10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2015

OR

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 001-34095

FIRST BUSINESS FINANCIAL SERVICES, INC.

(Exact name of registrant as specified in its charter)

Wisconsin	39-1576570
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

401 Charmany Drive, Madison, WI	53719
(Address of Principal Executive Offices)	(Zip Code)

(608) 238-8008

Registrant’s telephone number, including area code

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨	Accelerated filer þ	Non-accelerated filer ¨	Smaller reporting company ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

The number of shares outstanding of the registrant’s sole class of common stock, par value $0.01 per share, on August 5, 2015 was 4,334,918 shares.

FIRST BUSINESS FINANCIAL SERVICES, INC.

INDEX — FORM 10-Q

PART I. Financial Information	1
Item 1. Financial Statements	1
Consolidated Balance Sheets	1
Consolidated Statements of Income (Unaudited)	2
Consolidated Statements of Comprehensive Income (Unaudited)	3
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)	4
Consolidated Statements of Cash Flows (Unaudited)	5
Notes to Unaudited Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3. Quantitative and Qualitative Disclosures about Market Risk	57
Item 4. Controls and Procedures	58
PART II. Other Information	58
Item 1. Legal Proceedings	58
Item 1A. Risk Factors	58
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 3. Defaults Upon Senior Securities	58
Item 4. Mine Safety Disclosures	58
Item 5. Other Information	59
Item 6. Exhibits	59
Signatures	59

PART I. Financial Information

Item 1. Financial Statements

First Business Financial Services, Inc.

Consolidated Balance Sheets

		June 30, 2015			December 31, 2014
		(unaudited)
	(In Thousands, Except Share Data)
Assets
Cash and due from banks		$	12,829		$	14,881
Short-term investments		76,019			88,356
Cash and cash equivalents		88,848			103,237
Securities available-for-sale, at fair value		146,342			144,698
Securities held-to-maturity, at amortized cost		39,428			41,563
Loans held for sale		1,274			1,340
Loans and leases receivable, net of allowance for loan and lease losses of $15,199 and $14,329, respectively		1,334,091			1,265,098
Premises and equipment, net		3,998			3,943
Foreclosed properties		1,854			1,693
Cash surrender value of bank-owned life insurance		27,785			27,314
Investment in Federal Home Loan Bank and Federal Reserve Bank stock, at cost		2,891			2,340
Accrued interest receivable and other assets		24,920			26,217
Goodwill and other intangible assets		12,133			11,944
Total assets		$	1,683,564		$	1,629,387
Liabilities and Stockholders’ Equity
Deposits		$	1,471,068		$	1,438,268
Federal Home Loan Bank and other borrowings		47,401			33,994
Junior subordinated notes		10,315			10,315
Accrued interest payable and other liabilities		10,493			9,062
Total liabilities		1,539,277			1,491,639
Commitments and contingencies		—			—
Stockholders’ equity:
Preferred stock, $0.01 par value, 2,500,000 shares authorized, none issued or outstanding		—			—
Common stock, $0.01 par value, 25,000,000 shares authorized, 4,545,457 and 4,537,426 shares issued, 4,334,918 and 4,335,927 shares outstanding at June 30, 2015 and December 31, 2014, respectively		45			45
Additional paid-in capital		75,792			74,963
Retained earnings		74,028			67,886
Accumulated other comprehensive income		207			218
Treasury stock (210,539 and 201,499 shares at June 30, 2015 and December 31, 2014, respectively), at cost		(5,785		)	(5,364		)
Total stockholders’ equity		144,287			137,748
Total liabilities and stockholders’ equity		$	1,683,564		$	1,629,387

See accompanying Notes to Unaudited Consolidated Financial Statements.

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First Business Financial Services, Inc.

Consolidated Statements of Income (Unaudited)

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2015		2014			2015			2014
	(In Thousands, Except Per Share Data)
Interest income:
Loans and leases	$	16,680	$	12,651		$	34,005		$	25,126
Securities income	748		855			1,524			1,721
Short-term investments	92		59			207			119
Total interest income	17,520		13,565			35,736			26,966
Interest expense:
Deposits	2,593		2,337			5,162			4,506
Notes payable and other borrowings	461		152			904			310
Junior subordinated notes	278		277			552			551
Total interest expense	3,332		2,766			6,618			5,367
Net interest income	14,188		10,799			29,118			21,599
Provision for loan and lease losses	520		(91		)	1,204			89
Net interest income after provision for loan and lease losses	13,668		10,890			27,914			21,510
Non-interest income:
Trust and investment services fee income	1,279		1,110			2,486			2,178
Service charges on deposits	693		600			1,389			1,167
Loan fees	499		380			1,001			769
Increase in cash surrender value of bank-owned life insurance	238		209			472			416
Gain on sale of loans	1,064		—			1,717			—
Other	353		59			909			149
Total non-interest income	4,126		2,358			7,974			4,679
Non-interest expense:
Compensation	6,924		4,741			14,278			9,798
Occupancy	486		315			986			638
Professional fees	1,515		895			2,504			1,527
Data processing	655		423			1,185			839
Marketing	701		364			1,343			711
Equipment	298		125			606			255
FDIC insurance	220		173			433			363
Collateral liquidation costs	78		85			380			243
Net loss (gain) on foreclosed properties	1		4			(15		)	4
Other	1,096		624			2,006			1,222
Total non-interest expense	11,974		7,749			23,706			15,600
Income before income tax expense	5,820		5,499			12,182			10,589
Income tax expense	1,962		1,994			4,132			3,747
Net income	$	3,858	$	3,505		$	8,050		$	6,842
Earnings per common share:
Basic	$	0.89	$	0.89		$	1.86		$	1.73
Diluted	$	0.89	$	0.88		$	1.86		$	1.72
Dividends declared per share	$	0.22	$	0.21		$	0.44		$	0.42

See accompanying Notes to Unaudited Consolidated Financial Statements.

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First Business Financial Services, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2015			2014			2015			2014
	(In Thousands)
Net income	$	3,858		$	3,505		$	8,050		$	6,842
Other comprehensive (loss) income, before tax
Securities available-for-sale:
Unrealized securities (losses) gains arising during the period	(910		)	1,793			(145		)	2,142
Securities held-to-maturity:
Unrealized losses transferred to held-to-maturity	—			(874		)	—			(874		)
Amortization of net unrealized losses transferred from available-for-sale	64			25			127			25
Income tax benefit (expense)	327			(364		)	7			(499		)
Comprehensive income	$	3,339		$	4,085		$	8,039		$	7,636

See accompanying Notes to Unaudited Consolidated Financial Statements.

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First Business Financial Services, Inc.

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

	Common shares outstanding		Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive (loss) income			Treasury stock			Total
	(In Thousands, Except Share Data)
Balance at December 31, 2013	3,943,997		$	41	$	56,002	$	57,143		$	(342	)	$	(3,569	)	$	109,275
Net income	—		—		—		6,842			—			—			6,842
Other comprehensive income	—		—		—		—			794			—			794
Exercise of stock options	2,000		—		48		—			—			—			48
Share-based compensation - restricted shares	996		—		389		—			—			—			389
Share-based compensation - tax benefits	—		—		38		—			—			—			38
Cash dividends ($0.42 per share)	—		—		—		(1,657		)	—			—			(1,657		)
Treasury stock purchased	(1,773	)	—		—		—			—			(81		)	(81		)
Balance at June 30, 2014	3,945,220		$	41	$	56,477	$	62,328		$	452		$	(3,650	)	$	115,648

	Common shares outstanding		Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive income			Treasury stock			Total
	(In Thousands, Except Share Data)
Balance at December 31, 2014	4,335,927		$	45	$	74,963	$	67,886		$	218		$	(5,364	)	$	137,748
Net income	—		—		—		8,050			—			—			8,050
Other comprehensive loss	—		—		—		—			(11		)	—			(11		)
Exercise of stock options	12,000		—		300		—			—			—			300
Share-based compensation - restricted shares	(3,969	)	—		449		—			—			—			449
Share-based compensation - tax benefits	—		—		80		—			—			—			80
Cash dividends ($0.44 per share)	—		—		—		(1,908		)	—			—			(1,908		)
Treasury stock purchased	(9,040	)	—		—		—			—			(421		)	(421		)
Balance at June 30, 2015	4,334,918		$	45	$	75,792	$	74,028		$	207		$	(5,785	)	$	144,287

See accompanying Notes to Unaudited Consolidated Financial Statements.

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First Business Financial Services, Inc.

Consolidated Statements of Cash Flows (Unaudited)

	For the Six Months Ended June 30,
	2015			2014
	(In Thousands)
Operating activities
Net income	$	8,050		$	6,842
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes, net	490			443
Provision for loan and lease losses	1,204			89
Depreciation, amortization and accretion, net	(604		)	870
Share-based compensation	449			389
Increase in cash surrender value of bank-owned life insurance	(472		)	(416		)
Origination of loans for sale	(32,473		)	—
Sale of loans originated for sale	34,256			—
Gain on sale of loans originated for sale	(1,717		)	—
Net (gain) loss on foreclosed properties, including impairment valuation	(15		)	4
Excess tax benefit from share-based compensation	(80		)	(38		)
Decrease (increase) in accrued interest receivable and other assets	192			(224		)
Increase (decrease) in accrued interest payable and other liabilities	1,514			(1,328		)
Net cash provided by operating activities	10,794			6,631
Investing activities
Proceeds from maturities, redemptions and paydowns of available-for-sale securities	21,777			25,038
Proceeds from maturities, redemptions and paydowns of held-to-maturity securities	2,175			290
Purchases of available-for-sale securities	(24,189		)	(31,648		)
Proceeds from sale of foreclosed properties	143			—
Net increase in loans and leases	(69,107		)	(26,760		)
Distributions from limited partnerships	332			203
Investment in FHLB and FRB Stock	(928		)	(467		)
Proceeds from sale of FHLB Stock	377			373
Purchases of leasehold improvements and equipment, net	(420		)	(159		)
Net cash used in investing activities	(69,840		)	(33,130		)
Financing activities
Net increase in deposits	33,106			36,842
Proceeds from FHLB advances	13,000			—
Net increase in short-term borrowed funds	500			—
Repayment of subordinated notes payable	—			(4,000		)
Excess tax benefit from share-based compensation	80			38
Cash dividends paid	(1,908		)	(1,657		)
Exercise of stock options	300			48
Purchase of treasury stock	(421		)	(81		)
Net cash provided by financing activities	44,657			31,190
Net (decrease) increase in cash and cash equivalents	(14,389		)	4,691
Cash and cash equivalents at the beginning of the period	103,237			81,286
Cash and cash equivalents at the end of the period	$	88,848		$	85,977
Supplementary cash flow information
Cash paid during the period for:
Interest paid on deposits and borrowings	$	6,574		$	5,160
Income taxes paid	1,469			2,867
Non-cash investing and financing activities:
Transfer of securities from available-for-sale to held-to-maturity	—			44,587
Unrealized loss on transfer from available-for-sale to held-to-maturity	—			(874		)
Transfer to foreclosed properties	289			—

See accompanying Notes to Unaudited Consolidated Financial Statements.

5

Notes to Unaudited Consolidated Financial Statements

Note 1 — Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations. The accounting and reporting practices of First Business Financial Services, Inc. (the “Corporation”), its wholly-owned subsidiaries, First Business Bank (“FBB”), First Business Bank – Milwaukee (“FBB – Milwaukee”) and Alterra Bank (“Alterra”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). FBB, FBB – Milwaukee and Alterra are sometimes referred to together as the “Banks.” FBB operates as a commercial banking institution in the Madison, Wisconsin market, consisting primarily of Dane County and the surrounding areas, with loan production offices in Northeast Wisconsin. FBB also offers trust and investment services through First Business Trust & Investments (“FBTI”), a division of FBB. FBB – Milwaukee operates as a commercial banking institution in the Milwaukee, Wisconsin market, consisting primarily of Waukesha County and the surrounding areas, with a loan production office in Kenosha, Wisconsin. Alterra operates as a commercial banking institution in the Kansas City market and the surrounding areas. The Banks provide a full range of financial services to businesses, business owners, executives, professionals and high net worth individuals. The Banks are subject to competition from other financial institutions and service providers and are also subject to state and federal regulations. FBB has the following wholly-owned subsidiaries: First Business Capital Corp. (“FBCC”), First Madison Investment Corp. (“FMIC”), First Business Equipment Finance, LLC (“FBEF”), Rimrock Road Investment Fund, LLC (“Rimrock Road”) and BOC Investment, LLC (“BOC”). FMIC is located in and was formed under the laws of the state of Nevada. FBB-Milwaukee has one subsidiary, FBB – Milwaukee Real Estate, LLC (“FBBMRE”).

Basis of Presentation. The accompanying unaudited Consolidated Financial Statements were prepared in accordance with GAAP and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Corporation’s Consolidated Financial Statements and footnotes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014. The unaudited Consolidated Financial Statements include the accounts of the Corporation and its wholly-owned subsidiaries. In accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 810, the Corporation’s ownership interest in FBFS Statutory Trust II (“Trust II”) has not been consolidated into the financial statements. All significant intercompany balances and transactions have been eliminated in consolidation.

Management of the Corporation is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Material estimates that could significantly change in the near-term include the value of foreclosed property, lease residuals, property under operating leases, securities, income taxes and the level of the allowance for loan and lease losses. The results of operations for the six-month period ended June 30, 2015 are not necessarily indicative of results that may be expected for any other interim period or the entire fiscal year ending December 31, 2015. Certain amounts in prior periods may have been reclassified to conform to the current presentation. Subsequent events have been evaluated through the date of the issuance of the Consolidated Financial Statements. No significant subsequent events have occurred through this date requiring adjustment to the financial statements or disclosures.

The Corporation has not changed its significant accounting and reporting policies from those disclosed in the Corporation’s Form 10-K for the year ended December 31, 2014 except as described further below in this Note 1.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 666).” The ASU is a converged standard between the FASB and the IASB that provides a single comprehensive revenue recognition model for all contracts with customers across transactions and industries. The primary objective of the ASU is revenue recognition that represents the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU is effective for interim and annual reporting periods beginning after December 15, 2016. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In June 2014, the FASB issued ASU No. 2014-12, “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” This ASU requires a reporting entity to treat a performance target that affects vesting and that could be achieved after the requisite service period as a performance condition. A reporting entity should apply FASB ASC Topic 718, Compensation-Stock Compensation, to awards with performance conditions that affect vesting. For all entities, ASU 2014-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. ASU 2014-12 may be

6

adopted either prospectively for share-based payment awards granted or modified on or after the effective date, or retrospectively, using a modified retrospective approach. The modified retrospective approach would apply to share-based payment awards outstanding as of the beginning of the earliest annual period presented in the financial statements on adoption, and to all new or modified awards thereafter. While the Corporation does not have any performance-based awards outstanding as of the reporting date, the Corporation’s equity incentive plan does allow for such awards. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This ASU describes how an entity should assess its ability to meet obligations and sets rules for how this information should be disclosed in the financial statements. The standard provides accounting guidance that will be used along with existing auditing standards. The ASU is effective for interim and annual periods beginning after December 15, 2016. Early application is permitted. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis.” This ASU changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a variable interest entity (VIE), and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. It also eliminates the VIE consolidation model based on majority exposure to variability that applied to certain investment companies and similar entities. The new guidance excludes money market funds that are required to comply with Rule 2a-7 of the Investment Company Act of 1940 and similar entities from the U.S. GAAP consolidation requirements. The new consolidation guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. At the effective date, all previous consolidation analysis that the guidance affects must be reconsidered. This includes the consolidation analysis for all VIEs and for all limited partnerships and similar entities that previously were consolidated by the general partner even though the entities were not VIEs. Early adoption is permitted, including early adoption in an interim period. If a reporting enterprise chooses to early adopt in an interim period, adjustments resulting from the revised consolidation analysis must be reflected as of the beginning of the fiscal year that includes that interim period. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” This ASU intends to simplify the presentation of debt issuance costs. This ASU is effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In April 2015, the FASB issued ASU 2015-05, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement.” This ASU provides explicit guidance to help companies evaluate the accounting for fees paid by a customer in a cloud computing arrangement. The new guidance clarifies that if a cloud computing arrangement includes a software license, the customer should account for the license consistent with its accounting for other software licenses. If the arrangement does not include a software license, the customer should account for the arrangement as a service contract. This ASU is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. An entity can elect to adopt the amendments either prospectively for all arrangements entered into or materially modified after the effective date, or retrospectively. Early adoption is permitted for all entities. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In May 2015, the FASB issued ASU 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).” This ASU will eliminate the requirement to categorize investments in the fair value hierarchy if their fair value is measured at net asset value (NAV) per share (or its equivalent) using the practical expedient in the FASB’s fair value measurement guidance. Reporting entities are required to adopt the ASU retrospectively. The effective date for public business entities is fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for all entities. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

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Note 2 — Earnings Per Common Share

Earnings per common share are computed using the two-class method. Basic earnings per common share are computed by dividing net income allocated to common shares by the weighted average number of shares outstanding during the applicable period, excluding outstanding participating securities. Participating securities include unvested restricted shares. Unvested restricted shares are considered participating securities because holders of these securities receive non-forfeitable dividends at the same rate as holders of the Corporation’s common stock. Diluted earnings per share are computed by dividing net income allocated to common shares adjusted for reallocation of undistributed earnings of unvested restricted shares by the weighted average number of shares determined for the basic earnings per common share computation plus the dilutive effect of common stock equivalents using the treasury stock method.

For both the three and six month periods ending June 30, 2015 and 2014, there were no average anti-dilutive employee share-based awards.

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2015		2014		2015		2014
	(Dollars in Thousands, Except Per Share Data)
Basic earnings per common share
Net income	$	3,858	$	3,505	$	8,050	$	6,842
Less: earnings allocated to participating securities	65		75		138		147
Basic earnings allocated to common shareholders	$	3,793	$	3,430	$	7,912	$	6,695
Weighted-average common shares outstanding, excluding participating securities	4,261,127		3,860,087		4,261,218		3,859,795
Basic earnings per common share	$	0.89	$	0.89	$	1.86	$	1.73
Diluted earnings per common share
Earnings allocated to common shareholders	$	3,793	$	3,430	$	7,912	$	6,695
Reallocation of undistributed earnings	—		—		—		—
Diluted earnings allocated to common shareholders	$	3,793	$	3,430	$	7,912	$	6,695
Weighted-average common shares outstanding, excluding participating securities	4,261,127		3,860,087		4,261,218		3,859,795
Dilutive effect of share-based awards	—		23,268		1,121		22,203
Weighted-average diluted common shares outstanding, excluding participating securities	4,261,127		3,883,355		4,262,339		3,881,998
Diluted earnings per common share	$	0.89	$	0.88	$	1.86	$	1.72

Note 3 — Share-Based Compensation

The Corporation adopted the 2012 Equity Incentive Plan (the “Plan”) during the quarter ended June 30, 2012. The Plan is administered by the Compensation Committee of the Board of Directors of the Corporation and provides for the grant of equity ownership opportunities through incentive stock options and nonqualified stock options (together, “Stock Options”), restricted stock, restricted stock units, dividend equivalent units, and any other type of award permitted by the Plan. As of June 30, 2015, 178,738 shares were available for future grants under the Plan. Shares covered by awards that expire, terminate or lapse will again be available for the grant of awards under the Plan. The Corporation may issue new shares and shares from treasury for shares delivered under the Plan.

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Stock Options

The Corporation may grant Stock Options to senior executives and other employees under the Plan. Stock Options generally have an exercise price that is equal to the fair value of the common shares on the date the option is awarded. Stock Options granted under the Plan are subject to graded vesting, generally ranging from 4 years to 8 years, and have a contractual term of 10 years. For any new awards issued, compensation expense is recognized over the requisite service period for the entire award on a straight-line basis. No Stock Options have been granted since the Corporation became a reporting company under the Securities Exchange Act of 1934, as amended, and no Stock Options have been modified, repurchased or canceled since such time. For that reason, no stock-based compensation related to Stock Options was recognized in the Consolidated Financial Statements for the three and six months ended June 30, 2015 and 2014. As of June 30, 2015, all Stock Options granted and not previously forfeited have vested. The benefits of tax deductions as a result of disqualifying dispositions upon exercise of stock options are recognized as a financing cash flow.

Stock Option activity for the year ended December 31, 2014 and six months ended June 30, 2015 was as follows:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Outstanding at December 31, 2013	51,000		$	24.24	0.88
Granted	—		—
Exercised	(39,000	)	24.00
Expired	—		—
Forfeited	—		—
Outstanding at December 31, 2014	12,000		$	25.00	0.13
Exercisable at December 31, 2014	12,000		$	25.00	0.13
Outstanding as of December 31, 2014	12,000		$	25.00	0.13
Granted	—		—
Exercised	(12,000	)	25.00
Expired	—		—
Forfeited	—		—
Outstanding as of June 30, 2015	—		$	—
Exercisable at June 30, 2015	—		$	—

Restricted Stock

Under the Plan, the Corporation may grant restricted shares to plan participants, subject to forfeiture upon the occurrence of certain events until the dates specified in the participant’s award agreement. While the restricted shares are subject to forfeiture, the participant may exercise full voting rights and will receive all dividends and other distributions paid with respect to the restricted shares. The restricted shares granted under the Plan are subject to graded vesting. Compensation expense is recognized over the requisite service period of generally four years for the entire award on a straight-line basis. Upon vesting of restricted share awards, the benefit of tax deductions in excess of recognized compensation expense is recognized as a financing cash flow activity.

9

Restricted share activity for the year ended December 31, 2014 and the six months ended June 30, 2015 was as follows:

	Number of Restricted Shares		Weighted Average Grant-Date Fair Value
Nonvested balance as of December 31, 2013	84,709		$	23.10
Granted	32,261		44.98
Vested	(39,471	)	19.71
Forfeited	—		—
Nonvested balance as of December 31, 2014	77,499		33.94
Granted	500		46.60
Vested	(913	)	44.23
Forfeited	(4,469	)	31.37
Nonvested balance as of June 30, 2015	72,617		$	34.05

As of June 30, 2015, $1.7 million of deferred compensation expense was included in additional paid-in capital in the Consolidated Balance Sheets related to unvested restricted shares which the Corporation expects to recognize over a weighted-average period of approximately 2.5 years. As of June 30, 2015, all restricted shares that vested were delivered.

For the three and six months ended June 30, 2015 and 2014, share-based compensation expense related to restricted stock included in the Consolidated Statements of Income was as follows:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2015		2014		2015		2014
	(In Thousands)
Share-based compensation expense	$	215	$	196	$	449	$	389

Note 4 — Securities

The amortized cost and estimated fair value of securities available-for-sale and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:

	As of June 30, 2015
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses			Estimated fair value
	(In Thousands)
Available-for-sale:
U.S. Government agency obligations - government-sponsored enterprises	$	8,047	$	13	$	(37	)	$	8,023
Municipal obligations	3,254		4		(11		)	3,247
Asset-backed securities	1,441		4		—			1,445
Collateralized mortgage obligations - government issued	54,918		1,178		(114		)	55,982
Collateralized mortgage obligations - government-sponsored enterprises	77,765		233		(353		)	77,645
	$	145,425	$	1,432	$	(515	)	$	146,342

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	As of December 31, 2014
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses			Estimated fair value
	(In Thousands)
Available-for-sale:
U.S. Government agency obligations - government-sponsored enterprises	$	9,046	$	—	$	(81	)	$	8,965
Municipal obligations	573		5		—			578
Asset-backed securities	1,514		$	—	(4		)	1,510
Collateralized mortgage obligations - government issued	67,740		1,390		(256		)	68,874
Collateralized mortgage obligations - government-sponsored enterprises	64,763		234		(226		)	64,771
	$	143,636	$	1,629	$	(567	)	$	144,698

The amortized cost and estimated fair value of securities held-to-maturity and the corresponding amounts of gross unrecognized gains and losses were as follows:

	As of June 30, 2015
	Amortized cost		Gross unrecognized holding gains		Gross unrecognized holding losses			Estimated fair value
	(In Thousands)
Held-to-maturity:
U.S. Government agency obligations - government-sponsored enterprises	$	1,494	$	4	$	(9	)	$	1,489
Municipal obligations	16,063		48		(40		)	16,071
Collateralized mortgage obligations - government issued	13,106		73		(39		)	13,140
Collateralized mortgage obligations - government-sponsored enterprises	8,765		—		(46		)	8,719
	$	39,428	$	125	$	(134	)	$	39,419

	As of December 31, 2014
	Amortized cost		Gross unrecognized holding gains		Gross unrecognized holding losses			Estimated fair value
	(In Thousands)
Held-to-maturity:
U.S. Government agency obligations - government-sponsored enterprises	$	1,490	$	—	$	(17	)	$	1,473
Municipal obligations	16,088		85		(18		)	16,155
Collateralized mortgage obligations - government issued	14,505		57		(31		)	14,531
Collateralized mortgage obligations - government-sponsored enterprises	9,480		74		(19		)	9,535
	$	41,563	$	216	$	(85	)	$	41,694

U.S. Government agency obligations - government-sponsored enterprises represent securities issued by the Federal Home Loan Mortgage Corporation (“FHLMC”) and Federal National Mortgage Association (“FNMA”). Collateralized mortgage obligations - government issued represent securities guaranteed by the Government National Mortgage Association

11

(“GNMA”). Collateralized mortgage obligations - government-sponsored enterprises include securities guaranteed by the FHLMC and the FNMA. Asset-backed securities represent securities issued by the Student Loan Marketing Association (“SLMA”) which are 97% guaranteed by the U.S. government. Municipal obligations include securities issued by various municipalities located primarily within the State of Wisconsin and are primarily general obligation bonds that are tax-exempt in nature. There were no sales of securities available-for-sale for the three and six months ended June 30, 2015 and 2014.

At June 30, 2015 and December 31, 2014, securities with a fair value of $28.0 million and $32.7 million, respectively, were pledged to secure interest rate swap contracts, outstanding Federal Home Loan Bank (“FHLB”) advances, if any, and additional FHLB availability.

The amortized cost and estimated fair value of securities by contractual maturity at June 30, 2015 are shown below. Actual maturities may differ from contractual maturities because issuers have the right to call or prepay certain obligations without call or prepayment penalties.

	Available-for-Sale				Held-to-Maturity
	Amortized cost		Estimated fair value		Amortized cost		Estimated fair value
	(In Thousands)
Due in one year or less	$	—	$	—	$	—	$	—
Due in one year through five years	10,384		10,360		3,389		3,383
Due in five through ten years	84,949		85,407		13,668		13,681
Due in over ten years	50,092		50,575		22,371		22,355
	$	145,425	$	146,342	$	39,428	$	39,419

The tables below show the Corporation’s gross unrealized losses and fair value of available-for-sale investments with unrealized losses, aggregated by investment category and length of time that individual investments were in a continuous loss position at June 30, 2015 and December 31, 2014. At June 30, 2015 and December 31, 2014, the Corporation held 66 and 59 available-for-sale securities that were in an unrealized loss position, respectively. Such securities have not experienced credit rating downgrades; however, they have primarily declined in value due to the current interest rate environment. At June 30, 2015, the Corporation held 17 available-for-sale securities that had been in a continuous unrealized loss position for twelve months or greater.

The Corporation also has not specifically identified available-for-sale securities in a loss position that it intends to sell in the near term and does not believe that it will be required to sell any such securities. It is expected that the Corporation will recover the entire amortized cost basis of each security based upon an evaluation of the present value of the expected future cash flows. Accordingly, no other than temporary impairment was recorded in the Consolidated Statements of Income for the six months ended June 30, 2015 and 2014.

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A summary of unrealized loss information for securities available-for-sale, categorized by security type follows:

	As of June 30, 2015
	Less than 12 months				12 months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(In Thousands)
Available-for-sale:
U.S. Government agency obligations - government-sponsored enterprises	$	999	$	1	$	3,714	$	36	$	4,713	$	37
Municipal obligations	2,423		11		—		—		2,423		11
Collateralized mortgage obligations - government issued	2,970		14		6,878		100		9,848		114
Collateralized mortgage obligations - government-sponsored enterprises	40,081		292		4,604		61		44,685		353
	$	46,473	$	318	$	15,196	$	197	$	61,669	$	515

	As of December 31, 2014
	Less than 12 months				12 months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(In Thousands)
Available-for-sale:
U.S. Government agency obligations - government-sponsored enterprises	$	3,486	$	12	$	5,479	$	69	$	8,965	$	81
Asset-backed securities	—		$	—	1,510		4		1,510		4
Collateralized mortgage obligations - government issued	9,201		50		9,536		206		18,737		256
Collateralized mortgage obligations - government-sponsored enterprises	29,498		97		4,993		129		34,491		226
	$	42,185	$	159	$	21,518	$	408	$	63,703	$	567

The tables below show the Corporation’s gross unrecognized losses and fair value of held-to-maturity investments, aggregated by investment category and length of time that individual investments were in a continuous loss position at June 30, 2015 and December 31, 2014. At June 30, 2015 and December 31, 2014, the Corporation held 37 and 57 held-to-maturity securities that were in an unrecognized loss position, respectively. Such securities have not experienced credit rating downgrades; however, they have primarily declined in value due to the current interest rate environment. There were four held-to-maturity securities that were in a continuous unrecognized loss position for twelve months or greater as of June 30, 2015. It is expected that the Corporation will recover the entire amortized cost basis of each held-to-maturity security based upon an evaluation of the present value of the expected future cash flows. Accordingly, no other than temporary impairment was recorded in the Consolidated Statements of Income for the six months ended June 30, 2015.

A summary of unrecognized loss information for securities held-to-maturity, categorized by security type follows:

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	As of June 30, 2015
	Less than 12 months				12 months or longer				Total
	Fair value		Unrecognized losses		Fair value		Unrecognized losses		Fair value		Unrecognized losses
	(In Thousands)
Held-to-maturity:
U.S. Government agency obligations - government-sponsored enterprises	$	—	$	—	$	1,000	$	9	$	1,000	$	9
Municipal obligations	4,217		28		398		12		4,615		40
Collateralized mortgage obligations - government issued	6,426		39		—		—		6,426		39
Collateralized mortgage obligations - government-sponsored enterprises	8,765		46		—		—		8,765		46
	$	19,408	$	113	$	1,398	$	21	$	20,806	$	134

	As of December 31, 2014
	Less than 12 months				12 months or longer				Total
	Fair value		Unrecognized losses		Fair value		Unrecognized losses		Fair value		Unrecognized losses
	(In Thousands)
Held-to-maturity:
U.S. Government agency obligations - government-sponsored enterprises	$	1,490	$	17	$	—	$	—	$	1,490	$	17
Municipal obligations	2,222		18		—		—		2,222		18
Collateralized mortgage obligations - government issued	3,247		31		—		—		3,247		31
Collateralized mortgage obligations - government-sponsored enterprises	3,076		19		—		—		3,076		19
	$	10,035	$	85	$	—	$	—	$	10,035	$	85

14

Note 5 — Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses

Loan and lease receivables consist of the following:

	June 30, 2015		December 31, 2014
	(In Thousands)
Commercial real estate
Commercial real estate — owner occupied	$	169,768	$	163,884
Commercial real estate — non-owner occupied	400,018		417,962
Construction and land development	140,318		121,160
Multi-family	86,912		72,578
1-4 family (1)	47,091		36,182
Total commercial real estate	844,107		811,766
Commercial and industrial (2)	454,868		416,654
Direct financing leases, net	28,723		34,165
Consumer and other
Home equity and second mortgages (3)	9,466		7,866
Other	14,547		11,341
Total consumer and other	24,013		19,207
Total gross loans and leases receivable	1,351,711		1,281,792
Less:
Allowance for loan and lease losses	15,199		14,329
Deferred loan fees	1,147		1,025
Loans and leases receivable, net	$	1,335,365	$	1,266,438

(1) Includes residential real estate loans held for sale totaling $331,000 as of June 30, 2015 and $1.3 million as of December 31, 2014.

(2) Includes guaranteed portion of SBA loans held for sale totaling $638,000 as of June 30, 2015.

(3) Includes guaranteed portion of SBA loans held for sale totaling $305,000 as of June 30, 2015.

Loans transferred to third parties consist of the guaranteed portion of SBA loans as well as participation interests in other originated loans. The total principal amount of loans transferred during the three months ended June 30, 2015 and 2014 was $32.0 million and $6.6 million, respectively. For the six months ended June 30, 2015 and 2014, $46.6 million and $11.7 million of loans were transferred to third parties, respectively. Each of the transfers of these financial assets met the qualifications for sale accounting, including the requirements specific to loan participations, and therefore all of the loans transferred during the three and six months ended June 30, 2015 and June 30, 2014 have been derecognized in the unaudited Consolidated Financial Statements. The Corporation has a continuing involvement in each of the agreements by way of relationship management and servicing the loans; however, there are no further obligations to the third-party participant required of the Corporation in the event of a borrower’s default, other than standard representations and warranties related to sold amounts. The guaranteed portion of SBA loans were transferred at their fair value and the related gain was recognized upon the transfer as non-interest income in the unaudited Consolidated Financial Statements. No gain or loss was recognized on participation interests in other originated loans as they were transferred at or near the date of loan origination and the payments received for servicing the portion of the loans participated represents adequate compensation. The total amount of loan participations purchased on the Corporation’s Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014 was $475,000 and $482,000, respectively.

The total amount of outstanding loans transferred to third parties as loan participations sold at June 30, 2015 and December 31, 2014 was $140.0 million and $116.6 million, respectively, all of which was treated as a sale and derecognized under the applicable accounting guidance in effect at the time of the transfers of the financial assets. The Corporation’s continuing involvement with these loans is by way of partial ownership, relationship management and all servicing responsibilities. As of June 30, 2015 and December 31, 2014, the total amount of the Corporation’s partial ownership of loans on the Corporation’s Consolidated Balance Sheets was $98.4 million and $96.4 million, respectively. As of June 30, 2015, $1.0 million loans in this participation sold portfolio were considered impaired as compared to $1.2 million as of December 31, 2014. The Corporation does not share in the participant’s portion of the charge-offs.

15

The Corporation sells residential real estate loans, servicing released, in the secondary market. The total principal amount of residential real estate loans sold during the three and six months ended June 30, 2015 was $10.3 million and $19.5 million, respectively. No residential real estate loans were originated or sold during the three months ended June 30, 2014. Each of the transfers of these financial assets met the qualifications for sale accounting, and therefore all of the loans transferred during the three and six months ended June 30, 2015 have been derecognized in the unaudited Consolidated Financial Statements. The Corporation has a continuing involvement in each of the transactions by way of relationship management; however, there are no further obligations of the Corporation in the event of a borrower’s default, other than standard representations and warranties related to the sold amount. The loans were transferred at their fair value and the related gain was recognized as non-interest income upon the transfer in the unaudited Consolidated Financial Statements.

ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer, applies to purchased loans with evidence of deterioration in credit quality since origination for which it is probable at acquisition that the Corporation will be unable to collect all contractually required payments are considered to be credit impaired. Purchased credit-impaired loans are initially recorded at fair value, which is estimated by discounting the cash flows expected to be collected at the acquisition date. Because the estimate of expected cash flows reflects an estimate of future credit losses expected to be incurred over the life of the loans, an allowance for credit losses is not recorded at the acquisition date. The excess of cash flows expected at acquisition over the estimated fair value, referred to as the accretable yield, is recognized in interest income over the remaining life of the loan on a level-yield basis, contingent on the subsequent evaluation of future expected cash flows. The difference between the contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference. A subsequent decrease in the estimate of cash flows expected to be received on purchased credit-impaired loans generally results in the recognition of an allowance for credit losses. Subsequent increases in cash flows result in reversal of any nonaccretable difference (or allowance for loan and lease losses to the extent any has been recorded) with a positive impact on interest income subsequently recognized. The measurement of cash flows involves assumptions and judgments for interest rates, prepayments, default rates, loss severity, and collateral values. All of these factors are inherently subjective and significant changes in the cash flow estimates over the life of the loan can result.

The following table reflects the contractually required payments receivable and fair value of the Corporation’s purchased credit impaired loans as of June 30, 2015 and December 31, 2014:

	June 30, 2015		December 31, 2014
	(In Thousands)
Contractually required payments	$	6,382	$	6,874
Fair value of purchased credit impaired loans	$	3,701	$	4,025

The following table presents a rollforward of the Corporation’s accretable yield as of June 30, 2015 and December 31, 2014:

	As of and for the Six Months Ended June 30, 2015			As of and for the Year Ended December 31, 2014
	(In Thousands)
Accretable yield, beginning of period	$	676		$	683
Accretion recognized in earnings	(22		)	(7		)
Reclassification to nonaccretable difference for loans with changing cash flows(1)	(21		)	—
Changes in accretable yield for non-credit related changes in expected cash flows(2)	(155		)	—
Accretable yield, end of period	$	478		$	676

(1) Represents changes in accretable yield for those loans that are driven primarily by credit performance.

(2) Represents changes in accretable yield for those loans that are driven primarily by changes in actual and estimated payments.

16

The following information illustrates ending balances of the Corporation’s loan and lease portfolio, including impaired loans by class of receivable, and considering certain credit quality indicators as of June 30, 2015 and December 31, 2014:

	Category
As of June 30, 2015	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	137,582		$	18,053		$	13,480		$	653		$	169,768
Commercial real estate — non-owner occupied	372,874			24,903			1,334			907			400,018
Construction and land development	121,404			8,370			5,927			4,617			140,318
Multi-family	85,641			367			894			10			86,912
1-4 family	37,919			4,755			2,057			2,360			47,091
Total commercial real estate	755,420			56,448			23,692			8,547			844,107
Commercial and industrial(1)	407,737			10,501			29,224			7,406			454,868
Direct financing leases, net	26,633			1,382			708			—			28,723
Consumer and other:
Home equity and second mortgages	8,359			447			162			498			9,466
Other	13,856			—			—			691			14,547
Total consumer and other	22,215			447			162			1,189			24,013
Total gross loans and leases receivable	$	1,212,005		$	68,778		$	53,786		$	17,142		$	1,351,711
Category as a % of total portfolio	89.66		%	5.09		%	3.98		%	1.27		%	100.00		%

(1) Category IV includes $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

17

	Category
As of December 31, 2014	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	131,094		$	15,592		$	16,621		$	577		$	163,884
Commercial real estate — non-owner occupied	378,671			20,823			17,498			970			417,962
Construction and land development	100,934			8,193			6,876			5,157			121,160
Multi-family	70,897			751			913			17			72,578
1-4 family	25,997			5,278			3,336			1,571			36,182
Total commercial real estate	707,593			50,637			45,244			8,292			811,766
Commercial and industrial	383,755			18,524			12,026			2,349			416,654
Direct financing leases, net	32,756			1,120			289			—			34,165
Consumer and other:
Home equity and second mortgages	7,039			205			189			433			7,866
Other	10,570			50			—			721			11,341
Total consumer and other	17,609			255			189			1,154			19,207
Total gross loans and leases receivable	$	1,141,713		$	70,536		$	57,748		$	11,795		$	1,281,792
Category as a % of total portfolio	89.07		%	5.50		%	4.51		%	0.92		%	100.00		%

Credit underwriting through a committee process is a key component of the Corporation’s operating philosophy. Business development officers have relatively low individual lending authority limits, and thus a significant portion of the Corporation’s new credit extensions require approval from a loan approval committee regardless of the type of loan or lease, asset quality grade of the credit, amount of the credit, or the related complexities of each proposal. In addition, the Corporation makes every effort to ensure that there is appropriate collateral at the time of origination to protect the Corporation’s interest in the related loan or lease.

Each credit is evaluated for proper risk rating upon origination, at the time of each subsequent renewal, upon receipt and evaluation of updated financial information from the Corporation’s borrowers, or as other circumstances dictate. The Corporation uses a nine grade risk rating system to monitor the ongoing credit quality of its loans and leases. The risk rating grades follow a consistent definition, and are then applied to specific loan types based on the nature of the loan. Each risk rating is subjective and, depending on the size and nature of the credit, subject to various levels of review and concurrence on the stated risk rating. In addition to its nine grade risk rating system, the Corporation groups loans into four loan and related risk categories which determine the level and nature of review by management.

Category I — Loans and leases in this category are performing in accordance with the terms of the contract and generally exhibit no immediate concerns regarding the security and viability of the underlying collateral, financial stability of the borrower, integrity or strength of the borrower’s management team or the industry in which the borrower operates. Loans and leases in this category are not subject to additional monitoring procedures above and beyond what is required at the origination or renewal of the loan or lease. The Corporation monitors Category I loans and leases through payment performance, continued maintenance of its personal relationships with such borrowers and continued review of such borrowers’ compliance with the terms of their respective agreements.

Category II — Loans and leases in this category are beginning to show signs of deterioration in one or more of the Corporation’s core underwriting criteria such as financial stability, management strength, industry trends and collateral values. Management will place credits in this category to allow for proactive monitoring and resolution with the borrower to possibly mitigate the area of concern and prevent further deterioration or risk of loss to the Corporation. Category II loans are considered performing but are monitored frequently by the assigned business development officer and by subcommittees of the Banks’ loan committees.

