | ||||||
Non-time deposits / total deposits | 84 | % | 86 | % | ||||||||||
Demand deposits / total deposits | 25 | % | 27 | % |
• | Net income of $43.2 million, |
• | decrease in fair value of securities of $7.9 million, |
• | issuance under equity compensation plans of $3.2 million, |
• | dividends paid on common shares of $5.1 million, and |
• | repurchase of 64,915 shares at an average price of $47.10 per share, or approximately $3.1 million in the aggregate, pursuant to the publicly announced program. |
(in thousands) | June 30, 2018 | December 31, 2017 | Well Capitalized Minimum % | |||||||
Total capital to risk-weighted assets | 12.60 | % | 12.21 | % | 10.00 | % | ||||
Tier 1 capital to risk-weighted assets | 10.68 | % | 10.29 | % | 8.00 | % | ||||
Common equity tier 1 capital to risk-weighted assets | 9.32 | % | 8.88 | % | 6.50 | % | ||||
Leverage ratio (Tier 1 capital to average assets) | 9.99 | % | 9.72 | % | 5.00 | % | ||||
Tangible common equity to tangible assets1 | 8.30 | % | 8.14 | % | N/A | |||||
Tier 1 capital | $ | 529,624 | $ | 496,045 | ||||||
Total risk-based capital | 624,419 | 589,047 | ||||||||
1 Not a required regulatory capital ratio |
For the Three Months ended | For the Six Months ended | ||||||||||||||||||
(in thousands) | June 30, 2018 | March 31, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | ||||||||||||||
Net interest income | $ | 47,048 | $ | 46,171 | $ | 45,633 | $ | 93,219 | $ | 84,275 | |||||||||
Less: Incremental accretion income | 291 | 766 | 2,584 | 1,057 | 3,659 | ||||||||||||||
Core net interest income | 46,757 | 45,405 | 43,049 | 92,162 | 80,616 | ||||||||||||||
Total noninterest income | 9,693 | 9,542 | 7,934 | 19,235 | 14,910 | ||||||||||||||
Less: Gain on sale of investment securities | — | 9 | — | 9 | — | ||||||||||||||
Less: Other income from non-core acquired assets | 18 | 1,013 | — | 1,031 | — | ||||||||||||||
Less: Other non-core income | 649 | — | — | 649 | — | ||||||||||||||
Core noninterest income | 9,026 | 8,520 | 7,934 | 17,546 | 14,910 | ||||||||||||||
Total core revenue | 55,783 | 53,925 | 50,983 | 109,708 | 95,526 | ||||||||||||||
Provision for portfolio loans | 2,385 | 1,871 | 3,623 | 4,256 | 5,156 | ||||||||||||||
Total noninterest expense | 29,219 | 29,143 | 32,651 | 58,362 | 59,387 | ||||||||||||||
Less: Other expenses related to non-core acquired loans | (229 | ) | 14 | (16 | ) | (215 | ) | 107 | |||||||||||
Less: Merger related expenses | — | — | 4,480 | — | 6,147 | ||||||||||||||
Less: Facilities disposal charge | 239 | — | 389 | 239 | 389 | ||||||||||||||
Core noninterest expense | 29,209 | 29,129 | 27,798 | 58,338 | 52,744 | ||||||||||||||
Core income before income tax expense | 24,189 | 22,925 | 19,562 | 47,114 | 37,626 | ||||||||||||||
Total income tax expense | 4,881 | 3,778 | 5,545 | 8,659 | 10,651 | ||||||||||||||
Less: Other non-core income tax expense1 | 736 | 438 | (784 | ) | 1,174 | (594 | ) | ||||||||||||
Core income tax expense | 4,145 | 3,340 | 6,329 | 7,485 | 11,245 | ||||||||||||||
Core net income | $ | 20,044 | $ | 19,585 | $ | 13,233 | $ | 39,629 | $ | 26,381 | |||||||||
Core diluted earnings per share | $ | 0.86 | $ | 0.84 | $ | 0.56 | $ | 1.70 | $ | 1.15 | |||||||||
Core return on average assets | 1.48 | % | 1.49 | % | 1.06 | % | 1.49 | % | 1.11 | % | |||||||||
Core return on average common equity | 14.14 | % | 14.34 | % | 9.72 | % | 14.24 | % | 10.44 | % | |||||||||
Core return on average tangible common equity | 18.22 | % | 18.64 | % | 12.72 | % | 18.43 | % | 13.22 | % | |||||||||
Core efficiency ratio | 52.36 | % | 54.02 | % | 54.52 | % | 53.18 | % | 55.21 | % | |||||||||
1Other non-core income tax expense calculated at 24.7% of non-core pretax income for 2018. For 2017, the calculation is 38.0% of non-core pretax income plus an estimate of taxes payable related to non-deductible JCB acquisition costs. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net interest income | $ | 47,254 | $ | 46,096 | $ | 93,640 | $ | 85,243 | |||||||
Less: Incremental accretion income | 291 | 2,584 | 1,057 | 3,659 | |||||||||||
Core net interest income | $ | 46,963 | $ | 43,512 | $ | 92,583 | $ | 81,584 | |||||||
Average earning assets | $ | 5,023,607 | $ | 4,641,198 | $ | 4,986,447 | $ | 4,451,253 | |||||||
Reported net interest margin | 3.77 | % | 3.98 | % | 3.79 | % | 3.86 | % | |||||||
Core net interest margin | 3.75 | % | 3.76 | % | 3.74 | % | 3.70 | % |
(in thousands) | June 30, 2018 | December 31, 2017 | |||||
Total shareholders' equity | $ | 574,084 | $ | 548,573 | |||
Less: Goodwill | 117,345 | 117,345 | |||||
Less: Intangible assets | 9,768 | 11,056 | |||||
Tangible common equity | $ | 446,971 | $ | 420,172 | |||
Total assets | $ | 5,509,924 | $ | 5,289,225 | |||
Less: Goodwill | 117,345 | 117,345 | |||||
Less: Intangible assets | 9,768 | 11,056 | |||||
Tangible assets | $ | 5,382,811 | $ | 5,160,824 | |||
Tangible common equity to tangible assets | 8.30 | % | 8.14 | % |
(in thousands) | June 30, 2018 | December 31, 2017 | |||||
Total shareholders' equity | $ | 574,084 | $ | 548,573 | |||
Less: Goodwill | 117,345 | 117,345 | |||||
Less: Intangible assets, net of deferred tax liabilities | 7,355 | 6,661 | |||||
