þ | 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 | 27-2176993 | |||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||
5851 Legacy Circle, Plano, Texas | 75024 | |||
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company) | Emerging growth company o | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o |
Class: Common Stock | Shares Outstanding as of July 24, 2017: | |
48,009,379 |
June 30, 2017 | December 31, 2016 | ||||||
ASSETS | (unaudited) | ||||||
Cash and due from financial institutions | $ | 61,989 | $ | 59,823 | |||
Short-term interest-bearing deposits in other financial institutions | 256,251 | 229,389 | |||||
Total cash and cash equivalents | 318,240 | 289,212 | |||||
Securities available for sale, at fair value | 397,957 | 354,515 | |||||
Securities held to maturity (fair value: June 30, 2017 — $194,862 December 31, 2016— $212,981) | 191,578 | 210,387 | |||||
Loans held for sale, at fair value | 19,374 | 21,279 | |||||
Loans held for investment: | |||||||
Loans held for investment (net of allowance for loan losses of $75,091 at June 30, 2017 and $64,576 at December 31, 2016) | 6,338,617 | 5,998,596 | |||||
Loans held for investment - Warehouse Purchase Program | 1,256,742 | 1,055,341 | |||||
Total loans held for investment | 7,595,359 | 7,053,937 | |||||
Federal Home Loan Bank ("FHLB") stock and other restricted securities, at cost | 56,618 | 43,266 | |||||
Bank-owned life insurance | 57,078 | 56,477 | |||||
Premises and equipment, net | 71,068 | 74,226 | |||||
Goodwill | 178,559 | 178,559 | |||||
Other assets | 84,544 | 80,397 | |||||
Total assets | $ | 8,970,375 | $ | 8,362,255 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Deposits | |||||||
Non-interest-bearing demand | $ | 1,522,856 | $ | 1,383,951 | |||
Interest-bearing demand | 893,544 | 903,314 | |||||
Savings and money market | 2,685,627 | 2,710,307 | |||||
Time | 1,460,479 | 1,367,904 | |||||
Total deposits | 6,562,506 | 6,365,476 | |||||
FHLB advances | 1,151,682 | 833,682 | |||||
Repurchase agreements | 73,433 | 86,691 | |||||
Subordinated debt | 134,277 | 134,032 | |||||
Accrued expenses and other liabilities | 123,194 | 57,009 | |||||
Total liabilities | 8,045,092 | 7,476,890 | |||||
Commitments and contingent liabilities (See Note 9) | |||||||
Shareholders’ equity | |||||||
Preferred stock, $.01 par value; 10,000,000 shares authorized; 0 shares issued — June 30, 2017 and December 31, 2016 | — | — | |||||
Common stock, $.01 par value; 90,000,000 shares authorized; 48,009,379 shares issued — June 30, 2017 and 47,876,198 shares issued December 31, 2016 | 480 | 479 | |||||
Additional paid-in capital | 595,730 | 589,408 | |||||
Retained earnings | 342,384 | 310,641 | |||||
Accumulated other comprehensive income (loss), net | (1,125 | ) | (2,713 | ) | |||
Unearned Employee Stock Ownership Plan (ESOP) shares; 1,218,570 shares at June 30, 2017 and 1,245,046 shares at December 31, 2016 | (12,186 | ) | (12,450 | ) | |||
Total shareholders’ equity | 925,283 | 885,365 | |||||
Total liabilities and shareholders’ equity | $ | 8,970,375 | $ | 8,362,255 | |||
See accompanying notes to consolidated financial statements. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Interest and dividend income | |||||||||||||||
Loans, including fees | $ | 83,917 | $ | 73,376 | $ | 167,020 | $ | 142,182 | |||||||
Taxable securities | 2,725 | 2,359 | 5,287 | 4,671 | |||||||||||
Nontaxable securities | 739 | 759 | 1,494 | 1,533 | |||||||||||
Interest-bearing deposits in other financial institutions | 955 | 392 | 1,687 | 722 | |||||||||||
FHLB and Federal Reserve Bank stock and other | 411 | 450 | 795 | 836 | |||||||||||
88,747 | 77,336 | 176,283 | 149,944 | ||||||||||||
Interest expense | |||||||||||||||
Deposits | 8,359 | 4,422 | 15,469 | 8,544 | |||||||||||
FHLB advances | 2,427 | 2,103 | 4,059 | 3,776 | |||||||||||
Repurchase agreements and other borrowings | 2,241 | 1,457 | 4,487 | 2,919 | |||||||||||
13,027 | 7,982 | 24,015 | 15,239 | ||||||||||||
Net interest income | 75,720 | 69,354 | 152,268 | 134,705 | |||||||||||
Provision for credit losses | 6,255 | 6,800 | 28,556 | 15,600 | |||||||||||
Net interest income after provision for credit losses | 69,465 | 62,554 | 123,712 | 119,105 | |||||||||||
Non-interest income | |||||||||||||||
Service charges and other fees | 9,896 | 8,927 | 18,327 | 17,108 | |||||||||||
Net gain on sale of mortgage loans held for sale | 2,156 | 2,250 | 3,784 | 3,830 | |||||||||||
Bank-owned life insurance income | 440 | 441 | 862 | 867 | |||||||||||
Net gain (loss) on securities transactions | — | 65 | (19 | ) | 65 | ||||||||||
Gain on sale and disposition of assets | 157 | 1,186 | 1,556 | 5,258 | |||||||||||
Other | (324 | ) | 853 | (55 | ) | 1,249 | |||||||||
12,325 | 13,722 | 24,455 | 28,377 | ||||||||||||
Non-interest expense | |||||||||||||||
Salaries and employee benefits | 23,391 | 22,867 | 47,835 | 45,204 | |||||||||||
Advertising | 1,179 | 1,035 | 1,996 | 2,071 | |||||||||||
Occupancy and equipment | 3,656 | 3,779 | 7,310 | 7,470 | |||||||||||
Outside professional services | 1,203 | 1,227 | 2,359 | 2,043 | |||||||||||
Regulatory assessments | 1,271 | 1,330 | 2,256 | 2,463 | |||||||||||
Data processing | 3,877 | 3,664 | 7,772 | 6,994 | |||||||||||
Office operations | 2,404 | 2,541 | 4,680 | 5,009 | |||||||||||
Other | 2,608 | 3,170 | 5,133 | 5,901 | |||||||||||
39,589 | 39,613 | 79,341 | 77,155 | ||||||||||||
Income before income tax expense | 42,201 | 36,663 | 68,826 | 70,327 | |||||||||||
Income tax expense | 14,266 | 13,446 | 22,701 | 25,028 | |||||||||||
Net income | $ | 27,935 | $ | 23,217 | $ | 46,125 | $ | 45,299 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.60 | $ | 0.50 | $ | 0.99 | $ | 0.98 | |||||||
Diluted | $ | 0.59 | $ | 0.50 | $ | 0.98 | $ | 0.97 | |||||||
Dividends declared per share | $ | 0.15 | $ | 0.14 | $ | 0.30 | $ | 0.28 | |||||||
See accompanying notes to consolidated financial statements. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 27,935 | $ | 23,217 | $ | 46,125 | $ | 45,299 | |||||||
Change in unrealized gains on securities available for sale | 1,427 | 1,725 | 2,426 | 4,764 | |||||||||||
Reclassification of amount realized through securities transactions | — | (65 | ) | 19 | (65 | ) | |||||||||
Tax effect | (501 | ) | (583 | ) | (857 | ) | (1,648 | ) | |||||||
Other comprehensive income, net of tax | 926 | 1,077 | 1,588 | 3,051 | |||||||||||
Comprehensive income | $ | 28,861 | $ | 24,294 | $ | 47,713 | $ | 48,350 | |||||||
See accompanying notes to consolidated financial statements. |
For the six months ended June 30, 2016 | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income, Net | Unearned ESOP Shares | Total Shareholders’ Equity | |||||||||||||||||
Balance at January 1, 2016 | $ | 476 | $ | 576,753 | $ | 240,496 | $ | (133 | ) | $ | (13,516 | ) | $ | 804,076 | |||||||||
Net income | — | — | 45,299 | — | — | 45,299 | |||||||||||||||||
Other comprehensive income, net of tax | — | — | — | 3,051 | — | 3,051 | |||||||||||||||||
Dividends declared ($0.28 per share) | — | — | (13,341 | ) | — | — | (13,341 | ) | |||||||||||||||
ESOP shares earned, (71,447 shares) | — | 982 | — | — | 586 | 1,568 | |||||||||||||||||
Share-based compensation expense | — | 2,223 | — | — | — | 2,223 | |||||||||||||||||
Activity in employee stock plans, (24,614 shares) | — | 428 | — | — | — | 428 | |||||||||||||||||
Balance at June 30, 2016 | $ | 476 | $ | 580,386 | $ | 272,454 | $ | 2,918 | $ | (12,930 | ) | $ | 843,304 | ||||||||||
For the six months ended June 30, 2017 | |||||||||||||||||||||||
Balance at January 1, 2017 | $ | 479 | $ | 589,408 | $ | 310,641 | $ | (2,713 | ) | $ | (12,450 | ) | $ | 885,365 | |||||||||
Net income | — | — | 46,125 | — | — | 46,125 | |||||||||||||||||
Other comprehensive income, net of tax | — | — | — | 1,588 | — | 1,588 | |||||||||||||||||
Dividends declared ($0.30 per share) | — | — | (14,382 | ) | — | — | (14,382 | ) | |||||||||||||||
ESOP shares earned (26,476 shares) | — | 781 | — | — | 264 | 1,045 | |||||||||||||||||
Share-based compensation expense | — | 3,405 | — | — | — | 3,405 | |||||||||||||||||
Activity in employee stock plans (133,181 shares) | 1 | 2,136 | — | — | — | 2,137 | |||||||||||||||||
Balance at June 30, 2017 | $ | 480 | $ | 595,730 | $ | 342,384 | $ | (1,125 | ) | $ | (12,186 | ) | $ | 925,283 |
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 46,125 | $ | 45,299 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Provision for credit losses | 28,556 | 15,600 | |||||
Depreciation and amortization | 3,603 | 3,506 | |||||
Deferred tax benefit | (3,973 | ) | (5,063 | ) | |||
Premium amortization and accretion of securities, net | 2,177 | 2,082 | |||||
Accretion related to acquired loans | (1,817 | ) | (2,532 | ) | |||
Net (gain) loss on securities transactions | 19 | (65 | ) | ||||
ESOP compensation expense | 1,045 | 1,568 | |||||
Share-based compensation expense | 3,405 | 2,223 | |||||
Excess tax benefit on vesting of stock awards | 1,177 | — | |||||
Net gain on loans held for sale | (3,784 | ) | (3,830 | ) | |||
Loans originated or purchased for sale | (96,238 | ) | (100,690 | ) | |||
Proceeds from sale of loans held for sale | 101,927 | 106,303 | |||||
FHLB stock dividends | (227 | ) | (238 | ) | |||
Bank-owned life insurance income | (862 | ) | (867 | ) | |||
(Gain) on sale and disposition of repossessed assets, premises and equipment | (1,373 | ) | (3,937 | ) | |||
Disposition of insurance subsidiary goodwill upon sale of subsidiary operations | — | 2,217 | |||||
Net change in deferred loan fees/costs | (6,700 | ) | (4,259 | ) | |||
Net change in accrued interest receivable | 187 | (2,448 | ) | ||||
Net change in other assets | 1,110 | (4,974 | ) | ||||
Net change in other liabilities | 65,589 | 25,107 | |||||
Net cash provided by operating activities | 139,946 | 75,002 | |||||
Cash flows from investing activities | |||||||
Available-for-sale securities: | |||||||
Maturities, prepayments and calls | 1,185,797 | 228,710 | |||||
Purchases | (1,228,519 | ) | (246,485 | ) | |||
Proceeds from sale of AFS securities | — | 7,700 | |||||
Held-to-maturity securities: | |||||||
Maturities, prepayments and calls | 18,338 | 21,177 | |||||
Purchases | — | (5,774 | ) | ||||
Originations of Warehouse Purchase Program loans | (10,232,407 | ) | (8,729,890 | ) | |||
Proceeds from pay-offs of Warehouse Purchase Program loans | 10,031,006 | 8,793,219 | |||||
Net change in loans held for investment, excluding Warehouse Purchase Program loans | (365,656 | ) | (635,097 | ) | |||
Redemption (purchase) of FHLB and Federal Reserve Bank stock and other | (13,125 | ) | 1,066 | ||||
Purchases of premises and equipment | (1,278 | ) | (2,278 | ) | |||
Proceeds from sale of assets | 5,399 | 13,470 | |||||
Net cash (used in) investing activities | (600,445 | ) | (554,182 | ) |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Dollars in thousands) | |||||||
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Cash flows from financing activities | |||||||
Net change in deposits | 197,030 | 395,971 | |||||
Proceeds from FHLB advances | 325,000 | 650,000 | |||||
Repayments on FHLB advances | (7,000 | ) | (756,567 | ) | |||
Proceeds from borrowings | — | 24,894 | |||||
Repayments of borrowings | (13,258 | ) | (15,220 | ) | |||
Payment of dividends | (14,382 | ) | (13,341 | ) | |||
Activity in employee stock plans | 2,137 | 428 | |||||
Net cash provided by financing activities | 489,527 | 286,165 | |||||
Net change in cash and cash equivalents | 29,028 | (193,015 | ) | ||||
Beginning cash and cash equivalents | 289,212 | 615,639 | |||||
Ending cash and cash equivalents | $ | 318,240 | $ | 422,624 | |||
Supplemental noncash disclosures: | |||||||
Transfers from loans to other real estate owned | $ | 4,046 | $ | 10,590 | |||
See accompanying notes to consolidated financial statements. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Basic earnings per share: | |||||||||||||||
Numerator: | |||||||||||||||
Net income | $ | 27,935 | $ | 23,217 | $ | 46,125 | $ | 45,299 | |||||||
Distributed and undistributed earnings to participating securities | (98 | ) | (103 | ) | (181 | ) | (232 | ) | |||||||
Income available to common shareholders | $ | 27,837 | $ | 23,114 | $ | 45,944 | $ | 45,067 | |||||||
Denominator: | |||||||||||||||
Weighted average common shares outstanding | 47,986,979 | 47,658,896 | 47,942,269 | 47,652,361 | |||||||||||
Less: Average unallocated ESOP shares | (1,227,250 | ) | (1,317,433 | ) | (1,233,831 | ) | (1,335,294 | ) | |||||||
Average unvested restricted stock awards | (163,262 | ) | (205,464 | ) | (182,981 | ) | (236,942 | ) | |||||||
Average shares for basic earnings per share | 46,596,467 | 46,135,999 | 46,525,457 | 46,080,125 | |||||||||||
Basic earnings per common share | $ | 0.60 | $ | 0.50 | $ | 0.99 | $ | 0.98 | |||||||
Diluted earnings per share: | |||||||||||||||
Numerator: | |||||||||||||||
Income available to common shareholders | $ | 27,837 | $ | 23,114 | $ | 45,944 | $ | 45,067 | |||||||
Denominator: | |||||||||||||||
Average shares for basic earnings per share | 46,596,467 | 46,135,999 | 46,525,457 | 46,080,125 | |||||||||||
Dilutive effect of share-based compensation plan | 409,087 | 216,142 | 459,578 | 163,745 | |||||||||||
Average shares for diluted earnings per share | 47,005,554 | 46,352,141 | 46,985,035 | 46,243,870 | |||||||||||
Diluted earnings per common share | $ | 0.59 | $ | 0.50 | $ | 0.98 | $ | 0.97 | |||||||
Share awards excluded in the computation of diluted earnings per share because the exercise price was greater than the common stock average market price and were therefore antidilutive | 511,375 | 830,600 | 523,758 | 946,166 |
June 30, 2017 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Agency residential mortgage-backed securities 1 | $ | 209,224 | $ | 531 | $ | 1,379 | $ | 208,376 | |||||||
Agency commercial mortgage-backed securities 1 | 9,391 | — | 22 | 9,369 | |||||||||||
Agency residential collateralized mortgage obligations 1 | 141,650 | 158 | 1,195 | 140,613 | |||||||||||
US government and agency securities | 1,867 | 110 | — | 1,977 | |||||||||||
Municipal bonds | 37,557 | 341 | 276 | 37,622 | |||||||||||
Total securities | $ | 399,689 | $ | 1,140 | $ | 2,872 | $ | 397,957 | |||||||
December 31, 2016 | |||||||||||||||
Agency residential mortgage-backed securities 1 | $ | 220,744 | $ | 635 | $ | 2,828 | $ | 218,551 | |||||||
Agency commercial mortgage-backed securities 1 | 9,422 | — | 75 | 9,347 | |||||||||||
Agency residential collateralized mortgage obligations 1 | 87,959 | 22 | 1,452 | 86,529 | |||||||||||
US government and agency securities | 2,150 | 101 | — | 2,251 | |||||||||||
Municipal bonds | 38,417 | 47 | 627 | 37,837 | |||||||||||
Total securities | $ | 358,692 | $ | 805 | $ | 4,982 | $ | 354,515 |
1 | Mortgage-backed securities and collateralized mortgage obligations are issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises. |
June 30, 2017 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Agency residential mortgage-backed securities 1 | $ | 66,033 | $ | 962 | $ | 435 | $ | 66,560 | |||||||
Agency commercial mortgage-backed securities 1 | 27,731 | 939 | 49 | 28,621 | |||||||||||
Agency residential collateralized mortgage obligations 1 | 33,688 | 533 | 41 | 34,180 | |||||||||||
Municipal bonds | 64,126 | 1,626 | 251 | 65,501 | |||||||||||
Total securities | $ | 191,578 | $ | 4,060 | $ | 776 | $ | 194,862 | |||||||
December 31, 2016 | |||||||||||||||
Agency residential mortgage-backed securities 1 | $ | 74,881 | $ | 1,147 | $ | 817 | $ | 75,211 | |||||||
Agency commercial mortgage-backed securities 1 | 28,023 | 836 | 166 | 28,693 | |||||||||||
Agency residential collateralized mortgage obligations 1 | 40,707 | 697 | 33 | 41,371 | |||||||||||
Municipal bonds | 66,776 | 1,635 | 705 | 67,706 | |||||||||||
Total securities | $ | 210,387 | $ | 4,315 | $ | 1,721 | $ | 212,981 |
1 | Mortgage-backed securities and collateralized mortgage obligations are issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises. |
HTM | AFS | ||||||||||
Amortized Cost | Fair Value | Fair Value | |||||||||
Due in one year or less | $ | 1,791 | $ | 1,806 | $ | 2,807 | |||||
Due after one to five years | 8,760 | 9,068 | 12,885 | ||||||||
Due after five to ten years | 46,423 | 47,565 | 16,688 | ||||||||
Due after ten years | 7,152 | 7,062 | 7,219 | ||||||||
Agency residential mortgage-backed securities | 66,033 | 66,560 | 208,376 | ||||||||