18

Category III — Loans and leases in this category are identified by management as warranting special attention. However, the balance in this category is not intended to represent the amount of adversely classified assets held by the Banks. Category III loans and leases generally exhibit undesirable characteristics such as evidence of adverse financial trends and conditions, managerial problems, deteriorating economic conditions within the related industry, or evidence of adverse public filings and may exhibit collateral shortfall positions. Management continues to believe that it will collect all required principal and interest in accordance with the original terms of the contracts relating to the loans and leases in this category, and therefore Category III loans are considered performing with no specific reserves established for this category. Category III loans are monitored by management and loan committees of the Banks on a monthly basis and the Banks’ Boards of Directors at each of their regularly scheduled meetings.

Category IV — Loans and leases in this category are considered to be impaired. Impaired loans and leases have been placed on non-accrual as management has determined that it is unlikely that the Banks will receive the required principal and interest in accordance with the contractual terms of the agreement. Impaired loans are individually evaluated to assess the need for the establishment of specific reserves or charge-offs. When analyzing the adequacy of collateral, the Corporation obtains external appraisals at least annually for impaired loans and leases. External appraisals are obtained from the Corporation’s approved appraiser listing and are independently reviewed to monitor the quality of such appraisals. To the extent a collateral shortfall position is present, a specific reserve or charge-off will be recorded to reflect the magnitude of the impairment. Loans and leases in this category are monitored by management and loan committees of the Banks on a monthly basis and the Banks’ Boards of Directors at each of their regularly scheduled meetings.

Utilizing regulatory classification terminology, the Corporation identified $10.6 million and $27.1 million of loans and leases as Substandard as of June 30, 2015 and December 31, 2014, respectively. No loans were considered Special Mention, Doubtful or Loss as of either June 30, 2015 or December 31, 2014. The population of Substandard loans are a subset of Category III and Category IV loans.

19

The delinquency aging of the loan and lease portfolio by class of receivable as of June 30, 2015 and December 31, 2014 is as follows:

As of June 30, 2015	30-59 days past due			60-89 days past due			Greater than 90 days past due			Total past due			Current			Total loans
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	169,189		$	169,189
Non-owner occupied	—			—			—			—			399,736			399,736
Construction and land development	—			—			—			—			135,779			135,779
Multi-family	—			—			—			—			86,902			86,902
1-4 family	—			—			—			—			45,775			45,775
Commercial and industrial	399			—			—			399			447,091			447,490
Direct financing leases, net	—			—			—			—			28,723			28,723
Consumer and other:
Home equity and second mortgages	—			—			—			—			9,063			9,063
Other	—			—			—			—			13,856			13,856
Total	399			—			—			399			1,336,114			1,336,513
Non-accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	490		$	—		$	490		$	89		$	579
Non-owner occupied	—			—			235			235			47			282
Construction and land development	—			—			—			—			4,539			4,539
Multi-family	—			—			—			—			10			10
1-4 family	658			96			175			929			387			1,316
Commercial and industrial(1)	219			194			582			995			6,383			7,378
Direct financing leases, net	—			—			—			—			—			—
Consumer and other:
Home equity and second mortgages	—			—			50			50			353			403
Other	—			—			691			691			—			691
Total	877			780			1,733			3,390			11,808			15,198
Total loans and leases
Commercial real estate:
Owner occupied	$	—		$	490		$	—		$	490		$	169,278		$	169,768
Non-owner occupied	—			—			235			235			399,783			400,018
Construction and land development	—			—			—			—			140,318			140,318
Multi-family	—			—			—			—			86,912			86,912
1-4 family	658			96			175			929			46,162			47,091
Commercial and industrial	618			194			582			1,394			453,474			454,868
Direct financing leases, net	—			—			—			—			28,723			28,723
Consumer and other:
Home equity and second mortgages	—			—			50			50			9,416			9,466
Other	—			—			691			691			13,856			14,547
Total	$	1,276		$	780		$	1,733		$	3,789		$	1,347,922		$	1,351,711
Percent of portfolio	0.09		%	0.06		%	0.13		%	0.28		%	99.72		%	100.00		%

20

(1) Current balance includes $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

As of December 31, 2014	30-59 days past due			60-89 days past due			Greater than 90 days past due			Total past due			Current			Total loans
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	163,384		$	163,384
Non-owner occupied	—			—			—			—			417,676			417,676
Construction and land development	—			—			—			—			116,228			116,228
Multi-family	—			—			—			—			72,561			72,561
1-4 family	—			—			—			—			35,492			35,492
Commercial and industrial	—			—			—			—			414,336			414,336
Direct financing leases, net	—			—			—			—			34,165			34,165
Consumer and other:
Home equity and second mortgages	—			—			—			—			7,537			7,537
Other	—			—			—			—			10,621			10,621
Total	—			—			—			—			1,272,000			1,272,000
Non-accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	500		$	500
Non-owner occupied	—			215			—			215			71			286
Construction and land development	—			193			—			193			4,739			4,932
Multi-family	—			—			—			—			17			17
1-4 family	—			106			306			412			278			690
Commercial and industrial	364			146			736			1,246			1,072			2,318
Direct financing leases, net	—			—			—			—			—			—
Consumer and other:
Home equity and second mortgages	—			—			—			—			329			329
Other	—			—			720			720			—			720
Total	364			660			1,762			2,786			7,006			9,792
Total loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	163,884		$	163,884
Non-owner occupied	—			215			—			215			417,747			417,962
Construction and land development	—			193			—			193			120,967			121,160
Multi-family	—			—			—			—			72,578			72,578
1-4 family	—			106			306			412			35,770			36,182
Commercial and industrial	364			146			736			1,246			415,408			416,654
Direct financing leases, net	—			—			—			—			34,165			34,165
Consumer and other:
Home equity and second mortgages	—			—			—			—			7,866			7,866
Other	—			—			720			720			10,621			11,341
Total	$	364		$	660		$	1,762		$	2,786		$	1,279,006		$	1,281,792
Percent of portfolio	0.03		%	0.05		%	0.14		%	0.22		%	99.78		%	100.00		%

21

The Corporation’s total impaired assets consisted of the following at June 30, 2015 and December 31, 2014, respectively.

	June 30, 2015		December 31, 2014
	(Dollars in Thousands)
Non-accrual loans and leases
Commercial real estate:
Commercial real estate — owner occupied	$	579	$	500
Commercial real estate — non-owner occupied	282		286
Construction and land development	4,539		4,932
Multi-family	10		17
1-4 family	1,316		690
Total non-accrual commercial real estate	6,726		6,425
Commercial and industrial(1)	7,378		2,318
Direct financing leases, net	—		—
Consumer and other:
Home equity and second mortgages	403		329
Other	691		720
Total non-accrual consumer and other loans	1,094		1,049
Total non-accrual loans and leases	15,198		9,792
Performing troubled debt restructurings	1,944		2,003
Total impaired loans and leases	17,142		11,795
Foreclosed properties, net	1,854		1,693
Total impaired assets	$	18,996	$	13,488

	June 30, 2015		December 31, 2014
Total non-accrual loans and leases to gross loans and leases	1.12	%	0.76	%
Total non-performing assets to total gross loans and leases plus foreclosed properties, net	1.26		0.89
Total non-performing assets to total assets	1.01		0.70
Allowance for loan and lease losses to gross loans and leases	1.12		1.12
Allowance for loan and lease losses to non-accrual loans and leases	100.01		146.33

(1) Balance includes $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

As of June 30, 2015 and December 31, 2014, $6.9 million and $7.4 million of the non-accrual loans were considered troubled debt restructurings, respectively. As of June 30, 2015, there were no unfunded commitments associated with troubled debt restructured loans and leases.

22

	As of June 30, 2015					As of December 31, 2014
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
	(Dollars in Thousands)
Troubled debt restructurings:
Commercial real estate
Commercial real estate — owner occupied	2	$	625	$	564	2	$	624	$	577
Commercial real estate — non-owner occupied	5	1,151		907		5	1,095		970
Construction and land development	3	6,034		4,678		4	6,260		5,157
Multi-family	1	184		10		1	184		17
1-4 family	16	2,119		1,435		16	2,119		1,368
Commercial and industrial	3	201		144		4	361		155
Direct financing leases, net	—	—		—		—	—		—
Consumer and other:
Home equity and second mortgages	6	681		375		6	772		431
Other	1	2,076		690		2	2,080		721
Total	37	$	13,071	$	8,803	40	$	13,495	$	9,396

All loans and leases modified as a troubled debt restructuring are evaluated for impairment. The nature and extent of the impairment of restructured loans, including those which have experienced a default, is considered in the determination of an appropriate level of the allowance for loan and lease losses.

As of June 30, 2015 and December 31, 2014, the Corporation’s troubled debt restructurings grouped by type of concession were as follows:

	As of June 30, 2015			As of December 31, 2014
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
	(Dollars in Thousands)
Commercial real estate
Extension of term	1	$	31	1	$	39
Interest rate concession	1	56		1	65
Combination of extension and interest rate concession	25	7,506		26	7,984
Commercial and industrial
Combination of extension and interest rate concession	3	144		4	155
Consumer and other
Extension of term	2	723		3	753
Combination of extension and interest rate concession	5	343		5	400
Total	37	$	8,803	40	$	9,396

There were no loans and leases modified in a troubled debt restructuring during the previous 12 months which subsequently defaulted during the six months ended June 30, 2015.

23

The following represents additional information regarding the Corporation’s impaired loans and leases by class:

	Impaired Loans and Leases
	As of and for the Six Months Ended June 30, 2015
	Recorded investment		Unpaid principal balance		Impairment reserve		Average recorded investment(1)		Foregone interest income		Interest income recognized		Net foregone interest income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	564	$	564	$	—	$	575	$	13	$	—	$	13
Non-owner occupied	860		860		—		918		6		—		6
Construction and land development	4,617		7,287		—		5,039		71		—		71
Multi-family	10		377		—		13		24		—		24
1-4 family	1,442		1,514		—		1,578		33		—		33
Commercial and industrial(2)	6,375		6,384		—		231		63		1		62
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	317		317		—		292		8		—		8
Other	691		1,357		—		704		41		—		41
Total	14,876		18,660		—		9,350		259		1		258
With impairment reserve recorded:
Commercial real estate:
Owner occupied	$	89	$	89	$	4	$	17	$	—	$	—	$	—
Non-owner occupied	47		87		47		48		2		—		2
Construction and land development	—		—		—		—		—		—		—
Multi-family	—		—		—		—		—		—		—
1-4 family	918		924		177		375		11		—		11
Commercial and industrial	1,031		1,031		253		1,241		38		—		38
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	181		181		94		127		7		—		7
Other	—		—		—		—		—		—		—
Total	2,266		2,312		575		1,808		58		—		58
Total:
Commercial real estate:
Owner occupied	$	653	$	653	$	4	$	592	$	13	$	—	$	13
Non-owner occupied	907		947		47		966		8		—		8
Construction and land development	4,617		7,287		—		5,039		71		—		71
Multi-family	10		377		—		13		24		—		24
1-4 family	2,360		2,438		177		1,953		44		—		44
Commercial and industrial	7,406		7,415		253		1,472		101		1		100
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	498		498		94		419		15		—		15
Other	691		1,357		—		704		41		—		41
Grand total	$	17,142	$	20,972	$	575	$	11,158	$	317	$	1	$	316

(1) Average recorded investment is calculated primarily using daily average balances.

(2) Recorded investment and unpaid principal balances include $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

24

	Impaired Loans and Leases
	As of and for the Year Ended December 31, 2014
	Recorded investment		Unpaid principal balance		Impairment reserve		Average recorded investment(1)		Foregone interest income		Interest income recognized		Net Foregone Interest Income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	577	$	577	$	—	$	484	$	30	$	79	$	(49	)
Non-owner occupied	921		921		—		349		22		—		22
Construction and land development	5,157		7,828		—		5,285		155		—		155
Multi-family	17		384		—		24		53		—		53
1-4 family	1,181		1,218		—		380		15		12		3
Commercial and industrial	2,316		2,926		—		6,141		463		649		(186		)
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	380		380		—		495		18		—		18
Other	721		1,389		—		768		87		—		87
Total	11,270		15,623		—		13,926		843		740		103
With impairment reserve recorded:
Commercial real estate:
Owner occupied	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-owner occupied	49		89		49		52		4		—		4
Construction and land development	—		—		—		—		—		—		—
Multi-family	—		—		—		—		—		—		—
1-4 family	390		390		155		405		18		—		18
Commercial and industrial	33		33		33		34		—		—		—
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	53		53		53		57		5		—		5
Other	—		—		—		—		—		—		—
Total	525		565		290		548		27		—		27
Total:
Commercial real estate:
Owner occupied	$	577	$	577	$	—	$	484	$	30	$	79	$	(49	)
Non-owner occupied	970		1,010		49		401		26		—		26
Construction and land development	5,157		7,828		—		5,285		155		—		155
Multi-family	17		384		—		24		53		—		53
1-4 family	1,571		1,608		155		785		33		12		21
Commercial and industrial	2,349		2,959		33		6,175		463		649		(186		)
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	433		433		53		552		23		—		23
Other	721		1,389		—		768		87		—		87
Grand total	$	11,795	$	16,188	$	290	$	14,474	$	870	$	740	$	130

(1) Average recorded investment is calculated primarily using daily average balances.

25

The difference between the loans and leases recorded investment and the unpaid principal balance of $3.8 million and $4.4 million as of June 30, 2015 and December 31, 2014 represents partial charge-offs resulting from confirmed losses due to the value of the collateral securing the loans and leases being below the carrying values of the loans and leases. Impaired loans and leases also included $1.9 million and $2.0 million of loans as of June 30, 2015 and December 31, 2014 that were performing troubled debt restructurings, and thus, while not on non-accrual, were reported as impaired, due to the concession in terms. When a loan is placed on non-accrual, interest accrual is discontinued and previously accrued but uncollected interest is deducted from interest income. Cash payments collected on non-accrual loans are first applied to principal. Foregone interest represents the interest that was contractually due on the note but not received or recorded. To the extent the amount of principal on a non-accrual note is fully collected and additional cash is received, the Corporation will recognize interest income.

To determine the level and composition of the allowance for loan and lease losses, the Corporation breaks out the portfolio by segments and risk ratings. First, the Corporation evaluates loans and leases for potential impairment classification. The Corporation analyzes each loan and lease determined to be impaired on an individual basis to determine a specific reserve based upon the estimated value of the underlying collateral for collateral-dependent loans, or alternatively, the present value of expected cash flows. The Corporation applies historical trends from established risk factors to each category of loans and leases that has not been individually evaluated for the purpose of establishing the general portion of the allowance.

A summary of the activity in the allowance for loan and lease losses by portfolio segment is as follows:

	As of and for the Six Months Ended June 30, 2015
	Commercial real estate			Commercial and industrial loans and leases			Consumer and other			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	8,619		$	5,492		$	218		$	14,329
Charge-offs	(91		)	(313		)	(4		)	(408		)
Recoveries	66			5			3			74
Provision	123			1,024			57			1,204
Ending balance	$	8,717		$	6,208		$	274		$	15,199
Ending balance: individually evaluated for impairment	$	228		$	124		$	94		$	446
Ending balance: collectively evaluated for impairment	$	8,489		$	5,955		$	180		$	14,624
Ending balance: loans acquired with deteriorated credit quality	$	—		$	129		$	—		$	129
Loans and lease receivables:
Ending balance, gross	$	844,107		$	483,591		$	24,013		$	1,351,711
Ending balance: individually evaluated for impairment(1)	$	5,589		$	6,751		$	959		$	13,299
Ending balance: collectively evaluated for impairment	$	835,559		$	476,186		$	22,824		$	1,334,569
Ending balance: loans acquired with deteriorated credit quality	$	2,959		$	654		$	230		$	3,843
Allowance as % of gross loans	1.03		%	1.28		%	1.14		%	1.12		%

(1) Commercial and industrial loans and leases balance includes $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

26

	As of and for the Six Months Ended June 30, 2014
	Commercial real estate			Commercial and industrial loans and leases			Consumer and other			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	9,055		$	4,573		$	273		$	13,901
Charge-offs	—			—			—			—
Recoveries	17			1			7			25
Provision	(304		)	432			(39		)	89
Ending balance	$	8,768		$	5,006		$	241		$	14,015
Ending balance: individually evaluated for impairment	$	342		$	208		$	56		$	606
Ending balance: collectively evaluated for impairment	$	8,426		$	4,798		$	185		$	13,409
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—
Loans and lease receivables:
Ending balance, gross	$	637,403		$	355,549		$	15,663		$	1,008,615
Ending balance: individually evaluated for impairment	$	5,416		$	6,664		$	1,331		$	13,411
Ending balance: collectively evaluated for impairment	$	630,616		$	348,885		$	14,332		$	993,833
Ending balance: loans acquired with deteriorated credit quality	$	1,371		$	—		$	—		$	1,371
Allowance as % of gross loans	1.38		%	1.41		%	1.54		%	1.39		%

Note 6 — Deposits

The composition of deposits at June 30, 2015 and December 31, 2014 was as follows. Average balances represent year-to-date averages.

	June 30, 2015						December 31, 2014
	Balance		Average balance		Weighted average rate		Balance		Average balance		Weighted average rate
	(Dollars in Thousands)
Non-interest-bearing transaction accounts	$	221,064	$	202,905	—	%	$	204,328	$	154,687	—	%
Interest-bearing transaction accounts	107,318		106,442		0.23		104,199		83,508		0.22
Money market accounts	588,240		615,485		0.55		575,766		493,322		0.52
Certificates of deposit	109,966		117,748		0.75		126,635		60,284		0.89
Wholesale deposits	444,480		426,136		1.36		427,340		416,202		1.49
Total deposits	$	1,471,068	$	1,468,716	0.70		$	1,438,268	$	1,208,003	0.78

27

Note 7 — FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable

The composition of borrowed funds at June 30, 2015 and December 31, 2014 was as follows. Average balances represent year-to-date averages.

	June 30, 2015						December 31, 2014
	Balance		Average balance		Weighted average rate		Balance		Average balance		Weighted average rate
	(Dollars in Thousands)
Federal funds purchased	$	—	$	224	0.81	%	$	—	$	237	0.82	%
FHLB advances and other borrowings	22,965		16,770		0.99		10,058		5,093		0.56
Senior line of credit	1,510		1,018		3.17		1,010		13		3.30
Subordinated notes payable	22,926		22,926		6.96		22,926		13,362		7.07
Junior subordinated notes	10,315		10,315		10.70		10,315		10,315		10.78
	$	57,716	$	51,253	5.68		$	44,309	$	29,020	7.24
Short-term borrowings	$	18,010					$	2,010
Long-term borrowings	39,706						42,299
	$	57,716					$	44,309

As of June 30, 2015, the Corporation was in compliance with its debt covenants under its third party secured senior line of credit. Per the promissory note dated February 19, 2015, the Corporation pays a commitment fee on this senior line of credit. During the six months ended June 30, 2015 the Corporation incurred $6,000 additional interest expense due to this fee. Prior to February 19, 2015, the Corporation paid an unused line fee on this senior line of credit. During the six months ended June 30, 2014, the Corporation incurred $7,000 additional interest expense due to this fee.

Note 8 — Fair Value Disclosures

The Corporation determines the fair values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date and is based on exit prices. Fair value includes assumptions about risk such as nonperformance risk in liability fair values and is a market-based measurement, not an entity-specific measurement. The standard describes three levels of inputs that may be used to measure fair value.

Level 1 — Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date.

Level 2 — Level 2 inputs are inputs, other than quoted prices included with Level 1, that are observable for the asset or liability either directly or indirectly, 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 for substantially the full term of the assets or liabilities.

Level 3 — Level 3 inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Corporation’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

28

Assets and liabilities measured at fair value on a recurring basis, segregated by fair value hierarchy level, are summarized below:

	Fair Value Measurements Using
June 30, 2015	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Securities available-for-sale:
Municipal obligations	$	—	$	3,247	$	—	$	3,247
Asset backed securities	—		1,445		—		1,445
U.S. Government agency obligations - government-sponsored enterprises	—		8,023		—		8,023
Collateralized mortgage obligations - government issued	—		55,982		—		55,982
Collateralized mortgage obligations - government-sponsored enterprises	—		77,645		—		77,645
Interest rate swaps	—		519		—		519
Liabilities:
Interest rate swaps	$	—	$	519	$	—	$	519

	Fair Value Measurements Using
December 31, 2014	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Securities available-for-sale:
Municipal obligations	$	—	$	578	$	—	$	578
Asset backed securities	—		1,510		—		1,510
U.S. Government agency obligations - government-sponsored enterprises	—		8,965		—		8,965
Collateralized mortgage obligations - government issued	—		68,874		—		68,874
Collateralized mortgage obligations - government-sponsored enterprises	—		64,771		—		64,771
Interest rate swaps	—		575		—		575
Liabilities:
Interest rate swaps	$	—	$	575	$	—	$	575

For assets and liabilities measured at fair value on a recurring basis, there were no transfers between the levels during the six months ended June 30, 2015 or the year ended December 31, 2014 related to the above measurements.

29

Assets and liabilities measured at fair value on a non-recurring basis, segregated by fair value hierarchy are summarized below:

			As of and for the Six Months Ended June 30, 2015
	Balance at		Fair Value Measurements Using						Total Gains (Losses)
	June 30, 2015		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	8,795	$	—	$	7,573	$	1,222	$	—
Foreclosed properties	1,854		—		1,854		—		(1		)
Loan servicing rights	1,168		—		—		1,168		—

			As of and for the Year Ended December 31, 2014
	Balance at		Fair Value Measurements Using						Total Gains (Losses)
	December 31, 2014		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	8,565	$	—	$	7,025	$	1,540	$	—
Foreclosed properties	1,693		—		1,693		—		(4		)
Loan servicing rights	943		—		—		943		—

Impaired loans which are collateral dependent were written down to their net realizable value of $8.8 million and $8.6 million at June 30, 2015 and December 31, 2014, respectively, through the establishment of specific reserves or by recording charge-offs when the carrying value exceeded the fair value. Valuation techniques consistent with the market approach, income approach, or cost approach were used to measure fair value and primarily included observable inputs for the individual impaired loans being evaluated such as current appraisals, recent sales of similar assets or other observable market data, and are reflected within Level 2 of the hierarchy. In cases where an input is unobservable, specifically discounts applied to appraisal values to adjust such values to current market conditions or to reflect net realizable value, the impaired loan balance is reflected within Level 3 of the hierarchy. The quantification of unobservable inputs for Level 3 impaired loan values range from 10% - 100%. The weighted average of those unobservable inputs as of the measurement date of June 30, 2015 was 44%. The majority of the impaired loans in the Level 3 category are considered collateral dependent loans.

Loan servicing rights represent the asset retained upon sale of the guaranteed portion of certain SBA loans. When SBA loans are sold, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. The servicing rights are subsequently measured using the amortization method, which requires amortization into interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

The Corporation periodically reviews this portfolio for impairment and engages a third-party valuation firm to assess the fair value of the overall servicing rights portfolio. Loan servicing rights do not trade in an active, open market with readily observable prices. While sales of loan servicing rights do occur, the precise terms and conditions typically are not readily available to allow for a “quoted price for similar assets” comparison. Accordingly, the Corporation utilizes an independent valuation from a third party which uses a discounted cash flow model to estimate the fair value of its loan servicing rights. The valuation model incorporates prepayment assumptions to project loan servicing rights cash flows based on the current interest rate scenario, which is then discounted to estimate an expected fair value of the loan servicing rights. The valuation model considers portfolio characteristics of the underlying serviced portion of the SBA loans and uses the following significant unobservable inputs: (1) constant prepayment rate (“CPR”) assumptions based on the SBA sold pools historical CPR as quoted in Bloomberg and (2) a discount rate of 10%. Due to the nature of the valuation inputs, loan servicing rights are classified in Level 3 of the fair value hierarchy.

As of June 30, 2015 and December 31, 2014, the estimated fair value of the Corporation’s loan servicing asset was $1.2 million and $943,000, respectively.

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Foreclosed properties, upon initial recognition, are re-measured and reported at fair value through a charge-off to the allowance for loan and lease losses, if deemed necessary, based upon the fair value of the foreclosed property. The fair value of a foreclosed property, upon initial recognition, is estimated using a market approach or Level 2 inputs based on observable market data, typically a current appraisal, or Level 3 inputs based upon assumptions specific to the individual property or equipment. Level 3 inputs typically include unobservable inputs such as management-applied discounts used to further reduce values to a net realizable value and may be used in situations when observable inputs become stale. Foreclosed property fair value inputs may transition to Level 1 upon receipt of an accepted offer for the sale of the related foreclosed property.

As of June 30, 2015, there were no foreclosed properties supported by a Level 3 valuation. Subsequent impairments of foreclosed properties are recorded as a loss on foreclosed properties. Based upon an evaluation of value of certain of the Corporation’s foreclosed properties, impairment losses of $1,000 were recognized for the six months ended June 30, 2015. The activity of the Corporation’s foreclosed properties is summarized as follows:

	As of and for the Six Months Ended June 30, 2015			As of and for the Year Ended December 31, 2014
	(In Thousands)
Foreclosed properties at the beginning of the period	$	1,693		$	333
Foreclosed properties acquired in acquisition, at fair value	—			1,605
Loans transferred to foreclosed properties, at lower of cost or fair value	289			—
Proceeds from sale of foreclosed properties	(143		)	(255		)
Net gain on sale of foreclosed properties	16			14
Impairment valuation	(1		)	(4		)
Foreclosed properties at the end of the period	$	1,854		$	1,693

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Fair Value of Financial Instruments

The Corporation is required to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions, consistent with exit price concepts for fair value measurements, are set forth below:

	June 30, 2015
	Carrying Amount		Fair Value
			Total		Level 1		Level 2		Level 3
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	88,848	$	88,856	$	73,693	$	6,663	$	8,500
Securities available-for-sale	146,342		146,342		—		146,342		—
Securities held-to-maturity	39,428		39,419		—		39,419		—
Loans held for sale	1,274		1,274		—		1,274		—
Loans and lease receivables, net	1,334,091		1,365,475		—		7,573		1,357,902
Federal Home Loan Bank and Federal Reserve Bank stock	2,891		2,891		—		—		2,891
Cash surrender value of life insurance	27,785		27,785		27,785		—		—
Accrued interest receivable	4,159		4,159		4,159		—		—
Interest rate swaps	519		519		—		519		—
Financial liabilities:
Deposits	$	1,471,068	$	1,473,706	$	916,622	$	557,084	$	—
Federal Home Loan Bank and other borrowings	47,401		45,477		—		45,477		—
Junior subordinated notes	10,315		7,084		—		—		7,084
Interest rate swaps	519		519		—		519		—
Accrued interest payable	1,618		1,618		1,618		—		—
Off-balance-sheet items:
Standby letters of credit	124		124		—		—		124
Commitments to extend credit	—		*		*		*		*

*Not meaningful

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	December 31, 2014
	Carrying Amount		Fair Value
			Total		Level 1		Level 2		Level 3
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	103,237	$	103,227	$	85,937	$	6,890	$	10,400
Securities available-for-sale	144,698		144,698		—		144,698		—
Securities held-to-maturity	41,563		41,694		—		41,694		—
Loans held for sale	1,340		1,340		—		1,340		—
Loans and lease receivables, net	1,265,098		1,285,162		—		7,025		1,278,137
Federal Home Loan Bank and Federal Reserve Bank stock	2,340		2,340		—		—		2,340
Cash surrender value of life insurance	27,314		27,314		27,314		—		—
Accrued interest receivable	3,932		3,932		3,932		—		—
Interest rate swaps	575		575		—		575		—
Financial liabilities:
Deposits	$	1,438,268	$	1,440,248	$	884,292	$	555,956	$	—
Federal Home Loan Bank and other borrowings	33,994		34,590		—		34,590		—
Junior subordinated notes	10,315		7,101		—		—		7,101
Interest rate swaps	575		575		—		575		—
Accrued interest payable	1,574		1,574		1,574		—		—
Off-balance-sheet items:
Standby letters of credit	192		192		—		—		192
Commitments to extend credit	—		*		*		*		*

*Not meaningful

Disclosure of fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the Consolidated Balance Sheets. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Certain financial instruments and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not necessarily represent the underlying value of the Corporation.

Cash and cash equivalents: The carrying amounts reported for cash and due from banks, interest-bearing deposits held by the Corporation, accrued interest receivable and accrued interest payable approximate fair value because of their immediate availability and because they do not present unanticipated credit concerns. The carrying value of commercial paper, included in the cash and cash equivalents category, approximates fair value due to the short-term maturity structure of the instrument. As of June 30, 2015 and December 31, 2014, the Corporation held $8.5 million and $10.4 million, respectively, of commercial paper. The fair value of commercial paper is considered a Level 3 input due to the lack of available independent pricing sources. The carrying value of brokered certificates of deposit purchased is equivalent to the purchase price of the instruments as the Corporation has not elected a fair value option for these instruments. The fair value of brokered certificates of deposits purchased is based on the discounted value of contractual cash flows using a discount rate reflective of rates currently offered for deposits of similar remaining maturities. As of June 30, 2015 and December 31, 2014, the Corporation held $6.7 million and $6.9 million, respectively, of brokered certificates of deposits.

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Securities: The fair value measurements of investment securities are determined by a third-party pricing service which considers observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, trade execution data, market consensus prepayment speeds, credit information and the securities’ terms and conditions, among other things. The fair value measurements are subject to independent verification to another pricing source on a quarterly basis to review for reasonableness. Any significant differences in pricing are reviewed with appropriate members of management who have the relevant technical expertise to assess the results. The Corporation has determined that these valuations are classified in Level 2 of the fair value hierarchy. When the independent pricing service does not provide a fair value measurement for a particular security, the Corporation will estimate the fair value based on specific information about each security. Fair values derived in this manner are classified in Level 3 of the fair value hierarchy.

Loans Held for Sale: Loans held for sale, which consist of residential real estate mortgage loans and the guaranteed portion of SBA loans, are carried at the lower of cost or estimated fair value. The estimated fair value was based on what secondary markets are currently offering for portfolios with similar characteristics.

Loans and Leases: The fair value estimation process for the loan portfolio uses an exit price concept and reflects discounts that the Corporation believes are consistent with liquidity discounts in the market place. Fair values are estimated for portfolios of loans with similar financial characteristics. The fair value of performing and nonperforming loans is calculated by discounting scheduled and expected cash flows through the estimated maturity using estimated market rates that reflect the credit and interest rate risk inherent in the portfolio of loans and then applying a discount factor based upon the embedded credit risk of the loan and the fair value of collateral securing nonperforming loans when the loan is collateral dependent. The estimate of maturity is based on the Banks’ historical experience with repayments for each loan classification, modified, as required, by an estimate of the effect of current economic and lending conditions. Significant unobservable inputs include, but are not limited to, discounts (investor yield premiums) applied to fair value calculations to further determine the exit price value of a portfolio of loans.

Federal Home Loan Bank and Federal Reserve Bank Stock: The carrying amount of FHLB and FRB stock equals its fair value because the shares may be redeemed by the FHLB and the FRB at their carrying amount of $100 per share.

Cash Surrender Value of Life Insurance: The carrying amount of the cash surrender value of life insurance approximates its fair value as the carrying value represents the current settlement amount.

Deposits: The fair value of deposits with no stated maturity, such as demand deposits and money market accounts, is equal to the amount payable on demand. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The fair value estimates do not include the intangible value that results from the funding provided by deposit liabilities compared to borrowing funds in the market.

Borrowed Funds: Market rates currently available to the Corporation and Banks for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

Financial Instruments with Off-Balance-Sheet Risks: The fair value of the Corporation’s off-balance-sheet instruments is based on quoted market prices and fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the credit standing of the related counterparty. Commitments to extend credit and standby letters of credit are generally not marketable. Furthermore, interest rates on any amounts drawn under such commitments would generally be established at market rates at the time of the draw. Fair value would principally derive from the present value of fees received for those products.

Interest Rate Swaps: The carrying amount and fair value of existing derivative financial instruments are based upon independent valuation models, which use widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative contract. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Corporation considers the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Limitations: Fair value estimates are made at a discrete point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Corporation’s entire holding of a particular financial instrument. Because no market exists for a significant portion of the Corporation’s financial instruments, fair value estimates are based on judgments regarding future expected loss

34

experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and are not considered in the estimates.

Note 9 — Derivative Financial Instruments

The Corporation offers interest rate swap products directly to qualified commercial borrowers. The Corporation economically hedges client derivative transactions by entering into offsetting interest rate swap contracts executed with a third party. Derivative transactions executed as part of this program are not designated as accounting hedge relationships and are marked to market through earnings each period. The derivative contracts have mirror-image terms, which results in the positions’ changes in fair value primarily offsetting through earnings each period. The credit risk and risk of non-performance embedded in the fair value calculations is different between the dealer counterparties and the commercial borrowers, which may result in a difference in the changes in the fair value of the mirror-image swaps. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own non-performance risk and the counterparty’s risk in the fair value measurements. When evaluating the fair value of its derivative contracts for the effects of non-performance and credit risk, the Corporation considers the impact of netting and any applicable credit enhancements such as collateral postings, thresholds and guarantees.

At June 30, 2015, the aggregate amortizing notional value of interest rate swaps with various commercial borrowers was 27.3 million. The Corporation receives fixed rates and pays floating rates based upon LIBOR on the swaps with commercial borrowers. These interest rate swaps mature in March, 2016 through February, 2023. Commercial borrower swaps are completed independently with each borrower and are not subject to master netting arrangements. These commercial borrower swaps were reported on the Consolidated Balance Sheets as a derivative asset of $519,000 and are included in accrued interest receivable and other assets. In the event of default on a commercial borrower interest rate swap by the counterparty, a right of offset exists to allow the commercial borrower to set off amounts due against the related commercial loan. As of June 30, 2015, no interest rate swaps were in default and therefore all values for the commercial borrower swaps are recorded on a gross basis within the Corporation’s financial position.

At June 30, 2015, the aggregate amortizing notional value of interest rate swaps with dealer counterparties was also 27.3 million. The Corporation pays fixed rates and receives floating rates based upon LIBOR on the swaps with dealer counterparties. These interest rate swaps mature in March, 2016 through February, 2023. Dealer counterparty swaps are subject to master netting agreements among the contracts within each of the Banks and are reported on the Consolidated Balance Sheets as a net derivative liability of $519,000, included in accrued interest payable and other liabilities as of June 30, 2015. The gross amount of dealer counterparty swaps, without regard to the enforceable master netting agreement, was a derivative liability of $519,000, included in accrued interest payable and other liabilities as of June 30, 2015. No right of offset exists with the dealer counterparty swaps.

The table below provides information about the location and fair value of the Corporation’s derivative instruments as of June 30, 2015 and December 31, 2014.

	Interest Rate Swap Contracts
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(In Thousands)
Derivatives not designated as hedging instruments
June 30, 2015	Other assets	$	519	Other liabilities	$	519
December 31, 2014	Other assets	$	575	Other liabilities	$	575

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No derivative instruments held by the Corporation for the six months ended June 30, 2015 were considered hedging instruments. All changes in the fair value of these instruments are recorded in other non-interest income. Given the mirror-image terms of the outstanding derivative portfolio, the change in fair value for the six months ended June 30, 2015 and 2014 had an insignificant impact on the unaudited Consolidated Statements of Income.

Note 10 — Regulatory Capital

The Corporation and the Banks are subject to various regulatory capital requirements administered by Federal, State of Wisconsin and State of Kansas banking agencies. Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional discretionary actions on the part of regulators, that if undertaken, could have a direct material effect on the Banks’ assets, liabilities and certain off-balance-sheet items as calculated under regulatory practices. The Corporation’s and the Banks’ capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The Corporation regularly reviews and updates when appropriate its Capital and Liquidity Action Plan (the “Capital Plan”), which is designed to help ensure appropriate capital adequacy, to plan for future capital needs and to ensure that the Corporation serves as a source of financial strength to the Banks. The Corporation’s and the Banks’ Boards of Directors and management teams adhere to the appropriate regulatory guidelines on decisions which affect their respective capital positions, including but not limited to, decisions relating to the payment of dividends and increasing indebtedness.

As a bank holding company, the Corporation’s ability to pay dividends is affected by the policies and enforcement powers of the Board of Governors of the Federal Reserve system (the “Federal Reserve”). Federal Reserve guidance urges companies to strongly consider eliminating, deferring or significantly reducing dividends if: (i) net income available to common shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividend; (ii) the prospective rate of earnings retention is not consistent with the bank holding company’s capital needs and overall current prospective financial condition; or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum regulatory capital ratios. Management intends, when appropriate under regulatory guidelines, to consult with the Federal Reserve Bank of Chicago and provide it with information on the Corporation’s then-current and prospective earnings and capital position in advance of declaring any cash dividends. As a Wisconsin corporation, the Corporation is subject to the limitations of the Wisconsin Business Corporation Law, which prohibit the Corporation from paying dividends if such payment would: (i) render the Corporation unable to pay its debts as they become due in the usual course of business, or (ii) result in the Corporation’s assets being less than the sum of its total liabilities plus the amount needed to satisfy the preferential rights upon dissolution of any stockholders with preferential rights superior to those stockholders receiving the dividend.

The Banks are also subject to certain legal, regulatory and other restrictions on their ability to pay dividends to the Corporation. As a bank holding company, the payment of dividends by the Banks to the Corporation is one of the sources of funds the Corporation could use to pay dividends, if any, in the future and to make other payments. Future dividend decisions by the Banks and the Corporation will continue to be subject to compliance with various legal, regulatory and other restrictions as defined from time to time.

Qualitative measures established by regulation to ensure capital adequacy require the Corporation and the Banks to maintain minimum amounts and ratios of Total, common equity Tier 1 and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. These risk-based capital requirements presently address credit risk related to both recorded and off-balance-sheet commitments and obligations. Management believes, as of June 30, 2015, that the Corporation and the Banks met all applicable capital adequacy requirements.

In July 2013, the FRB and the FDIC approved the final rules implementing the Basel Committee on Banking Supervision’s (“BCBS”) capital guidelines for U.S. banks. These rules are applicable to all financial institutions that are subject to minimum capital requirements, including federal and state banks and savings and loan associations, as well as bank and savings and loan holding companies other than “small bank holding companies” (generally non-publicly traded bank holding companies with consolidated assets of less than $1 billion). Under the final rules, minimum requirements will increase for both the quantity and quality of capital held by the Corporation. The rules include a new common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0%, require a minimum ratio of Total Capital to risk-weighted assets of 8.0%, and require a minimum Tier 1 leverage ratio of 4.0%. The rules also permit banking organizations with less than $15 billion to retain, through one-time election, the existing treatment for accumulated other comprehensive income, which would not affect regulatory capital. The Corporation elected to retain this treatment, which reduces the volatility of regulatory capital ratios. A new capital conservation buffer, comprised of common equity Tier 1 capital, is also established above the regulatory minimum capital requirements. This capital conservation buffer

36

will be phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019.

The phase-in period for the final rules became effective for the Corporation on January 1, 2015, with full compliance with all of the final rules’ requirements phased in over a multi-year schedule, to be fully phased-in by January 1, 2019. As of June 30, 2015, the Corporation’s and the Bank’s capital levels remained characterized as well capitalized under the new rules.