Plus: Unrealized gains (losses) | (12,580 | ) | (3,818 | ) | |||
Plus: Other | — | 12 | |||||
Common equity Tier 1 capital | 461,964 | 428,397 | |||||
Plus: Qualifying trust preferred securities | 67,600 | 67,600 | |||||
Plus: Other | 60 | 48 | |||||
Tier 1 capital | 529,624 | 496,045 | |||||
Plus: Tier 2 capital | 94,795 | 93,002 | |||||
Total risk-based capital | 624,419 | 589,047 | |||||
Total risk-weighted assets determined in accordance with prescribed regulatory requirements | $ | 4,956,820 | $ | 4,822,695 | |||
Common equity tier 1 to risk-weighted assets | 9.32 | % | 8.88 | % | |||
Tier 1 capital to risk-weighted assets | 10.68 | % | 10.29 | % | |||
Total risk-based capital to risk-weighted assets | 12.60 | % | 12.21 | % |
Rate Shock | Annual % change in net interest income |
+ 300 bp | 4.9% |
+ 200 bp | 3.4% |
+ 100 bp | 1.7% |
- 100 bp | (3.9)% |
Exhibit No. | Description |
*12.1 |
14.0 |
*31.1 |
*31.2 |
**32.1 |
**32.2 |
101 | Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2018, is formatted in XBRL interactive data files: (i) Consolidated Balance Sheet at June 30, 2018 and December 31, 2017; (ii) Consolidated Statement of Income for the three and six months ended June 30, 2018 and 2017; (iii) Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2018 and 2017; (iv) Consolidated Statement of Changes in Equity for the six months ended June 30, 2018 and 2017; (v) Consolidated Statement of Cash Flows for the six months ended June 30, 2018 and 2017; and (vi) Notes to Financial Statements. |
ENTERPRISE FINANCIAL SERVICES CORP | |||
By: | /s/ James B. Lally | ||
James B. Lally | |||
Chief Executive Officer | |||
By: | /s/ Keene S. Turner | ||
Keene S. Turner | |||
Chief Financial Officer |
Six Months Ended June 30, | Years ended December 31, | ||||||||||||||||||
($ in thousands) | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||
Earnings (1): | |||||||||||||||||||
Income before income tax expense | $ | 51,831 | $ | 86,517 | $ | 74,839 | $ | 58,401 | $ | 41,044 | $ | 50,080 | |||||||
Add: Fixed charges from below | 19,824 | 25,235 | 13,729 | 12,369 | 14,386 | 18,137 | |||||||||||||
Earnings including interest expense on deposits (a) | $ | 71,655 | $ | 111,752 | $ | 88,568 | $ | 70,770 | $ | 55,430 | $ | 68,217 | |||||||
Less: interest expense on deposits | (13,930 | ) | (17,200 | ) | (10,841 | ) | (10,412 | ) | (10,487 | ) | (11,142 | ) | |||||||
Earnings excluding interest expense on deposits (b) | $ | 57,725 | $ | 94,552 | $ | 77,727 | $ | 60,358 | $ | 44,943 | $ | 57,075 | |||||||
Fixed charges (1): | |||||||||||||||||||
Interest on deposits | $ | 13,930 | $ | 17,200 | $ | 10,841 | $ | 10,412 | $ | 10,487 | $ | 11,142 | |||||||
Interest on borrowings | 5,894 | 8,035 | 2,888 | 1,957 | 3,899 | 6,995 | |||||||||||||
TARP preferred stock dividends (pre-tax) | — | — | — | — | — | — | |||||||||||||
Fixed charges including interest on deposits (c) | $ | 19,824 | $ | 25,235 | $ | 13,729 | $ | 12,369 | $ | 14,386 | $ | 18,137 | |||||||
Less: interest expense on deposits | (13,930 | ) | (17,200 | ) | (10,841 | ) | (10,412 | ) | (10,487 | ) | (11,142 | ) | |||||||
Fixed charges excluding interest expense on deposits (d) | $ | 5,894 | $ | 8,035 | $ | 2,888 | $ | 1,957 | $ | 3,899 | $ | 6,995 | |||||||
Ratio of earnings to combined fixed charges | |||||||||||||||||||
Excluding interest on deposits (b/d) | 9.79x | 11.77x | 26.91x | 30.85x | 11.53x | 8.16x | |||||||||||||
Including interest on deposits (a/c) | 3.61x | 4.43x | 6.45x | 5.72x | 3.85x | 3.76x | |||||||||||||
Ratio of earnings to combined fixed charges and preferred dividends: | |||||||||||||||||||
Excluding interest on deposits (b/d) (2) | 9.79x | 11.77x | 26.91x | 30.85x | 11.53x | 8.16x | |||||||||||||
Including interest on deposits (a/c) | 3.61x | 4.43x | 6.45x | 5.72x | 3.85x | 3.76x |
1. | I have reviewed this quarterly report on Form 10-Q of Enterprise Financial Services Corp; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: | /s/ James B. Lally | Date: | July 27, 2018 |
James B. Lally | |||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Enterprise Financial Services Corp; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: | /s/ Keene S. Turner | Date: | July 27, 2018 |
Keene S. Turner | |||
Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 25, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ENTERPRISE FINANCIAL SERVICES CORP | |
Entity Central Index Key | 0001025835 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 23,150,738 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Assets | ||
Collateral pledged | $ 1,295 | $ 1,365 |
State tax credits held for sale | 299 | 400 |
Payments of Debt Issuance Costs | $ 1,071 | $ 1,136 |
Shareholders' equity: | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 23,900,669 | 23,781,112 |
Treasury stock, shares | 756,588 | 691,673 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 22,251 | $ 11,955 | $ 43,172 | $ 24,346 |
Other comprehensive income (loss), net of tax: | ||||
Unrealized gains (losses) on investment securities arising during the period, net of income tax expense (benefit) for three months of $(333) and $921, and for six months of $($2,598) and $1,268, respectively | (1,017) | 1,502 | (7,921) | 2,070 |