Agency commercial mortgage-backed securities | 27,731 | 28,621 | 9,369 | ||||||||
Agency residential collateralized mortgage obligations | 33,688 | 34,180 | 140,613 | ||||||||
Total | $ | 191,578 | $ | 194,862 | $ | 397,957 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Proceeds | $ | — | $ | 7,700 | $ | — | $ | 7,700 | |||||||
Gross gains | — | 72 | — | 72 | |||||||||||
Gross losses | — | 7 | — | 7 | |||||||||||
Tax expense of securities gains/losses | — | 23 | — | 23 |
AFS | Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||
June 30, 2017 | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||
Agency residential mortgage-backed securities 1 | $ | 151,493 | $ | 1,299 | $ | 6,457 | $ | 80 | $ | 157,950 | $ | 1,379 | |||||||||||
Agency commercial mortgage-backed securities 1 | 9,370 | 22 | — | — | 9,370 | 22 | |||||||||||||||||
Agency residential collateralized mortgage obligations 1 | 105,592 | 1,154 | 2,477 | 41 | 108,069 | 1,195 | |||||||||||||||||
Municipal bonds | 7,578 | 96 | 4,243 | 180 | 11,821 | 276 | |||||||||||||||||
Total temporarily impaired | $ | 274,033 | $ | 2,571 | $ | 13,177 | $ | 301 | $ | 287,210 | $ | 2,872 | |||||||||||
December 31, 2016 | |||||||||||||||||||||||
Agency residential mortgage-backed securities 1 | $ | 167,503 | $ | 2,770 | $ | 7,516 | $ | 58 | $ | 175,019 | $ | 2,828 | |||||||||||
Agency commercial mortgage-backed securities 1 | 9,347 | 75 | — | — | 9,347 | 75 | |||||||||||||||||
Agency residential collateralized mortgage obligations 1 | 72,822 | 1,420 | 2,649 | 32 | 75,471 | 1,452 | |||||||||||||||||
Municipal bonds | 26,911 | 512 | 3,412 | 115 | 30,323 | 627 | |||||||||||||||||
Total temporarily impaired | $ | 276,583 | $ | 4,777 | $ | 13,577 | $ | 205 | $ | 290,160 | $ | 4,982 |
HTM | Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||
June 30, 2017 | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||
Agency residential mortgage-backed securities 1 | $ | 34,676 | $ | 435 | $ | — | $ | — | $ | 34,676 | $ | 435 | |||||||||||
Agency commercial mortgage-backed securities 1 | 3,552 | 49 | — | — | 3,552 | 49 | |||||||||||||||||
Agency residential collateralized mortgage obligations 1 | 2,661 | 16 | 1,279 | 25 | 3,940 | 41 | |||||||||||||||||
Municipal bonds | 13,549 | 208 | 1,322 | 43 | 14,871 | 251 | |||||||||||||||||
Total temporarily impaired | $ | 54,438 | $ | 708 | $ | 2,601 | $ | 68 | $ | 57,039 | $ | 776 | |||||||||||
December 31, 2016 | |||||||||||||||||||||||
Agency residential mortgage-backed securities 1 | $ | 41,375 | $ | 817 | $ | — | $ | — | $ | 41,375 | $ | 817 | |||||||||||
Agency commercial mortgage-backed securities 1 | 7,273 | 166 | — | — | 7,273 | 166 | |||||||||||||||||
Agency residential collateralized mortgage obligations 1 | 6,322 | 11 | 1,451 | 22 | 7,773 | 33 | |||||||||||||||||
Municipal bonds | 19,362 | 658 | 1,045 | 47 | 20,407 | 705 | |||||||||||||||||
Total temporarily impaired | $ | 74,332 | $ | 1,652 | $ | 2,496 | $ | 69 | $ | 76,828 | $ | 1,721 |
1 | Mortgage-backed securities and collateralized mortgage obligations are issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises. |
June 30, 2017 | December 31, 2016 | ||||||
Loans held for sale, at fair value | $ | 19,374 | $ | 21,279 | |||
Loans held for investment: | |||||||
Commercial real estate | $ | 2,817,443 | $ | 2,670,455 | |||
Commercial and industrial | 2,119,678 | 1,971,160 | |||||
Construction and land | 270,050 | 294,894 | |||||
Consumer real estate | 1,154,353 | 1,074,923 | |||||
Other consumer | 47,735 | 53,991 | |||||
Gross loans held for investment, excluding Warehouse Purchase Program | 6,409,259 | 6,065,423 | |||||
Net of: | |||||||
Deferred costs (fees) and discounts, net | 4,449 | (2,251 | ) | ||||
Allowance for loan losses | (75,091 | ) | (64,576 | ) | |||
Net loans held for investment, excluding Warehouse Purchase Program | 6,338,617 | 5,998,596 | |||||
Warehouse Purchase Program | 1,256,742 | 1,055,341 | |||||
Total loans held for investment | $ | 7,595,359 | $ | 7,053,937 |
For the three months ended June 30, 2017 | Commercial Real Estate | Commercial and Industrial | Construction and Land | Consumer Real Estate | Other Consumer | Total | |||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||
Beginning balance | $ | 19,358 | $ | 40,886 | $ | 4,559 | $ | 4,385 | $ | 1,468 | $ | 70,656 | |||||||||||
Charge-offs | — | (1,556 | ) | — | (17 | ) | (587 | ) | (2,160 | ) | |||||||||||||
Recoveries | — | 206 | 75 | 12 | 102 | 395 | |||||||||||||||||
Provision expense (benefit) | 764 | 5,625 | (578 | ) | 133 | 256 | 6,200 | ||||||||||||||||
Ending balance | $ | 20,122 | $ | 45,161 | $ | 4,056 | $ | 4,513 | $ | 1,239 | $ | 75,091 | |||||||||||
For the six months ended June 30, 2017 | |||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||
Beginning balance | $ | 18,303 | $ | 35,464 | $ | 5,075 | $ | 4,484 | $ | 1,250 | $ | 64,576 | |||||||||||
Charge-offs | (16 | ) | (18,086 | ) | (418 | ) | (52 | ) | (834 | ) | (19,406 | ) | |||||||||||
Recoveries | 205 | 246 | 75 | 24 | 471 | 1,021 | |||||||||||||||||
Provision expense (benefit) | 1,630 | 27,537 | (676 | ) | 57 | 352 | 28,900 | ||||||||||||||||
Ending balance | $ | 20,122 | $ | 45,161 | $ | 4,056 | $ | 4,513 | $ | 1,239 | $ | 75,091 | |||||||||||
Allowance ending balance: | |||||||||||||||||||||||
Individually evaluated for impairment | $ | 51 | $ | 14,428 | $ | — | $ | 132 | $ | 44 | $ | 14,655 | |||||||||||
Collectively evaluated for impairment | 20,071 | 30,733 | 4,056 | 4,381 | 1,195 | 60,436 | |||||||||||||||||
Loans: | |||||||||||||||||||||||
Individually evaluated for impairment | 4,201 | 87,599 | — | 2,556 | 55 | 94,411 | |||||||||||||||||
Collectively evaluated for impairment | 2,807,729 | 2,031,883 | 270,050 | 1,150,911 | 47,467 | 6,308,040 | |||||||||||||||||
PCI loans | 5,513 | 196 | — | 886 | 213 | 6,808 | |||||||||||||||||
Ending balance | $ | 2,817,443 | $ | 2,119,678 | $ | 270,050 | $ | 1,154,353 | $ | 47,735 | $ | 6,409,259 |
For the three months ended June 30, 2016 | Commercial Real Estate | Commercial and Industrial | Construction and Land | Consumer Real Estate | Other Consumer | Total | |||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||
Beginning balance | $ | 15,274 | $ | 31,431 | $ | 3,430 | $ | 4,252 | $ | 1,097 | $ | 55,484 | |||||||||||
Charge-offs | — | (82 | ) | — | (70 | ) | (193 | ) | (345 | ) | |||||||||||||
Recoveries | 3 | 178 | — | 9 | 65 | 255 | |||||||||||||||||
Provision expense | 889 | 4,852 | 520 | 398 | 141 | 6,800 | |||||||||||||||||
Ending balance | $ | 16,166 | $ | 36,379 | $ | 3,950 | $ | 4,589 | $ | 1,110 | $ | 62,194 | |||||||||||
For the six months ended June 30, 2016 | |||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||
Beginning balance | $ | 14,123 | $ | 24,975 | $ | 3,013 | $ | 3,992 | $ | 990 | $ | 47,093 | |||||||||||
Charge-offs | — | (465 | ) | — | (70 | ) | (391 | ) | (926 | ) | |||||||||||||
Recoveries | 9 | 214 | — | 52 | 152 | 427 | |||||||||||||||||
Provision expense | 2,034 | 11,655 | 937 | 615 | 359 | 15,600 | |||||||||||||||||
Ending balance | $ | 16,166 | $ | 36,379 | $ | 3,950 | $ | 4,589 | $ | 1,110 | $ | 62,194 | |||||||||||
Allowance ending balance: | |||||||||||||||||||||||
Individually evaluated for impairment | $ | 355 | $ | 8,250 | $ | — | $ | 109 | $ | 55 | $ | 8,769 | |||||||||||
Collectively evaluated for impairment | 15,811 | 28,129 | 3,950 | 4,480 | 1,055 | 53,425 | |||||||||||||||||
Loans: | |||||||||||||||||||||||
Individually evaluated for impairment | 1,341 | 31,370 | 27 | 4,924 | 90 | 37,752 | |||||||||||||||||
Collectively evaluated for impairment | 2,512,377 | 1,750,814 | 281,909 | 1,041,004 | 61,060 | 5,647,164 | |||||||||||||||||
PCI loans | 6,713 | 279 | — | 866 | 273 | 8,131 | |||||||||||||||||
Ending balance | $ | 2,520,431 | $ | 1,782,463 | $ | 281,936 | $ | 1,046,794 | $ | 61,423 | $ | 5,693,047 |
Three Months ended June 30, 2017 | Six Months ended June 30, 2017 | ||||||
Balance at beginning of period | $ | 1,174 | $ | 1,573 | |||
Charge-offs on lending-related commitments | — | — | |||||
Provision for credit losses on lending-related commitments | 55 | (344 | ) | ||||
Balance at end of period | $ | 1,229 | $ | 1,229 |
June 30, 2017 | Unpaid Contractual Principal Balance | Recorded Investment With No Allowance | Recorded Investment With Allowance | Total Recorded Investment | Related Allowance | |||||||||||||||
Commercial real estate | $ | 4,386 | $ | 4,201 | $ | — | $ | 4,201 | $ | — | ||||||||||
Commercial and industrial | 90,194 | 47,938 | 39,661 | 87,599 | 14,390 | |||||||||||||||
Consumer real estate | 3,054 | 2,458 | 98 | 2,556 | 11 | |||||||||||||||
Other consumer | 89 | 24 | 31 | 55 | 22 | |||||||||||||||
Total | $ | 97,723 | $ | 54,621 | $ | 39,790 | $ | 94,411 | $ | 14,423 | ||||||||||
December 31, 2016 | ||||||||||||||||||||
Commercial real estate | $ | 5,388 | $ | 4,429 | $ | 766 | $ | 5,195 | $ | 272 | ||||||||||
Commercial and industrial | 87,756 | 73,377 | 13,287 | 86,664 | 4,519 | |||||||||||||||
Construction and land | 11,384 | 11,385 | — | 11,385 | — | |||||||||||||||
Consumer real estate | 3,766 | 3,290 | 10 | 3,300 | 10 | |||||||||||||||
Other consumer | 107 | 33 | 42 | 75 | 30 | |||||||||||||||
Total | $ | 108,401 | $ | 92,514 | $ | 14,105 | $ | 106,619 | $ | 4,831 |
1 | No Warehouse Purchase Program loans were impaired at June 30, 2017 or December 31, 2016. Loans reported do not include PCI loans. |
June 30, 2017 | Current Quarter Average Recorded Investment | Year-to-Date Average Recorded Investment | Current Quarter Interest Income Recognized | Year-to-Date Interest Income Recognized | ||||||||||||
Commercial real estate | $ | 4,269 | $ | 4,658 | $ | 2 | $ | 4 | ||||||||
Commercial and industrial | 91,039 | 88,852 | — | — | ||||||||||||
Construction and land | 77 | 4,222 | — | — | ||||||||||||
Consumer real estate | 2,708 | 2,888 | 3 | 6 | ||||||||||||
Other consumer | 741 | 454 | 1 | 2 | ||||||||||||
Total | $ | 98,834 | $ | 101,074 | $ | 6 | $ | 12 | ||||||||
June 30, 2016 | ||||||||||||||||
Commercial real estate | $ | 1,376 | $ | 5,836 | $ | 2 | $ | 4 | ||||||||
Commercial and industrial | 30,351 | 25,076 | — | 1 | ||||||||||||
Construction and land | 29 | 31 | — | — | ||||||||||||
Consumer real estate | 6,040 | 5,834 | 4 | 8 | ||||||||||||
Other consumer | 98 | 105 | 1 | 2 | ||||||||||||
Total | $ | 37,894 | $ | 36,882 | $ | 7 | $ | 15 |
1 | Loans reported do not include PCI loans. |
June 30, 2017 | December 31, 2016 | ||||||
Commercial real estate | $ | 4,201 | $ | 5,195 | |||
Commercial and industrial | 87,599 | 86,664 | |||||
Construction and land | — | 11,385 | |||||
Consumer real estate | 7,265 | 7,987 | |||||
Other consumer | 131 | 158 | |||||
Total | $ | 99,196 | $ | 111,389 |
June 30, 2017 | December 31, 2016 | ||||||
Nonaccrual TDRs(1) | $ | 24,417 | $ | 11,701 | |||
Performing TDRs (2) | 438 | 454 | |||||
Total | $ | 24,855 | $ | 12,155 | |||
Specific reserves on TDRs | $ | 9,244 | $ | 1,686 | |||
Outstanding commitments to lend additional funds to borrowers with TDR loans | — | — |
1 | Nonaccrual TDR loans are included in the nonaccrual loan totals. |
2 | Performing TDR loans are loans that have been performing under the restructured terms for at least six months and the Company is accruing interest on these loans. |
Three Months ended June 30, 2017 | Six Months ended June 30, 2017 | ||||||||||||||||||||||||||||||
Principal Deferrals (1) | Combination of Rate Reduction and Principal Deferral | Other | Total | Principal Deferrals (1) | Combination of Rate Reduction and Principal Deferral | Other | Total | ||||||||||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 14,447 | (2) | $ | 14,447 | ||||||||||||||
Three Months ended June 30, 2016 | Six Months ended June 30, 2016 | ||||||||||||||||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | — | $ | 6 | $ | — | $ | 7,138 | (2) | $ | 7,144 | ||||||||||||||
Consumer real estate | — | — | — | — | 67 | 81 | — | 148 | |||||||||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | — | $ | 73 | $ | 81 | $ | 7,138 | $ | 7,292 |
1 | Principal deferrals include Chapter 7 bankruptcy loans for which the court has discharged the borrower's obligation and the borrower has not reaffirmed the debt. Such loans are placed on non-accrual status. |
2 | Reserve-based energy relationships where the primary modifications consisted of suspension of required borrowing base payments. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Consumer real estate | $ | — | $ | — | $ | — | $ | 35 |
June 30, 2017 | December 31, 2016 | ||||||
Carrying amount 1 | $ | 6,576 | $ | 6,793 | |||
Outstanding balance | 7,348 | 7,597 |
1 | The carrying amounts are reported net of allowance for loan losses of $232 and $180 as of June 30, 2017 and December 31, 2016. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Beginning balance | $ | 2,527 | $ | 3,056 | $ | 2,515 | $ | 3,356 | |||||||
Reclassifications (to) from nonaccretable | 142 | (493 | ) | 340 | (256 | ) | |||||||||
Disposals | (9 | ) | (14 | ) | (9 | ) | (282 | ) | |||||||
Accretion | (180 | ) | (273 | ) | (366 | ) | (542 | ) | |||||||
Balance at end of period | $ | 2,480 | $ | 2,276 | $ | 2,480 | $ | 2,276 |
June 30, 2017 | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days and Greater Past Due | Total Loans Past Due | Current Loans 1 | Total Loans | |||||||||||||||||
Commercial real estate | $ | 6,749 | $ | — | $ | 53 | $ | 6,802 | $ | 2,810,641 | $ | 2,817,443 | |||||||||||
Commercial and industrial | 3,606 | 136 | 8,122 | 11,864 | 2,107,814 | 2,119,678 | |||||||||||||||||
Construction and land | — | — | — | — | 270,050 | 270,050 | |||||||||||||||||
Consumer real estate | 300 | 2,064 | 969 | 3,333 | 1,151,020 | 1,154,353 | |||||||||||||||||
Other consumer | 302 | 38 | — | 340 | 47,395 | 47,735 | |||||||||||||||||
Total | $ | 10,957 | $ | 2,238 | $ | 9,144 | $ | 22,339 | $ | 6,386,920 | $ | 6,409,259 | |||||||||||
December 31, 2016 | |||||||||||||||||||||||
Commercial real estate | $ | 1,829 | $ | 72 | $ | 766 | $ | 2,667 | $ | 2,667,788 | $ | 2,670,455 | |||||||||||
Commercial and industrial | 20,910 | 495 | 46 | 21,451 | 1,949,709 | 1,971,160 | |||||||||||||||||
Construction and land | 19,517 | 283 | — | 19,800 | 275,094 | 294,894 | |||||||||||||||||
Consumer real estate | 10,487 | 1,916 | 1,199 | 13,602 | 1,061,321 | 1,074,923 | |||||||||||||||||
Other consumer | 1,523 | 31 | 6 | 1,560 | 52,431 | 53,991 | |||||||||||||||||
Total | $ | 54,266 | $ | 2,797 | $ | 2,017 | $ | 59,080 | $ | 6,006,343 | $ | 6,065,423 |
1 | Includes acquired PCI loans with a total carrying value of $6,808 and $6,729 at June 30, 2017 and December 31, 2016, respectively. |
June 30, 2017 | Commercial Real Estate | Commercial and Industrial | Construction and Land | Consumer Real Estate | ||||||||||||
Grade: 1 | ||||||||||||||||
Pass | $ | 2,777,822 | $ | 1,945,230 | $ | 269,968 | $ | 1,143,401 | ||||||||
Special Mention | 28,598 | 78,379 | — | 1,491 | ||||||||||||
Substandard | 11,023 | 96,053 | 82 | 7,794 | ||||||||||||
Doubtful | — | 16 | — | 1,667 | ||||||||||||
Total | $ | 2,817,443 | $ | 2,119,678 | $ | 270,050 | $ | 1,154,353 | ||||||||
December 31, 2016 | ||||||||||||||||
Grade: 1 | ||||||||||||||||
Pass | $ | 2,648,842 | $ | 1,712,171 | $ | 283,423 | $ | 1,062,549 | ||||||||
Special Mention | 7,972 | 155,110 | — | 2,083 | ||||||||||||
Substandard | 12,875 | 103,815 | 11,471 | 8,252 | ||||||||||||
Doubtful | 766 | 64 | — | 2,039 | ||||||||||||
Total | $ | 2,670,455 | $ | 1,971,160 | $ | 294,894 | $ | 1,074,923 |
1 | PCI loans are included in the substandard or doubtful categories. These categories are consistent with the "substandard" and "doubtful" categories as defined by regulatory authorities. |
June 30, 2017 | December 31, 2016 | ||||||
Performing | $ | 47,604 | $ | 53,833 | |||
Non-performing | 131 | 158 | |||||
Total | $ | 47,735 | $ | 53,991 |
Fair Value Measurements Using Level 2 | ||||||||
June 30, 2017 | December 31, 2016 | |||||||
Assets: | ||||||||
Agency residential mortgage-backed securities | $ | 208,376 | $ | 218,551 | ||||
Agency commercial mortgage-backed securities | 9,369 | 9,347 | ||||||
Agency residential collateralized mortgage obligations | 140,613 | 86,529 | ||||||
US government and agency securities | 1,977 | 2,251 | ||||||
Municipal bonds | 37,622 | 37,837 | ||||||
Total securities available for sale | $ | 397,957 | $ | 354,515 | ||||
