x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 36-4460265 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
800 West Madison Street, Chicago, Illinois | 60607 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o | |
Emerging growth company o |
Page | |||
PART I. | |||
Item 1. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
PART II. | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 6. | |||
Item 1. | Financial Statements |
(Unaudited) | ||||||||
June 30, 2018 | December 31, 2017 | |||||||
ASSETS | ||||||||
Cash and due from banks | $ | 373,448 | $ | 397,880 | ||||
Interest earning deposits with banks | 119,672 | 181,341 | ||||||
Total cash and cash equivalents | 493,120 | 579,221 | ||||||
Investment securities: | ||||||||
Securities available for sale, at fair value | 1,647,260 | 1,408,326 | ||||||
Securities held to maturity, at amortized cost ($940,203 fair value at June 30, 2018 and $992,455 at December 31, 2017) | 923,036 | 959,082 | ||||||
Marketable equity securities, at fair value | 10,922 | — | ||||||
Non-marketable securities - FHLB and FRB stock | 115,453 | 114,111 | ||||||
Total investment securities | 2,696,671 | 2,481,519 | ||||||
Loans held for sale | 423,367 | 548,578 | ||||||
Loans: | ||||||||
Total loans, excluding purchased credit-impaired loans | 13,719,244 | 13,846,318 | ||||||
Purchased credit-impaired loans | 101,001 | 119,744 | ||||||
Total loans | 13,820,245 | 13,966,062 | ||||||
Less: Allowance for loan and lease losses | 162,790 | 157,710 | ||||||
Net loans | 13,657,455 | 13,808,352 | ||||||
Lease investments, net | 433,505 | 409,051 | ||||||
Premises and equipment, net | 281,458 | 286,690 | ||||||
Cash surrender value of life insurance | 205,982 | 203,602 | ||||||
Goodwill | 999,925 | 1,003,548 | ||||||
Other intangibles | 50,968 | 54,766 | ||||||
Mortgage servicing rights, at fair value | 296,629 | 276,279 | ||||||
Other real estate owned, net | 10,869 | 9,736 | ||||||
Other real estate owned related to FDIC-assisted transactions | 2,908 | 4,788 | ||||||
Other assets | 413,700 | 420,810 | ||||||
Total assets | $ | 19,966,557 | $ | 20,086,940 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
LIABILITIES | ||||||||
Deposits: | ||||||||
Non-interest bearing | $ | 6,347,208 | $ | 6,381,512 | ||||
Interest bearing | 8,575,455 | 8,576,866 | ||||||
Total deposits | 14,922,663 | 14,958,378 | ||||||
Short-term borrowings | 651,462 | 861,039 | ||||||
Long-term borrowings | 730,292 | 505,158 | ||||||
Junior subordinated notes issued to capital trusts | 194,450 | 211,494 | ||||||
Accrued expenses and other liabilities | 518,997 | 541,048 | ||||||
Total liabilities | 17,017,864 | 17,077,117 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Preferred stock, ($0.01 par value, authorized 10,000,000 shares at June 30, 2018 and December 31, 2017; Series A, 8% perpetual non-cumulative, none issued and outstanding at June 30, 2018 and 4,000,000 shares issued and outstanding at December 31, 2017, $25 liquidation value; Series C, 6% perpetual non-cumulative, 200,000 shares issued and outstanding at June 30, 2018 and December 31, 2017, $1,000 liquidation value) | 194,719 | 309,999 | ||||||
Common stock, ($0.01 par value; authorized 120,000,000 shares at June 30, 2018 and December 31, 2017; issued 86,121,465 shares at June 30, 2018 and 85,801,702 shares at December 31, 2017) | 861 | 858 | ||||||
Additional paid-in capital | 1,698,057 | 1,691,007 | ||||||
Retained earnings | 1,127,814 | 1,065,303 | ||||||
Accumulated other comprehensive (loss) income | (9,818 | ) | 3,584 | |||||
Less: 1,926,871 and 1,883,810 shares of treasury common stock, at cost, at June 30, 2018 and December 31, 2017, respectively | (62,940 | ) | (60,928 | ) | ||||
Total stockholders’ equity | 2,948,693 | 3,009,823 | ||||||
Total liabilities and stockholders’ equity | $ | 19,966,557 | $ | 20,086,940 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Interest income: | ||||||||||||||||
Loans: | ||||||||||||||||
Taxable | $ | 164,401 | $ | 143,426 | $ | 321,520 | $ | 277,163 | ||||||||
Nontaxable | 2,330 | 2,791 | 4,601 | 5,671 | ||||||||||||
Investment securities: | ||||||||||||||||
Taxable | 10,578 | 8,717 | 18,512 | 17,839 | ||||||||||||
Nontaxable | 9,439 | 9,837 | 18,915 | 19,810 | ||||||||||||
Other interest earning accounts and Federal funds sold | 244 | 228 | 375 | 427 | ||||||||||||
Total interest income | 186,992 | 164,999 | 363,923 | 320,910 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 17,386 | 8,793 | 32,418 | 16,268 | ||||||||||||
Short-term borrowings | 2,769 | 3,912 | 5,285 | 6,292 | ||||||||||||
Long-term borrowings and junior subordinated notes | 7,768 | 3,300 | 13,770 | 6,313 | ||||||||||||
Total interest expense | 27,923 | 16,005 | 51,473 | 28,873 | ||||||||||||
Net interest income | 159,069 | 148,994 | 312,450 | 292,037 | ||||||||||||
Provision for credit losses | 6,219 | 9,699 | 13,727 | 13,433 | ||||||||||||
Net interest income after provision for credit losses | 152,850 | 139,295 | 298,723 | 278,604 | ||||||||||||
Non-interest income: | ||||||||||||||||
Mortgage banking revenue | 18,926 | 30,152 | 43,973 | 58,608 | ||||||||||||
Lease financing revenue, net | 22,918 | 18,401 | 47,628 | 39,819 | ||||||||||||
Treasury management fees | 15,066 | 14,499 | 30,222 | 29,188 | ||||||||||||
Wealth management fees | 8,969 | 8,498 | 18,090 | 17,018 | ||||||||||||
Card fees | 5,654 | 4,413 | 10,441 | 8,979 | ||||||||||||
Capital markets and international banking fees | 3,785 | 3,586 | 6,783 | 6,839 | ||||||||||||
Consumer and other deposit service fees | 2,929 | 3,285 | 5,841 | 6,648 | ||||||||||||
Brokerage fees | 1,050 | 1,250 | 1,914 | 2,375 | ||||||||||||
Loan service fees | 2,148 | 2,037 | 4,393 | 4,006 | ||||||||||||
Increase in cash surrender value of life insurance | 1,272 | 1,301 | 2,380 | 2,589 | ||||||||||||
Net (loss) gain on investment securities | (86 | ) | 137 | (260 | ) | 368 | ||||||||||
Net loss on disposal of other assets | (397 | ) | (4 | ) | (754 | ) | (127 | ) | ||||||||
Other operating income | 6,072 | 3,615 | 10,457 | 7,310 | ||||||||||||
Total non-interest income | 88,306 | 91,170 | 181,108 | 183,620 | ||||||||||||
Non-interest expenses: | ||||||||||||||||
Salaries and employee benefits expense | 123,478 | 102,566 | 229,992 | 204,117 | ||||||||||||
Occupancy and equipment expense | 16,451 | 15,284 | 33,880 | 30,328 | ||||||||||||
Computer services and telecommunication expense | 10,871 | 9,785 | 22,027 | 19,225 | ||||||||||||
Advertising and marketing expense | 3,342 | 3,245 | 7,205 | 6,406 | ||||||||||||
Professional and legal expense | 8,887 | 2,450 | 10,785 | 5,141 | ||||||||||||
Other intangibles amortization expense | 1,896 | 2,086 | 3,798 | 4,176 | ||||||||||||
Branch exit and facilities impairment charges | 340 | 6,589 | 340 | 5,907 | ||||||||||||
Net loss recognized on other real estate owned and other related expense | 1,048 | 690 | 1,095 | 1,534 | ||||||||||||
Loss on extinguishment of debt | — | — | 3,136 | — | ||||||||||||
Goodwill impairment loss | 3,623 | — | 3,623 | — | ||||||||||||
Other operating expenses | 23,056 | 23,517 | 44,997 | 45,720 | ||||||||||||
Total non-interest expenses | 192,992 | 166,212 | 360,878 | 322,554 | ||||||||||||
Income before income taxes | 48,164 | 64,253 | 118,953 | 139,670 | ||||||||||||
Income tax expense | 9,631 | 19,787 | 23,663 | 40,667 | ||||||||||||
Net income | 38,533 | 44,466 | 95,290 | 99,003 | ||||||||||||
Dividends on preferred shares | 3,000 | 2,002 | 6,100 | 4,005 | ||||||||||||
Return from preferred stockholders due to redemption | — | — | (15,280 | ) | — | |||||||||||
Net income available to common stockholders | $ | 35,533 | $ | 42,464 | $ | 104,470 | $ | 94,998 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Common share data: | ||||||||||||||||
Basic earnings per common share | $ | 0.42 | $ | 0.51 | $ | 1.24 | $ | 1.13 | ||||||||
Diluted earnings per common share | 0.42 | 0.50 | 1.23 | 1.12 | ||||||||||||
Weighted average common shares outstanding for basic earnings per common share | 84,253,966 | 83,842,963 | 84,160,344 | 83,753,195 | ||||||||||||
Diluted weighted average common shares outstanding for diluted earnings per common share | 85,251,810 | 84,767,414 | 85,074,626 | 84,773,271 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income | $ | 38,533 | $ | 44,466 | $ | 95,290 | $ | 99,003 | ||||||||
Unrealized holding (gains) losses on investment securities, net of reclassification adjustments | (7,968 | ) | 3,979 | (20,060 | ) | 10,033 | ||||||||||
Reclassification adjustment for amortization of unrealized losses (gains) on investment securities transferred to held to maturity from available for sale | 115 | (350 | ) | 266 | (823 | ) | ||||||||||
Reclassification adjustments for losses (gains) included in net income | 86 | (137 | ) | 260 | (368 | ) | ||||||||||
Other comprehensive (loss) income, before tax | (7,767 | ) | 3,492 | (19,534 | ) | 8,842 | ||||||||||
Income tax expense (benefit) related to items of other comprehensive (loss) income | 2,097 | (1,387 | ) | 5,225 | (3,512 | ) | ||||||||||
Other comprehensive (loss) income, net of tax | (5,670 | ) | 2,105 | (14,309 | ) | 5,330 | ||||||||||
Comprehensive income | $ | 32,863 | $ | 46,571 | $ | 80,981 | $ | 104,333 |
Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss), Net of Tax | Treasury Stock | Non-controlling Interest | Total Stock- holders’ Equity | |||||||||||||||||
Balance at December 31, 2016 | $ | 115,572 | $ | 856 | $ | 1,678,826 | $ | 838,892 | $ | 5,190 | $ | (60,384 | ) | $ | 257 | $ | 2,579,209 | |||||||
Net income | — | — | — | 99,003 | — | — | — | 99,003 | ||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | 5,330 | — | — | 5,330 | ||||||||||||||||
Cash dividends declared on preferred shares | — | — | — | (4,005 | ) | — | — | — | (4,005 | ) | ||||||||||||||
Cash dividends declared on common shares ($0.40 per share) | — | — | — | (33,960 | ) | — | — | — | (33,960 | ) | ||||||||||||||
Restricted common stock activity, net of tax | — | — | (6,837 | ) | — | — | 3,550 | — | (3,287 | ) | ||||||||||||||
Stock option activity, net of tax | — | 1 | 448 | — | — | — | — | 449 | ||||||||||||||||
Repurchase of common shares in connection with employee benefit plans and held in trust for deferred compensation plan | — | — | 461 | — | — | (3,017 | ) | — | (2,556 | ) | ||||||||||||||
Stock-based compensation expense | — | — | 8,924 | — | — | — | — | 8,924 | ||||||||||||||||
Purchase of additional investment in subsidiary from minority owners | — | — | (570 | ) | — | — | — | (257 | ) | (827 | ) | |||||||||||||
Balance at June 30, 2017 | $ | 115,572 | $ | 857 | $ | 1,681,252 | $ | 899,930 | $ | 10,520 | $ | (59,851 | ) | $ | — | $ | 2,648,280 | |||||||
Balance at December 31, 2017 | $ | 309,999 | $ | 858 | $ | 1,691,007 | $ | 1,065,303 | $ | 3,584 | $ | (60,928 | ) | $ | — | $ | 3,009,823 | |||||||
Cumulative effect of accounting changes | — | — | — | (1,204 | ) | 907 | — | — | (297 | ) | ||||||||||||||
Net income | — | — | — | 95,290 | — | — | — | 95,290 | ||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | (14,309 | ) | — | — | (14,309 | ) | ||||||||||||||
Redemption of preferred stock | (115,280 | ) | — | — | 15,280 | — | — | — | (100,000 | ) | ||||||||||||||
Cash dividends declared on preferred shares | — | — | — | (6,100 | ) | — | — | — | (6,100 | ) | ||||||||||||||
Cash dividends declared on common shares ($0.48 per share) | — | — | — | (40,755 | ) | — | — | — | (40,755 | ) | ||||||||||||||
Restricted common stock activity, net of tax | — | 1 | (3,210 | ) | — | — | — | — | (3,209 | ) | ||||||||||||||
Stock option activity, net of tax | — | 2 | 428 | — | — | — | — | 430 | ||||||||||||||||
Repurchase of common shares in connection with employee benefit plans and held in trust for deferred compensation plan | — | — | 686 | — | — | (2,012 | ) | — | (1,326 | ) | ||||||||||||||
Stock-based compensation expense | — | — | 9,146 | — | — | — | — | 9,146 | ||||||||||||||||
Balance at June 30, 2018 | $ | 194,719 | $ | 861 | $ | 1,698,057 | $ | 1,127,814 | $ | (9,818 | ) | $ | (62,940 | ) | $ | — | $ | 2,948,693 |
Six Months Ended | ||||||||
June 30, | ||||||||
2018 | 2017 | |||||||
Cash Flows From Operating Activities | ||||||||
Net income | $ | 95,290 | $ | 99,003 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation of premises and equipment and leased equipment | 55,690 | 44,922 | ||||||
Branch exit and facilities impairment charges | 340 | 5,907 | ||||||
Compensation expense for share-based payment plans | 9,146 | 8,924 | ||||||
Net loss (gain) on sales of premises and equipment and leased equipment | 684 | (752 | ) | |||||
Amortization of other intangibles | 3,798 | 4,176 | ||||||
Provision for credit losses | 13,727 | 13,433 | ||||||
Deferred income tax expense | 26,233 | 22,072 | ||||||
Amortization of premiums and discounts on investment securities, net | 16,731 | 20,754 | ||||||
Accretion of discounts on loans, net | (9,239 | ) | (13,858 | ) | ||||
Net loss (gain) on investment securities | 260 | (368 | ) | |||||
Proceeds from sale of loans held for sale | 2,046,650 | 2,340,861 | ||||||
Origination of loans held for sale | (1,949,399 | ) | (2,321,902 | ) | ||||
Net loss on sale of loans held for sale | 13,732 | 887 | ||||||
Origination of mortgage servicing rights | (25,041 | ) | (27,568 | ) | ||||
Change in fair value of mortgage servicing rights | 4,826 | 16,677 | ||||||
Net loss on other real estate owned | 737 | 1,313 | ||||||
Increase in cash surrender value of life insurance | (2,380 | ) | (2,589 | ) | ||||
Loss on extinguishment of debt | 3,136 | — | ||||||
Goodwill impairment loss | 3,623 | — | ||||||
Increase in other assets, net | 13,370 | 2,797 | ||||||
Decrease in other liabilities, net | (58,110 | ) | (37,530 | ) | ||||
Net cash provided by operating activities | 263,804 | 177,159 | ||||||
Cash Flows From Investing Activities | ||||||||
Proceeds from sales of investment securities available for sale | 2,610 | 2,271 | ||||||
Proceeds from maturities and calls of investment securities available for sale | 202,918 | 167,856 | ||||||
Purchases of investment securities available for sale | (480,158 | ) | (47,016 | ) | ||||
Proceeds from maturities and calls of investment securities held to maturity | 62,668 | 72,250 | ||||||
Purchases of investment securities held to maturity | (26,443 | ) | (29,457 | ) | ||||
Purchase of marketable equity securities | (312 | ) | — | |||||
Proceeds from sales of marketable equity securities | 178 | — | ||||||
Purchases of non-marketable securities - FHLB and FRB stock | (33,212 | ) | (110,711 | ) | ||||
Redemption of non-marketable securities - FHLB and FRB stock | 31,870 | 93,783 | ||||||
Net decrease (increase) in loans | 143,580 | (832,802 | ) | |||||
Purchases of mortgage servicing rights | (135 | ) | (786 | ) | ||||
Purchases of premises and equipment and leased equipment | (76,901 | ) | (78,833 | ) | ||||
Proceeds from sales of premises and equipment and leased equipment | 7,361 | 14,227 | ||||||
Proceeds from sale of other real estate owned | 2,766 | 16,686 | ||||||
Proceeds from sale of other real estate owned related to FDIC-assisted transactions | 1,213 | 2,587 | ||||||
Purchase of additional investment in subsidiary from minority owners | — | (827 | ) | |||||
Net proceeds from FDIC related covered assets | 434 | (227 | ) | |||||
Net cash used in investing activities | (161,563 | ) | (730,999 | ) | ||||
Cash Flows From Financing Activities | ||||||||
Net (decrease) increase in deposits | (35,715 | ) | 151,371 | |||||
Proceeds from short-term borrowings - FHLB advances | 140,000 | 2,350,000 | ||||||
Principal paid on short-term borrowings - FHLB advances | (550,000 | ) | (2,125,000 | ) | ||||
Net increase in other short-term borrowings | 15,423 | 49,070 | ||||||
Proceeds from long-term borrowings | 451,827 | 262,864 | ||||||
Principal paid on long-term borrowings | (41,693 | ) | (94,494 | ) | ||||
Redemption of junior subordinated notes issued to capital trusts | (20,619 | ) | — | |||||
Redemption of preferred stock | (100,000 | ) | — | |||||
Treasury stock transactions, net | (1,326 | ) | (2,556 | ) | ||||
Stock options exercised | 2,803 | 1,376 | ||||||
Dividends paid on preferred stock | (8,100 | ) | (4,005 | ) | ||||
Dividends paid on common stock | (40,942 | ) | (33,998 | ) | ||||
Net cash (used in) provided by financing activities | (188,342 | ) | 554,628 | |||||
Net (decrease) increase in cash and cash equivalents | $ | (86,101 | ) | $ | 788 | |||
Cash and cash equivalents: | ||||||||
Beginning of period | 579,221 | 463,469 | ||||||
End of period | $ | 493,120 | $ | 464,257 |
Six Months Ended | ||||||||
June 30, | ||||||||
2018 | 2017 | |||||||
Supplemental Disclosures of Cash Flow Information: | ||||||||
Cash payments for: | ||||||||
Interest paid to depositors and on other borrowed funds | $ | 50,873 | $ | 27,666 | ||||
Income tax payments, net | 1,951 | 2,486 | ||||||
Supplemental Schedule of Noncash Investing Activities: | ||||||||
Investment securities held to maturity purchased not settled | $ | 8,806 | $ | 2,553 | ||||
Loans transferred to other real estate owned | 3,890 | 2,658 | ||||||
Loans transferred to other real estate owned related to FDIC-assisted transactions | — | 2,321 | ||||||
Loans transferred to repossessed assets | 1,299 | 969 | ||||||
Operating leases rewritten as direct finance leases included as loans | 2,359 | 1,547 | ||||||
Long-term borrowings transferred to short-term borrowings | 185,000 | 150,000 | ||||||
Supplemental Schedule of Noncash Investing Activities From Acquisitions: | ||||||||
Adjustments to noncash assets previously acquired: | ||||||||
Loans | $ | — | $ | 1,846 | ||||
Goodwill | — | (1,113 | ) | |||||
Other assets | — | (733 | ) | |||||
Total adjustments to noncash assets previously acquired | $ | — | $ | — |
Note 1. | Basis of Presentation |
Note 2. | New Authoritative Accounting Guidance |
Note 3. | Earnings Per Common Share |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Distributed earnings allocated to common stock | $ | 20,472 | $ | 17,829 | $ | 40,755 | $ | 33,960 | ||||||||
Undistributed earnings | 18,061 | 26,637 | 54,535 | 65,043 | ||||||||||||
Net income | 38,533 | 44,466 | 95,290 | 99,003 | ||||||||||||
Less: preferred stock dividends | 3,000 | 2,002 | 6,100 | 4,005 | ||||||||||||
Plus: return from preferred stockholders due to redemption (1) | — | — | 15,280 | — | ||||||||||||
Net income available to common stockholders for basic earnings per common share | 35,533 | 42,464 | 104,470 | 94,998 | ||||||||||||
Plus: preferred stock dividends on convertible preferred stock | — | 2 | — | 5 | ||||||||||||
Less: earnings allocated to participating securities | 1 | 1 | 3 | 2 | ||||||||||||
Earnings allocated to common stockholders for diluted earnings per common share | $ | 35,532 | $ | 42,465 | $ | 104,467 | $ | 95,001 | ||||||||
Weighted average shares outstanding for basic earnings per common share | 84,253,966 | 83,842,963 | 84,160,344 | 83,753,195 | ||||||||||||
Dilutive effect of: | ||||||||||||||||
Stock options | 553,999 | 554,314 | 530,892 | 595,415 | ||||||||||||
Restricted shares and units | 443,845 | 363,003 | 383,390 | 417,433 | ||||||||||||
Convertible preferred stock | — | 7,134 | — | 7,228 | ||||||||||||
Total dilutive effect of equity awards and convertible preferred stock | 997,844 | 924,451 | 914,282 | 1,020,076 | ||||||||||||
Weighted average shares outstanding for diluted earnings per common share | 85,251,810 | 84,767,414 | 85,074,626 | 84,773,271 | ||||||||||||
Basic earnings per common share | $ | 0.42 | $ | 0.51 | $ | 1.24 | $ | 1.13 | ||||||||
Diluted earnings per common share | 0.42 | 0.50 | 1.23 | 1.12 |
(1) | Represents the excess carrying amount over the redemption price of the 8% Series A non-cumulative perpetual preferred stock redeemed in the first quarter of 2018. |
Note 4. | Investment Securities |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
June 30, 2018 | ||||||||||||||||
Available for Sale | ||||||||||||||||
U.S. Government sponsored agencies and enterprises | $ | 5,098 | $ | — | $ | (72 | ) | $ | 5,026 | |||||||
States and political subdivisions | 338,927 | 11,686 | (552 | ) | 350,061 | |||||||||||
Residential mortgage-backed securities | 1,225,978 | 1,594 | (21,993 | ) | 1,205,579 | |||||||||||
Commercial mortgage-backed securities | 63,527 | 84 | (187 | ) | 63,424 | |||||||||||
Corporate bonds | 23,179 | — | (9 | ) | 23,170 | |||||||||||
Total Available for Sale | 1,656,709 | 13,364 | (22,813 | ) | 1,647,260 | |||||||||||
Held to Maturity | ||||||||||||||||
States and political subdivisions | 884,576 | 18,512 | (1,745 | ) | 901,343 | |||||||||||
Residential mortgage-backed securities | 38,460 | 400 | — | 38,860 | ||||||||||||
Total Held to Maturity | 923,036 | 18,912 | (1,745 | ) | 940,203 | |||||||||||
Total | $ | 2,579,745 | $ | 32,276 | $ | (24,558 | ) | $ | 2,587,463 | |||||||
December 31, 2017 | ||||||||||||||||
Available for Sale | ||||||||||||||||
U.S. Government sponsored agencies and enterprises | $ | 23,013 | $ | 3 | $ | (9 | ) | $ | 23,007 | |||||||
States and political subdivisions | 363,813 | 15,998 | (486 | ) | 379,325 | |||||||||||
Residential mortgage-backed securities | 861,594 | 3,035 | (11,930 | ) | 852,699 | |||||||||||
Commercial mortgage-backed securities | 71,554 | 612 | (131 | ) | 72,035 | |||||||||||
Corporate bonds | 70,155 | 84 | (42 | ) | 70,197 | |||||||||||
Equity securities (1) | 11,236 | — | (173 | ) | 11,063 | |||||||||||
Total Available for Sale | 1,401,365 | 19,732 | (12,771 | ) | 1,408,326 | |||||||||||
Held to Maturity | ||||||||||||||||
States and political subdivisions | 878,400 | 32,559 | (447 | ) | 910,512 | |||||||||||
Residential mortgage-backed securities | 80,682 | 1,261 | — | 81,943 | ||||||||||||
Total Held to Maturity | 959,082 | 33,820 | (447 | ) | 992,455 | |||||||||||
Total | $ | 2,360,447 | $ | 53,552 | $ | (13,218 | ) | $ | 2,400,781 |
(1) | Reflected in marketable equity securities on the consolidated balance sheet following the adoption of the new guidance under ASC Topic 825 "Financial Instruments" on January 1, 2018. |
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
Available for Sale | ||||||||||||||||||||||||
U.S. Government sponsored agencies and enterprises | $ | 5,026 | $ | (72 | ) | $ | — | $ | — | $ | 5,026 | $ | (72 | ) | ||||||||||
States and political subdivisions | 13,492 | (57 | ) | 18,587 | (495 | ) | 32,079 | (552 | ) | |||||||||||||||
Residential mortgage-backed securities | 713,248 | (7,402 | ) | 398,203 | (14,591 | ) | 1,111,451 | (21,993 | ) | |||||||||||||||
Commercial mortgage-backed securities | 31,993 | (127 | ) | 11,263 | (60 | ) | 43,256 | (187 | ) | |||||||||||||||
Corporate bonds | 23,170 | (9 | ) | — | — | 23,170 | (9 | ) | ||||||||||||||||
Total Available for Sale | 786,929 | (7,667 | ) | 428,053 | (15,146 | ) | 1,214,982 | (22,813 | ) | |||||||||||||||
Held to Maturity | ||||||||||||||||||||||||
States and political subdivisions | 131,461 | (1,191 | ) | 14,546 | (554 | ) | 146,007 | (1,745 | ) | |||||||||||||||
Total | $ | 918,390 | $ | (8,858 | ) | $ | 442,599 | $ | (15,700 | ) | $ | 1,360,989 | $ | (24,558 | ) |
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
Available for Sale | ||||||||||||||||||||||||
U.S. Government sponsored agencies and enterprises | $ | 5,111 | $ | (9 | ) | $ | — | $ | — | $ | 5,111 | $ | (9 | ) | ||||||||||
States and political subdivisions | 9,016 | (29 | ) | 18,754 | (457 | ) | 27,770 | (486 | ) | |||||||||||||||
Residential mortgage-backed securities | 256,769 | (1,853 | ) | 407,224 | (10,077 | ) | 663,993 | (11,930 | ) | |||||||||||||||
Commercial mortgage-backed securities | 19,483 | (20 | ) | 14,583 | (111 | ) | 34,066 | (131 | ) | |||||||||||||||
Corporate bonds | 7,052 | (8 | ) | 9,963 | (34 | ) | 17,015 | (42 | ) | |||||||||||||||
Equity securities | 11,063 | (173 | ) | — | — | 11,063 | (173 | ) | ||||||||||||||||
Total Available for Sale | 308,494 | (2,092 | ) | 450,524 | (10,679 | ) | 759,018 | (12,771 | ) | |||||||||||||||
Held to Maturity | ||||||||||||||||||||||||
States and political subdivisions | 45,499 | (257 | ) | 12,561 | (190 | ) | 58,060 | (447 | ) | |||||||||||||||
Total | $ | 353,993 | $ | (2,349 | ) | $ | 463,085 | $ | (10,869 | ) | $ | 817,078 | $ | (13,218 | ) |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Realized gains | $ | 62 | $ | 137 | $ | 150 | $ | 374 | ||||||||
Realized losses | (148 | ) | — | (410 | ) | (6 | ) | |||||||||
Net (losses) gains | $ | (86 | ) | $ | 137 | $ | (260 | ) | $ | 368 |
Amortized | Fair | |||||||
(In thousands) | Cost | Value | ||||||
Available for sale: | ||||||||
Due in one year or less | $ | 61,670 | $ | 62,235 | ||||
Due after one year through five years | 124,424 | 128,078 | ||||||
Due after five years through ten years | 40,076 | 40,532 | ||||||
Due after ten years | 141,034 | 147,412 | ||||||
Residential and commercial mortgage-backed securities | 1,289,505 | 1,269,003 | ||||||
1,656,709 | 1,647,260 | |||||||
Held to maturity: | ||||||||
Due in one year or less | 42,695 | 42,916 | ||||||
Due after one year through five years | 175,308 | 180,895 | ||||||
Due after five years through ten years | 224,040 | 229,732 | ||||||
Due after ten years | 442,533 | 447,800 | ||||||
Residential mortgage-backed securities | 38,460 | 38,860 | ||||||
923,036 | 940,203 | |||||||
Total | $ | 2,579,745 | $ | 2,587,463 |
Note 5. | Loans |
June 30, 2018 | December 31, 2017 | |||||||
Commercial loans | $ | 4,816,545 | $ | 4,786,180 | ||||
Commercial loans collateralized by assignment of lease payments | 2,100,460 | 2,113,135 | ||||||
Commercial real estate | 3,929,327 | 4,147,529 | ||||||
Residential real estate | 1,352,625 | 1,432,458 | ||||||
Construction real estate | 495,805 | 406,849 | ||||||
Indirect vehicle | 749,983 | 667,928 | ||||||
Home equity | 192,785 | 219,098 | ||||||
Other consumer loans | 81,714 | 73,141 | ||||||
Total loans, excluding purchased credit-impaired loans | 13,719,244 | 13,846,318 | ||||||
Purchased credit-impaired loans | 101,001 | 119,744 | ||||||
Total loans | $ | 13,820,245 | $ | 13,966,062 |
Current | 30-59 Days Past Due | 60-89 Days Past Due | Loans Past Due 90 Days or More | Total Past Due | Total | |||||||||||||||||||
June 30, 2018 | ||||||||||||||||||||||||
Commercial | $ | 4,808,606 | $ | 116 | $ | 217 | $ | 7,606 | $ | 7,939 | $ | 4,816,545 | ||||||||||||
Commercial collateralized by assignment of lease payments | 2,069,443 | 16,560 | 10,769 | 3,688 | 31,017 | 2,100,460 | ||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Health care | 694,863 | — | — | — | — | 694,863 | ||||||||||||||||||