Less: Reclassification adjustment for realized gains on sale of securities available for sale included in net income, net of income tax expense for the six months of $2 and $0, respectively | 0 | 0 | (7) | 0 |
Total other comprehensive income (loss) | (1,017) | 1,502 | (7,928) | 2,070 |
Total comprehensive income | $ 21,234 | $ 13,457 | $ 35,244 | $ 26,416 |
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Other comprehensive income, tax: | ||||
Unrealized (loss)/gain on investment securities available for sale arising during the period, tax | $ (1,017) | $ 1,502 | $ (7,921) | $ 2,070 |
Reclassification adjustment for realized gains on sale of securities available for sale included in net income, tax | $ 0 | $ 0 | $ (7) | $ 0 |
Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands |
Total |
Common Stock [Member] |
Treasury Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
AOCI Attributable to Parent [Member] |
---|---|---|---|---|---|---|
Balance at Dec. 31, 2016 | $ 387,098 | $ 203 | $ (6,632) | $ 213,078 | $ 182,190 | $ (1,741) |
Net income | 24,346 | 0 | 0 | 0 | 24,346 | 0 |
Other comprehensive income | 2,070 | 0 | 0 | 0 | 0 | 2,070 |
Total comprehensive income | 26,416 | 0 | 0 | 0 | 24,346 | 2,070 |
Cash dividends paid on common shares | 5,163 | 0 | 0 | 0 | 5,163 | 0 |
Issuance under equity compensation plans, net | (2,903) | 1 | 0 | (2,904) | 0 | 0 |
Share-based Compensation | 1,576 | 0 | 0 | 1,576 | 0 | 0 |
Shares issued in connection with acquisition | 141,729 | 33 | 0 | 141,696 | 0 | 0 |
Reclassification for the adoption of new accounting standards | 0 | 0 | 0 | (5,229) | 5,229 | 0 |
Balance at Jun. 30, 2017 | 548,753 | 237 | (6,632) | 348,217 | 206,602 | 329 |
Balance at Dec. 31, 2017 | 548,573 | 238 | (23,268) | 350,061 | 225,360 | (3,818) |
Net income | 43,172 | 0 | 0 | 0 | 43,172 | 0 |
Other comprehensive income | (7,928) | 0 | 0 | 0 | 0 | (7,928) |
Total comprehensive income | 35,244 | 0 | 0 | 0 | 43,172 | (7,928) |
Cash dividends paid on common shares | 5,086 | 0 | 0 | 0 | 5,086 | 0 |
Repurchase of common stock | 3,058 | 0 | 3,058 | 0 | 0 | 0 |
Issuance under equity compensation plans, net | (3,220) | 1 | 0 | (3,221) | 0 | 0 |
Share-based Compensation | 1,631 | 0 | 0 | 1,631 | 0 | 0 |
Reclassification for the adoption of new accounting standards | 0 | 0 | 0 | 0 | 834 | (834) |
Balance at Jun. 30, 2018 | $ 574,084 | $ 239 | $ (26,326) | $ 348,471 | $ 264,280 | $ (12,580) |
Condensed Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Cash dividends paid on common shares, per share | $ 0.22 | $ 0.22 |
Issuance under equity compensation plans, shares | 119,557 | 140,531 |
Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies used by Enterprise Financial Services Corp (the "Company" or "Enterprise") in the preparation of the condensed consolidated financial statements are summarized below: Business and Consolidation Enterprise is a financial holding company that provides a full range of banking and wealth management services to individuals and corporate customers located in the St. Louis, Kansas City, and Phoenix metropolitan markets through its banking subsidiary, Enterprise Bank & Trust (the "Bank"). Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2018. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017. Basis of Financial Statement Presentation The condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with the accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All intercompany accounts and transactions have been eliminated. During the first quarter of 2018, the Company adopted Accounting Standards Update ("ASU") 2016-01, "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." ASU 2016-01 requires equity investments to be measured at fair value through earnings, and eliminates the available-for-sale classification for equity securities with readily determinable fair values. The guidance also provides an alternative to measure equity securities without readily determinable fair values at cost less impairment (if any), plus or minus observable price changes from an identical or similar investment of the same issuer (the “measurement alternative”). The Company elected the measurement alternative for its qualifying equity securities. The adoption of this update resulted in an insignificant increase to retained earnings which was reclassified from accumulated other comprehensive income. In addition, the Company early adopted ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" during the first quarter of 2018. The objective of ASU 2017-12 is to improve the financial reporting of hedging relationships by better aligning an entity's risk management activity with the economic objectives in undertaking those activities. The adoption of this update had an insignificant impact on the Company's consolidated financial statements. The Company also early adopted ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" during the first quarter of 2018. The ASU allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The adoption of this update resulted in an increase to retained earnings of $0.8 million which was reclassified from accumulated other comprehensive income. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Revenue The Company adopted the accounting standard regarding revenue recognition in the first quarter of 2018 using the modified retrospective approach. The Company's revenues are primarily composed of interest income on financial instruments, including investment securities, which are excluded from the scope of the new guidance. Certain other noninterest income from loans, investment securities and derivative financial instruments is also excluded from this guidance. Service charges on deposit accounts, wealth management revenue, card services revenue, and gain on sale of other real estate are within the scope of the guidance; however, there were no accounting policy changes as the Company's policies were consistent with the new guidance. Other noninterest income sources of revenue are considered immaterial. Implementation of this guidance did not change current business practices or have any changes to the Company's consolidated financial statements. Descriptions of our revenue-generating activities within the scope of this guidance, which are presented in our income statement as components of noninterest income are as follows:
Income Taxes The SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the Tax Cuts and Jobs Act of 2017 (“Tax Act”). SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. The Company has recorded amounts based on the information known and reasonable estimates used as of June 30, 2018, but are subject to change based on a number of factors. The Company will complete its analysis of certain tax positions at the time it files its tax returns for the year ended December 31, 2017 and will be able to conclude if any further adjustments to the provisional estimate of the impact recorded is required. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS PER SHARE Basic earnings per common share data is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Common shares outstanding include common stock and restricted stock awards where recipients have satisfied the vesting terms. Diluted earnings per common share gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. The following table presents a summary of per common share data and amounts for the periods indicated.
For the three and six months ended June 30, 2018 and 2017, there were no common stock equivalents excluded from the earnings per share calculations because their effect would have been anti-dilutive. |
Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | INVESTMENTS The following table presents the amortized cost, gross unrealized gains and losses and fair value of securities available for sale and held to maturity:
At June 30, 2018, and December 31, 2017, there were no holdings of securities of any one issuer in an amount greater than 10% of shareholders’ equity, other than U.S. Government agencies and sponsored enterprises. The agency mortgage-backed securities are all issued by U.S. Government agencies and sponsored enterprises. Securities having a fair value of $376.0 million and $500.0 million at June 30, 2018, and December 31, 2017, respectively, were pledged as collateral to secure deposits of public institutions and for other purposes as required by law or contract provisions. The amortized cost and estimated fair value of debt securities at June 30, 2018, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The weighted average life of the mortgage-backed securities is approximately 5 years.
The following table represents a summary of investment securities that had an unrealized loss:
The unrealized losses at both June 30, 2018, and December 31, 2017, were primarily attributable to changes in market interest rates since the securities were purchased. Management systematically evaluates investment securities for other-than-temporary declines in fair value on a quarterly basis. This analysis requires management to consider various factors, which include among other considerations (1) the present value of the cash flows expected to be collected compared to the amortized cost of the security, (2) duration and magnitude of the decline in value, (3) the financial condition of the issuer or issuers, (4) structure of the security, and (5) the intent to sell the security or whether it is more likely than not the Company would be required to sell the security before its anticipated recovery in market value. At June 30, 2018, management performed its quarterly analysis of all securities with an unrealized loss and concluded no individual securities were other-than-temporarily impaired. |
Loans |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio Loans | LOANS The loan portfolio is comprised of loans originated by the Company and loans that were acquired in connection with the Company’s acquisitions. These loans are accounted for using the guidance in the Accounting Standards Codification (ASC) section 310-30 and 310-20. Loans accounted for using ASC 310-30 are sometimes referred to as purchased credit impaired ("PCI") loans. The table below shows the loan portfolio composition including carrying value categorized by loans accounted for at amortized cost, which includes our originated loans, and by loans accounted for as PCI.