Loans held for sale | $ | 19,374 | 1 | $ | 21,279 | |||
Derivative financial instruments: | ||||||||
Interest rate lock commitments | 582 | 379 | ||||||
Forward mortgage-backed securities trades | 132 | 36 | ||||||
Loan customer counterparty | — | — | ||||||
Financial institution counterparty | 1,255 | 1,369 | ||||||
Liabilities: | ||||||||
Derivative financial instruments: | ||||||||
Interest rate lock commitments | 3 | — | ||||||
Forward mortgage-backed securities trades | 7 | 80 | ||||||
Loan customer counterparty | 1,255 | 1,369 | ||||||
Financial institution counterparty | — | — |
1 | At June 30, 2017, loans held for sale had an aggregate outstanding principal balance of $18,765. There were no mortgage loans held for sale that were 90 days or greater past due or on non-accrual at June 30, 2017. |
Fair Value Measurements Using Level 3 | ||||||||
June 30, 2017 | December 31, 2016 | |||||||
Assets: | ||||||||
Impaired loans | $ | 25,367 | $ | 9,274 | ||||
Foreclosed assets: | ||||||||
Commercial real estate | 10,545 | 10,638 | ||||||
Construction and land | 1,532 | 194 | ||||||
Foreclosed assets- other | 1,206 | 6 |
Fair Value Measurement Using | ||||||||||||||||
June 30, 2017 | Carrying Amount | Level 1 | Level 2 | Level 3 | ||||||||||||
Financial assets | ||||||||||||||||
Cash and cash equivalents | $ | 318,240 | $ | 318,240 | $ | — | $ | — | ||||||||
Securities held to maturity | 191,578 | — | 194,862 | — | ||||||||||||
Loans held for investment, net | 6,338,617 | — | — | 6,427,610 | ||||||||||||
Loans held for investment - Warehouse Purchase Program | 1,256,742 | — | — | 1,275,949 | ||||||||||||
FHLB and other restricted securities, at cost | 56,618 | — | 56,618 | — | ||||||||||||
Accrued interest receivable | 20,160 | 20,160 | — | — | ||||||||||||
Financial liabilities | ||||||||||||||||
Deposits | $ | 6,562,506 | $ | — | $ | — | $ | 6,204,060 | ||||||||
FHLB advances | 1,151,682 | — | — | 1,151,757 | ||||||||||||
Repurchase agreements | 73,433 | — | — | 71,438 | ||||||||||||
Subordinated debt | 134,277 | — | — | 124,784 | ||||||||||||
Accrued interest payable | 2,664 | 2,664 | — | — | ||||||||||||
December 31, 2016 | ||||||||||||||||
Financial assets | ||||||||||||||||
Cash and cash equivalents | $ | 289,212 | $ | 289,212 | $ | — | $ | — | ||||||||
Securities held to maturity | 210,387 | — | 212,981 | — | ||||||||||||
Loans held for investment, net | 5,998,596 | — | — | 6,080,165 | ||||||||||||
Loans held for investment - Warehouse Purchase Program | 1,055,341 | — | — | 1,055,219 | ||||||||||||
FHLB and other restricted securities, at cost | 43,266 | — | 43,266 | — | ||||||||||||
Accrued interest receivable | 20,347 | 20,347 | — | — | ||||||||||||
Financial liabilities | ||||||||||||||||
Deposits | $ | 6,365,476 | $ | — | $ | — | $ | 5,989,933 | ||||||||
FHLB advances | 833,682 | — | — | 830,930 | ||||||||||||
Repurchase agreement | 86,691 | — | — | 84,265 | ||||||||||||
Subordinated debt | 134,032 | — | — | 121,743 | ||||||||||||
Accrued interest payable | 2,111 | 2,111 | — | — |
June 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
Outstanding Notional Balance | Asset Derivative Fair Value | Liability Derivative Fair Value | Outstanding Notional Balance | Asset Derivative Fair Value | Liability Derivative Fair Value | |||||||||||||||||||
IRLCs | $ | 18,228 | $ | 582 | $ | 3 | $ | 10,952 | $ | 379 | $ | — | ||||||||||||
Forward mortgage-backed securities trades | 30,493 | 132 | 7 | 18,613 | 36 | 80 | ||||||||||||||||||
Commercial loan interest rate swaps and caps: | ||||||||||||||||||||||||
Loan customer counterparty | $ | 115,953 | $ | — | $ | 1,255 | $ | 112,294 | $ | — | $ | 1,369 | ||||||||||||
Financial institution counterparty | 115,953 | 1,255 | — | 112,294 | 1,369 | — |
Weighted-Average Interest Rate | ||||||||||||
June 30, 2017 | December 31, 2016 | |||||||||||
Received | Paid | Received | Paid | |||||||||
Loan customer counterparty | 2.53 | % | 2.29 | % | 3.12 | % | 2.36 | % |
Derivatives not designated as hedging instruments | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
IRLC's | $ | 29 | $ | 86 | $ | 201 | $ | 296 | |||||||
Forward mortgage-backed securities trades | (147 | ) | (301 | ) | (259 | ) | (646 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Restricted stock | $ | 857 | $ | 733 | $ | 1,725 | $ | 1,181 | |||||||
Stock options | 986 | 493 | 1,680 | 1,042 | |||||||||||
Income tax benefit | 645 | 429 | 1,192 | 778 |
Time-Vested Shares | Performance-Based Shares | ||||||||||||
Six Months ended June 30, 2016 | Shares | Weighted-Average Grant Date Fair Value per Share 1 | Shares | Weighted-Average Grant Date Fair Value per Share 2 | |||||||||
Non-vested at December 31, 2015 | 246,461 | $ | 20.98 | 61,800 | $ | 25.02 | |||||||
Vested | (96,665 | ) | 20.86 | (20,600 | ) | 25.02 | |||||||
Non-vested at June 30, 2016 | 149,796 | $ | 20.81 | 41,200 | $ | 26.33 | |||||||
Six Months ended June 30, 2017 | |||||||||||||
Non-vested at December 31, 2016 | 200,176 | $ | 23.79 | 81,400 | $ | 43.06 | |||||||
Granted | 19,208 | 38.92 | 12,208 | 39.90 | |||||||||
Vested | (85,996 | ) | 21.91 | (20,600 | ) | 41.32 | |||||||
Non-vested at June 30, 2017 | 133,388 | $ | 26.91 | 73,008 | $ | 38.13 |
1 | For restricted stock awards with time-based vesting conditions, the grant date fair value is based upon the closing stock price as quoted on the NASDAQ Stock Market on the grant date. |
2 | For restricted stock awards with performance-based vesting conditions, the value of the award is based upon the closing stock price as quoted on the NASDAQ Stock Market on the date of vesting. Until the final value is determined on the vesting date, the Company estimates the fair value based upon the closing stock price as quoted on the NASDAQ Stock Market near the last business day of each month. |
2017 | 2016 | ||||
Expected stock price volatility | 31.86 | % | 31.70 | % | |
Expected dividends | 1.61 | % | 2.60 | % | |
Expected term of stock options (years) | 6.2 | 6.3 | |||
Risk-free interest rate | 2.18 | % | 1.60 | % |
Six Months ended June 30, 2016 | Shares | Weighted- Average Exercise Price per Share | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||
Outstanding at December 31, 2015 | 1,865,750 | $ | 22.21 | 8.8 | $ | 6,401 | ||||||
Granted | 19,000 | 21.73 | ||||||||||
Exercised | (24,614 | ) | 19.97 | |||||||||
Forfeited | (59,666 | ) | 24.91 | |||||||||
Outstanding at June 30, 2016 | 1,800,470 | 22.14 | 8.8 | 8,641 | ||||||||
Six Months ended June 30, 2017 | ||||||||||||
Outstanding at December 31, 2016 | 2,008,080 | $ | 23.71 | 9.5 | $ | 38,850 | ||||||
Granted | 502,875 | 37.11 | ||||||||||
Exercised | (113,973 | ) | 18.75 | |||||||||
Forfeited | (46,825 | ) | 27.68 | |||||||||
Outstanding at June 30, 2017 | 2,350,157 | 26.74 | 10.7 | 26,853 | ||||||||
Fully vested and expected to vest | 2,322,982 | 26.64 | 10.6 | 26,782 | ||||||||
Exercisable at June 30, 2017 | 898,001 | $ | 21.10 | 7.4 | $ | 15,297 |
June 30, 2017 | December 31, 2016 | ||||||
Net deferred tax assets | $ | 31,170 | $ | 29,231 | |||
Estimated annual effective tax rate | 34 | % |
June 30, 2017 | December 31, 2016 | ||||||
Unused commitments to extend credit | $ | 1,849,912 | $ | 1,642,528 | |||
Unused capacity on Warehouse Purchase Program loans | 625,257 | 892,659 | |||||
Standby letters of credit | 27,060 | 29,198 | |||||
Total unused commitments/capacity | $ | 2,502,229 | $ | 2,564,385 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
• | Net income, which totaled $27.9 million for the second quarter of 2017, increased by $4.7 million compared to the second quarter of 2016, which included a $6.4 million increase in net interest income, a $545,000 decrease in the provision for credit losses, a $24,000 decrease in non-interest expense and a $1.4 million decrease in non-interest income compared to the same period in 2016. |
• | Assets totaled $8.97 billion at June 30, 2017, which generated basic earnings per share for the second quarter of 2017 of $0.60. |
• | Gross loans held for investment at June 30, 2017, excluding Warehouse Purchase Program loans, grew $343.8 million from December 31, 2016, while total deposits grew $197.0 million for the same period. |
• | Warehouse Purchase Program loans totaled $1.26 billion at June 30, 2017, an increase of $201.4 million from December 31, 2016. |
June 30, 2017 | December 31, 2016 | Dollar Change | Percent Change | |||||||||||
(Dollars in thousands) | ||||||||||||||
Commercial real estate | $ | 2,817,443 | $ | 2,670,455 | $ | 146,988 | 5.5 | % | ||||||
Commercial and industrial | 2,119,678 | 1,971,160 | 148,518 | 7.5 | ||||||||||
Construction and land | 270,050 | 294,894 | (24,844 | ) | (8.4 | ) | ||||||||
Consumer real estate | 1,154,353 | 1,074,923 | 79,430 | 7.4 | ||||||||||
Other consumer | 47,735 | 53,991 | (6,256 | ) | (11.6 | ) | ||||||||
Gross loans held for investment, excluding Warehouse Purchase Program loans | 6,409,259 | 6,065,423 | 343,836 | 5.7 | ||||||||||
Warehouse Purchase Program loans | 1,256,742 | 1,055,341 | 201,401 | 19.1 | ||||||||||
Gross loans held for investment | 7,666,001 | 7,120,764 | 545,237 | 7.7 | ||||||||||
Loans held for sale | 19,374 | 21,279 | (1,905 | ) | (9.0 | ) | ||||||||
Gross loans | $ | 7,685,375 | $ | 7,142,043 | $ | 543,332 | 7.6 | % |
June 30, 2017 | December 31, 2016 | ||||||
(Dollars in thousands) | |||||||
Doubtful | $ | 1,683 | $ | 2,880 | |||
Substandard | 115,310 | 136,815 | |||||
Total classified loans | 116,993 | 139,695 | |||||
Foreclosed assets | 13,283 | 10,838 | |||||
Total classified assets | $ | 130,276 | $ | 150,533 |
June 30, 2017 | December 31, 2016 | Dollar Change | Percent Change | |||||||||||
(Dollars in thousands) | ||||||||||||||
Non-interest-bearing demand | $ | 1,522,856 | $ | 1,383,951 | $ | 138,905 | 10.0 | % | ||||||
Interest-bearing demand | 893,544 | 903,314 | (9,770 | ) | (1.1 | ) | ||||||||
Savings and money market | 2,685,627 | 2,710,307 | (24,680 | ) | (0.9 | ) | ||||||||
Time | 1,460,479 | 1,367,904 | 92,575 | 6.8 | ||||||||||
Total deposits | $ | 6,562,506 | $ | 6,365,476 | $ | 197,030 | 3.1 | % |
Balance | Weighted Average Rate | |||||
(Dollars in thousands) | ||||||
Less than 90 days | $ | 303,547 | 1.23 | % | ||
90 days to less than one year | 837,205 | 1.08 | ||||
One to three years | 8,318 | 4.87 | ||||
After three to five years | 1,910 | 5.51 | ||||
After five years | 713 | 5.45 | ||||
1,151,693 | 1.16 | % | ||||
Restructuring prepayment penalty | (11 | ) | ||||
Total | $ | 1,151,682 |
June 30, 2017 | December 31, 2016 | Dollar Change | Percent Change | |||||||||||
(Dollars in thousands) | ||||||||||||||
Common stock | $ | 480 | $ | 479 | $ | 1 | 0.2 | % | ||||||
Additional paid-in capital | 595,730 | 589,408 | 6,322 | 1.1 | ||||||||||
Retained earnings | 342,384 | 310,641 | 31,743 | 10.2 | ||||||||||
Accumulated other comprehensive income (loss), net | (1,125 | ) | (2,713 | ) | 1,588 | (58.5 | ) | |||||||
Unearned ESOP shares | (12,186 | ) | (12,450 | ) | 264 | (2.1 | ) | |||||||
Total shareholders’ equity | $ | 925,283 | $ | 885,365 | $ | 39,918 | 4.5 | % |
Three Months Ended June 30, | Dollar Change | Percent Change | ||||||||||||
2017 | 2016 | |||||||||||||
(Dollars in thousands) | ||||||||||||||
Interest and dividend income | ||||||||||||||
Loans, including fees | $ | 83,917 | $ | 73,376 | $ | 10,541 | 14.4 | % | ||||||
Securities | 3,464 | 3,118 | 346 | 11.1 | ||||||||||
Interest-bearing deposits in other financial institutions | 955 | 392 | 563 | 143.6 | ||||||||||
FHLB and Federal Reserve Bank stock and other | 411 | 450 | (39 | ) | (8.7 | ) | ||||||||
$ | 88,747 | $ | 77,336 | $ | 11,411 | 14.8 | % |
Three Months Ended June 30, | Dollar Change | Percent Change | ||||||||||||
2017 | 2016 | |||||||||||||
(Dollars in thousands) | ||||||||||||||
Interest expense | ||||||||||||||
Deposits | $ | 8,359 | $ | 4,422 | $ | 3,937 | 89.0 | % | ||||||
FHLB advances | 2,427 | 2,103 | 324 | 15.4 | ||||||||||
Repurchase agreements and other borrowings | 2,241 | 1,457 | 784 | 53.8 | ||||||||||
$ | 13,027 | $ | 7,982 | $ | 5,045 | 63.2 | % |
Three Months Ended June 30, | Dollar Change | Percent Change | ||||||||||||
2017 | 2016 | |||||||||||||
(Dollars in thousands) | ||||||||||||||
Non-interest income | ||||||||||||||
Service charges and other fees | $ | 9,896 | $ | 8,927 | $ | 969 | 10.9 | % | ||||||
Net gain on sale of mortgage loans held for sale | 2,156 | 2,250 | (94 | ) | (4.2 | ) | ||||||||
Bank-owned life insurance income | 440 | 441 | (1 | ) | (0.2 | ) | ||||||||
Net gain on securities transactions | — | 65 | (65 | ) | N/M1 | |||||||||
Gain on sale and disposition of assets | 157 | 1,186 | (1,029 | ) | (86.8 | ) | ||||||||
Other | (324 | ) | 853 | (1,177 | ) | N/M1 | ||||||||
$ | 12,325 | $ | 13,722 | $ | (1,397 | ) | (10.2 | )% |
Three Months Ended June 30, | Dollar Change | Percent Change | ||||||||||||
2017 | 2016 | |||||||||||||
(Dollars in thousands) | ||||||||||||||
Non-interest expense | ||||||||||||||
Salaries and employee benefits | $ | 23,391 | $ | 22,867 | $ | 524 | 2.3 | % | ||||||
Advertising | 1,179 | 1,035 | 144 | 13.9 | ||||||||||
Occupancy and equipment | 3,656 | 3,779 | (123 | ) | (3.3 | ) | ||||||||
Outside professional services | 1,203 | 1,227 | (24 | ) | (2.0 | ) | ||||||||
Regulatory assessments | 1,271 | 1,330 | (59 | ) | (4.4 | ) | ||||||||
Data processing | 3,877 | 3,664 | 213 | 5.8 | ||||||||||
Office operations | 2,404 | 2,541 | (137 | ) | (5.4 | ) | ||||||||
Other | 2,608 | 3,170 | (562 | ) | (17.7 | ) | ||||||||
$ | 39,589 | $ | 39,613 | $ | (24 | ) | (0.1 | )% |
Six Months Ended June 30, | Dollar Change | Percent Change | ||||||||||||
2017 | 2016 | |||||||||||||
(Dollars in thousands) | ||||||||||||||
Interest and dividend income | ||||||||||||||
Loans, including fees | $ | 167,020 | $ | 142,182 | $ | 24,838 | 17.5 | % | ||||||
Securities | 6,781 | 6,204 | 577 | 9.3 | ||||||||||
Interest-bearing deposits in other financial institutions | 1,687 | 722 | 965 | 133.7 | ||||||||||
FHLB and Federal Reserve Bank stock and other | 795 | 836 | (41 | ) | (4.9 | ) | ||||||||
$ | 176,283 | $ | 149,944 | $ | 26,339 | 17.6 | % |
Six Months Ended June 30, | Dollar Change | Percent Change | ||||||||||||
2017 | 2016 | |||||||||||||
(Dollars in thousands) | ||||||||||||||
Interest expense | ||||||||||||||
Deposits | $ | 15,469 | $ | 8,544 | $ | 6,925 | 81.1 | % | ||||||
FHLB advances | 4,059 | 3,776 | 283 | 7.5 | ||||||||||
Repurchase agreements and other borrowings | 4,487 | 2,919 | 1,568 | 53.7 | ||||||||||
$ | 24,015 | $ | 15,239 | $ | 8,776 | 57.6 | % |
Six Months Ended June 30, | Dollar Change | Percent Change | ||||||||||||
2017 | 2016 | |||||||||||||
(Dollars in thousands) | ||||||||||||||
Non-interest income | ||||||||||||||
Service charges and other fees | $ | 18,327 | $ | 17,108 | $ | 1,219 | 7.1 | % | ||||||
Net gain on sale of mortgage loans held for sale | 3,784 | 3,830 | (46 | ) | (1.2 | ) | ||||||||
Bank-owned life insurance income | 862 | 867 | (5 | ) | (0.6 | ) | ||||||||
Net gain (loss) on securities transactions | (19 | ) | 65 | (84 | ) | N/M1 | ||||||||
Gain on sale and disposition of assets | 1,556 | 5,258 | (3,702 | ) | (70.4 | ) | ||||||||
Other | (55 | ) | 1,249 | (1,304 | ) | N/M1 | ||||||||
$ | 24,455 | $ | 28,377 | $ | (3,922 | ) | (13.8 | )% |
Six Months Ended June 30, | Dollar Change | Percent Change | ||||||||||||
2017 | 2016 | |||||||||||||
(Dollars in thousands) | ||||||||||||||
Non-interest expense | ||||||||||||||
Salaries and employee benefits | $ | 47,835 | $ | 45,204 | $ | 2,631 | 5.8 | % | ||||||
Advertising | 1,996 | 2,071 | (75 | ) | (3.6 | ) | ||||||||
Occupancy and equipment | 7,310 | 7,470 | (160 | ) | (2.1 | ) | ||||||||
Outside professional services | 2,359 | 2,043 | 316 | 15.5 | ||||||||||
Regulatory assessments | 2,256 | 2,463 | (207 | ) | (8.4 | ) | ||||||||
Data processing | 7,772 | 6,994 | 778 | 11.1 | ||||||||||
Office operations | 4,680 | 5,009 | (329 | ) | (6.6 | ) | ||||||||
Other | 5,133 | 5,901 | (768 | ) | (13.0 | ) | ||||||||
$ | 79,341 | $ | 77,155 | $ | 2,186 | 2.8 | % |
Three Months Ended June 30, | ||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||
Average Outstanding Balance | Interest Earned/Paid | Yield/ Rate | Average Outstanding Balance | Interest Earned/Paid | Yield/ Rate | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Commercial real estate | $ | 2,781,472 | $ | 35,222 | 5.08 | % | $ | 2,416,288 | $ | 30,458 | 5.07 | % | ||||||||||