Industrial | 857,560 | 764 | — | 3,424 | 4,188 | 861,748 | ||||||||||||||||||
Multifamily | 549,083 | 529 | — | — | 529 | 549,612 | ||||||||||||||||||
Retail | 489,135 | — | — | 835 | 835 | 489,970 | ||||||||||||||||||
Office | 430,984 | — | — | 228 | 228 | 431,212 | ||||||||||||||||||
Other | 900,604 | 552 | 86 | 680 | 1,318 | 901,922 | ||||||||||||||||||
Residential real estate | 1,341,504 | 617 | 1,687 | 8,817 | 11,121 | 1,352,625 | ||||||||||||||||||
Construction real estate | 495,805 | — | — | — | — | 495,805 | ||||||||||||||||||
Indirect vehicle | 744,297 | 3,947 | 1,131 | 608 | 5,686 | 749,983 | ||||||||||||||||||
Home equity | 186,479 | 1,187 | 794 | 4,325 | 6,306 | 192,785 | ||||||||||||||||||
Other consumer | 81,541 | 91 | 43 | 39 | 173 | 81,714 | ||||||||||||||||||
Total loans, excluding purchased credit-impaired loans | 13,649,904 | 24,363 | 14,727 | 30,250 | 69,340 | 13,719,244 | ||||||||||||||||||
Purchased credit-impaired loans | 60,429 | 4,685 | 5,124 | 30,763 | 40,572 | 101,001 | ||||||||||||||||||
Total loans | $ | 13,710,333 | $ | 29,048 | $ | 19,851 | $ | 61,013 | $ | 109,912 | $ | 13,820,245 | ||||||||||||
Non-performing loan aging | $ | 30,509 | $ | 1,103 | $ | 6,663 | $ | 30,250 | $ | 38,016 | $ | 68,525 | ||||||||||||
December 31, 2017 | ||||||||||||||||||||||||
Commercial | $ | 4,769,244 | $ | 1,702 | $ | 6,926 | $ | 8,308 | $ | 16,936 | $ | 4,786,180 | ||||||||||||
Commercial collateralized by assignment of lease payments | 2,099,246 | 11,320 | 1,878 | 691 | 13,889 | 2,113,135 | ||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Health care | 710,722 | — | — | — | — | 710,722 | ||||||||||||||||||
Industrial | 908,394 | — | — | 755 | 755 | 909,149 | ||||||||||||||||||
Multifamily | 601,844 | 688 | — | 732 | 1,420 | 603,264 | ||||||||||||||||||
Retail | 503,224 | — | — | 474 | 474 | 503,698 | ||||||||||||||||||
Office | 453,960 | — | 956 | 1,454 | 2,410 | 456,370 | ||||||||||||||||||
Other | 956,181 | 7,035 | 76 | 1,034 | 8,145 | 964,326 | ||||||||||||||||||
Residential real estate | 1,410,473 | 12,359 | 1,907 | 7,719 | 21,985 | 1,432,458 | ||||||||||||||||||
Construction real estate | 404,595 | 2,254 | — | — | 2,254 | 406,849 | ||||||||||||||||||
Indirect vehicle | 661,028 | 4,905 | 1,083 | 912 | 6,900 | 667,928 | ||||||||||||||||||
Home equity | 210,831 | 3,161 | 1,073 | 4,033 | 8,267 | 219,098 | ||||||||||||||||||
Other consumer | 72,846 | 202 | 36 | 57 | 295 | 73,141 | ||||||||||||||||||
Total loans, excluding purchased credit-impaired loans | 13,762,588 | 43,626 | 13,935 | 26,169 | 83,730 | 13,846,318 | ||||||||||||||||||
Purchased credit-impaired loans | 63,937 | 8,749 | 3,997 | 43,061 | 55,807 | 119,744 | ||||||||||||||||||
Total loans | $ | 13,826,525 | $ | 52,375 | $ | 17,932 | $ | 69,230 | $ | 139,537 | $ | 13,966,062 | ||||||||||||
Non-performing loan aging | $ | 36,879 | $ | 8,799 | $ | 4,961 | $ | 26,169 | $ | 39,929 | $ | 76,808 |
June 30, 2018 | December 31, 2017 | |||||||||||||||
Loans past due | Loans past due | |||||||||||||||
Non-accrual | 90 days or more and still accruing | Non-accrual | 90 days or more and still accruing | |||||||||||||
Commercial | $ | 10,727 | $ | — | $ | 14,001 | $ | 3,500 | ||||||||
Commercial collateralized by assignment of lease payments | 5,373 | 3,688 | 490 | 531 | ||||||||||||
Commercial real estate: | ||||||||||||||||
Health care | — | — | — | — | ||||||||||||
Industrial | 3,485 | — | 8,807 | — | ||||||||||||
Multifamily | 635 | — | 860 | — | ||||||||||||
Office | 557 | — | 2,772 | — | ||||||||||||
Retail | 835 | — | 590 | — | ||||||||||||
Other | 5,813 | 75 | 8,016 | 190 | ||||||||||||
Residential real estate | 19,103 | 201 | 18,374 | 1,210 | ||||||||||||
Construction real estate | — | — | — | — | ||||||||||||
Indirect vehicle | 3,444 | 7 | 3,019 | 81 | ||||||||||||
Home equity | 14,541 | — | 14,305 | — | ||||||||||||
Other consumer | 2 | 39 | 4 | 58 | ||||||||||||
Total | $ | 64,515 | $ | 4,010 | $ | 71,238 | $ | 5,570 |
Pass | Special Mention | Substandard | Doubtful | Total | ||||||||||||||||
June 30, 2018 | ||||||||||||||||||||
Commercial | $ | 4,518,183 | $ | 169,458 | $ | 128,904 | $ | — | $ | 4,816,545 | ||||||||||
Commercial collateralized by assignment of lease payments | 2,083,287 | 6,114 | 11,059 | — | 2,100,460 | |||||||||||||||
Commercial real estate: | ||||||||||||||||||||
Health care | 610,505 | 7,149 | 77,209 | — | 694,863 | |||||||||||||||
Industrial | 833,104 | 19,720 | 8,924 | — | 861,748 | |||||||||||||||
Multifamily | 546,488 | 1,345 | 1,779 | — | 549,612 | |||||||||||||||
Retail | 465,899 | 21,226 | 2,845 | — | 489,970 | |||||||||||||||
Office | 422,682 | 4,735 | 3,795 | — | 431,212 | |||||||||||||||
Other | 854,186 | 16,600 | 31,136 | — | 901,922 | |||||||||||||||
Construction real estate | 490,270 | — | 5,535 | — | 495,805 | |||||||||||||||
Total | $ | 10,824,604 | $ | 246,347 | $ | 271,186 | $ | — | $ | 11,342,137 | ||||||||||
December 31, 2017 | ||||||||||||||||||||
Commercial | $ | 4,535,111 | $ | 147,232 | $ | 103,837 | $ | — | $ | 4,786,180 | ||||||||||
Commercial collateralized by assignment of lease payments | 2,095,668 | 7,527 | 9,940 | — | 2,113,135 | |||||||||||||||
Commercial real estate: | ||||||||||||||||||||
Health care | 640,751 | 33,672 | 36,299 | — | 710,722 | |||||||||||||||
Industrial | 885,524 | 12,411 | 11,214 | — | 909,149 | |||||||||||||||
Multifamily | 595,818 | 146 | 7,300 | — | 603,264 | |||||||||||||||
Retail | 492,830 | 8,326 | 2,542 | — | 503,698 | |||||||||||||||
Office | 452,902 | 696 | 2,772 | — | 456,370 | |||||||||||||||
Other | 891,703 | 37,682 | 34,941 | — | 964,326 | |||||||||||||||
Construction real estate | 406,849 | — | — | — | 406,849 | |||||||||||||||
Total | $ | 10,997,156 | $ | 247,692 | $ | 208,845 | $ | — | $ | 11,453,693 |
Performing | Non-performing | Total | ||||||||||
June 30, 2018 | ||||||||||||
Residential real estate | $ | 1,333,321 | $ | 19,304 | $ | 1,352,625 | ||||||
Indirect vehicle | 746,532 | 3,451 | 749,983 | |||||||||
Home equity | 178,244 | 14,541 | 192,785 | |||||||||
Other consumer | 81,673 | 41 | 81,714 | |||||||||
Total | $ | 2,339,770 | $ | 37,337 | $ | 2,377,107 | ||||||
December 31, 2017 | ||||||||||||
Residential real estate | $ | 1,412,874 | $ | 19,584 | $ | 1,432,458 | ||||||
Indirect vehicle | 664,828 | 3,100 | 667,928 | |||||||||
Home equity | 204,793 | 14,305 | 219,098 | |||||||||
Other consumer | 73,079 | 62 | 73,141 | |||||||||
Total | $ | 2,355,574 | $ | 37,051 | $ | 2,392,625 |
June 30, 2018 | ||||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Partial Charge-offs | Allowance for Loan Losses Allocated | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||||||||||||||
Commercial | $ | 5,862 | $ | 5,321 | $ | 541 | $ | — | $ | 6,473 | $ | — | $ | 6,768 | $ | — | ||||||||||||||||
Commercial collateralized by assignment of lease payments | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||||||
Health care | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Industrial | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Multifamily | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Retail | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Office | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other | — | — | — | — | — | — | 1,653 | 52 | ||||||||||||||||||||||||
Residential real estate | 4,089 | 4,051 | 38 | — | 4,142 | — | 3,770 | — | ||||||||||||||||||||||||
Construction real estate | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Indirect vehicle | 647 | 334 | 313 | — | 644 | 21 | 562 | 28 | ||||||||||||||||||||||||
Home equity | 79 | 79 | — | — | — | — | — | — | ||||||||||||||||||||||||
Other consumer | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||||||||||||||
Commercial | 4,795 | 4,795 | — | 1,421 | 4,917 | 78 | 4,921 | 97 | ||||||||||||||||||||||||
Commercial collateralized by assignment of lease payments | 5,078 | 5,078 | — | 3,144 | 331 | — | 166 | — | ||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||||||
Health care | — | — | — | — | — | — | 539 | 28 | ||||||||||||||||||||||||
Industrial | 3,423 | 3,423 | — | 1,420 | 3,493 | 4 | 3,207 | 8 | ||||||||||||||||||||||||
Multifamily | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Retail | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Office | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other | 6,487 | 6,487 | — | 559 | 4,149 | 124 | 2,086 | 124 | ||||||||||||||||||||||||
Residential real estate | 20,461 | 18,603 | 1,858 | 1,729 | 18,605 | 31 | 18,956 | 32 | ||||||||||||||||||||||||
Construction real estate | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Indirect vehicle | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Home equity | 31,383 | 28,767 | 2,616 | 1,923 | 28,933 | 20 | 29,305 | 30 | ||||||||||||||||||||||||
Other consumer | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total | $ | 82,304 | $ | 76,938 | $ | 5,366 | $ | 10,196 | $ | 71,687 | $ | 278 | $ | 71,933 | $ | 399 |
December 31, 2017 | ||||||||||||||||||||||||
Year Ended | ||||||||||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Partial Charge-offs | Allowance for Loan Losses Allocated | Average Recorded Investment | Interest Income Recognized | |||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||||||
Commercial | $ | 8,312 | $ | 7,771 | $ | 541 | $ | — | $ | 5,595 | $ | 95 | ||||||||||||
Commercial collateralized by assignment of lease payments | — | — | — | — | 301 | — | ||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Health care | — | — | — | — | — | — | ||||||||||||||||||
Industrial | — | — | — | — | 1,260 | 8 | ||||||||||||||||||
Multifamily | — | — | — | — | 1,261 | 29 | ||||||||||||||||||
Retail | — | — | — | — | 814 | 27 | ||||||||||||||||||
Office | 527 | 527 | — | — | 1,426 | 18 | ||||||||||||||||||
Other | 10,597 | 10,597 | — | — | 2,312 | 128 | ||||||||||||||||||
Residential real estate | 1,950 | 1,912 | 38 | — | 483 | — | ||||||||||||||||||
Construction real estate | — | — | — | — | — | — | ||||||||||||||||||
Indirect vehicle | 408 | 202 | 206 | — | 411 | 26 | ||||||||||||||||||
Home equity | 81 | 81 | — | — | 376 | — | ||||||||||||||||||
Other consumer | — | — | — | — | — | — | ||||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||||||
Commercial | 7,418 | 7,418 | — | 2,315 | 7,668 | 277 | ||||||||||||||||||
Commercial collateralized by assignment of lease payments | — | — | — | — | 126 | 14 | ||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Health care | — | — | — | — | — | — | ||||||||||||||||||
Industrial | 8,339 | 8,317 | 22 | 2,669 | 3,215 | 171 | ||||||||||||||||||
Multifamily | 568 | 568 | — | 320 | 426 | — | ||||||||||||||||||
Retail | — | — | — | — | 1,345 | 28 | ||||||||||||||||||
Office | 2,293 | 2,277 | 16 | 752 | 636 | 4 | ||||||||||||||||||
Other | — | — | — | — | 29 | — | ||||||||||||||||||
Residential real estate | 21,380 | 19,014 | 2,366 | 2,158 | 17,616 | 25 | ||||||||||||||||||
Construction real estate | — | — | — | — | — | — | ||||||||||||||||||
Indirect vehicle | — | — | — | — | — | — | ||||||||||||||||||
Home equity | 30,762 | 28,286 | 2,476 | 2,200 | 27,982 | 54 | ||||||||||||||||||
Other consumer | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | 92,635 | $ | 86,970 | $ | 5,665 | $ | 10,414 | $ | 73,282 | $ | 904 |
June 30, 2018 | |||||||||||||||
Number of Loans | Pre-Modification Recorded Investment | Post-Modification Recorded Investment | Charge-offs and Specific Reserves | ||||||||||||
Performing: | |||||||||||||||
Total | — | $ | — | $ | — | $ | — | ||||||||
Non-Performing: | |||||||||||||||
Residential real estate | 8 | $ | 935 | $ | 935 | $ | 152 | ||||||||
Indirect vehicle | 9 | 54 | 54 | 36 | |||||||||||
Home equity | 2 | 76 | 76 | 5 | |||||||||||
Total | 19 | $ | 1,065 | $ | 1,065 | $ | 193 |
June 30, 2018 | ||||||||||||||
Number of Loans | Pre-Modification Recorded Investment | Post-Modification Recorded Investment | Charge-offs and Specific Reserves | |||||||||||
Performing: | ||||||||||||||
Residential real estate | 1 | $ | 88 | $ | 88 | $ | 9 | |||||||
Total | 1 | $ | 88 | $ | 88 | $ | 9 | |||||||
Non-Performing: | ||||||||||||||
Residential real estate | 16 | $ | 2,441 | $ | 2,441 | $ | 938 | |||||||
Indirect vehicle | 20 | 120 | 120 | 38 | ||||||||||
Home equity | 5 | 210 | 210 | 14 | ||||||||||
Total | 41 | $ | 2,771 | $ | 2,771 | $ | 990 |
June 30, 2017 | |||||||||||||||
Number of Loans | Pre-Modification Recorded Investment | Post-Modification Recorded Investment | Charge-offs and Specific Reserves | ||||||||||||
Performing: | |||||||||||||||
Commercial | 5 | $ | 2,491 | $ | 2,491 | $ | 373 | ||||||||
Commercial real estate: | |||||||||||||||
Industrial | 2 | 2,787 | 2,787 | — | |||||||||||
Office | 1 | 549 | 549 | — | |||||||||||
Other | 1 | 147 | 147 | — | |||||||||||
Residential real estate | 3 | $ | 493 | $ | 493 | $ | 86 | ||||||||
Home equity | 2 | 46 | 46 | 3 | |||||||||||
Total | 14 | $ | 6,513 | $ | 6,513 | $ | 462 | ||||||||
Non-Performing: | |||||||||||||||
Commercial | 2 | $ | 676 | $ | 676 | $ | — | ||||||||
Commercial real estate: | |||||||||||||||
Multifamily | 3 | 290 | 290 | — | |||||||||||
Retail | 1 | 906 | 906 | — | |||||||||||
Residential real estate | 8 | 1,122 | 1,122 | 289 | |||||||||||
Indirect vehicle | 8 | 77 | 77 | 25 | |||||||||||
Home equity | 2 | 593 | 593 | 57 | |||||||||||
Total | 24 | $ | 3,664 | $ | 3,664 | $ | 371 |
June 30, 2017 | ||||||||||||||
Number of Loans | Pre-Modification Recorded Investment | Post-Modification Recorded Investment | Charge-offs and Specific Reserves | |||||||||||
Performing: | ||||||||||||||
Commercial | 5 | $ | 2,491 | $ | 2,491 | $ | 373 | |||||||
Commercial real estate | ||||||||||||||
Industrial | 2 | 2,787 | 2,787 | — | ||||||||||
Office | 1 | 549 | 549 | — | ||||||||||
Other | 1 | 147 | 147 | — | ||||||||||
Residential real estate | 6 | 902 | 902 | 135 | ||||||||||
Home equity | 3 | 78 | 78 | 6 | ||||||||||
Total | 18 | $ | 6,954 | $ | 6,954 | $ | 514 | |||||||
Non-Performing: | ||||||||||||||
Commercial | 2 | $ | 676 | $ | 676 | $ | — | |||||||
Commercial real estate: | ||||||||||||||
Multifamily | 3 | 290 | 290 | — | ||||||||||
Retail | 1 | 906 | 906 | — | ||||||||||
Residential real estate | 17 | 2,380 | 2,380 | 443 | ||||||||||
Indirect vehicle | 11 | 97 | 97 | 29 | ||||||||||
Home equity | 3 | 593 | 593 | 57 | ||||||||||
Total | 37 | $ | 4,942 | $ | 4,942 | $ | 529 |
Performing | Non-performing | |||||||
Beginning balance | $ | 28,554 | $ | 30,836 | ||||
Additions | 88 | 2,771 | ||||||
Charge-offs | — | (130 | ) | |||||
Principal payments, net | (4,774 | ) | (5,364 | ) | ||||
Removals | (77 | ) | (8 | ) | ||||
Transfer to other real estate owned | — | — | ||||||
Transfers in | 2,382 | 513 | ||||||
Transfers out | (513 | ) | (2,382 | ) | ||||
Ending balance | $ | 25,660 | $ | 26,236 |
June 30, 2018 | |||||||||||||||
Extended | |||||||||||||||
Maturity, | Delay in | ||||||||||||||
Amortization | Extended | Payments and/or | |||||||||||||
and Reduction | Maturity and/or | Reduction of | |||||||||||||
of Interest Rate | Amortization | Interest Rate | Total | ||||||||||||
Residential real estate | $ | 1,256 | $ | 862 | $ | 411 | $ | 2,529 | |||||||
Indirect vehicle | — | — | 120 | 120 | |||||||||||
Home equity | — | 210 | — | 210 | |||||||||||
Total | $ | 1,256 | $ | 1,072 | $ | 531 | $ | 2,859 |
Commercial | Commercial collateralized by assignment of lease payments | Commercial real estate | Residential real estate | Construction real estate | Indirect vehicle | Home equity | Other consumer | Unfunded commitments | Total | |||||||||||||||||||||||||||||||
June 30, 2018 | ||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 45,551 | $ | 12,993 | $ | 65,798 | $ | 6,376 | $ | 19,803 | $ | 4,350 | $ | 4,346 | $ | 2,495 | $ | 1,678 | $ | 163,390 | ||||||||||||||||||||
Charge-offs | 1,534 | 716 | 2,621 | 28 | — | 1,328 | 184 | 309 | — | 6,720 | ||||||||||||||||||||||||||||||
Recoveries | 167 | 149 | 329 | 26 | 37 | 664 | 228 | 89 | — | 1,689 | ||||||||||||||||||||||||||||||
Provision | (3,866 | ) | 669 | 1,885 | (642 | ) | 6,952 | 1,052 | (248 | ) | 307 | 110 | 6,219 | |||||||||||||||||||||||||||
Ending balance | $ | 40,318 | $ | 13,095 | $ | 65,391 | $ | 5,732 | $ | 26,792 | $ | 4,738 | $ | 4,142 | $ | 2,582 | $ | 1,788 | $ | 164,578 | ||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 46,267 | $ | 13,007 | $ | 63,429 | $ | 7,012 | $ | 15,501 | $ | 4,728 | $ | 5,296 | $ | 2,470 | $ | 1,698 | $ | 159,408 | ||||||||||||||||||||
Charge-offs | 2,936 | 716 | 5,097 | 729 | — | 3,152 | 248 | 660 | — | 13,538 | ||||||||||||||||||||||||||||||
Recoveries | 504 | 400 | 1,091 | 96 | 430 | 1,843 | 298 | 319 | — | 4,981 | ||||||||||||||||||||||||||||||
Provision | (3,517 | ) | 404 | 5,968 | (647 | ) | 10,861 | 1,319 | (1,204 | ) | 453 | 90 | 13,727 | |||||||||||||||||||||||||||
Ending balance | $ | 40,318 | $ | 13,095 | $ | 65,391 | $ | 5,732 | $ | 26,792 | $ | 4,738 | $ | 4,142 | $ | 2,582 | $ | 1,788 | $ | 164,578 | ||||||||||||||||||||
Ending allowance balance attributable to loans: | ||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 1,421 | $ | 3,144 | $ | 1,979 | $ | 1,729 | $ | — | $ | — | $ | 1,923 | $ | — | $ | 616 | $ | 10,812 | ||||||||||||||||||||
Collectively evaluated for impairment | 38,823 | 9,951 | 62,400 | 4,003 | 26,757 | 4,738 | 2,219 | 2,582 | 1,172 | 152,645 | ||||||||||||||||||||||||||||||
Acquired and accounted for under ASC 310-30 (1) | 74 | — | 1,012 | — | 35 | — | — | — | — | 1,121 | ||||||||||||||||||||||||||||||
Total ending allowance balance | $ | 40,318 | $ | 13,095 | $ | 65,391 | $ | 5,732 | $ | 26,792 | $ | 4,738 | $ | 4,142 | $ | 2,582 | $ | 1,788 | $ | 164,578 | ||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 10,116 | $ | 5,078 | $ | 9,910 | $ | 22,654 | $ | — | $ | 334 | $ | 28,846 | $ | — | $ | — | $ | 76,938 | ||||||||||||||||||||
Collectively evaluated for impairment | 4,806,429 | 2,095,382 | 3,919,417 | 1,329,971 | 495,805 | 749,649 | 163,939 | 81,714 | — | 13,642,306 | ||||||||||||||||||||||||||||||
Acquired and accounted for under ASC 310-30 (1) | 10,459 | — | 24,286 | 51,485 | 3,641 | — | 9,855 | 1,275 | — | 101,001 | ||||||||||||||||||||||||||||||
Total ending loans balance | $ | 4,827,004 | $ | 2,100,460 | $ | 3,953,613 | $ | 1,404,110 | $ | 499,446 | $ | 749,983 | $ | 202,640 | $ | 82,989 | $ | — | $ | 13,820,245 | ||||||||||||||||||||
Commercial | Commercial collateralized by assignment of lease payments | Commercial real estate | Residential real estate | Construction real estate | Indirect vehicle | Home equity | Other consumer | Unfunded commitments | Total | |||||||||||||||||||||||||||||||
June 30, 2017 | ||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 40,690 | $ | 12,143 | $ | 58,220 | $ | 8,131 | $ | 14,859 | $ | 3,624 | $ | 5,312 | $ | 1,191 | $ | 2,328 | $ | 146,498 | ||||||||||||||||||||
Charge-offs | 700 | — | 262 | 270 | — | 930 | 261 | 498 | — | 2,921 | ||||||||||||||||||||||||||||||
Recoveries | 1,339 | 249 | 362 | 58 | 47 | 565 | 292 | 109 | — | 3,021 | ||||||||||||||||||||||||||||||
Provision | 2,454 | 373 | 4,927 | 330 | 357 | 704 | 206 | 412 | (64 | ) | 9,699 | |||||||||||||||||||||||||||||
Ending balance | $ | 43,783 | $ | 12,765 | $ | 63,247 | $ | 8,249 | $ | 15,263 | $ | 3,963 | $ | 5,549 | $ | 1,214 | $ | 2,264 | $ | 156,297 | ||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 44,661 | $ | 12,238 | $ | 51,807 | $ | 5,971 | $ | 14,758 | $ | 3,421 | $ | 5,469 | $ | 1,041 | $ | 2,476 | $ | 141,842 | ||||||||||||||||||||
Charge-offs | 868 | — | 1,347 | 360 | — | 2,341 | 434 | 944 | — | 6,294 | ||||||||||||||||||||||||||||||
Recoveries | 2,849 | 712 | 880 | 586 | 159 | 1,217 | 575 | 338 | — | 7,316 | ||||||||||||||||||||||||||||||
Provision | (2,859 | ) | (185 | ) | 11,907 | 2,052 | 346 | 1,666 | (61 | ) | 779 | (212 | ) | 13,433 | ||||||||||||||||||||||||||
Ending balance | $ | 43,783 | $ | 12,765 | $ | 63,247 | $ | 8,249 | $ | 15,263 | $ | 3,963 | $ | 5,549 | $ | 1,214 | $ | 2,264 | $ | 156,297 | ||||||||||||||||||||
Ending allowance balance attributable to loans: | ||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 1,076 | $ | — | $ | 724 | $ | 1,839 | $ | — | $ | — | $ | 2,940 | $ | — | $ | 516 | $ | 7,095 | ||||||||||||||||||||
Collectively evaluated for impairment | 42,619 | 12,765 | 62,115 | 6,410 | 15,227 | 3,963 | 2,609 | 1,214 | 1,748 | 148,670 | ||||||||||||||||||||||||||||||
Acquired and accounted for under ASC 310-30 (1) | 88 | — | 408 | — | 36 | — | — | — | — | 532 | ||||||||||||||||||||||||||||||
Total ending allowance balance | $ | 43,783 | $ | 12,765 | $ | 63,247 | $ | 8,249 | $ | 15,263 | $ | 3,963 | $ | 5,549 | $ | 1,214 | $ | 2,264 | $ | 156,297 | ||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 11,167 | $ | 1 | $ | 13,820 | $ | 16,956 | $ | — | $ | 144 | $ | 29,019 | $ | — | $ | — | $ | 71,107 | ||||||||||||||||||||
Collectively evaluated for impairment | 4,692,161 | 2,076,910 | 3,868,934 | 1,394,303 | 449,116 | 627,675 | 209,933 | 74,925 | — | 13,393,957 | ||||||||||||||||||||||||||||||
Acquired and accounted for under ASC 310-30 (1) | 17,797 | — | 38,859 | 73,872 | 5,201 | — | 11,558 | 1,790 | — | 149,077 | ||||||||||||||||||||||||||||||
Total ending loans balance | $ | 4,721,125 | $ | 2,076,911 | $ | 3,921,613 | $ | 1,485,131 | $ | 454,317 | $ | 627,819 | $ | 250,510 | $ | 76,715 | $ | — | $ | 13,614,141 |
(1) | Loans acquired in business combinations and accounted for under ASC Subtopic 310-30 “Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality.” |
• | Pass rated loans (typically performing loans) are accounted for in accordance with ASC Topic 310-20 "Nonrefundable Fees and Other Costs" as these loans do not have evidence of credit deterioration since origination. |
• | Non-impaired loans (typically performing substandard loans) are accounted for in accordance with ASC Topic 310-30 if they display at least some level of credit deterioration since origination. |
• | Impaired loans (typically substandard loans on non-accrual status) are accounted for in accordance with ASC Topic 310-30 as they display significant credit deterioration since origination. |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Balance at beginning of period | $ | 10,267 | $ | 14,911 | $ | 12,069 | $ | 16,050 | ||||||||
Purchases | — | — | — | 43 | ||||||||||||
Accretion | (2,223 | ) | (2,831 | ) | (4,634 | ) | (5,019 | ) | ||||||||
Other (1) | 197 | 606 | 806 | 1,612 | ||||||||||||
Balance at end of period | $ | 8,241 | $ | 12,686 | $ | 8,241 | $ | 12,686 |
(1) | Primarily includes discount transfers from non-accretable discount to accretable discount due to better than expected performance of loan pools acquired and accounted for under ASC 310-30. |
June 30, 2018 | Purchased Credit-Impaired Loans | Purchased Non-Credit-Impaired Loans | Total | |||||||||
Covered loans (1): | ||||||||||||
Consumer related | $ | 14,005 | $ | — | $ | 14,005 | ||||||
Non-covered loans: | ||||||||||||
Commercial loans | 10,459 | 176,660 | 187,119 | |||||||||
Commercial loans collateralized by assignment of lease payments | — | 15,406 | 15,406 | |||||||||
Commercial real estate | 24,285 | 601,356 | 625,641 | |||||||||
Construction real estate | 3,641 | 2,758 | 6,399 | |||||||||
Consumer related | 5,029 | 231,229 | 236,258 | |||||||||
Total non-covered loans | 43,414 | 1,027,409 | 1,070,823 | |||||||||
Total acquired | $ | 57,419 | $ | 1,027,409 | $ | 1,084,828 |
(1) | Covered loans refer to loans covered under loss-sharing agreements with the FDIC. The remaining loss-share agreements expire between 2019 and 2020. |
Note 6. | Goodwill and Intangibles |
Banking | Leasing | Mortgage Banking | Total | |||||||||||||
Balance at beginning of period | $ | 959,285 | $ | 40,640 | $ | 3,623 | $ | 1,003,548 | ||||||||
Impairment | — | — | (3,623 | ) | (3,623 | ) | ||||||||||
Balance at end of period | $ | 959,285 | $ | 40,640 | $ | — | $ | 999,925 |
June 30, 2018 | ||||
Balance at beginning of period | $ | 54,766 | ||
Amortization expense | (3,798 | ) | ||
Balance at end of period | $ | 50,968 | ||
Gross carrying amount | $ | 112,820 | ||
Accumulated amortization | (61,852 | ) | ||
Net book value | $ | 50,968 |
Year ending December 31, | Amount | |||
2018 | $ | 3,653 | ||
2019 | 5,674 | |||
2020 | 5,022 | |||
2021 | 4,790 | |||
2022 | 3,806 | |||
Thereafter | 28,023 | |||
$ | 50,968 |
Note 7. | Deposits |
June 30, | December 31, | |||||||
2018 | 2017 | |||||||
Demand deposit accounts, non-interest bearing | $ | 6,347,208 | $ | 6,381,512 | ||||
NOW, money market, and interest bearing deposits | 4,950,676 | 4,954,765 | ||||||
Savings accounts | 1,181,078 | 1,167,810 | ||||||
Certificates of deposit, $250,000 or more | 1,459,919 | 1,506,071 | ||||||
Other certificates of deposit | 983,782 | 948,220 | ||||||
Total | $ | 14,922,663 | $ | 14,958,378 |
Note 8. | Short-Term Borrowings |
June 30, 2018 | December 31, 2017 | |||||||||||||
Weighted Average Interest Rate | Amount | Weighted Average Interest Rate | Amount | |||||||||||
Customer repurchase agreements | 0.55 | % | $ | 244,462 | 0.27 | % | $ | 232,789 | ||||||
Federal Home Loan Bank advances | 2.13 | 400,000 | 1.31 | 625,000 | ||||||||||
Federal funds purchased | 2.21 | 7,000 | 1.26 | 3,250 | ||||||||||
Line of credit | — | — | — | — | ||||||||||
Total | 1.53 | % | $ | 651,462 | 1.03 | % | $ | 861,039 |
Note 9. | Long-Term Borrowings |
June 30, 2018 | December 31, 2017 | |||||||||||||
Weighted Average Interest Rate | Amount | Weighted Average Interest Rate | Amount | |||||||||||
Federal Home Loan Bank advances | 2.52 | % | $ | 478,096 | 1.73 | % | $ | 231,317 | ||||||
Notes payable | 4.57 | 79,196 | 4.14 | 90,807 | ||||||||||
Subordinated notes, net of issuance costs (1) | 4.00 | 173,000 | 4.00 | 173,034 | ||||||||||
Term note | — | — | 3.31 | 10,000 | ||||||||||
Total | 3.09 | % | $ | 730,292 | 2.97 | % | $ | 505,158 |
(1) | The amount decreased from December 31, 2017 as a result of an increase in issuance costs due to adjustments for actual costs. |
Note 10. | Junior Subordinated Notes Issued to Capital Trusts |
Coal City Capital Trust I | MB Financial Capital Trust II | MB Financial Capital Trust III | MB Financial Capital Trust IV | |||||||||||||
Junior Subordinated Notes: | ||||||||||||||||
Principal balance | $ | 25,774 | $ | 36,083 | $ | 10,310 | $ | 20,619 | ||||||||
Annual interest rate | 3-mo LIBOR + 1.80% | 3-mo LIBOR + 1.40% | 3-mo LIBOR + 1.50% | 3-mo LIBOR + 1.52% | ||||||||||||
Stated maturity date | September 1, 2028 | September 15, 2035 | September 23, 2036 | September 15, 2036 | ||||||||||||