The following table summarizes the Corporation’s and Banks’ capital ratios and the ratios required by their federal regulators at June 30, 2015 and December 31, 2014, respectively:

	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to Be Well Capitalized Under Prompt Corrective Action Requirements
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of June 30, 2015
Total capital
(to risk-weighted assets)
Consolidated	$	181,281	11.11	%	$	130,502	8.00	%	N/A		N/A
First Business Bank	135,519		11.23		96,523		8.00		$	120,654	10.00	%
First Business Bank — Milwaukee	19,404		11.27		13,779		8.00		17,223		10.00
Alterra Bank	27,979		10.79		20,748		8.00		25,935		10.00
Tier 1 capital
(to risk-weighted assets)
Consolidated	$	143,156	8.78	%	$	97,877	6.00	%	N/A		N/A
First Business Bank	123,424		10.23		72,393		6.00		$	96,523	8.00	%
First Business Bank — Milwaukee	17,746		10.30		10,334		6.00		13,779		8.00
Alterra Bank	26,533		10.23		15,561		6.00		20,748		8.00
Common equity tier 1 capital
(to risk-weighted assets)
Consolidated	$	133,156	8.16	%	$	73,407	4.50	%	N/A		N/A
First Business Bank	123,424		10.23		54,294		4.50		$	106,033	6.50	%
First Business Bank — Milwaukee	17,746		10.30		7,751		4.50		78,425		6.50
Alterra Bank	26,533		10.23		11,671		4.50		11,195		6.50
Tier 1 capital
(to average assets)
Consolidated	$	143,156	8.66	%	$	5,326	4.00	%	N/A		N/A
First Business Bank	123,424		10.55		4,937		4.00		$	6,171	5.00	%
First Business Bank — Milwaukee	17,746		7.46		710		4.00		887		5.00
Alterra Bank	26,533		10.00		1,061		4.00		1,327		5.00

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	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to Be Well Capitalized Under Prompt Corrective Action Requirements
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of December 31, 2014
Total capital
(to risk-weighted assets)
Consolidated	$	173,263	12.13	%	$	114,253	8.00	%	N/A		N/A
First Business Bank	131,411		12.19		86,272		8.00		$	107,841	10.00	%
First Business Bank — Milwaukee	19,128		12.47		12,274		8.00		15,343		10.00
Alterra Bank	22,657		10.90		16,628		8.00		20,785		10.00
Tier 1 capital
(to risk-weighted assets)
Consolidated	$	136,008	9.52		$	57,127	4.00	%	N/A		N/A
First Business Bank	118,907		11.03		43,136		4.00		$	64,704	6.00	%
First Business Bank — Milwaukee	17,641		11.50		6,137		4.00		9,206		6.00
Alterra Bank	22,320		10.74		8,314		4.00		12,471		6.00
Tier 1 capital
(to average assets)
Consolidated	$	136,008	8.71		$	62,490	4.00	%	N/A		N/A
First Business Bank	118,907		10.13		46,960		4.00		$	58,700	5.00	%
First Business Bank — Milwaukee	17,641		7.90		8,935		4.00		11,169		5.00
Alterra Bank	22,320		9.01		9,910		4.00		12,388		5.00

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

General

Unless otherwise indicated or unless the context requires otherwise, all references in this Report to the “Corporation,” “we,” “us,” “our,” or similar references mean First Business Financial Services, Inc. together with our subsidiaries. “FBB”, “FBB - Milwaukee” and “Alterra” are used to refer to our subsidiaries, First Business Bank, First Business Bank - Milwaukee, and Alterra Bank, respectively, and the “Banks” is used to refer to FBB, FBB - Milwaukee, and Alterra together.

Forward-Looking Statements

When used in this report the words or phrases “may,” “could,” “should,” “hope,” “might,” “believe,” “expect,” “plan,” “assume,” “intend,” “estimate,” “anticipate,” “project,” “likely,” or similar expressions are intended to identify “forward-looking statements.” Such statements are subject to risks and uncertainties, including, without limitation, changes in economic conditions in the market areas of FBB, FBB - Milwaukee, or Alterra, changes in policies by regulatory agencies, fluctuation in interest rates, demand for loans in the market areas of FBB, FBB - Milwaukee, or Alterra, borrowers defaulting in the repayment of loans and competition. These risks could cause actual results to differ materially from what we have anticipated or projected. These risk factors and uncertainties should be carefully considered by our shareholders and potential investors. See Item 1A — Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2014 for discussion relating to risk factors impacting us. Investors should not place undue reliance on any such forward-looking statements, which speak only as of the date made. The factors described within this Form 10-Q could affect our financial performance and could cause actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods.

Where any such forward-looking statement includes a statement of the assumptions or bases underlying such forward-looking statement, we caution that, while our management believes such assumptions or bases are reasonable and are made in good faith, assumed facts or bases can vary from actual results, and the differences between assumed facts or bases and actual results can be material, depending on the circumstances. Where, in any forward-looking statement, an expectation or belief is expressed as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will be achieved or accomplished.

We do not intend to, and specifically disclaim any obligation to, update any forward-looking statements.

The following discussion and analysis is intended as a review of significant events and factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with the Unaudited Consolidated Financial Statements and the Notes thereto presented in this Form 10-Q.

Overview

We are a registered bank holding company incorporated under the laws of the State of Wisconsin and are engaged in the commercial banking business through our wholly-owned banking subsidiaries, FBB, FBB-Milwaukee and Alterra. All of our operations are conducted through the Banks and certain subsidiaries of FBB. We operate as a business bank focusing on delivering a full line of commercial banking products and services tailored to meet the specific needs of small- and medium-sized businesses, business owners, executives, professionals and high net worth individuals. Business lines include commercial lending, SBA lending, asset-based lending, equipment financing, factoring, residential mortgage lending, trust and investment services, treasury management services and a broad range of deposit products. We do not utilize a branch network to attract retail clients. Our operating philosophy is focused on local decision-making and local client service from each of our primary banking locations in Madison, Brookfield and Appleton, Wisconsin and Leawood, Kansas combined with the efficiency of centralized administrative functions, such as credit, information technology, marketing, finance and accounting and human resources. We have a unique niche business-banking model and we consistently operate within this model to provide value-added financial solutions to our clients through the high touch service of our experienced staff.

For the remainder of 2015, we plan to continue to diligently focus on maintaining asset quality while organically growing our loan and lease portfolio, increasing the number and volume of transaction accounts to support ongoing efforts to increase fee revenue associated with treasury management services, trust and investment services and SBA lending activity and investing in and utilizing technology to support these initiatives. While we grow, we will maintain our efficient operating model and we believe timely investments in technology and people are imperative as we continue to drive operational efficiency to keep pace with our strategic growth trajectory. We believe this strategy will continue to create opportunities to increase market share and capitalize on economic expansion in our core Wisconsin and Kansas City markets.

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Operational Highlights

• Total assets increased to $1.684 billion as of June 30, 2015 compared to $1.629 billion as of December 31, 2014.

• Net income for the three months ended June 30, 2015 was $3.9 million compared to net income of $3.5 million for the three months ended June 30, 2014. Net income for the six months ended June 30, 2015 was $8.1 million compared to net income of $6.8 million for the six months ended June 30, 2014.

• Diluted earnings per common share for the three months ended June 30, 2015 were $0.89 compared to diluted earnings per common share of $0.88 for the three months ended June 30, 2014. Diluted earnings per common share for the six months ended June 30, 2015 were $1.86 compared to diluted earnings per common share of $1.72 for the six months ended June 30, 2014.

• Net interest margin increased by 9 basis points to 3.61% for the three months ended June 30, 2015 compared to 3.52% for the three months ended June 30, 2014. Net interest margin increased by 15 basis points to 3.70% for the six months ended June 30, 2015 compared to 3.55% for the six months ended June 30, 2014.

• Top line revenue, the sum of net interest income and non-interest income, increased 39.2% to $18.3 million for the three months ended June 30, 2015 compared to $13.2 million for the three months ended June 30, 2014. For the six months ended June 30, 2015, top line revenue increased 41.2% to $37.1 million as compared to $26.3 million for the six months ended June 30, 2014.

• Annualized return on average assets (“ROAA”) and annualized return on average equity (“ROAE”) were 0.93% and 10.73%, respectively, for the three-month period ended June 30, 2015, compared to 1.09% and 12.29%, respectively, for the same time period in 2014. ROAA and ROAE were 0.96% and 11.35%, respectively, for the six-month period ended June 30, 2015, compared to 1.07% and 12.15%, respectively, for the same time period in 2014.

• Our efficiency ratio was 65.28% for the three months end June 30, 2015, compared to 58.87% for the three months ended June 30, 2014. For the six months ended June 30, 2015 our efficiency ratio was 63.85%, compared to 59.35% for the same time period in 2014.

• Our effective tax rate was 33.9% and 35.4% for the six months ended June 30, 2015 and 2014, respectively.

• Our provision for loan and lease losses was $520,000 for the three months ended June 30, 2015 compared to a negative provision of $91,000 for the same period in the prior year. Provision for loan and lease losses was $1.2 million for the six months end June 30, 2015 compared to $89,000 for the comparable period of 2014.

• Allowance for loan and lease losses as a percentage of gross loans and leases was 1.12% at both June 30, 2015 and December 31, 2014.

• Non-performing assets as a percentage of total assets was 1.01% at June 30, 2015 compared to 0.70% at December 31, 2014.

• Non-accrual loans increased by $5.4 million, or 55.2%, to $15.2 million at June 30, 2015 from $9.8 million at December 31, 2014.

Results of Operations

Top Line Revenue

Top line revenue is comprised of net interest income and non-interest income. This measurement is also commonly referred to as operating revenue. Top line revenue increased 39.2% and 41.2% for the three and six months ended June 30, 2015, respectively, as compared to the same period in the prior year primarily due to the acquisition of Alterra, which was completed on November 1, 2014. The components of top line revenue were as follows:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2015		2014		Change		2015		2014		Change
	(Dollars in Thousands)
Net interest income	$	14,188	$	10,799	31.4	%	$	29,118	$	21,599	34.8	%
Non-interest income	4,126		2,358		75.0		7,974		4,679		70.4
Total top line revenue	$	18,314	$	13,157	39.2		$	37,092	$	26,278	41.2

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Return on Average Assets and Return on Average Equity

ROAA for the three months ended June 30, 2015 decreased to 0.93% compared to 1.09% for the three months ended June 30, 2014. ROAA for the six months ended June 30, 2015 was 0.96% compared to 1.07% for the six months ended June 30, 2014. The decline in ROAA for both time periods presented was primarily due to the increase in total average assets exceeding the increase in net income primarily due to the acquisition of Alterra. Total average assets for the three months ended 2015 increased 29.9% year over year while net income increased 10.1%. Total average assets for the six months ended 2015 increased 31.1% year over year while net income increased 17.7%. ROAA is a critical metric used by us to measure the profitability of our organization and how efficiently our assets are deployed. It is a measurement that allows us to better benchmark our profitability to our peers without the need to consider different degrees of leverage which can ultimately influence return on equity measures.

ROAE for the three months ended June 30, 2015 was 10.73% compared to 12.29% for the three months ended June 30, 2014. ROAE for the six months ended June 30, 2015 was 11.35% compared to 12.15% for the six months ended June 30, 2014. The decline was primarily due to the growth of our average equity outpacing the improvement in our net income for the comparable periods which can be directly attributable to the acquisition of Alterra and the issuance of 360,081 shares of common stock as a portion of consideration paid in the transaction. We view return on average equity to be an important measure of profitability, and we continue to focus on improving our return to our shareholders by enhancing the overall profitability of our client relationships, controlling our expenses and minimizing our credit costs.

Efficiency Ratio

Efficiency ratio is a non-GAAP measure representing non-interest expense excluding the effects of losses or gains on foreclosed properties and amortization of other intangible assets, if any, divided by top line revenue. In the judgment of our management, the efficiency ratio allows investors and analysts to better assess the Corporation’s operating expenses in relation to its top line revenue by removing the volatility that is associated with certain one-time and other discrete items. The information provided below reconciles the efficiency ratio to its most comparable GAAP measure.

Total non-interest expense, in particular professional fees, increased in line with expectations as we continue to search for a permanent Chief Financial Officer and a new Chief Accounting Officer as well as invest in solutions that will drive operational efficiency. Management expects to continue investing in products and technology to support strategic growth initiatives. Please refer to the Non-Interest Expense section below for further discussion on the primary drivers of the year-over-year increase in the efficiency ratio.

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2015			2014			2015			2014
	(Dollars in Thousands)
Total non-interest expense	$	11,974		$	7,749		$	23,706		$	15,600
Less:
Net loss (gain) on foreclosed properties	1			4			(15		)	4
Amortization of other intangible assets	18			—			36			—
Total operating expense	$	11,955		$	7,745		$	23,685		$	15,596
Net interest income	$	14,188		$	10,799		$	29,118		$	21,599
Total non-interest income	4,126			2,358			7,974			4,679
Top line revenue	$	18,314		$	13,157		$	37,092		$	26,278
Efficiency ratio	65.28		%	58.87		%	63.85		%	59.35		%

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Net Interest Income

Net interest income levels depend on the amounts of and yields on interest-earning assets as compared to the amounts of and rates paid on interest-bearing liabilities. Net interest income is sensitive to changes in market rates of interest and the asset/liability management processes to prepare for and respond to such changes.

The following table provides information with respect to (1) the change in net interest income attributable to changes in rate (changes in rate multiplied by prior volume) and (2) the change in net interest income attributable to changes in volume (changes in volume multiplied by prior rate) for the three and six months ended June 30, 2015 compared to the same period of 2014. The change in net interest income attributable to changes in rate and volume (changes in rate multiplied by changes in volume) has been allocated to the rate and volume changes in proportion to the relationship of the absolute dollar amounts of the change in each.

	Increase (Decrease) for the Three Months Ended June 30,								Increase (Decrease) for the Six Months Ended June 30,
	2015 Compared to 2014								2015 Compared to 2014
	Rate			Volume		Net			Rate			Volume			Net
	(In Thousands)
Interest-earning assets
Commercial real estate and other mortgage loans(1)	$	(244	)	$	2,214	$	1,970		$	(24	)	$	4,366		$	4,342
Commercial and industrial loans(1)	239			1,693		1,932			518			3,714			4,232
Direct financing leases(1)	1			25		26			8			103			111
Consumer and other loans(1)	22			79		101			44			150			194
Total loans and leases receivable	18			4,011		4,029			546			8,333			8,879
Mortgage-related securities(2)	(114		)	—		(114		)	(216		)	19			(197		)
Other investment securities(3)	1			6		7			9			(9		)	—
FHLB and FRB Stock	17			2		19			32			4			36
Short-term investments	(21		)	35		14			(36		)	88			52
Total net change in income on interest-earning assets	(99		)	4,054		3,955			335			8,435			8,770
Interest-bearing liabilities
Transaction accounts	3			15		18			—			31			31
Money market accounts	58			212		270			106			431			537
Certificates of deposit	(26		)	130		104			(63		)	266			203
Wholesale deposits	(159		)	23		(136		)	(270		)	155			(115		)
Total deposits	(124		)	380		256			(227		)	883			656
FHLB advances	16			11		27			33			17			50
Other borrowings	(6		)	289		283			(14		)	559			545
Junior subordinated notes	—			—		—			—			—			—
Total net change in expense on interest-bearing liabilities	(114		)	680		566			(208		)	1,459			1,251
Net change in net interest income	$	15		$	3,374	$	3,389		$	543		$	6,976		$	7,519

(1) The average balances of loans and leases include non-performing loans and leases. Interest income related to non-performing loans and leases is recognized when collected.

(2) Includes amortized cost basis of assets available for sale and held to maturity.

(3) Yields on tax-exempt municipal obligations are not presented on a tax-equivalent basis in this table.

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The table below shows our average balances, interest, average yields/rates, net interest margin and the spread between the combined average yields earned on interest-earning assets and average rates on interest-bearing liabilities for the three months ended June 30, 2015 and 2014. The average balances are derived from average daily balances.

	For the Three Months Ended June 30,
	2015							2014
	Average balance			Interest		Average yield/rate		Average balance			Interest		Average yield/rate
	(Dollars in Thousands)
Interest-earning assets
Commercial real estate and other mortgage loans(1)	$	824,250		$	9,672	4.69	%	$	636,174		$	7,702	4.84	%
Commercial and industrial loans(1)	439,986			6,408		5.83		323,045			4,476		5.54
Direct financing leases(1)	29,631			342		4.62		27,457			316		4.60
Consumer and other loans(1)	24,888			258		4.15		17,044			157		3.68
Total loans and leases receivable(1)	1,318,755			16,680		5.06		1,003,720			12,651		5.04
Mortgage-related securities(2)	156,137			632		1.62		156,073			746		1.91
Other investment securities(3)	28,912			116		1.60		27,497			109		1.59
FHLB and FRB stock	2,926			20		2.73		1,427			1		0.44
Short-term investments	66,035			72		0.44		37,451			58		0.62
Total interest-earning assets	1,572,765			17,520		4.46		1,226,168			13,565		4.43
Non-interest-earning assets	93,477							56,063
Total assets	$	1,666,242						$	1,282,231
Interest-bearing liabilities
Transaction accounts	$	105,582		63		0.24		$	80,027		45		0.22
Money market accounts	605,195			841		0.56		449,907			571		0.51
Certificates of deposit	111,192			219		0.79		47,332			115		0.97
Wholesale deposits	428,080			1,470		1.37		422,024			1,606		1.52
Total interest-bearing deposits	1,250,049			2,593		0.83		999,290			2,337		0.94
FHLB advances	22,749			31		0.55		9,418			4		0.17
Other borrowings	25,556			430		6.73		8,381			148		7.06
Junior subordinated notes	10,315			278		10.78		10,315			277		10.74
Total interest-bearing liabilities	1,308,669			3,332		1.02		1,027,404			2,766		1.08
Non-interest-bearing demand deposit accounts	205,508							134,892
Other non-interest-bearing liabilities	8,252							5,882
Total liabilities	1,522,429							1,168,178
Stockholders’ equity	143,813							114,053
Total liabilities and stockholders’ equity	$	1,666,242						$	1,282,231
Net interest income				$	14,188						$	10,799
Interest rate spread						3.44	%						3.35	%
Net interest-earning assets	$	264,096						$	198,764
Net interest margin						3.61	%						3.52	%
Average interest-earning assets to average interest-bearing liabilities	120.18		%					119.35		%
Return on average assets	0.93							1.09
Return on average equity	10.73							12.29
Average equity to average assets	8.63							8.89
Non-interest expense to average assets	2.87							2.42

(1) The average balances of loans and leases include non-performing loans and leases. Interest income related to non-performing loans and leases is recognized when collected.

(2) Includes amortized cost basis of assets available for sale and held to maturity.

(3) Yields on tax-exempt municipal obligations are not presented on a tax-equivalent basis in this table.

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The table below shows our average balances, interest, average yields/rates, net interest margin and the spread between the combined average yields earned on interest-earning assets and average rates on interest-bearing liabilities for the six months ended June 30, 2015 and 2014. The average balances are derived from average daily balances.

	For the Six Months Ended June 30,
	2015							2014
	Average balance			Interest		Average yield/ cost		Average balance			Interest		Average yield/ cost
Interest-earning assets
Commercial real estate and other mortgage loans(1)	$	819,617		$	19,541	4.77	%	$	636,491		$	15,199	4.78	%
Commercial and industrial loans(1)	433,379			13,232		6.11	%	310,938			9,000		5.79	%
Direct financing leases(1)	31,183			725		4.65	%	26,760			614		4.59	%
Consumer and other loans(1)	24,501			507		4.14	%	17,064			313		3.67	%
Total loans and leases receivable(1)	1,308,680			34,005		5.20	%	991,253			25,126		5.07	%
Mortgage-related securities(2)	155,735			1,294		1.66	%	153,788			1,491		1.94	%
Other investment securities(3)	28,594			230		1.61	%	29,711			230		1.55	%
FHLB and FRB stock	2,763			38		2.75	%	1,344			2		0.30	%
Short-term investments	79,410			169		0.43	%	40,671			117		0.58	%
Total interest-earning assets	1,575,182			35,736		4.54	%	1,216,767			26,966		4.43	%
Non-interest-earning assets	94,869							56,878
Total assets	$	1,670,051						$	1,273,645
Interest-bearing liabilities
Transaction accounts	$	106,442		121		0.23	%	$	79,313		90		0.23	%
Money market	615,485			1,694		0.55	%	456,206			1,157		0.51	%
Certificates of deposit	117,748			439		0.75	%	49,119			236		0.96	%
Wholesale deposits	426,136			2,908		1.36	%	404,728			3,023		1.49	%
Total interest-bearing deposits	1,265,811			5,162		0.82	%	989,366			4,506		0.91	%
FHLB advances	16,095			55		0.68	%	6,282			5		0.16	%
Other borrowings	24,843			849		6.83	%	8,513			305		7.17	%
Junior subordinated notes	10,315			552		10.70	%	10,315			551		10.68	%
Total interest-bearing liabilities	1,317,064			6,618		1.00	%	1,014,476			5,367		1.06	%
Non-interest-bearing demand deposit accounts	202,905							139,397
Other non-interest-bearing liabilities	8,202							7,150
Total liabilities	1,528,171							1,161,023
Stockholders’ equity	141,880							112,622
Total liabilities and stockholders’ equity	$	1,670,051						$	1,273,645
Net interest income				$	29,118						$	21,599
Interest rate spread						3.54	%						3.37	%
Net interest-earning assets	$	258,118						$	202,291
Net interest margin						3.70	%						3.55	%
Average interest-earning assets to average interest-bearing liabilities	119.60		%					119.94		%
Return on average assets	0.96							1.07
Return on average equity	11.35							12.15
Average equity to average assets	8.50							8.84
Non-interest expense to average assets	2.84							2.45

(1) The average balances of loans and leases include non-performing loans and leases. Interest income related to non-performing loans and leases is recognized when collected.

(2) Includes amortized cost basis of assets available for sale and held to maturity.

(3) Yields on tax-exempt municipal obligations are not presented on a tax-equivalent basis in this table.

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Comparison of Net Interest Income for the Three Months Ended June 30, 2015 and 2014

Net interest income increased$3.4 million, or 31.4%, during the three months ended June 30, 2015 compared to the same period in 2014. The increase in net interest income was primarily attributable to the addition of Alterra and the corresponding favorable volume variance on the loan and the lease portfolio, partially offset by an overall unfavorable variance on interest-bearing liabilities.

The yield on average earning assets for the three months ended June 30, 2015 was 4.46% compared to 4.43% for the three months ended June 30, 2014. The increase in the yield on average earning assets was attributable to several factors. The total loans and leases receivable yield was 5.06% for the three months ended June 30, 2015, compared to 5.04% for the three months ended June 30, 2014 primarily due to the addition of the Alterra loan portfolio at yields greater than that of the Wisconsin-based portfolio. This benefit was partially offset by fixed rate commercial real estate loans renewing at current market rates subject to competitive pricing pressures, an increase in average short-term investments in the form of excess cash held on deposit at the FRB and a 29 basis point decrease in the yield on average mortgage-related securities.

The overall weighted average rate paid on interest-bearing liabilities was 1.02% for the three months ended June 30, 2015, a decrease of 6 basis points from 1.08% for the three months ended June 30, 2014. The decrease in the overall rate on the interest-bearing liabilities was primarily caused by a decrease in rate paid on our wholesale deposits as well as our in-market certificates of deposit. This decrease was partially offset by an unfavorable rate variance on the money market account deposit category and by the addition of other borrowings resulting from the $15.0 million of subordinated debt issued on August 26, 2014 at a rate that is significantly higher than our average cost of funds.

The weighted average rate paid on our interest-bearing deposits was 0.83% for the three months ended June 30, 2015, a decrease of 11 basis points from 0.94% for the three months ended June 30, 2014. The decrease in the weighted average rate paid on our interest-bearing deposits was primarily driven by the replacement of maturing wholesale deposits with in-market deposit relationships at lower current rates. The continued low rate environment combined with the maturity structure of our wholesale deposits continues to provide us the opportunity to manage our liability structure in both term and rate to deliver an enhanced net interest margin. Further, the addition of Alterra in-market deposits combined with our continued success of attracting in-market deposits in our Wisconsin-based markets contributed to the overall decline in our cost of funds. Average in-market client deposits - comprised of all transaction accounts, money market accounts and non-wholesale deposits - increased 44.3% to $1.027 billion for the period ended June 30, 2015 from $712.2 million for the period ended June 30, 2014 primarily attributable to the acquisition of Alterra.

Net interest margin increasednine basis points to 3.61% for the three months ended June 30, 2015 compared to 3.52% for the three months ended June 30, 2014. Net accretion/amortization on the Alterra purchase accounting adjustments of $542,000, partially offset by continued competitive pricing pressure on the loan and lease portfolio, drove a favorable impact of 12 basis points in net interest margin. Management expects the net accretion/amortization to remain volatile in future quarters due to the uncertain nature of loan prepayments. In addition, the changing mix of our deposit base reduced our overall cost of funds and positively affected our net interest margin by approximately ten basis points, offsetting the nine basis point decrease related to the declining yield on our investment portfolio. Other factors, primarily the issuance of $15.0 million of subordinated debt on August 26, 2014, negatively influenced the net interest margin by four basis points in the aggregate.

Comparison of Net Interest Income for the Six Months Ended June 30, 2015 and 2014

Net interest income increased$7.5 million, or 34.8%, during the six months ended June 30, 2015 compared to the same period in 2014. The increase in net interest income was primarily attributable to the addition of Alterra and the corresponding favorable rate and volume variances on the loan and the lease portfolio, partially offset by an overall unfavorable variance on interest-bearing liabilities.

The yield on average earning assets for the six months ended June 30, 2015 was 4.54% compared to 4.43% for the six months ended June 30, 2014. The reasons for the increase in the yield on average earning assets are consistent with explanations provided for the second quarter results discussed above.

The overall weighted average rate paid on interest-bearing liabilities was 1.00% for the six months ended June 30, 2015, a decrease of six basis points from 1.06% for the six months ended June 30, 2014. The reasons for the decrease in the overall weighted average rate paid on interest-bearing liabilities are consistent with explanations provided for the second quarter results discussed above.

Net interest margin increased15 basis points to 3.70% for the six months ended June 30, 2015 compared to 3.55% for the six months ended June 30, 2014. Net accretion/amortization on the Alterra purchase accounting adjustments of $1.8 million,

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partially offset by continued competitive pricing pressure on the loan and lease portfolio, drove a favorable impact of 19 basis points in net interest margin. In addition, the changing mix of our deposit base reduced our overall cost of funds and positively affected our net interest margin by approximately nine basis points, offsetting the nine basis point decrease related to the declining yield on our investment portfolio. Other factors, primarily the issuance of the subordinated debt, negatively influenced the net interest margin by four basis points in the aggregate.

Provision for Loan and Lease Losses

We determine our provision for loan and lease losses based upon credit risk and other subjective factors pursuant to our allowance for loan and lease loss methodology, the magnitude of current and historical net charge-offs recorded and the amount of reserves established for impaired loans that present collateral shortfall positions.

We recorded provision expense of $520,000 and negative provision of $91,000 for the three months ended June 30, 2015 and 2014, respectively. Provision for the three months ended June 30, 2015 primarily reflects additions commensurate with growth, partially offset by a reduction of the loss factors applied in calculating the probable losses within the loan and lease portfolio for which a reserve should be established, primarily due to improving macro and microeconomic factors.    

During the three and six months ended June 30, 2015 and 2014, the factors influencing the provision for loan and lease losses were the following:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2015			2014			2015			2014
	(In Thousands)
Components of the provision for loan and lease losses:
Net additions of specific reserves on impaired loans	$	243		$	99		$	252		$	205
Net decrease in allowance for loan and lease loss reserve due to subjective factor changes	(693		)	(496		)	(693		)	(502		)
Charge-offs in excess of specific reserves	24			—			348			—
Recoveries	(70		)	(6		)	(75		)	(26		)
Change in inherent risk of the loan and lease portfolio	1,016			312			1,372			412
Total provision for loan and lease losses	$	520		$	(91	)	$	1,204		$	89

The net additions of specific reserves on impaired loans represents the new specific reserves established on impaired loans for which, although collateral shortfalls are present, we believe we will recover our principal, offset by any release of previously established reserves that are no longer required. A decrease in allowance for loan and lease losses reserves due to subjective factor changes reflects management’s evaluation of the level of risk within the portfolio based upon the level and trend of certain criteria such as delinquencies, volume and average loan size, average risk rating, technical defaults, geographic concentrations, loans and leases on management attention watch lists, unemployment rates in our market areas, experience in credit granting functions, and changes in underwriting standards. As our asset quality metrics improve and the level and trend of the factors improve for a sustained period of time, the level of general reserve due to these factors may be reduced, causing an overall reduction in the level of the required reserve deemed to be appropriate by management. Conversely, increases in the level and trend of these factors may warrant an increase to our overall allowance for loan loss. Charge-offs in excess of specific reserves represent an additional provision for loan and lease losses required to maintain the allowance for loan and leases at a level deemed appropriate by management. This amount is net of the release of any specific reserve that may have already been provided. Charge-offs in excess of specific reserves can occur in situations where: (i) a loan has previously been partially written down to its estimated fair value and continues to decline, (ii) rapid deterioration of a credit requires an immediate partial or full charge-off, or (iii) the specific reserve was not adequate to cover the amount of the required charge-off. Change in the inherent risk of the portfolio can be influenced by portfolio growth or by migration in and out of an impaired loan classification where a specific evaluation of a particular credit may be required rather than the application of a general reserve ratio. Refer to Asset Quality for further information regarding the overall credit quality of our loan and lease portfolio.

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Non-interest Income

Comparison of Non-Interest Income for the Three Months Ended June 30, 2015 and 2014

Non-interest income increased$1.8 million, or 75.0%, to $4.1 million for the three months ended June 30, 2015, from $2.4 million for the three months ended June 30, 2014. The increase was primarily due to increased fees earned for trust and investment services and the additional fee income related to the acquisition of Alterra, specifically gain on the sale of loans.

Trust and investment services fee income increased by $169,000, or 15.2%, to $1.3 million for the three months ended June 30, 2015 from $1.1 million for the three months ended June 30, 2014. This increase was primarily driven by the amount of assets under management and administration as well as the mix of business at different fee structures and can be positively or negatively influenced by the timing and magnitude of volatility within the capital markets. At June 30, 2015, we had $800.6 million of trust assets under management compared to $773.2 million at December 31, 2014 and $703.6 million at June 30, 2014. Assets under administration were $197.3 million at June 30, 2015 compared to $186.5 million at December 31, 2014 and $186.0 million at June 30, 2014.

Services charges on deposits increased by $93,000, or 15.5%, to $693,000 for the three months ended June 30, 2015, compared to $600,000 for the three months ended June 30, 2014. The increase in services charges on deposits was primarily due to the acquisition of Alterra, and the related increase in transaction accounts, in addition to the increase in transaction accounts in our Wisconsin markets.

Loan fees increased by $119,000, or 31.3%, to $499,000 for the three months ended June 30, 2015, compared to $380,000 for the three months ended June 30, 2014. The increase in loan fees was primarily due to the acquisition of Alterra and the related increase in fee income on our SBA and residential mortgage business lines.

Gain on sale of loans for the three months ended June 30, 2015 totaled $1.1 million, an increase of $1.1 million from the same period in 2014, attributable to $222,000 from the sale of the residential real estate loans originated in our Kansas City market and $842,000 from the sale of the guaranteed portion of SBA loans originated in our Kansas City and Wisconsin markets.

Other non-interest income increased by $294,000 to $353,000 for the three months ended June 30, 2015, compared to $59,000 for the three months ended June 30, 2014. The increase in other income was primarily due to gains recognized on the termination of leased assets and the unwinding of the reserve for unfunded commitments resulting from the fair value purchase accounting adjustments associated with the Alterra transaction. The remaining reserve for unfunded commitments was $99,000 as of June 30, 2015. Should the commitment be withdrawn for any reason or become fully funded prior to maturity, we will accelerate the remaining liability accordingly.

Comparison of Non-Interest Income for the Six Months Ended June 30, 2015 and 2014

Non-interest income increased$3.3 million, or 70.4%, to $8.0 million for the six months ended June 30, 2015, from $4.7 million for the six months ended June 30, 2014. The increase was primarily due to increased fees earned for trust and investment services and the additional fee income related to the acquisition of Alterra, specifically gain on the sale of loans.

Trust and investment services fee income increased by $308,000, or 14.1%, to $2.5 million for the six months ended June 30, 2015 from $2.2 million for the six months ended June 30, 2014. Consistent with the second quarter results discussed above, trust and investment services fee income was primarily driven by the amount of assets under management as market values continue to increase. Assets under management can be positively or negatively influenced by the timing and magnitude of volatility within the equity markets, which will therefore influence the level of fee income recognized.

Services charges on deposits increased by $222,000, or 19.0%, to $1.4 million for the six months ended June 30, 2015, compared to $1.2 million for the six months ended June 30, 2014. The increase in services charges on deposits was due to the acquisition of Alterra in addition to the increase in transaction accounts in our Wisconsin markets.

Loan fees increased by $232,000, or 30.2%, to $1.0 million for the six months ended June 30, 2015, compared to $769,000 for the six months ended June 30, 2014. The reasons for the increase in loan fees are consistent with explanations provided for the second quarter results discussed above.

Gain on sale of loans and leases for the six months ended June 30, 2015 totaled $1.7 million, an increase of $1.7 million from the same period in 2014. Consistent with the second quarter results discussed above, the increase in gain on sale of loans and leases was attributable to $370,000 from the sale of the residential real estate loans originated in our Kansas City

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market and $1.3 million from the sale of the guaranteed portion of SBA loans originated in our Kansas City and Wisconsin markets.

Other non-interest income increased by $760,000 to $909,000 for the six months ended June 30, 2015, compared to $149,000 for the six months ended June 30, 2014. The reasons for the increase in other non-interest income are consistent with explanations provided for the second quarter results discussed above.

Non-Interest Expense

Comparison of Non-Interest Expense for the Three Months Ended June 30, 2015 and 2014

Non-interest expense increased by $4.2 million, or 54.5%, to $12.0 million for the three months ended June 30, 2015 from $7.7 million for the comparable period of 2014. The acquisition of Alterra was the primary driver for the increase in all non-interest expense categories. Compensation, professional fees and marketing expenses comprise the majority of the overall increase.

Compensation expense increased by $2.2 million, or 46.0%, to $6.9 million for the three months ended June 30, 2015 from $4.7 million for the three months ended June 30, 2014. In addition to the increase related to Alterra, the overall increase reflects growth in compensation costs related to annual merit increases, employee benefit costs and incentive compensation accruals on a larger base of employees than in the comparative period of the prior year. Full time equivalent employees as of June 30, 2015 were 219, up 45.0% from 151 at June 30, 2014. Most of the increase was the result of the Alterra acquisition. Excluding Alterra, full time equivalent employees as of June 30, 2015 increased by 20 compared to June 30, 2014. As opportunities arise, we expect to continue investing in talent to support our strategic growth efforts, both in the form of additional business development officers and operational staff.

Professional fees expense increased by $620,000, or 69.3%, to $1.5 million for the three months ended June 30, 2015 from $895,000 for the three months ended June 30, 2014. The increase was primarily due to the addition of Alterra and our ongoing strategy to invest in technology-based corporate initiatives as we continue to implement solutions that will drive operational efficiency. For the quarter ended June 30, 2015, professional fees specifically related to information technology (“IT”) projects increased $326,000. In addition, fees paid to other outside service providers increased $253,000 primarily due to temp-to-hire employees required to support our strategic IT initiatives. The largest remaining item in the variance was an increase in recruiting expenses related to our search for a permanent Chief Financial Officer and new Chief Accounting Officer, offset by a decrease in merger-related costs of $287,000.

Marketing expense increased by $337,000, or 92.6%, to $701,000 for the three months ended June 30, 2015 from $364,000 for the three months ended June 30, 2014. The acquisition of Alterra was the primary driver for the increase.

Comparison of Non-Interest Expense for the Six Months Ended June 30, 2015 and 2014

Non-interest expense increased by $8.1 million, or 52.0%, to $23.7 million for the six months ended June 30, 2015 from $15.6 million for the comparable period of 2014. The acquisition of Alterra was the primary driver for the increase in all non-interest expense categories. Compensation, professional fees and marketing expenses comprise the majority of the overall increase.

Compensation expense increased by $4.5 million, or 45.7%, to $14.3 million for the six months ended June 30, 2015 from $9.8 million for the six months ended June 30, 2014. The reasons for the increase in compensation expense are consistent with explanations provided for the second quarter results discussed above.

Professional fees expense increased by $1.0 million, or 64.0%, to $2.5 million for the six months ended June 30, 2015 from $1.5 million for the six months ended June 30, 2014. Consistent with the second quarter results discussed above, professional fees specifically related to IT projects increased $437,000. In addition, fees paid to other outside service providers increased $287,000 primarily due to temp-to-hire employees required to support our strategic IT initiatives while fees paid to our external auditors increased by $147,000 primarily due to the additional services required to complete the acquisition of Alterra. The largest item in the remaining variance is an increase in recruiting expenses related to our search for a new Chief Financial Officer and Chief Accounting Officer, partially offset by a decrease in merger-related costs of $209,000.

Marketing expense increased by $632,000, or 88.9%, to $1.3 million for the six months ended June 30, 2015 from $711,000 for the six months ended June 30, 2014. The acquisition of Alterra was the primary driver for the increase.

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Income Taxes

Income tax expense was $4.1 million for the six months ended June 30, 2015, with an effective tax rate of 33.9%, compared to income tax expense of $3.7 million for the six months ended June 30, 2014, with an effective tax rate of 35.4%. The effective tax rate differs from the federal statutory corporate tax rate as follows:

	For the Six Months Ended June 30,
	2015		2014
Statutory federal tax rate	34.4	%	34.4	%
State taxes, net of federal benefit	4.6		4.7
Bank owned life insurance	(1.3	)	(1.4	)
Tax-exempt security and loan income, net of TEFRA adjustments	(3.4	)	(3.4	)
Federal new market tax credit	(1.0	)	—
Non-deductible transaction costs	—		0.7
Other	0.6		0.4
	33.9	%	35.4	%

Generally, the provision for income taxes is determined by applying an estimated annual effective income tax rate to income before taxes and adjusting for discrete items. Typically, the rate is based on the most recent annualized forecast of pre-tax income, book versus tax differences and tax credits, if any. If we conclude that a reliable estimated annual effective tax rate cannot be determined, the actual effective tax rate for the year-to-date period may be used. We re-evaluate the income tax rates each quarter. Therefore, the current projected effective tax rate for the entire year may change.

Financial Condition

General

Our total assets increased by $54.2 million, or 3.3%, to $1.684 billion as of June 30, 2015 compared to $1.629 billion at December 31, 2014. The increase in total assets was primarily driven by growth in our loan and lease portfolio.

Short-term investments

Short-term investments decreased by $12.3 million, or 14.0%, to $76.0 million at June 30, 2015 from $88.4 million at December 31, 2014. Our short-term investments primarily consist of interest-bearing deposits held at the FRB. We value the safety and soundness provided by the FRB and therefore we incorporate short-term investments in our on-balance-sheet liquidity program. As of June 30, 2015, our total investment in commercial paper, which is also considered a short-term investment, was $8.5 million as compared to $10.4 million at December 31, 2014. We approach our decisions to purchase commercial paper with similar rigor and underwriting standards applied to our loan and lease portfolio. The original maturities of the commercial paper are usually sixty days or less and provide an attractive yield in comparison to other short-term alternatives. These investments also assist us in maintaining a shorter duration of our overall investment portfolio which we believe is necessary to take advantage of an anticipated rising-rate environment. In general, the level of our short-term investments will be influenced by the timing of deposit gathering, scheduled maturities of wholesale deposits, funding of loan growth when opportunities are presented and the level of our available-for-sale securities portfolio. Please refer to Liquidity and Capital Resources for further discussion.

Securities

Total securities, including available-for-sale and held-to-maturity, decreased by $491,000 to $185.8 million at June 30, 2015 compared to $186.3 million at December 31, 2014. During the six months ended June 30, 2015, we recognized unrealized holding losses of $145,000 before income taxes through other comprehensive income. As of June 30, 2015, our overall securities portfolio, including available-for-sale securities and held-to-maturity securities, had an estimated weighted average maturity of 3.09 years. Generally, our investment philosophy remains unchanged from our statements made in our most recent Annual Report on Form 10-K.

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We use a third-party pricing service as our primary source of market prices for our securities portfolio. On a quarterly basis, we validate the reasonableness of prices received from this source through independent verification of a representative sample of the portfolio, data integrity validation through comparison of current price to prior period prices, and an expectation-based analysis of movement in prices based upon the changes in the related yield curves and other market factors. No securities within our portfolio were deemed to be other-than-temporarily impaired as of June 30, 2015. There were no sales of securities during the three and six months ended June 30, 2015.

Loans and Leases Receivable

Loans and leases receivable, net of allowance for loan and lease losses, increased by $68.9 million, or 5.4%, to $1.335 billion at June 30, 2015 from $1.266 billion at December 31, 2014 with the majority of the growth distributed relatively evenly between our commercial and industrial and commercial real estate portfolios. We continue to have a concentration in commercial real estate, as commercial real estate loans represent approximately 62% of our total loans as of June 30, 2015. Over the past five years there has been a generally declining trend in this concentration level as we continue to direct our efforts toward growing our commercial and industrial portfolio. The types of loans and leases we originate and the various risks associated with these originations remain consistent with information previously outlined in our most recent Annual Report on Form 10-K.

Our commercial and industrial portfolio increased $38.2 million, or 9.2%, to $454.9 million at June 30, 2015 from $416.7 million at December 31, 2014 while our commercial real estate portfolio increased by $32.3 million, or 4.0%, to $844.1 million at June 30, 2015 from $811.8 million at December 31, 2014. We believe loan growth relative to prior years reflects improvement in economic activity within our markets, in addition to the ability of our business development teams to capture market share from the competition. While we continue to experience significant competition as banks operating in our primary geographic area attempt to deploy excess liquidity, we remain committed to our underwriting standards. We expect our new loan and lease activity to be more than adequate to replace normal amortization and to continue to grow in future quarters.