The following tables refer to loans not accounted for as PCI loans. Below is a summary of loans by category at June 30, 2018 and December 31, 2017:
A summary of the activity in the allowance for loan losses and the recorded investment in loans by class and category based on impairment methodology through June 30, 2018, and at December 31, 2017, is as follows:
A summary of nonperforming loans individually evaluated for impairment by category at June 30, 2018 and December 31, 2017, and the income recognized on impaired loans is as follows:
The recorded investment in nonperforming loans by category at June 30, 2018 and December 31, 2017, is as follows:
At June 30, 2018, performing loans over 90 days past due and still accruing interest totaled $4.1 million. There were no loans over 90 days past due and still accruing interest at December 31, 2017. There were no portfolio loans restructured during the three and six months ended June 30, 2018 and 2017. As of June 30, 2018, the Company had $2.0 million in specific reserves allocated to $7.9 million of loans that have been restructured. During the three and six months ended June 30, 2018 and 2017, there were no portfolio loans that subsequently defaulted. The aging of the recorded investment in past due loans by portfolio class and category at June 30, 2018 and December 31, 2017 is shown below.
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, payment experience, credit documentation, and current economic factors among other factors. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:
The recorded investment by risk category of the loans by portfolio class and category at June 30, 2018, which is based upon the most recent analysis performed, and December 31, 2017 is as follows:
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Purchased Credit Impaired ("PCI") Loans |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase Credit Impaired (PCI) Loans | Below is a summary of PCI loans by category at June 30, 2018 and December 31, 2017:
The aging of the recorded investment in past due PCI loans by portfolio class and category at June 30, 2018 and December 31, 2017 is shown below:
The following table is a roll forward of PCI loans, net of the allowance for loan losses, for the six months ended June 30, 2018 and 2017.
The accretable yield is recognized in interest income over the estimated life of the acquired loans using the effective yield method. Outstanding customer balances on PCI loans were $81.1 million and $94.9 million as of June 30, 2018, and December 31, 2017, respectively. |
Commitments |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Commitments | COMMITMENTS AND CONTINGENCIES The Company issues financial instruments with off balance sheet risk in the normal course of the business of meeting the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments may involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. The Company’s extent of involvement and maximum potential exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of these instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for financial instruments included on its consolidated balance sheets. At June 30, 2018, the amount of unadvanced commitments on impaired loans was insignificant. The contractual amounts of off-balance-sheet financial instruments as of June 30, 2018, and December 31, 2017, are as follows:
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments usually have fixed expiration dates or other termination clauses, may have significant usage restrictions, and may require payment of a fee. Of the total commitments to extend credit at June 30, 2018, and December 31, 2017, approximately $103.4 million and $112.0 million, respectively, represent fixed rate loan commitments. Since certain of the commitments may expire without being drawn upon or may be revoked, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral held varies, but may include accounts receivable, inventory, premises and equipment, and real estate. Other liabilities includes $0.4 million for estimated losses attributable to the unadvanced commitments at June 30, 2018, and December 31, 2017. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance or payment of a customer to a third party. These standby letters of credit are issued to support contractual obligations of the Company’s customers. The credit risk involved in issuing letters of credit is essentially the same as the risk involved in extending loans to customers. As of June 30, 2018, the approximate remaining terms of standby letters of credit range from 1 month to 3 years and 6 months. Contingencies The Company and its subsidiaries are, from time to time, parties to various legal proceedings arising out of their businesses. Management believes there are no such proceedings pending or threatened against the Company or its subsidiaries which, if determined adversely, would have a material adverse effect on the business, consolidated financial condition, results of operations or cash flows of the Company or any of its subsidiaries. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | DERIVATIVE FINANCIAL INSTRUMENTS The Company is a party to various derivative financial instruments that are used in the normal course of business to meet the needs of its clients and as part of its risk management activities. These instruments include interest rate swaps and option contracts and foreign exchange forward contracts. The Company does not enter into derivative financial instruments for trading purposes. Hedging Instruments. At June 30, 2018, the Company has no outstanding derivative contracts used to manage risk. Client-Related Derivative Instruments. The Company enters into interest rate swaps to allow customers to hedge changes in fair value of certain loans while maintaining a variable rate loan on its own books. The Company also enters into foreign exchange forward contracts with clients, and enters into offsetting foreign exchange forward contracts with established financial institution counterparties. The table below summarizes the notional amounts and fair values of the client-related derivative instruments:
Changes in the fair value of client-related derivative instruments are recognized currently in operations. For the three and six months ended June 30, 2018 and 2017, the gains and losses offset each other due to the Company's hedging of the client swaps and foreign exchange contracts with other bank counterparties. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS Below is a description of certain assets and liabilities measured at fair value. The following table summarizes financial instruments measured at fair value on a recurring basis as of June 30, 2018 and December 31, 2017, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
The Company is not aware of an active market that exists for the 10-year streams of state tax credit financial instruments. However, the Company’s principal market for these tax credits consists of Missouri state residents who buy these credits and local and regional accounting firms who broker them. As such, the Company employed a discounted cash flow analysis (income approach) to determine the fair value. The remaining state tax credits carried at fair value are expected to be sold within the next several quarters. The state tax credit assets are reported as Level 3 assets.