Warehouse Purchase Program | 896,018 | 8,260 | 3.70 | 987,225 | 8,042 | 3.28 | ||||||||||||||||
Commercial and industrial | 1,995,882 | 23,038 | 4.63 | 1,695,037 | 18,477 | 4.38 | ||||||||||||||||
Construction and land | 278,986 | 3,559 | 5.12 | 266,968 | 3,566 | 5.37 | ||||||||||||||||
Consumer real estate | 1,126,744 | 12,923 | 4.59 | 1,002,848 | 11,765 | 4.69 | ||||||||||||||||
Other consumer | 49,721 | 690 | 5.57 | 63,525 | 893 | 5.65 | ||||||||||||||||
Loans held for sale | 22,581 | 225 | 3.99 | 19,726 | 175 | 3.55 | ||||||||||||||||
Less: deferred fees and allowance for loan loss | (68,779 | ) | — | — | (55,940 | ) | — | — | ||||||||||||||
Loans receivable 1 | 7,082,625 | 83,917 | 4.75 | 6,395,677 | 73,376 | 4.61 | ||||||||||||||||
Agency mortgage-backed securities | 320,361 | 1,724 | 2.15 | 352,330 | 1,837 | 2.09 | ||||||||||||||||
Agency collateralized mortgage obligations | 165,862 | 974 | 2.35 | 81,651 | 476 | 2.33 | ||||||||||||||||
Investment securities | 108,946 | 766 | 2.81 | 123,510 | 805 | 2.61 | ||||||||||||||||
FHLB and FRB stock and other restricted securities | 50,436 | 411 | 3.26 | 65,657 | 450 | 2.74 | ||||||||||||||||
Interest-earning deposit accounts | 324,406 | 955 | 1.18 | 291,754 | 392 | 0.54 | ||||||||||||||||
Total interest-earning assets | 8,052,636 | 88,747 | 4.42 | 7,310,579 | 77,336 | 4.25 | ||||||||||||||||
Non-interest-earning assets | 439,060 | 428,436 | ||||||||||||||||||||
Total assets | $ | 8,491,696 | $ | 7,739,015 | ||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Interest-bearing demand | $ | 849,633 | 1,223 | 0.58 | $ | 784,741 | 966 | 0.50 | ||||||||||||||
Savings and money market | 2,703,291 | 3,787 | 0.56 | 2,166,002 | 1,318 | 0.24 | ||||||||||||||||
Time | 1,355,681 | 3,349 | 0.99 | 1,169,960 | 2,138 | 0.73 | ||||||||||||||||
Borrowings | 1,142,998 | 4,668 | 1.64 | 1,508,787 | 3,560 | 0.95 | ||||||||||||||||
Total interest-bearing liabilities | 6,051,603 | 13,027 | 0.86 | 5,629,490 | 7,982 | 0.57 | ||||||||||||||||
Non-interest-bearing demand | 1,410,566 | 1,194,118 | ||||||||||||||||||||
Non-interest-bearing liabilities | 114,963 | 79,655 | ||||||||||||||||||||
Total liabilities | 7,577,132 | 6,903,263 | ||||||||||||||||||||
Total shareholders’ equity | 914,564 | 835,752 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 8,491,696 | $ | 7,739,015 | ||||||||||||||||||
Net interest income and margin | $ | 75,720 | 3.77 | % | $ | 69,354 | 3.81 | % | ||||||||||||||
Net interest income and margin (tax-equivalent basis) 2 | $ | 75,979 | 3.78 | % | $ | 69,620 | 3.83 | % | ||||||||||||||
Net interest rate spread | 3.56 | % | 3.68 | % | ||||||||||||||||||
Net earning assets | $ | 2,001,033 | $ | 1,681,089 | ||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 133.07 | % | 129.86 | % | ||||||||||||||||||
1 | Calculated net of deferred fees, loan discounts, loans in process and allowance for loan losses. | |||||||||||||||||||||
2 | In order to make pretax income and resultant yields on tax-exempt investments and loans comparable to those on taxable investments and loans, a tax-equivalent adjustment has been computed using a federal income tax rate of 35% for 2017 and 2016. Tax-exempt investments and loans had an average balance of $102.5 million and $106.4 million for the three months ended June 30, 2017 and 2016, respectively. |
Six Months Ended June 30, | ||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||
Average Outstanding Balance | Interest Earned/Paid | Yield/ Rate | Average Outstanding Balance | Interest Earned/Paid | Yield/ Rate | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Commercial real estate | $ | 2,752,978 | $ | 69,146 | 5.07 | % | $ | 2,322,485 | $ | 58,604 | 5.07 | % | ||||||||||
Warehouse Purchase Program | 797,216 | 14,285 | 3.61 | 892,028 | 14,716 | 3.32 | ||||||||||||||||
Commercial and industrial | 1,982,896 | 49,259 | 5.01 | 1,653,581 | 36,406 | 4.43 | ||||||||||||||||
Construction and land | 284,888 | 7,275 | 5.15 | 268,329 | 7,170 | 5.37 | ||||||||||||||||
Consumer real estate | 1,108,822 | 25,303 | 4.56 | 976,208 | 23,090 | 4.73 | ||||||||||||||||
Other consumer | 51,180 | 1,406 | 5.54 | 65,290 | 1,841 | 5.67 | ||||||||||||||||
Loans held for sale | 17,651 | 346 | 3.92 | 19,657 | 355 | 3.61 | ||||||||||||||||
Less: deferred fees and allowance for loan loss | (67,350 | ) | — | — | (52,559 | ) | — | — | ||||||||||||||
Loans receivable 1 | 6,928,281 | 167,020 | 4.86 | 6,145,019 | 142,182 | 4.65 | ||||||||||||||||
Agency mortgage-backed securities | 323,318 | 3,396 | 2.10 | 348,546 | 3,640 | 2.09 | ||||||||||||||||
Agency collateralized mortgage obligations | 154,828 | 1,832 | 2.37 | 80,475 | 939 | 2.33 | ||||||||||||||||
Investment securities | 111,650 | 1,553 | 2.78 | 123,395 | 1,625 | 2.63 | ||||||||||||||||
FHLB and FRB stock and other restricted securities | 47,736 | 795 | 3.33 | 58,998 | 836 | 2.83 | ||||||||||||||||
Interest-earning deposit accounts | 328,512 | 1,687 | 1.04 | 265,165 | 722 | 0.55 | ||||||||||||||||
Total interest-earning assets | 7,894,325 | 176,283 | 4.50 | 7,021,598 | 149,944 | 4.29 | ||||||||||||||||
Non-interest-earning assets | 438,442 | 426,539 | ||||||||||||||||||||
Total assets | $ | 8,332,767 | $ | 7,448,137 | ||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Interest-bearing demand | $ | 852,339 | 2,344 | 0.55 | $ | 779,770 | 1,899 | 0.49 | ||||||||||||||
Savings and money market | 2,678,217 | 6,812 | 0.51 | 2,187,839 | 2,659 | 0.24 | ||||||||||||||||
Time | 1,335,258 | 6,313 | 0.95 | 1,109,885 | 3,986 | 0.72 | ||||||||||||||||
Borrowings | 1,092,199 | 8,546 | 1.58 | 1,307,682 | 6,695 | 1.03 | ||||||||||||||||
Total interest-bearing liabilities | 5,958,013 | 24,015 | 0.81 | 5,385,176 | 15,239 | 0.57 | ||||||||||||||||
Non-interest-bearing demand | 1,376,132 | 1,164,094 | ||||||||||||||||||||
Non-interest-bearing liabilities | 91,241 | 71,722 | ||||||||||||||||||||
Total liabilities | 7,425,386 | 6,620,992 | ||||||||||||||||||||
Total shareholders’ equity | 907,381 | 827,145 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 8,332,767 | $ | 7,448,137 | ||||||||||||||||||
Net interest income and margin | $ | 152,268 | 3.88 | % | $ | 134,705 | 3.85 | % | ||||||||||||||
Net interest income and margin (tax-equivalent basis) 2 | $ | 152,791 | 3.90 | % | $ | 135,243 | 3.87 | % | ||||||||||||||
Net interest rate spread | 3.69 | % | 3.72 | % | ||||||||||||||||||
Net earning assets | $ | 1,936,312 | $ | 1,636,422 | ||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 132.50 | % | 130.39 | % | ||||||||||||||||||
1 | Calculated net of deferred fees, loan discounts, loans in process and allowance for loan losses. | |||||||||||||||||||||
2 | In order to make pretax income and resultant yields on tax-exempt investments and loans comparable to those on taxable investments and loans, a tax-equivalent adjustment has been computed using a federal income tax rate of 35% for 2017 and 2016. Tax-exempt investments and loans had an average balance of $103.2 million and $107.3 million for the six months ended June 30, 2017 and 2016, respectively. |
Three Months Ended June 30, | |||||||||||
2017 versus 2016 | |||||||||||
Increase (Decrease) Due to | Total Increase | ||||||||||
Volume | Rate | (Decrease) | |||||||||
(Dollars in thousands) | |||||||||||
Interest-earning assets: | |||||||||||
Commercial real estate | $ | 4,624 | $ | 140 | $ | 4,764 | |||||
Warehouse Purchase Program | (783 | ) | 1,001 | 218 | |||||||
Commercial and industrial | 3,424 | 1,137 | 4,561 | ||||||||
Construction and land | 157 | (164 | ) | (7 | ) | ||||||
Consumer real estate | 1,426 | (268 | ) | 1,158 | |||||||
Other consumer | (192 | ) | (11 | ) | (203 | ) | |||||
Loans held for sale | 27 | 23 | 50 | ||||||||
Loans receivable | 8,683 | 1,858 | 10,541 | ||||||||
Agency mortgage-backed securities | (171 | ) | 58 | (113 | ) | ||||||
Agency collateralized mortgage obligations | 494 | 4 | 498 | ||||||||
Investment securities | (99 | ) | 60 | (39 | ) | ||||||
FHLB and FRB stock and other restricted securities | (115 | ) | 76 | (39 | ) | ||||||
Interest-earning deposit accounts | 48 | 515 | 563 | ||||||||
Total interest-earning assets | 8,840 | 2,571 | 11,411 | ||||||||
Interest-bearing liabilities: | |||||||||||
Interest-bearing demand | 84 | 173 | 257 | ||||||||
Savings and money market | 395 | 2,074 | 2,469 | ||||||||
Time | 377 | 834 | 1,211 | ||||||||
Borrowings | (1,020 | ) | 2,128 | 1,108 | |||||||
Total interest-bearing liabilities | (164 | ) | 5,209 | 5,045 | |||||||
Net interest income | $ | 9,004 | $ | (2,638 | ) | $ | 6,366 | ||||
Six Months Ended June 30, | |||||||||||
2017 versus 2016 | |||||||||||
Increase (Decrease) Due to | Total Increase | ||||||||||
Volume | Rate | (Decrease) | |||||||||
(Dollars in thousands) | |||||||||||
Interest-earning assets: | |||||||||||
Commercial real estate | $ | 10,814 | $ | (272 | ) | $ | 10,542 | ||||
Warehouse Purchase Program | (1,639 | ) | 1,208 | (431 | ) | ||||||
Commercial and industrial | 7,816 | 5,037 | 12,853 | ||||||||
Construction and land | 431 | (326 | ) | 105 | |||||||
Consumer real estate | 3,049 | (836 | ) | 2,213 | |||||||
Other consumer | (389 | ) | (46 | ) | (435 | ) | |||||
Loans held for sale | (38 | ) | 29 | (9 | ) | ||||||
Loans receivable | 20,044 | 4,794 | 24,838 | ||||||||
Agency mortgage-backed securities | (265 | ) | 21 | (244 | ) | ||||||
Agency collateralized mortgage obligations | 880 | 13 | 893 | ||||||||
Investment securities | (160 | ) | 88 | (72 | ) | ||||||
FHLB and FRB stock and other restricted securities | (174 | ) | 133 | (41 | ) | ||||||
Interest-earning deposit accounts | 205 | 760 | 965 | ||||||||
Total interest-earning assets | 20,530 | 5,809 | 26,339 | ||||||||
Interest-bearing liabilities: | |||||||||||
Interest-bearing demand | 186 | 259 | 445 | ||||||||
Savings and money market | 707 | 3,446 | 4,153 | ||||||||
Time | 910 | 1,417 | 2,327 | ||||||||
Borrowings | (1,242 | ) | 3,093 | 1,851 | |||||||
Total interest-bearing liabilities | 561 | 8,215 | 8,776 | ||||||||
Net interest income | $ | 19,969 | $ | (2,406 | ) | $ | 17,563 |
June 30, 2017 | |||||||||||||||||||
Less than One Year | One through Three Years | Four through Five Years | After Five Years | Total | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Contractual obligations: | |||||||||||||||||||
Deposits without a stated maturity | $ | 5,102,027 | $ | — | $ | — | $ | — | $ | 5,102,027 | |||||||||
Certificates of deposit | 1,042,211 | 336,523 | 78,415 | 3,330 | 1,460,479 | ||||||||||||||
FHLB advances 1 | 1,140,752 | 8,318 | 1,910 | 713 | 1,151,693 | ||||||||||||||
Repurchase agreements | 73,433 | — | — | — | 73,433 | ||||||||||||||
Subordinated debt 1 | — | — | — | 140,464 | 140,464 | ||||||||||||||
Private equity fund for Community Reinvestment Act purposes | 1,680 | — | — | — | 1,680 | ||||||||||||||
Operating leases (premises) | 6,125 | 10,101 | 8,593 | 17,974 | 42,793 | ||||||||||||||
Total contractual obligations | $ | 7,366,228 | $ | 354,942 | $ | 88,918 | $ | 162,481 | 7,972,569 | ||||||||||
Off-balance sheet loan commitments: 2 | |||||||||||||||||||
Unused commitments to extend credit | $ | 822,280 | $ | 612,709 | $ | 345,246 | $ | 69,677 | 1,849,912 | ||||||||||
Unused capacity on Warehouse Purchase Program loans 3 | 558,257 | 67,000 | — | — | 625,257 | ||||||||||||||
Standby letters of credit | 20,034 | 4,617 | 2,186 | 223 | 27,060 | ||||||||||||||
Total loan commitments | $ | 1,400,571 | $ | 684,326 | $ | 347,432 | $ | 69,900 | 2,502,229 | ||||||||||
Total contractual obligations and loan commitments | $ | 10,474,798 |
1 | FHLB advances and subordinated debt are shown at their contractual amounts. |
2 | Loans having no stated maturity are reported in the “Less than One Year” category. |
3 | In regards to unused capacity on Warehouse Purchase Program loans, the Company has established a maximum purchase facility amount, but reserves the right, at any time, to refuse to buy any mortgage loans offered for sale by its mortgage banking company customers for any reason in the Company's sole and absolute discretion. |
Actual | Required for Capital Adequacy Purposes | To Be Well-Capitalized | ||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||
June 30, 2017 | (Dollars in thousands) | |||||||||||||||||||
Total risk-based capital | ||||||||||||||||||||
Company | $ | 958,844 | 11.43 | % | $ | 671,326 | 8.00 | % | $ | 839,158 | 10.00 | % | ||||||||
Bank | 912,580 | 10.88 | 671,285 | 8.00 | 839,106 | 10.00 | ||||||||||||||
Tier 1 risk-based capital | ||||||||||||||||||||
Company | 760,081 | 9.06 | 503,495 | 6.00 | 503,495 | 6.00 | ||||||||||||||
Bank | 836,260 | 9.97 | 503,464 | 6.00 | 671,285 | 8.00 | ||||||||||||||
Common equity tier 1 risk-based capital | ||||||||||||||||||||
Company | 748,246 | 8.92 | 377,621 | 4.50 | n/a 1 | n/a 1 | ||||||||||||||
Bank | 836,260 | 9.97 | 377,598 | 4.50 | 545,419 | 6.50 | ||||||||||||||
Tier 1 leverage | ||||||||||||||||||||
Company | 760,081 | 9.14 | 332,743 | 4.00 | n/a 1 | n/a 1 | ||||||||||||||
Bank | 836,260 | 10.05 | 332,817 | 4.00 | 416,022 | 5.00 | ||||||||||||||
December 31, 2016 | ||||||||||||||||||||
Total risk-based capital | ||||||||||||||||||||
Company | $ | 910,040 | 11.71 | % | $ | 621,870 | 8.00 | % | $ | 777,338 | 10.00 | % | ||||||||
Bank | 869,523 | 11.19 | 621,840 | 8.00 | 777,300 | 10.00 | ||||||||||||||
Tier 1 risk-based capital | ||||||||||||||||||||
Company | 721,600 | 9.28 | 466,403 | 6.00 | 466,403 | 6.00 | ||||||||||||||
Bank | 803,374 | 10.34 | 466,380 | 6.00 | 621,840 | 8.00 | ||||||||||||||
Common equity tier 1 risk-based capital | ||||||||||||||||||||
Company | 709,858 | 9.13 | 349,802 | 4.50 | n/a 1 | n/a 1 | ||||||||||||||
Bank | 803,374 | 10.34 | 349,785 | 4.50 | 505,245 | 6.50 | ||||||||||||||
Tier 1 leverage | ||||||||||||||||||||
Company | 721,600 | 8.73 | 330,782 | 4.00 | n/a 1 | n/a 1 | ||||||||||||||
Bank | 803,374 | 9.71 | 330,873 | 4.00 | 413,591 | 5.00 | ||||||||||||||
1 Not applicable |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
June 30, 2017 | |||||||||||||||||||||
Change in Interest Rates in Basis Points | Economic Value of Equity | Earnings at Risk (12 months) | |||||||||||||||||||
Estimated EVE | Estimated Increase / (Decrease) in EVE | EVE Ratio % | Estimated Net Interest Income | Increase / (Decrease) in Estimated Net Interest Income | |||||||||||||||||
$ Amount | $ Change | % Change | $ Amount | $ Change | % Change | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
400 | 1,165,160 | (122,054 | ) | (9.48 | ) | 14.01 | 347,301 | 11,380 | 3.39 | ||||||||||||
300 | 1,204,854 | (82,360 | ) | (6.40 | ) | 14.25 | 344,750 | 8,829 | 2.63 | ||||||||||||
200 | 1,240,067 | (47,147 | ) | (3.66 | ) | 14.42 | 342,010 | 6,089 | 1.81 | ||||||||||||
100 | 1,269,970 | (17,244 | ) | (1.34 | ) | 14.52 | 339,114 | 3,193 | 0.95 | ||||||||||||
— | 1,287,214 | — | — | 14.49 | 335,921 | — | — | ||||||||||||||
(100 | ) | 1,237,907 | (49,307 | ) | (3.83 | ) | 13.73 | 323,326 | (12,595 | ) | (3.75 | ) |
December 31, 2016 | |||||||||||||||||||||
Change in Interest Rates in Basis Points | Economic Value of Equity | Earnings at Risk (12 months) | |||||||||||||||||||
Estimated EVE | Estimated Increase / (Decrease) in EVE | EVE Ratio % | Estimated Net Interest Income | Increase / (Decrease) in Estimated Net Interest Income | |||||||||||||||||
$ Amount | $ Change | % Change | $ Amount | $ Change | % Change | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
400 | 1,137,560 | (127,508 | ) | (10.08 | ) | 14.74 | 312,457 | 1,807 | 0.58 | ||||||||||||
300 | 1,180,103 | (84,965 | ) | (6.72 | ) | 15.02 | 312,109 | 1,459 | 0.47 | ||||||||||||
200 | 1,216,125 | (48,943 | ) | (3.87 | ) | 15.21 | 311,549 | 899 | 0.29 | ||||||||||||
100 | 1,248,129 | (16,939 | ) | (1.34 | ) | 15.34 | 310,953 | 303 | 0.10 | ||||||||||||
— | 1,265,068 | — | — | 15.30 | 310,650 | — | — | ||||||||||||||
(100 | ) | 1,230,570 | (34,498 | ) | (2.73 | ) | 14.64 | 297,726 | (12,924 | ) | (4.16 | ) |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit | |||
Number | Description | ||
2.1 | Agreement and Plan of Merger, dated as of November 25, 2013, by and between the Registrant and LegacyTexas Group, Inc. (incorporated herein by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on November 25, 2013 (File No. 001-34737)) | ||