Non-performing loans increased $5.4 million, or 55.2%, to $15.2 million, compared to $9.8 million at December 31, 2014, primarily due to one $6.2 million relationship identified as impaired in the second quarter. Subsequent to June 30, 2015, we granted a concession to the client and considered the loans to be troubled debt restructurings. Management believes this increase is not systemic in nature or indicative of a trend of increasing non-performing loans. Further, management expects the outcome of this relationship to be consistent with results experienced historically due to an aggressive and disciplined credit resolution process. As a result, the Company's non-performing loans as a percentage of total gross loans and leases measured 1.12% and 0.76% at June 30, 2015 and December 31, 2014, respectively. Likewise, the ratio of non-performing assets to total assets increased to 1.01% at June 30, 2015, compared to 0.70% at December 31, 2014. We do not expect any material changes in non-accrual loans as a percentage of gross loans and leases; however, we may experience some volatility from time to time. Please refer to Asset Quality for additional information.

Deposits

As of June 30, 2015, deposits increased by $32.8 million to $1.471 billion from $1.438 billion at December 31, 2014. The increase in deposits was primarily due to an increase in the level of in-market deposits, specifically non-interest-bearing transaction accounts, which increased by $16.7 million to $221.1 million at June 30, 2015 from $204.3 million at December 31, 2014, and partially due to a $12.5 million increase in the level of money market accounts to $588.2 million at June 30, 2015 from $575.8 million at December 31, 2014. Deposit ending balances associated with in-market relationships will fluctuate based upon maturity of time deposits, client demands for the use of their cash, our ability to service and maintain client relationships and new client deposit relationships.

Our strategic efforts continue to be focused on adding in-market relationships and related transaction deposit accounts. We measure the success of deposit gathering efforts based on our ability to maintain the average balances of our in-market deposit accounts consistent with our current period mix and recent trends. Our Banks’ in-market deposits, consisting of all transaction accounts, money market accounts and non-wholesale deposits, are obtained primarily from the South Central, Northeastern and Southeastern regions of Wisconsin and the greater Kansas City area. Of our total year-to-date average deposits, approximately $1.043 billion, or 71.0%, were considered in-market deposits for the six months ended June 30, 2015. This compares to in-market deposits of $724.0 million, or 64.1%, for the year-to-date average at June 30, 2014.

The Corporation’s operating range of wholesale deposits to total deposits is 30%-40%. As of June 30, 2015, the ratio of wholesale deposits to total deposits was 30.2%. We will continue to use wholesale deposits in specific maturity periods needed, typically three to five years, to effectively mitigate interest rate risk measured through our asset/liability management process and to support asset growth initiatives while taking into consideration our operating goals and desired level of

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wholesale deposits. Refer to Liquidity and Capital Resources for further information regarding our use and monitoring of wholesale deposits.     

FHLB Advances and Other Borrowings

As of June 30, 2015, FHLB advances and other borrowings increased by $13.4 million, or 39.4%, to $47.4 million from $34.0 million at December 31, 2014. The primary reason for the increase in borrowings was due to a two-week advance of $13.0 million from the FHLB with a maturity date of July 13, 2015 at a rate of 0.16%. We routinely utilize short-term advances from the FHLB in order to provide the appropriate time to accumulate wholesale deposits in an orderly manner.

Asset Quality

Non-performing Assets

Our total impaired assets consisted of the following at June 30, 2015 and December 31, 2014, respectively:

	June 30, 2015			December 31, 2014
	(Dollars in Thousands)
Non-accrual loans and leases
Commercial real estate:
Commercial real estate - owner occupied	$	579		$	500
Commercial real estate - non-owner occupied	282			286
Construction and land development	4,539			4,932
Multi-family	10			17
1-4 family	1,316			690
Total non-accrual commercial real estate	6,726			6,425
Commercial and industrial(1)	7,378			2,318
Direct financing leases, net	—			—
Consumer and other:
Home equity and second mortgages	403			329
Other	691			720
Total non-accrual consumer and other loans	1,094			1,049
Total non-accrual loans and leases	15,198			9,792
Performing troubled debt restructurings	1,944			2,003
Total impaired loans and leases	17,142			11,795
Foreclosed properties, net	1,854			1,693
Total impaired assets	$	18,996		$	13,488
Total non-accrual loans and leases to gross loans and leases	1.12		%	0.76		%
Total non-performing assets to total loans and leases plus other real estate owned	1.26			0.89
Total non-performing assets to total assets	1.01			0.70
Allowance for loan and lease losses to gross loans and leases	1.12			1.12
Allowance for loan and lease losses to non-accrual loans and leases	100.01			146.33

As of June 30, 2015 and December 31, 2014, $6.9 million and $7.4 million of the non-accrual loans were considered troubled debt restructurings, respectively.

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A summary of our non-accrual loan and lease activity from December 31, 2014 through June 30, 2015 is as follows:

(In Thousands)
Non-accrual loans and leases as of the beginning of the period	$	9,792
Loans and leases transferred to non-accrual status(1)	7,648
Accretion of the fair value discount on purchased credit impaired loans	22
Non-accrual loans and leases transferred to foreclosed properties	(289		)
Non-accrual loans and leases partially or fully charged-off	(408		)
Cash received and applied to principal of non-accrual loans and leases	(1,567		)
Non-accrual loans and leases as of the end of the period	$	15,198

(1) Balance includes $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

We use a wide variety of available metrics to assess the overall asset quality of the portfolio and no one metric is used independently to make a final conclusion as to the asset quality of the portfolio. As of June 30, 2015, non-performing assets as a percentage of total assets increased to 1.01% from 0.70% at December 31, 2014. This is primarily due to one $6.2 million relationship identified as impaired in the second quarter. We believe this increase is not systemic in nature or indicative of a trend of increasing non-performing loans. We expect the outcome of this relationship to be consistent with results experienced historically due to an aggressive and disciplined credit resolution process. This increase was partially offset by cash collections on previously identified impaired loans and a partial charge-off on one commercial loan.

We also monitor early stage delinquencies to assist in the identification of potential future problems. As of June 30, 2015, the payment performance did not point to any new areas of concern, as approximately 99.7% of the loan and lease portfolio was in a current payment status. This metric can change rapidly however, if factors unknown to us change. We also monitor our asset quality through our established credit quality indicator categories. We are generally seeing positive trends with improving percentages of loans and leases in our higher quality loan categories which is indicative of overall credit quality improvement. While overall asset quality has improved, we will continue to actively monitor the credit quality of our loan and lease portfolios. Through this monitoring effort, we may identify additional loans and leases for which the borrowers or lessees are having difficulties making the required principal and interest payments based upon factors including, but not limited to, the inability to sell the underlying collateral, inadequate cash flow from the operations of the underlying businesses, liquidation events, or bankruptcy filings. We generally work proactively with our impaired loan borrowers to find meaningful solutions to difficult situations that are in the best interests of the Banks. Given our current low level of non-accrual loans, any meaningful improvement in reducing this balance further will likely be at a slower pace than what has been accomplished over the last several years. We expect to demonstrate an overall declining trend of non-accrual loan balances; however, we may experience some volatility in this trend from time to time.

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The following represents additional information regarding our impaired loans and leases:

	As of and for the Six Months Ended June 30,				As of and for the Year Ended December 31,
	2015		2014		2014
	(In Thousands)
Impaired loans and leases with no impairment reserves required(1)	$	14,876	$	7,290	$	11,270
Impaired loans and leases with impairment reserves required	2,266		7,492		525
Total impaired loans and leases	17,142		14,782		11,795
Less:
Impairment reserve (included in allowance for loan and lease losses)	575		606		290
Net impaired loans and leases	$	16,567	$	14,176	$	11,505
Average impaired loans and leases	$	11,158	$	15,285	$	14,474
Foregone interest income attributable to impaired loans and leases	$	317	$	443	$	870
Less: Interest income recognized on impaired loans and leases	1		310		740
Net foregone interest income on impaired loans and leases	$	316	$	133	$	130

(1) Balance includes $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

Non-performing assets also include foreclosed properties. A summary of our current-period foreclosed properties activity is as follows:

(In Thousands)
Foreclosed properties as of December 31, 2014	$	1,693
Loans transferred to foreclosed properties	289
Proceeds from sale of foreclosed properties	(143		)
Net gain on sale of foreclosed properties	16
Impairment valuation	(1		)
Foreclosed properties as of June 30, 2015	$	1,854

Allowance for loan and lease losses.

The allowance for loan and lease losses as a percentage of gross loans and leases was 1.12% as of both June 30, 2015 and December 31, 2014. During the six months ended June 30, 2015, we recorded net charge-offs on impaired loans and leases of approximately $334,000, comprised of $408,000 of charge-offs and $74,000 of recoveries. During the six months ended June 30, 2014, we recorded net recoveries on impaired loans and leases of approximately $25,000, comprised of no charge-offs and $25,000 of recoveries.

While charge-offs have been relatively low in recent periods, we will continue to experience some level of periodic charge-offs in the future as exit strategies are considered and executed. Loans and leases with previously established specific reserves may ultimately result in a charge-off under a variety of scenarios. There have been no substantive changes to our methodology for estimating the appropriate level of allowance for loan and lease loss reserves from what was previously outlined in our most recent Annual Report on Form 10-K. Based upon this methodology, which includes actively monitoring the asset quality and inherent risks within the loan and lease portfolio, management concluded that an allowance for loan and lease losses of $15.2 million, or 1.12% of total loans and leases, was appropriate as of June 30, 2015. Given ongoing complexities with current workout situations and the measured pace of improvement in economic conditions, further charge-offs and increased provisions for loan and lease losses may be recorded if additional facts and circumstances lead us to a different conclusion. In addition, various federal and state regulatory agencies review appropriateness of the allowance for loan and lease losses. These agencies could require certain loan and lease balances to be classified differently or charged off if their credit evaluations differ from those of management, based on their judgments about information available to them at the time of their examination.

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As of June 30, 2015 and December 31, 2014, our allowance for loan and lease losses to total non-accrual loans and leases was 100.01% and 146.33%, respectively. Impaired loans and leases exhibit weaknesses that inhibit repayment in compliance with the original terms of the note or lease. However, the measurement of impairment on loans and leases may not always result in a specific reserve included in the allowance for loan and lease losses. As part of the underwriting process, as well as our ongoing monitoring efforts, we endeavor to have appropriate collateral to protect our interest in the related loan or lease. As a result of this practice, a significant portion of our outstanding balance of non-performing loans or leases either does not require additional specific reserves or requires only a minimal amount of required specific reserve, as we believe the loans and leases are adequately collateralized as of the measurement period. In addition, management is proactive in recording charge-offs to bring loans to their net realizable value in situations where it is determined with certainty that we will not recover the entire amount of our principal. This practice may lead to a lower allowance for loan and lease loss to non-accrual loans and leases ratio as compared to our peers or industry expectations. In general, as asset quality remains strong, our allowance for loan and lease loss is measured more through general characteristics, including historical loss experience of our portfolio rather than through specific identification and we therefore expect to see this ratio to rise. As was the case with the $6.2 million relationship identified in the second quarter of 2015, if we identify additional impaired loans which are adequately collateralized and therefore require no specific or general reserve, this ratio could fall. Given our business practices and evaluation of our existing loan and lease portfolio, we believe this coverage ratio is appropriate for the probable losses inherent in our loan and lease portfolio as of June 30, 2015.

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A tabular summary of the activity in the allowance for loan and lease losses follows:

	As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,
	2015			2014			2015			2014
	(Dollars in Thousands)
Allowance at beginning of period	$	14,694		$	14,101		$	14,329		$	13,901
Charge-offs:
Commercial real estate
Commercial real estate — owner occupied	—			—			—			—
Commercial real estate — non-owner occupied	—			—			—			—
Construction and land development	—			—			—			—
Multi-family	—			—			—			—
1-4 family	(80		)	—			(91		)	—
Commercial and industrial	—			—			(313		)	—
Direct financing leases	—			—			—			—
Consumer and other
Home equity and second mortgages	—			—			—			—
Other	(4		)	—			(4		)	—
Total charge-offs	(84		)	—			(408		)
Recoveries:
Commercial real estate
Commercial real estate — owner occupied	—			—			—			8
Commercial real estate — non-owner occupied	—			—			—			4
Construction and land development	62			—			62			—
Multi-family	—			—			—			—
1-4 family	2			2			4			5
Commercial and industrial	5			1			5			1
Direct financing leases	—			—			—			—
Consumer and other
Home equity and second mortgages	—			2			2			7
Other	—			—			1			—
Total recoveries	69			5			74			25
Net (charge-offs) recoveries	(15		)	5			(334		)	25
Provision for loan and lease losses	520			(91		)	1,204			89
Allowance at end of period	$	15,199		$	14,015		$	15,199		$	14,015
Annualized net (charge-offs) recoveries as a % of average gross loans and leases	—		%	—		%	(0.05		)%	0.01		%

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Liquidity and Capital Resources

The Corporation expects to meet its liquidity needs through existing cash on hand, established cash flow sources, its third party senior line of credit and dividends received from the Banks. While the Banks are subject to certain regulatory limitations regarding their ability to pay dividends to the Corporation, we do not believe that the Corporation will be adversely affected by these dividend limitations. The Corporation’s principal liquidity requirements at June 30, 2015 were the interest payments due on subordinated and junior subordinated notes. In April 2015, FBB declared a dividend in the amount of $2.0 million bringing year-to-date dividend declarations to $4.0 million through June 30, 2015. During the year ended December 31, 2014, FBB declared and paid dividends totaling $8.0 million. The capital ratios of the Corporation and its subsidiaries continue to meet all applicable regulatory capital adequacy requirements. The Corporation’s and the Banks’ respective Boards of Directors and management teams adhere to the appropriate regulatory guidelines on decisions which affect their capital positions, including but not limited to, decisions relating to the payment of dividends and increasing indebtedness.

The Banks maintain liquidity by obtaining funds from several sources. The Banks’ primary sources of funds are principal and interest repayments on loans receivable and mortgage-related securities, deposits and other borrowings, such as federal funds and FHLB advances. The scheduled payments of loans and mortgage-related securities are generally a predictable source of funds. Deposit flows and loan prepayments, however, are greatly influenced by general interest rates, economic conditions and competition.

We view on-balance-sheet liquidity as a critical element to maintaining adequate liquidity to meet our cash and collateral obligations. We define our on-balance-sheet liquidity as the total of our short-term investments, our unencumbered securities fair value and our unencumbered pledged loans. As of June 30, 2015 and December 31, 2014, our immediate on-balance-sheet liquidity was $299.5 million and $290.8 million, respectively. At June 30, 2015 and December 31, 2014, the Banks had $60.7 million and $70.5 million on deposit with the FRB, respectively. Any excess funds not used for loan funding or satisfying other cash obligations were maintained as part of our on-balance-sheet liquidity in our interest-bearing accounts with the FRB, as we value the safety and soundness provided by the FRB. We plan to utilize excess liquidity to fund loan and lease portfolio growth, pay down maturing debt, allow run-off of maturing brokered certificates of deposit, or invest in securities to maintain adequate liquidity at an improved margin.

We had $444.5 million of outstanding wholesale deposits at June 30, 2015, compared to $427.3 million of wholesale deposits as of December 31, 2014, which represented 30.2% and 29.7%, respectively, of the ending balance of total deposits. While we are committed to our continued efforts to raise in-market deposits and maintain our overall mix of wholesale deposits and in-market deposits, wholesale deposits continue to be an efficient source of funding for the Banks and allow them to gather funds across a larger geographic base at price levels and maturities that are more attractive than local time deposits when required to raise a similar level of in-market deposits within a short time period. Access to such deposits allows us the flexibility to refrain from pursuing single-service deposit relationships in markets that have experienced unfavorable pricing levels. In addition, the administrative costs associated with wholesale deposits are considerably lower than those that would be incurred to administer a similar level of local deposits with a similar maturity structure. During the time frames necessary to accumulate wholesale deposits in an orderly manner, we will use FHLB short-term advances to meet our temporary funding needs. The FHLB short-term advances will typically have terms of one week to one month to cover the overall expected funding demands.

Our in-market relationships remain stable; however, deposit balances associated with those relationships will fluctuate. We expect to establish new client relationships and continue marketing efforts aimed at increasing the balances in existing clients’ deposit accounts. Nonetheless, we will continue to use wholesale deposits in specific maturity periods, typically three to five years, needed to effectively mitigate the interest rate risk measured through our asset/liability management process or in shorter time periods if in-market deposit balances decline. In order to provide for ongoing liquidity and funding, all of our wholesale deposits are certificates of deposit which do not allow for withdrawal at the option of the depositor before the stated maturity with the exception of deposits accumulated through the internet listing service which have the same early withdrawal privileges and fees as do our other in-market deposits. The Banks limit the percentage of wholesale deposits to total deposits in accordance with liquidity policies approved by their respective Boards of Directors. The Corporation’s overall operating range of wholesale deposits to total deposits is 30%-40%. The Banks were in compliance with their respective policy limits as of June 30, 2015 and December 31, 2014.

The Banks were able to access the wholesale deposit market as needed at rates and terms comparable to market standards during the six-month period ended June 30, 2015. In the event there is a disruption in the availability of wholesale deposits at maturity, the Banks have managed the maturity structure, in compliance with our approved liquidity policy, so at least one year of maturities could be funded through on-balance-sheet liquidity. These potential funding sources include deposits with the FRB and borrowings from the FHLB or Federal Reserve Discount Window utilizing currently unencumbered securities and acceptable loans as collateral. As of June 30, 2015, the available liquidity was in excess of the stated policy

56

minimum. As on-balance-sheet liquidity is utilized to fund growth, asset quality remains stable and the ratio of in-market deposits to total deposits remains within an acceptable range, management may consider reducing the number of months of maturity coverage slightly while remaining confident in its ability to manage the maturities of wholesale deposits in the event of a disruption in the wholesale market. We believe the Banks will also have access to the unused federal funds lines, cash flows from borrower repayments and cash flows from security maturities. The Banks also have the ability to raise local market deposits by offering attractive rates to generate the level required to fulfill their liquidity needs.

The Banks are required by federal regulation to maintain sufficient liquidity to ensure safe and sound operations. We believe the Banks have sufficient liquidity to match the balance of net withdrawable deposits and short-term borrowings in light of present economic conditions and deposit flows.

During the six months ended June 30, 2015, operating activities resulted in a net cash inflow of $10.8 million. Operating cash flows included net income of $8.1 million. Net cash used in investing activities for the the six months ended June 30, 2015 was approximately $69.8 million which consisted of cash outflows to fund net loan growth and reinvestment of cash flows within purchases of additional securities available-for-sale offset by cash inflows from maturities, redemptions and paydowns of available-for-sale and held-to-maturity securities. Net cash provided by financing activities for the the six months ended June 30, 2015 was $44.7 million primarily from net increases in deposits and the use of FHLB short-term advances to meet our temporary funding needs. Please refer to the Consolidated Statements of Cash Flows for further details regarding significant sources of cash flow for the Corporation.

Contractual Obligations and Off-Balance-Sheet Arrangements

As of June 30, 2015, there were no significant changes to our contractual obligations and off-balance-sheet arrangements disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014. We continue to believe that we have adequate capital and liquidity available from various sources to fund projected contractual obligations and commitments.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest rate risk, or market risk, arises from exposure of our financial position to changes in interest rates. It is our strategy to reduce the impact of interest rate risk on net interest margin and net interest income by maintaining a favorable match between the maturities and repricing dates of interest-earning assets and interest-bearing liabilities. This strategy is monitored by the Banks’ respective Asset/Liability Management Committees, in accordance with policies approved by the Banks’ respective Boards of Directors. These committees meet regularly to review the sensitivity of each Bank’s assets and liabilities to changes in interest rates, liquidity needs and sources, and pricing and funding strategies.

We use two techniques to measure interest rate risk. The first is simulation of earnings. In this measurement technique the balance sheet is modeled as an ongoing entity whereby future growth, pricing, and funding assumptions are implemented. These assumptions are modeled under different rate scenarios that include a simultaneous, instant and sustained change in interest rates. The second measurement technique used is static gap analysis. Gap analysis involves measurement of the difference in asset and liability repricing on a cumulative basis within a specified time frame. In general, a positive gap indicates that more interest-earning assets than interest-bearing liabilities reprice/mature in a time frame and a negative gap indicates the opposite. In addition to the gap position, other determinants of net interest income are the shape of the yield curve, general rate levels and the corresponding effect of contractual interest rate floors, reinvestment spreads, balance sheet growth and mix and interest rate spreads. We manage the structure of interest-earning assets and interest-bearing liabilities by adjusting their mix, yield, maturity and/or repricing characteristics based on market conditions. Currently, we do not employ any derivatives to assist in managing our interest rate risk exposure; however, management has the authorization, as permitted within applicable approved policies, and ability to utilize such instruments should they be appropriate to manage interest rate exposure.

The process of asset and liability management requires management to make a number of assumptions as to when an asset or liability will reprice or mature. Management believes that its assumptions approximate actual experience and considers them reasonable, although the actual amortization and repayment of assets and liabilities may vary substantially. Our economic sensitivity to changes in interest rates at June 30, 2015 has not changed materially since December 31, 2014.

57

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Corporation’s management, with the participation of the Corporation’s Chief Executive Officer and Chief Financial Officer, has evaluated the Corporation’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer have concluded that the Corporation’s disclosure controls and procedures were effective as of June 30, 2015.

Changes in Internal Control over Financial Reporting

There was no change in the Corporation’s internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) that occurred during the quarter ended June 30, 2015 that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

PART II. Other Information

Item 1. Legal Proceedings

From time to time, the Corporation and its subsidiaries are engaged in legal proceedings in the ordinary course of their respective businesses. Management believes that any liability arising from any such proceedings currently existing or threatened will not have a material adverse effect on the Corporation’s financial position, results of operations, or cash flows.

Item 1A. Risk Factors

There were no material changes to the risk factors previously disclosed in Item 1A. to Part I of the Corporation’s Form 10-K for the year ended December 31, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) None.

(b) Not applicable.

(c) Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased(1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1, 2015 - April 30, 2015	—	$	—	—	$	—
May 1, 2015 - May 31, 2015	168	$	45.62	—	$	—
June 1, 2015 - June 30, 2015	—	$	—	—	$	—
Total	168	$	45.62	—	$	—

(1) The shares in this column represent: the 168 shares that were surrendered to us to satisfy income tax withholding obligations in connection with the vesting of restricted shares.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

58

Item 5. Other Information

None.

Item 6. Exhibits

31.1	Certification of the Chief Executive Officer +
31.2	Certification of the Chief Financial Officer +
32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 +
101	The following financial information from First Business Financial Services, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014, (ii) Consolidated Statements of Income for the three and six months ended June 30, 2015 and 2014, (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2015 and 2014, (iv) Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2015 and 2014, (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014, and (vi) the Notes to Unaudited Consolidated Financial Statements +

+ Submitted electronically with this Quarterly Report.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FIRST BUSINESS FINANCIAL SERVICES, INC.
August 7, 2015	/s/ Corey A. Chambas
	Corey A. Chambas
	Chief Executive Officer
August 7, 2015	/s/ James F. Ropella
	James F. Ropella
	Chief Financial Officer (Principal Financial and Accounting Officer)

59

FIRST BUSINESS FINANCIAL SERVICES, INC.

Exhibit Index to Quarterly Report on Form 10-Q

Exhibit Number

31.1	Certification of the Chief Executive Officer +
31.2	Certification of the Chief Financial Officer +
32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 +
101	The following financial information from First Business Financial Services, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014, (ii) Consolidated Statements of Income for the three and six months ended June 30, 2015 and 2014, (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2015 and 2014, (iv) Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2015 and 2014, (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014, and (vi) the Notes to Unaudited Consolidated Financial Statements +

+ Submitted electronically with this Quarterly Report.

60

EX-31.1

Exhibit 31.1

Certifications

I, Corey A. Chambas, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of First Business Financial Services, 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 assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Corey A. Chambas

Corey A. Chambas

Chief Executive Officer

August 7, 2015

EX-31.2

Exhibit 31.2

Certifications

I, James F. Ropella, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of First Business Financial Services, 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 assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ James F. Ropella

James F. Ropella

Chief Financial Officer (Principal Financial and Accounting Officer)

August 7, 2015

EX-32

Exhibit 32

Certification of the Chief Executive Officer and the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

Solely for the purposes of complying with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, the undersigned Chief Executive Officer and Chief Financial Officer, of First Business Financial Services, Inc., a Wisconsin Corporation (the “Corporation”), hereby certify, based on our knowledge that the Quarterly Report on Form 10-Q of the Corporation for the three months ended June 30, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Corey A. Chambas

Corey A. Chambas

Chief Executive Officer

August 7, 2015

/s/ James F. Ropella

James F. Ropella

Chief Financial Officer (Principal Financial and Accounting Officer)

August 7, 2015

XML

Share-Based Compensation (Narrative Disclosures) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of shares available for grant	178,738		178,738
Stock options graded vesting minimum period			4 years
Stock options graded vesting maximum period			8 years
Stock options contractual term			10 years
Stock-based compensation related to stock options recognized in the consolidated financial statements	$ 0	$ 0	$ 0	$ 0
Deferred compensation expense yet to be recognized	$ 1,700		$ 1,700
Period of time that deferred compensation expense will be recognized			2 years 6 months 4 days

XML

Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Impaired Loans and Leases) (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2015		Dec. 31, 2014
Recorded investment
With no impairment reserve recorded	$ 14,876		$ 11,270
With impairment reserve recorded	2,266		525
Total	17,142		11,795
Unpaid principal balance
With no impairment reserve recorded	18,660		15,623
With impairment reserve recorded	2,312		565
Total	20,972		16,188
Impairment reserve
Impairment reserve	575		290
Average recorded investment(1)
With no impairment reserve recorded	9,350	[1]	13,926	[2]
With impairment reserve recorded	1,808	[1]	548	[2]
Total	11,158	[1]	14,474	[2]
Foregone interest income
With no impairment reserve recorded	259		843
With impairment reserve recorded	58		27
Foregone interest income	317		870
Interest income recognized
With no impairment reserve recorded	1		740
With impairment reserve recorded	0		0
Total	1		740
Net foregone interest income
With no impairment reserve recorded	258		103
With impairment reserve recorded	58		27
Total	316		130
Commercial real estate — owner occupied
Recorded investment
With no impairment reserve recorded	564		577
With impairment reserve recorded	89		0
Total	653		577
Unpaid principal balance
With no impairment reserve recorded	564		577
With impairment reserve recorded	89		0
Total	653		577
Impairment reserve
Impairment reserve	4		0
Average recorded investment(1)
With no impairment reserve recorded	575	[1]	484	[2]
With impairment reserve recorded	17	[1]	0	[2]
Total	592	[1]	484	[2]
Foregone interest income
With no impairment reserve recorded	13		30
With impairment reserve recorded	0		0
Foregone interest income	13		30
Interest income recognized
With no impairment reserve recorded	0		79
With impairment reserve recorded	0		0
Total	0		79
Net foregone interest income
With no impairment reserve recorded	13		(49)
With impairment reserve recorded	0		0
Total	13		(49)
Commercial real estate — non-owner occupied
Recorded investment
With no impairment reserve recorded	860		921
With impairment reserve recorded	47		49
Total	907		970
Unpaid principal balance
With no impairment reserve recorded	860		921
With impairment reserve recorded	87		89
Total	947		1,010
Impairment reserve
Impairment reserve	47		49
Average recorded investment(1)
With no impairment reserve recorded	918	[1]	349	[2]
With impairment reserve recorded	48	[1]	52	[2]
Total	966	[1]	401	[2]
Foregone interest income
With no impairment reserve recorded	6		22
With impairment reserve recorded	2		4
Foregone interest income	8		26
Interest income recognized
With no impairment reserve recorded	0		0
With impairment reserve recorded	0		0
Total	0		0
Net foregone interest income
With no impairment reserve recorded	6		22
With impairment reserve recorded	2		4
Total	8		26
Construction and land development
Recorded investment
With no impairment reserve recorded	4,617		5,157
With impairment reserve recorded	0		0
Total	4,617		5,157
Unpaid principal balance
With no impairment reserve recorded	7,287		7,828
With impairment reserve recorded	0		0
Total	7,287		7,828
Impairment reserve
Impairment reserve	0		0
Average recorded investment(1)
With no impairment reserve recorded	5,039	[1]	5,285	[2]
With impairment reserve recorded	0	[1]	0	[2]
Total	5,039	[1]	5,285	[2]
Foregone interest income
With no impairment reserve recorded	71		155
With impairment reserve recorded	0		0
Foregone interest income	71		155
Interest income recognized
With no impairment reserve recorded	0		0
With impairment reserve recorded	0		0
Total	0		0
Net foregone interest income
With no impairment reserve recorded	71		155
With impairment reserve recorded	0		0
Total	71		155
Multi-family
Recorded investment
With no impairment reserve recorded	10		17
With impairment reserve recorded	0		0
Total	10		17
Unpaid principal balance
With no impairment reserve recorded	377		384
With impairment reserve recorded	0		0
Total	377		384
Impairment reserve
Impairment reserve	0		0
Average recorded investment(1)
With no impairment reserve recorded	13	[1]	24	[2]
With impairment reserve recorded	0	[1]	0	[2]
Total	13	[1]	24	[2]
Foregone interest income
With no impairment reserve recorded	24		53
With impairment reserve recorded	0		0
Foregone interest income	24		53
Interest income recognized
With no impairment reserve recorded	0		0
With impairment reserve recorded	0		0
Total	0		0
Net foregone interest income
With no impairment reserve recorded	24		53
With impairment reserve recorded	0		0
Total	24		53
1-4 family
Recorded investment
With no impairment reserve recorded	1,442		1,181
With impairment reserve recorded	918		390
Total	2,360		1,571
Unpaid principal balance
With no impairment reserve recorded	1,514		1,218
With impairment reserve recorded	924		390
Total	2,438		1,608
Impairment reserve
Impairment reserve	177		155
Average recorded investment(1)
With no impairment reserve recorded	1,578	[1]	380	[2]
With impairment reserve recorded	375	[1]	405	[2]
Total	1,953	[1]	785	[2]
Foregone interest income
With no impairment reserve recorded	33		15
With impairment reserve recorded	11		18
Foregone interest income	44		33
Interest income recognized
With no impairment reserve recorded	0		12
With impairment reserve recorded	0		0
Total	0		12
Net foregone interest income
With no impairment reserve recorded	33		3
With impairment reserve recorded	11		18
Total	44		21
Commercial and industrial
Recorded investment
With no impairment reserve recorded	6,375		2,316
With impairment reserve recorded	1,031		33
Total	7,406		2,349
Unpaid principal balance
With no impairment reserve recorded	6,384		2,926
With impairment reserve recorded	1,031		33
Total	7,415		2,959
Impairment reserve
Impairment reserve	253		33
Average recorded investment(1)
With no impairment reserve recorded	231	[1]	6,141	[2]
With impairment reserve recorded	1,241	[1]	34	[2]
Total	1,472	[1]	6,175	[2]
Foregone interest income
With no impairment reserve recorded	63		463
With impairment reserve recorded	38		0
Foregone interest income	101		463
Interest income recognized
With no impairment reserve recorded	1		649
With impairment reserve recorded	0		0
Total	1		649
Net foregone interest income
With no impairment reserve recorded	62		(186)
With impairment reserve recorded	38		0
Total	100		(186)
Direct financing leases, net
Recorded investment
With no impairment reserve recorded	0		0
With impairment reserve recorded	0		0
Total	0		0
Unpaid principal balance
With no impairment reserve recorded	0		0
With impairment reserve recorded	0		0
Total	0		0
Impairment reserve
Impairment reserve	0		0
Average recorded investment(1)
With no impairment reserve recorded	0	[1]	0	[2]
With impairment reserve recorded	0	[1]	0	[2]
Total	0	[1]	0	[2]
Foregone interest income
With no impairment reserve recorded	0		0
With impairment reserve recorded	0		0
Foregone interest income	0		0
Interest income recognized
With no impairment reserve recorded	0		0
With impairment reserve recorded	0		0
Total	0		0
Net foregone interest income
With no impairment reserve recorded	0		0
With impairment reserve recorded	0		0
Total	0		0
Home equity and second mortgages
Recorded investment
With no impairment reserve recorded	317		380
With impairment reserve recorded	181		53
Total	498		433
Unpaid principal balance
With no impairment reserve recorded	317		380
With impairment reserve recorded	181		53
Total	498		433
Impairment reserve
Impairment reserve	94		53
Average recorded investment(1)
With no impairment reserve recorded	292	[1]	495	[2]
With impairment reserve recorded	127	[1]	57	[2]
Total	419	[1]	552	[2]
Foregone interest income
With no impairment reserve recorded	8		18
With impairment reserve recorded	7		5
Foregone interest income	15		23
Interest income recognized
With no impairment reserve recorded	0		0
With impairment reserve recorded	0		0
Total	0		0
Net foregone interest income
With no impairment reserve recorded	8		18
With impairment reserve recorded	7		5
Total	15		23
Other
Recorded investment
With no impairment reserve recorded	691		721
With impairment reserve recorded	0		0
Total	691		721
Unpaid principal balance
With no impairment reserve recorded	1,357		1,389
With impairment reserve recorded	0		0
Total	1,357		1,389
Impairment reserve
Impairment reserve	0		0
Average recorded investment(1)
With no impairment reserve recorded	704	[1]	768	[2]
With impairment reserve recorded	0	[1]	0	[2]
Total	704	[1]	768	[2]
Foregone interest income
With no impairment reserve recorded	41		87
With impairment reserve recorded	0		0
Foregone interest income	41		87
Interest income recognized
With no impairment reserve recorded	0		0
With impairment reserve recorded	0		0
Total	0		0
Net foregone interest income
With no impairment reserve recorded	41		87
With impairment reserve recorded	0		0
Total	$ 41		$ 87

[1] (1)Average recorded investment is calculated primarily using daily average balances.

[2] (1)Average recorded investment is calculated primarily using daily average balances.

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Accretable Yield) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Receivables [Abstract]
Accretable yield at the beginning of period	$ 676
Accretion	(22)	$ (7)
Reclassification to nonaccretable difference for loans with changing cash flows	(21)	0
Changes in accretable yield for non-credit related changes in expected cash flows	(155)	0
Outstanding accretable yield	$ 478	$ 676

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Allowance for Loan and Lease Losses) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Allowance for credit losses:
Beginning balance	$ 14,329	$ 13,901
Charge-offs	(408)	0
Recoveries	74	25
Provision	1,204	89
Ending balance	14,329	13,901	$ 15,199	$ 14,329	$ 14,015
Ending balance: individually evaluated for impairment			446		606
Ending balance: collectively evaluated for impairment			14,624		13,409
Ending balance: loans acquired with deteriorated credit quality			129		0
Loans and lease receivables:
Total gross loans and leases receivable			1,351,711	$ 1,281,792	1,008,615
Ending balance: individually evaluated for impairment			13,299		13,411
Ending balance: collectively evaluated for impairment			1,334,569		993,833
Ending balance: loans acquired with deteriorated credit quality			$ 3,843		$ 1,371
Allowance as % of gross loans			1.12%	1.12%	1.39%
Commercial real estate
Allowance for credit losses:
Beginning balance	8,619	9,055
Charge-offs	(91)	0
Recoveries	66	17
Provision	123	(304)
Ending balance	8,619	9,055	$ 8,717	$ 8,619	$ 8,768
Ending balance: individually evaluated for impairment			228		342
Ending balance: collectively evaluated for impairment			8,489		8,426
Ending balance: loans acquired with deteriorated credit quality			0		0
Loans and lease receivables:
Total gross loans and leases receivable			844,107		637,403
Ending balance: individually evaluated for impairment			5,589		5,416
Ending balance: collectively evaluated for impairment			835,559		630,616
Ending balance: loans acquired with deteriorated credit quality			$ 2,959		$ 1,371
Allowance as % of gross loans			1.03%		1.38%
Commercial and industrial loans and leases
Allowance for credit losses:
Beginning balance	5,492	4,573
Charge-offs	(313)	0
Recoveries	5	1
Provision	1,024	432
Ending balance	5,492	4,573	$ 6,208	5,492	$ 5,006
Ending balance: individually evaluated for impairment			124		208
Ending balance: collectively evaluated for impairment			5,955		4,798
Ending balance: loans acquired with deteriorated credit quality			129		0
Loans and lease receivables:
Total gross loans and leases receivable			483,591		355,549
Ending balance: individually evaluated for impairment			6,751		6,664
Ending balance: collectively evaluated for impairment			476,186		348,885
Ending balance: loans acquired with deteriorated credit quality			$ 654		$ 0
Allowance as % of gross loans			1.28%		1.41%
Consumer and other
Allowance for credit losses:
Beginning balance	218	273
Charge-offs	(4)	0
Recoveries	3	7
Provision	57	(39)
Ending balance	$ 218	$ 273	$ 274	$ 218	$ 241
Ending balance: individually evaluated for impairment			94		56
Ending balance: collectively evaluated for impairment			180		185
Ending balance: loans acquired with deteriorated credit quality			0		0
Loans and lease receivables:
Total gross loans and leases receivable			24,013		15,663
Ending balance: individually evaluated for impairment			959		1,331
Ending balance: collectively evaluated for impairment			22,824		14,332
Ending balance: loans acquired with deteriorated credit quality			$ 230		$ 0
Allowance as % of gross loans			1.14%		1.54%

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Loan Composition) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Receivables [Abstract]
Commercial real estate — owner occupied	$ 169,768	$ 163,884
Commercial real estate — non-owner occupied	400,018	417,962
Construction and land development	140,318	121,160
Multi-family	86,912	72,578
1-4 family (1)	47,091	36,182
Total commercial real estate	844,107	811,766
Commercial and industrial (2)	454,868	416,654
Direct financing leases, net	28,723	34,165
Home equity and second mortgages (3)	9,466	7,866
Other	14,547	11,341
Total consumer and other	24,013	19,207
Total gross loans and leases receivable	1,351,711	1,281,792	$ 1,008,615
Allowance for loan and lease losses	15,199	14,329
Deferred loan fees	1,147	1,025
Loans and leases receivable, net	$ 1,335,365	$ 1,266,438

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Regulatory Capital (Tables)

6 Months Ended

Jun. 30, 2015

Regulatory Capital Requirements [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations

The following table summarizes the Corporation’s and Banks’ capital ratios and the ratios required by their federal regulators at June 30, 2015 and December 31, 2014, respectively:

	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to Be Well Capitalized Under Prompt Corrective Action Requirements
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of June 30, 2015
Total capital
(to risk-weighted assets)
Consolidated	$	181,281	11.11	%	$	130,502	8.00	%	N/A		N/A
First Business Bank	135,519		11.23		96,523		8.00		$	120,654	10.00	%
First Business Bank — Milwaukee	19,404		11.27		13,779		8.00		17,223		10.00
Alterra Bank	27,979		10.79		20,748		8.00		25,935		10.00
Tier 1 capital
(to risk-weighted assets)
Consolidated	$	143,156	8.78	%	$	97,877	6.00	%	N/A		N/A
First Business Bank	123,424		10.23		72,393		6.00		$	96,523	8.00	%
First Business Bank — Milwaukee	17,746		10.30		10,334		6.00		13,779		8.00
Alterra Bank	26,533		10.23		15,561		6.00		20,748		8.00
Common equity tier 1 capital
(to risk-weighted assets)
Consolidated	$	133,156	8.16	%	$	73,407	4.50	%	N/A		N/A
First Business Bank	123,424		10.23		54,294		4.50		$	106,033	6.50	%
First Business Bank — Milwaukee	17,746		10.30		7,751		4.50		78,425		6.50
Alterra Bank	26,533		10.23		11,671		4.50		11,195		6.50
Tier 1 capital
(to average assets)
Consolidated	$	143,156	8.66	%	$	5,326	4.00	%	N/A		N/A
First Business Bank	123,424		10.55		4,937		4.00		$	6,171	5.00	%
First Business Bank — Milwaukee	17,746		7.46		710		4.00		887		5.00
Alterra Bank	26,533		10.00		1,061		4.00		1,327		5.00

	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to Be Well Capitalized Under Prompt Corrective Action Requirements
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of December 31, 2014
Total capital
(to risk-weighted assets)
Consolidated	$	173,263	12.13	%	$	114,253	8.00	%	N/A		N/A
First Business Bank	131,411		12.19		86,272		8.00		$	107,841	10.00	%
First Business Bank — Milwaukee	19,128		12.47		12,274		8.00		15,343		10.00
Alterra Bank	22,657		10.90		16,628		8.00		20,785		10.00
Tier 1 capital
(to risk-weighted assets)
Consolidated	$	136,008	9.52		$	57,127	4.00	%	N/A		N/A
First Business Bank	118,907		11.03		43,136		4.00		$	64,704	6.00	%
First Business Bank — Milwaukee	17,641		11.50		6,137		4.00		9,206		6.00
Alterra Bank	22,320		10.74		8,314		4.00		12,471		6.00
Tier 1 capital
(to average assets)
Consolidated	$	136,008	8.71		$	62,490	4.00	%	N/A		N/A
First Business Bank	118,907		10.13		46,960		4.00		$	58,700	5.00	%
First Business Bank — Milwaukee	17,641		7.90		8,935		4.00		11,169		5.00
Alterra Bank	22,320		9.01		9,910		4.00		12,388		5.00