Call date | September 1, 2008 | December 15, 2010 | September 23, 2011 | September 15, 2011 | ||||||||||||
Trust Preferred Securities: | ||||||||||||||||
Face Value | $ | 25,000 | $ | 35,000 | $ | 10,000 | $ | 20,000 | ||||||||
Annual distribution rate | 3-mo LIBOR + 1.80% | 3-mo LIBOR + 1.40% | 3-mo LIBOR + 1.50% | 3-mo LIBOR + 1.52% | ||||||||||||
Issuance date | July 1998 | August 2005 | July 2006 | August 2006 | ||||||||||||
Distribution dates (1) | Quarterly | Quarterly | Quarterly | Quarterly |
MB Financial Capital Trust V | MB Financial Capital Trust VI | FOBB Statutory Trust III (2) | TAYC Capital Trust II (3) | |||||||||||||
Junior Subordinated Notes: | ||||||||||||||||
Principal balance | $ | 30,928 | $ | 23,196 | $ | 5,155 | $ | 41,238 | ||||||||
Annual interest rate | 3-mo LIBOR + 1.30% | 3-mo LIBOR + 1.30% | 3-mo LIBOR + 2.80% | 3-mo LIBOR + 2.68% | ||||||||||||
Stated maturity date | December 15, 2037 | October 30, 2037 | January 23, 2034 | June 17, 2034 | ||||||||||||
Call date | December 15, 2012 | October 30, 2012 | January 23, 2009 | June 17, 2009 | ||||||||||||
Trust Preferred Securities: | ||||||||||||||||
Face Value | $ | 30,000 | $ | 22,500 | $ | 5,000 | $ | 40,000 | ||||||||
Annual distribution rate | 3-mo LIBOR + 1.30% | 3-mo LIBOR + 1.30% | 3-mo LIBOR + 2.80% | 3-mo LIBOR + 2.68% | ||||||||||||
Issuance date | September 2007 | October 2007 | December 2003 | June 2004 | ||||||||||||
Distribution dates (1) | Quarterly | Quarterly | Quarterly | Quarterly |
American Chartered Statutory Trust II (4) | ||||
Junior Subordinated Notes: | ||||
Principal balance | $ | 10,310 | ||
Annual interest rate | 3-mo LIBOR + 2.75% | |||
Stated maturity date | October 7, 2034 | |||
Call date | October 7, 2009 | |||
Trust Preferred Securities: | ||||
Face Value | $ | 10,000 | ||
Annual distribution rate | 3-mo LIBOR + 2.75% | |||
Issuance date | August 2004 | |||
Distribution dates (1) | Quarterly |
(1) | All distributions are cumulative and paid in cash. |
(2) | FOBB Statutory Trust III was established by First Oak Brook Bancshares, Inc. (“FOBB”) prior to the Company's acquisition of FOBB in 2006, and the junior subordinated notes issued by FOBB to FOBB Statutory Trust III were assumed by the Company upon completion of the acquisition. |
(3) | TAYC Capital Trust II was established by Taylor Capital Group, Inc. (“Taylor Capital”) prior to the Company's acquisition of Taylor Capital in 2014, and the junior subordinated notes issued by Taylor Capital to TAYC Capital Trust II were assumed by the Company upon completion of the acquisition. Principal balance and face value amounts associated with TAYC Capital Trust II do not include purchase accounting adjustments to such amounts, which in each case resulted in a remaining discount of $6.2 million at June 30, 2018. |
(4) | American Chartered Statutory Trust II was established by American Chartered prior to the Company's acquisition of American Chartered in August 2016, and the junior subordinated notes issued by American Chartered to American Chartered Statutory Trust II were assumed by the Company upon completion of the acquisition. Principal balance and face value amounts associated with American Chartered Statutory Trust II do not include acquisition accounting adjustments to such amounts, which in each case resulted in a remaining discount of $2.6 million at June 30, 2018. |
Note 11. | Commitments and Contingencies |
Contractual Amount | ||||||||
June 30, 2018 | December 31, 2017 | |||||||
Commitments to extend credit: | ||||||||
Home equity lines | $ | 185,528 | $ | 203,922 | ||||
Other commitments | 4,084,835 | 4,073,044 | ||||||
Letters of credit: | ||||||||
Standby | 165,960 | 161,014 | ||||||
Commercial | 756 | 2,248 |
Note 12. | Fair Value Measurements |
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
June 30, 2018 | ||||||||||||||||
Financial assets | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
U.S Government sponsored agencies and enterprises | $ | 5,026 | $ | — | $ | 5,026 | $ | — | ||||||||
States and political subdivisions | 350,061 | — | 349,732 | 329 | ||||||||||||
Residential mortgage-backed securities | 1,205,579 | — | 1,205,566 | 13 | ||||||||||||
Commercial mortgage-backed securities | 63,424 | — | 63,424 | — | ||||||||||||
Corporate bonds | 23,170 | — | 23,170 | — | ||||||||||||
Marketable equity securities | 10,922 | 10,922 | — | — | ||||||||||||
Loans held for sale | 423,367 | — | 423,367 | — | ||||||||||||
Loans | 36,347 | — | 36,347 | — | ||||||||||||
Mortgage servicing rights | 296,629 | — | — | 296,629 | ||||||||||||
Assets held in trust for deferred compensation | 24,300 | 24,300 | — | — | ||||||||||||
Derivative financial instruments | 52,418 | 482 | 51,659 | 277 | ||||||||||||
Financial liabilities | ||||||||||||||||
Other liabilities (1) | 24,300 | 24,300 | — | — | ||||||||||||
Derivative financial instruments | 52,572 | 1,217 | 51,355 | — | ||||||||||||
December 31, 2017 | ||||||||||||||||
Financial assets | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
U.S. Government sponsored agencies and enterprises | $ | 23,007 | $ | — | $ | 23,007 | $ | — | ||||||||
States and political subdivisions | 379,325 | — | 378,996 | 329 | ||||||||||||
Residential mortgage-backed securities | 852,699 | — | 852,665 | 34 | ||||||||||||
Commercial mortgage-backed securities | 72,035 | — | 72,035 | — | ||||||||||||
Corporate bonds | 70,197 | — | 70,197 | — | ||||||||||||
Equity securities | 11,063 | 11,063 | — | — | ||||||||||||
Loans held for sale | 548,578 | — | 548,578 | — | ||||||||||||
Loans | 40,531 | — | 40,531 | — | ||||||||||||
Mortgage servicing rights | 276,279 | — | — | 276,279 | ||||||||||||
Assets held in trust for deferred compensation | 21,410 | 21,410 | — | — | ||||||||||||
Derivative financial instruments | 31,499 | 389 | 29,539 | 1,571 | ||||||||||||
Financial liabilities | ||||||||||||||||
Other liabilities (1) | 21,410 | 21,410 | — | — | ||||||||||||
Derivative financial instruments | 40,296 | 1,072 | 39,224 | — |
(1) | Liabilities associated with assets held in trust for deferred compensation |
Fair Value at | |||||||||
June 30, 2018 | Valuation Technique | Unobservable Input | Range | ||||||
States and political subdivisions | $ | 329 | Discounted cash flows | Credit assumption | 40% - 45% Loss | ||||
Residential mortgage-backed securities | 13 | Discounted cash flows | Constant pre-payment rates (CPR) | 1% - 3% | |||||
Mortgage servicing rights | 296,629 | Discounted cash flows | CPR | 6.30% - 6.71% | |||||
Discount rate | 9.53 - 11.07 | ||||||||
Maturity (months) | 326 - 358 | ||||||||
Delinquency rate | 2.19 - 4.88 | ||||||||
Costs to service | $ 67 - $ 227 | ||||||||
Additive delinquent costs to service | $ 175 - $ 1,000 | ||||||||
Derivative financial instruments (mortgage | 277 | Sales cash flows | Expected closing ratio | 70% - 95% | |||||
interest rate lock commitments) | Expected delivery price | 98.12 bps - 106.46 bps |
Fair Value at | |||||||||
December 31, 2017 | Valuation Technique | Unobservable Input | Range | ||||||
States and political subdivisions | $ | 329 | Discounted cash flows | Credit assumption | 40-45% Loss | ||||
Residential mortgage-backed securities | 34 | Discounted cash flows | Constant pre-payment rates (CPR) | 1% - 3% | |||||
Mortgage servicing rights | 276,279 | Discounted cash flows | CPR | 6.7% - 7.8% | |||||
Discount rate | 9.53 - 11.06 | ||||||||
Maturity (months) | 324 - 358 | ||||||||
Delinquency rate | 2.42 - 5.30 | ||||||||
Costs to service | $ 67 - $ 227 | ||||||||
Additive delinquent costs to service | $ 175 - $ 1,000 | ||||||||
Derivative financial instruments (mortgage | 1,571 | Sales cash flows | Expected closing ratio | 70% - 95% | |||||
interest rate lock commitments) | Expected delivery price | 97.38 bps - 106.87 bps |
(dollars in thousands, except for weighted average cost to service) | June 30, 2018 | ||
Weighted average CPR | 6.49 | % | |
Impact on fair value of 10% adverse change | $ | (8,581 | ) |
Impact on fair value of 20% adverse change | (16,741 | ) | |
Weighted average discount rate | 9.83 | % | |
Impact on fair value of 10% adverse change | $ | (12,630 | ) |
Impact on fair value of 20% adverse change | (24,245 | ) | |
Weighted average delinquency rate | 4.65 | % | |
Impact on fair value of 10% adverse change | $ | (3,657 | ) |
Impact on fair value of 20% adverse change | (6,023 | ) | |
Weighted average costs to service | $ | 91.39 | |
Impact on fair value of 10% adverse change | (5,534 | ) | |
Impact on fair value of 20% adverse change | (11,067 | ) |
Six Months Ended | ||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
(in thousands) | Investment Securities | Mortgage Servicing Rights | Derivatives | |||||||||||||||||||||
Balance, beginning of period | $ | 363 | $ | 544 | $ | 276,279 | $ | 238,011 | $ | 1,571 | $ | 3,160 | ||||||||||||
Purchases | — | — | 135 | 786 | — | — | ||||||||||||||||||
Originations | — | — | 25,041 | 27,568 | — | — | ||||||||||||||||||
Included in earnings | — | — | (4,826 | ) | (16,677 | ) | (1,294 | ) | (461 | ) | ||||||||||||||
Principal payments | (21 | ) | (82 | ) | — | — | — | — | ||||||||||||||||
Sales | — | — | — | — | — | — | ||||||||||||||||||
Balance, ending of period | $ | 342 | $ | 462 | $ | 296,629 | $ | 249,688 | $ | 277 | $ | 2,699 |
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
June 30, 2018 | ||||||||||||||||
Financial assets: | ||||||||||||||||
Impaired loans | $ | 62,089 | $ | — | $ | — | $ | 62,089 | ||||||||
Non-financial assets: | ||||||||||||||||
Foreclosed assets | 14,420 | — | — | 14,420 | ||||||||||||
December 31, 2017 | ||||||||||||||||
Financial assets: | ||||||||||||||||
Impaired loans | $ | 60,569 | $ | — | $ | — | $ | 60,569 | ||||||||
Non-financial assets: | ||||||||||||||||
Foreclosed assets | 15,113 | — | — | 15,113 |
Fair Value at | Valuation | ||||||||
June 30, 2018 | Technique | Unobservable Input | Range | ||||||
Impaired loans | $ | 62,089 | Appraisal of collateral | Appraisal adjustments - sales costs | 5% - 10% | ||||
Foreclosed assets | 14,420 | Appraisal of collateral | Appraisal adjustments - sales costs | 5% - 10% |
Fair Value at | Valuation | ||||||||
December 31, 2017 | Technique | Unobservable Input | Range | ||||||
Impaired loans | $ | 60,569 | Appraisal of collateral | Appraisal adjustments - sales costs | 5% - 10% | ||||
Foreclosed assets | 15,113 | Appraisal of collateral | Appraisal adjustments - sales costs | 5% - 10% |
June 30, 2018 | |||||||||||||||||
Carrying Amount | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Financial Assets: | |||||||||||||||||
Cash and due from banks | $ | 373,448 | $ | 373,448 | $ | 373,448 | $ | — | $ | — | |||||||
Interest earning deposits with banks | 119,672 | 119,672 | 119,672 | — | — | ||||||||||||
Investment securities available for sale | 1,647,260 | 1,647,260 | — | 1,646,918 | 342 | ||||||||||||
Investment securities held to maturity | 923,036 | 940,203 | — | 940,203 | — | ||||||||||||
Marketable equity securities | 10,922 | 10,922 | 10,922 | — | — | ||||||||||||
Non-marketable securities - FHLB and FRB stock | 115,453 | 115,453 | — | — | 115,453 | ||||||||||||
Loans held for sale | 423,367 | 423,367 | — | 423,367 | — | ||||||||||||
Loans, net | 13,657,455 | 13,728,529 | — | 36,347 | 13,692,182 | ||||||||||||
Accrued interest receivable | 65,129 | 65,129 | 65,129 | — | — | ||||||||||||
Derivative financial instruments | 52,418 | 52,418 | 482 | 51,659 | 277 | ||||||||||||
Financial Liabilities: | |||||||||||||||||
Non-interest bearing deposits | $ | 6,347,208 | $ | 6,347,208 | $ | 6,347,208 | $ | — | $ | — | |||||||
Interest bearing deposits | 8,575,455 | 8,563,444 | — | — | 8,563,444 | ||||||||||||
Short-term borrowings | 651,462 | 651,328 | — | — | 651,328 | ||||||||||||
Long-term borrowings | 730,292 | 731,194 | — | — | 731,194 | ||||||||||||
Junior subordinated notes issued to capital trusts | 194,450 | 163,817 | — | — | 163,817 | ||||||||||||
Accrued interest payable | 7,058 | 7,058 | 7,058 | — | — | ||||||||||||
Derivative financial instruments | 52,572 | 52,572 | 1,217 | 51,355 | — |
December 31, 2017 | |||||||||||||||||
Carrying Amount | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Financial Assets: | |||||||||||||||||
Cash and due from banks | $ | 397,880 | $ | 397,880 | $ | 397,880 | $ | — | $ | — | |||||||
Interest earning deposits with banks | 181,341 | 181,341 | 181,341 | — | — | ||||||||||||
Investment securities available for sale | 1,408,326 | 1,408,326 | 11,063 | 1,396,900 | 363 | ||||||||||||
Investment securities held to maturity | 959,082 | 992,455 | — | 992,455 | — | ||||||||||||
Non-marketable securities - FHLB and FRB stock | 114,111 | 114,111 | — | — | 114,111 | ||||||||||||
Loans held for sale | 548,578 | 548,578 | — | 548,578 | — | ||||||||||||
Loans, net | 13,808,352 | 13,988,392 | — | 40,531 | 13,947,861 | ||||||||||||
Accrued interest receivable | 63,589 | 63,589 | 63,589 | — | — | ||||||||||||
Derivative financial instruments | 31,499 | 31,499 | 389 | 29,539 | 1,571 | ||||||||||||
Financial Liabilities: | |||||||||||||||||
Non-interest bearing deposits | $ | 6,381,512 | $ | 6,381,512 | $ | 6,381,512 | $ | — | $ | — | |||||||
Interest bearing deposits | 8,576,866 | 8,569,368 | — | — | 8,569,368 | ||||||||||||
Short-term borrowings | 861,039 | 860,676 | — | — | 860,676 | ||||||||||||
Long-term borrowings | 505,158 | 513,725 | — | — | 513,725 | ||||||||||||
Junior subordinated notes issued to capital trusts | 211,494 | 170,965 | — | — | 170,965 | ||||||||||||
Accrued interest payable | 6,458 | 6,458 | 6,458 | — | — | ||||||||||||
Derivative financial instruments | 40,296 | 40,296 | 1,072 | 39,224 | — |
Note 13. | Stock Incentive Plans |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Total compensation expense for share-based payment plans during the period | $ | 4,695 | $ | 4,443 | $ | 9,146 | $ | 8,924 | ||||||||
Amount of related income tax benefit recognized in income (1) | 2,599 | 1,916 | 3,953 | 6,338 |
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (In Years) | Aggregate Intrinsic Value (in thousands) | ||||||||||
Options outstanding as of December 31, 2017 | 1,721,978 | $ | 29.10 | 5.19 | |||||||||
Granted | 160,644 | 41.14 | |||||||||||
Exercised | (380,567 | ) | 26.39 | ||||||||||
Expired | (1,092 | ) | 39.28 | ||||||||||
Forfeited or cancelled | (9,411 | ) | 28.93 | ||||||||||
Options outstanding as of June 30, 2018 | 1,491,552 | $ | 31.08 | 6.11 | $ | 23,303 | |||||||
Options exercisable as of June 30, 2018 | 989,220 | $ | 28.19 | 4.99 | $ | 18,313 |
June 30, 2018 | ||||
Risk-free interest rate | 2.80 | % | ||
Expected volatility of Company’s stock | 26.13 | % | ||
Expected dividend yield | 2.06 | % | ||
Expected life of options | 5.9 years | |||
Weighted average fair value per option of options granted during the year | $ | 9.65 |
Number of Shares and Units | Weighted Average Grant Date Fair Value | ||||||
Shares and units outstanding at December 31, 2017 | 973,201 | $ | 37.03 | ||||
Granted | 414,895 | 41.45 | |||||
Vested | (303,774 | ) | 34.98 | ||||
Forfeited or cancelled | (88,806 | ) | 34.86 | ||||
Shares and units outstanding at June 30, 2018 | 995,516 | 39.69 |
Note 14. | Derivative Financial Instruments |
Asset Derivatives | Liability Derivatives | |||||||||||||||||||||||||||||||
June 30, 2018 | December 31, 2017 | June 30, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||
Notional | Estimated | Notional | Estimated | Notional | Estimated | Notional | Estimated | |||||||||||||||||||||||||
Amount | Fair Value | Amount | Fair Value | Amount | Fair Value | Amount | Fair Value | |||||||||||||||||||||||||
Derivative instruments designated as hedges of fair value: | ||||||||||||||||||||||||||||||||
Interest rate swap contracts (1) | $ | — | $ | — | $ | — | $ | — | $ | 32 | $ | (1 | ) | $ | 58 | $ | (1 | ) | ||||||||||||||
Stand-alone derivative instruments: (2) | ||||||||||||||||||||||||||||||||
Interest rate swap contracts | 1,732,420 | 34,477 | 1,563,109 | 21,217 | 1,732,420 | (34,477 | ) | 1,563,109 | (21,217 | ) | ||||||||||||||||||||||
Interest rate options contracts | 510,228 | 3,818 | 372,927 | 1,887 | 510,157 | (3,818 | ) | 372,927 | (1,887 | ) | ||||||||||||||||||||||
Foreign exchange contracts | 64,661 | 2,309 | 40,713 | 1,934 | 53,842 | (2,006 | ) | 34,029 | (1,759 | ) | ||||||||||||||||||||||
Spot foreign exchange contracts | 10,135 | 18 | 1,424 | 23 | 11,823 | (23 | ) | 24 | — | |||||||||||||||||||||||
Mortgage related derivatives: | ||||||||||||||||||||||||||||||||
Interest rate swap contracts | 270,000 | 10,983 | 458,000 | 4,479 | 320,000 | (11,031 | ) | 1,008,000 | (14,360 | ) | ||||||||||||||||||||||
Interest rate swaptions contracts | 240,000 | 54 | — | — | — | — | — | — | ||||||||||||||||||||||||
Treasury futures contracts | 20,000 | 66 | 28,000 | 39 | 32,500 | (105 | ) | 30,000 | (222 | ) | ||||||||||||||||||||||
TBA mortgage securities | 50,000 | 359 | 15,000 | 16 | — | — | 100,000 | (63 | ) | |||||||||||||||||||||||
Forward loan sale commitments | 36,000 | 57 | 259,000 | 333 | 298,700 | (1,111 | ) | 483,500 | (787 | ) | ||||||||||||||||||||||
Interest rate lock commitments | 66,093 | 277 | 404,557 | 1,571 | — | — | — | — | ||||||||||||||||||||||||
Total stand-alone derivative instruments | 2,999,537 | 52,418 | 3,142,730 | 31,499 | 2,959,442 | (52,571 | ) | 3,591,589 | (40,295 | ) | ||||||||||||||||||||||
Total | $ | 2,999,537 | $ | 52,418 | $ | 3,142,730 | $ | 31,499 | $ | 2,959,474 | $ | (52,572 | ) | $ | 3,591,647 | $ | (40,296 | ) |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Derivative instruments designated as hedges of fair value: | ||||||||||||||||
Interest rate swap contracts | $ | 1 | $ | 1 | $ | 1 | $ | 2 | ||||||||
Stand-alone derivative instruments: | ||||||||||||||||
Interest rate swap contracts | 1,913 | 1,624 | 3,628 | 3,473 | ||||||||||||
Interest rate options contracts | — | — | — | — | ||||||||||||
Foreign exchange contracts | 212 | 197 | 255 | 260 | ||||||||||||
Spot foreign exchange contracts | 884 | 729 | 1,617 | 1,407 | ||||||||||||
Mortgage related derivatives | (872 | ) | (301 | ) | (1,453 | ) | (10,442 | ) | ||||||||
Total stand-alone derivative instruments | 2,137 | 2,249 | 4,047 | (5,302 | ) | |||||||||||
Total | $ | 2,138 | $ | 2,250 | $ | 4,048 | $ | (5,300 | ) |
Financial Assets | Financial Liabilities | |||||||||||||||||||||||
Gross Amount Recognized | Gross Amount Offset | Net Amount Recognized | Gross Amount Recognized | Gross Amount Offset | Net Amount Recognized | |||||||||||||||||||
Derivatives: | ||||||||||||||||||||||||
Interest rate swap contracts, caps and floors | $ | 33,823 | $ | — | $ | 33,823 | $ | 4,649 | $ | — | $ | 4,649 | ||||||||||||
Foreign exchange contracts | 1,338 | — | 1,338 | 966 | — | 966 | ||||||||||||||||||
Mortgage related derivatives | 11,518 | — | 11,518 | 12,248 | — | 12,248 | ||||||||||||||||||
Total derivatives | 46,679 | — | 46,679 | 17,863 | — | 17,863 | ||||||||||||||||||
Repurchase agreements | — | — | — | 244,462 | — | 244,462 | ||||||||||||||||||
Total | $ | 46,679 | $ | — | $ | 46,679 | $ | 262,325 | $ | — | $ | 262,325 |
Financial Assets | Financial Liabilities | |||||||||||||||||||||||||||||||
Net Amount Recognized | Financial Instruments | Collateral | Net Amount | Net Amount Recognized | Financial Instruments | Collateral | Net Amount | |||||||||||||||||||||||||
Derivatives: | ||||||||||||||||||||||||||||||||
Counterparty A | $ | 16,943 | $ | (11,030 | ) | $ | — | $ | 5,913 | $ | 11,030 | $ | (11,030 | ) | $ | — | $ | — | ||||||||||||||
Counterparty B | 9,885 | (2,262 | ) | — | 7,623 | 2,262 | (2,262 | ) | — | — | ||||||||||||||||||||||
Counterparty C | 3,253 | (492 | ) | (2,761 | ) | — | 492 | (492 | ) | — | — | |||||||||||||||||||||
Other counterparties | 16,598 | (531 | ) | (3,434 | ) | 12,633 | 4,079 | (531 | ) | (690 | ) | 2,858 | ||||||||||||||||||||
Total derivatives | 46,679 | (14,315 | ) | (6,195 | ) | 26,169 | 17,863 | (14,315 | ) | (690 | ) | 2,858 | ||||||||||||||||||||
Repurchase agreements | — | — | — | — | 244,462 | — | (244,462 | ) | — | |||||||||||||||||||||||
Total | $ | 46,679 | $ | (14,315 | ) | $ | (6,195 | ) | $ | 26,169 | $ | 262,325 | $ | (14,315 | ) | $ | (245,152 | ) | $ | 2,858 |
Financial Assets | Financial Liabilities | |||||||||||||||||||||||
Gross Amount Recognized | Gross Amount Offset | Net Amount Recognized | Gross Amount Recognized | Gross Amount Offset | Net Amount Recognized | |||||||||||||||||||
Derivatives: | ||||||||||||||||||||||||
Interest rate swap contracts, caps and floors | $ | 11,659 | $ | — | $ | 11,659 | $ | 11,562 | $ | — | $ | 11,562 | ||||||||||||
Foreign exchange contracts | 1,013 | — | 1,013 | 953 | — | 953 | ||||||||||||||||||
Mortgage related derivatives | 4,868 | — | 4,868 | 15,432 | — | 15,432 | ||||||||||||||||||
Total derivatives | 17,540 | — | 17,540 | 27,947 | — | 27,947 | ||||||||||||||||||
Repurchase agreements | — | — | — | 232,789 | — | 232,789 | ||||||||||||||||||
Total | $ | 17,540 | $ | — | $ | 17,540 | $ | 260,736 | $ | — | $ | 260,736 |
Financial Assets | Financial Liabilities | |||||||||||||||||||||||||||||||
Net Amount Recognized | Financial Instruments | Collateral | Net Amount | Net Amount Recognized | Financial Instruments | Collateral | Net Amount | |||||||||||||||||||||||||
Derivatives: | ||||||||||||||||||||||||||||||||
Counterparty A | $ | 6,068 | $ | (6,068 | ) | $ | — | $ | — | $ | 13,807 | $ | (6,068 | ) | $ | (7,739 | ) | $ | — | |||||||||||||
Counterparty B | 3,261 | (3,261 | ) | — | — | 5,595 | (3,261 | ) | (2,334 | ) | — | |||||||||||||||||||||
Counterparty C | 5,285 | (3,640 | ) | — | 1,645 | 3,640 | (3,640 | ) | — | — | ||||||||||||||||||||||
Other counterparties | 2,926 | (1,750 | ) | — | 1,176 | 4,905 | (1,750 | ) | (3,150 | ) | 5 | |||||||||||||||||||||
Total derivatives | 17,540 | (14,719 | ) | — | 2,821 | 27,947 | (14,719 | ) | (13,223 | ) | 5 | |||||||||||||||||||||
Repurchase agreements | — | — | — | — | 232,789 | — | (232,789 | ) | — | |||||||||||||||||||||||
Total | $ | 17,540 | $ | (14,719 | ) | $ | — | $ | 2,821 | $ | 260,736 | $ | (14,719 | ) | $ | (246,012 | ) | $ | 5 |
Note 15. | Operating Segments |
Banking | Leasing | Mortgage Banking | Consolidated | ||||||||||||
Three months ended June 30, 2018 | |||||||||||||||
Net interest income | $ | 146,614 | $ | 2,349 | $ | 10,106 | $ | 159,069 | |||||||
Provision for credit losses | 5,746 | 500 | (27 | ) | 6,219 | ||||||||||
Non-interest income | 46,716 | 22,651 | 18,939 | 88,306 | |||||||||||
Non-interest expense (1) | 124,682 | 15,212 | 53,098 | 192,992 | |||||||||||
Income tax expense | 15,009 | 1,052 | (6,430 | ) | 9,631 | ||||||||||
Net income | $ | 47,893 | $ | 8,236 | $ | (17,596 | ) | $ | 38,533 | ||||||
Total assets | $ | 16,581,205 | $ | 1,354,940 | $ | 2,030,412 | $ | 19,966,557 | |||||||
Three months ended June 30, 2017 | |||||||||||||||
Net interest income | $ | 135,982 | $ | 2,345 | $ | 10,667 | $ | 148,994 | |||||||
Provision for credit losses | 8,890 | 410 | 399 | 9,699 | |||||||||||
Non-interest income | 43,491 | 18,180 | 29,499 | 91,170 | |||||||||||
Non-interest expense (1) | 117,022 | 13,436 | 35,754 | 166,212 | |||||||||||
Income tax expense | 15,662 | 2,525 | 1,600 | 19,787 | |||||||||||
Net income | $ | 37,899 | $ | 4,154 | $ | 2,413 | $ | 44,466 | |||||||
Total assets | $ | 16,320,111 | $ | 1,275,386 | $ | 2,369,560 | $ | 19,965,057 |
(1) | Includes merger related and repositioning expenses of $5.5 million and $19.5 million in the Banking and Mortgage Banking Segment, respectively, for the three months ended June 30, 2018 and $7.2 million in the Banking Segment for the three months ended June 30, 2017. |
Banking | Leasing | Mortgage Banking | Consolidated | ||||||||||||
Six months ended June 30, 2018 | |||||||||||||||
Net interest income | $ | 287,085 | $ | 4,831 | $ | 20,534 | $ | 312,450 | |||||||
Provision for credit losses | 13,325 | 476 | (74 | ) | 13,727 | ||||||||||
Non-interest income | 89,808 | 47,507 | 43,793 | 181,108 | |||||||||||
Non-interest expense (1) | 240,510 | 30,708 | 89,660 | 360,878 | |||||||||||
Income tax expense | 28,617 | 1,808 | (6,762 | ) | 23,663 | ||||||||||
Net income | $ | 94,441 | $ | 19,346 | $ | (18,497 | ) | $ | 95,290 | ||||||
Total assets | $ | 16,581,205 | $ | 1,354,940 | $ | 2,030,412 | $ | 19,966,557 | |||||||
Six months ended June 30, 2017 | |||||||||||||||
Net interest income | $ | 267,431 | $ | 4,614 | $ | 19,992 | $ | 292,037 | |||||||
Provision for credit losses | 12,417 | 275 | 741 | 13,433 | |||||||||||
Non-interest income | 86,699 | 39,643 | 57,278 | 183,620 | |||||||||||
Non-interest expense (1) | 225,538 | 27,280 | 69,736 | 322,554 | |||||||||||
Income tax expense | 31,322 | 6,644 | 2,701 | 40,667 | |||||||||||
Net income | $ | 84,853 | $ | 10,058 | $ | 4,092 | $ | 99,003 | |||||||
Total assets | $ | 16,320,111 | $ | 1,275,386 | $ | 2,369,560 | $ | 19,965,057 |
(1) | Includes merger related and repositioning expenses of $5.5 million and $20.1 million in the Banking and Mortgage Banking Segment, respectively, for the six months ended June 30, 2018 and $7.4 million in the Banking Segment for the six months ended June 30, 2017. |
Note 16. | Preferred Stock |
Note 17. | Definitive Merger Agreement |
Note 18. | Subsequent Events |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended June 30, | ||||||||||||||||||||||
(dollars in thousands) | 2018 | 2017 | ||||||||||||||||||||
Average | Yield/ | Average | Yield/ | |||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||
Interest Earning Assets: | ||||||||||||||||||||||
Loans held for sale | $ | 573,444 | $ | 5,429 | 3.79 | % | $ | 585,207 | $ | 5,434 | 3.71 | % | ||||||||||
Loans (1) (2) | 13,560,785 | 158,971 | 4.65 | 12,850,707 | 137,992 | 4.26 | ||||||||||||||||
Loans exempt from federal income taxes (3) | 278,238 | 2,950 | 4.19 | 354,706 | 4,294 | 4.79 | ||||||||||||||||
Taxable investment securities | 1,510,287 | 10,579 | 2.80 | 1,539,432 | 8,717 | 2.26 | ||||||||||||||||
Investment securities exempt from federal income taxes (3) | 1,222,531 | 11,948 | 3.91 | 1,263,213 | 15,134 | 4.79 | ||||||||||||||||
Federal funds sold | 265 | 2 | 2.17 | 145 | 1 | 1.37 | ||||||||||||||||
Other interest earning deposits | 129,274 | 242 | 0.75 | 87,549 | 227 | 1.04 | ||||||||||||||||
Total interest earning assets | 17,274,824 | $ | 190,121 | 4.37 | 16,680,959 | $ | 171,799 | 4.10 | ||||||||||||||
Non-interest earning assets | 2,882,363 | 2,708,504 | ||||||||||||||||||||
Total assets | $ | 20,157,187 | $ | 19,389,463 | ||||||||||||||||||
Interest Bearing Liabilities: | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