2.2 | Amendment No. One to the Agreement and Plan of Merger, dated as of February 19, 2014, by and between the Registrant and LegacyTexas Group, Inc. (incorporated herein by reference to Exhibit 2.3 of the Registrant’s Annual Report on Form 10-K filed with the SEC on February 26, 2014 (File No. 001-34737)) | ||
2.3 | Amendment No. Two to the Agreement and Plan of Merger, dated as of August 29, 2014, by and between the Registrant and LegacyTexas Group, Inc. (incorporated herein by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on August 29, 2014 (File No. 001-34737)) | ||
3.1 | Charter of the Registrant (incorporated herein by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 25, 2017 (File No. 001-34737)) | ||
3.2 | Bylaws of the Registrant, as amended | ||
4.1 | Certificate of Registrant’s Common Stock (incorporated herein by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on January 6, 2015 (File No. 001-34737)) | ||
4.2 | 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 | ViewPoint Bank Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1, as amended (File No. 0-24566-01)) | ||
10.2 | Amended and Restated ViewPoint Bank Supplemental Executive Retirement Plan (incorporated herein by reference to Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1, as amended (File No. 0-24566-01)) | ||
10.3 | 2017 Executive Annual Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 3, 2017 (File No. 001-34737)) | ||
10.4 | Change in Control and Severance Benefits Agreement entered into between the Registrant and Mays Davenport (incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the SEC on November 25, 2013 (File No. 001-34737)). | ||
10.5 | Form of Change In Control and Severance Benefits Agreement entered into between the Registrant and the following executive officers: Scott A. Almy, Charles D. Eikenberg, Thomas S. Swiley, and Mark L. Williamson (incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the SEC on December 2, 2013 (File No. 001-34737)). | ||
10.6 | Amended and Restated Executive Employment Agreement entered into by the Registrant on December 2, 2013 with Kevin J. Hanigan (incorporated herein by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the SEC on December 2, 2013 (File No. 001-34737)). | ||
10.7 | Registrant's 2007 Equity Incentive Plan (incorporated herein by reference to Appendix A to the proxy statement filed with the SEC on March 30, 2007 (File No. 001-32992)) | ||
10.8 | Registrant's 2012 Equity Incentive Plan (incorporated herein by reference to Appendix A to the Registrant's proxy statement filed with the SEC on April 4, 2012 (File No. 001-34737)) | ||
10.9 | Forms of Incentive Stock Option, Non-Qualified Stock Option, and Restricted Stock (time and performance-based) Agreements under the 2012 Equity Incentive Plan (incorporated herein by reference to the Exhibits to the Registrant's Registration Statement on Form S-8 filed with the SEC on June 14, 2012 (File No. 333-182122)) | ||
10.10 | Form of 2012 Equity Incentive Plan Restricted Stock Award and Non-Solicitation Agreement (incorporated herein by reference to Exhibit 10.10 to the Registrant's Quarterly Report on Form 10-Q filed with the SEC on July 26, 2016 (File No. 001-34737)) | ||
10.11 | Form of 2012 Equity Incentive Plan Non-Employee Restricted Stock Award Agreement (incorporated herein by reference to Exhibit 10.11 to the Registrant's Quarterly Report on Form 10-Q filed with the SEC on July 26, 2016 (File No. 001-34737)) | ||
10.12 | Registrant's 2017 Omnibus Incentive Plan (incorporated herein by reference to Appendix A to the Registrant's proxy statement filed with the SEC on April 14, 2017 (File No. 001-34737)) | ||
11 | Statement regarding computation of per share earnings (See Note 2 of the Condensed Notes to Unaudited Consolidated Interim Financial Statements included in this Form 10-Q). | ||
31.1 | Rule 13a — 14(a)/15d — 14(a) Certification (Chief Executive Officer) | ||
31.2 | Rule 13a — 14(a)/15d — 14(a) Certification (Chief Financial Officer) | ||
32 | Section 1350 Certifications | ||
101 | Financial statements from Quarterly Report on Form 10-Q of the Registrant for the quarter ended June 30, 2017, formatted in eXtensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Condensed Notes to Unaudited Consolidated Interim Financial Statements. | ||
Date: | July 25, 2017 | By: | /s/ Kevin J. Hanigan | |
Kevin J. Hanigan, | ||||
President and Chief Executive Officer | ||||
(Duly Authorized Officer) | ||||
Date: | July 25, 2017 | By: | /s/ J. Mays Davenport | |
J. Mays Davenport | ||||
Executive Vice President and Chief Financial Officer | ||||
(Principal Financial and Accounting Officer) |
3.2 | Bylaws of the Registrant, as amended |
31.1 | Certification of the Chief Executive Officer |
31.2 | Certification of the Chief Financial Officer |
32.0 | Section 1350 Certifications |
101 | Financial statements from Quarterly Report on Form 10-Q of the Registrant for the quarter ended June 30, 2017, formatted in eXtensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders' Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Condensed Notes to Unaudited Consolidated Interim Financial Statements. |
(i) | To declare dividends from time to time in accordance with law; |
(ii) | To purchase or otherwise acquire any property, rights or privileges on such terms as it shall determine; |
(iii) | To authorize the creation, making and issuance, in such form as it may determine, of written obligations of every kind, negotiable or non-negotiable, secured or unsecured, and to do all things necessary in connection therewith; |
(iv) | To remove any officer of the Corporation with or without cause, and from time to time to devolve the powers and duties of any officer upon any other person for the time being; |
(v) | To confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate officers, employees and agents; |
(vi) | To adopt from time to time such stock, option, stock purchase, bonus or other compensation plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine; |
(vii) | To adopt from time to time such insurance, retirement, and other benefit plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine; and |
(viii) | To adopt from time to time regulations, not inconsistent with these Bylaws, for the management of the Corporation's business and affairs. |
/s/ Scott A. Almy | |
Scott A. Almy | |
Secretary | |
1. | I have reviewed this Quarterly Report on Form 10-Q of LegacyTexas Financial Group, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | July 25, 2017 | By: | /s/ Kevin J. Hanigan | |
Kevin J. Hanigan, | ||||
President and Chief Executive Officer | ||||
1. | I have reviewed this Quarterly Report on Form 10-Q of LegacyTexas Financial Group, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | July 25, 2017 | By: | /s/ J. Mays Davenport | |
J. Mays Davenport, | ||||
Executive Vice President and Chief Financial Officer |
1) | The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and | |
2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company as of the dates and for the periods presented in the financial statements included in such Report. |
Date: | July 25, 2017 | By: | /s/ Kevin J. Hanigan | |
Kevin J. Hanigan, | ||||
President and Chief Executive Officer | ||||
Date: | July 25, 2017 | By: | /s/ J. Mays Davenport | |
J. Mays Davenport, | ||||
Executive Vice President and Chief Financial Officer |
DOCUMENT AND ENTITY INFORMATION - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jul. 24, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | LegacyTexas Financial Group, Inc. | |
Entity Central Index Key | 0001487052 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 48,009,379 |
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Fair value of securities held to maturity | $ 194,862 | $ 212,981 |
Allowance for loan losses on loans held for investment | $ 75,091 | $ 64,576 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized (in shares) | 90,000,000 | 90,000,000 |
Common Stock, shares issued (in shares) | 48,009,379 | 47,876,198 |
Unearned Employee Stock Ownership Plan, shares (in shares) | 1,218,570 | 1,245,046 |
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Interest and dividend income | ||||
Loans, including fees | $ 83,917 | $ 73,376 | $ 167,020 | $ 142,182 |
Taxable securities | 2,725 | 2,359 | 5,287 | 4,671 |
Nontaxable securities | 739 | 759 | 1,494 | 1,533 |
Interest-bearing deposits in other financial institutions | 955 | 392 | 1,687 | 722 |
FHLB and Federal Reserve Bank stock and other | 411 | 450 | 795 | 836 |
Total interest and dividend income | 88,747 | 77,336 | 176,283 | 149,944 |
Interest expense | ||||
Deposits | 8,359 | 4,422 | 15,469 | 8,544 |
FHLB advances | 2,427 | 2,103 | 4,059 | 3,776 |
Repurchase agreements and other borrowings | 2,241 | 1,457 | 4,487 | 2,919 |
Total interest expense | 13,027 | 7,982 | 24,015 | 15,239 |
Net interest income | 75,720 | 69,354 | 152,268 | 134,705 |
Provision for credit losses | 6,255 | 6,800 | 28,556 | 15,600 |
Net interest income after provision for credit losses | 69,465 | 62,554 | 123,712 | 119,105 |
Non-interest income | ||||
Service charges and other fees | 9,896 | 8,927 | 18,327 | 17,108 |
Net gain on sale of mortgage loans held for sale | 2,156 | 2,250 | 3,784 | 3,830 |
Bank-owned life insurance income | 440 | 441 | 862 | 867 |
Net gain (loss) on securities transactions | 0 | 65 | (19) | 65 |
Gain on sale and disposition of assets | 157 | 1,186 | 1,556 | 5,258 |
Other | (324) | 853 | (55) | 1,249 |
Total non-interest income | 12,325 | 13,722 | 24,455 | 28,377 |
Non-interest expense | ||||
Salaries and employee benefits | 23,391 | 22,867 | 47,835 | 45,204 |
Advertising | 1,179 | 1,035 | 1,996 | 2,071 |
Occupancy and equipment | 3,656 | 3,779 | 7,310 | 7,470 |
Outside professional services | 1,203 | 1,227 | 2,359 | 2,043 |
Regulatory assessments | 1,271 | 1,330 | 2,256 | 2,463 |
Data processing | 3,877 | 3,664 | 7,772 | 6,994 |
Office operations | 2,404 | 2,541 | 4,680 | 5,009 |
Other | 2,608 | 3,170 | 5,133 | 5,901 |
Total non-interest expense | 39,589 | 39,613 | 79,341 | 77,155 |
Income before income tax expense | 42,201 | 36,663 | 68,826 | 70,327 |
Income tax expense | 14,266 | 13,446 | 22,701 | 25,028 |
Net income | $ 27,935 | $ 23,217 | $ 46,125 | $ 45,299 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.60 | $ 0.50 | $ 0.99 | $ 0.98 |
Diluted (in dollars per share) | 0.59 | 0.50 | 0.98 | 0.97 |
Dividends declared (in dollars per share) | $ 0.15 | $ 0.14 | $ 0.3 | $ 0.28 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 27,935 | $ 23,217 | $ 46,125 | $ 45,299 |
Change in unrealized gains on securities available for sale | 1,427 | 1,725 | 2,426 | 4,764 |
Reclassification of amount realized through securities transactions | 0 | (65) | 19 | (65) |
Tax effect | (501) | (583) | (857) | (1,648) |
Other comprehensive income, net of tax | 926 | 1,077 | 1,588 | 3,051 |
Comprehensive income | $ 28,861 | $ 24,294 | $ 47,713 | $ 48,350 |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands |
Total |
Common Stock [Member] |
Additional Paid-In Capital [Member] |
Retained Earnings [Member] |
Accumulated Other Comprehensive Income, Net [Member] |
Unearned ESOP Shares [Member] |
---|---|---|---|---|---|---|
Beginning Balance at Dec. 31, 2015 | $ 804,076 | $ 476 | $ 576,753 | $ 240,496 | $ (133) | $ (13,516) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 45,299 | 45,299 | ||||
Other comprehensive income, net of tax | 3,051 | 3,051 | ||||
Dividends declared | (13,341) | (13,341) | ||||
ESOP shares earned | 1,568 | 982 | 586 | |||
Share-based compensation expense | 2,223 | 2,223 | ||||
Activity in employee stock plans | 428 | 0 | 428 | |||
Ending Balance at Jun. 30, 2016 | 843,304 | 476 | 580,386 | 272,454 | 2,918 | (12,930) |
Beginning Balance at Dec. 31, 2016 | 885,365 | 479 | 589,408 | 310,641 | (2,713) | (12,450) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 46,125 | 46,125 | ||||
Other comprehensive income, net of tax | 1,588 | 1,588 | ||||
Dividends declared | (14,382) | (14,382) | ||||
ESOP shares earned | 1,045 | 781 | 264 | |||
Share-based compensation expense | 3,405 | 3,405 | ||||
Activity in employee stock plans | 2,137 | 1 | 2,136 | |||
Ending Balance at Jun. 30, 2017 | $ 925,283 | $ 480 | $ 595,730 | $ 342,384 | $ (1,125) | $ (12,186) |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (PARENTHETICAL) - $ / shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared (in dollars per share) | $ 0.3 | $ 0.28 |
ESOP shares earned (in shares) | 26,476 | 71,447 |
Net issuance of common stock under employee stock plans (in shares) | 133,181 | 24,614 |
Basis of Financial Statement Presentation |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Financial Statement Presentation | Basis of Financial Statement Presentation The accompanying consolidated interim financial statements of LegacyTexas Financial Group, Inc. (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles ("US GAAP") and with the rules and regulations of the Securities and Exchange Commission for interim financial reporting. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, all normal and recurring adjustments which are considered necessary to fairly present the results for the interim periods presented have been included. Certain items in prior periods were reclassified to conform to the current presentation. These 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, 2016 (“2016 Form 10-K”). Interim results are not necessarily indicative of results for a full year. In preparing the financial statements, management is required to make estimates and assumptions that affect the recorded amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period. Actual results could differ from those estimates. For further information with respect to significant accounting policies followed by the Company in preparation of its consolidated financial statements, refer to the 2016 Form 10-K. The accompanying Unaudited Consolidated Interim Financial Statements include the accounts of the Company, whose business primarily consists of the operations of its wholly owned subsidiary, LegacyTexas Bank (the “Bank”). All significant intercompany transactions and balances are eliminated in consolidation. |
Earnings Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share | Earnings Per Common Share Basic earnings per common share is computed by dividing net income (which has been adjusted for distributed and undistributed earnings to participating securities) by the weighted-average number of common shares outstanding for the period, reduced for average unallocated ESOP shares and average unvested restricted stock awards. Unvested restricted stock awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method described in Accounting Standards Codification ("ASC") 260-10-45-60B. Diluted earnings per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock (such as stock awards and options) were exercised or converted to common stock, or resulted in the issuance of common stock that then shared in the Company’s earnings. Diluted earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding for the period increased for the dilutive effect of unexercised stock options and unvested restricted stock awards. The dilutive effect of the unexercised stock options and unvested restricted stock awards is calculated under the treasury stock method utilizing the average market value of the Company’s stock for the period. A reconciliation of the numerator and denominator of the basic and diluted earnings per common share computation for the three and six months ended June 30, 2017 and 2016 is as follows:
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Securities |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities | Securities The amortized cost, related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss), and the fair value of securities available for sale ("AFS") were as follows:
The amortized cost (carrying amount), unrealized gains and losses, and fair value of securities held to maturity ("HTM") were as follows:
The amortized cost (carrying amount) and fair value of held to maturity debt securities and the fair value of available for sale debt securities at June 30, 2017 by contractual maturity are set forth in the table below. Securities with contractual payments not due at a single maturity date, including mortgage-backed securities and collateralized mortgage obligations, are shown separately.