There were no transfers between Level 1 and Level 2 during the three and six months ended June 30, 2018 and 2017. Level 3 financial instruments The following table presents the changes in Level 3 financial instruments measured at fair value on a recurring basis as of June 30, 2018 and 2017.
From time to time, the Company measures certain assets at fair value on a nonrecurring basis. These include assets that are measured at the lower of cost or fair value that were recognized at fair value below cost at the end of the period. The following table presents financial instruments and non-financial assets measured at fair value on a non-recurring basis as of June 30, 2018.
(1) The amounts represent only balances measured at fair value during the period and still held as of the reporting date. Impaired loans are reported at the fair value of the underlying collateral for collateral dependent loans. Fair values for impaired loans are obtained from current appraisals by qualified licensed appraisers or independent valuation specialists. At June 30, 2018, impaired loans measured on a non-recurring basis had a principal balance of $2.4 million, with a valuation allowance of $0.9 million. Other real estate owned is adjusted to fair value upon foreclosure of the underlying loan. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value less costs to sell. Fair value of other real estate is based upon the current appraised values of the properties as determined by qualified licensed appraisers and the Company’s judgment of other relevant market conditions. Following is a summary of the carrying amounts and fair values of the Company’s financial instruments on the consolidated balance sheets at June 30, 2018 and December 31, 2017. Fair values that are not estimable are listed at the carrying value.
For information regarding the methods and assumptions used to estimate the fair value of each class of financial instruments for which it is practical to estimate such value, refer to Note 18 – Fair Value Measurements in the Company's Annual Report on Form 10-K for the year ended December 31, 2017. The following table presents the level in the fair value hierarchy for the estimated fair values of only the Company’s financial instruments that are not already presented on the condensed consolidated balance sheets at fair value at June 30, 2018, and December 31, 2017.
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New Authoritative Accounting Guidance |
6 Months Ended |
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Jun. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Authoritative Accounting Guidance | NEW AUTHORITATIVE ACCOUNTING GUIDANCE Financial Accounting Standards Board (the "FASB") ASU 2017-08 "Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities" In March 2017, the FASB issued ASU 2017-08, "Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20)" which shortens the amortization period of certain callable debt securities held at a premium to the earliest call date. The amendments are effective for public business entities for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption being permitted. The Company has evaluated the new guidance and does not expect it to have a material impact on the Company's consolidated financial statements. At June 30, 2018, the book value of callable bonds that were purchased at a premium totaled $22.0 million, and the amount of unamortized premium remaining on these securities was $0.8 million. FASB ASU 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" In June 2016, the FASB issued ASU 2016-13, "Financial Instruments (Topic 326)" which changes the methodology for evaluating impairment of most financial instruments. The ASU replaces the currently used incurred loss model with a forward-looking expected loss model, which will generally result in a more timely recognition of losses. The guidance becomes effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company has formed an implementation team that includes members of accounting, credit, and loan operations to review the requirements of ASU 2016-13, and has contracted with a software provider to aid in implementation. The Company has not determined the impact this standard may have on its financial statements. FASB ASU 2016-02 "Leases (Topic 842)" In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)" which requires organizations that lease assets ("lessees") to recognize the assets and liabilities for the rights and obligations created by leases with terms of more than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee remains dependent on its classification as a finance or operating lease. The criteria for determining whether a lease is a finance or operating lease has not been significantly changed by this ASU. The ASU also requires additional disclosure of the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. The guidance becomes effective for periods beginning after December 15, 2018, including interim periods therein. Early adoption will be permitted. The Company has formed a lease implementation team that includes members of accounting, facilities and operations to review lease contracts and the requirements of ASU 2016-02. The Company expects the adoption of this standard will increase total assets on the Company's consolidated balance sheet and utilize capital. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||
Business and Consolidation | Basis of Financial Statement Presentation The condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with the accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All intercompany accounts and transactions have been eliminated. During the first quarter of 2018, the Company adopted Accounting Standards Update ("ASU") 2016-01, "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." ASU 2016-01 requires equity investments to be measured at fair value through earnings, and eliminates the available-for-sale classification for equity securities with readily determinable fair values. The guidance also provides an alternative to measure equity securities without readily determinable fair values at cost less impairment (if any), plus or minus observable price changes from an identical or similar investment of the same issuer (the “measurement alternative”). The Company elected the measurement alternative for its qualifying equity securities. The adoption of this update resulted in an insignificant increase to retained earnings which was reclassified from accumulated other comprehensive income. In addition, the Company early adopted ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" during the first quarter of 2018. The objective of ASU 2017-12 is to improve the financial reporting of hedging relationships by better aligning an entity's risk management activity with the economic objectives in undertaking those activities. The adoption of this update had an insignificant impact on the Company's consolidated financial statements. The Company also early adopted ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" during the first quarter of 2018. The ASU allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The adoption of this update resulted in an increase to retained earnings of $0.8 million which was reclassified from accumulated other comprehensive income. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Revenue The Company adopted the accounting standard regarding revenue recognition in the first quarter of 2018 using the modified retrospective approach. The Company's revenues are primarily composed of interest income on financial instruments, including investment securities, which are excluded from the scope of the new guidance. Certain other noninterest income from loans, investment securities and derivative financial instruments is also excluded from this guidance. Service charges on deposit accounts, wealth management revenue, card services revenue, and gain on sale of other real estate are within the scope of the guidance; however, there were no accounting policy changes as the Company's policies were consistent with the new guidance. Other noninterest income sources of revenue are considered immaterial. Implementation of this guidance did not change current business practices or have any changes to the Company's consolidated financial statements. Descriptions of our revenue-generating activities within the scope of this guidance, which are presented in our income statement as components of noninterest income are as follows:
Income Taxes The SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the Tax Cuts and Jobs Act of 2017 (“Tax Act”). SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. The Company has recorded amounts based on the information known and reasonable estimates used as of June 30, 2018, but are subject to change based on a number of factors. The Company will complete its analysis of certain tax positions at the time it files its tax returns for the year ended December 31, 2017 and will be able to conclude if any further adjustments to the provisional estimate of the impact recorded is required. |
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Available-for-sale Securities | Management systematically evaluates investment securities for other-than-temporary declines in fair value on a quarterly basis. This analysis requires management to consider various factors, which include among other considerations (1) the present value of the cash flows expected to be collected compared to the amortized cost of the security, (2) duration and magnitude of the decline in value, (3) the financial condition of the issuer or issuers, (4) structure of the security, and (5) the intent to sell the security or whether it is more likely than not the Company would be required to sell the security before its anticipated recovery in market value. At June 30, 2018, management performed its quarterly analysis of all securities with an unrealized loss and concluded no individual securities were other-than-temporarily impaired. |
Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Per Common Share Data and Amounts | The following table presents a summary of per common share data and amounts for the periods indicated.
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Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Available-for-sale and Held-to-Maturity Securities Reconciliation | The following table presents the amortized cost, gross unrealized gains and losses and fair value of securities available for sale and held to maturity:
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Schedule of Available-for-sale and Held-to-Maturity Securities Reconciliation | The following table presents the amortized cost, gross unrealized gains and losses and fair value of securities available for sale and held to maturity:
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Investments Classified by Contractual Maturity Date | The amortized cost and estimated fair value of debt securities at June 30, 2018, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The weighted average life of the mortgage-backed securities is approximately 5 years.
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Schedule of Unrealized Loss on Investments | The following table represents a summary of investment securities that had an unrealized loss:
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Loans (Tables) - Portfolio loans, net |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-covered Loans [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Portfolio Loans by Category | The table below shows the loan portfolio composition including carrying value categorized by loans accounted for at amortized cost, which includes our originated loans, and by loans accounted for as PCI.
The following tables refer to loans not accounted for as PCI loans. Below is a summary of loans by category at June 30, 2018 and December 31, 2017:
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Summary of Allowance for Loan Losses and the Recorded Investment in Portfolio Loans by Class and Category Based on Impairment Method | A summary of the activity in the allowance for loan losses and the recorded investment in loans by class and category based on impairment methodology through June 30, 2018, and at December 31, 2017, is as follows:
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Summary of Portfolio Loans Individually Evaluated for Impairment and Recorded Investment in Impaired Non-Covered Loans by Category | A summary of nonperforming loans individually evaluated for impairment by category at June 30, 2018 and December 31, 2017, and the income recognized on impaired loans is as follows:
The recorded investment in nonperforming loans by category at June 30, 2018 and December 31, 2017, is as follows:
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Summary of Recorded Investment by Category for Portfolio Loans Restructured | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Recorded Investment by Category for Portfolio Loans Restructured and Subsequently Defaulted | As of June 30, 2018, the Company had $2.0 million in specific reserves allocated to $7.9 million of loans that have been restructured. During the three and six months ended June 30, 2018 and 2017, there were no portfolio loans that subsequently defaulted. |
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Summary of Aging of Recorded Investment in Past Due Portfolio Loans by Portfolio Class and Category | The aging of the recorded investment in past due loans by portfolio class and category at June 30, 2018 and December 31, 2017 is shown below.
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Summary of Recorded Investment by Risk Category of Portfolio Loans by Portfolio Class and Category | The recorded investment by risk category of the loans by portfolio class and category at June 30, 2018, which is based upon the most recent analysis performed, and December 31, 2017 is as follows:
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Purchased Credit Impaired ("PCI") Loans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Covered Loans [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rollforward of PCI Loans, Net of Allowance for Loan Losses | The following table is a roll forward of PCI loans, net of the allowance for loan losses, for the six months ended June 30, 2018 and 2017.
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Covered Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Covered Loans [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of PCI Loans by Category | Below is a summary of PCI loans by category at June 30, 2018 and December 31, 2017:
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Summary of Aging of Recorded Investment in Past Due PCI Loans by Portfolio Class and Category | The aging of the recorded investment in past due PCI loans by portfolio class and category at June 30, 2018 and December 31, 2017 is shown below:
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Summary of FDIC Loss Share Receivable | Outstanding customer balances on PCI loans were $81.1 million and $94.9 million as of June 30, 2018, and December 31, 2017, respectively. |
Commitments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Commitments | The contractual amounts of off-balance-sheet financial instruments as of June 30, 2018, and December 31, 2017, are as follows:
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Derivative Financial Instruments (Tables) - Client-Related |
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Derivative [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts and Fair Values of Derivative Instruments and Client-Related Derivative Instruments | The table below summarizes the notional amounts and fair values of the client-related derivative instruments:
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | For the three and six months ended June 30, 2018 and 2017, the gains and losses offset each other due to the Company's hedging of the client swaps and foreign exchange contracts with other bank counterparties. |
Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Instruments Measured at Fair Value on a Recurring Basis | The following table summarizes financial instruments measured at fair value on a recurring basis as of June 30, 2018 and December 31, 2017, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
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Schedule of Level 3 Financial Instruments Measured at Fair Value on a Recurring Basis | The following table presents the changes in Level 3 financial instruments measured at fair value on a recurring basis as of June 30, 2018 and 2017.