NOW, money market and interest bearing deposits | $ | 4,878,700 | $ | 7,647 | 0.63 | % | $ | 4,506,765 | $ | 3,284 | 0.29 | % | ||||||||||
Savings deposits | 1,209,360 | 886 | 0.29 | 1,113,159 | 244 | 0.09 | ||||||||||||||||
Time deposits | 2,493,726 | 8,853 | 1.42 | 2,138,021 | 5,265 | 0.99 | ||||||||||||||||
Short-term borrowings | 737,718 | 2,769 | 1.51 | 1,697,212 | 3,912 | 0.92 | ||||||||||||||||
Long-term borrowings and junior subordinated notes | 997,203 | 7,768 | 3.07 | 520,241 | 3,300 | 2.47 | ||||||||||||||||
Total interest bearing liabilities | 10,316,707 | $ | 27,923 | 1.08 | 9,975,398 | $ | 16,005 | 0.64 | ||||||||||||||
Non-interest bearing deposits | 6,414,450 | 6,336,151 | ||||||||||||||||||||
Other non-interest bearing liabilities | 490,314 | 451,071 | ||||||||||||||||||||
Stockholders’ equity | 2,935,716 | 2,626,843 | ||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 20,157,187 | $ | 19,389,463 | ||||||||||||||||||
Net interest income/interest rate spread (4) | $ | 162,198 | 3.29 | % | $ | 155,794 | 3.46 | % | ||||||||||||||
Less: taxable equivalent adjustment | 3,129 | 6,800 | ||||||||||||||||||||
Net interest income, as reported | $ | 159,069 | $ | 148,994 | ||||||||||||||||||
Net interest margin (5) | 3.66 | % | 3.55 | % | ||||||||||||||||||
Tax equivalent effect | 0.07 | % | 0.16 | % | ||||||||||||||||||
Net interest margin on a fully tax equivalent basis (non-GAAP) (5) | 3.73 | % | 3.71 | % | ||||||||||||||||||
Effect of acquisition accounting discount accretion on loans acquired through bank mergers | (0.11 | )% | (0.17 | )% | ||||||||||||||||||
Net interest margin on a fully tax equivalent basis, excluding the effect of acquisition accounting discount accretion on loans acquired through bank mergers (non-GAAP) (5) | 3.62 | % | 3.54 | % |
Six Months Ended June 30, | ||||||||||||||||||||||
(dollars in thousands) | 2018 | 2017 | ||||||||||||||||||||
Average | Yield/ | Average | Yield/ | |||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||
Interest Earning Assets: | ||||||||||||||||||||||
Loans held for sale | $ | 559,495 | $ | 9,860 | 3.52 | % | $ | 575,223 | $ | 10,467 | 3.64 | % | ||||||||||
Loans (1) (2) | 13,595,255 | 311,659 | 4.57 | 12,578,441 | 266,696 | 4.23 | ||||||||||||||||
Loans exempt from federal income taxes (3) | 276,986 | 5,824 | 4.18 | 367,257 | 8,724 | 4.72 | ||||||||||||||||
Taxable investment securities | 1,387,964 | 18,513 | 2.67 | 1,566,172 | 17,839 | 2.28 | ||||||||||||||||
Investment securities exempt from federal income taxes (3) | 1,224,415 | 23,943 | 3.91 | 1,270,640 | 30,478 | 4.80 | ||||||||||||||||
Federal funds sold | 169 | 2 | 2.09 | 92 | 1 | 1.34 | ||||||||||||||||
Other interest earning deposits | 127,323 | 373 | 0.59 | 108,932 | 426 | 0.79 | ||||||||||||||||
Total interest earning assets | 17,171,607 | $ | 370,174 | 4.30 | 16,466,757 | $ | 334,631 | 4.05 | ||||||||||||||
Non-interest earning assets | 2,876,869 | 2,730,533 | ||||||||||||||||||||
Total assets | $ | 20,048,476 | $ | 19,197,290 | ||||||||||||||||||
Interest Bearing Liabilities: | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
NOW and money market deposit | $ | 4,875,120 | $ | 13,967 | 0.58 | % | $ | 4,518,021 | $ | 5,906 | 0.26 | % | ||||||||||
Savings deposit | 1,209,103 | 1,703 | 0.28 | 1,122,407 | 499 | 0.09 | ||||||||||||||||
Time deposits | 2,476,119 | 16,748 | 1.36 | 2,099,536 | 9,863 | 0.95 | ||||||||||||||||
Short-term borrowings | 803,851 | 5,285 | 1.33 | 1,597,339 | 6,292 | 0.79 | ||||||||||||||||
Long-term borrowings and junior subordinated notes | 887,980 | 13,770 | 3.07 | 521,122 | 6,313 | 2.38 | ||||||||||||||||
Total interest bearing liabilities | 10,252,173 | $ | 51,473 | 1.01 | 9,858,425 | $ | 28,873 | 0.59 | ||||||||||||||
Non-interest bearing deposits | 6,354,286 | 6,273,127 | ||||||||||||||||||||
Other non-interest bearing liabilities | 493,595 | 458,039 | ||||||||||||||||||||
Stockholders’ equity | 2,948,422 | 2,607,699 | ||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 20,048,476 | $ | 19,197,290 | ||||||||||||||||||
Net interest income/interest rate spread (4) | $ | 318,701 | 3.29 | % | $ | 305,758 | 3.46 | % | ||||||||||||||
Less: taxable equivalent adjustment | 6,251 | 13,721 | ||||||||||||||||||||
Net interest income, as reported | $ | 312,450 | $ | 292,037 | ||||||||||||||||||
Net interest margin (5) | 3.63 | % | 3.54 | % | ||||||||||||||||||
Tax equivalent effect | 0.07 | % | 0.16 | % | ||||||||||||||||||
Net interest margin on a fully tax equivalent basis (non-GAAP) (5) | 3.70 | % | 3.70 | % | ||||||||||||||||||
Effect of acquisition accounting discount accretion on loans acquired through bank mergers | (0.12 | )% | (0.18 | )% | ||||||||||||||||||
Net interest margin on a fully tax equivalent basis, excluding the effect of acquisition accounting discount accretion on loans acquired through bank mergers (non-GAAP) | 3.58 | % | 3.52 | % |
Three Months Ended | |||||||||||||||
June 30, | |||||||||||||||
2018 | 2017 | Increase/ (Decrease) | Percentage Change | ||||||||||||
Non-interest income: | |||||||||||||||
Mortgage banking revenue | $ | 18,926 | $ | 30,152 | $ | (11,226 | ) | (37.2 | )% | ||||||
Lease financing revenue, net | 22,918 | 18,401 | 4,517 | 24.5 | |||||||||||
Treasury management fees | 15,066 | 14,499 | 567 | 3.9 | |||||||||||
Wealth management fees | 8,969 | 8,498 | 471 | 5.5 | |||||||||||
Card fees | 5,654 | 4,413 | 1,241 | 28.1 | |||||||||||
Capital markets and international banking fees | 3,785 | 3,586 | 199 | 5.5 | |||||||||||
Consumer and other deposit service fees | 2,929 | 3,285 | (356 | ) | (10.8 | ) | |||||||||
Brokerage fees | 1,050 | 1,250 | (200 | ) | (16.0 | ) | |||||||||
Loan service fees | 2,148 | 2,037 | 111 | 5.4 | |||||||||||
Increase in cash surrender value of life insurance | 1,272 | 1,301 | (29 | ) | (2.2 | ) | |||||||||
Net (loss) gain on investment securities | (86 | ) | 137 | (223 | ) | (162.8 | ) | ||||||||
Net loss on disposal of other assets | (397 | ) | (4 | ) | (393 | ) | NM | ||||||||
Other operating income | 6,072 | 3,615 | 2,457 | 68.0 | |||||||||||
Total non-interest income | $ | 88,306 | $ | 91,170 | $ | (2,864 | ) | (3.1 | )% |
• | Mortgage banking revenue decreased due to lower mortgage origination volume as a result of the discontinuation of the national mortgage origination business in the second quarter of 2018. |
• | Lease financing revenue increased due to higher residual gains and promotional income partly offset by lower fees from the sale of third-party equipment maintenance contracts. |
• | Card fees increased due to higher prepaid card fees and credit card fees as a result of increased sales and volume. |
• | Other operating income increased as a result of stronger earnings from investments in Small Business Investment Companies. |
Six Months Ended | |||||||||||||||
June 30, | |||||||||||||||
2018 | 2017 | Increase/ (Decrease) | Percentage Change | ||||||||||||
Non-interest income: | |||||||||||||||
Mortgage banking revenue | $ | 43,973 | $ | 58,608 | $ | (14,635 | ) | (25.0 | )% | ||||||
Lease financing revenue, net | 47,628 | 39,819 | 7,809 | 19.6 | |||||||||||
Treasury management fees | 30,222 | 29,188 | 1,034 | 3.5 | |||||||||||
Wealth management fees | 18,090 | 17,018 | 1,072 | 6.3 | |||||||||||
Card fees | 10,441 | 8,979 | 1,462 | 16.3 | |||||||||||
Capital markets and international banking fees | 6,783 | 6,839 | (56 | ) | (0.8 | ) | |||||||||
Consumer and other deposit service fees | 5,841 | 6,648 | (807 | ) | (12.1 | ) | |||||||||
Brokerage fees | 1,914 | 2,375 | (461 | ) | (19.4 | ) | |||||||||
Loan service fees | 4,393 | 4,006 | 387 | 9.7 | |||||||||||
Increase in cash surrender value of life insurance | 2,380 | 2,589 | (209 | ) | (8.1 | ) | |||||||||
Net (loss) gain on investment securities | (260 | ) | 368 | (628 | ) | (170.7 | ) | ||||||||
Net loss on sale of assets | (754 | ) | (127 | ) | (627 | ) | 493.7 | ||||||||
Other operating income | 10,457 | 7,310 | 3,147 | 43.1 | |||||||||||
Total non-interest income | $ | 181,108 | $ | 183,620 | $ | (2,512 | ) | (1.4 | )% |
• | Mortgage banking revenue decreased due to lower mortgage origination volume as a result of the discontinuation of the national mortgage origination business. |
• | Lease financing revenue increased due to higher residual gains and promotional income. |
• | Treasury management fees increased due to increased corporate treasury management services. |
• | Wealth management fees increased due to the addition of new customers. |
• | Card fees increased due to higher prepaid card fees and credit card fees as a result of increased sales and volume. |
• | Other operating income increased as a result of stronger earnings from investments in Small Business Investment Companies. |
Three Months Ended | |||||||||||||||
June 30, | |||||||||||||||
2018 | 2017 | Increase/ (Decrease) | Percentage Change | ||||||||||||
Non-interest expenses: | |||||||||||||||
Salaries and employee benefits expense | $ | 123,478 | $ | 102,566 | $ | 20,912 | 20.4 | % | |||||||
Occupancy and equipment expense | 16,451 | 15,284 | 1,167 | 7.6 | |||||||||||
Computer services and telecommunication expense | 10,871 | 9,785 | 1,086 | 11.1 | |||||||||||
Advertising and marketing expense | 3,342 | 3,245 | 97 | 3.0 | |||||||||||
Professional and legal expense | 8,887 | 2,450 | 6,437 | 262.7 | |||||||||||
Other intangibles amortization expense | 1,896 | 2,086 | (190 | ) | (9.1 | ) | |||||||||
Branch exit and facilities impairment charges | 340 | 6,589 | (6,249 | ) | (94.8 | ) | |||||||||
Net loss recognized on other real estate owned and other expense | 1,048 | 690 | 358 | 51.9 | |||||||||||
Goodwill impairment loss | 3,623 | — | 3,623 | 100.0 | |||||||||||
Other operating expenses | 23,056 | 23,517 | (461 | ) | (2.0 | ) | |||||||||
Total non-interest expenses | $ | 192,992 | $ | 166,212 | $ | 26,780 | 16.1 | % |
• | Salaries and employee benefits expense increased due to annual salary increases, new hires, and higher health insurance costs. |
• | Occupancy and equipment expense increased due to higher depreciation, as a result of our investment in our buildings and technology, and higher rental expenses, as a result of the office locations from the mortgage banking acquisition in the fourth quarter of 2017. |
• | Computer services and telecommunication expense increased due to investments in technology and infrastructure. |
• | Professional and legal expense increased due to case settlements and other legal and professional fees. |
Three Months Ended | ||||||||
June 30, | ||||||||
2018 | 2017 | |||||||
Merger related and repositioning expenses (1): | ||||||||
Salaries and employee benefits | $ | 17,510 | $ | 552 | ||||
Occupancy and equipment expense | 1 | 6 | ||||||
Computer services and telecommunication expense | — | 76 | ||||||
Professional and legal expense | 3,453 | 3 | ||||||
Branch exit and facilities impairment charges | 340 | 6,589 | ||||||
Goodwill impairment loss (2) | 3,623 | — | ||||||
Other operating expenses | 17 | (60 | ) | |||||
Total merger related and repositioning expenses | $ | 24,944 | $ | 7,166 |
(1) | Primarily includes costs incurred in connection with the pending merger with Fifth Third, the discontinuation of our national mortgage origination business, and the American Chartered merger. |
(2) | Represents the goodwill impairment charge within the Mortgage Banking Segment in the second quarter of 2018. |
Six Months Ended | |||||||||||||||
June 30, | |||||||||||||||
2018 | 2017 | Increase/ (Decrease) | Percentage Change | ||||||||||||
Non-interest expenses: | |||||||||||||||
Salaries and employee benefits | $ | 229,992 | $ | 204,117 | $ | 25,875 | 12.7 | % | |||||||
Occupancy and equipment expense | 33,880 | 30,328 | 3,552 | 11.7 | |||||||||||
Computer services and telecommunication expense | 22,027 | 19,225 | 2,802 | 14.6 | |||||||||||
Advertising and marketing expense | 7,205 | 6,406 | 799 | 12.5 | |||||||||||
Professional and legal expense | 10,785 | 5,141 | 5,644 | 109.8 | |||||||||||
Other intangibles amortization expense | 3,798 | 4,176 | (378 | ) | (9.1 | ) | |||||||||
Branch exit and facilities impairment charges | 340 | 5,907 | (5,567 | ) | (94.2 | ) | |||||||||
Net loss recognized on other real estate owned and other expense | 1,095 | 1,534 | (439 | ) | (28.6 | ) | |||||||||
Loss on extinguishment of debt | 3,136 | — | 3,136 | 100.0 | |||||||||||
Goodwill impairment loss | 3,623 | — | 3,623 | 100.0 | |||||||||||
Other operating expenses | 44,997 | 45,720 | (723 | ) | (1.6 | ) | |||||||||
Total non-interest expenses | $ | 360,878 | $ | 322,554 | $ | 38,324 | 11.9 | % |
• | Salaries and employee benefits expense increased due to annual salary increases, new hires, and higher health insurance costs. |
• | Occupancy and equipment expense increased due to higher depreciation, as a result of our investment in our buildings and technology, and higher rental expenses, as a result of the office locations from the mortgage banking acquisition. |
• | Computer services and telecommunication expense increased due to investments in technology and infrastructure. |
• | Professional and legal expense increased due to case settlements and other legal and professional fees. |
• | A $3.1 million loss on extinguishment of debt was recognized in the first quarter of 2018 due to the redemption of the junior subordinated notes held by American Chartered Statutory Trust I, as noted earlier. |
Six Months Ended | ||||||||
June 30, | ||||||||
2018 | 2017 | |||||||
Merger related and repositioning expenses (1): | ||||||||
Salaries and employee benefits | $ | 18,067 | $ | 1,166 | ||||
Occupancy and equipment expense | 36 | 10 | ||||||
Computer services and telecommunication expense | — | 261 | ||||||
Advertising and marketing expense | 26 | — | ||||||
Professional and legal expense | 3,457 | 100 | ||||||
Branch exit and facilities impairment charges | 340 | 5,907 | ||||||
Goodwill impairment loss (2) | 3,623 | — | ||||||
Other operating expenses | 39 | (20 | ) | |||||
Total merger related and repositioning expenses | $ | 25,588 | $ | 7,424 |
(1) | Primarily includes costs incurred in connection with the pending merger with Fifth Third, the discontinuation of our national mortgage origination business, and the American Chartered merger. |
(2) | Represents the goodwill impairment charge within the Mortgage Banking Segment in the second quarter of 2018. |
Six Months Ended | ||||||||
June 30, | ||||||||
2018 | 2017 | |||||||
Income before income taxes - as reported | $ | 118,953 | $ | 139,670 | ||||
Tax at Federal statutory rate (21% for 2018 and 35% for 2017) | 24,980 | 48,885 | ||||||
Increase (decrease) due to: | ||||||||
Tax exempt income, net | (5,320 | ) | (9,715 | ) | ||||
State tax expense (benefit), net of Federal impact | 6,557 | 5,491 | ||||||
Other items, net | 1,517 | 1,068 | ||||||
Tax expense before discrete items | 27,734 | 45,729 | ||||||
Income tax rate before discrete items (effective tax rate) | 23.3 | % | 32.7 | % | ||||
Discrete tax expense (benefit) items (1) | (684 | ) | (2,958 | ) | ||||
Discrete tax benefit corporate tax rate changes (2) | (3,387 | ) | — | |||||
Discrete tax expense (benefit) merger related items (3) | — | (2,104 | ) | |||||
Income tax expense - as reported | $ | 23,663 | $ | 40,667 | ||||
Income tax rate | 19.9 | % | 29.1 | % |
(1) | Includes tax benefits on the vesting of restricted shares, exercise of options, and other compensation. |
(2) | Includes the impact of the Federal income tax rate decrease due to the TCJ Act (enacted on December 22, 2017) on our net deferred tax liabilities. The re-measurement of our net deferred tax liabilities due to the TCJ Act was determined to be provisional at June 30, 2018. |
(3) | Includes reversals of a tax liability no longer needed specifically related to two entities we acquired and certain non-deductible merger related items. |
• | Investment securities increased $215.2 million, or 8.7%, from December 31, 2017 to June 30, 2018 due to the purchase of residential mortgage-backed securities in March 2018. |
• | Total loans, excluding purchased credit-impaired, decreased by $127.1 million, or 0.9%, to $13.7 billion at June 30, 2018 from December 31, 2017 mostly due to a decrease in commercial real estate loans. |
• | Total deposits decreased by $35.7 million, or 0.2%, to $14.9 billion at June 30, 2018 from December 31, 2017 due to the decrease in non-interest bearing deposits. |
• | Total borrowings decreased by $1.5 million, or 0.1%, to $1.6 billion at June 30, 2018. |
June 30, 2018 | December 31, 2017 | June 30, 2017 | ||||||||||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||
Available for sale | ||||||||||||||||||||||||
U.S. Government sponsored agencies and enterprises | $ | 5,098 | $ | 5,026 | $ | 23,013 | $ | 23,007 | $ | 23,141 | $ | 23,229 | ||||||||||||
States and political subdivisions | 338,927 | 350,061 | 363,813 | 379,325 | 367,385 | 387,351 | ||||||||||||||||||
Residential mortgage-backed securities | 1,225,978 | 1,205,579 | 861,594 | 852,699 | 920,005 | 917,605 | ||||||||||||||||||
Commercial mortgage-backed securities | 63,527 | 63,424 | 71,554 | 72,035 | 88,159 | 89,326 | ||||||||||||||||||
Corporate bonds | 23,179 | 23,170 | 70,155 | 70,197 | 137,948 | 138,556 | ||||||||||||||||||
Equity securities (1) | — | — | 11,236 | 11,063 | 11,114 | 11,004 | ||||||||||||||||||
Total Available for Sale | 1,656,709 | 1,647,260 | 1,401,365 | 1,408,326 | 1,547,752 | 1,567,071 | ||||||||||||||||||
Held to maturity | ||||||||||||||||||||||||
States and political subdivisions | 884,576 | 901,343 | 878,400 | 910,512 | 896,043 | 931,209 | ||||||||||||||||||
Residential mortgage-backed securities | 38,460 | 38,860 | 80,682 | 81,943 | 126,869 | 129,835 | ||||||||||||||||||
Total Held to Maturity | 923,036 | 940,203 | 959,082 | 992,455 | 1,022,912 | 1,061,044 | ||||||||||||||||||
Total | $ | 2,579,745 | $ | 2,587,463 | $ | 2,360,447 | $ | 2,400,781 | $ | 2,570,664 | $ | 2,628,115 |
(1) | Reflected in marketable equity securities on the consolidated balance sheet following the adoption of the new guidance under ASC Topic 825 "Financial Instruments" on January 1, 2018. |
June 30, 2018 | December 31, 2017 | |||||||||||||||||||||||||
Legacy (1) | Acquired (2) | Total | % of Total | Legacy (1) | Acquired (2) | Total | % of Total | |||||||||||||||||||
Commercial-related credits: | ||||||||||||||||||||||||||
Commercial loans | $ | 4,639,885 | $ | 176,660 | $ | 4,816,545 | 35 | % | $ | 4,532,153 | $ | 254,027 | $ | 4,786,180 | 34 | % | ||||||||||
Commercial loans collateralized by assignment of lease payments | 2,085,054 | 15,406 | 2,100,460 | 15 | 2,077,972 | 35,163 | 2,113,135 | 15 | ||||||||||||||||||
Commercial real estate | 3,327,971 | 601,356 | 3,929,327 | 28 | 3,370,590 | 776,939 | 4,147,529 | 30 | ||||||||||||||||||
Construction real estate | 493,047 | 2,758 | 495,805 | 4 | 401,189 | 5,660 | 406,849 | 3 | ||||||||||||||||||
Total commercial-related credits | 10,545,957 | 796,180 | 11,342,137 | 82 | 10,381,904 | 1,071,789 | 11,453,693 | 82 | ||||||||||||||||||
Other loans: | ||||||||||||||||||||||||||
Residential real estate | 1,159,942 | 192,683 | 1,352,625 | 10 | 1,212,120 | 220,338 | 1,432,458 | 10 | ||||||||||||||||||
Indirect vehicle | 748,645 | 1,338 | 749,983 | 5 | 666,443 | 1,485 | 667,928 | 4 | ||||||||||||||||||
Home equity | 155,877 | 36,908 | 192,785 | 1 | 165,297 | 53,801 | 219,098 | 2 | ||||||||||||||||||
Other consumer loans | 81,414 | 300 | 81,714 | 1 | 72,742 | 399 | 73,141 | 1 | ||||||||||||||||||
Total other loans | 2,145,878 | 231,229 | 2,377,107 | 17 | 2,116,602 | 276,023 | 2,392,625 | 17 | ||||||||||||||||||
Total loans excluding purchased credit-impaired loans | 12,691,835 | 1,027,409 | 13,719,244 | 99 | 12,498,506 | 1,347,812 | 13,846,318 | 99 | ||||||||||||||||||
Purchased credit-impaired loans | 66,229 | 34,772 | 101,001 | 1 | 79,066 | 40,678 | 119,744 | 1 | ||||||||||||||||||
Total loans | $ | 12,758,064 | $ | 1,062,181 | $ | 13,820,245 | 100 | % | $ | 12,577,572 | $ | 1,388,490 | $ | 13,966,062 | 100 | % |
(1) | Legacy loans include all loans other than those acquired through the American Chartered and Taylor Capital mergers, including loans acquired in connection with our FDIC-assisted transactions and our other acquisition transactions, as well as new loans originated subsequent to the American Chartered and Taylor Capital mergers, and American Chartered and Taylor Capital loans that have been renewed. |
(2) | Represents loans acquired through the American Chartered and Taylor Capital mergers that have not yet been renewed. These balances will decrease to zero over time. |
June 30, 2018 | December 31, 2017 | June 30, 2017 | ||||||||||
Non-performing loans: | ||||||||||||
Non-accruing loans | $ | 64,515 | $ | 71,238 | $ | 51,013 | ||||||
Loans 90 days or more past due, still accruing interest | 4,010 | 5,570 | 1,190 | |||||||||
Total non-performing loans | 68,525 | 76,808 | 52,203 | |||||||||
Other real estate owned | 10,869 | 9,736 | 11,063 | |||||||||
Repossessed assets | 643 | 589 | 484 | |||||||||
Total non-performing assets | $ | 80,037 | $ | 87,133 | $ | 63,750 | ||||||
Purchased credit-impaired loans | $ | 101,001 | $ | 119,744 | $ | 149,077 | ||||||
Total allowance for loan and lease losses | $ | 162,790 | $ | 157,710 | $ | 154,033 | ||||||
Accruing restructured loans (1) | 25,660 | 28,554 | 29,658 | |||||||||
Total non-performing loans to total loans | 0.50 | % | 0.55 | % | 0.38 | % | ||||||
Total non-performing assets to total assets | 0.40 | 0.43 | 0.32 | |||||||||
Allowance for loan and lease losses to total non-performing loans | 237.56 | 205.33 | 295.07 |
(1) | Accruing restructured loans consists of loans that have been modified and are performing in accordance with those modified terms. |
June 30, | ||||||||
2018 | 2017 | |||||||
Beginning balance | $ | 9,736 | $ | 26,279 | ||||
Transfers in at fair value less estimated costs to sell | 3,890 | 2,658 | ||||||
Fair value adjustments | (160 | ) | (1,858 | ) | ||||
Net gains on sales of other real estate owned | 169 | 670 | ||||||
Cash received upon disposition | (2,766 | ) | (16,686 | ) | ||||
Ending balance | $ | 10,869 | $ | 11,063 |
June 30, 2018 | December 31, 2017 | |||||||
Commercial loans | $ | 118,178 | $ | 89,836 | ||||
Commercial loans collateralized by assignment of lease payments | 5,686 | 9,407 | ||||||
Commercial real estate | 114,286 | 74,023 | ||||||
Construction real estate | 5,534 | — | ||||||
Total | $ | 243,684 | $ | 173,266 |
• | Commercial loans and lease loans: BBB-rated debt yield and number of civilians unemployed for 27 weeks or more. |
• | Commercial real estate loans and construction loans: M2 Money stock, the U.S. Commercial Real Estate Index and the University of Michigan Consumer Sentiment Index. |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Balance at beginning of period | $ | 163,390 | $ | 146,498 | $ | 159,408 | $ | 141,842 | ||||||||
Provision for credit losses | 6,219 | 9,699 | 13,727 | 13,433 | ||||||||||||
Charge-offs: | ||||||||||||||||
Commercial loans | 1,534 | 700 | 2,936 | 868 | ||||||||||||
Commercial loans collateralized by assignment of lease payments | 716 | — | 716 | — | ||||||||||||
Commercial real estate | 2,621 | 262 | 5,097 | 1,347 | ||||||||||||
Construction real estate | — | — | — | — | ||||||||||||
Residential real estate | 28 | 270 | 729 | 360 | ||||||||||||
Home equity | 184 | 261 | 248 | 434 | ||||||||||||
Indirect vehicles | 1,328 | 930 | 3,152 | 2,341 | ||||||||||||
Other consumer loans | 309 | 498 | 660 | 944 | ||||||||||||
Total charge-offs | 6,720 | 2,921 | 13,538 | 6,294 | ||||||||||||
Recoveries: | ||||||||||||||||
Commercial loans | 167 | 1,339 | 504 | 2,849 | ||||||||||||
Commercial loans collateralized by assignment of lease payments | 149 | 249 | 400 | 712 | ||||||||||||
Commercial real estate | 329 | 362 | 1,091 | 880 | ||||||||||||
Construction real estate | 37 | 47 | 430 | 159 | ||||||||||||
Residential real estate | 26 | 58 | 96 | 586 | ||||||||||||
Home equity | 228 | 292 | 298 | 575 | ||||||||||||
Indirect vehicles | 664 | 565 | 1,843 | 1,217 | ||||||||||||
Other consumer loans | 89 | 109 | 319 | 338 | ||||||||||||
Total recoveries | 1,689 | 3,021 | 4,981 | 7,316 | ||||||||||||
Net charge-offs (recoveries) | 5,031 | (100 | ) | 8,557 | (1,022 | ) | ||||||||||
Allowance for credit losses | 164,578 | 156,297 | 164,578 | 156,297 | ||||||||||||
Allowance for unfunded credit commitments | (1,788 | ) | (2,264 | ) | (1,788 | ) | (2,264 | ) | ||||||||
Allowance for loan and lease losses | $ | 162,790 | $ | 154,033 | $ | 162,790 | $ | 154,033 | ||||||||
Total loans | $ | 13,820,245 | $ | 13,614,141 | $ | 13,820,245 | $ | 13,614,141 | ||||||||
Ratio of allowance to total loans | 1.18 | % | 1.13 | % | 1.18 | % | 1.13 | % | ||||||||
Ratio of net charge-offs (recoveries) to average loans (annualized) | 0.15 | (0.00 | ) | 0.12 | (0.02 | ) |
June 30, 2018 | December 31, 2017 | June 30, 2017 | ||||||||||
Direct finance leases: | ||||||||||||
Minimum lease payments | $ | 460,476 | $ | 492,953 | $ | 454,283 | ||||||
Estimated unguaranteed residual values | 64,717 | 74,220 | 68,135 | |||||||||
Less: unearned income | (38,712 | ) | (41,311 | ) | (37,020 | ) | ||||||
Direct finance leases (1) | $ | 486,481 | $ | 525,862 | $ | 485,398 | ||||||
Leveraged leases: | ||||||||||||
Minimum lease payments | $ | 45 | $ | 179 | $ | 390 | ||||||
Estimated unguaranteed residual values | 10 | 10 | 54 | |||||||||
Less: unearned income | — | (3 | ) | (10 | ) | |||||||
Less: related non-recourse debt | (45 | ) | (177 | ) | (383 | ) | ||||||
Leveraged leases (1) | $ | 10 | $ | 9 | $ | 51 | ||||||
Operating leases: | ||||||||||||
Equipment, at cost | $ | 620,227 | $ | 575,612 | $ | 491,844 | ||||||
Less accumulated depreciation | (186,722 | ) | (166,561 | ) | (145,808 | ) | ||||||
Lease investments, net | $ | 433,505 | $ | 409,051 | $ | 346,036 |
(1) | Direct finance and leveraged leases are included as commercial loans collateralized by assignment of lease payments for financial statement purposes. |
Residual Values | ||||||||||||||||
Direct | ||||||||||||||||
End of initial lease term | Finance | Leveraged | Operating | |||||||||||||
December 31, | Leases | Leases | Leases | Total | ||||||||||||
2018 | $ | 5,112 | $ | 10 | $ | 10,050 | $ | 15,172 | ||||||||
2019 | 9,190 | — | 12,240 | 21,430 | ||||||||||||
2020 | 13,795 | — | 26,984 | 40,779 | ||||||||||||
2021 | 5,629 | — | 21,085 | 26,714 | ||||||||||||
2022 | 9,417 | — | 17,147 | 26,564 | ||||||||||||
Thereafter | 21,574 | — | 43,280 | 64,854 | ||||||||||||