Securities with a carrying value of $264,968 and $224,674 at June 30, 2017 and December 31, 2016, respectively, were pledged to secure public deposits, repurchase agreements and for other purposes required or permitted by law. Sales activity of securities during the three and six months ended June 30, 2017 or 2016 was as follows. All securities sold were classified as available for sale.
Securities with unrealized losses at June 30, 2017 and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:
Other-than-Temporary Impairment In determining other-than-temporary impairment for debt securities, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than amortized cost; (2) the financial condition and near-term prospects of the issuer; (3) whether the market decline was affected by macroeconomic conditions; and (4) whether the Company has the intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. As of June 30, 2017, 193 securities had unrealized losses, 24 of which had been in an unrealized loss position for over 12 months at June 30, 2017. The Company does not believe these unrealized losses are other-than-temporary and, at June 30, 2017, believes that full recovery of the amortized cost basis is more likely than not. All principal and interest payments are being received on time and in full. |
Loans |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans | Loans Loans consist of the following:
Activity in the allowance for loan losses for the three and six months ended June 30, 2017 and 2016, segregated by portfolio segment and evaluation for impairment, is set forth below. The below activity does not include Warehouse Purchase Program loans, which are collectively evaluated for impairment and are purchased under several contractual requirements, providing safeguards to the Company. To date, the Company has not experienced a loss on these loans and no allowance for loan losses has been allocated to them. At June 30, 2017 and 2016, the allowance for loan impairment related to purchased credit impaired ("PCI") loans totaled $232 and $148, respectively.
The allowance for loan losses and related provision expense are susceptible to change if the credit quality of our loan portfolio changes, which is evidenced by many factors, including but not limited to charge-offs and non-performing loan trends. Generally, consumer real estate lending has a lower credit risk profile compared to other consumer lending (such as automobile loans). Commercial real estate and commercial and industrial lending, however, can have higher risk profiles than consumer loans due to these loans being larger in amount and non-homogeneous in structure and term. Changes in economic conditions, the mix and size of the loan portfolio and individual borrower conditions can dramatically impact our level of allowance for loan losses in relatively short periods of time. The allowance for loan losses is maintained to cover incurred losses that are estimated in accordance with US GAAP. It is our estimate of credit losses inherent in our loan portfolio at each balance sheet date. Our methodology for analyzing the allowance for loan losses consists of general and specific components. For the general component, we stratify the loan portfolio into homogeneous groups of loans that possess similar loss potential characteristics and apply a loss ratio to these groups of loans to estimate the credit losses in the loan portfolio. We use both historical loss ratios and qualitative loss factors assigned to major loan collateral types to establish general component loss allocations, inclusive of estimated loss emergence periods. Qualitative loss factors are based on management's judgment of company, market, industry or business specific data and external economic indicators, which are not yet reflected in the historical loss ratios, and that could impact the Company's specific loan portfolios. The Allowance for Loan Loss Committee sets and adjusts qualitative loss factors by regularly reviewing changes in underlying loan composition and the seasonality of specific portfolios. The Allowance for Loan Loss Committee also considers credit quality and trends relating to delinquency, non-performing and adversely rated loans within the Company's loan portfolio when evaluating qualitative loss factors. Additionally, the Allowance for Loan Loss Committee adjusts qualitative factors to account for the potential impact of external economic factors, including the unemployment rate, vacancy and capitalization rates and other pertinent economic data specific to our primary market area and lending portfolios. For the specific component, the allowance for loan losses includes loans where management has concerns about the borrower's ability to repay and on individually analyzed loans found to be impaired. Management evaluates current information and events regarding a borrower's ability to repay its obligations and considers a loan to be impaired when the ultimate collectability of amounts due, according to the contractual terms of the loan agreement, is in doubt. If an impaired loan is collateral-dependent, the fair value of the collateral, less the estimated cost to sell, is used to determine the amount of impairment. If an impaired loan is not collateral-dependent, estimated discounted cash flows are used to determine the amount of impairment, if any. For impaired loans, the amount of the impairment can be adjusted, based on current data, until such time as the actual basis is established by acquisition of the collateral or until the basis is collected. Impairment losses are reflected in the allowance for loan losses through a charge to the provision for credit losses. Subsequent recoveries are credited to the allowance for loan losses. Cash receipts for accruing loans are applied to principal and interest under the contractual terms of the loan agreement. Cash receipts on impaired loans for which the accrual of interest has been discontinued are applied first to principal. Large groups of smaller-balance homogeneous loans are collectively evaluated for impairment. As a result, the Company does not separately identify consumer real estate loans less than $417 or individual consumer non-real estate secured loans for impairment disclosures. The Company considers these loans to be homogeneous in nature due to the smaller dollar amount and the similar underwriting criteria. Changes in the allowance for off-balance sheet credit losses on lending-related commitments and guarantees on credit card debt, included in "accrued expenses and other liabilities" on the consolidated balance sheets, are summarized in the following table. Please see Note 9 - Commitments and Contingent Liabilities for more information.
Impaired loans at June 30, 2017 and December 31, 2016, were as follows1:
Income on impaired loans for the three and six months ended June 30, 2017 and 2016, was as follows1:
Past due status is based on the contractual terms of the loan. Loans that are past due 30 days are considered delinquent. Interest income on loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Non-mortgage consumer loans are typically charged off no later than 120 days past due. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and larger individually classified impaired loans. All interest accrued but not received for loans placed on nonaccrual status is reversed against interest income. Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. No loans past due over 90 days were still accruing interest at June 30, 2017. At December 31, 2016, $141 of loans past due over 90 days were still accruing interest, which consisted entirely of PCI loans. At June 30, 2017, no PCI loans were considered non-performing loans. No Warehouse Purchase Program loans were non-performing at June 30, 2017 or December 31, 2016. Non-performing (nonaccrual) loans were as follows:
A loan that has been modified is considered a troubled debt restructuring (“TDR”) when two conditions are met: 1) the borrower is experiencing financial difficulty and 2) concessions are made for the borrower's benefit that would not otherwise be considered for a borrower or transaction with similar credit risk characteristics. Modifications to loan terms may include a modification of the contractual interest rate to a below-market rate (even if the modified rate is higher than the original rate), forgiveness of accrued interest, forgiveness of a portion of principal, an extended repayment period or a deed in lieu of foreclosure or other transfer of assets other than cash to fully or partially satisfy a debt. The Company's policy is to place all TDRs on nonaccrual for a minimum period of six months. Loans qualify for return to accrual status once they have demonstrated performance with the restructured terms of the loan agreement for a minimum of six months and the collection of principal and interest under the revised terms is deemed probable. All TDRs are considered to be impaired loans. The outstanding balances of TDRs are shown below:
The following tables provide the recorded balances of loans modified as a TDR during the three and six months ended June 30, 2017 and 2016.
Loans modified as a TDR during the three and six months ended June 30, 2017 and 2016, which experienced a subsequent payment default in the preceding twelve months are shown below. A payment default is defined as a loan that was 90 days or more past due.
Loans acquired with evidence of credit quality deterioration at acquisition, for which it was probable that the Company would not be able to collect all contractual amounts due, were accounted for as PCI loans. The carrying amount of PCI loans included in the consolidated balance sheets and the related outstanding balances at June 30, 2017 and December 31, 2016 are set forth in the table below. The outstanding balance represents the total amount owed, including accrued but unpaid interest, and any amounts previously charged off.
Changes in the accretable yield for PCI loans for the three and six months ended June 30, 2017 and 2016 are as follows:
Below is an analysis of the age of recorded investment in loans that were past due at June 30, 2017 and December 31, 2016. No Warehouse Purchase Program loans were delinquent at June 30, 2017 or December 31, 2016 and therefore are not included in the following table.
For loans collateralized by real property and commercial and industrial loans, credit exposure is monitored by internally assigned grades used for classification of loans. A loan is considered “special mention” when management has determined that there is a potential weakness that deserves management's close attention. Loans rated as "special mention" are not adversely classified according to regulatory classifications and do not expose the Company to sufficient risk to warrant adverse classification. A loan is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. “Substandard” loans include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected, and the loan may or may not meet the criteria for impairment. Loans classified as “doubtful” have all of the weaknesses of 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.” All other loans that do not fall into the above mentioned categories are considered “pass” loans. Updates to internally assigned grades are made monthly and/or upon significant developments. For other consumer loans (non-real estate), credit exposure is monitored by payment history of the loans. Non-performing other consumer loans are on nonaccrual status and are generally greater than 90 days past due. The recorded investment in loans by credit quality indicators at June 30, 2017 and December 31, 2016, was as follows. Real Estate and Commercial and Industrial Credit Exposure Credit Risk Profile by Internally Assigned Grade
Warehouse Purchase Program Credit Exposure All Warehouse Purchase Program loans were graded pass as of June 30, 2017 and December 31, 2016. Other Consumer Credit Exposure Credit Risk Profile Based on Payment Activity
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value ASC 820, “Fair Value Measurements and Disclosures”, establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: 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: Prices or valuation techniques that require inputs that are both significant and unobservable in the market. These instruments are valued using the best information available, some of which is internally developed, and reflects a reporting entity’s own assumptions about the risk premiums that market participants would generally require and the assumptions they would use. Assets and Liabilities Measured on a Recurring Basis Assets and liabilities measured at fair value on a recurring basis are summarized below.
The following methodologies were used to measure the fair value of financial assets and liabilities valued on a recurring basis: Securities available for sale - The fair values of securities available for sale are 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 (Level 2 inputs). Residential mortgage loans held for sale - Mortgage loans held for sale, which are sold on a servicing released basis, are valued using a market approach by utilizing either: (i) the fair value of securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the value attributable to mortgage servicing and credit risk, (ii) current commitments to purchase loans or (iii) recent observable market trades for similar loans, adjusted to credit risk and other individual loan characteristics. As these prices are derived from market observable inputs, the Company classifies these valuations as Level 2 in the fair value disclosures. Interest income on mortgage loans held for sale is recognized based on the contractual rates and reflected in interest income on loans held for sale in the consolidated income statement. The Company has no continuing involvement in any residential mortgage loans sold. Derivative instruments: Interest rate lock commitments ("IRLCs") and forward mortgage-backed securities trades - The Company enters into a variety of derivative instruments as part of its hedging strategy and measures these instruments at fair value on a recurring basis in the balance sheet. The majority of these derivatives are forward mortgage-backed securities and are exchange-traded or traded within highly active dealer markets. In order to determine the fair value of these instruments, the Company utilized the exchange price or dealer market price for the particular derivative contract; therefore these contracts are classified as Level 2. In addition, the Company enters into interest rate lock commitments with prospective borrowers. These commitments are carried at fair value based on the fair value of the underlying mortgage loans which are based on observable market data. The Company adjusts the outstanding IRLCs with prospective borrowers based on an expectation that it will be exercised and the loan will be funded. These commitments are classified as Level 2 in the fair value disclosures, as the valuations are based on market observable inputs. Loan customer counterparty and financial institution counterparty - The Company also enters into certain interest rate derivative positions that are not designated as hedging instruments. The estimated fair value of these commercial loan interest rate swaps are obtained from a pricing service that provides the swaps' unwind value (Level 2 inputs). Please see Note 6 — Derivative Financial Instruments for more information. Assets and Liabilities Measured on a Non-Recurring Basis Assets measured at fair value on a non-recurring basis are summarized below. There were no liabilities measured at fair value on a non-recurring basis at June 30, 2017 or December 31, 2016.
Impaired loans that are collateral dependent are measured for impairment using the fair value of the collateral adjusted by additional Level 3 inputs, such as discounts of market value, estimated marketing costs and estimated legal expenses. Impaired loans secured by real estate, receivables or inventory had discounts determined by management on an individual loan basis. Impaired loans that are not collateral dependent are measured for impairment by a discounted cash flow analysis using a net present value calculation that utilizes data from the loan file before and after the modification. Foreclosed assets are measured at the lower of book or fair value less costs to sell using third party appraisals, listing agreements or sale contracts, which may be adjusted by additional Level 3 inputs, such as discounts of market value, estimated marketing costs and estimated legal expenses. Management may also consider additional adjustments on specific properties due to the age of the appraisal, expected holding period, lack of comparable sales, or if the other real estate owned is a special use property. At June 30, 2017, the Company had $180 in residential mortgage loans in the process of foreclosure. The Credit Risk Management department evaluates the valuations on impaired loans and foreclosed assets at least quarterly. The valuations on impaired loans are reviewed at least quarterly by the Allowance for Loan Loss Committee and are considered in the calculation of the allowance for loan losses. Unobservable inputs, such as discounts to collateral, are monitored and adjusted if market conditions change. Fair value of financial instruments not recorded at fair value The carrying amount and fair value information of financial instruments not recorded at fair value in their entirety on a recurring basis on the Company's consolidated balance sheets at June 30, 2017 and at December 31, 2016, were as follows:
The following methods and assumptions were used to estimate the fair values of each class of financial instrument presented: Cash and cash equivalents - Due to their short term nature, the carrying amount approximates the estimated fair value. Securities held to maturity - The fair values of these securities 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 (Level 2 inputs). Loans held for investment (including Warehouse Purchase Program loans) - Fair value is based on discounted cash flows using current market offering rates, estimated life, and applicable credit risk. FHLB stock and other restricted securities - The fair value on these securities is their cost basis due to restrictions on transferability. Accrued interest receivable - Due to their short term nature, the carrying amount approximates the estimated fair value. Deposits - Fair value is calculated using the FHLB advance curve to discount cash flows based on the estimated life of the deposits. FHLB advances - Fair value is calculated using the FHLB advance curve to discount cash flows based on the contractual repayment schedule. Repurchase agreement - The fair value is based on discounting the estimated cash flows using the current rate at which similar borrowings would be made with similar terms and remaining maturities. Subordinated debt - The estimated fair value is based on current market rates on similar debt in the market. Accrued interest payable - Due to their short term nature, the carrying amount approximates the estimated fair value. The fair value of off-balance sheet items is based on the current fees or costs that would be charged to enter into or terminate such arrangements and are not considered significant to this presentation. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments The following table provides the outstanding notional balances and fair values of outstanding derivative positions at June 30, 2017 and December 31, 2016.
These financial instruments are not designated as hedging instruments and are used for asset and liability management and commercial customers' financing needs. All derivatives are carried at fair value in either other assets or other liabilities. IRLCs - The Company enters into IRLCs with prospective residential mortgage borrowers whereby the interest rate on the loan is determined prior to funding and the borrowers have locked into that interest rate. The estimated fair values of IRLCs are based on the fair value of the related mortgage loan which is based on observable market data. The Company adjusts the outstanding IRLCs based on the expectation that it will be exercised and the loan will be funded. Forward mortgage-backed securities trades - To manage the price risk associated with IRLCs, the Company enters into forward sales of mortgage-backed securities in an amount similar to the portion of the IRLC expected to close, assuming no change in mortgage interest rates. In addition, to manage the interest rate risk associated with mortgage loans held for sale, the Company enters into forward sales of mortgage-backed securities to deliver mortgage loan inventory to investors. The estimated fair values of forward sales of mortgage-backed securities and forward sale commitments are based on quoted market values. Interest rate swaps and caps - These derivative positions relate to transactions in which we enter into an interest rate swap or cap with a customer, while at the same time entering into an offsetting interest rate swap or cap with another financial institution. An interest rate swap transaction allows our customer to effectively convert a variable rate loan to a fixed rate. In connection with each swap, we agree to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, we agree to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. In connection with each interest rate cap, we sell a cap to the customer and agree to pay interest if the underlying index exceeds the strike price defined in the cap agreement. Simultaneously we purchase a cap with matching terms from another financial institution which agrees to pay us if the underlying index exceeds the strike price. The commercial loan customer counterparty weighted average received and paid interest rates for interest rate swaps outstanding at June 30, 2017 and December 31, 2016 are presented in the following table.
Our credit exposure on interest rate swaps is limited to the net favorable value of all swaps by each counterparty, which was approximately $174 at June 30, 2017 and $118 at December 31, 2016. This credit exposure is partly mitigated as transactions with customers are generally secured by the collateral, if any, securing the underlying transaction being hedged. Our credit exposure, net of collateral pledged, relating to interest rate swaps with upstream financial institution counter-parties was approximately $1,245 at June 30, 2017. A credit support annex is in place and allows the bank to call collateral from upstream financial institution counter-parties. Collateral levels are monitored and adjusted on a regular basis for changes in interest rate swap values. Our cash collateral pledged for interest rate swaps and included in our interest-bearing deposits, which totaled $1,950 at June 30, 2017 and $1,950 at December 31, 2016, is in excess of our credit exposure. The initial and subsequent changes in the fair value of IRLCs and the forward sales of mortgage-back securities are recorded in net gain on sale of mortgage loans. These gains and losses were not attributable to instrument-specific credit risk. For interest rate swaps and caps, because we act as an intermediary for our customer, changes in the fair value of the underlying derivative contracts substantially offset each other and do not have a material impact on our results of operations. Income (loss) for the three and six months ended June 30, 2017 and 2016 was as follows:
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation | Share-based Compensation The 2017 Omnibus Incentive Plan (the "2017 Plan") was approved at the Company's 2017 annual meeting of shareholders, held on May 22, 2017. Prior to approval of the 2017 Plan by shareholders, the Company had in effect the 2012 and 2007 Equity Incentive Plans (the “Prior Plans” and together with the 2017 Plan, the “Plans”). No further awards will be made under the Prior Plans and shares reserved to make new awards under the Prior Plans have been released; provided that shares reserved to fund issued and outstanding awards under the Prior Plans continue to be reserved to provide for those awards. All awards outstanding under the Prior Plans remain outstanding in accordance with their terms. Each outstanding award under the Prior Plans continue to be governed solely by the terms of the documents evidencing such award, and no provision of the 2017 Plan is deemed to affect or otherwise modify the rights or obligations of the holders of such awards with respect to their acquisition of Company shares. The 2017 Plan permits the granting of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and cash awards to participants. Participants under the 2017 Plan include employees and directors (including advisory and emeritus directors) of the Company and its subsidiaries. As of June 30, 2017, no shares had been issued under the 2017 Plan. There are 3,250,000 total shares authorized under the 2017 Plan, with a fungible share rate of 2.5-for-1 for full-value awards (stock-based awards other than stock options and stock appreciation rights.) The Plans are accounted for under ASC 718, Compensation - Stock Compensation, which requires companies to record compensation cost for share-based payment transactions with employees in return for employment service. Compensation cost is recognized for stock options and restricted stock awards based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with time-based vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. For awards with performance-based vesting conditions, compensation cost is recognized when the achievement of the performance condition is considered probable of achievement. If a performance condition is subsequently determined to be improbable of achievement, compensation cost is reversed. Compensation cost charged to income for share-based compensation is presented below:
A summary of activity in the restricted stock portion of the Company's Plans is presented below:
As of June 30, 2017, there was $4,445 of total unrecognized compensation expense related to non-vested restricted shares awarded under the Company's Plans. That expense is expected to be recognized over a weighted-average period of 1.6 years. The total fair value of shares vested during the six months ended June 30, 2017 and 2016, was $2,735 and $2,532, respectively. Under the terms of the 2017 Plan, stock options may not be granted with an exercise price less than the fair market value of the Company’s common stock on the date the option is granted and may not be exercised later than ten years after the grant date. The fair market value is the closing stock price as quoted on the NASDAQ Stock Market on the date of grant. The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. The risk-free interest rate is the implied yield available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term of the stock option in effect at the time of the grant. The expected term of stock options is based on employees' actual vesting behavior and expected volatilities are based on historical volatilities of the Company’s common stock. Expected dividends are the estimated dividend rate over the expected term of the stock options. The weighted average fair value of stock options granted during the six months ended June 30, 2017 and 2016 was $10.74 and $5.37, respectively. The fair value of options granted was determined using the following weighted-average assumptions as of grant date:
A summary of activity in the stock option portion of the Company's Plans as of is presented below:
As of June 30, 2017, there was $10,464 of total unrecognized compensation expense related to non-vested stock options. That expense is expected to be recognized over a weighted-average period of 2.4 years. At June 30, 2017, the Company applied an estimated forfeiture rate of 5% based on historical activity. The intrinsic value for stock options is calculated based on the difference between the exercise price of the underlying awards and the market price of our common stock as of the reporting date. The total intrinsic value of stock options exercised was $2,334 and $127 for the six months ended June 30, 2017 and 2016, respectively. Effective January 1, 2017, the Company changed the accounting for income taxes upon the vesting of stock options and restricted stock to be in accordance with ASC 718, as modified by Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting. Prior to the implementation of ASU 2016-09, the tax effects of income tax deductions in excess of compensation cost (windfalls) were recorded in additional paid-in capital, and the tax effects of compensation cost in excess of income tax deductions (shortfalls) were recorded in additional paid-in capital to the extent of previously recognized windfalls, with the remainder recorded in income tax expense. Under ASU 2016-09, all tax effects of windfalls and shortfalls related to share-based payments are recorded through the income statement. For the six months ended June 30, 2017, we recognized income tax deductions in excess of compensation cost of $3,363 for share-based payment awards, which resulted in a tax benefit of $1,177 recorded as a reduction of income tax expense. The tax effect of this windfall is treated as a discrete item in this interim reporting period and is not considered in determining the annual estimated effective tax rate. The classification of excess tax benefits on the statement of cash flows will be shown as an operating activity. |
Income Taxes |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes A summary of the net deferred tax assets as of June 30, 2017 and December 31, 2016, is presented below:
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Commitments and Contingent Liabilities |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingent Liabilities | Commitments and Contingent Liabilities In the normal course of business, the Company enters into various transactions which, in accordance with US GAAP, are not included in its consolidated balance sheets. The Company enters into these transactions to meet the financing needs of its customers. These transactions include commitments to extend credit and standby letters of credit which involve, to varying degrees, elements of credit and interest rate risk. Credit losses up to the face amount of these instruments could occur, although material losses are not anticipated. The Company's credit policies applied to loan originations are also applied to these commitment requests, including obtaining collateral at the exercise of the commitment. The contractual amounts of financial instruments with off‑balance sheet risk at June 30, 2017 and December 31, 2016, are summarized below. Please see Part I-Item 2-"Off-Balance Sheet Arrangements, Contractual Obligations and Commitments" of this Form 10-Q for information related to commitment maturities.