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Deposits (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Deposits [Line Items]
Deposits	$ 1,471,068	$ 1,438,268
Average balance, deposits	$ 1,468,716	$ 1,208,003
Deposits, weighted average interest rate during the period	0.70%	0.78%
Non-interest-bearing transaction accounts
Deposits [Line Items]
Deposits	$ 221,064	$ 204,328
Average balance, deposits	$ 202,905	$ 154,687
Deposits, weighted average interest rate during the period	0.00%	0.00%
Interest-bearing transaction accounts
Deposits [Line Items]
Deposits	$ 107,318	$ 104,199
Average balance, deposits	$ 106,442	$ 83,508
Deposits, weighted average interest rate during the period	0.23%	0.22%
Money market accounts
Deposits [Line Items]
Deposits	$ 588,240	$ 575,766
Average balance, deposits	$ 615,485	$ 493,322
Deposits, weighted average interest rate during the period	0.55%	0.52%
Certificates of deposit
Deposits [Line Items]
Deposits	$ 109,966	$ 126,635
Average balance, deposits	$ 117,748	$ 60,284
Deposits, weighted average interest rate during the period	0.75%	0.89%
Wholesale deposits
Deposits [Line Items]
Deposits	$ 444,480	$ 427,340
Average balance, deposits	$ 426,136	$ 416,202
Deposits, weighted average interest rate during the period	1.36%	1.49%

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Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2015		2014		2015		2014
	(Dollars in Thousands, Except Per Share Data)
Basic earnings per common share
Net income	$	3,858	$	3,505	$	8,050	$	6,842
Less: earnings allocated to participating securities	65		75		138		147
Basic earnings allocated to common shareholders	$	3,793	$	3,430	$	7,912	$	6,695
Weighted-average common shares outstanding, excluding participating securities	4,261,127		3,860,087		4,261,218		3,859,795
Basic earnings per common share	$	0.89	$	0.89	$	1.86	$	1.73
Diluted earnings per common share
Earnings allocated to common shareholders	$	3,793	$	3,430	$	7,912	$	6,695
Reallocation of undistributed earnings	—		—		—		—
Diluted earnings allocated to common shareholders	$	3,793	$	3,430	$	7,912	$	6,695
Weighted-average common shares outstanding, excluding participating securities	4,261,127		3,860,087		4,261,218		3,859,795
Dilutive effect of share-based awards	—		23,268		1,121		22,203
Weighted-average diluted common shares outstanding, excluding participating securities	4,261,127		3,883,355		4,262,339		3,881,998
Diluted earnings per common share	$	0.89	$	0.88	$	1.86	$	1.72

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Past Due Loans) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	$ 1,276	$ 364
60-89 days past due	780	660
Greater than 90 days past due	1,733	1,762
Total past due	3,789	2,786
Current	1,347,922	1,279,006
Non-accrual loans and leases	15,198	9,792
Total gross loans and leases receivable	$ 1,351,711	$ 1,281,792	$ 1,008,615
30 to 59 days past due, percent of total portfolio	0.09%	0.03%
60 to 89 days past due, percent of total portfolio	0.06%	0.05%
Greater than 90 days past due, percent of portfolio	0.13%	0.14%
Past due, percent of total portfolio	0.28%	0.22%
Current, percent of total portfolio	99.72%	99.78%
Gross loans, percent of total portfolio	100.00%	100.00%
Commercial real estate — owner occupied
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	$ 0	$ 0
60-89 days past due	490	0
Greater than 90 days past due	0	0
Total past due	490	0
Current	169,278	163,884
Non-accrual loans and leases	579	500
Total gross loans and leases receivable	169,768	163,884
Commercial real estate — non-owner occupied
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	215
Greater than 90 days past due	235	0
Total past due	235	215
Current	399,783	417,747
Non-accrual loans and leases	282	286
Total gross loans and leases receivable	400,018	417,962
Construction and land development
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	193
Greater than 90 days past due	0	0
Total past due	0	193
Current	140,318	120,967
Non-accrual loans and leases	4,539	4,932
Total gross loans and leases receivable	140,318	121,160
Multi-family
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	86,912	72,578
Non-accrual loans and leases	10	17
Total gross loans and leases receivable	86,912	72,578
1-4 family
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	658	0
60-89 days past due	96	106
Greater than 90 days past due	175	306
Total past due	929	412
Current	46,162	35,770
Non-accrual loans and leases	1,316	690
Total gross loans and leases receivable	47,091	36,182
Commercial and industrial
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	618	364
60-89 days past due	194	146
Greater than 90 days past due	582	736
Total past due	1,394	1,246
Current	453,474	415,408
Non-accrual loans and leases	7,378	2,318
Total gross loans and leases receivable	454,868	416,654
Direct financing leases, net
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	28,723	34,165
Non-accrual loans and leases	0	0
Total gross loans and leases receivable	28,723	34,165
Home equity and second mortgages
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	50	0
Total past due	50	0
Current	9,416	7,866
Non-accrual loans and leases	403	329
Total gross loans and leases receivable	9,466	7,866
Other
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	691	720
Total past due	691	720
Current	13,856	10,621
Non-accrual loans and leases	691	720
Total gross loans and leases receivable	14,547	11,341
Accruing loans and leases
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	399	0
60-89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	399	0
Current	1,336,114	1,272,000
Accrual loans and leases	1,336,513	1,272,000
Accruing loans and leases | Commercial real estate — owner occupied
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	169,189	163,384
Accrual loans and leases	169,189	163,384
Accruing loans and leases | Commercial real estate — non-owner occupied
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	399,736	417,676
Accrual loans and leases	399,736	417,676
Accruing loans and leases | Construction and land development
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	135,779	116,228
Accrual loans and leases	135,779	116,228
Accruing loans and leases | Multi-family
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	86,902	72,561
Accrual loans and leases	86,902	72,561
Accruing loans and leases | 1-4 family
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	45,775	35,492
Accrual loans and leases	45,775	35,492
Accruing loans and leases | Commercial and industrial
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	399	0
60-89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	399	0
Current	447,091	414,336
Accrual loans and leases	447,490	414,336
Accruing loans and leases | Direct financing leases, net
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	28,723	34,165
Accrual loans and leases	28,723	34,165
Accruing loans and leases | Home equity and second mortgages
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	9,063	7,537
Accrual loans and leases	9,063	7,537
Accruing loans and leases | Other
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	13,856	10,621
Accrual loans and leases	13,856	10,621
Non-accruing loans and leases
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	877	364
60-89 days past due	780	660
Greater than 90 days past due	1,733	1,762
Total past due	3,390	2,786
Current	11,808	7,006
Non-accrual loans and leases	15,198	9,792
Non-accruing loans and leases | Commercial real estate — owner occupied
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	490	0
Greater than 90 days past due	0	0
Total past due	490	0
Current	89	500
Non-accrual loans and leases	579	500
Non-accruing loans and leases | Commercial real estate — non-owner occupied
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	215
Greater than 90 days past due	235	0
Total past due	235	215
Current	47	71
Non-accrual loans and leases	282	286
Non-accruing loans and leases | Construction and land development
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	193
Greater than 90 days past due	0	0
Total past due	0	193
Current	4,539	4,739
Non-accrual loans and leases	4,539	4,932
Non-accruing loans and leases | Multi-family
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	10	17
Non-accrual loans and leases	10	17
Non-accruing loans and leases | 1-4 family
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	658	0
60-89 days past due	96	106
Greater than 90 days past due	175	306
Total past due	929	412
Current	387	278
Non-accrual loans and leases	1,316	690
Non-accruing loans and leases | Commercial and industrial
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	219	364
60-89 days past due	194	146
Greater than 90 days past due	582	736
Total past due	995	1,246
Current	6,383	1,072
Non-accrual loans and leases	7,378	2,318
Non-accruing loans and leases | Direct financing leases, net
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	0	0
Non-accrual loans and leases	0	0
Non-accruing loans and leases | Home equity and second mortgages
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	50	0
Total past due	50	0
Current	353	329
Non-accrual loans and leases	403	329
Non-accruing loans and leases | Other
Financing Receivable, Recorded Investment, Aging [Abstract]
30-59 days past due	0	0
60-89 days past due	0	0
Greater than 90 days past due	691	720
Total past due	691	720
Current	0	0
Non-accrual loans and leases	$ 691	$ 720

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Securities (Contractual Maturity) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Available-for-Sale, Amortized Cost
Due in one year or less	$ 0
Due in one year through five years	10,384
Due in five through ten years	84,949
Due in over ten years	50,092
Amortized cost	145,425	$ 143,636
Available-for-Sale, Estimated Fair Value
Due in one year or less	0
Due in one year through five years	10,360
Due in five through ten years	85,407
Due in over ten years	50,575
Estimated fair value	146,342	144,698
Held-to-Maturity, Amortized Cost
Due in one year or less	0
Due in one year through five years	3,389
Due in five through ten years	13,668
Due in over ten years	22,371
Amortized cost	39,428	41,563
Held-to-Maturity, Estimated Fair Value
Due in one year or less	0
Due in one year through five years	3,383
Due in five through ten years	13,681
Due in over ten years	22,355
Estimated Fair Value	$ 39,419	$ 41,694

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Share-Based Compensation (Restricted Share Activity) (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Number of Restricted Shares
Nonvested balance, beginning	77,499	84,709
Granted	500	32,261
Vested	(913)	(39,471)
Forfeited	(4,469)	0
Nonvested balance, ending	72,617	77,499
Weighted Average Grant-Date Fair Value
Nonvested balance, beginning	$ 33.94	$ 23.10
Granted	46.60	44.98
Vested	44.23	19.71
Forfeited	31.37	0.00
Nonvested balance, ending	$ 34.05	$ 33.94

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Troubled Debt Restructurings) (Details) $ in Thousands	Jun. 30, 2015 USD ($) loans	Dec. 31, 2014 USD ($) loans
Troubled debt restructurings
Number of Loans | loans	37	40
Pre-Modification Recorded Investment	$ 13,071	$ 13,495
Post-Modification Recorded Investment	$ 8,803	$ 9,396
Commercial real estate — owner occupied
Troubled debt restructurings
Number of Loans | loans	2	2
Pre-Modification Recorded Investment	$ 625	$ 624
Post-Modification Recorded Investment	$ 564	$ 577
Commercial real estate — non-owner occupied
Troubled debt restructurings
Number of Loans | loans	5	5
Pre-Modification Recorded Investment	$ 1,151	$ 1,095
Post-Modification Recorded Investment	$ 907	$ 970
Construction and land development
Troubled debt restructurings
Number of Loans | loans	3	4
Pre-Modification Recorded Investment	$ 6,034	$ 6,260
Post-Modification Recorded Investment	$ 4,678	$ 5,157
Multi-family
Troubled debt restructurings
Number of Loans | loans	1	1
Pre-Modification Recorded Investment	$ 184	$ 184
Post-Modification Recorded Investment	$ 10	$ 17
1-4 family
Troubled debt restructurings
Number of Loans | loans	16	16
Pre-Modification Recorded Investment	$ 2,119	$ 2,119
Post-Modification Recorded Investment	$ 1,435	$ 1,368
Commercial and industrial
Troubled debt restructurings
Number of Loans | loans	3	4
Pre-Modification Recorded Investment	$ 201	$ 361
Post-Modification Recorded Investment	$ 144	$ 155
Direct financing leases, net
Troubled debt restructurings
Number of Loans | loans	0	0
Pre-Modification Recorded Investment	$ 0	$ 0
Post-Modification Recorded Investment	$ 0	$ 0
Home equity and second mortgages
Troubled debt restructurings
Number of Loans | loans	6	6
Pre-Modification Recorded Investment	$ 681	$ 772
Post-Modification Recorded Investment	$ 375	$ 431
Other
Troubled debt restructurings
Number of Loans | loans	1	2
Pre-Modification Recorded Investment	$ 2,076	$ 2,080
Post-Modification Recorded Investment	$ 690	$ 721

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Regulatory Capital (Regulatory Capital Ratios) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Compliance with Regulatory Capital Requirements under Banking Regulations
Total capital	$ 181,281	$ 173,263
Total capital to risk-weighted assets	11.11%	12.13%
Total capital, Minimum Required for Capital Adequacy Purposes	$ 130,502	$ 114,253
Total capital to risk-weighted assets, Minimum Required for Capital Adequacy Purposes	8.00%	8.00%
Tier 1 capital	$ 143,156	$ 136,008
Tier 1 capital to risk-weighted assets	8.78%	9.52%
Tier 1 capital, Minimum Required for Capital Adequacy Purposes	$ 97,877	$ 57,127
Tier 1 capital to risk-weighted assets, Minimum Required for Capital Adequacy Purposes	6.00%	4.00%
Common equity tier 1 capital	$ 133,156
Common equity tier 1 capital to risk-weighted assets	8.16%
Common equity tier 1 capital, Minimum Required for Capital Adequacy Purposes	$ 73,407
Common equity tier 1 capital to risk-weighted assets, Minimum Required for Capital Adequacy Purposes	4.50%
Tier 1 capital	$ 143,156	$ 136,008
Tier 1 leverage capital to average assets	8.66%	8.71%
Tier 1 leverage capital, Minimum Required for Capital Adequacy Purposes	$ 5,326	$ 62,490
Tier 1 leverage capital to average assets, Minimum Required for Capital Adequacy Purposes	4.00%	4.00%
First Business Bank
Compliance with Regulatory Capital Requirements under Banking Regulations
Total capital	$ 135,519	$ 131,411
Total capital to risk-weighted assets	11.23%	12.19%
Total capital, Minimum Required for Capital Adequacy Purposes	$ 96,523	$ 86,272
Total capital to risk-weighted assets, Minimum Required for Capital Adequacy Purposes	8.00%	8.00%
Total capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	$ 120,654	$ 107,841
Total capital to risk-weighted assets, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	10.00%	10.00%
Tier 1 capital	$ 123,424	$ 118,907
Tier 1 capital to risk-weighted assets	10.23%	11.03%
Tier 1 capital, Minimum Required for Capital Adequacy Purposes	$ 72,393	$ 43,136
Tier 1 capital to risk-weighted assets, Minimum Required for Capital Adequacy Purposes	6.00%	4.00%
Tier 1 capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	$ 96,523	$ 64,704
Tier 1 capital to risk weighted assets, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	8.00%	6.00%
Common equity tier 1 capital	$ 123,424
Common equity tier 1 capital to risk-weighted assets	10.23%
Common equity tier 1 capital, Minimum Required for Capital Adequacy Purposes	$ 54,294
Common equity tier 1 capital to risk-weighted assets, Minimum Required for Capital Adequacy Purposes	4.50%
Common equity tier 1 capital, Minimum Required to Be Well Capitalized Under Prompt Corrective Action Requirements	$ 106,033
Common equity tier 1 capital to risk-weighted assets, Minimum Required to Be Well Capitalized Under Prompt Corrective Action Requirements	6.50%
Tier 1 capital	$ 123,424	$ 118,907
Tier 1 leverage capital to average assets	10.55%	10.13%
Tier 1 leverage capital, Minimum Required for Capital Adequacy Purposes	$ 4,937	$ 46,960
Tier 1 leverage capital to average assets, Minimum Required for Capital Adequacy Purposes	4.00%	4.00%
Tier 1 leverage capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	$ 6,171	$ 58,700
Tier 1 leverage capital to average assets, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	5.00%	5.00%
First Business Bank - Milwaukee
Compliance with Regulatory Capital Requirements under Banking Regulations
Total capital	$ 19,404	$ 19,128
Total capital to risk-weighted assets	11.27%	12.47%
Total capital, Minimum Required for Capital Adequacy Purposes	$ 13,779	$ 12,274
Total capital to risk-weighted assets, Minimum Required for Capital Adequacy Purposes	8.00%	8.00%
Total capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	$ 17,223	$ 15,343
Total capital to risk-weighted assets, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	10.00%	10.00%
Tier 1 capital	$ 17,746	$ 17,641
Tier 1 capital to risk-weighted assets	10.30%	11.50%
Tier 1 capital, Minimum Required for Capital Adequacy Purposes	$ 10,334	$ 6,137
Tier 1 capital to risk-weighted assets, Minimum Required for Capital Adequacy Purposes	6.00%	4.00%
Tier 1 capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	$ 13,779	$ 9,206
Tier 1 capital to risk weighted assets, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	8.00%	6.00%
Common equity tier 1 capital	$ 17,746
Common equity tier 1 capital to risk-weighted assets	10.30%
Common equity tier 1 capital, Minimum Required for Capital Adequacy Purposes	$ 7,751
Common equity tier 1 capital to risk-weighted assets, Minimum Required for Capital Adequacy Purposes	4.50%
Common equity tier 1 capital, Minimum Required to Be Well Capitalized Under Prompt Corrective Action Requirements	$ 78,425
Common equity tier 1 capital to risk-weighted assets, Minimum Required to Be Well Capitalized Under Prompt Corrective Action Requirements	6.50%
Tier 1 capital	$ 17,746	$ 17,641
Tier 1 leverage capital to average assets	7.46%	7.90%
Tier 1 leverage capital, Minimum Required for Capital Adequacy Purposes	$ 710	$ 8,935
Tier 1 leverage capital to average assets, Minimum Required for Capital Adequacy Purposes	4.00%	4.00%
Tier 1 leverage capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	$ 887	$ 11,169
Tier 1 leverage capital to average assets, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	5.00%	5.00%
Alterra Bank
Compliance with Regulatory Capital Requirements under Banking Regulations
Total capital	$ 27,979	$ 22,657
Total capital to risk-weighted assets	10.79%	10.90%
Total capital, Minimum Required for Capital Adequacy Purposes	$ 20,748	$ 16,628
Total capital to risk-weighted assets, Minimum Required for Capital Adequacy Purposes	8.00%	8.00%
Total capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	$ 25,935	$ 20,785
Total capital to risk-weighted assets, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	10.00%	10.00%
Tier 1 capital	$ 26,533	$ 22,320
Tier 1 capital to risk-weighted assets	10.23%	10.74%
Tier 1 capital, Minimum Required for Capital Adequacy Purposes	$ 15,561	$ 8,314
Tier 1 capital to risk-weighted assets, Minimum Required for Capital Adequacy Purposes	6.00%	4.00%
Tier 1 capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	$ 20,748	$ 12,471
Tier 1 capital to risk weighted assets, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	8.00%	6.00%
Common equity tier 1 capital	$ 26,533
Common equity tier 1 capital to risk-weighted assets	10.23%
Common equity tier 1 capital, Minimum Required for Capital Adequacy Purposes	$ 11,671
Common equity tier 1 capital to risk-weighted assets, Minimum Required for Capital Adequacy Purposes	4.50%
Common equity tier 1 capital, Minimum Required to Be Well Capitalized Under Prompt Corrective Action Requirements	$ 11,195
Common equity tier 1 capital to risk-weighted assets, Minimum Required to Be Well Capitalized Under Prompt Corrective Action Requirements	6.50%
Tier 1 capital	$ 26,533	$ 22,320
Tier 1 leverage capital to average assets	10.00%	9.01%
Tier 1 leverage capital, Minimum Required for Capital Adequacy Purposes	$ 1,061	$ 9,910
Tier 1 leverage capital to average assets, Minimum Required for Capital Adequacy Purposes	4.00%	4.00%
Tier 1 leverage capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	$ 1,327	$ 12,388
Tier 1 leverage capital to average assets, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	5.00%	5.00%

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Fair Value Disclosures (Measured on a Non-Recurring Basis) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Total gains (losses) on impaired loans	$ 0	$ 0
Total gains (losses) on foreclosed properties	(1)	(4)
Total gains (losses) on servicing assets	0	0
Impaired loans
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	8,795	8,565
Impaired loans | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	0	0
Impaired loans | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	7,573	7,025
Impaired loans | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	1,222	1,540
Foreclosed properties
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	1,854	1,693
Foreclosed properties | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	0	0
Foreclosed properties | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	1,854	1,693
Foreclosed properties | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	0	0
Loan servicing rights
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	1,168	943
Loan servicing rights | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	0	0
Loan servicing rights | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	0	0
Loan servicing rights | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	$ 1,168	$ 943

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Fair Value of Credit Impaired Loans Acquired) (Details) - Purchased Credit Impaired Loans - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule of Contractually Required Payments Receivable, Expected Cash Flows, and Fair Value of Credit Impaired Loans Acquired [Line Items]
Contractually required payments	$ 6,382	$ 6,874
Fair value of purchase credit impaired loans	$ 3,701	$ 4,025

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Nature of Operations and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations. The accounting and reporting practices of First Business Financial Services, Inc. (the “Corporation”), its wholly-owned subsidiaries, First Business Bank (“FBB”), First Business Bank – Milwaukee (“FBB – Milwaukee”) and Alterra Bank (“Alterra”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). FBB, FBB – Milwaukee and Alterra are sometimes referred to together as the “Banks.” FBB operates as a commercial banking institution in the Madison, Wisconsin market, consisting primarily of Dane County and the surrounding areas, with loan production offices in Northeast Wisconsin. FBB also offers trust and investment services through First Business Trust & Investments (“FBTI”), a division of FBB. FBB – Milwaukee operates as a commercial banking institution in the Milwaukee, Wisconsin market, consisting primarily of Waukesha County and the surrounding areas, with a loan production office in Kenosha, Wisconsin. Alterra operates as a commercial banking institution in the Kansas City market and the surrounding areas. The Banks provide a full range of financial services to businesses, business owners, executives, professionals and high net worth individuals. The Banks are subject to competition from other financial institutions and service providers and are also subject to state and federal regulations. FBB has the following wholly-owned subsidiaries: First Business Capital Corp. (“FBCC”), First Madison Investment Corp. (“FMIC”), First Business Equipment Finance, LLC (“FBEF”), Rimrock Road Investment Fund, LLC (“Rimrock Road”) and BOC Investment, LLC (“BOC”). FMIC is located in and was formed under the laws of the state of Nevada. FBB-Milwaukee has one subsidiary, FBB – Milwaukee Real Estate, LLC (“FBBMRE”).

Basis of Presentation. The accompanying unaudited Consolidated Financial Statements were prepared in accordance with GAAP and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Corporation’s Consolidated Financial Statements and footnotes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014. The unaudited Consolidated Financial Statements include the accounts of the Corporation and its wholly-owned subsidiaries. In accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 810, the Corporation’s ownership interest in FBFS Statutory Trust II (“Trust II”) has not been consolidated into the financial statements. All significant intercompany balances and transactions have been eliminated in consolidation.

Management of the Corporation is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Material estimates that could significantly change in the near-term include the value of foreclosed property, lease residuals, property under operating leases, securities, income taxes and the level of the allowance for loan and lease losses. The results of operations for the six-month period ended June 30, 2015 are not necessarily indicative of results that may be expected for any other interim period or the entire fiscal year ending December 31, 2015. Certain amounts in prior periods may have been reclassified to conform to the current presentation. Subsequent events have been evaluated through the date of the issuance of the Consolidated Financial Statements. No significant subsequent events have occurred through this date requiring adjustment to the financial statements or disclosures.

The Corporation has not changed its significant accounting and reporting policies from those disclosed in the Corporation’s Form 10-K for the year ended December 31, 2014 except as described further below in this Note 1.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 666).” The ASU is a converged standard between the FASB and the IASB that provides a single comprehensive revenue recognition model for all contracts with customers across transactions and industries. The primary objective of the ASU is revenue recognition that represents the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU is effective for interim and annual reporting periods beginning after December 15, 2016. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In June 2014, the FASB issued ASU No. 2014-12, “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” This ASU requires a reporting entity to treat a performance target that affects vesting and that could be achieved after the requisite service period as a performance condition. A reporting entity should apply FASB ASC Topic 718, Compensation-Stock Compensation, to awards with performance conditions that affect vesting. For all entities, ASU 2014-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. ASU 2014-12 may be adopted either prospectively for share-based payment awards granted or modified on or after the effective date, or retrospectively, using a modified retrospective approach. The modified retrospective approach would apply to share-based payment awards outstanding as of the beginning of the earliest annual period presented in the financial statements on adoption, and to all new or modified awards thereafter. While the Corporation does not have any performance-based awards outstanding as of the reporting date, the Corporation’s equity incentive plan does allow for such awards. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This ASU describes how an entity should assess its ability to meet obligations and sets rules for how this information should be disclosed in the financial statements. The standard provides accounting guidance that will be used along with existing auditing standards. The ASU is effective for interim and annual periods beginning after December 15, 2016. Early application is permitted. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis.” This ASU changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a variable interest entity (VIE), and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. It also eliminates the VIE consolidation model based on majority exposure to variability that applied to certain investment companies and similar entities. The new guidance excludes money market funds that are required to comply with Rule 2a-7 of the Investment Company Act of 1940 and similar entities from the U.S. GAAP consolidation requirements. The new consolidation guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. At the effective date, all previous consolidation analysis that the guidance affects must be reconsidered. This includes the consolidation analysis for all VIEs and for all limited partnerships and similar entities that previously were consolidated by the general partner even though the entities were not VIEs. Early adoption is permitted, including early adoption in an interim period. If a reporting enterprise chooses to early adopt in an interim period, adjustments resulting from the revised consolidation analysis must be reflected as of the beginning of the fiscal year that includes that interim period. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” This ASU intends to simplify the presentation of debt issuance costs. This ASU is effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In April 2015, the FASB issued ASU 2015-05, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement.” This ASU provides explicit guidance to help companies evaluate the accounting for fees paid by a customer in a cloud computing arrangement. The new guidance clarifies that if a cloud computing arrangement includes a software license, the customer should account for the license consistent with its accounting for other software licenses. If the arrangement does not include a software license, the customer should account for the arrangement as a service contract. This ASU is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. An entity can elect to adopt the amendments either prospectively for all arrangements entered into or materially modified after the effective date, or retrospectively. Early adoption is permitted for all entities. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In May 2015, the FASB issued ASU 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).” This ASU will eliminate the requirement to categorize investments in the fair value hierarchy if their fair value is measured at net asset value (NAV) per share (or its equivalent) using the practical expedient in the FASB’s fair value measurement guidance. Reporting entities are required to adopt the ASU retrospectively. The effective date for public business entities is fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for all entities. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

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Fair Value Disclosures (Foreclosed Properties) (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Fair Value Disclosures [Abstract]
Foreclosed properties at the beginning of the period	$ 1,693	$ 333	$ 333
Foreclosed properties acquired in acquisition, at fair value	0		1,605
Loans transferred to foreclosed properties, at lower of cost or fair value	289	0	0
Proceeds from sale of foreclosed properties	(143)	$ 0	(255)
Net gain on sale of foreclosed properties	16		14
Impairment valuation	(1)		(4)
Foreclosed properties at the end of the period	$ 1,854		$ 1,693

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Securities (Unrealized Losses Available for Sale) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair value
Less than 12 months	$ 46,473	$ 42,185
12 months or longer	15,196	21,518
Total	61,669	63,703
Unrealized losses
Less than 12 months	318	159
12 months or longer	197	408
Total	515	567
U.S. Government agency obligations - government-sponsored enterprises
Fair value
Less than 12 months	999	3,486
12 months or longer	3,714	5,479
Total	4,713	8,965
Unrealized losses
Less than 12 months	1	12
12 months or longer	36	69
Total	37	81
Municipal obligations
Fair value
Less than 12 months	2,423
12 months or longer	0
Total	2,423
Unrealized losses
Less than 12 months	11
12 months or longer	0
Total	11
Asset-backed securities
Fair value
Less than 12 months		0
12 months or longer		1,510
Total		1,510
Unrealized losses
Less than 12 months		0
12 months or longer		4
Total		4
Collateralized mortgage obligations - government issued
Fair value
Less than 12 months	2,970	9,201
12 months or longer	6,878	9,536
Total	9,848	18,737
Unrealized losses
Less than 12 months	14	50
12 months or longer	100	206
Total	114	256
Collateralized mortgage obligations - government-sponsored enterprises
Fair value
Less than 12 months	40,081	29,498
12 months or longer	4,604	4,993
Total	44,685	34,491
Unrealized losses
Less than 12 months	292	97
12 months or longer	61	129
Total	$ 353	$ 226

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Deposits (Tables)

6 Months Ended

Jun. 30, 2015

Deposits [Abstract]

Deposits

The composition of deposits at June 30, 2015 and December 31, 2014 was as follows. Average balances represent year-to-date averages.

	June 30, 2015						December 31, 2014
	Balance		Average balance		Weighted average rate		Balance		Average balance		Weighted average rate
	(Dollars in Thousands)
Non-interest-bearing transaction accounts	$	221,064	$	202,905	—	%	$	204,328	$	154,687	—	%
Interest-bearing transaction accounts	107,318		106,442		0.23		104,199		83,508		0.22
Money market accounts	588,240		615,485		0.55		575,766		493,322		0.52
Certificates of deposit	109,966		117,748		0.75		126,635		60,284		0.89
Wholesale deposits	444,480		426,136		1.36		427,340		416,202		1.49
Total deposits	$	1,471,068	$	1,468,716	0.70		$	1,438,268	$	1,208,003	0.78

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Tables)

6 Months Ended

Jun. 30, 2015

Receivables [Abstract]

Loan Composition Schedule

Loan and lease receivables consist of the following:

	June 30, 2015		December 31, 2014
	(In Thousands)
Commercial real estate
Commercial real estate — owner occupied	$	169,768	$	163,884
Commercial real estate — non-owner occupied	400,018		417,962
Construction and land development	140,318		121,160
Multi-family	86,912		72,578
1-4 family (1)	47,091		36,182
Total commercial real estate	844,107		811,766
Commercial and industrial (2)	454,868		416,654
Direct financing leases, net	28,723		34,165
Consumer and other
Home equity and second mortgages (3)	9,466		7,866
Other	14,547		11,341
Total consumer and other	24,013		19,207
Total gross loans and leases receivable	1,351,711		1,281,792
Less:
Allowance for loan and lease losses	15,199		14,329
Deferred loan fees	1,147		1,025
Loans and leases receivable, net	$	1,335,365	$	1,266,438

(1) Includes residential real estate loans held for sale totaling $331,000 as of June 30, 2015 and $1.3 million as of December 31, 2014.

(2) Includes guaranteed portion of SBA loans held for sale totaling $638,000 as of June 30, 2015.

Schedule of Fair Value of Credit Impaired Loans Acquired

The following table reflects the contractually required payments receivable and fair value of the Corporation’s purchased credit impaired loans as of June 30, 2015 and December 31, 2014:

	June 30, 2015		December 31, 2014
	(In Thousands)
Contractually required payments	$	6,382	$	6,874
Fair value of purchased credit impaired loans	$	3,701	$	4,025

Accretable Yield Rollforward

The following table presents a rollforward of the Corporation’s accretable yield as of June 30, 2015 and December 31, 2014:

	As of and for the Six Months Ended June 30, 2015			As of and for the Year Ended December 31, 2014
	(In Thousands)
Accretable yield, beginning of period	$	676		$	683
Accretion recognized in earnings	(22		)	(7		)
Reclassification to nonaccretable difference for loans with changing cash flows(1)	(21		)	—
Changes in accretable yield for non-credit related changes in expected cash flows(2)	(155		)	—
Accretable yield, end of period	$	478		$	676

Financing Receivable by Credit Quality Indicators

The following information illustrates ending balances of the Corporation’s loan and lease portfolio, including impaired loans by class of receivable, and considering certain credit quality indicators as of June 30, 2015 and December 31, 2014:

	Category
As of June 30, 2015	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	137,582		$	18,053		$	13,480		$	653		$	169,768
Commercial real estate — non-owner occupied	372,874			24,903			1,334			907			400,018
Construction and land development	121,404			8,370			5,927			4,617			140,318
Multi-family	85,641			367			894			10			86,912
1-4 family	37,919			4,755			2,057			2,360			47,091
Total commercial real estate	755,420			56,448			23,692			8,547			844,107
Commercial and industrial(1)	407,737			10,501			29,224			7,406			454,868
Direct financing leases, net	26,633			1,382			708			—			28,723
Consumer and other:
Home equity and second mortgages	8,359			447			162			498			9,466
Other	13,856			—			—			691			14,547
Total consumer and other	22,215			447			162			1,189			24,013
Total gross loans and leases receivable	$	1,212,005		$	68,778		$	53,786		$	17,142		$	1,351,711
Category as a % of total portfolio	89.66		%	5.09		%	3.98		%	1.27		%	100.00		%

(1) Category IV includes $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

	Category
As of December 31, 2014	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	131,094		$	15,592		$	16,621		$	577		$	163,884
Commercial real estate — non-owner occupied	378,671			20,823			17,498			970			417,962
Construction and land development	100,934			8,193			6,876			5,157			121,160
Multi-family	70,897			751			913			17			72,578
1-4 family	25,997			5,278			3,336			1,571			36,182
Total commercial real estate	707,593			50,637			45,244			8,292			811,766
Commercial and industrial	383,755			18,524			12,026			2,349			416,654
Direct financing leases, net	32,756			1,120			289			—			34,165
Consumer and other:
Home equity and second mortgages	7,039			205			189			433			7,866
Other	10,570			50			—			721			11,341
Total consumer and other	17,609			255			189			1,154			19,207
Total gross loans and leases receivable	$	1,141,713		$	70,536		$	57,748		$	11,795		$	1,281,792
Category as a % of total portfolio	89.07		%	5.50		%	4.51		%	0.92		%	100.00		%

Past Due Financing Receivables

The delinquency aging of the loan and lease portfolio by class of receivable as of June 30, 2015 and December 31, 2014 is as follows:

As of June 30, 2015	30-59 days past due			60-89 days past due			Greater than 90 days past due			Total past due			Current			Total loans
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	169,189		$	169,189
Non-owner occupied	—			—			—			—			399,736			399,736
Construction and land development	—			—			—			—			135,779			135,779
Multi-family	—			—			—			—			86,902			86,902
1-4 family	—			—			—			—			45,775			45,775
Commercial and industrial	399			—			—			399			447,091			447,490
Direct financing leases, net	—			—			—			—			28,723			28,723
Consumer and other:
Home equity and second mortgages	—			—			—			—			9,063			9,063
Other	—			—			—			—			13,856			13,856
Total	399			—			—			399			1,336,114			1,336,513
Non-accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	490		$	—		$	490		$	89		$	579
Non-owner occupied	—			—			235			235			47			282
Construction and land development	—			—			—			—			4,539			4,539
Multi-family	—			—			—			—			10			10
1-4 family	658			96			175			929			387			1,316
Commercial and industrial(1)	219			194			582			995			6,383			7,378
Direct financing leases, net	—			—			—			—			—			—
Consumer and other:
Home equity and second mortgages	—			—			50			50			353			403
Other	—			—			691			691			—			691
Total	877			780			1,733			3,390			11,808			15,198
Total loans and leases
Commercial real estate:
Owner occupied	$	—		$	490		$	—		$	490		$	169,278		$	169,768
Non-owner occupied	—			—			235			235			399,783			400,018
Construction and land development	—			—			—			—			140,318			140,318
Multi-family	—			—			—			—			86,912			86,912
1-4 family	658			96			175			929			46,162			47,091
Commercial and industrial	618			194			582			1,394			453,474			454,868
Direct financing leases, net	—			—			—			—			28,723			28,723
Consumer and other:
Home equity and second mortgages	—			—			50			50			9,416			9,466
Other	—			—			691			691			13,856			14,547
Total	$	1,276		$	780		$	1,733		$	3,789		$	1,347,922		$	1,351,711
Percent of portfolio	0.09		%	0.06		%	0.13		%	0.28		%	99.72		%	100.00		%

(1) Current balance includes $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

As of December 31, 2014	30-59 days past due			60-89 days past due			Greater than 90 days past due			Total past due			Current			Total loans
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	163,384		$	163,384
Non-owner occupied	—			—			—			—			417,676			417,676
Construction and land development	—			—			—			—			116,228			116,228
Multi-family	—			—			—			—			72,561			72,561
1-4 family	—			—			—			—			35,492			35,492
Commercial and industrial	—			—			—			—			414,336			414,336
Direct financing leases, net	—			—			—			—			34,165			34,165
Consumer and other:
Home equity and second mortgages	—			—			—			—			7,537			7,537
Other	—			—			—			—			10,621			10,621
Total	—			—			—			—			1,272,000			1,272,000
Non-accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	500		$	500
Non-owner occupied	—			215			—			215			71			286
Construction and land development	—			193			—			193			4,739			4,932
Multi-family	—			—			—			—			17			17
1-4 family	—			106			306			412			278			690
Commercial and industrial	364			146			736			1,246			1,072			2,318
Direct financing leases, net	—			—			—			—			—			—
Consumer and other:
Home equity and second mortgages	—			—			—			—			329			329
Other	—			—			720			720			—			720
Total	364			660			1,762			2,786			7,006			9,792
Total loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	163,884		$	163,884
Non-owner occupied	—			215			—			215			417,747			417,962
Construction and land development	—			193			—			193			120,967			121,160
Multi-family	—			—			—			—			72,578			72,578
1-4 family	—			106			306			412			35,770			36,182
Commercial and industrial	364			146			736			1,246			415,408			416,654
Direct financing leases, net	—			—			—			—			34,165			34,165
Consumer and other:
Home equity and second mortgages	—			—			—			—			7,866			7,866
Other	—			—			720			720			10,621			11,341
Total	$	364		$	660		$	1,762		$	2,786		$	1,279,006		$	1,281,792
Percent of portfolio	0.03		%	0.05		%	0.14		%	0.22		%	99.78		%	100.00		%

Schedule of Financing Receivables, Non Accrual Status

The Corporation’s total impaired assets consisted of the following at June 30, 2015 and December 31, 2014, respectively.

	June 30, 2015		December 31, 2014
	(Dollars in Thousands)
Non-accrual loans and leases
Commercial real estate:
Commercial real estate — owner occupied	$	579	$	500
Commercial real estate — non-owner occupied	282		286
Construction and land development	4,539		4,932
Multi-family	10		17
1-4 family	1,316		690
Total non-accrual commercial real estate	6,726		6,425
Commercial and industrial(1)	7,378		2,318
Direct financing leases, net	—		—
Consumer and other:
Home equity and second mortgages	403		329
Other	691		720
Total non-accrual consumer and other loans	1,094		1,049
Total non-accrual loans and leases	15,198		9,792
Performing troubled debt restructurings	1,944		2,003
Total impaired loans and leases	17,142		11,795
Foreclosed properties, net	1,854		1,693
Total impaired assets	$	18,996	$	13,488

	June 30, 2015		December 31, 2014
Total non-accrual loans and leases to gross loans and leases	1.12	%	0.76	%
Total non-performing assets to total gross loans and leases plus foreclosed properties, net	1.26		0.89
Total non-performing assets to total assets	1.01		0.70
Allowance for loan and lease losses to gross loans and leases	1.12		1.12
Allowance for loan and lease losses to non-accrual loans and leases	100.01		146.33

Troubled Debt Restructurings on Financing Receivables

	As of June 30, 2015					As of December 31, 2014
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
	(Dollars in Thousands)
Troubled debt restructurings:
Commercial real estate
Commercial real estate — owner occupied	2	$	625	$	564	2	$	624	$	577
Commercial real estate — non-owner occupied	5	1,151		907		5	1,095		970
Construction and land development	3	6,034		4,678		4	6,260		5,157
Multi-family	1	184		10		1	184		17
1-4 family	16	2,119		1,435		16	2,119		1,368
Commercial and industrial	3	201		144		4	361		155
Direct financing leases, net	—	—		—		—	—		—
Consumer and other:
Home equity and second mortgages	6	681		375		6	772		431
Other	1	2,076		690		2	2,080		721
Total	37	$	13,071	$	8,803	40	$	13,495	$	9,396

Troubled Debt Restructurings by Modification Type

As of June 30, 2015 and December 31, 2014, the Corporation’s troubled debt restructurings grouped by type of concession were as follows:

	As of June 30, 2015			As of December 31, 2014
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
	(Dollars in Thousands)
Commercial real estate
Extension of term	1	$	31	1	$	39
Interest rate concession	1	56		1	65
Combination of extension and interest rate concession	25	7,506		26	7,984
Commercial and industrial
Combination of extension and interest rate concession	3	144		4	155
Consumer and other
Extension of term	2	723		3	753
Combination of extension and interest rate concession	5	343		5	400
Total	37	$	8,803	40	$	9,396

Impaired Financing Receivables

The following represents additional information regarding the Corporation’s impaired loans and leases by class:

	Impaired Loans and Leases
	As of and for the Six Months Ended June 30, 2015
	Recorded investment		Unpaid principal balance		Impairment reserve		Average recorded investment(1)		Foregone interest income		Interest income recognized		Net foregone interest income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	564	$	564	$	—	$	575	$	13	$	—	$	13
Non-owner occupied	860		860		—		918		6		—		6
Construction and land development	4,617		7,287		—		5,039		71		—		71
Multi-family	10		377		—		13		24		—		24
1-4 family	1,442		1,514		—		1,578		33		—		33
Commercial and industrial(2)	6,375		6,384		—		231		63		1		62
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	317		317		—		292		8		—		8
Other	691		1,357		—		704		41		—		41
Total	14,876		18,660		—		9,350		259		1		258
With impairment reserve recorded:
Commercial real estate:
Owner occupied	$	89	$	89	$	4	$	17	$	—	$	—	$	—
Non-owner occupied	47		87		47		48		2		—		2
Construction and land development	—		—		—		—		—		—		—
Multi-family	—		—		—		—		—		—		—
1-4 family	918		924		177		375		11		—		11
Commercial and industrial	1,031		1,031		253		1,241		38		—		38
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	181		181		94		127		7		—		7
Other	—		—		—		—		—		—		—
Total	2,266		2,312		575		1,808		58		—		58
Total:
Commercial real estate:
Owner occupied	$	653	$	653	$	4	$	592	$	13	$	—	$	13
Non-owner occupied	907		947		47		966		8		—		8
Construction and land development	4,617		7,287		—		5,039		71		—		71
Multi-family	10		377		—		13		24		—		24
1-4 family	2,360		2,438		177		1,953		44		—		44
Commercial and industrial	7,406		7,415		253		1,472		101		1		100
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	498		498		94		419		15		—		15
Other	691		1,357		—		704		41		—		41
Grand total	$	17,142	$	20,972	$	575	$	11,158	$	317	$	1	$	316

(1) Average recorded investment is calculated primarily using daily average balances.