$ | 64,717 | $ | 10 | $ | 130,786 | $ | 195,513 |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Time to Maturity or Repricing | ||||||||||||||||||||
0 – 90 | 91 - 365 | 1 – 5 | Over 5 | |||||||||||||||||
Days | Days | Years | Years | Total | ||||||||||||||||
Interest Earning Assets: | ||||||||||||||||||||
Interest earning deposits with banks | $ | 106,833 | $ | 10,519 | $ | 2,320 | $ | — | $ | 119,672 | ||||||||||
Investment securities | 95,850 | 279,635 | 1,257,482 | 1,063,704 | 2,696,671 | |||||||||||||||
Loans held for sale | 423,367 | — | — | — | 423,367 | |||||||||||||||
Loans, including covered loans | 8,200,144 | 1,530,777 | 3,386,908 | 702,416 | 13,820,245 | |||||||||||||||
Total interest earning assets | $ | 8,826,194 | $ | 1,820,931 | $ | 4,646,710 | $ | 1,766,120 | $ | 17,059,955 | ||||||||||
Interest Bearing Liabilities: | ||||||||||||||||||||
NOW, money market, and interest bearing deposits | $ | 2,356,771 | $ | 378,214 | $ | 1,219,715 | $ | 995,976 | $ | 4,950,676 | ||||||||||
Savings deposits | 370,623 | 145,882 | 442,857 | 221,716 | 1,181,078 | |||||||||||||||
Time deposits | 384,151 | 970,464 | 1,088,115 | 971 | 2,443,701 | |||||||||||||||
Short-term borrowings | 576,462 | 75,000 | — | — | 651,462 | |||||||||||||||
Long-term borrowings | 383,282 | 19,260 | 323,762 | 3,988 | 730,292 | |||||||||||||||
Junior subordinated notes issued to capital trusts | 194,450 | — | — | — | 194,450 | |||||||||||||||
Total interest bearing liabilities | $ | 4,265,739 | $ | 1,588,820 | $ | 3,074,449 | $ | 1,222,651 | $ | 10,151,659 | ||||||||||
Rate sensitive assets (RSA) | $ | 8,826,194 | $ | 10,647,125 | $ | 15,293,835 | $ | 17,059,955 | $ | 17,059,955 | ||||||||||
Rate sensitive liabilities (RSL) | 4,265,739 | 5,854,559 | 8,929,008 | 10,151,659 | 10,151,659 | |||||||||||||||
Cumulative GAP (GAP=RSA-RSL) | 4,560,455 | 4,792,566 | 6,364,827 | 6,908,296 | 6,908,296 | |||||||||||||||
RSA/Total assets | 44.20 | % | 53.32 | % | 76.60 | % | 85.44 | % | 85.44 | % | ||||||||||
RSL/Total assets | 21.36 | 29.32 | 44.72 | 50.84 | 50.84 | |||||||||||||||
GAP/Total assets | 22.84 | 24.00 | 31.88 | 34.60 | 34.60 | |||||||||||||||
GAP/RSA | 51.67 | 45.01 | 41.62 | 40.49 | 40.49 |
Gradual | Changes in Net Interest Income Over One Year Horizon | |||||||||||||
Changes in | June 30, 2018 | December 31, 2017 | ||||||||||||
Levels of | Dollar | Percentage | Dollar | Percentage | ||||||||||
Interest Rates | Change | Change | Change | Change | ||||||||||
+ 2.00% | $ | 54,542 | 8.43 | % | $ | 46,967 | 7.33 | % | ||||||
+ 1.00% | 27,675 | 4.28 | 25,565 | 3.99 | ||||||||||
- 1.00% | (27,058 | ) | (4.18 | ) | (33,889 | ) | (5.29 | ) |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
• | we may experience negative reactions from the financial markets, including negative impacts on our stock price (including to the extent that the current market price reflects a market assumption that the merger will be completed); |
• | we may experience negative reactions from our customers, vendors and employees; |
• | we will have incurred substantial expenses and will be required to pay certain costs relating to the merger, whether or not the merger is completed; |
• | the merger agreement places certain restrictions on the conduct of our businesses prior to completion of the merger. Such restrictions, the waiver of which is subject to the consent of Fifth Third (not to be unreasonably withheld, conditioned or delayed), may prevent us from making certain acquisitions or taking certain other specified actions during the pendency of the merger; and |
• | matters relating to the merger (including integration planning) will require substantial commitments of time and resources by our management, which would otherwise have been devoted to other opportunities that may have been beneficial to us as an independent company. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in Thousands) | |||||||||||
April 1, 2018 — April 30, 2018 | — | $ | — | — | $ | — | ||||||||
May 1, 2018 — May 31, 2018 | — | — | — | — | ||||||||||
June 1, 2018 — June 30, 2018 | — | — | — | — | ||||||||||
Total | — | $ | — | — |
Item 6. | Exhibits |
Exhibit Number | Description | |
Exhibit Number | Description | |
4.1 | The Registrant hereby agrees to furnish to the Commission, upon request, the instruments defining the rights of the holders of each issue of long-term debt of the Registrant and its consolidated subsidiaries | |
10.1 | Reserved | |
10.5 | Reserved | |
10.5A | Reserved | |
10.5B | Reserved | |
Exhibit Number | Description | |
10.10 | Reserved | |
Exhibit Number | Description | |
Exhibit Number | Description | |
10.24 | Reserved | |
Exhibit Number | Description | |
101 | The following financial statements from the MB Financial, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, formatted in Extensive Business Reporting Language (XBRL): (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of comprehensive income, (iv) consolidated statements of cash flows and (v) the notes to consolidated financial statements* |
Date: | August 9, 2018 | By: | /s/Mitchell Feiger |
Mitchell Feiger | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) | |||
Date: | August 9, 2018 | By: | /s/Randall T. Conte |
Randall T. Conte | |||
Vice President and Chief Financial Officer | |||
(Principal Financial Officer) |
Date: | August 9, 2018 | /s/Mitchell Feiger | |
Mitchell Feiger | |||
President and Chief Executive Officer | |||
Date: | August 9, 2018 | /s/Randall T. Conte | |
Randall T. Conte | |||
Vice President and Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Aug. 08, 2018 |
|
Document and Entity Information | ||
Entity Registrant Name | MB FINANCIAL INC /MD | |
Entity Central Index Key | 0001139812 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock shares outstanding | 84,200,745 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Loans: | ||||
Taxable | $ 164,401,000 | $ 143,426,000 | $ 321,520,000 | $ 277,163,000 |
Nontaxable | 2,330,000 | 2,791,000 | 4,601,000 | 5,671,000 |
Investment securities: | ||||
Taxable | 10,578,000 | 8,717,000 | 18,512,000 | 17,839,000 |
Nontaxable | 9,439,000 | 9,837,000 | 18,915,000 | 19,810,000 |
Other interest earning accounts and Federal funds sold | 244,000 | 228,000 | 375,000 | 427,000 |
Total interest income | 186,992,000 | 164,999,000 | 363,923,000 | 320,910,000 |
Interest expense: | ||||
Deposits | 17,386,000 | 8,793,000 | 32,418,000 | 16,268,000 |
Short-term borrowings | 2,769,000 | 3,912,000 | 5,285,000 | 6,292,000 |
Long-term borrowings and junior subordinated notes | 7,768,000 | 3,300,000 | 13,770,000 | 6,313,000 |
Total interest expense | 27,923,000 | 16,005,000 | 51,473,000 | 28,873,000 |
Net interest income | 159,069,000 | 148,994,000 | 312,450,000 | 292,037,000 |
Provision for credit losses | 6,219,000 | 9,699,000 | 13,727,000 | 13,433,000 |
Net interest income after provision for credit losses | 152,850,000 | 139,295,000 | 298,723,000 | 278,604,000 |
Non-interest income: | ||||
Mortgage banking revenue | 18,926,000 | 30,152,000 | 43,973,000 | 58,608,000 |
Lease financing revenue, net | 22,918,000 | 18,401,000 | 47,628,000 | 39,819,000 |
Treasury management fees | 15,066,000 | 14,499,000 | 30,222,000 | 29,188,000 |
Wealth management fees | 8,969,000 | 8,498,000 | 18,090,000 | 17,018,000 |
Card fees | 5,654,000 | 4,413,000 | 10,441,000 | 8,979,000 |
Capital markets and international banking fees | 3,785,000 | 3,586,000 | 6,783,000 | 6,839,000 |
Consumer and other deposit service fees | 2,929,000 | 3,285,000 | 5,841,000 | 6,648,000 |
Brokerage fees | 1,050,000 | 1,250,000 | 1,914,000 | 2,375,000 |
Loan service fees | 2,148,000 | 2,037,000 | 4,393,000 | 4,006,000 |
Increase in cash surrender value of life insurance | 1,272,000 | 1,301,000 | 2,380,000 | 2,589,000 |
Net (loss) gain on investment securities | (86,000) | 137,000 | (260,000) | 368,000 |
Net loss on disposal of other assets | (397,000) | (4,000) | (754,000) | (127,000) |
Other operating income | 6,072,000 | 3,615,000 | 10,457,000 | 7,310,000 |
Total non-interest income | 88,306,000 | 91,170,000 | 181,108,000 | 183,620,000 |
Non-interest expenses: | ||||
Salaries and employee benefits expense | 123,478,000 | 102,566,000 | 229,992,000 | 204,117,000 |
Occupancy and equipment expense | 16,451,000 | 15,284,000 | 33,880,000 | 30,328,000 |
Computer services and telecommunication expense | 10,871,000 | 9,785,000 | 22,027,000 | 19,225,000 |
Advertising and marketing expense | 3,342,000 | 3,245,000 | 7,205,000 | 6,406,000 |
Professional and legal expense | 8,887,000 | 2,450,000 | 10,785,000 | 5,141,000 |
Other intangibles amortization expense | 1,896,000 | 2,086,000 | 3,798,000 | 4,176,000 |
Branch exit and facilities impairment charges | 340,000 | 6,589,000 | 340,000 | 5,907,000 |
Net loss recognized on other real estate owned and other related expense | 1,048,000 | 690,000 | 1,095,000 | 1,534,000 |
Loss on extinguishment of debt | 0 | 0 | 3,136,000 | 0 |
Goodwill impairment loss | 3,623,000 | 0 | 3,623,000 | 0 |
Other operating expenses | 23,056,000 | 23,517,000 | 44,997,000 | 45,720,000 |
Total non-interest expenses | 192,992,000 | 166,212,000 | 360,878,000 | 322,554,000 |
Income before income taxes | 48,164,000 | 64,253,000 | 118,953,000 | 139,670,000 |
Income tax expense | 9,631,000 | 19,787,000 | 23,663,000 | 40,667,000 |
Net income | 38,533,000 | 44,466,000 | 95,290,000 | 99,003,000 |
Dividends on preferred shares | 3,000,000 | 2,002,000 | 6,100,000 | 4,005,000 |
Return from preferred stockholders due to redemption | 0 | 0 | (15,280,000) | 0 |
Net income available to common stockholders | $ 35,533,000 | $ 42,464,000 | $ 104,470,000 | $ 94,998,000 |
Common share data: | ||||
Basic earnings per common share (in dollars per share) | $ 0.42 | $ 0.51 | $ 1.24 | $ 1.13 |
Diluted earnings per common share (in dollars per share) | $ 0.42 | $ 0.50 | $ 1.23 | $ 1.12 |
Weighted average common shares outstanding for basic earnings per common share (in shares) | 84,253,966 | 83,842,963 | 84,160,344 | 83,753,195 |
Diluted weighted average common shares outstanding for diluted earnings per common share (in shares) | 85,251,810 | 84,767,414 | 85,074,626 | 84,773,271 |
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 | $ 38,533 | $ 44,466 | $ 95,290 | $ 99,003 |
Unrealized holding (gains) losses on investment securities, net of reclassification adjustments | (7,968) | 3,979 | (20,060) | 10,033 |
Reclassification adjustment for amortization of unrealized losses (gains) on investment securities transferred to held to maturity from available for sale | 115 | (350) | 266 | (823) |
Reclassification adjustments for losses (gains) included in net income | 86 | (137) | 260 | (368) |
Other comprehensive (loss) income, before tax | (7,767) | 3,492 | (19,534) | 8,842 |
Income tax expense (benefit) related to items of other comprehensive (loss) income | 2,097 | (1,387) | 5,225 | (3,512) |
Other comprehensive (loss) income, net of tax | (5,670) | 2,105 | (14,309) | 5,330 |
Comprehensive income | $ 32,863 | $ 46,571 | $ 80,981 | $ 104,333 |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends declared (in dollars per share) | $ 0.48 | $ 0.40 |
Basis of Presentation |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation These unaudited consolidated financial statements include the accounts of MB Financial, Inc., a Maryland corporation (the “Company”), and its subsidiaries, including its wholly owned national bank subsidiary, MB Financial Bank, N.A. (“MB Financial Bank”), based in Chicago, Illinois. In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the financial condition, results of operations and cash flows for the interim periods have been made. The results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the entire fiscal year. These unaudited interim financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and industry practice. Certain information in footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP and industry practice has been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods. Actual results could differ from those estimates. Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications did not result in any changes to previously reported net income or stockholders’ equity. |
New Authoritative Accounting Guidance |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
New Authoritative Accounting Guidance | New Authoritative Accounting Guidance ASC Topic 805 "Business Combinations." New authoritative accounting guidance under ASC Topic 805 "Business Combinations" amends prior guidance to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. ASC Topic 606 "Revenue from Contracts with Customers." New authoritative accounting guidance under ASC Topic 606, "Revenue from Contracts with Customers" amended prior guidance to require an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new authoritative guidance was initially effective for reporting periods after January 1, 2017 but was deferred to January 1, 2018. The Company's revenue is comprised of interest income on financial assets, which is excluded from the scope of this new guidance, and non-interest income. This new guidance changes how certain recurring revenue streams are recognized within lease financing revenue and insignificant components of non-interest income. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. See "Accounting changes" below. ASC Topic 825 "Financial Instruments." New authoritative accounting guidance under ASC Topic 825 "Financial Instruments" amended prior guidance to require equity investments (except those accounted for under the equity method of accounting) to be measured at fair value with changes in fair value recognized in net income. An entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. The new guidance simplifies the impairment assessment of equity investments without readily determinable fair values, requires public entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from changes in the instrument-specific credit risk when the entity has selected the fair value option for financial instruments and requires separate presentation of financial assets and liabilities by measurement category and form of financial asset. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. See "Accounting changes" below. ASC Topic 405 "Liabilities-Extinguishment of Liabilities." New authoritative accounting guidance under ASC Topic 405, "Liabilities-Extinguishment of Liabilities" amended prior guidance to clarify that liabilities related to the sale of prepaid store-value products within the scope of this guidance are financial liabilities and that breakage for those liabilities are to be accounted for consistent with the breakage guidance in ASC Topic 606 "Revenue from Contracts with Customers." The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. ASC Topic 842 "Leases." New authoritative accounting guidance under ASC Topic 842 "Leases" amended prior guidance to require lessees to recognize the assets and liabilities arising from all leases on the balance sheet. The new authoritative guidance defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. In addition, the qualifications for a sale and leaseback transaction have been amended. The new authoritative guidance also requires qualitative and quantitative disclosures by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The new authoritative guidance will be effective for reporting periods after January 1, 2019. In July 2018, the Financial Accounting Standards Board issued new authoritative guidance to provide an additional transition method that allows entities to not apply this new guidance in the comparative periods presented in the financial statements and instead recognize a cumulative effect adjustment to the beginning retained earnings at the date of application. The Company is evaluating the new guidance and its impact on the Company's statements of operations and financial condition. The Company expects an increase in assets and liabilities as a result of recording additional lease contracts where the Company is lessee. ASC Topic 815 "Derivatives and Hedging." New authoritative accounting guidance under ASC Topic 815 "Derivatives and Hedging" amended prior guidance to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The new authoritative guidance expands and refines hedge accounting for both nonfinancial and financial risk components. The new authoritative guidance will be effective for reporting periods after January 1, 2019 with early adoption permitted. This new authoritative guidance is not expected to have a significant impact on the Company's statements of operations or financial condition. ASC Topic 718 "Compensation - Stock Compensation." New authoritative accounting guidance under ASC Topic 718 "Compensation - Stock Compensation" amends prior guidance by clarifying which changes to terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of a modification unless the fair value, vesting conditions and classification of the modified award are the same as the original award. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. ASC Topic 326 "Financial Instruments - Credit Losses." New authoritative accounting guidance under ASC Topic 326 "Financial Instruments - Credit Losses" amended the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information for credit loss estimates. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The new authoritative guidance also requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected (net of the allowance for credit losses). In addition, the credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses rather than a write-down. The new authoritative guidance will be effective for reporting periods after January 1, 2020. The Company is evaluating the new guidance and expects it to have an impact on the Company's statements of operations and financial condition, the significance of which is not yet known nor can it be reasonably estimated currently. Due to the significant differences in the new authoritative guidance from existing GAAP, the implementation of this guidance may result in material changes in our accounting for credit losses on the financial instruments and will be impacted by the Company's loan and securities portfolios' composition, attributes, and quality in addition to the prevailing economic conditions and forecasts at the time of adoption. As part of the Company's evaluation process, it has established a steering committee and working group, including individuals from various functional areas, to assess processes and related controls, portfolio segmentation, model development, system requirements, and needed resources. ASC Topic 230 "Statement of Cash Flows." New authoritative accounting guidance under ASC Topic 230 "Statement of Cash Flows" addresses eight specific cash flow classification issues with the objective of reducing the existing diversity in practice. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. New authoritative accounting guidance under ASC Topic 230 "Statement of Cash Flows" amends prior guidance to require an entity to include amounts generally described as restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. ASC Topic 740 "Income Taxes." New authoritative accounting guidance under ASC Topic 740 "Income Taxes" amends prior guidance to require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. ASC Topic 350 "Intangibles-Goodwill and Other." New authoritative accounting guidance under ASC Topic 350 "Intangibles-Goodwill and Other" amends prior guidance to eliminate Step 2 from the goodwill impairment test and require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new authoritative guidance will be effective for reporting periods after January 1, 2020. The Company is evaluating the new guidance and its impact on the Company's statements of operations and financial condition. ASC Topic 610 "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets." New authoritative accounting guidance under ASC Topic 610 "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets" amends prior guidance to clarify the scope of Subtopic 610-20 by defining in substance nonfinancial assets and to add guidance for partial sales of nonfinancial assets. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. ASC Topic 310 "Receivables - Nonrefundable Fees and Other Costs." New authoritative accounting guidance under ASC Topic 310 "Receivables - Nonrefundable Fees and Other Costs" amends prior guidance by shortening the amortization period for certain callable debt securities held at a premium requiring the premium to be amortized to the earliest call date. The new authoritative guidance will be effective for reporting periods after January 1, 2019 with early adoption permitted. The Company is evaluating the new guidance and its impact on the Company's statements of operations and financial condition. ASC Topic 220 "Income Statement - Reporting Comprehensive Income." New authoritative accounting guidance under ASC Topic 220 "Income Statement - Reporting Comprehensive Income" allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from enactment of H.R. 1, originally known as the "Tax Cuts and Jobs Act." The new authoritative guidance will be effective for reporting periods after January 1, 2019 with early adoption permitted. The Company early adopted the new guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. See "Accounting changes" below. Accounting changes. The Company adopted the new authoritative accounting guidance under ASC Topic 606, "Revenue from Contracts with Customers" on January 1, 2018 using the modified retrospective transition method for contracts that were not completed at the date of initial application. The Company recognized a cumulative effect reduction to the beginning retained earnings totaling $683 thousand. This amount relates to lease financing revenue where the Company's performance obligation is over time. Previously, such revenue was recognized immediately. See "Lease financing revenue, net" below. The new authoritative accounting guidance under ASC Topic 606 requires an entity to recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. To achieve this, the Company takes the following steps: identify the contract(s) with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; and recognize revenue when (or as) the Company satisfies a performance obligation. The non-interest revenue streams that are considered to be in the scope of this new guidance are discussed below. Lease financing revenue, net. Fees from the sale of third-party equipment maintenance contracts are included within lease financing revenue, net. The Company sells third-party equipment maintenance contracts and provides customers with an asset and maintenance contract management tool over the life of the maintenance contract. Since the Company provides support for the asset and maintenance contract management tool, the Company's performance obligation is satisfied over the life of the maintenance contract, and the fees are recognized monthly over the life of the maintenance contract. Payment is typically received at the time of sale of the maintenance contract. Treasury management fees and consumer and other deposit service fees. Deposit related fees (account analysis fees, monthly service fees, and other related fees) are included within treasury management fees and consumer and other deposit service fees. The Company's performance obligation is ongoing and either party may cancel at any time. These fees are generally recognized as the services are rendered on a monthly basis. Payment is typically received monthly. Wealth management fees. Wealth management fees include revenue from the management and advisement of client assets and trust administration. The Company's performance obligation is generally satisfied over time, and the fees are recognized monthly. Payment is typically received quarterly or annually. Card fees. Card fees include debit and credit card interchange fees and ATM fees. For debit and credit card transactions, the Company considers the merchant as the customer for interchange revenue with the performance obligation being satisfied when the cardholder purchases goods or services from the merchant. Interchange revenue is recognized as the services are provided. The Company's performance obligation for ATM fees is satisfied when services are provided, and the fees are recognized at that time. Payment is typically received immediately or in the following month. Capital markets and international banking fees. Capital markets and international banking fees include M&A advisory and syndication fees. The Company's performance obligation is generally satisfied over time, and the fees are recognized monthly. For M&A advisory fees, a portion of the payment is received at the beginning of the engagement with the remainder once the transaction is completed. For syndication fees, payment is received annually. The Company also adopted the new authoritative accounting guidance under ASC Topic 825 "Financial Instruments" and ASC Topic 220 "Income Statement - Reporting Comprehensive Income" on January 1, 2018. The Company recognized a cumulative effect increase to the beginning retained earnings and accumulated other comprehensive income totaling $385 thousand under ASC Topic 825 representing the fair value adjustment to equity securities at the date of initial application. In addition, the Company reclassified $729 thousand from accumulated other comprehensive loss to retained earnings for the stranded tax effects resulting from enactment of the Tax Cuts and Jobs Act at the date of initial application of the new guidance under ASC Topic 220. |
Earnings Per Common Share |
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Earnings Per Common Share | Earnings Per Common Share Earnings per common share is computed using the two-class method. Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the applicable period, excluding outstanding participating securities. Participating securities include non-vested restricted stock awards and restricted stock units, though no actual shares of common stock related to restricted stock units are issued until the settlement of such units, to the extent holders of these securities receive non-forfeitable dividends or dividend equivalents at the same rate as holders of the Company's common stock. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method. The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share (amounts in thousands, except share and per share data).