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Summary of Financial Instruments and Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis | The following table presents financial instruments and non-financial assets measured at fair value on a non-recurring basis as of June 30, 2018.
(1) The amounts represent only balances measured at fair value during the period and still held as of the reporting date. |
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Summary of Carrying Amount and Fair Values of Financial Instruments Reported on the Balance Sheets | Following is a summary of the carrying amounts and fair values of the Company’s financial instruments on the consolidated balance sheets at June 30, 2018 and December 31, 2017. Fair values that are not estimable are listed at the carrying value.
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Schedule of Estimated Fair Values of Financial Instruments Not Recorded at Fair Value on Balance Sheet | The following table presents the level in the fair value hierarchy for the estimated fair values of only the Company’s financial instruments that are not already presented on the condensed consolidated balance sheets at fair value at June 30, 2018, and December 31, 2017.
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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net income as reported | $ 22,251 | $ 11,955 | $ 43,172 | $ 24,346 |
Weighted average common shares outstanding (in shares) | 23,124,000 | 23,475,000 | 23,119,000 | 22,706,000 |
Additional dilutive common stock equivalents (in shares) | 194,000 | 257,000 | 213,000 | 314,000 |
Weighted average diluted common shares outstanding (in shares) | 23,318,000 | 23,732,000 | 23,332,000 | 23,020,000 |
Basic earnings per common share (in dollars per share) | $ 0.96 | $ 0.51 | $ 1.87 | $ 1.07 |
Diluted earnings per common share (in dollars per share) | $ 0.95 | $ 0.50 | $ 1.85 | $ 1.06 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 0 |
Investments - Narrative (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Schedule of Available-for-sale Securities [Line Items] | ||
Other investments, at cost | $ 36,132 | $ 26,661 |
Maximum percentage of shareholders' equity security holdings held of one issuer | 10.00% | 10.00% |
Available-for-sale securities pledged as collateral, fair value | $ 376,000 | $ 500,000 |
Mortgage-backed securities, weighted average life | 5 years |
Loans - Summary of Past Due and Impaired Loans (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Receivables [Abstract] | ||||
Total interest income that would have been recognized under original terms | $ 467 | $ 340 | $ 1,001 | $ 655 |
Total cash received and recognized as interest income on non-accrual loans | 78 | 16 | 89 | 39 |
Total interest income recognized on accruing, impaired loans | $ 13 | $ 14 | $ 23 | $ 47 |
Loans - Narrative (Details) |
Jun. 30, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
loan
|
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of loans over 90 days past due and still accruing interest | loan | 0 | |
Unadvanced commitments on impaired loans | $ 0 | |
Specific reserves on restructured loans | $ 2,000,000.0 | |
Restructuring Reserve | 7,900,000 | |
Unadvanced Commitment on Impaired Loan | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Estimated losses attributable to unadvanced commitments on impaired loans | 400,000 | 350,000 |
Non-Covered Loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Restructuring Reserve | 633,000 | 719,000 |
Financing Receivable, Gross | 4,216,081,000 | 4,024,221,000 |
Non-Covered Loans | Consumer and other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Restructuring Reserve | 0 | 0 |
Financing Receivable, Gross | $ 147,304,000 | $ 137,234,000 |
Purchased Credit Impaired ("PCI") Loans - Narrative (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Receivables [Abstract] | ||
PCI loans outstanding | $ 81.1 | $ 94.9 |
Commitments (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Schedule of Commitments [Line Items] | ||
Unadvanced commitments on impaired loans | $ 0 | |
Commitments to extend credit | ||
Schedule of Commitments [Line Items] | ||
Off-balance sheet financial instruments, contractual amounts | $ 1,272,570 | 1,298,423 |
Letters of credit | ||
Schedule of Commitments [Line Items] | ||
Off-balance sheet financial instruments, contractual amounts | $ 54,647 | 73,790 |
Letters of credit | Maximum | ||
Schedule of Commitments [Line Items] | ||
Remaining term | 3 years 6 months | |
Letters of credit | Minimum | ||
Schedule of Commitments [Line Items] | ||
Remaining term | 1 month | |
Unadvanced Commitment on Impaired Loan | ||
Schedule of Commitments [Line Items] | ||
Estimated losses attributable to unadvanced commitments on impaired loans | $ 400 | 350 |
Fixed Rate Loan Commitment | Commitments to extend credit | ||
Schedule of Commitments [Line Items] | ||
Off-balance sheet financial instruments, contractual amounts | $ 103,400 | $ 112,000 |
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