(2) Recorded investment and unpaid principal balances include $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

	Impaired Loans and Leases
	As of and for the Year Ended December 31, 2014
	Recorded investment		Unpaid principal balance		Impairment reserve		Average recorded investment(1)		Foregone interest income		Interest income recognized		Net Foregone Interest Income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	577	$	577	$	—	$	484	$	30	$	79	$	(49	)
Non-owner occupied	921		921		—		349		22		—		22
Construction and land development	5,157		7,828		—		5,285		155		—		155
Multi-family	17		384		—		24		53		—		53
1-4 family	1,181		1,218		—		380		15		12		3
Commercial and industrial	2,316		2,926		—		6,141		463		649		(186		)
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	380		380		—		495		18		—		18
Other	721		1,389		—		768		87		—		87
Total	11,270		15,623		—		13,926		843		740		103
With impairment reserve recorded:
Commercial real estate:
Owner occupied	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-owner occupied	49		89		49		52		4		—		4
Construction and land development	—		—		—		—		—		—		—
Multi-family	—		—		—		—		—		—		—
1-4 family	390		390		155		405		18		—		18
Commercial and industrial	33		33		33		34		—		—		—
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	53		53		53		57		5		—		5
Other	—		—		—		—		—		—		—
Total	525		565		290		548		27		—		27
Total:
Commercial real estate:
Owner occupied	$	577	$	577	$	—	$	484	$	30	$	79	$	(49	)
Non-owner occupied	970		1,010		49		401		26		—		26
Construction and land development	5,157		7,828		—		5,285		155		—		155
Multi-family	17		384		—		24		53		—		53
1-4 family	1,571		1,608		155		785		33		12		21
Commercial and industrial	2,349		2,959		33		6,175		463		649		(186		)
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	433		433		53		552		23		—		23
Other	721		1,389		—		768		87		—		87
Grand total	$	11,795	$	16,188	$	290	$	14,474	$	870	$	740	$	130

(1) Average recorded investment is calculated primarily using daily average balances.

Allowance for Credit Losses on Financing Receivables

A summary of the activity in the allowance for loan and lease losses by portfolio segment is as follows:

	As of and for the Six Months Ended June 30, 2015
	Commercial real estate			Commercial and industrial loans and leases			Consumer and other			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	8,619		$	5,492		$	218		$	14,329
Charge-offs	(91		)	(313		)	(4		)	(408		)
Recoveries	66			5			3			74
Provision	123			1,024			57			1,204
Ending balance	$	8,717		$	6,208		$	274		$	15,199
Ending balance: individually evaluated for impairment	$	228		$	124		$	94		$	446
Ending balance: collectively evaluated for impairment	$	8,489		$	5,955		$	180		$	14,624
Ending balance: loans acquired with deteriorated credit quality	$	—		$	129		$	—		$	129
Loans and lease receivables:
Ending balance, gross	$	844,107		$	483,591		$	24,013		$	1,351,711
Ending balance: individually evaluated for impairment(1)	$	5,589		$	6,751		$	959		$	13,299
Ending balance: collectively evaluated for impairment	$	835,559		$	476,186		$	22,824		$	1,334,569
Ending balance: loans acquired with deteriorated credit quality	$	2,959		$	654		$	230		$	3,843
Allowance as % of gross loans	1.03		%	1.28		%	1.14		%	1.12		%

(1) Commercial and industrial loans and leases balance includes $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

	As of and for the Six Months Ended June 30, 2014
	Commercial real estate			Commercial and industrial loans and leases			Consumer and other			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	9,055		$	4,573		$	273		$	13,901
Charge-offs	—			—			—			—
Recoveries	17			1			7			25
Provision	(304		)	432			(39		)	89
Ending balance	$	8,768		$	5,006		$	241		$	14,015
Ending balance: individually evaluated for impairment	$	342		$	208		$	56		$	606
Ending balance: collectively evaluated for impairment	$	8,426		$	4,798		$	185		$	13,409
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—
Loans and lease receivables:
Ending balance, gross	$	637,403		$	355,549		$	15,663		$	1,008,615
Ending balance: individually evaluated for impairment	$	5,416		$	6,664		$	1,331		$	13,411
Ending balance: collectively evaluated for impairment	$	630,616		$	348,885		$	14,332		$	993,833
Ending balance: loans acquired with deteriorated credit quality	$	1,371		$	—		$	—		$	1,371
Allowance as % of gross loans	1.38		%	1.41		%	1.54		%	1.39		%

XML

Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Narrative Disclosures) (Details) loans in Thousands, $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) loans	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Financing Receivable, Recorded Investment
Loans and leases transferred to third parties total principal amount	$ 32,000	$ 6,600	$ 46,600	$ 11,700
Gain (Loss) Recognized on Participation Interest in Originated Loans			0
Loan participations purchased on the Corporation's balance sheet	475		475		$ 482
Total amount of outstanding loans transferred to third parties as loan participations	140,000		140,000		116,600
Total amount of loan participations remaining on the Corporations balance sheet	98,400		98,400		96,400
Loans in the participation sold portfolio, considered impaired	1,000		1,000		1,200
Residential Real Estate Loans Sold, Principal Amount	10,300		19,500		0
Total gross loans and leases receivable	1,351,711	$ 1,008,615	1,351,711	$ 1,008,615	1,281,792
Non-accrual troubled debt restructurings	6,900		6,900		7,400
Unfunded commitments, troubled debt restructurings	0		$ 0
Troubled debt restructurings, subsequent default, number of loans | loans			0
Loans and leases receivable, difference between recorded investment and unpaid principal balance	3,800		$ 3,800		4,400
Performing troubled debt restructurings	1,944		1,944		2,003
Substandard
Financing Receivable, Recorded Investment
Total gross loans and leases receivable	10,600		10,600		27,100
Special Mention
Financing Receivable, Recorded Investment
Total gross loans and leases receivable	0		0		0
Doubtful
Financing Receivable, Recorded Investment
Total gross loans and leases receivable	0		0		0
Loss
Financing Receivable, Recorded Investment
Total gross loans and leases receivable	$ 0		$ 0		$ 0

XML

Securities (Unrealized Losses Held-to-Maturity) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value
Less than 12 months	$ 19,408	$ 10,035
12 months or longer	1,398	0
Total	20,806	10,035
Unrealized Losses
Less than 12 months	113	85
12 months or longer	21	0
Total	134	85
U.S. Government agency obligations - government-sponsored enterprises
Fair Value
Less than 12 months	0	1,490
12 months or longer	1,000	0
Total	1,000	1,490
Unrealized Losses
Less than 12 months	0	17
12 months or longer	9	0
Total	9	17
Municipal obligations
Fair Value
Less than 12 months	4,217	2,222
12 months or longer	398	0
Total	4,615	2,222
Unrealized Losses
Less than 12 months	28	18
12 months or longer	12	0
Total	40	18
Collateralized mortgage obligations - government issued
Fair Value
Less than 12 months	6,426	3,247
12 months or longer	0	0
Total	6,426	3,247
Unrealized Losses
Less than 12 months	39	31
12 months or longer	0	0
Total	39	31
Collateralized mortgage obligations - government-sponsored enterprises
Fair Value
Less than 12 months	8,765	3,076
12 months or longer	0	0
Total	8,765	3,076
Unrealized Losses
Less than 12 months	46	19
12 months or longer	0	0
Total	$ 46	$ 19

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FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable (Tables)

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Schedule of Debt

The composition of borrowed funds at June 30, 2015 and December 31, 2014 was as follows. Average balances represent year-to-date averages.

	June 30, 2015						December 31, 2014
	Balance		Average balance		Weighted average rate		Balance		Average balance		Weighted average rate
	(Dollars in Thousands)
Federal funds purchased	$	—	$	224	0.81	%	$	—	$	237	0.82	%
FHLB advances and other borrowings	22,965		16,770		0.99		10,058		5,093		0.56
Senior line of credit	1,510		1,018		3.17		1,010		13		3.30
Subordinated notes payable	22,926		22,926		6.96		22,926		13,362		7.07
Junior subordinated notes	10,315		10,315		10.70		10,315		10,315		10.78
	$	57,716	$	51,253	5.68		$	44,309	$	29,020	7.24
Short-term borrowings	$	18,010					$	2,010
Long-term borrowings	39,706						42,299
	$	57,716					$	44,309

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Fair Value Disclosures (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements, Recurring Basis

Assets and liabilities measured at fair value on a recurring basis, segregated by fair value hierarchy level, are summarized below:

	Fair Value Measurements Using
June 30, 2015	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Securities available-for-sale:
Municipal obligations	$	—	$	3,247	$	—	$	3,247
Asset backed securities	—		1,445		—		1,445
U.S. Government agency obligations - government-sponsored enterprises	—		8,023		—		8,023
Collateralized mortgage obligations - government issued	—		55,982		—		55,982
Collateralized mortgage obligations - government-sponsored enterprises	—		77,645		—		77,645
Interest rate swaps	—		519		—		519
Liabilities:
Interest rate swaps	$	—	$	519	$	—	$	519

	Fair Value Measurements Using
December 31, 2014	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Securities available-for-sale:
Municipal obligations	$	—	$	578	$	—	$	578
Asset backed securities	—		1,510		—		1,510
U.S. Government agency obligations - government-sponsored enterprises	—		8,965		—		8,965
Collateralized mortgage obligations - government issued	—		68,874		—		68,874
Collateralized mortgage obligations - government-sponsored enterprises	—		64,771		—		64,771
Interest rate swaps	—		575		—		575
Liabilities:
Interest rate swaps	$	—	$	575	$	—	$	575

Fair Value Measurements, Nonrecurring Basis

Assets and liabilities measured at fair value on a non-recurring basis, segregated by fair value hierarchy are summarized below:

			As of and for the Six Months Ended June 30, 2015
	Balance at		Fair Value Measurements Using						Total Gains (Losses)
	June 30, 2015		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	8,795	$	—	$	7,573	$	1,222	$	—
Foreclosed properties	1,854		—		1,854		—		(1		)
Loan servicing rights	1,168		—		—		1,168		—

			As of and for the Year Ended December 31, 2014
	Balance at		Fair Value Measurements Using						Total Gains (Losses)
	December 31, 2014		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	8,565	$	—	$	7,025	$	1,540	$	—
Foreclosed properties	1,693		—		1,693		—		(4		)
Loan servicing rights	943		—		—		943		—

Foreclosed Properties

The activity of the Corporation’s foreclosed properties is summarized as follows:

	As of and for the Six Months Ended June 30, 2015			As of and for the Year Ended December 31, 2014
	(In Thousands)
Foreclosed properties at the beginning of the period	$	1,693		$	333
Foreclosed properties acquired in acquisition, at fair value	—			1,605
Loans transferred to foreclosed properties, at lower of cost or fair value	289			—
Proceeds from sale of foreclosed properties	(143		)	(255		)
Net gain on sale of foreclosed properties	16			14
Impairment valuation	(1		)	(4		)
Foreclosed properties at the end of the period	$	1,854		$	1,693

Fair Value, by Balance Sheet Grouping

Fair value estimates, methods, and assumptions, consistent with exit price concepts for fair value measurements, are set forth below:

	June 30, 2015
	Carrying Amount		Fair Value
			Total		Level 1		Level 2		Level 3
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	88,848	$	88,856	$	73,693	$	6,663	$	8,500
Securities available-for-sale	146,342		146,342		—		146,342		—
Securities held-to-maturity	39,428		39,419		—		39,419		—
Loans held for sale	1,274		1,274		—		1,274		—
Loans and lease receivables, net	1,334,091		1,365,475		—		7,573		1,357,902
Federal Home Loan Bank and Federal Reserve Bank stock	2,891		2,891		—		—		2,891
Cash surrender value of life insurance	27,785		27,785		27,785		—		—
Accrued interest receivable	4,159		4,159		4,159		—		—
Interest rate swaps	519		519		—		519		—
Financial liabilities:
Deposits	$	1,471,068	$	1,473,706	$	916,622	$	557,084	$	—
Federal Home Loan Bank and other borrowings	47,401		45,477		—		45,477		—
Junior subordinated notes	10,315		7,084		—		—		7,084
Interest rate swaps	519		519		—		519		—
Accrued interest payable	1,618		1,618		1,618		—		—
Off-balance-sheet items:
Standby letters of credit	124		124		—		—		124
Commitments to extend credit	—		*		*		*		*

*Not meaningful

	December 31, 2014
	Carrying Amount		Fair Value
			Total		Level 1		Level 2		Level 3
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	103,237	$	103,227	$	85,937	$	6,890	$	10,400
Securities available-for-sale	144,698		144,698		—		144,698		—
Securities held-to-maturity	41,563		41,694		—		41,694		—
Loans held for sale	1,340		1,340		—		1,340		—
Loans and lease receivables, net	1,265,098		1,285,162		—		7,025		1,278,137
Federal Home Loan Bank and Federal Reserve Bank stock	2,340		2,340		—		—		2,340
Cash surrender value of life insurance	27,314		27,314		27,314		—		—
Accrued interest receivable	3,932		3,932		3,932		—		—
Interest rate swaps	575		575		—		575		—
Financial liabilities:
Deposits	$	1,438,268	$	1,440,248	$	884,292	$	555,956	$	—
Federal Home Loan Bank and other borrowings	33,994		34,590		—		34,590		—
Junior subordinated notes	10,315		7,101		—		—		7,101
Interest rate swaps	575		575		—		575		—
Accrued interest payable	1,574		1,574		1,574		—		—
Off-balance-sheet items:
Standby letters of credit	192		192		—		—		192
Commitments to extend credit	—		*		*		*		*

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating activities
Net income	$ 8,050	$ 6,842
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes, net	490	443
Provision for loan and lease losses	1,204	89
Depreciation, amortization and accretion, net	(604)	870
Share-based compensation	449	389
Increase in cash surrender value of bank-owned life insurance	(472)	(416)
Origination of loans for sale	32,473	0
Sale of loans originated for sale	34,256	0
Gain on sale of loans originated for sale	1,717	0
Net (gain) loss on foreclosed properties, including impairment valuation	(15)	4
Excess tax benefit from share-based compensation	(80)	(38)
Decrease (increase) in accrued interest receivable and other assets	192	(224)
Increase (decrease) in accrued interest payable and other liabilities	1,514	(1,328)
Net cash provided by operating activities	10,794	6,631
Investing activities
Proceeds from maturities, redemptions and paydowns of available-for-sale securities	21,777	25,038
Proceeds from maturities, redemptions and paydowns of held-to-maturity securities	2,175	290
Purchases of available-for-sale securities	(24,189)	(31,648)
Proceeds from sale of foreclosed properties	143	0
Net increase in loans and leases	(69,107)	(26,760)
Distributions from limited partnerships	332	203
Investment in FHLB and FRB Stock	(928)	(467)
Proceeds from sale of FHLB Stock	377	373
Purchases of leasehold improvements and equipment, net	(420)	(159)
Net cash used in investing activities	(69,840)	(33,130)
Financing activities
Net increase in deposits	33,106	36,842
Proceeds from FHLB advances	13,000	0
Net increase in short-term borrowed funds	500	0
Repayment of subordinated notes payable	0	(4,000)
Excess tax benefit from share-based compensation	80	38
Cash dividends paid	(1,908)	(1,657)
Exercise of stock options	300	48
Purchase of treasury stock	(421)	(81)
Net cash provided by financing activities	44,657	31,190
Net (decrease) increase in cash and cash equivalents	(14,389)	4,691
Cash and cash equivalents at the beginning of the period	103,237	81,286
Cash and cash equivalents at the end of the period	88,848	85,977
Supplementary cash flow information
Interest paid on deposits and borrowings	6,574	5,160
Income taxes paid	1,469	2,867
Transfer of securities from available-for-sale to held-to-maturity	0	44,587
Unrealized loss on transfer from available-for-sale to held-to-maturity	0	(874)
Transfer to foreclosed properties	$ 289	$ 0

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The table below provides information about the location and fair value of the Corporation’s derivative instruments as of June 30, 2015 and December 31, 2014.

	Interest Rate Swap Contracts
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(In Thousands)
Derivatives not designated as hedging instruments
June 30, 2015	Other assets	$	519	Other liabilities	$	519
December 31, 2014	Other assets	$	575	Other liabilities	$	575

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Securities (Available-for-Sale Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities
Amortized cost	$ 145,425	$ 143,636
Gross unrealized holding gains	1,432	1,629
Gross unrealized holding losses	515	567
Estimated fair value	146,342	144,698
U.S. Government agency obligations - government-sponsored enterprises
Schedule of Available-for-sale Securities
Amortized cost	8,047	9,046
Gross unrealized holding gains	13	0
Gross unrealized holding losses	37	81
Estimated fair value	8,023	8,965
Municipal obligations
Schedule of Available-for-sale Securities
Amortized cost	3,254	573
Gross unrealized holding gains	4	5
Gross unrealized holding losses	11	0
Estimated fair value	3,247	578
Asset-backed securities
Schedule of Available-for-sale Securities
Amortized cost	1,441	1,514
Gross unrealized holding gains	4	0
Gross unrealized holding losses	0	4
Estimated fair value	1,445	1,510
Collateralized mortgage obligations - government issued
Schedule of Available-for-sale Securities
Amortized cost	54,918	67,740
Gross unrealized holding gains	1,178	1,390
Gross unrealized holding losses	114	256
Estimated fair value	55,982	68,874
Collateralized mortgage obligations - government-sponsored enterprises
Schedule of Available-for-sale Securities
Amortized cost	77,765	64,763
Gross unrealized holding gains	233	234
Gross unrealized holding losses	353	226
Estimated fair value	$ 77,645	$ 64,771

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Troubled Debt Restructurings by Modification Type) (Details) $ in Thousands	Jun. 30, 2015 USD ($) securities loans	Dec. 31, 2014 USD ($) securities loans
Troubled debt restructurings
Number of Loans | loans	37	40
Recorded Investment	$ 8,803	$ 9,396
Commercial real estate | Extension of term
Troubled debt restructurings
Number of Loans | loans	1	1
Recorded Investment	$ 31	$ 39
Commercial real estate | Interest Rate Concession
Troubled debt restructurings
Number of Loans | securities	1	1
Recorded Investment	$ 56	$ 65
Commercial real estate | Combination of extension and interest rate concession
Troubled debt restructurings
Number of Loans | loans	25	26
Recorded Investment	$ 7,506	$ 7,984
Commercial and industrial
Troubled debt restructurings
Number of Loans | loans	3	4
Recorded Investment	$ 144	$ 155
Commercial and industrial | Combination of extension and interest rate concession
Troubled debt restructurings
Number of Loans | loans	3	4
Recorded Investment	$ 144	$ 155
Consumer and other | Extension of term
Troubled debt restructurings
Number of Loans | loans	2	3
Recorded Investment	$ 723	$ 753
Consumer and other | Combination of extension and interest rate concession
Troubled debt restructurings
Number of Loans | loans	5	5
Recorded Investment	$ 343	$ 400

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Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Assets
Cash and due from banks	$ 12,829	$ 14,881
Short-term investments	76,019	88,356
Cash and cash equivalents	88,848	103,237
Securities available-for-sale, at fair value	146,342	144,698
Securities held-to-maturity, at amortized cost	39,428	41,563
Loans held-for-sale	1,274	1,340
Loans and leases receivable, net of allowance for loan and lease losses of $15,199 and $14,329, respectively	1,334,091	1,265,098
Premises and equipment, net	3,998	3,943
Foreclosed properties	1,854	1,693
Cash surrender value of bank-owned life insurance	27,785	27,314
Investment in Federal Home Loan Bank and Federal Reserve Bank stock, at cost	2,891	2,340
Accrued interest receivable and other assets	24,920	26,217
Goodwill and other intangible assets	12,133	11,944
Total assets	1,683,564	1,629,387
Liabilities and Stockholders’ Equity
Deposits	1,471,068	1,438,268
Federal Home Loan Bank and other borrowings	47,401	33,994
Junior subordinated notes	10,315	10,315
Accrued interest payable and other liabilities	10,493	9,062
Total liabilities	1,539,277	1,491,639
Commitments and contingencies	0	0
Stockholders’ equity:
Preferred stock, $0.01 par value, 2,500,000 shares authorized, none issued or outstanding	0	0
Common stock, $0.01 par value, 25,000,000 shares authorized, 4,545,457 and 4,537,426 shares issued, 4,334,918 and 4,335,927 shares outstanding at June 30, 2015 and December 31, 2014, respectively	45	45
Additional paid-in capital	75,792	74,963
Retained earnings	74,028	67,886
Accumulated other comprehensive income	207	218
Treasury stock (210,539 and 201,499 shares at June 30, 2015 and December 31, 2014, respectively), at cost	(5,785)	(5,364)
Total stockholders’ equity	144,287	137,748
Total liabilities and stockholders’ equity	$ 1,683,564	$ 1,629,387

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Securities (Narrative Disclosures) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($) securities	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) securities	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($) securities
Investments, Debt and Equity Securities [Abstract]
Proceeds from sale of available-for-sale securities	$ 0	$ 0	$ 0	$ 0
Available-for-sale securities pledged as collateral	$ 28,000		$ 28,000		$ 32,700
Number of available-for-sales securities in an unrealized loss position | securities	66		66		59
Number of available-for-sale securities in an unrealized loss position, twelve months or greater | securities	17		17
Other than temporary impairment on available-for-sale securities recorded on the income statement			$ 0	$ 0
Number of held-to-maturity securities in an unrealized loss position | securities	37		37		57
Number of held-to-maturity Securities in an unrealized loss position, twelve months or greater | securities	4		4
Other than temporary impairment on held-to-maturity securities recorded on the income statement			$ 0

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Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock
Common shares outstanding at Dec. 31, 2013		3,943,997
Beginning balance at Dec. 31, 2013	$ 109,275	$ 41	$ 56,002	$ 57,143	$ (342)	$ (3,569)
Net income	6,842			6,842
Other comprehensive income (loss)	794				794
Exercise of stock options, shares		2,000
Exercise of stock options	48	$ 0	48
Share-based compensation - restricted shares, shares issued		996
Share-based compensation - restricted shares	389		389
Share-based compensation - tax benefits	38		38
Cash dividends ($0.42 per share during 2014 and $.44 per share during 2015)	(1,657)			(1,657)
Treasury stock purchased, shares		(1,773)
Treasury stock purchased	(81)					(81)
Common shares outstanding at Jun. 30, 2014		3,945,220
Ending balance at Jun. 30, 2014	115,648	$ 41	56,477	62,328	452	(3,650)
Common shares outstanding at Dec. 31, 2013		3,943,997
Beginning balance at Dec. 31, 2013	$ 109,275	$ 41	56,002	57,143	(342)	(3,569)
Exercise of stock options, shares	39,000
Common shares outstanding at Dec. 31, 2014	4,335,927	4,335,927
Ending balance at Dec. 31, 2014	$ 137,748	$ 45	74,963	67,886	218	(5,364)
Net income	8,050			8,050
Other comprehensive income (loss)	$ (11)				(11)
Exercise of stock options, shares	12,000	12,000
Exercise of stock options	$ 300	$ 0	300
Share-based compensation - restricted shares, shares issued		(3,969)
Share-based compensation - restricted shares	449		449
Share-based compensation - tax benefits	80		80
Cash dividends ($0.42 per share during 2014 and $.44 per share during 2015)	(1,908)			(1,908)
Treasury stock purchased, shares		(9,040)
Treasury stock purchased	$ (421)					(421)
Common shares outstanding at Jun. 30, 2015	4,334,918	4,334,918.000
Ending balance at Jun. 30, 2015	$ 144,287	$ 45	$ 75,792	$ 74,028	$ 207	$ (5,785)

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FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable (Narrative Disclosures) (Details) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Line of credit
Line of Credit Facility [Line Items]
Line of credit - unused line fee	$ 6,000	$ 7,000

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Earnings Per Common Share (Narrative Disclosures) (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0	0	0	0

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Derivative Financial Instruments (Location and Fair Value of Derivative Instruments) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Derivatives not designated as hedging instruments, fair value
Interest rate swap contracts not designated as hedging instruments - assets, gross	$ 519	$ 575
Interest rate swap contracts not designated as hedging instruments - liabilities, gross	$ 519	$ 575
Other assets
Derivatives not designated as hedging instruments, fair value
Description of location of interest rate derivative instruments not designated as hedging instruments on balance sheet	Other assets	Other assets
Other liabilities
Derivatives not designated as hedging instruments, fair value
Description of location of interest rate derivative instruments not designated as hedging instruments on balance sheet	Other liabilities	Other liabilities

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Policies)

6 Months Ended

Jun. 30, 2015

Receivables [Abstract]

Loans and Leases Receivable, Allowance for Loan Losses Policy

To determine the level and composition of the allowance for loan and lease losses, the Corporation breaks out the portfolio by segments and risk ratings. First, the Corporation evaluates loans and leases for potential impairment classification. The Corporation analyzes each loan and lease determined to be impaired on an individual basis to determine a specific reserve based upon the estimated value of the underlying collateral for collateral-dependent loans, or alternatively, the present value of expected cash flows. The Corporation applies historical trends from established risk factors to each category of loans and leases that has not been individually evaluated for the purpose of establishing the general portion of the allowance.

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Share-Based Compensation (Stock Option Activity) (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014	Dec. 31, 2013
Options
Outstanding, beginning balance	12,000	51,000
Granted	0	0
Exercised	(12,000)	(39,000)
Expired	0	0
Forfeited	0	0
Outstanding, ending balance	0	12,000	51,000
Exercisable	0	12,000
Weighted Average Exercise Price
Outstanding, beginning	$ 25.00	$ 24.24
Granted	0.00	0.00
Exercised	25.00	24.00
Expired	0.00	0.00
Forfeited	0.00	0.00
Outstanding, ending	0.00	25.00	$ 24.24
Exercisable	$ 0.00	$ 25.00
Weighted Average Remaining Contractual Life (Years)
Outstanding		1 month 17 days	10 months 17 days
Exercisable		1 month 17 days

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Derivative Financial Instruments (Policies)

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives, Policy

The Corporation offers interest rate swap products directly to qualified commercial borrowers. The Corporation economically hedges client derivative transactions by entering into offsetting interest rate swap contracts executed with a third party. Derivative transactions executed as part of this program are not designated as accounting hedge relationships and are marked to market through earnings each period. The derivative contracts have mirror-image terms, which results in the positions’ changes in fair value primarily offsetting through earnings each period. The credit risk and risk of non-performance embedded in the fair value calculations is different between the dealer counterparties and the commercial borrowers, which may result in a difference in the changes in the fair value of the mirror-image swaps. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own non-performance risk and the counterparty’s risk in the fair value measurements. When evaluating the fair value of its derivative contracts for the effects of non-performance and credit risk, the Corporation considers the impact of netting and any applicable credit enhancements such as collateral postings, thresholds and guarantees.

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Regulatory Capital (Narrative Disclosures) (Details) - Jun. 30, 2015	Total
Regulatory Capital Requirements [Abstract]
Description of possible effects of noncompliance or less than adequately capitalized	Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional discretionary actions on the part of regulators, that if undertaken, could have a direct material effect on the Banks’ assets, liabilities and certain off-balance-sheet items as calculated under regulatory practices.
Capital Conservation Buffer, Initial Phase In Percent	0.625%
Capital Conservation Buffer, Yearly Phase-In Percent Increase	0.625%
Capital Conservation Buffer, Fully Phased-In Percent	2.50%

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Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Common stock, cash dividends, per share, declared	$ 0.44	$ 0.42
Retained earnings
Common stock, cash dividends, per share, declared	$ 0.44	$ 0.42

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Consolidated Balance Sheets - Parenthetical [Abstract]
Allowance for loan and lease losses	$ 15,199	$ 14,329
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	2,500,000	2,500,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	4,545,457	4,537,426
Common stock, shares outstanding	4,334,918	4,335,927
Treasury stock, shares	210,539	201,499

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The Corporation offers interest rate swap products directly to qualified commercial borrowers. The Corporation economically hedges client derivative transactions by entering into offsetting interest rate swap contracts executed with a third party. Derivative transactions executed as part of this program are not designated as accounting hedge relationships and are marked to market through earnings each period. The derivative contracts have mirror-image terms, which results in the positions’ changes in fair value primarily offsetting through earnings each period. The credit risk and risk of non-performance embedded in the fair value calculations is different between the dealer counterparties and the commercial borrowers, which may result in a difference in the changes in the fair value of the mirror-image swaps. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own non-performance risk and the counterparty’s risk in the fair value measurements. When evaluating the fair value of its derivative contracts for the effects of non-performance and credit risk, the Corporation considers the impact of netting and any applicable credit enhancements such as collateral postings, thresholds and guarantees.

At June 30, 2015, the aggregate amortizing notional value of interest rate swaps with various commercial borrowers was 27.3 million. The Corporation receives fixed rates and pays floating rates based upon LIBOR on the swaps with commercial borrowers. These interest rate swaps mature in March, 2016 through February, 2023. Commercial borrower swaps are completed independently with each borrower and are not subject to master netting arrangements. These commercial borrower swaps were reported on the Consolidated Balance Sheets as a derivative asset of $519,000 and are included in accrued interest receivable and other assets. In the event of default on a commercial borrower interest rate swap by the counterparty, a right of offset exists to allow the commercial borrower to set off amounts due against the related commercial loan. As of June 30, 2015, no interest rate swaps were in default and therefore all values for the commercial borrower swaps are recorded on a gross basis within the Corporation’s financial position.

At June 30, 2015, the aggregate amortizing notional value of interest rate swaps with dealer counterparties was also 27.3 million. The Corporation pays fixed rates and receives floating rates based upon LIBOR on the swaps with dealer counterparties. These interest rate swaps mature in March, 2016 through February, 2023. Dealer counterparty swaps are subject to master netting agreements among the contracts within each of the Banks and are reported on the Consolidated Balance Sheets as a net derivative liability of $519,000, included in accrued interest payable and other liabilities as of June 30, 2015. The gross amount of dealer counterparty swaps, without regard to the enforceable master netting agreement, was a derivative liability of $519,000, included in accrued interest payable and other liabilities as of June 30, 2015. No right of offset exists with the dealer counterparty swaps.

The table below provides information about the location and fair value of the Corporation’s derivative instruments as of June 30, 2015 and December 31, 2014.

	Interest Rate Swap Contracts
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(In Thousands)
Derivatives not designated as hedging instruments
June 30, 2015	Other assets	$	519	Other liabilities	$	519
December 31, 2014	Other assets	$	575	Other liabilities	$	575

No derivative instruments held by the Corporation for the six months ended June 30, 2015 were considered hedging instruments. All changes in the fair value of these instruments are recorded in other non-interest income. Given the mirror-image terms of the outstanding derivative portfolio, the change in fair value for the six months ended June 30, 2015 and 2014 had an insignificant impact on the unaudited Consolidated Statements of Income.

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 05, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	First Business Financial Services, Inc.
Entity Central Index Key	0001521951
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		4,334,918

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Regulatory Capital

6 Months Ended

Jun. 30, 2015

Regulatory Capital Requirements [Abstract]

Regulatory Capital

Regulatory Capital

The Corporation and the Banks are subject to various regulatory capital requirements administered by Federal, State of Wisconsin and State of Kansas banking agencies. Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional discretionary actions on the part of regulators, that if undertaken, could have a direct material effect on the Banks’ assets, liabilities and certain off-balance-sheet items as calculated under regulatory practices. The Corporation’s and the Banks’ capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The Corporation regularly reviews and updates when appropriate its Capital and Liquidity Action Plan (the “Capital Plan”), which is designed to help ensure appropriate capital adequacy, to plan for future capital needs and to ensure that the Corporation serves as a source of financial strength to the Banks. The Corporation’s and the Banks’ Boards of Directors and management teams adhere to the appropriate regulatory guidelines on decisions which affect their respective capital positions, including but not limited to, decisions relating to the payment of dividends and increasing indebtedness.

As a bank holding company, the Corporation’s ability to pay dividends is affected by the policies and enforcement powers of the Board of Governors of the Federal Reserve system (the “Federal Reserve”). Federal Reserve guidance urges companies to strongly consider eliminating, deferring or significantly reducing dividends if: (i) net income available to common shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividend; (ii) the prospective rate of earnings retention is not consistent with the bank holding company’s capital needs and overall current prospective financial condition; or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum regulatory capital ratios. Management intends, when appropriate under regulatory guidelines, to consult with the Federal Reserve Bank of Chicago and provide it with information on the Corporation’s then-current and prospective earnings and capital position in advance of declaring any cash dividends. As a Wisconsin corporation, the Corporation is subject to the limitations of the Wisconsin Business Corporation Law, which prohibit the Corporation from paying dividends if such payment would: (i) render the Corporation unable to pay its debts as they become due in the usual course of business, or (ii) result in the Corporation’s assets being less than the sum of its total liabilities plus the amount needed to satisfy the preferential rights upon dissolution of any stockholders with preferential rights superior to those stockholders receiving the dividend.

The Banks are also subject to certain legal, regulatory and other restrictions on their ability to pay dividends to the Corporation. As a bank holding company, the payment of dividends by the Banks to the Corporation is one of the sources of funds the Corporation could use to pay dividends, if any, in the future and to make other payments. Future dividend decisions by the Banks and the Corporation will continue to be subject to compliance with various legal, regulatory and other restrictions as defined from time to time.

Qualitative measures established by regulation to ensure capital adequacy require the Corporation and the Banks to maintain minimum amounts and ratios of Total, common equity Tier 1 and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. These risk-based capital requirements presently address credit risk related to both recorded and off-balance-sheet commitments and obligations. Management believes, as of June 30, 2015, that the Corporation and the Banks met all applicable capital adequacy requirements.

In July 2013, the FRB and the FDIC approved the final rules implementing the Basel Committee on Banking Supervision’s (“BCBS”) capital guidelines for U.S. banks. These rules are applicable to all financial institutions that are subject to minimum capital requirements, including federal and state banks and savings and loan associations, as well as bank and savings and loan holding companies other than “small bank holding companies” (generally non-publicly traded bank holding companies with consolidated assets of less than $1 billion). Under the final rules, minimum requirements will increase for both the quantity and quality of capital held by the Corporation. The rules include a new common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0%, require a minimum ratio of Total Capital to risk-weighted assets of 8.0%, and require a minimum Tier 1 leverage ratio of 4.0%. The rules also permit banking organizations with less than $15 billion to retain, through one-time election, the existing treatment for accumulated other comprehensive income, which would not affect regulatory capital. The Corporation elected to retain this treatment, which reduces the volatility of regulatory capital ratios. A new capital conservation buffer, comprised of common equity Tier 1 capital, is also established above the regulatory minimum capital requirements. This capital conservation buffer will be phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019.

The phase-in period for the final rules became effective for the Corporation on January 1, 2015, with full compliance with all of the final rules’ requirements phased in over a multi-year schedule, to be fully phased-in by January 1, 2019. As of June 30, 2015, the Corporation’s and the Bank’s capital levels remained characterized as well capitalized under the new rules.

The following table summarizes the Corporation’s and Banks’ capital ratios and the ratios required by their federal regulators at June 30, 2015 and December 31, 2014, respectively:

	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to Be Well Capitalized Under Prompt Corrective Action Requirements
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of June 30, 2015
Total capital
(to risk-weighted assets)
Consolidated	$	181,281	11.11	%	$	130,502	8.00	%	N/A		N/A
First Business Bank	135,519		11.23		96,523		8.00		$	120,654	10.00	%
First Business Bank — Milwaukee	19,404		11.27		13,779		8.00		17,223		10.00
Alterra Bank	27,979		10.79		20,748		8.00		25,935		10.00
Tier 1 capital
(to risk-weighted assets)
Consolidated	$	143,156	8.78	%	$	97,877	6.00	%	N/A		N/A
First Business Bank	123,424		10.23		72,393		6.00		$	96,523	8.00	%
First Business Bank — Milwaukee	17,746		10.30		10,334		6.00		13,779		8.00
Alterra Bank	26,533		10.23		15,561		6.00		20,748		8.00
Common equity tier 1 capital
(to risk-weighted assets)
Consolidated	$	133,156	8.16	%	$	73,407	4.50	%	N/A		N/A
First Business Bank	123,424		10.23		54,294		4.50		$	106,033	6.50	%
First Business Bank — Milwaukee	17,746		10.30		7,751		4.50		78,425		6.50
Alterra Bank	26,533		10.23		11,671		4.50		11,195		6.50
Tier 1 capital
(to average assets)
Consolidated	$	143,156	8.66	%	$	5,326	4.00	%	N/A		N/A
First Business Bank	123,424		10.55		4,937		4.00		$	6,171	5.00	%
First Business Bank — Milwaukee	17,746		7.46		710		4.00		887		5.00
Alterra Bank	26,533		10.00		1,061		4.00		1,327		5.00

	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to Be Well Capitalized Under Prompt Corrective Action Requirements
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of December 31, 2014
Total capital
(to risk-weighted assets)
Consolidated	$	173,263	12.13	%	$	114,253	8.00	%	N/A		N/A
First Business Bank	131,411		12.19		86,272		8.00		$	107,841	10.00	%
First Business Bank — Milwaukee	19,128		12.47		12,274		8.00		15,343		10.00
Alterra Bank	22,657		10.90		16,628		8.00		20,785		10.00
Tier 1 capital
(to risk-weighted assets)
Consolidated	$	136,008	9.52		$	57,127	4.00	%	N/A		N/A
First Business Bank	118,907		11.03		43,136		4.00		$	64,704	6.00	%
First Business Bank — Milwaukee	17,641		11.50		6,137		4.00		9,206		6.00
Alterra Bank	22,320		10.74		8,314		4.00		12,471		6.00
Tier 1 capital
(to average assets)
Consolidated	$	136,008	8.71		$	62,490	4.00	%	N/A		N/A
First Business Bank	118,907		10.13		46,960		4.00		$	58,700	5.00	%
First Business Bank — Milwaukee	17,641		7.90		8,935		4.00		11,169		5.00
Alterra Bank	22,320		9.01		9,910		4.00		12,388		5.00

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Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Interest income:
Loans and leases	$ 16,680	$ 12,651	$ 34,005	$ 25,126
Securities income	748	855	1,524	1,721
Short-term investments	92	59	207	119
Total interest income	17,520	13,565	35,736	26,966
Interest expense:
Deposits	2,593	2,337	5,162	4,506
Notes payable and other borrowings	461	152	904	310
Junior subordinated notes	278	277	552	551
Total interest expense	3,332	2,766	6,618	5,367
Net interest income	14,188	10,799	29,118	21,599
Provision for loan and lease losses	520	(91)	1,204	89
Net interest income after provision for loan and lease losses	13,668	10,890	27,914	21,510
Non-interest income:
Trust and investment services fee income	1,279	1,110	2,486	2,178
Service charges on deposits	693	600	1,389	1,167
Loan fees	499	380	1,001	769
Increase in cash surrender value of bank-owned life insurance	238	209	472	416
Gain on sale of loans and leases	1,064	0	1,717	0
Other	353	59	909	149
Total non-interest income	4,126	2,358	7,974	4,679
Non-interest expense:
Compensation	6,924	4,741	14,278	9,798
Occupancy	486	315	986	638
Professional fees	1,515	895	2,504	1,527
Data processing	655	423	1,185	839
Marketing	701	364	1,343	711
Equipment	298	125	606	255
FDIC insurance	220	173	433	363
Collateral liquidation costs	78	85	380	243
Net loss (gain) on foreclosed properties	1	4	(15)	4
Other	1,096	624	2,006	1,222
Total non-interest expense	11,974	7,749	23,706	15,600
Income before income tax expense	5,820	5,499	12,182	10,589
Income tax expense	1,962	1,994	4,132	3,747
Net income	$ 3,858	$ 3,505	$ 8,050	$ 6,842
Earnings per common share:
Basic	$ 0.89	$ 0.89	$ 1.86	$ 1.73
Diluted	0.89	0.88	1.86	1.72
Dividends declared per share	$ 0.22	$ 0.21	$ 0.44	$ 0.42

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Securities

6 Months Ended

Jun. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Securities

Securities

The amortized cost and estimated fair value of securities available-for-sale and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:

	As of June 30, 2015
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses			Estimated fair value
	(In Thousands)
Available-for-sale:
U.S. Government agency obligations - government-sponsored enterprises	$	8,047	$	13	$	(37	)	$	8,023
Municipal obligations	3,254		4		(11		)	3,247
Asset-backed securities	1,441		4		—			1,445
Collateralized mortgage obligations - government issued	54,918		1,178		(114		)	55,982
Collateralized mortgage obligations - government-sponsored enterprises	77,765		233		(353		)	77,645
	$	145,425	$	1,432	$	(515	)	$	146,342

	As of December 31, 2014
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses			Estimated fair value
	(In Thousands)
Available-for-sale:
U.S. Government agency obligations - government-sponsored enterprises	$	9,046	$	—	$	(81	)	$	8,965
Municipal obligations	573		5		—			578
Asset-backed securities	1,514		$	—	(4		)	1,510
Collateralized mortgage obligations - government issued	67,740		1,390		(256		)	68,874
Collateralized mortgage obligations - government-sponsored enterprises	64,763		234		(226		)	64,771
	$	143,636	$	1,629	$	(567	)	$	144,698

The amortized cost and estimated fair value of securities held-to-maturity and the corresponding amounts of gross unrecognized gains and losses were as follows:

	As of June 30, 2015
	Amortized cost		Gross unrecognized holding gains		Gross unrecognized holding losses			Estimated fair value
	(In Thousands)
Held-to-maturity:
U.S. Government agency obligations - government-sponsored enterprises	$	1,494	$	4	$	(9	)	$	1,489
Municipal obligations	16,063		48		(40		)	16,071
Collateralized mortgage obligations - government issued	13,106		73		(39		)	13,140
Collateralized mortgage obligations - government-sponsored enterprises	8,765		—		(46		)	8,719
	$	39,428	$	125	$	(134	)	$	39,419

	As of December 31, 2014
	Amortized cost		Gross unrecognized holding gains		Gross unrecognized holding losses			Estimated fair value
	(In Thousands)
Held-to-maturity:
U.S. Government agency obligations - government-sponsored enterprises	$	1,490	$	—	$	(17	)	$	1,473
Municipal obligations	16,088		85		(18		)	16,155
Collateralized mortgage obligations - government issued	14,505		57		(31		)	14,531
Collateralized mortgage obligations - government-sponsored enterprises	9,480		74		(19		)	9,535
	$	41,563	$	216	$	(85	)	$	41,694

U.S. Government agency obligations - government-sponsored enterprises represent securities issued by the Federal Home Loan Mortgage Corporation (“FHLMC”) and Federal National Mortgage Association (“FNMA”). Collateralized mortgage obligations - government issued represent securities guaranteed by the Government National Mortgage Association (“GNMA”). Collateralized mortgage obligations - government-sponsored enterprises include securities guaranteed by the FHLMC and the FNMA. Asset-backed securities represent securities issued by the Student Loan Marketing Association (“SLMA”) which are 97% guaranteed by the U.S. government. Municipal obligations include securities issued by various municipalities located primarily within the State of Wisconsin and are primarily general obligation bonds that are tax-exempt in nature. There were no sales of securities available-for-sale for the three and six months ended June 30, 2015 and 2014.