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Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | Investment Securities Amortized cost and fair value of investment securities, excluding marketable equity securities and non-marketable FHLB and FRB stock, were as follows as of the dates indicated (in thousands):
The increase in investment securities was due to investments in residential mortgage-backed securities in the first quarter of 2018. The Company has no direct exposure to the State of Illinois in its investment securities portfolio, but approximately 20% of the state and political subdivisions portfolio consisted of securities issued by municipalities located in Illinois as of June 30, 2018. Approximately 95% of the state and political subdivisions securities were general obligation issues, and 27% were insured or had another form of credit enhancement as of June 30, 2018. Unrealized losses on investment securities by length of time in a continuous unrealized loss position and the fair value of the related securities at June 30, 2018 were as follows (in thousands):
Unrealized losses on investment securities by length of time in a continuous unrealized loss position and the fair value of the related securities at December 31, 2017 were as follows (in thousands):
The total number of security positions in the investment portfolio in an unrealized loss position at June 30, 2018 was 626 compared to 471 at December 31, 2017. This increase in total number of security positions in a continuous unrealized loss position from December 31, 2017 to June 30, 2018 was mainly attributable to the mortgage-backed securities in the investment securities portfolio. Declines in the fair value of available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. In estimating other-than-temporary impairment losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) whether the Company is more likely than not to sell the security before recovery of its cost basis. As of June 30, 2018, management does not have the intent to sell any of the securities in the table above and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of June 30, 2018, management believes the impairments detailed in the table above are temporary. Changes in market interest rates can significantly influence the fair value of securities, and the fair value of our municipal securities portfolio would decline substantially if interest rates increase materially. Net gains (losses) recognized on investment securities were as follows (in thousands):
The amortized cost and fair value of investment securities as of June 30, 2018 by contractual maturity are shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid without any penalties. Therefore, mortgage-backed securities are not included in the maturity categories in the following maturity summary.
Investment securities with a carrying amount of $738.6 million at June 30, 2018 and $726.1 million at December 31, 2017 were pledged as collateral on public deposits and for other purposes as required or permitted by law, while only $606.0 million and $625.2 million were required to be pledged at June 30, 2018 and December 31, 2017, respectively. Investment securities held to maturity with a carrying amount of $2.6 million were transferred to the available for sale portfolio and subsequently sold during the first quarter of 2018. These investment securities were obligations of states and political subdivisions that were downgraded and no longer met our credit criteria. |
Loans |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans | Loans Loans consist of the following at (in thousands):
Loans are made to individuals as well as commercial and tax exempt entities. Specific loan terms vary as to interest rate, repayment, and collateral requirements based on the type of loan requested and the credit worthiness of the prospective borrower. Except for commercial loans collateralized by assignment of lease payments, asset-based loans, residential real estate loans, and indirect vehicle loans, credit risk tends to be geographically concentrated in that a majority of the loan customers are located in Illinois. The Company's extension of credit is governed by its Credit Risk Policy, which was established to control the quality of the Company's loans. This policy is reviewed and approved by the Enterprise Risk Committee of the Company's Board of Directors on an annual basis. Commercial Loans. Commercial credit is extended mostly to middle market customers. Such credits are typically comprised of working capital loans, loans for physical asset expansion, asset acquisition loans and other business loans. Loans to closely held businesses will generally be guaranteed in full or for a significant amount by the businesses' principal owners. Commercial loans are made based primarily on the historical cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not perform as forecasted and collateral securing loans may fluctuate in value due to economic or individual performance factors. Minimum standards and underwriting guidelines have been established for all commercial loan types. Asset-based loans, also included in commercial loans, are made to businesses with the primary source of repayment derived from payments on the related assets securing the loan. Collateral for these loans may include accounts receivable, inventory and equipment, and is monitored regularly to ensure ongoing sufficiency of collateral coverage and quality. The primary risk for these loans is a significant decline in collateral values due to general market conditions. Loan terms that mitigate these risks include typical industry amortization schedules, percentage of collateral advances, maintenance of cash collateral accounts and regular asset monitoring. Because of the national scope of our asset-based lending, the risk of these loans is also diversified by geography. Commercial Loans Collateralized by Assignment of Lease Payments ("Lease Loans"). The Company makes lease loans to lessors where the underlying leases are with both investment grade and non-investment grade companies. Investment grade lessees are companies rated in one of the four highest categories by Moody's Investor Services. Whether or not companies fall into this category, each lease loan is considered on its individual merit based on the financial wherewithal of the lessee using financial information available at the time of underwriting. In addition, leases that transfer substantially all of the benefits and risk related to the equipment ownership are classified as direct finance leases and are included in lease loans. Commercial Real Estate Loans. Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans. These loans are viewed primarily as property income based loans and the repayment of these loans is largely dependent on the successful operation of the property, which also serves as collateral for the loan. In addition, $1.2 billion of commercial real estate loans at June 30, 2018 were secured by owner-occupied properties where the primary source of repayment is the cash flow from the ongoing operations and activities conducted by the owner of the property. Loan performance may be adversely affected by factors impacting the general economy or conditions specific to the real estate market such as geographic location and/or property type. Construction Real Estate Loans. The Company defines construction loans as loans where the loan proceeds are monitored by the Company and used exclusively for the improvement of real estate in which the Company holds a mortgage. Due to the inherent risk in this type of loan, these loans are subject to other industry specific policy guidelines outlined in the Company's Credit Risk Policy. Consumer Related Loans. The Company originates direct and indirect consumer loans, including residential real estate, home equity lines and loans, credit cards, and indirect vehicle loans (motorcycle, marine, recreational, and powersports vehicles). Each loan type is underwritten based upon several factors including debt to income, type of collateral and loan to collateral value, credit history, and the Company's relationship with the borrower. Indirect loan and credit card underwriting involves the use of risk-based pricing in the underwriting process. Purchased credit-impaired loans. Purchased credit-impaired loans are accounted for under ASC Topic 310-30, which include purchased credit-impaired loans acquired through business combinations, FDIC-assisted transactions and re-purchase transactions with the Government National Mortgage Association ("GNMA"). The loans re-purchased from GNMA were originally sold by the Company with servicing retained and subsequently became delinquent. These loans are also insured by the Federal Housing Administration (commonly referred to as "FHA") or the U.S. Department of Veterans Affairs (commonly referred to as "VA") where the Company would be able to recover the principal balance of these loans. All re-purchases from GNMA are at the Company's discretion. Pledged loans. A collateral pledge agreement exists whereby at all times, the Company must keep on hand, free of all other pledges, liens, and encumbrances, loans with unpaid principal balances aggregating no less than 160% for qualifying first mortgage loans, 170% for home equity loans, 161% for qualifying commercial real estate loans and 105% for loans held for sale, of the outstanding advances from the Federal Home Loan Bank. As of June 30, 2018 and December 31, 2017, the Company had $4.3 billion and $4.7 billion, respectively, of loans pledged as collateral for long-term Federal Home Loan Bank advances and third party letters of credit, while only $3.2 billion and $3.1 billion were required to be pledged at June 30, 2018 and December 31, 2017, respectively. The Company also has a collateral pledge agreement with the Federal Reserve Bank. As of June 30, 2018 and December 31, 2017, the Company had $858.9 million and $902.2 million, respectively, of loans pledged as collateral at the Federal Reserve Bank for the discount window as a backup liquidity funding source. The following table presents the contractual aging of the recorded investment in past due loans by class of loans as of June 30, 2018 and December 31, 2017 (in thousands):
The following table presents the recorded investment in non-accrual loans and loans past due ninety days or more and still accruing by class of loans, excluding purchased credit-impaired loans, as of June 30, 2018 and December 31, 2017 (in thousands):
The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Under the Company's risk rating system, the Company classifies potential problem and problem loans as “Special Mention,” “Substandard,” and “Doubtful.” Substandard loans include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses that deserve management's close attention are deemed to be Special Mention. Loans rated but not adversely classified are deemed to be Pass. Risk ratings are updated any time the situation warrants and at least annually. Loans not rated are included in groups of homogeneous loans with similar risk and loss characteristics and are not included in the table below. The following tables present the risk category of loans by class of loans based on the most recent analysis performed, excluding purchased credit-impaired loans, as of June 30, 2018 and December 31, 2017 (in thousands):
Approximately $27.5 million and $35.6 million of the substandard loans were non-performing as of June 30, 2018 and December 31, 2017, respectively. For residential real estate, home equity, indirect vehicle and other consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in those loan classes based on payment activity, excluding purchased credit-impaired loans, as of June 30, 2018 and December 31, 2017 (in thousands):
The recorded investment in residential mortgage loans secured by residential real estate properties (including purchased credit-impaired loans) for which foreclosure proceedings are in process totaled $54.7 million and $43.6 million at June 30, 2018 and December 31, 2017, respectively. The following tables present loans individually evaluated for impairment by class of loans, excluding purchased credit-impaired loans, as of June 30, 2018 and December 31, 2017 (in thousands):
Impaired loans included accruing restructured loans of $25.7 million and $28.6 million that have been modified and are performing in accordance with those modified terms as of June 30, 2018 and December 31, 2017, respectively. In addition, impaired loans included $26.2 million and $30.8 million of non-performing restructured loans as of June 30, 2018 and December 31, 2017, respectively. Loans may be restructured in an effort to maximize collections from financially distressed borrowers. We use various restructuring techniques, including, but not limited to, deferring past due interest or principal, implementing an A/B note structure, redeeming past due taxes, reducing interest rates, extending maturities and modifying amortization schedules. Residential real estate loans are restructured in an effort to minimize losses while allowing borrowers to remain in their primary residences when possible. A loan classified as a troubled debt restructuring will no longer be included in the troubled debt restructuring disclosures in the years after the restructuring if the loan performs in accordance with the terms specified by the restructuring agreement and the interest rate specified in the restructuring agreement represents a market rate at the time of modification. The specified interest rate is considered a market rate when the interest rate is equal to or greater than the rate the Company is willing to accept at the time of restructuring for a new loan with comparable risk. If there are concerns that the borrower will not be able to meet the modified terms of the loan, the loan will continue to be included in the troubled debt restructuring disclosures. Impairment analyses on commercial-related loans classified as troubled debt restructurings are performed in conjunction with the normal allowance for loan and lease losses process. Consumer loans classified as troubled debt restructurings are aggregated in two pools that share common risk characteristics, home equity and residential real estate loans, with impairment measured on a quarterly basis based on the present value of expected future cash flows discounted at the loan's effective interest rate. The following table presents loans that were restructured during the three months ended June 30, 2018 (dollars in thousands):
The following table presents loans that were restructured during the six months ended June 30, 2018 (dollars in thousands):
The following table presents loans that were restructured during the three months ended June 30, 2017 (dollars in thousands):
The following table presents loans that were restructured during the six months ended June 30, 2017 (dollars in thousands):
Of the troubled debt restructurings entered into during the past twelve months, none subsequently defaulted during the six months ended June 30, 2018. Performing troubled debt restructurings are considered to have defaulted when they become 90 days or more past due post-restructuring or are placed on non-accrual status. The following table presents the troubled debt restructurings activity during the six months ended June 30, 2018 (in thousands):
Loans removed from troubled debt restructuring status are those that were restructured in a previous calendar year at a market rate of interest and have performed in compliance with the modified terms. The following table presents the type of modification for loans that have been restructured during the six months ended June 30, 2018 (in thousands):
The following table presents the activity in the allowance for credit losses, balance in allowance for credit losses and recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2018 and 2017 (in thousands):
Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date without a carryover of the related allowance for loan and lease losses. These acquired loans are segregated into three types: pass rated loans with no discount attributable to credit quality, non-impaired loans with a discount attributable at least in part to credit quality and impaired loans with evidence of significant credit deterioration.
For pass rated loans (non-purchased credit-impaired loans), the difference between the estimated fair value of the loans and the principal outstanding is accreted over the remaining life of the loans. In accordance with ASC 310-30, for both purchased non-impaired loans and purchased credit-impaired loans, the loans are pooled by loan type and the difference between contractually required payments at acquisition and the cash flows expected to be collected is referred to as the non-accretable difference. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan pools when there is a reasonable expectation about the amount and timing of such cash flows. Substantially all of the loans acquired in FDIC-assisted transactions displayed at least some level of credit deterioration and as such are included as non-impaired and impaired loans as described immediately above. During the six months ended June 30, 2018, there was a negative provision for credit losses of $413 thousand and net recoveries of $357 thousand in relation to purchased credit-impaired loans. There was $1.1 million and $1.2 million in allowance for loan and lease losses related to these purchased credit-impaired loans at June 30, 2018 and December 31, 2017, respectively. The provision for credit losses and accompanying charge-offs are included in the table above. Changes in the accretable yield for loans acquired and accounted for under ASC 310-30 were as follows for the three and six months ended June 30, 2018 and 2017 (in thousands):
In our FDIC-assisted transactions, the fair value of purchased credit-impaired loans, on the acquisition date, was determined based on assigned risk ratings, expected cash flows and the fair value of loan collateral. The fair value of loans that were non-impaired was determined based on estimates of losses on defaults and other market factors. Due to the loss-share agreements with the FDIC, we recorded a receivable (FDIC indemnification asset) from the FDIC equal to the present value of the corresponding reimbursement percentages on the estimated losses embedded in the loan portfolio. For other loans acquired through business combinations, the fair value of purchased credit-impaired loans, on the acquisition date, was determined based on assigned risk ratings, expected cash flows and the fair value of loan collateral. The fair value of loans that were non-impaired was determined based on estimates of losses on defaults and other market factors. The carrying amount of loans acquired through a business combination by loan pool type are as follows (in thousands):
In addition to loans acquired through a business combination noted in the table above, consumer related purchased credit-impaired loans includes loans repurchased from GNMA of $43.6 million as of June 30, 2018. |
Goodwill and Intangibles |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangibles | Goodwill and Intangibles The excess of the cost of an acquisition over the fair value of the net assets acquired, including core deposit and client relationship intangibles, consists of goodwill. Under ASC Topic 350, goodwill is subject to at least annual assessments for impairment by applying a fair value based test. The Company reviews goodwill to determine potential impairment annually, or more frequently if events and circumstances indicate that goodwill might be impaired, by comparing the carrying value of the reporting units with the fair value of the reporting units. The Company's annual assessment date is as of December 31. Goodwill is tested for impairment at the reporting unit level. The Company has three reporting units: Banking, Leasing, and Mortgage Banking. The carrying amount of goodwill was $1.0 billion at June 30, 2018 and December 31, 2017. On April 12, 2018, the Company announced the discontinuation of its national mortgage origination business, which includes substantially all originations outside of the Company's consumer banking footprint in the Chicagoland area. As a result, the Company recorded an impairment loss in the amount of $3.6 million within the Mortgage Banking segment in the second quarter of 2018. No impairment losses were recognized during the six months ended June 30, 2017. The following table presents the carrying amount of goodwill by segment for the six months ended June 30, 2018 (in thousands):
The Company has other intangible assets consisting of core deposit and client relationship intangibles that had a remaining weighted average amortization period of approximately 12 years as of June 30, 2018. The following table presents the changes during the six months ended June 30, 2018 in the carrying amount of core deposit and client relationship intangibles, and the gross carrying amount, accumulated amortization, and net book value as of June 30, 2018 (in thousands):
The following presents the estimated future amortization expense of other intangible assets (in thousands):
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Deposits |
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | Deposits The composition of deposits was as follows as of June 30, 2018 and December 31, 2017 (in thousands):
Certificates of deposit of $250,000 or more included $1.1 billion of brokered deposits at June 30, 2018 and December 31, 2017. Brokered deposits typically consist of smaller individual time certificates that have the same liquidity characteristics and yields consistent with time certificates of $250,000 or more. |
Short-Term Borrowings |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Borrowings | Short-Term Borrowings Short-term borrowings were as follows as of June 30, 2018 and December 31, 2017 (dollars in thousands):
Securities sold under agreements to repurchase are agreements in which the Company acquires funds by selling assets to another party under a simultaneous agreement to repurchase the same assets at a specified price and date. The Company enters into repurchase agreements and also offers a demand deposit account product to customers that sweeps their balances in excess of an agreed upon target amount into overnight repurchase agreements. All securities sold under agreements to repurchase are recorded on the face of the balance sheet. The Company pledges mortgage-backed securities as collateral for the repurchase agreements and may be required to provide additional collateral based on the fair value of those securities. The Company had Federal Home Loan Bank ("FHLB") advances with a maturity date less than one year of $400.0 million at June 30, 2018 and $625.0 million at December 31, 2017. At June 30, 2018, the interest rate on the advances outstanding on that date had rates ranging from 1.35% to 2.35% with maturities from September 2018 to June 2019. The Company has loans pledged as collateral on these Federal Home Loan Bank advances. See Note 5. Loans. On December 18, 2015, the Company entered into a $35.0 million unsecured line of credit at the holding company level with a correspondent bank. Interest was payable at a rate of one month LIBOR + 1.75%. No borrowings under the line of credit were outstanding as of June 30, 2018 and December 31, 2017. The line of credit matured on June 30, 2018. |
Long-Term Borrowings |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Borrowings | Long-Term Borrowings Long-term borrowings were as follows as of June 30, 2018 and December 31, 2017 (dollars in thousands):
The Company had Federal Home Loan Bank advances with remaining contractual maturities greater than one year of $478.1 million at June 30, 2018 and $231.3 million at December 31, 2017. As of June 30, 2018, the advances had interest rates ranging from 2.31% to 5.87% and maturities ranging from September 2019 to April 2035. The Company has loans pledged as collateral on these Federal Home Loan Bank advances. See Note 5. Loans. The Company had notes payable to banks totaling $75.5 million and $76.3 million at June 30, 2018 and December 31, 2017, respectively, which as of June 30, 2018, were accruing interest at rates ranging from 2.25% to 7.25%, with a weighted average rate of 4.57%. Lease investments includes equipment with an amortized cost of $92.8 million and $91.9 million at June 30, 2018 and December 31, 2017, respectively, that is pledged as collateral on these notes. The Company also had $3.7 million and $14.5 million at June 30, 2018 and December 31, 2017, respectively, in other secured borrowings (included in the notes payable above) with a weighted average rate of 4.56% as of June 30, 2018. On August 24, 2016, the Company assumed a $16.0 million unsecured term loan at the holding company level with a correspondent bank through the merger of American Chartered Bancorp, Inc. ("American Chartered") with and into the Company on that date. Interest was payable at a rate of one month LIBOR + 1.75%, and the loan was to mature on June 30, 2020. Principal payments of $1.0 million were due quarterly until maturity. As of June 30, 2018, nothing was outstanding on this loan as it was prepaid in full in the first quarter of 2018. On November 16, 2017, MB Financial Bank issued $175.0 million in 4.00% fixed-to-floating subordinated notes that mature on December 1, 2027. The subordinated notes bear a fixed interest rate of 4.00% until December 1, 2022 and a variable interest rate of three month LIBOR + 1.873% thereafter until maturity. The subordinated notes are callable on a semi-annual basis beginning on December 1, 2022. |
Junior Subordinated Notes Issued to Capital Trusts |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Junior Subordinated Notes Issued to Capital Trusts | Junior Subordinated Notes Issued to Capital Trusts The Company has established statutory trusts for the sole purpose of issuing trust preferred securities and related trust common securities. The proceeds from such issuances were used by the trusts to purchase junior subordinated notes of the Company, which are the sole assets of each trust. Concurrently with the issuance of the trust preferred securities, the Company issued guarantees for the benefit of the holders of the trust preferred securities. The Company’s outstanding trust preferred securities qualify, and are treated by the Company, as Tier 2 regulatory capital. Prior to the completion of the American Chartered merger, the trust preferred securities qualified, and were treated by the Company, as Tier 1 regulatory capital. The Company owns all of the common securities of each trust. The trust preferred securities issued by each trust rank equally with the common securities in right of payment, except that if an event of default under the indenture governing the notes has occurred and is continuing, the preferred securities will rank senior to the common securities in right of payment. The table below summarizes the outstanding junior subordinated notes and the related trust preferred securities issued by each trust as of June 30, 2018 (in thousands). Subsequent to June 30, 2018, the Company redeemed all of the outstanding junior subordinated notes held by Coal City Capital Trust I, which concurrently redeemed all of its outstanding trust preferred securities, and the Company called for redemption all of the outstanding junior subordinated notes held by TAYC Capital Trust II, which will concurrently redeem all of its outstanding trust preferred securities. See Note 18. Subsequent Events.