Unused commitments to extend credit - The Company enters into contractual commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Since many commitments expire without being drawn upon, the total contractual amount of commitments does not necessarily represent future cash requirements of the Company. Substantially all of the Company's commitments to extend credit are contingent upon customers maintaining specific credit standards at the time of future loan funding. Unused capacity on Warehouse Purchase Program loans - In regard to unused capacity on Warehouse Purchase Program loans, the Company has established maximum purchase facility amounts, but reserves the right, at any time, to refuse to buy any mortgage loans offered for sale by each customer, for any reason in the Company's sole and absolute discretion. Standby letters of credit - Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. In addition to the commitments above, the Company guarantees the credit card debt of certain customers to the merchant bank that issues the credit cards. These guarantees are in place for as long as the guaranteed credit card is open. At June 30, 2017 and December 31, 2016, these credit card guarantees totaled $4,280 and $3,335, respectively. This amount represents the maximum potential amount of future payments under the guarantee, which the Company is responsible for in the event of customer non-payment. The Company funds an allowance for credit losses on off-balance sheet lending-related commitments and guarantees on credit card debt through a charge to provision for credit losses on the Company's consolidated statement of income. At June 30, 2017 and December 31, 2016, this allowance for credit losses on off-balance sheet lending-related commitments and guarantees on credit card debt, included in "other liabilities" on the Company's consolidated balance sheets, totaled $1,229 and $1,500, respectively. In addition to the commitments above, the Company had overdraft protection available in the amounts of $85,080 and $85,709 at June 30, 2017 and December 31, 2016, respectively. The Company, at June 30, 2017 and December 31, 2016, had FHLB letters of credit of $1,018,605 and $946,338, respectively, pledged to secure public deposits, repurchase agreements, and for other purposes required or permitted by law. At June 30, 2017 and December 31, 2016, the Company had $1,680 and $2,080, respectively, of unfunded commitments recorded in other liabilities in its consolidated balance sheet related to investments in community development-oriented private equity funds used for Community Reinvestment Act purposes. |
Recent Accounting Developments |
6 Months Ended |
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Jun. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Developments | Recent Accounting Developments Effect of Newly Issued But Not Yet Effective Accounting Standards In May 2014, the Financial Accounting Standards Board (the "FASB") issued ASU 2014-09, Revenue from Contracts with Customers. This ASU states that an entity should 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. This ASU affects entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," which deferred the effective date of ASU 2014-09 for public entities to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Our revenue is comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASU 2014-09, and non-interest income. ASU 2014-09 could require us to change how we recognize certain recurring revenue streams; however, we do not expect these changes to have a significant impact on our financial statements. We continue to evaluate the impact of ASU 2014-09 on components of non-interest income. We expect to adopt the standard in the first quarter of 2018 with a cumulative effect adjustment to opening retained earnings, if such adjustment is deemed to be significant. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurements of Financial Assets and Financial Liabilities. This ASU requires that all equity investments be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). This ASU also requires that an entity present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, this ASU eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. For public business entities, this ASU is effective for annual periods beginning after December 15, 2017, and interim periods therein. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements and disclosures. In February 2016, the FASB issued ASU 2016-02, Leases. This ASU requires lessees to put most leases on their balance sheets but recognize expenses in the income statement in a manner similar to current accounting treatment. This ASU changes the guidance on sale-leaseback transactions, initial direct costs and lease execution costs, and, for lessors, modifies the classification criteria and the accounting for sales-type and direct financing leases. For public business entities, this ASU is effective for annual periods beginning after December 15, 2018, and interim periods therein. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is evaluating the impact of this ASU on its financial statements and disclosures. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This ASU removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current US GAAP, companies generally recognize credit losses when it is probable that the loss has been incurred. This revised guidance will remove all recognition thresholds and will require companies to recognize an allowance for lifetime expected credit losses. Credit losses will be immediately recognized through net income; the amount recognized will be based on the current estimate of contractual cash flows not expected to be collected over the financial asset’s contractual term. ASU 2016-13 also amends the credit loss measurement guidance for available for sale debt securities. For public business entities, this ASU is effective for financial statements issued for fiscal years and for interim periods within those fiscal years beginning after December 15, 2019. The Company is evaluating the impact of this ASU on its financial statements and disclosures. |
Subsequent Events |
6 Months Ended |
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Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company evaluated events from the date of the consolidated financial statements on June 30, 2017 through the issuance of those consolidated financial statements included in this Quarterly Report on Form 10-Q dated July 25, 2017. No additional events were identified requiring recognition in and/or disclosures in the consolidated financial statements. |
Basis of Financial Statement Presentation (Policies) |
6 Months Ended |
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Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | In preparing the financial statements, management is required to make estimates and assumptions that affect the recorded amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period. Actual results could differ from those estimates. For further information with respect to significant accounting policies followed by the Company in preparation of its consolidated financial statements, refer to the 2016 Form 10-K. |
Consolidation | The accompanying Unaudited Consolidated Interim Financial Statements include the accounts of the Company, whose business primarily consists of the operations of its wholly owned subsidiary, LegacyTexas Bank (the “Bank”). All significant intercompany transactions and balances are eliminated in consolidation. |
Other-than-Temporary Impairment | Other-than-Temporary Impairment In determining other-than-temporary impairment for debt securities, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than amortized cost; (2) the financial condition and near-term prospects of the issuer; (3) whether the market decline was affected by macroeconomic conditions; and (4) whether the Company has the intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. |
Allowance for Loan Losses | The allowance for loan losses and related provision expense are susceptible to change if the credit quality of our loan portfolio changes, which is evidenced by many factors, including but not limited to charge-offs and non-performing loan trends. Generally, consumer real estate lending has a lower credit risk profile compared to other consumer lending (such as automobile loans). Commercial real estate and commercial and industrial lending, however, can have higher risk profiles than consumer loans due to these loans being larger in amount and non-homogeneous in structure and term. Changes in economic conditions, the mix and size of the loan portfolio and individual borrower conditions can dramatically impact our level of allowance for loan losses in relatively short periods of time. The allowance for loan losses is maintained to cover incurred losses that are estimated in accordance with US GAAP. It is our estimate of credit losses inherent in our loan portfolio at each balance sheet date. Our methodology for analyzing the allowance for loan losses consists of general and specific components. For the general component, we stratify the loan portfolio into homogeneous groups of loans that possess similar loss potential characteristics and apply a loss ratio to these groups of loans to estimate the credit losses in the loan portfolio. We use both historical loss ratios and qualitative loss factors assigned to major loan collateral types to establish general component loss allocations, inclusive of estimated loss emergence periods. Qualitative loss factors are based on management's judgment of company, market, industry or business specific data and external economic indicators, which are not yet reflected in the historical loss ratios, and that could impact the Company's specific loan portfolios. The Allowance for Loan Loss Committee sets and adjusts qualitative loss factors by regularly reviewing changes in underlying loan composition and the seasonality of specific portfolios. The Allowance for Loan Loss Committee also considers credit quality and trends relating to delinquency, non-performing and adversely rated loans within the Company's loan portfolio when evaluating qualitative loss factors. Additionally, the Allowance for Loan Loss Committee adjusts qualitative factors to account for the potential impact of external economic factors, including the unemployment rate, vacancy and capitalization rates and other pertinent economic data specific to our primary market area and lending portfolios. For the specific component, the allowance for loan losses includes loans where management has concerns about the borrower's ability to repay and on individually analyzed loans found to be impaired. Management evaluates current information and events regarding a borrower's ability to repay its obligations and considers a loan to be impaired when the ultimate collectability of amounts due, according to the contractual terms of the loan agreement, is in doubt. If an impaired loan is collateral-dependent, the fair value of the collateral, less the estimated cost to sell, is used to determine the amount of impairment. If an impaired loan is not collateral-dependent, estimated discounted cash flows are used to determine the amount of impairment, if any. For impaired loans, the amount of the impairment can be adjusted, based on current data, until such time as the actual basis is established by acquisition of the collateral or until the basis is collected. Impairment losses are reflected in the allowance for loan losses through a charge to the provision for credit losses. Subsequent recoveries are credited to the allowance for loan losses. Cash receipts for accruing loans are applied to principal and interest under the contractual terms of the loan agreement. Cash receipts on impaired loans for which the accrual of interest has been discontinued are applied first to principal. Large groups of smaller-balance homogeneous loans are collectively evaluated for impairment. As a result, the Company does not separately identify consumer real estate loans less than $417 or individual consumer non-real estate secured loans for impairment disclosures. The Company considers these loans to be homogeneous in nature due to the smaller dollar amount and the similar underwriting criteria. A loan that has been modified is considered a troubled debt restructuring (“TDR”) when two conditions are met: 1) the borrower is experiencing financial difficulty and 2) concessions are made for the borrower's benefit that would not otherwise be considered for a borrower or transaction with similar credit risk characteristics. Modifications to loan terms may include a modification of the contractual interest rate to a below-market rate (even if the modified rate is higher than the original rate), forgiveness of accrued interest, forgiveness of a portion of principal, an extended repayment period or a deed in lieu of foreclosure or other transfer of assets other than cash to fully or partially satisfy a debt. The Company's policy is to place all TDRs on nonaccrual for a minimum period of six months. Loans qualify for return to accrual status once they have demonstrated performance with the restructured terms of the loan agreement for a minimum of six months and the collection of principal and interest under the revised terms is deemed probable. All TDRs are considered to be impaired loans. |
Loans | For loans collateralized by real property and commercial and industrial loans, credit exposure is monitored by internally assigned grades used for classification of loans. A loan is considered “special mention” when management has determined that there is a potential weakness that deserves management's close attention. Loans rated as "special mention" are not adversely classified according to regulatory classifications and do not expose the Company to sufficient risk to warrant adverse classification. A loan is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. “Substandard” loans include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected, and the loan may or may not meet the criteria for impairment. Loans classified as “doubtful” have all of the weaknesses of 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.” All other loans that do not fall into the above mentioned categories are considered “pass” loans. Updates to internally assigned grades are made monthly and/or upon significant developments. For other consumer loans (non-real estate), credit exposure is monitored by payment history of the loans. Non-performing other consumer loans are on nonaccrual status and are generally greater than 90 days past due. Past due status is based on the contractual terms of the loan. Loans that are past due 30 days are considered delinquent. Interest income on loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Non-mortgage consumer loans are typically charged off no later than 120 days past due. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and larger individually classified impaired loans. All interest accrued but not received for loans placed on nonaccrual status is reversed against interest income. Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. |
Fair Value | Impaired loans that are collateral dependent are measured for impairment using the fair value of the collateral adjusted by additional Level 3 inputs, such as discounts of market value, estimated marketing costs and estimated legal expenses. Impaired loans secured by real estate, receivables or inventory had discounts determined by management on an individual loan basis. Impaired loans that are not collateral dependent are measured for impairment by a discounted cash flow analysis using a net present value calculation that utilizes data from the loan file before and after the modification. Foreclosed assets are measured at the lower of book or fair value less costs to sell using third party appraisals, listing agreements or sale contracts, which may be adjusted by additional Level 3 inputs, such as discounts of market value, estimated marketing costs and estimated legal expenses. Management may also consider additional adjustments on specific properties due to the age of the appraisal, expected holding period, lack of comparable sales, or if the other real estate owned is a special use property. At June 30, 2017, the Company had $180 in residential mortgage loans in the process of foreclosure. The Credit Risk Management department evaluates the valuations on impaired loans and foreclosed assets at least quarterly. The valuations on impaired loans are reviewed at least quarterly by the Allowance for Loan Loss Committee and are considered in the calculation of the allowance for loan losses. Unobservable inputs, such as discounts to collateral, are monitored and adjusted if market conditions change. The following methods and assumptions were used to estimate the fair values of each class of financial instrument presented: Cash and cash equivalents - Due to their short term nature, the carrying amount approximates the estimated fair value. Securities held to maturity - The fair values of these securities 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 (Level 2 inputs). Loans held for investment (including Warehouse Purchase Program loans) - Fair value is based on discounted cash flows using current market offering rates, estimated life, and applicable credit risk. FHLB stock and other restricted securities - The fair value on these securities is their cost basis due to restrictions on transferability. Accrued interest receivable - Due to their short term nature, the carrying amount approximates the estimated fair value. Deposits - Fair value is calculated using the FHLB advance curve to discount cash flows based on the estimated life of the deposits. FHLB advances - Fair value is calculated using the FHLB advance curve to discount cash flows based on the contractual repayment schedule. Repurchase agreement - The fair value is based on discounting the estimated cash flows using the current rate at which similar borrowings would be made with similar terms and remaining maturities. Subordinated debt - The estimated fair value is based on current market rates on similar debt in the market. Accrued interest payable - Due to their short term nature, the carrying amount approximates the estimated fair value. The fair value of off-balance sheet items is based on the current fees or costs that would be charged to enter into or terminate such arrangements and are not considered significant to this presentation. ASC 820, “Fair Value Measurements and Disclosures”, establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: 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: Prices or valuation techniques that require inputs that are both significant and unobservable in the market. These instruments are valued using the best information available, some of which is internally developed, and reflects a reporting entity’s own assumptions about the risk premiums that market participants would generally require and the assumptions they would use. The following methodologies were used to measure the fair value of financial assets and liabilities valued on a recurring basis: Securities available for sale - The fair values of securities available for sale are 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 (Level 2 inputs). Residential mortgage loans held for sale - Mortgage loans held for sale, which are sold on a servicing released basis, are valued using a market approach by utilizing either: (i) the fair value of securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the value attributable to mortgage servicing and credit risk, (ii) current commitments to purchase loans or (iii) recent observable market trades for similar loans, adjusted to credit risk and other individual loan characteristics. As these prices are derived from market observable inputs, the Company classifies these valuations as Level 2 in the fair value disclosures. Interest income on mortgage loans held for sale is recognized based on the contractual rates and reflected in interest income on loans held for sale in the consolidated income statement. The Company has no continuing involvement in any residential mortgage loans sold. Derivative instruments: Interest rate lock commitments ("IRLCs") and forward mortgage-backed securities trades - The Company enters into a variety of derivative instruments as part of its hedging strategy and measures these instruments at fair value on a recurring basis in the balance sheet. The majority of these derivatives are forward mortgage-backed securities and are exchange-traded or traded within highly active dealer markets. In order to determine the fair value of these instruments, the Company utilized the exchange price or dealer market price for the particular derivative contract; therefore these contracts are classified as Level 2. In addition, the Company enters into interest rate lock commitments with prospective borrowers. These commitments are carried at fair value based on the fair value of the underlying mortgage loans which are based on observable market data. The Company adjusts the outstanding IRLCs with prospective borrowers based on an expectation that it will be exercised and the loan will be funded. These commitments are classified as Level 2 in the fair value disclosures, as the valuations are based on market observable inputs. Loan customer counterparty and financial institution counterparty - The Company also enters into certain interest rate derivative positions that are not designated as hedging instruments. The estimated fair value of these commercial loan interest rate swaps are obtained from a pricing service that provides the swaps' unwind value (Level 2 inputs). Please see Note 6 — Derivative Financial Instruments for more information. |
Derivatives | These financial instruments are not designated as hedging instruments and are used for asset and liability management and commercial customers' financing needs. All derivatives are carried at fair value in either other assets or other liabilities. IRLCs - The Company enters into IRLCs with prospective residential mortgage borrowers whereby the interest rate on the loan is determined prior to funding and the borrowers have locked into that interest rate. The estimated fair values of IRLCs are based on the fair value of the related mortgage loan which is based on observable market data. The Company adjusts the outstanding IRLCs based on the expectation that it will be exercised and the loan will be funded. Forward mortgage-backed securities trades - To manage the price risk associated with IRLCs, the Company enters into forward sales of mortgage-backed securities in an amount similar to the portion of the IRLC expected to close, assuming no change in mortgage interest rates. In addition, to manage the interest rate risk associated with mortgage loans held for sale, the Company enters into forward sales of mortgage-backed securities to deliver mortgage loan inventory to investors. The estimated fair values of forward sales of mortgage-backed securities and forward sale commitments are based on quoted market values. Interest rate swaps and caps - These derivative positions relate to transactions in which we enter into an interest rate swap or cap with a customer, while at the same time entering into an offsetting interest rate swap or cap with another financial institution. An interest rate swap transaction allows our customer to effectively convert a variable rate loan to a fixed rate. In connection with each swap, we agree to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, we agree to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. In connection with each interest rate cap, we sell a cap to the customer and agree to pay interest if the underlying index exceeds the strike price defined in the cap agreement. Simultaneously we purchase a cap with matching terms from another financial institution which agrees to pay us if the underlying index exceeds the strike price. |
Share-based Compensation | Effective January 1, 2017, the Company changed the accounting for income taxes upon the vesting of stock options and restricted stock to be in accordance with ASC 718, as modified by Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting. Prior to the implementation of ASU 2016-09, the tax effects of income tax deductions in excess of compensation cost (windfalls) were recorded in additional paid-in capital, and the tax effects of compensation cost in excess of income tax deductions (shortfalls) were recorded in additional paid-in capital to the extent of previously recognized windfalls, with the remainder recorded in income tax expense. Under ASU 2016-09, all tax effects of windfalls and shortfalls related to share-based payments are recorded through the income statement. Compensation cost is recognized for stock options and restricted stock awards based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with time-based vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. For awards with performance-based vesting conditions, compensation cost is recognized when the achievement of the performance condition is considered probable of achievement. If a performance condition is subsequently determined to be improbable of achievement, compensation cost is reversed. |
Effect of Newly Issued But Not Yet Effective Accounting Standards | Effect of Newly Issued But Not Yet Effective Accounting Standards In May 2014, the Financial Accounting Standards Board (the "FASB") issued ASU 2014-09, Revenue from Contracts with Customers. This ASU states that an entity should 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. This ASU affects entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," which deferred the effective date of ASU 2014-09 for public entities to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Our revenue is comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASU 2014-09, and non-interest income. ASU 2014-09 could require us to change how we recognize certain recurring revenue streams; however, we do not expect these changes to have a significant impact on our financial statements. We continue to evaluate the impact of ASU 2014-09 on components of non-interest income. We expect to adopt the standard in the first quarter of 2018 with a cumulative effect adjustment to opening retained earnings, if such adjustment is deemed to be significant. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurements of Financial Assets and Financial Liabilities. This ASU requires that all equity investments be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). This ASU also requires that an entity present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, this ASU eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. For public business entities, this ASU is effective for annual periods beginning after December 15, 2017, and interim periods therein. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements and disclosures. In February 2016, the FASB issued ASU 2016-02, Leases. This ASU requires lessees to put most leases on their balance sheets but recognize expenses in the income statement in a manner similar to current accounting treatment. This ASU changes the guidance on sale-leaseback transactions, initial direct costs and lease execution costs, and, for lessors, modifies the classification criteria and the accounting for sales-type and direct financing leases. For public business entities, this ASU is effective for annual periods beginning after December 15, 2018, and interim periods therein. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is evaluating the impact of this ASU on its financial statements and disclosures. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This ASU removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current US GAAP, companies generally recognize credit losses when it is probable that the loss has been incurred. This revised guidance will remove all recognition thresholds and will require companies to recognize an allowance for lifetime expected credit losses. Credit losses will be immediately recognized through net income; the amount recognized will be based on the current estimate of contractual cash flows not expected to be collected over the financial asset’s contractual term. ASU 2016-13 also amends the credit loss measurement guidance for available for sale debt securities. For public business entities, this ASU is effective for financial statements issued for fiscal years and for interim periods within those fiscal years beginning after December 15, 2019. The Company is evaluating the impact of this ASU on its financial statements and disclosures. |
Earnings Per Common Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Numerator and Denominator of Basic and Diluted Earnings per Common Share | A reconciliation of the numerator and denominator of the basic and diluted earnings per common share computation for the three and six months ended June 30, 2017 and 2016 is as follows:
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Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Available-for-Sale Securities and Related Gross Unrealized Gains and Losses | The amortized cost, related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss), and the fair value of securities available for sale ("AFS") were as follows:
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Carrying Amount, Unrecognized Gains and Losses, and Fair Value of Securities Held to Maturity | The amortized cost (carrying amount), unrealized gains and losses, and fair value of securities held to maturity ("HTM") were as follows:
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Carrying Amount and Fair Value of Held to Maturity Debt Securities and Fair Value of Available-for-Sale Debt Securities | The amortized cost (carrying amount) and fair value of held to maturity debt securities and the fair value of available for sale debt securities at June 30, 2017 by contractual maturity are set forth in the table below. Securities with contractual payments not due at a single maturity date, including mortgage-backed securities and collateralized mortgage obligations, are shown separately.