At June 30, 2015 and December 31, 2014, securities with a fair value of $28.0 million and $32.7 million, respectively, were pledged to secure interest rate swap contracts, outstanding Federal Home Loan Bank (“FHLB”) advances, if any, and additional FHLB availability.

The amortized cost and estimated fair value of securities by contractual maturity at June 30, 2015 are shown below. Actual maturities may differ from contractual maturities because issuers have the right to call or prepay certain obligations without call or prepayment penalties.

	Available-for-Sale				Held-to-Maturity
	Amortized cost		Estimated fair value		Amortized cost		Estimated fair value
	(In Thousands)
Due in one year or less	$	—	$	—	$	—	$	—
Due in one year through five years	10,384		10,360		3,389		3,383
Due in five through ten years	84,949		85,407		13,668		13,681
Due in over ten years	50,092		50,575		22,371		22,355
	$	145,425	$	146,342	$	39,428	$	39,419

The tables below show the Corporation’s gross unrealized losses and fair value of available-for-sale investments with unrealized losses, aggregated by investment category and length of time that individual investments were in a continuous loss position at June 30, 2015 and December 31, 2014. At June 30, 2015 and December 31, 2014, the Corporation held 66 and 59 available-for-sale securities that were in an unrealized loss position, respectively. Such securities have not experienced credit rating downgrades; however, they have primarily declined in value due to the current interest rate environment. At June 30, 2015, the Corporation held 17 available-for-sale securities that had been in a continuous unrealized loss position for twelve months or greater.

The Corporation also has not specifically identified available-for-sale securities in a loss position that it intends to sell in the near term and does not believe that it will be required to sell any such securities. It is expected that the Corporation will recover the entire amortized cost basis of each security based upon an evaluation of the present value of the expected future cash flows. Accordingly, no other than temporary impairment was recorded in the Consolidated Statements of Income for the six months ended June 30, 2015 and 2014.

A summary of unrealized loss information for securities available-for-sale, categorized by security type follows:

	As of June 30, 2015
	Less than 12 months				12 months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(In Thousands)
Available-for-sale:
U.S. Government agency obligations - government-sponsored enterprises	$	999	$	1	$	3,714	$	36	$	4,713	$	37
Municipal obligations	2,423		11		—		—		2,423		11
Collateralized mortgage obligations - government issued	2,970		14		6,878		100		9,848		114
Collateralized mortgage obligations - government-sponsored enterprises	40,081		292		4,604		61		44,685		353
	$	46,473	$	318	$	15,196	$	197	$	61,669	$	515

	As of December 31, 2014
	Less than 12 months				12 months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(In Thousands)
Available-for-sale:
U.S. Government agency obligations - government-sponsored enterprises	$	3,486	$	12	$	5,479	$	69	$	8,965	$	81
Asset-backed securities	—		$	—	1,510		4		1,510		4
Collateralized mortgage obligations - government issued	9,201		50		9,536		206		18,737		256
Collateralized mortgage obligations - government-sponsored enterprises	29,498		97		4,993		129		34,491		226
	$	42,185	$	159	$	21,518	$	408	$	63,703	$	567

The tables below show the Corporation’s gross unrecognized losses and fair value of held-to-maturity investments, aggregated by investment category and length of time that individual investments were in a continuous loss position at June 30, 2015 and December 31, 2014. At June 30, 2015 and December 31, 2014, the Corporation held 37 and 57 held-to-maturity securities that were in an unrecognized loss position, respectively. Such securities have not experienced credit rating downgrades; however, they have primarily declined in value due to the current interest rate environment. There were four held-to-maturity securities that were in a continuous unrecognized loss position for twelve months or greater as of June 30, 2015. It is expected that the Corporation will recover the entire amortized cost basis of each held-to-maturity security based upon an evaluation of the present value of the expected future cash flows. Accordingly, no other than temporary impairment was recorded in the Consolidated Statements of Income for the six months ended June 30, 2015.

A summary of unrecognized loss information for securities held-to-maturity, categorized by security type follows:

	As of June 30, 2015
	Less than 12 months				12 months or longer				Total
	Fair value		Unrecognized losses		Fair value		Unrecognized losses		Fair value		Unrecognized losses
	(In Thousands)
Held-to-maturity:
U.S. Government agency obligations - government-sponsored enterprises	$	—	$	—	$	1,000	$	9	$	1,000	$	9
Municipal obligations	4,217		28		398		12		4,615		40
Collateralized mortgage obligations - government issued	6,426		39		—		—		6,426		39
Collateralized mortgage obligations - government-sponsored enterprises	8,765		46		—		—		8,765		46
	$	19,408	$	113	$	1,398	$	21	$	20,806	$	134

	As of December 31, 2014
	Less than 12 months				12 months or longer				Total
	Fair value		Unrecognized losses		Fair value		Unrecognized losses		Fair value		Unrecognized losses
	(In Thousands)
Held-to-maturity:
U.S. Government agency obligations - government-sponsored enterprises	$	1,490	$	17	$	—	$	—	$	1,490	$	17
Municipal obligations	2,222		18		—		—		2,222		18
Collateralized mortgage obligations - government issued	3,247		31		—		—		3,247		31
Collateralized mortgage obligations - government-sponsored enterprises	3,076		19		—		—		3,076		19
	$	10,035	$	85	$	—	$	—	$	10,035	$	85

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Share-Based Compensation

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

The Corporation adopted the 2012 Equity Incentive Plan (the “Plan”) during the quarter ended June 30, 2012. The Plan is administered by the Compensation Committee of the Board of Directors of the Corporation and provides for the grant of equity ownership opportunities through incentive stock options and nonqualified stock options (together, “Stock Options”), restricted stock, restricted stock units, dividend equivalent units, and any other type of award permitted by the Plan. As of June 30, 2015, 178,738 shares were available for future grants under the Plan. Shares covered by awards that expire, terminate or lapse will again be available for the grant of awards under the Plan. The Corporation may issue new shares and shares from treasury for shares delivered under the Plan.

Stock Options

The Corporation may grant Stock Options to senior executives and other employees under the Plan. Stock Options generally have an exercise price that is equal to the fair value of the common shares on the date the option is awarded. Stock Options granted under the Plan are subject to graded vesting, generally ranging from 4 years to 8 years, and have a contractual term of 10 years. For any new awards issued, compensation expense is recognized over the requisite service period for the entire award on a straight-line basis. No Stock Options have been granted since the Corporation became a reporting company under the Securities Exchange Act of 1934, as amended, and no Stock Options have been modified, repurchased or canceled since such time. For that reason, no stock-based compensation related to Stock Options was recognized in the Consolidated Financial Statements for the three and six months ended June 30, 2015 and 2014. As of June 30, 2015, all Stock Options granted and not previously forfeited have vested. The benefits of tax deductions as a result of disqualifying dispositions upon exercise of stock options are recognized as a financing cash flow.

Stock Option activity for the year ended December 31, 2014 and six months ended June 30, 2015 was as follows:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Outstanding at December 31, 2013	51,000		$	24.24	0.88
Granted	—		—
Exercised	(39,000	)	24.00
Expired	—		—
Forfeited	—		—
Outstanding at December 31, 2014	12,000		$	25.00	0.13
Exercisable at December 31, 2014	12,000		$	25.00	0.13
Outstanding as of December 31, 2014	12,000		$	25.00	0.13
Granted	—		—
Exercised	(12,000	)	25.00
Expired	—		—
Forfeited	—		—
Outstanding as of June 30, 2015	—		$	—
Exercisable at June 30, 2015	—		$	—

Restricted Stock

Under the Plan, the Corporation may grant restricted shares to plan participants, subject to forfeiture upon the occurrence of certain events until the dates specified in the participant’s award agreement. While the restricted shares are subject to forfeiture, the participant may exercise full voting rights and will receive all dividends and other distributions paid with respect to the restricted shares. The restricted shares granted under the Plan are subject to graded vesting. Compensation expense is recognized over the requisite service period of generally four years for the entire award on a straight-line basis. Upon vesting of restricted share awards, the benefit of tax deductions in excess of recognized compensation expense is recognized as a financing cash flow activity.

Restricted share activity for the year ended December 31, 2014 and the six months ended June 30, 2015 was as follows:

	Number of Restricted Shares		Weighted Average Grant-Date Fair Value
Nonvested balance as of December 31, 2013	84,709		$	23.10
Granted	32,261		44.98
Vested	(39,471	)	19.71
Forfeited	—		—
Nonvested balance as of December 31, 2014	77,499		33.94
Granted	500		46.60
Vested	(913	)	44.23
Forfeited	(4,469	)	31.37
Nonvested balance as of June 30, 2015	72,617		$	34.05

As of June 30, 2015, $1.7 million of deferred compensation expense was included in additional paid-in capital in the Consolidated Balance Sheets related to unvested restricted shares which the Corporation expects to recognize over a weighted-average period of approximately 2.5 years. As of June 30, 2015, all restricted shares that vested were delivered.

For the three and six months ended June 30, 2015 and 2014, share-based compensation expense related to restricted stock included in the Consolidated Statements of Income was as follows:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2015		2014		2015		2014
	(In Thousands)
Share-based compensation expense	$	215	$	196	$	449	$	389

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Fair Value Disclosures (Policies)

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments, Policy

The Corporation determines the fair values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date and is based on exit prices. Fair value includes assumptions about risk such as nonperformance risk in liability fair values and is a market-based measurement, not an entity-specific measurement. The standard describes three levels of inputs that may be used to measure fair value.

Level 1 — Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date.

Level 2 — Level 2 inputs are inputs, other than quoted prices included with Level 1, that are observable for the asset or liability either directly or indirectly, 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 for substantially the full term of the assets or liabilities.

Level 3 — Level 3 inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Corporation’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Impaired loans which are collateral dependent were written down to their net realizable value of $8.8 million and $8.6 million at June 30, 2015 and December 31, 2014, respectively, through the establishment of specific reserves or by recording charge-offs when the carrying value exceeded the fair value. Valuation techniques consistent with the market approach, income approach, or cost approach were used to measure fair value and primarily included observable inputs for the individual impaired loans being evaluated such as current appraisals, recent sales of similar assets or other observable market data, and are reflected within Level 2 of the hierarchy. In cases where an input is unobservable, specifically discounts applied to appraisal values to adjust such values to current market conditions or to reflect net realizable value, the impaired loan balance is reflected within Level 3 of the hierarchy. The quantification of unobservable inputs for Level 3 impaired loan values range from 10% - 100%. The weighted average of those unobservable inputs as of the measurement date of June 30, 2015 was 44%. The majority of the impaired loans in the Level 3 category are considered collateral dependent loans.

Loan servicing rights represent the asset retained upon sale of the guaranteed portion of certain SBA loans. When SBA loans are sold, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. The servicing rights are subsequently measured using the amortization method, which requires amortization into interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

The Corporation periodically reviews this portfolio for impairment and engages a third-party valuation firm to assess the fair value of the overall servicing rights portfolio. Loan servicing rights do not trade in an active, open market with readily observable prices. While sales of loan servicing rights do occur, the precise terms and conditions typically are not readily available to allow for a “quoted price for similar assets” comparison. Accordingly, the Corporation utilizes an independent valuation from a third party which uses a discounted cash flow model to estimate the fair value of its loan servicing rights. The valuation model incorporates prepayment assumptions to project loan servicing rights cash flows based on the current interest rate scenario, which is then discounted to estimate an expected fair value of the loan servicing rights. The valuation model considers portfolio characteristics of the underlying serviced portion of the SBA loans and uses the following significant unobservable inputs: (1) constant prepayment rate (“CPR”) assumptions based on the SBA sold pools historical CPR as quoted in Bloomberg and (2) a discount rate of 10%. Due to the nature of the valuation inputs, loan servicing rights are classified in Level 3 of the fair value hierarchy.

As of June 30, 2015 and December 31, 2014, the estimated fair value of the Corporation’s loan servicing asset was $1.2 million and $943,000, respectively.

Foreclosed properties, upon initial recognition, are re-measured and reported at fair value through a charge-off to the allowance for loan and lease losses, if deemed necessary, based upon the fair value of the foreclosed property. The fair value of a foreclosed property, upon initial recognition, is estimated using a market approach or Level 2 inputs based on observable market data, typically a current appraisal, or Level 3 inputs based upon assumptions specific to the individual property or equipment. Level 3 inputs typically include unobservable inputs such as management-applied discounts used to further reduce values to a net realizable value and may be used in situations when observable inputs become stale. Foreclosed property fair value inputs may transition to Level 1 upon receipt of an accepted offer for the sale of the related foreclosed property.

As of June 30, 2015, there were no foreclosed properties supported by a Level 3 valuation. Subsequent impairments of foreclosed properties are recorded as a loss on foreclosed properties. Based upon an evaluation of value of certain of the Corporation’s foreclosed properties, impairment losses of $1,000 were recognized for the six months ended June 30, 2015.

Fair Value Measurement, Policy

Disclosure of fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the Consolidated Balance Sheets. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Certain financial instruments and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not necessarily represent the underlying value of the Corporation.

Cash and cash equivalents: The carrying amounts reported for cash and due from banks, interest-bearing deposits held by the Corporation, accrued interest receivable and accrued interest payable approximate fair value because of their immediate availability and because they do not present unanticipated credit concerns. The carrying value of commercial paper, included in the cash and cash equivalents category, approximates fair value due to the short-term maturity structure of the instrument. As of June 30, 2015 and December 31, 2014, the Corporation held $8.5 million and $10.4 million, respectively, of commercial paper. The fair value of commercial paper is considered a Level 3 input due to the lack of available independent pricing sources. The carrying value of brokered certificates of deposit purchased is equivalent to the purchase price of the instruments as the Corporation has not elected a fair value option for these instruments. The fair value of brokered certificates of deposits purchased is based on the discounted value of contractual cash flows using a discount rate reflective of rates currently offered for deposits of similar remaining maturities. As of June 30, 2015 and December 31, 2014, the Corporation held $6.7 million and $6.9 million, respectively, of brokered certificates of deposits.

Securities: The fair value measurements of investment securities are determined by a third-party pricing service which considers observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, trade execution data, market consensus prepayment speeds, credit information and the securities’ terms and conditions, among other things. The fair value measurements are subject to independent verification to another pricing source on a quarterly basis to review for reasonableness. Any significant differences in pricing are reviewed with appropriate members of management who have the relevant technical expertise to assess the results. The Corporation has determined that these valuations are classified in Level 2 of the fair value hierarchy. When the independent pricing service does not provide a fair value measurement for a particular security, the Corporation will estimate the fair value based on specific information about each security. Fair values derived in this manner are classified in Level 3 of the fair value hierarchy.

Loans Held for Sale: Loans held for sale, which consist of residential real estate mortgage loans and the guaranteed portion of SBA loans, are carried at the lower of cost or estimated fair value. The estimated fair value was based on what secondary markets are currently offering for portfolios with similar characteristics.

Loans and Leases: The fair value estimation process for the loan portfolio uses an exit price concept and reflects discounts that the Corporation believes are consistent with liquidity discounts in the market place. Fair values are estimated for portfolios of loans with similar financial characteristics. The fair value of performing and nonperforming loans is calculated by discounting scheduled and expected cash flows through the estimated maturity using estimated market rates that reflect the credit and interest rate risk inherent in the portfolio of loans and then applying a discount factor based upon the embedded credit risk of the loan and the fair value of collateral securing nonperforming loans when the loan is collateral dependent. The estimate of maturity is based on the Banks’ historical experience with repayments for each loan classification, modified, as required, by an estimate of the effect of current economic and lending conditions. Significant unobservable inputs include, but are not limited to, discounts (investor yield premiums) applied to fair value calculations to further determine the exit price value of a portfolio of loans.

Federal Home Loan Bank and Federal Reserve Bank Stock: The carrying amount of FHLB and FRB stock equals its fair value because the shares may be redeemed by the FHLB and the FRB at their carrying amount of $100 per share.

Cash Surrender Value of Life Insurance: The carrying amount of the cash surrender value of life insurance approximates its fair value as the carrying value represents the current settlement amount.

Deposits: The fair value of deposits with no stated maturity, such as demand deposits and money market accounts, is equal to the amount payable on demand. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The fair value estimates do not include the intangible value that results from the funding provided by deposit liabilities compared to borrowing funds in the market.

Borrowed Funds: Market rates currently available to the Corporation and Banks for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

Financial Instruments with Off-Balance-Sheet Risks: The fair value of the Corporation’s off-balance-sheet instruments is based on quoted market prices and fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the credit standing of the related counterparty. Commitments to extend credit and standby letters of credit are generally not marketable. Furthermore, interest rates on any amounts drawn under such commitments would generally be established at market rates at the time of the draw. Fair value would principally derive from the present value of fees received for those products.

Interest Rate Swaps: The carrying amount and fair value of existing derivative financial instruments are based upon independent valuation models, which use widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative contract. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Corporation considers the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Limitations: Fair value estimates are made at a discrete point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Corporation’s entire holding of a particular financial instrument. Because no market exists for a significant portion of the Corporation’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and are not considered in the estimates.

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Nature of Operations and Summary of Significant Accounting Policies Nature of Operations and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation. The accompanying unaudited Consolidated Financial Statements were prepared in accordance with GAAP and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Corporation’s Consolidated Financial Statements and footnotes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014.

Principles of Consolidation

The unaudited Consolidated Financial Statements include the accounts of the Corporation and its wholly-owned subsidiaries. In accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 810, the Corporation’s ownership interest in FBFS Statutory Trust II (“Trust II”) has not been consolidated into the financial statements. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates, Policy

Management of the Corporation is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Material estimates that could significantly change in the near-term include the value of foreclosed property, lease residuals, property under operating leases, securities, income taxes and the level of the allowance for loan and lease losses.

Reclassification, Policy

Certain amounts in prior periods may have been reclassified to conform to the current presentation.

Subsequent Events, Policy

Subsequent events have been evaluated through the date of the issuance of the Consolidated Financial Statements. No significant subsequent events have occurred through this date requiring adjustment to the financial statements or disclosures.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 666).” The ASU is a converged standard between the FASB and the IASB that provides a single comprehensive revenue recognition model for all contracts with customers across transactions and industries. The primary objective of the ASU is revenue recognition that represents the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU is effective for interim and annual reporting periods beginning after December 15, 2016. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In June 2014, the FASB issued ASU No. 2014-12, “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” This ASU requires a reporting entity to treat a performance target that affects vesting and that could be achieved after the requisite service period as a performance condition. A reporting entity should apply FASB ASC Topic 718, Compensation-Stock Compensation, to awards with performance conditions that affect vesting. For all entities, ASU 2014-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. ASU 2014-12 may be adopted either prospectively for share-based payment awards granted or modified on or after the effective date, or retrospectively, using a modified retrospective approach. The modified retrospective approach would apply to share-based payment awards outstanding as of the beginning of the earliest annual period presented in the financial statements on adoption, and to all new or modified awards thereafter. While the Corporation does not have any performance-based awards outstanding as of the reporting date, the Corporation’s equity incentive plan does allow for such awards. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This ASU describes how an entity should assess its ability to meet obligations and sets rules for how this information should be disclosed in the financial statements. The standard provides accounting guidance that will be used along with existing auditing standards. The ASU is effective for interim and annual periods beginning after December 15, 2016. Early application is permitted. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis.” This ASU changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a variable interest entity (VIE), and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. It also eliminates the VIE consolidation model based on majority exposure to variability that applied to certain investment companies and similar entities. The new guidance excludes money market funds that are required to comply with Rule 2a-7 of the Investment Company Act of 1940 and similar entities from the U.S. GAAP consolidation requirements. The new consolidation guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. At the effective date, all previous consolidation analysis that the guidance affects must be reconsidered. This includes the consolidation analysis for all VIEs and for all limited partnerships and similar entities that previously were consolidated by the general partner even though the entities were not VIEs. Early adoption is permitted, including early adoption in an interim period. If a reporting enterprise chooses to early adopt in an interim period, adjustments resulting from the revised consolidation analysis must be reflected as of the beginning of the fiscal year that includes that interim period. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” This ASU intends to simplify the presentation of debt issuance costs. This ASU is effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In April 2015, the FASB issued ASU 2015-05, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement.” This ASU provides explicit guidance to help companies evaluate the accounting for fees paid by a customer in a cloud computing arrangement. The new guidance clarifies that if a cloud computing arrangement includes a software license, the customer should account for the license consistent with its accounting for other software licenses. If the arrangement does not include a software license, the customer should account for the arrangement as a service contract. This ASU is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. An entity can elect to adopt the amendments either prospectively for all arrangements entered into or materially modified after the effective date, or retrospectively. Early adoption is permitted for all entities. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

In May 2015, the FASB issued ASU 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).” This ASU will eliminate the requirement to categorize investments in the fair value hierarchy if their fair value is measured at net asset value (NAV) per share (or its equivalent) using the practical expedient in the FASB’s fair value measurement guidance. Reporting entities are required to adopt the ASU retrospectively. The effective date for public business entities is fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for all entities. The Corporation is in the process of evaluating the impact of this standard but does not expect this standard to have a material impact on the Corporation’s consolidated financial position or results of operations.

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FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable

FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable

The composition of borrowed funds at June 30, 2015 and December 31, 2014 was as follows. Average balances represent year-to-date averages.

	June 30, 2015						December 31, 2014
	Balance		Average balance		Weighted average rate		Balance		Average balance		Weighted average rate
	(Dollars in Thousands)
Federal funds purchased	$	—	$	224	0.81	%	$	—	$	237	0.82	%
FHLB advances and other borrowings	22,965		16,770		0.99		10,058		5,093		0.56
Senior line of credit	1,510		1,018		3.17		1,010		13		3.30
Subordinated notes payable	22,926		22,926		6.96		22,926		13,362		7.07
Junior subordinated notes	10,315		10,315		10.70		10,315		10,315		10.78
	$	57,716	$	51,253	5.68		$	44,309	$	29,020	7.24
Short-term borrowings	$	18,010					$	2,010
Long-term borrowings	39,706						42,299
	$	57,716					$	44,309

As of June 30, 2015, the Corporation was in compliance with its debt covenants under its third party secured senior line of credit. Per the promissory note dated February 19, 2015, the Corporation pays a commitment fee on this senior line of credit. During the six months ended June 30, 2015 the Corporation incurred $6,000 additional interest expense due to this fee. Prior to February 19, 2015, the Corporation paid an unused line fee on this senior line of credit. During the six months ended June 30, 2014, the Corporation incurred $7,000 additional interest expense due to this fee.

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Fair Value Disclosures (Measured on a Recurring Basis) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Interest rate swaps
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Liabilities measured on a recurring basis, fair value	$ 519	$ 575
Interest rate swaps | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Liabilities measured on a recurring basis, fair value	0	0
Interest rate swaps | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Liabilities measured on a recurring basis, fair value	519	575
Interest rate swaps | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Liabilities measured on a recurring basis, fair value	0	0
Interest rate swaps
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	519	575
Interest rate swaps | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Interest rate swaps | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	519	575
Interest rate swaps | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Municipal obligations
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	3,247	578
Municipal obligations | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Municipal obligations | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	3,247	578
Municipal obligations | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Asset-backed securities
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	1,445	1,510
Asset-backed securities | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Asset-backed securities | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	1,445	1,510
Asset-backed securities | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
U.S. Government agency obligations - government-sponsored enterprises
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	8,023	8,965
U.S. Government agency obligations - government-sponsored enterprises | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
U.S. Government agency obligations - government-sponsored enterprises | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	8,023	8,965
U.S. Government agency obligations - government-sponsored enterprises | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Collateralized mortgage obligations - government issued
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	55,982	68,874
Collateralized mortgage obligations - government issued | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Collateralized mortgage obligations - government issued | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	55,982	68,874
Collateralized mortgage obligations - government issued | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Collateralized mortgage obligations - government-sponsored enterprises
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	77,645	64,771
Collateralized mortgage obligations - government-sponsored enterprises | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Collateralized mortgage obligations - government-sponsored enterprises | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	77,645	64,771
Collateralized mortgage obligations - government-sponsored enterprises | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	$ 0	$ 0

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses

6 Months Ended

Jun. 30, 2015

Receivables [Abstract]

Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses

Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses

Loan and lease receivables consist of the following:

	June 30, 2015		December 31, 2014
	(In Thousands)
Commercial real estate
Commercial real estate — owner occupied	$	169,768	$	163,884
Commercial real estate — non-owner occupied	400,018		417,962
Construction and land development	140,318		121,160
Multi-family	86,912		72,578
1-4 family (1)	47,091		36,182
Total commercial real estate	844,107		811,766
Commercial and industrial (2)	454,868		416,654
Direct financing leases, net	28,723		34,165
Consumer and other
Home equity and second mortgages (3)	9,466		7,866
Other	14,547		11,341
Total consumer and other	24,013		19,207
Total gross loans and leases receivable	1,351,711		1,281,792
Less:
Allowance for loan and lease losses	15,199		14,329
Deferred loan fees	1,147		1,025
Loans and leases receivable, net	$	1,335,365	$	1,266,438

(1) Includes residential real estate loans held for sale totaling $331,000 as of June 30, 2015 and $1.3 million as of December 31, 2014.

(2) Includes guaranteed portion of SBA loans held for sale totaling $638,000 as of June 30, 2015.

(3) Includes guaranteed portion of SBA loans held for sale totaling $305,000 as of June 30, 2015.

Loans transferred to third parties consist of the guaranteed portion of SBA loans as well as participation interests in other originated loans. The total principal amount of loans transferred during the three months ended June 30, 2015 and 2014 was $32.0 million and $6.6 million, respectively. For the six months ended June 30, 2015 and 2014, $46.6 million and $11.7 million of loans were transferred to third parties, respectively. Each of the transfers of these financial assets met the qualifications for sale accounting, including the requirements specific to loan participations, and therefore all of the loans transferred during the three and six months ended June 30, 2015 and June 30, 2014 have been derecognized in the unaudited Consolidated Financial Statements. The Corporation has a continuing involvement in each of the agreements by way of relationship management and servicing the loans; however, there are no further obligations to the third-party participant required of the Corporation in the event of a borrower’s default, other than standard representations and warranties related to sold amounts. The guaranteed portion of SBA loans were transferred at their fair value and the related gain was recognized upon the transfer as non-interest income in the unaudited Consolidated Financial Statements. No gain or loss was recognized on participation interests in other originated loans as they were transferred at or near the date of loan origination and the payments received for servicing the portion of the loans participated represents adequate compensation. The total amount of loan participations purchased on the Corporation’s Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014 was $475,000 and $482,000, respectively.

The total amount of outstanding loans transferred to third parties as loan participations sold at June 30, 2015 and December 31, 2014 was $140.0 million and $116.6 million, respectively, all of which was treated as a sale and derecognized under the applicable accounting guidance in effect at the time of the transfers of the financial assets. The Corporation’s continuing involvement with these loans is by way of partial ownership, relationship management and all servicing responsibilities. As of June 30, 2015 and December 31, 2014, the total amount of the Corporation’s partial ownership of loans on the Corporation’s Consolidated Balance Sheets was $98.4 million and $96.4 million, respectively. As of June 30, 2015, $1.0 million loans in this participation sold portfolio were considered impaired as compared to $1.2 million as of December 31, 2014. The Corporation does not share in the participant’s portion of the charge-offs.

The Corporation sells residential real estate loans, servicing released, in the secondary market. The total principal amount of residential real estate loans sold during the three and six months ended June 30, 2015 was $10.3 million and $19.5 million, respectively. No residential real estate loans were originated or sold during the three months ended June 30, 2014. Each of the transfers of these financial assets met the qualifications for sale accounting, and therefore all of the loans transferred during the three and six months ended June 30, 2015 have been derecognized in the unaudited Consolidated Financial Statements. The Corporation has a continuing involvement in each of the transactions by way of relationship management; however, there are no further obligations of the Corporation in the event of a borrower’s default, other than standard representations and warranties related to the sold amount. The loans were transferred at their fair value and the related gain was recognized as non-interest income upon the transfer in the unaudited Consolidated Financial Statements.

ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer, applies to purchased loans with evidence of deterioration in credit quality since origination for which it is probable at acquisition that the Corporation will be unable to collect all contractually required payments are considered to be credit impaired. Purchased credit-impaired loans are initially recorded at fair value, which is estimated by discounting the cash flows expected to be collected at the acquisition date. Because the estimate of expected cash flows reflects an estimate of future credit losses expected to be incurred over the life of the loans, an allowance for credit losses is not recorded at the acquisition date. The excess of cash flows expected at acquisition over the estimated fair value, referred to as the accretable yield, is recognized in interest income over the remaining life of the loan on a level-yield basis, contingent on the subsequent evaluation of future expected cash flows. The difference between the contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference. A subsequent decrease in the estimate of cash flows expected to be received on purchased credit-impaired loans generally results in the recognition of an allowance for credit losses. Subsequent increases in cash flows result in reversal of any nonaccretable difference (or allowance for loan and lease losses to the extent any has been recorded) with a positive impact on interest income subsequently recognized. The measurement of cash flows involves assumptions and judgments for interest rates, prepayments, default rates, loss severity, and collateral values. All of these factors are inherently subjective and significant changes in the cash flow estimates over the life of the loan can result.

The following table reflects the contractually required payments receivable and fair value of the Corporation’s purchased credit impaired loans as of June 30, 2015 and December 31, 2014:

	June 30, 2015		December 31, 2014
	(In Thousands)
Contractually required payments	$	6,382	$	6,874
Fair value of purchased credit impaired loans	$	3,701	$	4,025

The following table presents a rollforward of the Corporation’s accretable yield as of June 30, 2015 and December 31, 2014:

	As of and for the Six Months Ended June 30, 2015			As of and for the Year Ended December 31, 2014
	(In Thousands)
Accretable yield, beginning of period	$	676		$	683
Accretion recognized in earnings	(22		)	(7		)
Reclassification to nonaccretable difference for loans with changing cash flows(1)	(21		)	—
Changes in accretable yield for non-credit related changes in expected cash flows(2)	(155		)	—
Accretable yield, end of period	$	478		$	676

(1) Represents changes in accretable yield for those loans that are driven primarily by credit performance.

(2) Represents changes in accretable yield for those loans that are driven primarily by changes in actual and estimated payments.

The following information illustrates ending balances of the Corporation’s loan and lease portfolio, including impaired loans by class of receivable, and considering certain credit quality indicators as of June 30, 2015 and December 31, 2014:

	Category
As of June 30, 2015	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	137,582		$	18,053		$	13,480		$	653		$	169,768
Commercial real estate — non-owner occupied	372,874			24,903			1,334			907			400,018
Construction and land development	121,404			8,370			5,927			4,617			140,318
Multi-family	85,641			367			894			10			86,912
1-4 family	37,919			4,755			2,057			2,360			47,091
Total commercial real estate	755,420			56,448			23,692			8,547			844,107
Commercial and industrial(1)	407,737			10,501			29,224			7,406			454,868
Direct financing leases, net	26,633			1,382			708			—			28,723
Consumer and other:
Home equity and second mortgages	8,359			447			162			498			9,466
Other	13,856			—			—			691			14,547
Total consumer and other	22,215			447			162			1,189			24,013
Total gross loans and leases receivable	$	1,212,005		$	68,778		$	53,786		$	17,142		$	1,351,711
Category as a % of total portfolio	89.66		%	5.09		%	3.98		%	1.27		%	100.00		%

(1) Category IV includes $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

	Category
As of December 31, 2014	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	131,094		$	15,592		$	16,621		$	577		$	163,884
Commercial real estate — non-owner occupied	378,671			20,823			17,498			970			417,962
Construction and land development	100,934			8,193			6,876			5,157			121,160
Multi-family	70,897			751			913			17			72,578
1-4 family	25,997			5,278			3,336			1,571			36,182
Total commercial real estate	707,593			50,637			45,244			8,292			811,766
Commercial and industrial	383,755			18,524			12,026			2,349			416,654
Direct financing leases, net	32,756			1,120			289			—			34,165
Consumer and other:
Home equity and second mortgages	7,039			205			189			433			7,866
Other	10,570			50			—			721			11,341
Total consumer and other	17,609			255			189			1,154			19,207
Total gross loans and leases receivable	$	1,141,713		$	70,536		$	57,748		$	11,795		$	1,281,792
Category as a % of total portfolio	89.07		%	5.50		%	4.51		%	0.92		%	100.00		%

Credit underwriting through a committee process is a key component of the Corporation’s operating philosophy. Business development officers have relatively low individual lending authority limits, and thus a significant portion of the Corporation’s new credit extensions require approval from a loan approval committee regardless of the type of loan or lease, asset quality grade of the credit, amount of the credit, or the related complexities of each proposal. In addition, the Corporation makes every effort to ensure that there is appropriate collateral at the time of origination to protect the Corporation’s interest in the related loan or lease.

Each credit is evaluated for proper risk rating upon origination, at the time of each subsequent renewal, upon receipt and evaluation of updated financial information from the Corporation’s borrowers, or as other circumstances dictate. The Corporation uses a nine grade risk rating system to monitor the ongoing credit quality of its loans and leases. The risk rating grades follow a consistent definition, and are then applied to specific loan types based on the nature of the loan. Each risk rating is subjective and, depending on the size and nature of the credit, subject to various levels of review and concurrence on the stated risk rating. In addition to its nine grade risk rating system, the Corporation groups loans into four loan and related risk categories which determine the level and nature of review by management.

Category I — Loans and leases in this category are performing in accordance with the terms of the contract and generally exhibit no immediate concerns regarding the security and viability of the underlying collateral, financial stability of the borrower, integrity or strength of the borrower’s management team or the industry in which the borrower operates. Loans and leases in this category are not subject to additional monitoring procedures above and beyond what is required at the origination or renewal of the loan or lease. The Corporation monitors Category I loans and leases through payment performance, continued maintenance of its personal relationships with such borrowers and continued review of such borrowers’ compliance with the terms of their respective agreements.

Category II — Loans and leases in this category are beginning to show signs of deterioration in one or more of the Corporation’s core underwriting criteria such as financial stability, management strength, industry trends and collateral values. Management will place credits in this category to allow for proactive monitoring and resolution with the borrower to possibly mitigate the area of concern and prevent further deterioration or risk of loss to the Corporation. Category II loans are considered performing but are monitored frequently by the assigned business development officer and by subcommittees of the Banks’ loan committees.

Category III — Loans and leases in this category are identified by management as warranting special attention. However, the balance in this category is not intended to represent the amount of adversely classified assets held by the Banks. Category III loans and leases generally exhibit undesirable characteristics such as evidence of adverse financial trends and conditions, managerial problems, deteriorating economic conditions within the related industry, or evidence of adverse public filings and may exhibit collateral shortfall positions. Management continues to believe that it will collect all required principal and interest in accordance with the original terms of the contracts relating to the loans and leases in this category, and therefore Category III loans are considered performing with no specific reserves established for this category. Category III loans are monitored by management and loan committees of the Banks on a monthly basis and the Banks’ Boards of Directors at each of their regularly scheduled meetings.

Category IV — Loans and leases in this category are considered to be impaired. Impaired loans and leases have been placed on non-accrual as management has determined that it is unlikely that the Banks will receive the required principal and interest in accordance with the contractual terms of the agreement. Impaired loans are individually evaluated to assess the need for the establishment of specific reserves or charge-offs. When analyzing the adequacy of collateral, the Corporation obtains external appraisals at least annually for impaired loans and leases. External appraisals are obtained from the Corporation’s approved appraiser listing and are independently reviewed to monitor the quality of such appraisals. To the extent a collateral shortfall position is present, a specific reserve or charge-off will be recorded to reflect the magnitude of the impairment. Loans and leases in this category are monitored by management and loan committees of the Banks on a monthly basis and the Banks’ Boards of Directors at each of their regularly scheduled meetings.

Utilizing regulatory classification terminology, the Corporation identified $10.6 million and $27.1 million of loans and leases as Substandard as of June 30, 2015 and December 31, 2014, respectively. No loans were considered Special Mention, Doubtful or Loss as of either June 30, 2015 or December 31, 2014. The population of Substandard loans are a subset of Category III and Category IV loans.