The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated notes at the stated maturity date or upon redemption. Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon the Company making payment on the related junior subordinated notes. The Company’s obligation under the junior subordinated notes and other relevant trust agreements, in aggregate, constitute a full and unconditional guarantee by the Company of each trust’s obligations under the trust preferred securities issued by each trust. The Company has the right to defer payment of interest on the notes and, therefore, distributions on the trust preferred securities, for up to five years, but not beyond the stated maturity date in the table above. During any such deferral period, the Company may not pay cash dividends on its common or preferred stock and generally may not repurchase its common or preferred stock. On March 19, 2018, the Company redeemed the junior subordinated notes held by American Chartered Statutory Trust I and, as a result, all of the issued and outstanding three month LIBOR + 3.60% American Chartered Statutory Trust I capital (preferred) securities were concurrently redeemed. The aggregate liquidation amount of these trust preferred securities was $20.0 million. American Chartered Statutory Trust I was established by American Chartered prior to the Company's acquisition of American Chartered, and the junior subordinated notes issued by American Chartered to American Chartered Statutory Trust I were assumed by the Company upon completion of the acquisition. As a result, the Company recognized a $3.1 million loss on extinguishment of debt in the first quarter of 2018. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Commitments: The Company is a party to credit-related financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit, and commercial letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The Company’s exposure to credit loss is represented by the contractual amount of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance-sheet instruments. At June 30, 2018 and December 31, 2017, the following financial instruments were outstanding, the contractual amounts of which represent off-balance sheet credit risk (in thousands):
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 generally have fixed expiration dates or other termination clauses and may require a payment of a fee. The commitments for home equity lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation of the customer. The Company, in the normal course of its business, regularly offers standby and commercial letters of credit to its bank customers. Standby and commercial letters of credit are a conditional but irrevocable form of guarantee. Under letters of credit, the Company typically guarantees payment to a third party beneficiary upon the default of payment or nonperformance by the bank customer and upon receipt of complying documentation from that beneficiary. Both standby and commercial letters of credit may be issued for any length of time, but normally do not exceed a period of five years. These letters of credit may also be extended or amended from time to time depending on the bank customer’s needs. As of June 30, 2018, the maximum remaining term for any standby letters of credit was December 31, 2025. A fee is charged to the bank customer and is recognized as income over the life of the letter of credit, unless considered non-rebatable under the terms of a letter of credit application. At June 30, 2018, the aggregate contractual amount of these letters of credit, which represents the maximum potential amount of future payments that the Company would be obligated to pay, increased $3.4 million to $166.7 million from $163.3 million at December 31, 2017. Of the $166.7 million in commitments outstanding at June 30, 2018, approximately $77.2 million of the letters of credit have been issued or renewed since December 31, 2017. Letters of credit issued on behalf of bank customers may be done on either a secured or unsecured basis. If a letter credit is secured, the collateral can take various forms including bank accounts, investments, fixed assets, inventory, accounts receivable or real estate. The Company takes the same care in making credit decisions and obtaining collateral when it issues letters of credit on behalf of its customers as it does when making other types of loans. As of June 30, 2018, the Company had approximately $3.2 million in capital expenditure commitments outstanding which relate to various projects to renovate the corporate office space and branches. Concentrations of credit risk: As of June 30, 2018, approximately 20% of our investments in securities issued by states and political subdivisions were within the state of Illinois. We did not hold any direct exposure to the state of Illinois as of June 30, 2018. Our commitments to extend credit are primarily related to commercial credits. Standby and commercial letters of credit are granted primarily to commercial borrowers. Our asset-based loans are made to borrowers located throughout the United States. Lease banking provides banking services to lessors located throughout the United States. Our leasing subsidiaries originate leases to companies located throughout the United States. In addition, our mortgage segment and indirect vehicle lenders originate loans to borrowers located throughout the United States. Contingencies: In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from pending proceedings would not be expected to have a material adverse effect on the Company’s consolidated financial statements. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact. ASC Topic 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert expected future amounts, such as cash flows or earnings, to a single present value amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability. A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality, the Company's creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. Our valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company's valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally coincides with the Company's monthly and/or quarterly valuation process. Financial Instruments Recorded at Fair Value on a Recurring Basis Securities Available for Sale. The fair values of securities available for sale are determined by quoted prices in active markets, when available, and classified as Level 1. If quoted market prices are not available, the fair value is determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities and classified as Level 2. In cases where significant credit valuation adjustments are incorporated into the estimation of fair value, reported amounts are classified as Level 3. The change in fair value is recorded through an adjustment to the statement of other comprehensive income. Marketable Equity Securities. The fair values of marketable equity securities are determined by quoted prices in active markets, when available, and classified as Level 1. The change in fair value is recorded through an adjustment to the statement of operations. Loans Held for Sale. Mortgage loans originated and held for sale in the secondary market are carried at fair value. The fair value of loans held for sale is determined using quoted secondary market prices and classified as Level 2. The change in fair value is recorded through an adjustment to the statement of operations. Loans. The Company has elected to record certain mortgage loans at fair value. The fair value of these loans is determined using quoted secondary market prices and classified as Level 2. The change in fair value is recorded through an adjustment to the statement of operations. Mortgage Servicing Rights. The Company has elected to record its mortgage servicing rights at fair value. Mortgage servicing rights do not trade in an active market with readily observable prices. Accordingly, the Company determines the fair value of mortgage servicing rights by estimating the fair value of the future cash flows associated with the mortgage loans being serviced. Key economic assumptions used in measuring the fair value of mortgage servicing rights include, but are not limited to, prepayment speeds, discount rates, delinquencies and cost to service. The assumptions used in the model are validated on a regular basis. The fair value is validated on a quarterly basis with an independent third party. Any material discrepancies between the internal model and the third party validation are investigated and resolved by an internal committee. Due to the nature of the valuation inputs, mortgage servicing rights are classified in Level 3 of the fair value hierarchy. The change in fair value is recorded through an adjustment to the statement of operations. Assets Held in Trust for Deferred Compensation and Associated Liabilities. Assets held in trust for deferred compensation are recorded at fair value and included in “Other Assets” on the consolidated balance sheets. These assets are invested in mutual funds and classified as Level 1. Deferred compensation liabilities, also classified as Level 1, are carried at the fair value of the obligation to the employee, which corresponds to the fair value of the invested assets. The change in fair value is recorded through an adjustment to the statement of operations. Derivatives. Currently, we use interest rate swaps to manage our interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative and classified as Level 2. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including LIBOR rate curves. The Company also obtains dealer quotations for these derivatives for comparative purposes to assess the reasonableness of the model valuations. In addition, the Company uses forward commitments to buy to-be-announced mortgage securities for which we do not intend to take delivery of the security and will enter into an offsetting position before physical delivery to lessen the price volatility of the mortgage servicing rights asset. Dealer quotations are used for these derivatives and are classified as Level 1. The Company also offers other derivatives, including foreign currency forward contracts and interest rate lock commitments, to our customers and offset our exposure from such contracts by purchasing other financial contracts, which are valued using market consensus prices. For certain interest rate lock commitments, the Company uses an external valuation model that relies on internally developed inputs to estimate the fair value of its interest rate lock commitments. This is based on unobservable inputs that reflect management’s assumptions and specific information about each borrower transaction and is classified in Level 3 of the hierarchy. The change in fair value is recorded through an adjustment to the statement of operations. The following table summarizes financial assets and financial liabilities 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 (in thousands):
The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a recurring basis that were categorized within the Level 3 of the fair value hierarchy (fair value in thousands):
The significant unobservable inputs used in the fair value measurement of the Company’s mortgage servicing rights include prepayment speeds, discount rates, maturities, delinquencies and cost to service. Significant increases in prepayment speeds, discount rates, delinquencies or cost to service would result in a significantly lower fair value measurement. Conversely, significant decreases in prepayment speeds, discount rates, delinquencies or costs to service would result in a significantly higher fair value measurement. With the exception of changes in delinquencies, which can change the cost to service, the unobservable inputs move independently of each other. Key economic assumptions used in the measuring of the fair value of the mortgage servicing rights and the sensitivity of the fair value to immediate adverse changes in those assumptions at June 30, 2018 are presented in the following table. This table does not take into account the derivatives used to economically hedge the mortgage servicing rights.
The Company did not have any transfers between Level 1 and Level 2 of the fair value hierarchy during the six months ended June 30, 2018. The Company's policy for determining transfers between levels occurs at the end of the reporting period when circumstances in the underlying valuation criteria change and result in transfer between levels. The following table presents additional information about financial assets measured at fair value on a recurring basis for which the Company used significant unobservable inputs (Level 3):
Financial Instruments Recorded at Fair Value on a Nonrecurring Basis The Company may be required, from time to time, to measure certain financial assets and financial liabilities at fair value on a nonrecurring basis in accordance with U.S. GAAP. 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. Impaired Loans. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment in accordance with ASC Topic 310. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, liquidation value, and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. In accordance with ASC Topic 820, impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. Collateral values are estimated using Level 3 inputs based on customized discounting criteria. For a majority of impaired real estate loans where an allowance is established based on the fair value of collateral (100% at June 30, 2018), the Company obtains a current external appraisal. Other valuation techniques are used as well, including internal valuations, comparable property analysis and contractual sales information. Non-Financial Assets and Non-Financial Liabilities Recorded at Fair Value The Company has no non-financial assets or non-financial liabilities measured at fair value on a recurring basis. Certain non-financial assets and non-financial liabilities measured at fair value on a non-recurring basis include foreclosed assets and non-financial long-lived assets. Other Real Estate and Repossessed Vehicles Owned (Foreclosed Assets). Foreclosed assets, upon initial recognition, are measured and reported at fair value through a charge-off to the allowance for loan and lease losses based upon the fair value of the foreclosed asset. The fair value of foreclosed assets, upon initial recognition, are estimated using Level 3 inputs based on customized discounting criteria. Non-Financial Long-Lived Assets. Non-financial long-lived assets, when determined to be impaired, are measured and reported at fair value using Level 3 inputs based on customized discounting criteria. Assets measured at fair value on a nonrecurring basis as of June 30, 2018 and December 31, 2017 are included in the table below (in thousands):
The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a nonrecurring basis that were categorized within the Level 3 of the fair value hierarchy (fair value in thousands):
ASC Topic 825 requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The estimated fair value approximates carrying value for cash and cash equivalents, accrued interest and the cash surrender value of life insurance policies. The methodologies for other financial assets and financial liabilities are discussed below: The following methods and assumptions were used by the Company in estimating the fair values of its other financial instruments: Cash and due from banks and interest earning deposits with banks: The carrying amounts reported in the balance sheet approximate fair value. Securities held to maturity: The fair values of securities held to maturity are determined by quoted prices in active markets, when available, and classified as Level 1. If quoted market prices are not available, the fair value is determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities and classified as Level 2. In cases where significant credit valuation adjustments are incorporated into the estimation of fair value, reported amounts are classified as Level 3. Non-marketable securities - FHLB and FRB Stock: The carrying amounts reported in the balance sheet approximate fair value. Loans: The fair values for loans are estimated using discounted cash flow analyses, using the corporate bond curve adjusted for liquidity for commercial loans and the swap curve adjusted for liquidity for retail loans, including increased interest rate spreads to incorporate a credit mark, estimating an exit price. Non-interest bearing deposits: The fair values disclosed are equal to their balance sheet carrying amounts, which represent the amount payable on demand. Interest bearing deposits: The fair values disclosed for deposits with no defined maturities are equal to their carrying amounts, which represent the amounts payable on demand. Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies the Company's current incremental borrowing rates for similar terms. Short-term borrowings: The carrying amounts of federal funds purchased, borrowings under repurchase agreements and other short-term borrowings with maturities of 90 days or less approximate their fair values. The fair value of short-term borrowings greater than 90 days is based on the discounted value of contractual cash flows. Long-term borrowings: The fair values of the Company's long-term borrowings (other than deposits) are estimated using discounted cash flow analyses, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. Junior subordinated notes issued to capital trusts: The fair values of the Company's junior subordinated notes issued to capital trusts are estimated based on the quoted market prices, when available, of the related trust preferred security instruments, or are estimated based on the quoted market prices of comparable trust preferred securities. Accrued interest: The carrying amount of accrued interest receivable and payable approximate their fair values. Off-balance-sheet instruments: Fair values for the Company’s off-balance-sheet lending commitments (guarantees, letters of credit and commitments to extend credit) are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements. The estimated fair values of financial instruments are as follows (in thousands):
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Stock Incentive Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Incentive Plans | Stock Incentive Plans ASC Topic 718 requires that the grant date fair value of equity awards to employees be recognized as compensation expense over the period during which an employee is required to provide service in exchange for such award. The following table summarizes the impact of the Company’s share-based payment plans in the financial statements for the periods shown (in thousands):
(1) Includes tax benefits recorded for the vesting of restricted shares and exercise of options. The Company adopted the Omnibus Incentive Plan (the “Omnibus Plan”) in 1997. On May 28, 2014, the Company’s stockholders approved the third amendment and restatement of the Omnibus Plan to add 3,100,000 authorized shares for a total of 11,400,000 shares of common stock authorized to be utilized in connection with awards under the Omnibus Plan to directors, officers, and employees of the Company or any of its subsidiaries. The number of shares authorized increased by 2,400,000 to 13,800,000 upon completion of the Taylor Capital merger. Equity grants under the Omnibus Plan can be in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and other stock-based awards. Shares awarded in the form of restricted stock, restricted stock units, performance shares, performance units, or other stock-based awards generally will reduce the shares available under the Omnibus Plan on a 2-for-1 basis. No more than 10% of the total number of authorized shares may be issued with respect to awards granted after May 28, 2014, other than stock appreciation rights, stock options and performance-based awards, which at the date of grant are scheduled to fully vest prior to three years from the date of grant (although such awards may provide scheduled vesting earlier with respect to some of such shares and for acceleration of vesting as provided in the Omnibus Plan). As of June 30, 2018, there were 2,114,097 shares available for future grants. Annual equity-based incentive awards are generally granted to selected officers and employees in the first quarter of the year. Options are granted with an exercise price equal to no less than the market price of the Company’s shares at the date of grant; those option awards generally vest over four years of service and have 10-year contractual terms. Restricted shares and units typically vest over a two to four year period. Equity awards may also be granted at other times throughout the year in connection with the recruitment and retention of officers and employees. Directors currently may elect, in lieu of cash, to receive up to 70% of their fees in stock options with a five year term, which are fully vested on the grant date (provided that the director may not sell the underlying shares for at least six months after the grant date), and up to 100% of their fees in restricted shares, which vest one year after the grant date. The following table summarizes changes in stock options for the six months ended June 30, 2018:
The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model based on certain assumptions. Expected volatility is based on historical volatility and the expectations of future volatility of Company shares. The risk free interest rate for periods within the contractual term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life of options is estimated based on historical employee behavior and represents the period of time that options granted are expected to remain outstanding. The following assumptions were used for options granted during the six months ended June 30, 2018:
The total intrinsic value of options exercised during the six months ended June 30, 2018 and 2017 was $8.3 million and $3.9 million, respectively. The following is a summary of changes in restricted shares and units for the six months ended June 30, 2018:
The total intrinsic value of restricted shares and units that vested during the six months ended June 30, 2018 and 2017 was $12.8 million and $15.5 million, respectively. The Company awarded 71,567, 65,476, and 80,780 market-based restricted stock units in 2018, 2017, and 2016, respectively, which entitle recipients to shares of common stock at the end of a three year vesting period. Recipients will earn shares, totaling between 0% and 175% of the number of units issued, based on the Company's total stockholder return relative to a specified peer group of financial institutions over the three year period. The Company awarded 71,560 market-based restricted stock units in 2015 that vested in 2018. The threshold performance for the units granted in 2015 was not met and, as a result, no shares were issued. The market-based restricted stock units are included in the preceding table as if the recipients earned shares equal to 100% of the units issued. A Monte Carlo simulation model was used to value the market-based restricted stock units at the time awarded. As of June 30, 2018, there was $30.9 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements (including share option and nonvested share awards) granted under the Omnibus Plan. At June 30, 2018, the weighted-average period over which the unrecognized compensation expense is expected to be recognized was approximately two years. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments The Company offers various derivatives, including interest rate swaps and foreign currency forward contracts, to its qualifying customers which can mitigate our exposure to market risk through the execution of off-setting positions with inter-bank dealer counterparties. This also permits the Company to offer customized risk management solutions to our customers. These customer accommodations and any offsetting financial contracts are treated as non-designated derivative instruments and carried at fair value through an adjustment to the statement of operations. Interest rate swap and foreign currency forward contracts involve the risk of dealing with counterparties and their ability to meet contractual terms. The net amount payable or receivable under interest rate swaps is accrued as an adjustment to interest income. The net amount payable as of June 30, 2018 and December 31, 2017 was approximately $1 thousand. The Company's credit exposure on interest rate swaps is limited to the Company's net favorable value and interest payments of all swaps to each counterparty. In such cases, collateral is generally required from the counterparties involved if the net value of the swaps exceeds a nominal amount. At June 30, 2018, the Company’s credit exposure relating to interest rate swaps was approximately $17.7 million, which is secured by the underlying collateral on customer loans. The Company also enters into mortgage banking derivatives which are classified as non-designated hedging derivatives. These derivatives include interest rate lock commitments provided to customers to fund certain mortgage loans to be sold into the secondary market and forward commitments for the future delivery of such loans. It is the Company's practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of future changes in interest rates on its commitments to fund the loans as well as on its portfolio of mortgage loans held-for-sale. The Company had fair value commercial loan interest rate swaps, to hedge its interest rate risk, with an aggregate notional amount of $32 thousand at June 30, 2018. For fair value hedges, the changes in fair values of both the hedging derivative and the hedged item were recorded in current earnings as other income. Interest rate swaps, swaptions and treasury futures are used in order to lessen the price volatility of the mortgage servicing rights asset. The Company also uses forward commitments to buy to-be-announced ("TBA") mortgage securities for which the Company does not intend to take delivery of the security and will enter into an offsetting position before physical delivery to lessen the price volatility of the mortgage servicing rights asset. These derivatives are recorded at their fair value on the consolidated balance sheets in other assets with changes in fair value recorded on the consolidated statements of operations in mortgage banking revenue in non-interest income. The Company’s derivative financial instruments are summarized below as of June 30, 2018 and December 31, 2017 (in thousands):
(1) Derivative instruments designated to hedge fixed-rate commercial real estate loans. (2) These portfolio swaps are not designated as hedging instruments under ASC Topic 815. Amounts included in other operating income in the consolidated statements of operations related to derivative financial instruments were as follows (in thousands):
Methods and assumptions used by the Company in estimating the fair value of its interest rate swaps are discussed in Note 13 to consolidated financial statements. Certain instruments and transactions subject to an agreement similar to a master netting arrangement are eligible for offset in the consolidated balance sheet. The instruments and transactions would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. The Company’s derivative transactions with financial institution counterparties are generally executed under International Swaps and Derivative Association (“ISDA”) master agreements which include “right of set-off” provisions. Under these agreements, there is generally a legally enforceable right to offset recognized amounts, and there may be an intention to settle such amounts on a net basis. The Company, however, does not generally offset such financial instruments for financial reporting purposes. Information about the Company's financial instruments that are eligible for offset in the consolidated balance sheet as of June 30, 2018 is summarized below (in thousands):
Information about the Company's financial instruments that are eligible for offset in the consolidated balance sheet as of December 31, 2017 is summarized below (in thousands):
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Operating Segments |
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Operating Segments | Operating Segments The Company's operations currently consist of three reportable operating segments: Banking, Leasing, and Mortgage Banking. The Company offers different products and services through its three segments. The accounting policies of the segments are generally the same as those of the consolidated company. The Banking Segment generates its revenues primarily from its lending, deposit gathering and fee business activities. The profitability of this segment's operations depends primarily on its net interest income after provision for credit losses, which is the difference between interest earned on interest earning assets and interest paid on interest bearing liabilities less provision for credit losses. The provision for credit losses is almost entirely dependent on changes in the Banking Segment's loan portfolio and management’s assessment of the collectability of the loan portfolio as well as prevailing economic and market conditions. The Banking Segment is also subject to an extensive system of laws and regulations that are intended primarily for the protection of depositors and other customers, federal deposit insurance funds and the banking system as a whole. These laws and regulations govern such areas as capital, permissible activities, allowance for loan and lease losses, loans and investments, and rates of interest that can be charged on loans. The Leasing Segment generates its revenues through lease originations and related services. The Leasing Segment invests directly in equipment that the Company leases (referred to as direct finance, leveraged or operating leases) to "Fortune 1000," middle-market companies and health care providers located throughout the United States. The lease portfolio is made up of various kinds of equipment, generally technology related, such as computer systems, satellite equipment, medical equipment and general manufacturing, industrial, construction and transportation equipment. The Leasing Segment also specializes in selling third party equipment maintenance contracts to large companies. The Mortgage Banking Segment originates residential mortgage loans for sale to investors and for the Company's portfolio through its retail and third party originator channels. This segment also services residential mortgage loans for various investors and for loans owned by the Company. The Mortgage Banking Segment is subject to an extensive system of laws and regulations that are intended primarily for the protection of customers. On April 12, 2018, the Company announced the discontinuation of its national mortgage origination business, which includes substantially all originations outside of the Company's consumer banking footprint in the Chicagoland area. The Company expects to stop operating its mortgage business as a defined segment with separate Mortgage Banking Segment reporting prior to the first quarter of 2019. Net interest income for the Leasing and Mortgage Banking segments include adjustments based on the Company's internal funds transfer pricing model. Non-interest income for the Leasing Segment includes income on loans originated for the sole purpose of funding equipment purchases related to leases at the Company's lease subsidiaries. The following tables present summary financial information for the reportable segments (in thousands):
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Jun. 30, 2018 | |
Equity [Abstract] | |
Preferred Stock | Preferred Stock On August 18, 2014, in connection with the Taylor Capital merger, the Company issued one share of its Perpetual Non-Cumulative Preferred Stock, Series A (“Company Series A Preferred Stock”), in exchange for each of the 4,000,000 outstanding shares of Taylor Capital’s Perpetual Non-Cumulative Preferred Stock, Series A. Holders of the Company Series A Preferred Stock were entitled to receive, when as and if declared by the Company’s board of directors, non-cumulative cash dividends on the liquidation preference amount, which was $25 per share, at a rate of 8.00% per annum, payable quarterly. The Company Series A Preferred Stock was included in Tier 1 capital for regulatory capital purposes. On February 15, 2018, the Company redeemed all of the 4,000,000 issued and outstanding shares of Company Series A Preferred Stock at a redemption price of $25.00 per share, or $100.0 million in the aggregate. The excess carrying amount of the Series A Preferred Stock in the amount of $15.3 million was retained in stockholders' equity and reflected as income available to common stockholders, which was included in the calculation of earnings per common share. On November 22, 2017, the Company issued 8,000,000 depositary shares, each representing a 1/40th interest in a share of its Non-Cumulative Preferred Stock, Series C (“Company Series C Preferred Stock”). Holders of the Company Series C Preferred Stock are entitled to receive, when as and if declared by the Company's board of directors, non-cumulative cash dividends on the liquidation preference, which is $25 per depositary share (equivalent to $1,000 per share of preferred stock), at a rate of 6.00% per annum, payable quarterly. The Company Series C Preferred Stock is included in Tier 1 capital for regulatory capital purposes and is redeemable at the option of the Company at a redemption price of $25 per depositary share, plus any declared and unpaid dividends, (i) in whole or in part from time to time, on any dividend payment date on or after November 25, 2022, and (ii) in whole but not in part prior to November 25, 2022, within 90 days following a “regulatory capital treatment event,” as defined in the terms of the Company Series C Preferred Stock. The Company must receive the approval of the Federal Reserve Board prior to any redemption of the Company Series C Preferred Stock. |
Definitive Merger Agreement |
6 Months Ended |
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Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Definitive Merger Agreement | Definitive Merger Agreement On May 20, 2018, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Fifth Third Bancorp, an Ohio corporation ("Fifth Third"), and its wholly-owned subsidiary, Fifth Third Financial Corporation, an Ohio corporation ("Intermediary"). The Merger Agreement provides for the combination of the Company and Fifth Third, either through the merger of the Company with and into Intermediary, with Intermediary as the surviving corporation (the "Direct Merger"), or through the merger of a newly formed subsidiary of Fifth Third with and into the Company, with the Company as the surviving corporation (the "Alternative Merger" and collectively with the Direct Merger, the "Merger"). Only if the Direct Merger is not approved by the holders of the Company Series C Preferred Stock will the Alternative Merger occur instead of the Direct Merger, if the holders of the Company's common stock ("Company Common Stock") approve the Merger and the Charter Amendment (as defined and described below). At the effective time of the Merger (the "Effective Time"), each outstanding share of Company Common Stock will be converted into the right to receive (i) 1.45 shares of Fifth Third common stock ("Fifth Third Common Stock"), and (ii) $5.54 in cash (collectively, the "Merger Consideration"). In addition, if the Direct Merger is approved by the holders of Company Series C Preferred Stock, each share of Company Series C Preferred Stock will be converted into the right to receive one share of a newly created series of preferred stock of Fifth Third, having substantially the same terms as the Company Series C Preferred Stock, except that the new series of preferred stock will have no voting rights (including upon an arrearage in the payment of dividends thereon) except as required by Ohio law and have certain other differences consistent with Fifth Third’s currently outstanding series of preferred stock and its articles of incorporation. If the Direct Merger is not approved by the holders of Company Series C Preferred Stock, then the Alternative Merger will occur instead of the Direct Merger, in which case the holders of Company Common Stock will receive the same Merger Consideration as described above, but the Company Series C Preferred Stock will not be converted into a share of new Fifth Third preferred stock and will instead remain outstanding and unchanged (except as modified by the Charter Amendment) as preferred stock of the Company, which will be a subsidiary of Fifth Third. Pursuant to an amendment to the Company's charter (the "Charter Amendment"), effective immediately prior to consummation of the Alternative Merger, the holders of Company Series C Preferred Stock will have the right to vote with the holders of Company Common Stock as a single class on all matters submitted to a vote of such common stockholders. Upon completion of the Alternative Merger, Fifth Third, as the sole holder of Company Common Stock, will control the Company. Following completion of the Alternative Merger, the holders of Company Series C Preferred Stock will vote with Fifth Third as a single class on all matters submitted to a vote of Fifth Third, as the sole common stockholder of the Company. Thus, the voting rights that would be conferred upon the holders of Company Series C Preferred Stock by the Charter Amendment would continue to apply with respect to the Company, and not Fifth Third, following completion of the Alternative Merger. At the Effective Time, each option granted by the Company to purchase shares of Company Common Stock (the "Company Options") will be converted into an option to purchase shares of Fifth Third Common Stock on the same terms and conditions as were applicable to such Company Options prior to the Merger, subject to certain adjustments to the exercise price and the number of shares of Fifth Third Common Stock issuable upon exercise of such option in accordance with the Merger Agreement. In addition, each Company restricted stock award, restricted stock unit and performance-based award (the "Company Equity Awards") that remains unvested and would not automatically vest by its terms at the Effective Time will be assumed by Fifth Third and converted into a number of shares of Fifth Third Common Stock (the "Assumed Equity Awards") with such shares being subject to certain adjustments in accordance with the Merger Agreement but otherwise remaining subject to the same terms and conditions as applicable immediately prior to such conversion. Each Company Equity Award that is outstanding immediately prior to the Effective Time that is not assumed under the Merger Agreement will be cancelled and converted automatically into the right to receive the Merger Consideration. The Merger is subject to regulatory approvals, approval by the Company's stockholders, and certain other customary closing conditions. |
Subsequent Events Subsequent Events |
6 Months Ended |
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Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On August 6, 2018, the Company redeemed the junior subordinated notes held by Coal City Capital Trust I and, as a result, all of the issued and outstanding three month LIBOR + 1.80% Coal City Capital Trust I capital (preferred) securities were concurrently redeemed. The aggregate liquidation amount of these trust preferred securities was $25.0 million. On September 17, 2018, the Company will redeem the junior subordinated notes held by TAYC Capital Trust II and, as a result, all of the issued and outstanding three month LIBOR + 2.68% TAYC Capital Trust II capital (preferred) securities will be concurrently redeemed. The aggregate liquidation amount of these trust preferred securities is $40.0 million. For additional information regarding these securities, see Note 10. Junior Subordinated Notes Issued to Capital Trusts. |
New Authoritative Accounting Guidance (Policies) |
6 Months Ended |
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Jun. 30, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
New Authoritative Accounting Guidance | ASC Topic 805 "Business Combinations." New authoritative accounting guidance under ASC Topic 805 "Business Combinations" amends prior guidance to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. ASC Topic 606 "Revenue from Contracts with Customers." New authoritative accounting guidance under ASC Topic 606, "Revenue from Contracts with Customers" amended prior guidance to require an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new authoritative guidance was initially effective for reporting periods after January 1, 2017 but was deferred to January 1, 2018. The Company's revenue is comprised of interest income on financial assets, which is excluded from the scope of this new guidance, and non-interest income. This new guidance changes how certain recurring revenue streams are recognized within lease financing revenue and insignificant components of non-interest income. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. See "Accounting changes" below. ASC Topic 825 "Financial Instruments." New authoritative accounting guidance under ASC Topic 825 "Financial Instruments" amended prior guidance to require equity investments (except those accounted for under the equity method of accounting) to be measured at fair value with changes in fair value recognized in net income. An entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. The new guidance simplifies the impairment assessment of equity investments without readily determinable fair values, requires public entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from changes in the instrument-specific credit risk when the entity has selected the fair value option for financial instruments and requires separate presentation of financial assets and liabilities by measurement category and form of financial asset. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. See "Accounting changes" below. ASC Topic 405 "Liabilities-Extinguishment of Liabilities." New authoritative accounting guidance under ASC Topic 405, "Liabilities-Extinguishment of Liabilities" amended prior guidance to clarify that liabilities related to the sale of prepaid store-value products within the scope of this guidance are financial liabilities and that breakage for those liabilities are to be accounted for consistent with the breakage guidance in ASC Topic 606 "Revenue from Contracts with Customers." The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. ASC Topic 842 "Leases." New authoritative accounting guidance under ASC Topic 842 "Leases" amended prior guidance to require lessees to recognize the assets and liabilities arising from all leases on the balance sheet. The new authoritative guidance defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. In addition, the qualifications for a sale and leaseback transaction have been amended. The new authoritative guidance also requires qualitative and quantitative disclosures by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The new authoritative guidance will be effective for reporting periods after January 1, 2019. In July 2018, the Financial Accounting Standards Board issued new authoritative guidance to provide an additional transition method that allows entities to not apply this new guidance in the comparative periods presented in the financial statements and instead recognize a cumulative effect adjustment to the beginning retained earnings at the date of application. The Company is evaluating the new guidance and its impact on the Company's statements of operations and financial condition. The Company expects an increase in assets and liabilities as a result of recording additional lease contracts where the Company is lessee. ASC Topic 815 "Derivatives and Hedging." New authoritative accounting guidance under ASC Topic 815 "Derivatives and Hedging" amended prior guidance to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The new authoritative guidance expands and refines hedge accounting for both nonfinancial and financial risk components. The new authoritative guidance will be effective for reporting periods after January 1, 2019 with early adoption permitted. This new authoritative guidance is not expected to have a significant impact on the Company's statements of operations or financial condition. ASC Topic 718 "Compensation - Stock Compensation." New authoritative accounting guidance under ASC Topic 718 "Compensation - Stock Compensation" amends prior guidance by clarifying which changes to terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of a modification unless the fair value, vesting conditions and classification of the modified award are the same as the original award. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. ASC Topic 326 "Financial Instruments - Credit Losses." New authoritative accounting guidance under ASC Topic 326 "Financial Instruments - Credit Losses" amended the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information for credit loss estimates. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The new authoritative guidance also requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected (net of the allowance for credit losses). In addition, the credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses rather than a write-down. The new authoritative guidance will be effective for reporting periods after January 1, 2020. The Company is evaluating the new guidance and expects it to have an impact on the Company's statements of operations and financial condition, the significance of which is not yet known nor can it be reasonably estimated currently. Due to the significant differences in the new authoritative guidance from existing GAAP, the implementation of this guidance may result in material changes in our accounting for credit losses on the financial instruments and will be impacted by the Company's loan and securities portfolios' composition, attributes, and quality in addition to the prevailing economic conditions and forecasts at the time of adoption. As part of the Company's evaluation process, it has established a steering committee and working group, including individuals from various functional areas, to assess processes and related controls, portfolio segmentation, model development, system requirements, and needed resources. ASC Topic 230 "Statement of Cash Flows." New authoritative accounting guidance under ASC Topic 230 "Statement of Cash Flows" addresses eight specific cash flow classification issues with the objective of reducing the existing diversity in practice. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. New authoritative accounting guidance under ASC Topic 230 "Statement of Cash Flows" amends prior guidance to require an entity to include amounts generally described as restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. ASC Topic 740 "Income Taxes." New authoritative accounting guidance under ASC Topic 740 "Income Taxes" amends prior guidance to require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. ASC Topic 350 "Intangibles-Goodwill and Other." New authoritative accounting guidance under ASC Topic 350 "Intangibles-Goodwill and Other" amends prior guidance to eliminate Step 2 from the goodwill impairment test and require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new authoritative guidance will be effective for reporting periods after January 1, 2020. The Company is evaluating the new guidance and its impact on the Company's statements of operations and financial condition. ASC Topic 610 "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets." New authoritative accounting guidance under ASC Topic 610 "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets" amends prior guidance to clarify the scope of Subtopic 610-20 by defining in substance nonfinancial assets and to add guidance for partial sales of nonfinancial assets. The Company adopted this new authoritative guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. ASC Topic 310 "Receivables - Nonrefundable Fees and Other Costs." New authoritative accounting guidance under ASC Topic 310 "Receivables - Nonrefundable Fees and Other Costs" amends prior guidance by shortening the amortization period for certain callable debt securities held at a premium requiring the premium to be amortized to the earliest call date. The new authoritative guidance will be effective for reporting periods after January 1, 2019 with early adoption permitted. The Company is evaluating the new guidance and its impact on the Company's statements of operations and financial condition. ASC Topic 220 "Income Statement - Reporting Comprehensive Income." New authoritative accounting guidance under ASC Topic 220 "Income Statement - Reporting Comprehensive Income" allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from enactment of H.R. 1, originally known as the "Tax Cuts and Jobs Act." The new authoritative guidance will be effective for reporting periods after January 1, 2019 with early adoption permitted. The Company early adopted the new guidance on January 1, 2018, and it did not have a significant impact on the Company's statements of operations or financial condition. See "Accounting changes" below. Accounting changes. The Company adopted the new authoritative accounting guidance under ASC Topic 606, "Revenue from Contracts with Customers" on January 1, 2018 using the modified retrospective transition method for contracts that were not completed at the date of initial application. The Company recognized a cumulative effect reduction to the beginning retained earnings totaling $683 thousand. This amount relates to lease financing revenue where the Company's performance obligation is over time. Previously, such revenue was recognized immediately. See "Lease financing revenue, net" below. The new authoritative accounting guidance under ASC Topic 606 requires an entity to recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. To achieve this, the Company takes the following steps: identify the contract(s) with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; and recognize revenue when (or as) the Company satisfies a performance obligation. The non-interest revenue streams that are considered to be in the scope of this new guidance are discussed below. Lease financing revenue, net. Fees from the sale of third-party equipment maintenance contracts are included within lease financing revenue, net. The Company sells third-party equipment maintenance contracts and provides customers with an asset and maintenance contract management tool over the life of the maintenance contract. Since the Company provides support for the asset and maintenance contract management tool, the Company's performance obligation is satisfied over the life of the maintenance contract, and the fees are recognized monthly over the life of the maintenance contract. Payment is typically received at the time of sale of the maintenance contract. Treasury management fees and consumer and other deposit service fees. Deposit related fees (account analysis fees, monthly service fees, and other related fees) are included within treasury management fees and consumer and other deposit service fees. The Company's performance obligation is ongoing and either party may cancel at any time. These fees are generally recognized as the services are rendered on a monthly basis. Payment is typically received monthly. Wealth management fees. Wealth management fees include revenue from the management and advisement of client assets and trust administration. The Company's performance obligation is generally satisfied over time, and the fees are recognized monthly. Payment is typically received quarterly or annually. Card fees. Card fees include debit and credit card interchange fees and ATM fees. For debit and credit card transactions, the Company considers the merchant as the customer for interchange revenue with the performance obligation being satisfied when the cardholder purchases goods or services from the merchant. Interchange revenue is recognized as the services are provided. The Company's performance obligation for ATM fees is satisfied when services are provided, and the fees are recognized at that time. Payment is typically received immediately or in the following month. Capital markets and international banking fees. Capital markets and international banking fees include M&A advisory and syndication fees. The Company's performance obligation is generally satisfied over time, and the fees are recognized monthly. For M&A advisory fees, a portion of the payment is received at the beginning of the engagement with the remainder once the transaction is completed. For syndication fees, payment is received annually. The Company also adopted the new authoritative accounting guidance under ASC Topic 825 "Financial Instruments" and ASC Topic 220 "Income Statement - Reporting Comprehensive Income" on January 1, 2018. The Company recognized a cumulative effect increase to the beginning retained earnings and accumulated other comprehensive income totaling $385 thousand under ASC Topic 825 representing the fair value adjustment to equity securities at the date of initial application. In addition, the Company reclassified $729 thousand from accumulated other comprehensive loss to retained earnings for the stranded tax effects resulting from enactment of the Tax Cuts and Jobs Act at the date of initial application of the new guidance under ASC Topic 220. |
Earnings Per Common Share (Tables) |
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Reconciliation of the Number of Shares Used in the Calculation of Basic and Diluted Earnings Per Common Share | The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share (amounts in thousands, except share and per share data).