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Schedule of Realized Gain (Loss) | Sales activity of securities during the three and six months ended June 30, 2017 or 2016 was as follows. All securities sold were classified as available for sale.
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Securities with Unrealized Losses Aggregated by Investment and Length of Time that Individual Securities have been in Continuous Unrealized Loss Position Category | Securities with unrealized losses at June 30, 2017 and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:
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Loans (Tables) |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans | Loans consist of the following:
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Allowance for Loan Losses | Activity in the allowance for loan losses for the three and six months ended June 30, 2017 and 2016, segregated by portfolio segment and evaluation for impairment, is set forth below. The below activity does not include Warehouse Purchase Program loans, which are collectively evaluated for impairment and are purchased under several contractual requirements, providing safeguards to the Company. To date, the Company has not experienced a loss on these loans and no allowance for loan losses has been allocated to them. At June 30, 2017 and 2016, the allowance for loan impairment related to purchased credit impaired ("PCI") loans totaled $232 and $148, respectively.
Changes in the allowance for off-balance sheet credit losses on lending-related commitments and guarantees on credit card debt, included in "accrued expenses and other liabilities" on the consolidated balance sheets, are summarized in the following table. Please see Note 9 - Commitments and Contingent Liabilities for more information.
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Impaired Loans | The carrying amount of PCI loans included in the consolidated balance sheets and the related outstanding balances at June 30, 2017 and December 31, 2016 are set forth in the table below. The outstanding balance represents the total amount owed, including accrued but unpaid interest, and any amounts previously charged off.
Changes in the accretable yield for PCI loans for the three and six months ended June 30, 2017 and 2016 are as follows:
Impaired loans at June 30, 2017 and December 31, 2016, were as follows1:
Income on impaired loans for the three and six months ended June 30, 2017 and 2016, was as follows1:
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Non-Performing (Nonaccrual) Loans | Non-performing (nonaccrual) loans were as follows:
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Summary of Outstanding Balances of Troubled Debt Restructuring | The outstanding balances of TDRs are shown below:
The following tables provide the recorded balances of loans modified as a TDR during the three and six months ended June 30, 2017 and 2016.
Loans modified as a TDR during the three and six months ended June 30, 2017 and 2016, which experienced a subsequent payment default in the preceding twelve months are shown below. A payment default is defined as a loan that was 90 days or more past due.
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Analysis of Age of Recorded Investment in Loans | Below is an analysis of the age of recorded investment in loans that were past due at June 30, 2017 and December 31, 2016. No Warehouse Purchase Program loans were delinquent at June 30, 2017 or December 31, 2016 and therefore are not included in the following table.
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Real Estate and Commercial and Industrial Credit Exposure Credit Risk Profile by Internally Assigned Grade | The recorded investment in loans by credit quality indicators at June 30, 2017 and December 31, 2016, was as follows. Real Estate and Commercial and Industrial Credit Exposure Credit Risk Profile by Internally Assigned Grade
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Consumer Credit Exposure Credit Risk Profile Based on Payment Activity | Other Consumer Credit Exposure Credit Risk Profile Based on Payment Activity
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Fair Value (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Fair Value Measured on Recurring Basis | Assets and liabilities measured at fair value on a recurring basis are summarized below.
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Summary of Fair Value Measured on Nonrecurring Basis | Assets measured at fair value on a non-recurring basis are summarized below. There were no liabilities measured at fair value on a non-recurring basis at June 30, 2017 or December 31, 2016.
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Fair Value, by Balance Sheet Grouping | The carrying amount and fair value information of financial instruments not recorded at fair value in their entirety on a recurring basis on the Company's consolidated balance sheets at June 30, 2017 and at December 31, 2016, were as follows:
|
Derivative Financial Instruments (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Outstanding Notional Balances and Fair Values of Outstanding Positions | The following table provides the outstanding notional balances and fair values of outstanding derivative positions at June 30, 2017 and December 31, 2016.
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Schedule of Derivative Instruments | The commercial loan customer counterparty weighted average received and paid interest rates for interest rate swaps outstanding at June 30, 2017 and December 31, 2016 are presented in the following table.
Income (loss) for the three and six months ended June 30, 2017 and 2016 was as follows:
|
Share-based Compensation - (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | Compensation cost charged to income for share-based compensation is presented below:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonvested Shares for the Company's Stock Plans | A summary of activity in the restricted stock portion of the Company's Plans is presented below:
|
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The fair value of options granted was determined using the following weighted-average assumptions as of grant date:
|
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Schedule of Stock Option Activity | A summary of activity in the stock option portion of the Company's Plans as of is presented below:
|
Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Summary of Net Deferred Tax Assets | A summary of the net deferred tax assets as of June 30, 2017 and December 31, 2016, is presented below:
|
Commitments and Contingent Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments Contractual Amounts with off Balance Sheet Risk | The contractual amounts of financial instruments with off‑balance sheet risk at June 30, 2017 and December 31, 2016, are summarized below. Please see Part I-Item 2-"Off-Balance Sheet Arrangements, Contractual Obligations and Commitments" of this Form 10-Q for information related to commitment maturities.
|
Securities - Summarized Sales Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Proceeds | $ 0 | $ 7,700 | $ 0 | $ 7,700 |
Gross gains | 0 | 72 | 0 | 72 |
Gross losses | 0 | 7 | 0 | 7 |
Tax expense (benefit) of securities gains/losses | $ 0 | $ 23 | $ 0 | $ 23 |
Securities - (Narrative) (Details) $ in Thousands |
Jun. 30, 2017
USD ($)
security
|
Dec. 31, 2016
USD ($)
|
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Pledged as collateral | $ | $ 264,968 | $ 224,674 |
Number of securities in unrealized losses | 193 | |
Number of securities in unrealized losses for greater than one year | 24 |
Loans - Narrative (Details) - USD ($) |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
Jun. 30, 2016 |
|
Receivables [Abstract] | |||
Portion of allowance for loan losses allocated to PCI loans | $ 232,000 | $ 180,000 | $ 148,000 |
Threshold at which large consumer real estate loans are individually evaluated for impairment | $ 417,000 | ||
Loans That Are Past Due Or Greater Are Considered Delinquent | 30 days | ||
Delinquent Period of Loan to Discontinued Interest Income for Consumer Loan | 90 days | ||
Consumer Loans Are Typically Charged Off | 120 days | ||
Loans past due over 90 days and still accruing | $ 0 | $ 141,000 | |
Troubled debt restructuring, non-accrual period | 6 months | ||
Number Of Days To Define Payment Default | 90 days | ||
Period of time for Consumer Loans to be Past Due to be Classified as Non-Performing | 90 days |
Loans - Off-Balance Sheet (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Allowance for loan losses: | ||||
Charge-offs on lending-related commitments | $ 2,160 | $ 345 | $ 19,406 | $ 926 |
Other Liabilities [Member] | ||||
Allowance for loan losses: | ||||
Balance at beginning of period | 1,174 | 1,573 | ||
Charge-offs on lending-related commitments | 0 | 0 | ||
Provision for credit losses on lending-related commitments | 55 | (344) | ||
Balance at end of period | $ 1,229 | $ 1,229 |
Loans - Non-Performing (nonaccrual) loans (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-performing | $ 99,196 | $ 111,389 |
Commercial Real Estate [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-performing | 4,201 | 5,195 |
Commercial and Industrial [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-performing | 87,599 | 86,664 |
Construction and land [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-performing | 0 | 11,385 |
Consumer Real Estate [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-performing | 7,265 | 7,987 |
Other Consumer [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-performing | $ 131 | $ 158 |
Loans - Summary of Outstanding Balances of Troubled Debt Restructuring (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
|
Troubled Debt Restructuring, Debtor, Current Period [Line Items] | ||
Recorded investment | $ 24,855 | $ 12,155 |
Specific reserves on TDRs | 9,244 | 1,686 |
Outstanding commitments to lend additional funds to borrowers with TDR loans | $ 0 | 0 |
Troubled debt restructuring, non-accrual period | 6 months | |
Nonperforming Financing Receivable [Member] | ||
Troubled Debt Restructuring, Debtor, Current Period [Line Items] | ||
Recorded investment | $ 24,417 | 11,701 |
Performing Financing Receivable [Member] | ||
Troubled Debt Restructuring, Debtor, Current Period [Line Items] | ||
Recorded investment | $ 438 | $ 454 |
Loans - Carrying Amount of Acquired PCI Loans Included in the Consolidated Balance Sheet (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
Jun. 30, 2016 |
---|---|---|---|
Receivables [Abstract] | |||
Carrying amount | $ 6,576 | $ 6,793 | |
Outstanding balance | 7,348 | 7,597 | |
Portion of allowance for loan losses allocated to PCI loans | $ 232 | $ 180 | $ 148 |
Loans - Changes in the Accretable Yield for Acquired PCI Loans (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||||
Beginning balance | $ 2,527 | $ 3,056 | $ 2,515 | $ 3,356 |
Reclassifications (to) from nonaccretable | 142 | (493) | 340 | (256) |
Disposals | (9) | (14) | (9) | (282) |
Accretion | (180) | (273) | (366) | (542) |
Balance at end of period | $ 2,480 | $ 2,276 | $ 2,480 | $ 2,276 |
Loans - Consumer Credit Exposure Credit Risk Profile Based on Payment Activity (Details) - Other Consumer [Member] - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Financing Receivable, Recorded Investment [Line Items] | ||
Other consumer | $ 47,735 | $ 53,991 |
Performing Financing Receivable [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Other consumer | 47,604 | 53,833 |
Nonperforming Financing Receivable [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Other consumer | $ 131 | $ 158 |
Fair Value - Narrative (Details) $ in Thousands |
Jun. 30, 2017
USD ($)
|
---|---|
Fair Value Disclosures [Abstract] | |
Mortgage loans on real estate, pending foreclosures | $ 180 |
Fair Value - Summary of Fair Value Measured on Nonrecurring Basis (Details) - Significant Unobservable Inputs (Level 3) [Member] - Fair Value, Measurements, Nonrecurring [Member] - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans | $ 25,367 | $ 9,274 |
Commercial Real Estate [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreclosed assets | 10,545 | 10,638 |
Construction and Land [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreclosed assets | 1,532 | 194 |
Foreclose assets- other [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreclosed assets | $ 1,206 | $ 6 |
Derivative Financial Instruments - Schedule of Outstanding Notional Balances and Fair Values of Outstanding Positions (Details) - Not Designated as Hedging Instrument [Member] - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Interest Rate Lock Commitments [Member] | ||
Derivative [Line Items] | ||
Asset, Outstanding Notional Balance | $ 18,228 | $ 10,952 |
Asset, Fair Value | 582 | 379 |
Liability, Fair Value | 3 | 0 |
Forward Mortgage Backed Securities Trades [Member] | ||
Derivative [Line Items] | ||
Asset, Outstanding Notional Balance | 30,493 | 18,613 |
Asset, Fair Value | 132 | 36 |
Liability, Fair Value | 7 | 80 |
Loan Customer Counterparty [Member] | Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Asset, Fair Value | 0 | 0 |
Liability, Outstanding Notional Amount | 115,953 | 112,294 |
Liability, Fair Value | 1,255 | 1,369 |
Financial Institution Counterparty [Member] | Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Asset, Outstanding Notional Balance | 115,953 | 112,294 |
Asset, Fair Value | 1,255 | 1,369 |
Liability, Fair Value | $ 0 | $ 0 |
Derivative Financial Instruments - Narrative (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Derivative [Line Items] | ||
Derivative, collateral pledged | $ 1,950 | $ 1,950 |
Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Exposure | 174 | $ 118 |
Financial Institution Counterparty [Member] | Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Exposure | $ 1,245 |
Derivative Financial Instruments - Interest rates, notional amounts, fair values (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Interest Rate Lock Commitments [Member] | |||||
Derivative [Line Items] | |||||
Derivative, Gain (Loss) on Derivative, Net | $ 29 | $ 86 | $ 201 | $ 296 | |
Forward Mortgage Backed Securities Trades [Member] | |||||
Derivative [Line Items] | |||||
Derivative, Gain (Loss) on Derivative, Net | $ (147) | $ (301) | $ (259) | $ (646) | |
Loan Customer Counterparty [Member] | Commercial Loan [Member] | Interest Rate Swap [Member] | Not Designated as Hedging Instrument [Member] | |||||
Derivative [Line Items] | |||||
Received | 2.53% | 2.53% | 3.12% | ||
Paid | 2.29% | 2.29% | 2.36% |
Share-based Compensation - Compensation Cost Charged to Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Compensation cost charged to income for: | ||||
Income tax benefit | $ 645 | $ 429 | $ 1,192 | $ 778 |
Restricted Stock [Member] | ||||
Compensation cost charged to income for: | ||||
Compensation cost | 857 | 733 | 1,725 | 1,181 |
Stock options [Member] | ||||
Compensation cost charged to income for: | ||||
Compensation cost | $ 986 | $ 493 | $ 1,680 | $ 1,042 |
Share-based Compensation - Valuation Assumptions (Details) |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Expected stock price volatility | 31.86% | 31.70% |
Expected dividends | 1.61% | 2.60% |
Expected term of stock options (years) | 6 years 2 months 12 days | 6 years 4 months 5 days |
Risk-free interest rate | 2.18% | 1.60% |
Share-based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Authorized (shares) | 3,250,000 | |
Fungible share rate | 2.5 | |
Fair value ($ per share) | $ 10.74 | $ 5.37 |
Expected forfeiture rate | 5.00% | |
Aggregate Intrinsic Value, Exercised | $ 2,334 | $ 127 |
Deductions in excess of compensation cost | 3,363 | |
Excess tax benefit | 1,177 | |
Restricted stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total unrecognized compensation expense related to non-vested shares | $ 4,445 | |
Weighted-average period | 1 year 6 months 22 days | |
Fair value | $ 2,735 | $ 2,532 |
Stock options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total unrecognized compensation expense related to non-vested shares | $ 10,464 | |
Weighted-average period | 2 years 4 months 24 days | |
Expiration period | 10 years |
Income Taxes - (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | ||
Net deferred tax assets | $ 31,170 | $ 29,231 |
Estimated annual effective tax rate | 34.00% |
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