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Investment Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Amortized Cost and Fair Value of Investment Securities | Amortized cost and fair value of investment securities, excluding marketable equity securities and non-marketable FHLB and FRB stock, were as follows as of the dates indicated (in thousands):
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Unrealized Losses on Investment Securities and the Fair Value of the Related Securities | Unrealized losses on investment securities by length of time in a continuous unrealized loss position and the fair value of the related securities at June 30, 2018 were as follows (in thousands):
Unrealized losses on investment securities by length of time in a continuous unrealized loss position and the fair value of the related securities at December 31, 2017 were as follows (in thousands):
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Summary of Net Gains (Losses) on Investment Securities Available for Sale | Net gains (losses) recognized on investment securities were as follows (in thousands):
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Amortized Cost and Fair Value of Investment Securities by Contractual Maturity | The amortized cost and fair value of investment securities as of June 30, 2018 by contractual maturity are shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid without any penalties. Therefore, mortgage-backed securities are not included in the maturity categories in the following maturity summary.
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Loans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Composition of Loans | Loans consist of the following at (in thousands):
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Contractual Aging of the Recorded Investment in Past Due Loans by Class of Loans | The following table presents the contractual aging of the recorded investment in past due loans by class of loans as of June 30, 2018 and December 31, 2017 (in thousands):
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Recorded Investment in Non-accrual Loans and Loans Past Due Ninety Days or More and Still Accruing by Class of Loans | The following table presents the recorded investment in non-accrual loans and loans past due ninety days or more and still accruing by class of loans, excluding purchased credit-impaired loans, as of June 30, 2018 and December 31, 2017 (in thousands):
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Risk Category of Loans by Class of Loans | The following tables present the risk category of loans by class of loans based on the most recent analysis performed, excluding purchased credit-impaired loans, as of June 30, 2018 and December 31, 2017 (in thousands):
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Recorded Investment in Loan Classes Based on Payment Activity | The following table presents the recorded investment in those loan classes based on payment activity, excluding purchased credit-impaired loans, as of June 30, 2018 and December 31, 2017 (in thousands):
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Loans Individually Evaluated for Impairment by Class of Loans | The following tables present loans individually evaluated for impairment by class of loans, excluding purchased credit-impaired loans, as of June 30, 2018 and December 31, 2017 (in thousands):
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Schedule of Loans That Have Been Restructured | The following table presents loans that were restructured during the three months ended June 30, 2018 (dollars in thousands):
The following table presents loans that were restructured during the six months ended June 30, 2018 (dollars in thousands):
The following table presents loans that were restructured during the three months ended June 30, 2017 (dollars in thousands):
The following table presents loans that were restructured during the six months ended June 30, 2017 (dollars in thousands):
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Troubled Debt Restructuring Activity Rollforward | The following table presents the troubled debt restructurings activity during the six months ended June 30, 2018 (in thousands):
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Type of Financing Receivable Modifications and Restructuring | The following table presents the type of modification for loans that have been restructured during the six months ended June 30, 2018 (in thousands):
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Allowance Activity for Credit Losses, Balance in Allowance for Credit Losses and Recorded Investment in Loans by Portfolio Segment | The following table presents the activity in the allowance for credit losses, balance in allowance for credit losses and recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2018 and 2017 (in thousands):
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Changes in the Accretable Yield for Purchased Credit-Impaired Loans | Changes in the accretable yield for loans acquired and accounted for under ASC 310-30 were as follows for the three and six months ended June 30, 2018 and 2017 (in thousands):
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Carrying Amount of Loans Acquired Through a Business Combination by Loan Pool Type | The carrying amount of loans acquired through a business combination by loan pool type are as follows (in thousands):
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Goodwill and Intangibles (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Amount of Goodwill | The following table presents the carrying amount of goodwill by segment for the six months ended June 30, 2018 (in thousands):
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Changes in the Carrying Amount of Core Deposit and Client Relationship Intangibles | The following table presents the changes during the six months ended June 30, 2018 in the carrying amount of core deposit and client relationship intangibles, and the gross carrying amount, accumulated amortization, and net book value as of June 30, 2018 (in thousands):
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Estimated Future Amortization Expense of Other Intangible Assets | The following presents the estimated future amortization expense of other intangible assets (in thousands):
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Deposits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Composition of Deposits | The composition of deposits was as follows as of June 30, 2018 and December 31, 2017 (in thousands):
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Short-Term Borrowings (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Short-Term Borrowings | Short-term borrowings were as follows as of June 30, 2018 and December 31, 2017 (dollars in thousands):
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Long-Term Borrowings (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Borrowings | Long-term borrowings were as follows as of June 30, 2018 and December 31, 2017 (dollars in thousands):
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Junior Subordinated Notes Issued to Capital Trusts (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Junior Subordinated Notes and the Related Trust Preferred Securities Issued by Each Trust | The table below summarizes the outstanding junior subordinated notes and the related trust preferred securities issued by each trust as of June 30, 2018 (in thousands). Subsequent to June 30, 2018, the Company redeemed all of the outstanding junior subordinated notes held by Coal City Capital Trust I, which concurrently redeemed all of its outstanding trust preferred securities, and the Company called for redemption all of the outstanding junior subordinated notes held by TAYC Capital Trust II, which will concurrently redeem all of its outstanding trust preferred securities. See Note 18. Subsequent Events.
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Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Outstanding Financial Instruments, Contractual Amounts of Off-Balance Sheet Credit Risk | At June 30, 2018 and December 31, 2017, the following financial instruments were outstanding, the contractual amounts of which represent off-balance sheet credit risk (in thousands):
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis | The following table summarizes financial assets and financial liabilities 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 (in thousands):
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Summary of Financial Assets Measured at Fair Value on a Recurring Basis, Unobservable Inputs Used | The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a recurring basis that were categorized within the Level 3 of the fair value hierarchy (fair value in thousands):
The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a nonrecurring basis that were categorized within the Level 3 of the fair value hierarchy (fair value in thousands):
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Schedule of Sensitivity Analysis of Fair Value, Transferor's Interests in Transferred Financial Assets | Key economic assumptions used in the measuring of the fair value of the mortgage servicing rights and the sensitivity of the fair value to immediate adverse changes in those assumptions at June 30, 2018 are presented in the following table. This table does not take into account the derivatives used to economically hedge the mortgage servicing rights.
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Financial Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3) | The following table presents additional information about financial assets measured at fair value on a recurring basis for which the Company used significant unobservable inputs (Level 3):
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Assets Measured at Fair Value on a Nonrecurring Basis | Assets measured at fair value on a nonrecurring basis as of June 30, 2018 and December 31, 2017 are included in the table below (in thousands):
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Estimated Fair Values of Financial Instruments | The estimated fair values of financial instruments are as follows (in thousands):
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Stock Incentive Plans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-Based Payment Plans | The following table summarizes the impact of the Company’s share-based payment plans in the financial statements for the periods shown (in thousands):
(1) Includes tax benefits recorded for the vesting of restricted shares and exercise of options. |
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Summary of Changes in Stock Options | The following table summarizes changes in stock options for the six months ended June 30, 2018:
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Assumptions Used for Options Granted | The following assumptions were used for options granted during the six months ended June 30, 2018:
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Summary of Changes in Restricted Shares and Units | The following is a summary of changes in restricted shares and units for the six months ended June 30, 2018:
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Derivative Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Derivative Financial Instruments | The Company’s derivative financial instruments are summarized below as of June 30, 2018 and December 31, 2017 (in thousands):
(1) Derivative instruments designated to hedge fixed-rate commercial real estate loans. (2) These portfolio swaps are not designated as hedging instruments under ASC Topic 815. |
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Schedule of the Amounts Included in Consolidated Statements of Operations Related to Derivative Financial Instruments | Amounts included in other operating income in the consolidated statements of operations related to derivative financial instruments were as follows (in thousands):
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Schedule of Financial Instruments Eligible for Offset In the Consolidated Balance Sheet | Information about the Company's financial instruments that are eligible for offset in the consolidated balance sheet as of June 30, 2018 is summarized below (in thousands):
Information about the Company's financial instruments that are eligible for offset in the consolidated balance sheet as of December 31, 2017 is summarized below (in thousands):
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Operating Segments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Financial Information for the Reportable Segments | The following tables present summary financial information for the reportable segments (in thousands):
|
Loans - Troubled Debt Restructuring Activity (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Performing | |
Financing Receivable, Modifications, Post Modification Recorded Investment [Roll Forward] | |
Beginning balance | $ 28,554 |
Additions | 88 |
Charge-offs | 0 |
Principal payments, net | (4,774) |
Removals | (77) |
Transfer to other real estate owned | 0 |
Transfers in | 2,382 |
Transfers out | (513) |
Ending balance | 25,660 |
Non-performing | |
Financing Receivable, Modifications, Post Modification Recorded Investment [Roll Forward] | |
Beginning balance | 30,836 |
Additions | 2,771 |
Charge-offs | (130) |
Principal payments, net | (5,364) |
Removals | (8) |
Transfer to other real estate owned | 0 |
Transfers in | 513 |
Transfers out | (2,382) |
Ending balance | $ 26,236 |
Loans - Changes in the Accretable Yield (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Changes in the accretable yield for purchased credit-impaired loans | ||||
Balance at beginning of period | $ 10,267 | $ 14,911 | $ 12,069 | $ 16,050 |
Purchases | 0 | 0 | 0 | 43 |
Accretion | (2,223) | (2,831) | (4,634) | (5,019) |
Other | 197 | 606 | 806 | 1,612 |
Balance at end of period | $ 8,241 | $ 12,686 | $ 8,241 | $ 12,686 |
Goodwill and Intangibles - Additional Information (Details) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
segment
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Number of operating segments | segment | 3 | ||||
Goodwill | $ 999,925,000 | $ 999,925,000 | $ 1,003,548,000 | ||
Impairment | $ 3,623,000 | $ 0 | $ 3,623,000 | $ 0 | |
Weighted average amortization period (in years) | 12 years |
Goodwill and Intangibles - Changes In Carrying Amount of Goodwill (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Goodwill [Roll Forward] | ||||
Balance at beginning of period | $ 1,003,548,000 | |||
Impairment | $ (3,623,000) | $ 0 | (3,623,000) | $ 0 |
Balance at end of period | 999,925,000 | 999,925,000 | ||
Banking | ||||
Goodwill [Roll Forward] | ||||
Balance at beginning of period | 959,285,000 | |||
Impairment | 0 | |||
Balance at end of period | 959,285,000 | 959,285,000 | ||
Leasing | ||||
Goodwill [Roll Forward] | ||||
Balance at beginning of period | 40,640,000 | |||
Impairment | 0 | |||
Balance at end of period | 40,640,000 | 40,640,000 | ||
Mortgage Banking | ||||
Goodwill [Roll Forward] | ||||
Balance at beginning of period | 3,623,000 | |||
Impairment | (3,623,000) | |||
Balance at end of period | $ 0 | $ 0 |
Goodwill and Intangibles - Changes in Core Deposit and Client Relationship Intangibles (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
|
Changes in the carrying amount of core deposit and client relationship intangibles | |||||
Balance at beginning of period | $ 54,766 | ||||
Amortization expense | $ (1,896) | $ (2,086) | (3,798) | $ (4,176) | |
Balance at end of period | 50,968 | 50,968 | |||
Gross carrying amount | $ 112,820 | ||||
Accumulated amortization | (61,852) | ||||
Net book value | $ 50,968 | $ 54,766 | $ 50,968 |
Goodwill and Intangibles - Estimated Future Amortization Expense (Details) $ in Thousands |
Jun. 30, 2018
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2018 | $ 3,653 |
2019 | 5,674 |
2020 | 5,022 |
2021 | 4,790 |
2022 | 3,806 |
Thereafter | 28,023 |
Total estimated future amortization expense | $ 50,968 |
Deposits (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Banking and Thrift [Abstract] | ||
Demand deposit accounts, noninterest bearing | $ 6,347,208 | $ 6,381,512 |
NOW, money market, and interest bearing deposits | 4,950,676 | 4,954,765 |
Savings accounts | 1,181,078 | 1,167,810 |
Certificates of deposit, $250,000 or more | 1,459,919 | 1,506,071 |
Other certificates of deposit | 983,782 | 948,220 |
Total deposits | 14,922,663 | 14,958,378 |
Brokered deposits | $ 1,100,000 | $ 1,100,000 |
Short-Term Borrowings - Schedule of Short-Term Borrowings (Details) - USD ($) |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Short-term borrowings | ||
Weighted Average Interest Rate | 1.53% | 1.03% |
Amount | $ 651,462,000 | $ 861,039,000 |
Customer repurchase agreements | ||
Short-term borrowings | ||
Weighted Average Interest Rate | 0.55% | 0.27% |
Amount | $ 244,462,000 | $ 232,789,000 |
Federal Home Loan Bank advances | ||
Short-term borrowings | ||
Weighted Average Interest Rate | 2.13% | 1.31% |
Amount | $ 400,000,000 | $ 625,000,000 |
Federal funds purchased | ||
Short-term borrowings | ||
Weighted Average Interest Rate | 2.21% | 1.26% |
Amount | $ 7,000,000 | $ 3,250,000 |
Line of credit | ||
Short-term borrowings | ||
Weighted Average Interest Rate | 0.00% | 0.00% |
Amount | $ 0 | $ 0 |
Short-Term Borrowings - Additional Information (Details) - USD ($) |
Aug. 24, 2016 |
Dec. 18, 2015 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Short-term borrowings | ||||
Fixed interest rate Federal Home Loan Bank advances | $ 400,000,000 | $ 625,000,000 | ||
Short-term borrowings | 651,462,000 | 861,039,000 | ||
London Interbank Offered Rate (LIBOR) | ||||
Short-term borrowings | ||||
Basis spread on variable rate | 1.75% | |||
Federal Home Loan Bank advances | ||||
Short-term borrowings | ||||
Short-term borrowings | $ 400,000,000 | 625,000,000 | ||
Federal Home Loan Bank advances | Minimum | ||||
Short-term borrowings | ||||
Effective interest rate of amounts due within one year | 1.35% | |||
Federal Home Loan Bank advances | Maximum | ||||
Short-term borrowings | ||||
Effective interest rate of amounts due within one year | 2.35% | |||
Line of credit | ||||
Short-term borrowings | ||||
Line of credit facility, maximum borrowing capacity | $ 35,000,000.0 | |||
Short-term borrowings | $ 0 | $ 0 | ||
Line of credit | London Interbank Offered Rate (LIBOR) | ||||
Short-term borrowings | ||||
Basis spread on variable rate | 1.75% |
Fair Value Measurements - Additional Information (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair value assumption, allowance for impaired real estate loans percentage | 100.00% |
Maximum maturity period of short-term borrowings where carrying value approximates fair value (in days) | 90 days |
Minimum maturity period of short-term borrowings where fair value is based on discounted value of contractual cash flows (in days) | 90 days |
Fair Value Measurements - Assets Measured at Fair Value on Nonrecurring Basis (Details) - Nonrecurring basis - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Financial Assets: | ||
Impaired loans | $ 62,089 | $ 60,569 |
Foreclosed assets | 14,420 | 15,113 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Financial Assets: | ||
Impaired loans | 0 | 0 |
Foreclosed assets | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Financial Assets: | ||
Impaired loans | 0 | 0 |
Foreclosed assets | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Financial Assets: | ||
Impaired loans | 62,089 | 60,569 |
Foreclosed assets | $ 14,420 | $ 15,113 |
Significant Unobservable Inputs (Level 3) | Minimum | ||
Financial Assets: | ||
Appraisal adjustment impaired loans (as a percent) | 5.00% | 5.00% |
Appraisal adjustment foreclosed assets (as a percent) | 5.00% | 5.00% |
Significant Unobservable Inputs (Level 3) | Maximum | ||
Financial Assets: | ||
Appraisal adjustment impaired loans (as a percent) | 10.00% | 10.00% |
Appraisal adjustment foreclosed assets (as a percent) | 10.00% | 10.00% |
Stock Incentive Plans - Impact of Share-Based Payment Plans (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Total compensation expense for share-based payment plans during the period | $ 4,695 | $ 4,443 | $ 9,146 | $ 8,924 |
Amount of related income tax benefit recognized in income | $ 2,599 | $ 1,916 | $ 3,953 | $ 6,338 |
Stock Incentive Plans - Assumptions Used For Options Granted (Details) - Stock options |
6 Months Ended |
---|---|
Jun. 30, 2018
$ / shares
| |
Fair value assumptions | |
Risk-free interest rate | 2.80% |
Expected volatility of Company’s stock | 26.13% |
Expected dividend yield | 2.06% |
Expected life of options | 5 years 10 months 20 days |
Weighted average fair value per option of options granted during the year (in dollars per share) | $ 9.65 |
Stock Incentive Plans - Changes in Restricted Shares and Units (Details) - Restricted shares |
6 Months Ended |
---|---|
Jun. 30, 2018
$ / shares
shares
| |
Number of Shares and Units | |
Shares and units outstanding, beginning balance (in shares) | shares | 973,201 |
Granted (in shares) | shares | 414,895 |
Vested (in shares) | shares | (303,774) |
Forfeited or cancelled (in shares) | shares | (88,806) |
Shares and units outstanding, ending balance (in shares) | shares | 995,516 |
Weighted Average Grant Date Fair Value | |
Shares and units outstanding, beginning balance (in dollars per share) | $ / shares | $ 37.03 |
Granted (in dollars per share) | $ / shares | 41.45 |
Vested (in dollars per share) | $ / shares | 34.98 |
Forfeited or cancelled (in dollars per share) | $ / shares | 34.86 |
Shares and units outstanding, ending balance (in dollars per share) | $ / shares | $ 39.69 |
Derivative Financial Instruments - Additional Information (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Derivatives, Fair Value [Line Items] | ||
Net amount payable under interest rate swap | $ 1 | $ 1 |
Interest rate swap credit risk exposure | 17,700 | |
Derivative liability, notional amount | 2,959,474 | $ 3,591,647 |
Commercial loan interest rate swaps | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, notional amount | $ 32 |
Operating Segments (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
segment
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Segment Reporting Information [Line Items] | |||||
Number of reportable operating segments | segment | 3 | ||||
Net interest income | $ 159,069 | $ 148,994 | $ 312,450 | $ 292,037 | |
Provision for credit losses | 6,219 | 9,699 | 13,727 | 13,433 | |
Non-interest income | 88,306 | 91,170 | 181,108 | 183,620 | |
Non-interest expense | 192,992 | 166,212 | 360,878 | 322,554 | |
Income tax expense | 9,631 | 19,787 | 23,663 | 40,667 | |
Net income | 38,533 | 44,466 | 95,290 | 99,003 | |
Total assets | 19,966,557 | 19,965,057 | 19,966,557 | 19,965,057 | $ 20,086,940 |
Banking | |||||
Segment Reporting Information [Line Items] | |||||
Net interest income | 146,614 | 135,982 | 287,085 | 267,431 | |
Provision for credit losses | 5,746 | 8,890 | 13,325 | 12,417 | |
Non-interest income | 46,716 | 43,491 | 89,808 | 86,699 | |
Non-interest expense | 124,682 | 117,022 | 240,510 | 225,538 | |
Income tax expense | 15,009 | 15,662 | 28,617 | 31,322 | |
Net income | 47,893 | 37,899 | 94,441 | 84,853 | |
Total assets | 16,581,205 | 16,320,111 | 16,581,205 | 16,320,111 | |
Pretax merger related costs | 5,500 | 7,200 | 5,500 | 7,400 | |
Leasing | |||||
Segment Reporting Information [Line Items] | |||||
Net interest income | 2,349 | 2,345 | 4,831 | 4,614 | |
Provision for credit losses | 500 | 410 | 476 | 275 | |
Non-interest income | 22,651 | 18,180 | 47,507 | 39,643 | |
Non-interest expense | 15,212 | 13,436 | 30,708 | 27,280 | |
Income tax expense | 1,052 | 2,525 | 1,808 | 6,644 | |
Net income | 8,236 | 4,154 | 19,346 | 10,058 | |
Total assets | 1,354,940 | 1,275,386 | 1,354,940 | 1,275,386 | |
Mortgage Banking | |||||
Segment Reporting Information [Line Items] | |||||
Net interest income | 10,106 | 10,667 | 20,534 | 19,992 | |
Provision for credit losses | (27) | 399 | (74) | 741 | |
Non-interest income | 18,939 | 29,499 | 43,793 | 57,278 | |
Non-interest expense | 53,098 | 35,754 | 89,660 | 69,736 | |
Income tax expense | (6,430) | 1,600 | (6,762) | 2,701 | |
Net income | (17,596) | 2,413 | (18,497) | 4,092 | |
Total assets | 2,030,412 | $ 2,369,560 | 2,030,412 | $ 2,369,560 | |
Pretax merger related costs | $ 19,500 | $ 20,100 |
Definitive Merger Agreement (Details) - $ / shares |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
May 20, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Business Combination, Separately Recognized Transactions [Line Items] | |||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Preferred stock, par or stated value per share (in dollars per share) | $ 0.01 | $ 0.01 | |
Series C Preferred Stock | |||
Business Combination, Separately Recognized Transactions [Line Items] | |||
Preferred stock, dividend rate (percent) | 6.00% | 6.00% | |
Merger With Fifth Third Bancorp | |||
Business Combination, Separately Recognized Transactions [Line Items] | |||
Number of shares called by each right (in shares) | 1.450 | ||
Cash paid per share (in dollars per share) | $ 5.54 |
Subsequent Events (Details) - USD ($) $ in Thousands |
6 Months Ended | |||
---|---|---|---|---|
Sep. 17, 2018 |
Aug. 06, 2018 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Subsequent Event [Line Items] | ||||
Liquidation of trust preferred securities | $ 20,619 | $ 0 | ||
Coal City Capital Trust I | Junior Subordinated Notes | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 1.80% | |||
TAYC Capital Trust II | Junior Subordinated Notes | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 2.68% | |||
Trust Preferred Securities | Coal City Capital Trust I | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 1.80% | |||
Trust Preferred Securities | TAYC Capital Trust II | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 2.68% | |||
Subsequent Event | Trust Preferred Securities | Coal City Capital Trust I | ||||
Subsequent Event [Line Items] | ||||
Liquidation of trust preferred securities | $ 25,000 | |||
Scenario, Forecast | Trust Preferred Securities | TAYC Capital Trust II | ||||
Subsequent Event [Line Items] | ||||
Liquidation of trust preferred securities | $ 40,000 |
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