The delinquency aging of the loan and lease portfolio by class of receivable as of June 30, 2015 and December 31, 2014 is as follows:

As of June 30, 2015	30-59 days past due			60-89 days past due			Greater than 90 days past due			Total past due			Current			Total loans
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	169,189		$	169,189
Non-owner occupied	—			—			—			—			399,736			399,736
Construction and land development	—			—			—			—			135,779			135,779
Multi-family	—			—			—			—			86,902			86,902
1-4 family	—			—			—			—			45,775			45,775
Commercial and industrial	399			—			—			399			447,091			447,490
Direct financing leases, net	—			—			—			—			28,723			28,723
Consumer and other:
Home equity and second mortgages	—			—			—			—			9,063			9,063
Other	—			—			—			—			13,856			13,856
Total	399			—			—			399			1,336,114			1,336,513
Non-accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	490		$	—		$	490		$	89		$	579
Non-owner occupied	—			—			235			235			47			282
Construction and land development	—			—			—			—			4,539			4,539
Multi-family	—			—			—			—			10			10
1-4 family	658			96			175			929			387			1,316
Commercial and industrial(1)	219			194			582			995			6,383			7,378
Direct financing leases, net	—			—			—			—			—			—
Consumer and other:
Home equity and second mortgages	—			—			50			50			353			403
Other	—			—			691			691			—			691
Total	877			780			1,733			3,390			11,808			15,198
Total loans and leases
Commercial real estate:
Owner occupied	$	—		$	490		$	—		$	490		$	169,278		$	169,768
Non-owner occupied	—			—			235			235			399,783			400,018
Construction and land development	—			—			—			—			140,318			140,318
Multi-family	—			—			—			—			86,912			86,912
1-4 family	658			96			175			929			46,162			47,091
Commercial and industrial	618			194			582			1,394			453,474			454,868
Direct financing leases, net	—			—			—			—			28,723			28,723
Consumer and other:
Home equity and second mortgages	—			—			50			50			9,416			9,466
Other	—			—			691			691			13,856			14,547
Total	$	1,276		$	780		$	1,733		$	3,789		$	1,347,922		$	1,351,711
Percent of portfolio	0.09		%	0.06		%	0.13		%	0.28		%	99.72		%	100.00		%

(1) Current balance includes $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

As of December 31, 2014	30-59 days past due			60-89 days past due			Greater than 90 days past due			Total past due			Current			Total loans
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	163,384		$	163,384
Non-owner occupied	—			—			—			—			417,676			417,676
Construction and land development	—			—			—			—			116,228			116,228
Multi-family	—			—			—			—			72,561			72,561
1-4 family	—			—			—			—			35,492			35,492
Commercial and industrial	—			—			—			—			414,336			414,336
Direct financing leases, net	—			—			—			—			34,165			34,165
Consumer and other:
Home equity and second mortgages	—			—			—			—			7,537			7,537
Other	—			—			—			—			10,621			10,621
Total	—			—			—			—			1,272,000			1,272,000
Non-accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	500		$	500
Non-owner occupied	—			215			—			215			71			286
Construction and land development	—			193			—			193			4,739			4,932
Multi-family	—			—			—			—			17			17
1-4 family	—			106			306			412			278			690
Commercial and industrial	364			146			736			1,246			1,072			2,318
Direct financing leases, net	—			—			—			—			—			—
Consumer and other:
Home equity and second mortgages	—			—			—			—			329			329
Other	—			—			720			720			—			720
Total	364			660			1,762			2,786			7,006			9,792
Total loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	163,884		$	163,884
Non-owner occupied	—			215			—			215			417,747			417,962
Construction and land development	—			193			—			193			120,967			121,160
Multi-family	—			—			—			—			72,578			72,578
1-4 family	—			106			306			412			35,770			36,182
Commercial and industrial	364			146			736			1,246			415,408			416,654
Direct financing leases, net	—			—			—			—			34,165			34,165
Consumer and other:
Home equity and second mortgages	—			—			—			—			7,866			7,866
Other	—			—			720			720			10,621			11,341
Total	$	364		$	660		$	1,762		$	2,786		$	1,279,006		$	1,281,792
Percent of portfolio	0.03		%	0.05		%	0.14		%	0.22		%	99.78		%	100.00		%

The Corporation’s total impaired assets consisted of the following at June 30, 2015 and December 31, 2014, respectively.

	June 30, 2015		December 31, 2014
	(Dollars in Thousands)
Non-accrual loans and leases
Commercial real estate:
Commercial real estate — owner occupied	$	579	$	500
Commercial real estate — non-owner occupied	282		286
Construction and land development	4,539		4,932
Multi-family	10		17
1-4 family	1,316		690
Total non-accrual commercial real estate	6,726		6,425
Commercial and industrial(1)	7,378		2,318
Direct financing leases, net	—		—
Consumer and other:
Home equity and second mortgages	403		329
Other	691		720
Total non-accrual consumer and other loans	1,094		1,049
Total non-accrual loans and leases	15,198		9,792
Performing troubled debt restructurings	1,944		2,003
Total impaired loans and leases	17,142		11,795
Foreclosed properties, net	1,854		1,693
Total impaired assets	$	18,996	$	13,488

	June 30, 2015		December 31, 2014
Total non-accrual loans and leases to gross loans and leases	1.12	%	0.76	%
Total non-performing assets to total gross loans and leases plus foreclosed properties, net	1.26		0.89
Total non-performing assets to total assets	1.01		0.70
Allowance for loan and lease losses to gross loans and leases	1.12		1.12
Allowance for loan and lease losses to non-accrual loans and leases	100.01		146.33

(1) Balance includes $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

As of June 30, 2015 and December 31, 2014, $6.9 million and $7.4 million of the non-accrual loans were considered troubled debt restructurings, respectively. As of June 30, 2015, there were no unfunded commitments associated with troubled debt restructured loans and leases.

	As of June 30, 2015					As of December 31, 2014
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
	(Dollars in Thousands)
Troubled debt restructurings:
Commercial real estate
Commercial real estate — owner occupied	2	$	625	$	564	2	$	624	$	577
Commercial real estate — non-owner occupied	5	1,151		907		5	1,095		970
Construction and land development	3	6,034		4,678		4	6,260		5,157
Multi-family	1	184		10		1	184		17
1-4 family	16	2,119		1,435		16	2,119		1,368
Commercial and industrial	3	201		144		4	361		155
Direct financing leases, net	—	—		—		—	—		—
Consumer and other:
Home equity and second mortgages	6	681		375		6	772		431
Other	1	2,076		690		2	2,080		721
Total	37	$	13,071	$	8,803	40	$	13,495	$	9,396

All loans and leases modified as a troubled debt restructuring are evaluated for impairment. The nature and extent of the impairment of restructured loans, including those which have experienced a default, is considered in the determination of an appropriate level of the allowance for loan and lease losses.

As of June 30, 2015 and December 31, 2014, the Corporation’s troubled debt restructurings grouped by type of concession were as follows:

	As of June 30, 2015			As of December 31, 2014
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
	(Dollars in Thousands)
Commercial real estate
Extension of term	1	$	31	1	$	39
Interest rate concession	1	56		1	65
Combination of extension and interest rate concession	25	7,506		26	7,984
Commercial and industrial
Combination of extension and interest rate concession	3	144		4	155
Consumer and other
Extension of term	2	723		3	753
Combination of extension and interest rate concession	5	343		5	400
Total	37	$	8,803	40	$	9,396

There were no loans and leases modified in a troubled debt restructuring during the previous 12 months which subsequently defaulted during the six months ended June 30, 2015.

The following represents additional information regarding the Corporation’s impaired loans and leases by class:

	Impaired Loans and Leases
	As of and for the Six Months Ended June 30, 2015
	Recorded investment		Unpaid principal balance		Impairment reserve		Average recorded investment(1)		Foregone interest income		Interest income recognized		Net foregone interest income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	564	$	564	$	—	$	575	$	13	$	—	$	13
Non-owner occupied	860		860		—		918		6		—		6
Construction and land development	4,617		7,287		—		5,039		71		—		71
Multi-family	10		377		—		13		24		—		24
1-4 family	1,442		1,514		—		1,578		33		—		33
Commercial and industrial(2)	6,375		6,384		—		231		63		1		62
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	317		317		—		292		8		—		8
Other	691		1,357		—		704		41		—		41
Total	14,876		18,660		—		9,350		259		1		258
With impairment reserve recorded:
Commercial real estate:
Owner occupied	$	89	$	89	$	4	$	17	$	—	$	—	$	—
Non-owner occupied	47		87		47		48		2		—		2
Construction and land development	—		—		—		—		—		—		—
Multi-family	—		—		—		—		—		—		—
1-4 family	918		924		177		375		11		—		11
Commercial and industrial	1,031		1,031		253		1,241		38		—		38
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	181		181		94		127		7		—		7
Other	—		—		—		—		—		—		—
Total	2,266		2,312		575		1,808		58		—		58
Total:
Commercial real estate:
Owner occupied	$	653	$	653	$	4	$	592	$	13	$	—	$	13
Non-owner occupied	907		947		47		966		8		—		8
Construction and land development	4,617		7,287		—		5,039		71		—		71
Multi-family	10		377		—		13		24		—		24
1-4 family	2,360		2,438		177		1,953		44		—		44
Commercial and industrial	7,406		7,415		253		1,472		101		1		100
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	498		498		94		419		15		—		15
Other	691		1,357		—		704		41		—		41
Grand total	$	17,142	$	20,972	$	575	$	11,158	$	317	$	1	$	316

(1) Average recorded investment is calculated primarily using daily average balances.

(2) Recorded investment and unpaid principal balances include $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

	Impaired Loans and Leases
	As of and for the Year Ended December 31, 2014
	Recorded investment		Unpaid principal balance		Impairment reserve		Average recorded investment(1)		Foregone interest income		Interest income recognized		Net Foregone Interest Income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	577	$	577	$	—	$	484	$	30	$	79	$	(49	)
Non-owner occupied	921		921		—		349		22		—		22
Construction and land development	5,157		7,828		—		5,285		155		—		155
Multi-family	17		384		—		24		53		—		53
1-4 family	1,181		1,218		—		380		15		12		3
Commercial and industrial	2,316		2,926		—		6,141		463		649		(186		)
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	380		380		—		495		18		—		18
Other	721		1,389		—		768		87		—		87
Total	11,270		15,623		—		13,926		843		740		103
With impairment reserve recorded:
Commercial real estate:
Owner occupied	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-owner occupied	49		89		49		52		4		—		4
Construction and land development	—		—		—		—		—		—		—
Multi-family	—		—		—		—		—		—		—
1-4 family	390		390		155		405		18		—		18
Commercial and industrial	33		33		33		34		—		—		—
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	53		53		53		57		5		—		5
Other	—		—		—		—		—		—		—
Total	525		565		290		548		27		—		27
Total:
Commercial real estate:
Owner occupied	$	577	$	577	$	—	$	484	$	30	$	79	$	(49	)
Non-owner occupied	970		1,010		49		401		26		—		26
Construction and land development	5,157		7,828		—		5,285		155		—		155
Multi-family	17		384		—		24		53		—		53
1-4 family	1,571		1,608		155		785		33		12		21
Commercial and industrial	2,349		2,959		33		6,175		463		649		(186		)
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	433		433		53		552		23		—		23
Other	721		1,389		—		768		87		—		87
Grand total	$	11,795	$	16,188	$	290	$	14,474	$	870	$	740	$	130

(1) Average recorded investment is calculated primarily using daily average balances.

The difference between the loans and leases recorded investment and the unpaid principal balance of $3.8 million and $4.4 million as of June 30, 2015 and December 31, 2014 represents partial charge-offs resulting from confirmed losses due to the value of the collateral securing the loans and leases being below the carrying values of the loans and leases. Impaired loans and leases also included $1.9 million and $2.0 million of loans as of June 30, 2015 and December 31, 2014 that were performing troubled debt restructurings, and thus, while not on non-accrual, were reported as impaired, due to the concession in terms. When a loan is placed on non-accrual, interest accrual is discontinued and previously accrued but uncollected interest is deducted from interest income. Cash payments collected on non-accrual loans are first applied to principal. Foregone interest represents the interest that was contractually due on the note but not received or recorded. To the extent the amount of principal on a non-accrual note is fully collected and additional cash is received, the Corporation will recognize interest income.

To determine the level and composition of the allowance for loan and lease losses, the Corporation breaks out the portfolio by segments and risk ratings. First, the Corporation evaluates loans and leases for potential impairment classification. The Corporation analyzes each loan and lease determined to be impaired on an individual basis to determine a specific reserve based upon the estimated value of the underlying collateral for collateral-dependent loans, or alternatively, the present value of expected cash flows. The Corporation applies historical trends from established risk factors to each category of loans and leases that has not been individually evaluated for the purpose of establishing the general portion of the allowance.

A summary of the activity in the allowance for loan and lease losses by portfolio segment is as follows:

	As of and for the Six Months Ended June 30, 2015
	Commercial real estate			Commercial and industrial loans and leases			Consumer and other			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	8,619		$	5,492		$	218		$	14,329
Charge-offs	(91		)	(313		)	(4		)	(408		)
Recoveries	66			5			3			74
Provision	123			1,024			57			1,204
Ending balance	$	8,717		$	6,208		$	274		$	15,199
Ending balance: individually evaluated for impairment	$	228		$	124		$	94		$	446
Ending balance: collectively evaluated for impairment	$	8,489		$	5,955		$	180		$	14,624
Ending balance: loans acquired with deteriorated credit quality	$	—		$	129		$	—		$	129
Loans and lease receivables:
Ending balance, gross	$	844,107		$	483,591		$	24,013		$	1,351,711
Ending balance: individually evaluated for impairment(1)	$	5,589		$	6,751		$	959		$	13,299
Ending balance: collectively evaluated for impairment	$	835,559		$	476,186		$	22,824		$	1,334,569
Ending balance: loans acquired with deteriorated credit quality	$	2,959		$	654		$	230		$	3,843
Allowance as % of gross loans	1.03		%	1.28		%	1.14		%	1.12		%

(1) Commercial and industrial loans and leases balance includes $6.2 million considered performing impaired loans with interest income recognized on a cash basis as of June 30, 2015. Subsequent to June 30, 2015, the Corporation granted a concession to the client and considered the loans to be troubled debt restructurings.

	As of and for the Six Months Ended June 30, 2014
	Commercial real estate			Commercial and industrial loans and leases			Consumer and other			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	9,055		$	4,573		$	273		$	13,901
Charge-offs	—			—			—			—
Recoveries	17			1			7			25
Provision	(304		)	432			(39		)	89
Ending balance	$	8,768		$	5,006		$	241		$	14,015
Ending balance: individually evaluated for impairment	$	342		$	208		$	56		$	606
Ending balance: collectively evaluated for impairment	$	8,426		$	4,798		$	185		$	13,409
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—
Loans and lease receivables:
Ending balance, gross	$	637,403		$	355,549		$	15,663		$	1,008,615
Ending balance: individually evaluated for impairment	$	5,416		$	6,664		$	1,331		$	13,411
Ending balance: collectively evaluated for impairment	$	630,616		$	348,885		$	14,332		$	993,833
Ending balance: loans acquired with deteriorated credit quality	$	1,371		$	—		$	—		$	1,371
Allowance as % of gross loans	1.38		%	1.41		%	1.54		%	1.39		%

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Deposits

6 Months Ended

Jun. 30, 2015

Deposits [Abstract]

Deposits

Deposits

The composition of deposits at June 30, 2015 and December 31, 2014 was as follows. Average balances represent year-to-date averages.

	June 30, 2015						December 31, 2014
	Balance		Average balance		Weighted average rate		Balance		Average balance		Weighted average rate
	(Dollars in Thousands)
Non-interest-bearing transaction accounts	$	221,064	$	202,905	—	%	$	204,328	$	154,687	—	%
Interest-bearing transaction accounts	107,318		106,442		0.23		104,199		83,508		0.22
Money market accounts	588,240		615,485		0.55		575,766		493,322		0.52
Certificates of deposit	109,966		117,748		0.75		126,635		60,284		0.89
Wholesale deposits	444,480		426,136		1.36		427,340		416,202		1.49
Total deposits	$	1,471,068	$	1,468,716	0.70		$	1,438,268	$	1,208,003	0.78

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Fair Value Disclosures

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Disclosures

Fair Value Disclosures

The Corporation determines the fair values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date and is based on exit prices. Fair value includes assumptions about risk such as nonperformance risk in liability fair values and is a market-based measurement, not an entity-specific measurement. The standard describes three levels of inputs that may be used to measure fair value.

Level 1 — Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date.

Level 2 — Level 2 inputs are inputs, other than quoted prices included with Level 1, that are observable for the asset or liability either directly or indirectly, 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 for substantially the full term of the assets or liabilities.

Level 3 — Level 3 inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Corporation’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Assets and liabilities measured at fair value on a recurring basis, segregated by fair value hierarchy level, are summarized below:

	Fair Value Measurements Using
June 30, 2015	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Securities available-for-sale:
Municipal obligations	$	—	$	3,247	$	—	$	3,247
Asset backed securities	—		1,445		—		1,445
U.S. Government agency obligations - government-sponsored enterprises	—		8,023		—		8,023
Collateralized mortgage obligations - government issued	—		55,982		—		55,982
Collateralized mortgage obligations - government-sponsored enterprises	—		77,645		—		77,645
Interest rate swaps	—		519		—		519
Liabilities:
Interest rate swaps	$	—	$	519	$	—	$	519

	Fair Value Measurements Using
December 31, 2014	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Securities available-for-sale:
Municipal obligations	$	—	$	578	$	—	$	578
Asset backed securities	—		1,510		—		1,510
U.S. Government agency obligations - government-sponsored enterprises	—		8,965		—		8,965
Collateralized mortgage obligations - government issued	—		68,874		—		68,874
Collateralized mortgage obligations - government-sponsored enterprises	—		64,771		—		64,771
Interest rate swaps	—		575		—		575
Liabilities:
Interest rate swaps	$	—	$	575	$	—	$	575

For assets and liabilities measured at fair value on a recurring basis, there were no transfers between the levels during the six months ended June 30, 2015 or the year ended December 31, 2014 related to the above measurements.

Assets and liabilities measured at fair value on a non-recurring basis, segregated by fair value hierarchy are summarized below:

			As of and for the Six Months Ended June 30, 2015
	Balance at		Fair Value Measurements Using						Total Gains (Losses)
	June 30, 2015		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	8,795	$	—	$	7,573	$	1,222	$	—
Foreclosed properties	1,854		—		1,854		—		(1		)
Loan servicing rights	1,168		—		—		1,168		—

			As of and for the Year Ended December 31, 2014
	Balance at		Fair Value Measurements Using						Total Gains (Losses)
	December 31, 2014		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	8,565	$	—	$	7,025	$	1,540	$	—
Foreclosed properties	1,693		—		1,693		—		(4		)
Loan servicing rights	943		—		—		943		—

Impaired loans which are collateral dependent were written down to their net realizable value of $8.8 million and $8.6 million at June 30, 2015 and December 31, 2014, respectively, through the establishment of specific reserves or by recording charge-offs when the carrying value exceeded the fair value. Valuation techniques consistent with the market approach, income approach, or cost approach were used to measure fair value and primarily included observable inputs for the individual impaired loans being evaluated such as current appraisals, recent sales of similar assets or other observable market data, and are reflected within Level 2 of the hierarchy. In cases where an input is unobservable, specifically discounts applied to appraisal values to adjust such values to current market conditions or to reflect net realizable value, the impaired loan balance is reflected within Level 3 of the hierarchy. The quantification of unobservable inputs for Level 3 impaired loan values range from 10% - 100%. The weighted average of those unobservable inputs as of the measurement date of June 30, 2015 was 44%. The majority of the impaired loans in the Level 3 category are considered collateral dependent loans.

Loan servicing rights represent the asset retained upon sale of the guaranteed portion of certain SBA loans. When SBA loans are sold, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. The servicing rights are subsequently measured using the amortization method, which requires amortization into interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

The Corporation periodically reviews this portfolio for impairment and engages a third-party valuation firm to assess the fair value of the overall servicing rights portfolio. Loan servicing rights do not trade in an active, open market with readily observable prices. While sales of loan servicing rights do occur, the precise terms and conditions typically are not readily available to allow for a “quoted price for similar assets” comparison. Accordingly, the Corporation utilizes an independent valuation from a third party which uses a discounted cash flow model to estimate the fair value of its loan servicing rights. The valuation model incorporates prepayment assumptions to project loan servicing rights cash flows based on the current interest rate scenario, which is then discounted to estimate an expected fair value of the loan servicing rights. The valuation model considers portfolio characteristics of the underlying serviced portion of the SBA loans and uses the following significant unobservable inputs: (1) constant prepayment rate (“CPR”) assumptions based on the SBA sold pools historical CPR as quoted in Bloomberg and (2) a discount rate of 10%. Due to the nature of the valuation inputs, loan servicing rights are classified in Level 3 of the fair value hierarchy.

As of June 30, 2015 and December 31, 2014, the estimated fair value of the Corporation’s loan servicing asset was $1.2 million and $943,000, respectively.

Foreclosed properties, upon initial recognition, are re-measured and reported at fair value through a charge-off to the allowance for loan and lease losses, if deemed necessary, based upon the fair value of the foreclosed property. The fair value of a foreclosed property, upon initial recognition, is estimated using a market approach or Level 2 inputs based on observable market data, typically a current appraisal, or Level 3 inputs based upon assumptions specific to the individual property or equipment. Level 3 inputs typically include unobservable inputs such as management-applied discounts used to further reduce values to a net realizable value and may be used in situations when observable inputs become stale. Foreclosed property fair value inputs may transition to Level 1 upon receipt of an accepted offer for the sale of the related foreclosed property.

As of June 30, 2015, there were no foreclosed properties supported by a Level 3 valuation. Subsequent impairments of foreclosed properties are recorded as a loss on foreclosed properties. Based upon an evaluation of value of certain of the Corporation’s foreclosed properties, impairment losses of $1,000 were recognized for the six months ended June 30, 2015. The activity of the Corporation’s foreclosed properties is summarized as follows:

	As of and for the Six Months Ended June 30, 2015			As of and for the Year Ended December 31, 2014
	(In Thousands)
Foreclosed properties at the beginning of the period	$	1,693		$	333
Foreclosed properties acquired in acquisition, at fair value	—			1,605
Loans transferred to foreclosed properties, at lower of cost or fair value	289			—
Proceeds from sale of foreclosed properties	(143		)	(255		)
Net gain on sale of foreclosed properties	16			14
Impairment valuation	(1		)	(4		)
Foreclosed properties at the end of the period	$	1,854		$	1,693

Fair Value of Financial Instruments

The Corporation is required to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions, consistent with exit price concepts for fair value measurements, are set forth below:

	June 30, 2015
	Carrying Amount		Fair Value
			Total		Level 1		Level 2		Level 3
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	88,848	$	88,856	$	73,693	$	6,663	$	8,500
Securities available-for-sale	146,342		146,342		—		146,342		—
Securities held-to-maturity	39,428		39,419		—		39,419		—
Loans held for sale	1,274		1,274		—		1,274		—
Loans and lease receivables, net	1,334,091		1,365,475		—		7,573		1,357,902
Federal Home Loan Bank and Federal Reserve Bank stock	2,891		2,891		—		—		2,891
Cash surrender value of life insurance	27,785		27,785		27,785		—		—
Accrued interest receivable	4,159		4,159		4,159		—		—
Interest rate swaps	519		519		—		519		—
Financial liabilities:
Deposits	$	1,471,068	$	1,473,706	$	916,622	$	557,084	$	—
Federal Home Loan Bank and other borrowings	47,401		45,477		—		45,477		—
Junior subordinated notes	10,315		7,084		—		—		7,084
Interest rate swaps	519		519		—		519		—
Accrued interest payable	1,618		1,618		1,618		—		—
Off-balance-sheet items:
Standby letters of credit	124		124		—		—		124
Commitments to extend credit	—		*		*		*		*

*Not meaningful

	December 31, 2014
	Carrying Amount		Fair Value
			Total		Level 1		Level 2		Level 3
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	103,237	$	103,227	$	85,937	$	6,890	$	10,400
Securities available-for-sale	144,698		144,698		—		144,698		—
Securities held-to-maturity	41,563		41,694		—		41,694		—
Loans held for sale	1,340		1,340		—		1,340		—
Loans and lease receivables, net	1,265,098		1,285,162		—		7,025		1,278,137
Federal Home Loan Bank and Federal Reserve Bank stock	2,340		2,340		—		—		2,340
Cash surrender value of life insurance	27,314		27,314		27,314		—		—
Accrued interest receivable	3,932		3,932		3,932		—		—
Interest rate swaps	575		575		—		575		—
Financial liabilities:
Deposits	$	1,438,268	$	1,440,248	$	884,292	$	555,956	$	—
Federal Home Loan Bank and other borrowings	33,994		34,590		—		34,590		—
Junior subordinated notes	10,315		7,101		—		—		7,101
Interest rate swaps	575		575		—		575		—
Accrued interest payable	1,574		1,574		1,574		—		—
Off-balance-sheet items:
Standby letters of credit	192		192		—		—		192
Commitments to extend credit	—		*		*		*		*

*Not meaningful

Disclosure of fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the Consolidated Balance Sheets. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Certain financial instruments and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not necessarily represent the underlying value of the Corporation.

Cash and cash equivalents: The carrying amounts reported for cash and due from banks, interest-bearing deposits held by the Corporation, accrued interest receivable and accrued interest payable approximate fair value because of their immediate availability and because they do not present unanticipated credit concerns. The carrying value of commercial paper, included in the cash and cash equivalents category, approximates fair value due to the short-term maturity structure of the instrument. As of June 30, 2015 and December 31, 2014, the Corporation held $8.5 million and $10.4 million, respectively, of commercial paper. The fair value of commercial paper is considered a Level 3 input due to the lack of available independent pricing sources. The carrying value of brokered certificates of deposit purchased is equivalent to the purchase price of the instruments as the Corporation has not elected a fair value option for these instruments. The fair value of brokered certificates of deposits purchased is based on the discounted value of contractual cash flows using a discount rate reflective of rates currently offered for deposits of similar remaining maturities. As of June 30, 2015 and December 31, 2014, the Corporation held $6.7 million and $6.9 million, respectively, of brokered certificates of deposits.

Securities: The fair value measurements of investment securities are determined by a third-party pricing service which considers observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, trade execution data, market consensus prepayment speeds, credit information and the securities’ terms and conditions, among other things. The fair value measurements are subject to independent verification to another pricing source on a quarterly basis to review for reasonableness. Any significant differences in pricing are reviewed with appropriate members of management who have the relevant technical expertise to assess the results. The Corporation has determined that these valuations are classified in Level 2 of the fair value hierarchy. When the independent pricing service does not provide a fair value measurement for a particular security, the Corporation will estimate the fair value based on specific information about each security. Fair values derived in this manner are classified in Level 3 of the fair value hierarchy.

Loans Held for Sale: Loans held for sale, which consist of residential real estate mortgage loans and the guaranteed portion of SBA loans, are carried at the lower of cost or estimated fair value. The estimated fair value was based on what secondary markets are currently offering for portfolios with similar characteristics.

Loans and Leases: The fair value estimation process for the loan portfolio uses an exit price concept and reflects discounts that the Corporation believes are consistent with liquidity discounts in the market place. Fair values are estimated for portfolios of loans with similar financial characteristics. The fair value of performing and nonperforming loans is calculated by discounting scheduled and expected cash flows through the estimated maturity using estimated market rates that reflect the credit and interest rate risk inherent in the portfolio of loans and then applying a discount factor based upon the embedded credit risk of the loan and the fair value of collateral securing nonperforming loans when the loan is collateral dependent. The estimate of maturity is based on the Banks’ historical experience with repayments for each loan classification, modified, as required, by an estimate of the effect of current economic and lending conditions. Significant unobservable inputs include, but are not limited to, discounts (investor yield premiums) applied to fair value calculations to further determine the exit price value of a portfolio of loans.

Federal Home Loan Bank and Federal Reserve Bank Stock: The carrying amount of FHLB and FRB stock equals its fair value because the shares may be redeemed by the FHLB and the FRB at their carrying amount of $100 per share.

Cash Surrender Value of Life Insurance: The carrying amount of the cash surrender value of life insurance approximates its fair value as the carrying value represents the current settlement amount.

Deposits: The fair value of deposits with no stated maturity, such as demand deposits and money market accounts, is equal to the amount payable on demand. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The fair value estimates do not include the intangible value that results from the funding provided by deposit liabilities compared to borrowing funds in the market.

Borrowed Funds: Market rates currently available to the Corporation and Banks for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

Financial Instruments with Off-Balance-Sheet Risks: The fair value of the Corporation’s off-balance-sheet instruments is based on quoted market prices and fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the credit standing of the related counterparty. Commitments to extend credit and standby letters of credit are generally not marketable. Furthermore, interest rates on any amounts drawn under such commitments would generally be established at market rates at the time of the draw. Fair value would principally derive from the present value of fees received for those products.

Interest Rate Swaps: The carrying amount and fair value of existing derivative financial instruments are based upon independent valuation models, which use widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative contract. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Corporation considers the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Limitations: Fair value estimates are made at a discrete point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Corporation’s entire holding of a particular financial instrument. Because no market exists for a significant portion of the Corporation’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and are not considered in the estimates.

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Fair Value Disclosures (Narrative Disclosures) (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2015 USD ($) foreclosed_property	Dec. 31, 2014 USD ($)
Fair Value Inputs, Assets, Quantitative Information
Fair value, assets, level 1 to level 2 transfers	$ 0	$ 0
Fair value, assets, level 2 to Level 1 transfers	0	0
Fair value, assets, transfers into level 3	0	0
Fair value, assets, transfers out of level 3	0	0
Fair value, liabilities, level 1 to level 2 transfers	0	0
Fair value, liabilities, level 2 to level 1 transfers	0	0
Fair value, liabilities, transfers into level 3	0	0
Fair value, liabilities, transfers out of level 3	0	0
Impairment of Real Estate	1,000	4,000
Commercial paper, at carrying value	8,500,000	10,400,000
Certificates of deposit, at carrying value	$ 6,700,000	6,900,000
Minimum
Fair Value Inputs, Assets, Quantitative Information
Quantification of unobservable inputs for level 3 values for impaired loans	10.00%
Maximum
Fair Value Inputs, Assets, Quantitative Information
Quantification of unobservable inputs for level 3 values for impaired loans	100.00%
Weighted Average
Fair Value Inputs, Assets, Quantitative Information
Quantification of unobservable inputs for level 3 values for impaired loans	44.00%
Impaired loans
Fair Value Inputs, Assets, Quantitative Information
Assets measured on a non-recurring basis, fair value	$ 8,795,000	8,565,000
Loan servicing rights
Fair Value Inputs, Assets, Quantitative Information
Assets measured on a non-recurring basis, fair value	1,168,000	943,000
Foreclosed properties
Fair Value Inputs, Assets, Quantitative Information
Assets measured on a non-recurring basis, fair value	1,854,000	1,693,000
Fair Value Measurements - Level 3 Inputs | Impaired loans
Fair Value Inputs, Assets, Quantitative Information
Assets measured on a non-recurring basis, fair value	1,222,000	1,540,000
Fair Value Measurements - Level 3 Inputs | Loan servicing rights
Fair Value Inputs, Assets, Quantitative Information
Assets measured on a non-recurring basis, fair value	1,168,000	943,000
Fair Value Measurements - Level 3 Inputs | Foreclosed properties
Fair Value Inputs, Assets, Quantitative Information
Assets measured on a non-recurring basis, fair value	$ 0	$ 0
Assets, fair value disclosure, nonrecurring, number of foreclosed properties | foreclosed_property	0

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Derivative Financial Instruments (Narrative Disclosures) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Derivatives
Derivative Instruments in Hedges, at Fair Value, Net	$ 0
Interest rate swap contracts not designated as hedging instruments - assets, gross	519	$ 575
Interest rate swap contracts not designated as hedging instruments - liabilities, gross	519	$ 575
Derivative asset, fair value, amount offset against collateral	$ 0
Interest rate derivatives, line item on income statement for gain (loss)	other non-interest income
To commercial borrowers, corporation receives fixed rates and pays floating rates
Derivatives
Interest rate swap contracts not designated as hedging instruments - assets, gross	$ 519
To commercial borrowers, corporation receives fixed rates and pays floating rates | Minimum
Derivatives
Derivative, maturity date	Mar. 15, 2016
To commercial borrowers, corporation receives fixed rates and pays floating rates | Maximum
Derivatives
Derivative, maturity date	Feb. 15, 2023
To dealer countparties, corporation pays fixed rates and receives floating rates
Derivatives
Interest rate swap contracts not designated as hedging instruments - liabilities, gross	$ 519
Interest rate derivative instruments not designated as hedging instruments at fair value, net	$ 519
To dealer countparties, corporation pays fixed rates and receives floating rates | Minimum
Derivatives
Derivative, maturity date	Mar. 15, 2016
To dealer countparties, corporation pays fixed rates and receives floating rates | Maximum
Derivatives
Derivative, maturity date	Feb. 15, 2023
Not Designated as Hedging Instrument | To commercial borrowers, corporation receives fixed rates and pays floating rates
Derivatives
Notional value of interest rate swaps with various commercial borrowers	$ 27,300
Not Designated as Hedging Instrument | To dealer countparties, corporation pays fixed rates and receives floating rates
Derivatives
Notional value of interest rate swaps with various commercial borrowers	$ 27,300

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Fair Value Disclosures (Fair Value by Balance Sheet Groupings) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013
Financial assets:
Cash and cash equivalents, carrying amount	$ 88,848	$ 103,237	$ 85,977	$ 81,286
Securities available-for-sale, carrying amount	146,342	144,698
Securities held-to-maturity, carrying amount	39,428	41,563
Loans held for sale, carrying amount	1,274	1,340
Loans and leases receivable, net amount, carrying amount	1,334,091	1,265,098
Federal Home Loan Bank and Federal Reserve Bank stock, carrying amount	2,891	2,340
Cash surrender value of life insurance, carrying amount	27,785	27,314
Accrued interest receivable, carrying amount	4,159	3,932
Interest rate swaps - assets, carrying amount	519	575
Cash and cash equivalents, fair value	88,856	103,227
Securities available-for-sale, fair value	146,342	144,698
Held-to-maturity Securities, fair value	39,419	41,694
Loans Held-for-sale, Fair Value Disclosure	1,274	1,340
Loans and lease receivables, net, fair value	1,365,475	1,285,162
Federal Home Loan Bank and Federal Reserve Bank stock, fair value	2,891	2,340
Cash surrender value of life insurance, fair value	27,785	27,314
Accrued interest receivable, fair value	4,159	3,932
Interest rate swaps - assets, fair value	519	575
Financial liabilities:
Deposits, carrying amount	1,471,068	1,438,268
Federal Home Loan Bank and other borrowings, carrying amount	47,401	33,994
Junior subordinated notes, carrying amount	10,315	10,315
Interest rate swaps - liabilities, carrying amount	519	575
Accrued interest payable, carrying amount	1,618	1,574
Standby letters of credit, carrying amount	124	192
Commitments to extend credit, carrying amount	0	0
Deposits, fair value	1,473,706	1,440,248
Federal Home Loan Bank and other borrowings fair value	45,477	34,590
Junior subordinated notes, fair value	7,084	7,101
Interest rate swaps - liabilities, fair value	519	575
Accrued interest payable, fair value	1,618	1,574
Standby letters of credit, fair value	124	192
Fair Value Measurements - Level 1 Inputs
Financial assets:
Cash and cash equivalents, fair value	73,693	85,937
Securities available-for-sale, fair value	0	0
Held-to-maturity Securities, fair value	0	0
Loans Held-for-sale, Fair Value Disclosure	0	0
Loans and lease receivables, net, fair value	0	0
Federal Home Loan Bank and Federal Reserve Bank stock, fair value	0	0
Cash surrender value of life insurance, fair value	27,785	27,314
Accrued interest receivable, fair value	4,159	3,932
Interest rate swaps - assets, fair value	0	0
Financial liabilities:
Deposits, fair value	916,622	884,292
Federal Home Loan Bank and other borrowings fair value	0	0
Junior subordinated notes, fair value	0	0
Interest rate swaps - liabilities, fair value	0	0
Accrued interest payable, fair value	1,618	1,574
Standby letters of credit, fair value	0	0
Fair Value Measurements - Level 2 Inputs
Financial assets:
Cash and cash equivalents, fair value	6,663	6,890
Securities available-for-sale, fair value	146,342	144,698
Held-to-maturity Securities, fair value	39,419	41,694
Loans Held-for-sale, Fair Value Disclosure	1,274	1,340
Loans and lease receivables, net, fair value	7,573	7,025
Federal Home Loan Bank and Federal Reserve Bank stock, fair value	0	0
Cash surrender value of life insurance, fair value	0	0
Accrued interest receivable, fair value	0	0
Interest rate swaps - assets, fair value	519	575
Financial liabilities:
Deposits, fair value	557,084	555,956
Federal Home Loan Bank and other borrowings fair value	45,477	34,590
Junior subordinated notes, fair value	0	0
Interest rate swaps - liabilities, fair value	519	575
Accrued interest payable, fair value	0	0
Standby letters of credit, fair value	0	0
Fair Value Measurements - Level 3 Inputs
Financial assets:
Cash and cash equivalents, fair value	8,500	10,400
Securities available-for-sale, fair value	0	0
Held-to-maturity Securities, fair value	0	0
Loans Held-for-sale, Fair Value Disclosure	0	0
Loans and lease receivables, net, fair value	1,357,902	1,278,137
Federal Home Loan Bank and Federal Reserve Bank stock, fair value	2,891	2,340
Cash surrender value of life insurance, fair value	0	0
Accrued interest receivable, fair value	0	0
Interest rate swaps - assets, fair value	0	0
Financial liabilities:
Deposits, fair value	0	0
Federal Home Loan Bank and other borrowings fair value	0	0
Junior subordinated notes, fair value	7,084	7,101
Interest rate swaps - liabilities, fair value	0	0
Accrued interest payable, fair value	0	0
Standby letters of credit, fair value	$ 124	$ 192

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Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Basic earnings per common share
Net income	$ 3,858	$ 3,505	$ 8,050	$ 6,842
Less: earnings allocated to participating securities	65	75	138	147
Basic earnings allocated to common shareholders	$ 3,793	$ 3,430	$ 7,912	$ 6,695
Weighted-average common shares outstanding, excluding participating securities	4,261,127	3,860,087	4,261,218	3,859,795
Basic earnings per common share	$ 0.89	$ 0.89	$ 1.86	$ 1.73
Diluted earnings per common share
Earnings allocated to common shareholders	$ 3,793	$ 3,430	$ 7,912	$ 6,695
Reallocation of undistributed earnings	0	0	0	0
Diluted earnings allocated to common shareholders	$ 3,793	$ 3,430	$ 7,912	$ 6,695
Weighted-average common shares outstanding, excluding participating securities	4,261,127	3,860,087	4,261,218	3,859,795
Dilutive effect of share-based awards	0	23,268	1,121	22,203
Weighted-average diluted common shares outstanding, excluding participating securities	4,261,127	3,883,355	4,262,339	3,881,998
Diluted earnings per common share	$ 0.89	$ 0.88	$ 1.86	$ 1.72

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Non-accrual Loans) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Impaired
Non-accrual loans and leases	$ 15,198	$ 9,792
Foreclosed properties, net	1,854	1,693		$ 333
Total non-performing assets	17,142	11,795
Performing troubled debt restructurings	1,944	2,003
Total impaired assets	$ 18,996	$ 13,488
Total non-accrual loans and leases to gross loans and leases	1.12%	0.76%
Total non-performing assets to total gross loans and leases plus foreclosed properties, net	1.26%	0.89%
Total non-performing assets to total assets	1.01%	0.70%
Allowance for loan and lease losses to gross loans and leases	1.12%	1.12%	1.39%
Allowance for loan and lease losses to non-accrual loans and leases	100.01%	146.33%
Commercial real estate — owner occupied
Financing Receivable, Impaired
Non-accrual loans and leases	$ 579	$ 500
Commercial real estate — non-owner occupied
Financing Receivable, Impaired
Non-accrual loans and leases	282	286
Construction and land development
Financing Receivable, Impaired
Non-accrual loans and leases	4,539	4,932
Multi-family
Financing Receivable, Impaired
Non-accrual loans and leases	10	17
1-4 family
Financing Receivable, Impaired
Non-accrual loans and leases	1,316	690
Total non-accrual commercial real estate
Financing Receivable, Impaired
Non-accrual loans and leases	$ 6,726	6,425
Allowance for loan and lease losses to gross loans and leases	1.03%		1.38%
Commercial and industrial
Financing Receivable, Impaired
Non-accrual loans and leases	$ 7,378	2,318
Direct financing leases, net
Financing Receivable, Impaired
Non-accrual loans and leases	0	0
Home equity and second mortgages
Financing Receivable, Impaired
Non-accrual loans and leases	403	329
Other
Financing Receivable, Impaired
Non-accrual loans and leases	691	720
Total non-accrual consumer and other loans
Financing Receivable, Impaired
Non-accrual loans and leases	$ 1,094	$ 1,049
Allowance for loan and lease losses to gross loans and leases	1.14%		1.54%

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Share-Based Compensation (Policies)

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based Compensation, Option and Incentive Plans Policy

The Corporation adopted the 2012 Equity Incentive Plan (the “Plan”) during the quarter ended June 30, 2012. The Plan is administered by the Compensation Committee of the Board of Directors of the Corporation and provides for the grant of equity ownership opportunities through incentive stock options and nonqualified stock options (together, “Stock Options”), restricted stock, restricted stock units, dividend equivalent units, and any other type of award permitted by the Plan. As of June 30, 2015, 178,738 shares were available for future grants under the Plan. Shares covered by awards that expire, terminate or lapse will again be available for the grant of awards under the Plan. The Corporation may issue new shares and shares from treasury for shares delivered under the Plan.

Stock Options

The Corporation may grant Stock Options to senior executives and other employees under the Plan. Stock Options generally have an exercise price that is equal to the fair value of the common shares on the date the option is awarded. Stock Options granted under the Plan are subject to graded vesting, generally ranging from 4 years to 8 years, and have a contractual term of 10 years. For any new awards issued, compensation expense is recognized over the requisite service period for the entire award on a straight-line basis. No Stock Options have been granted since the Corporation became a reporting company under the Securities Exchange Act of 1934, as amended, and no Stock Options have been modified, repurchased or canceled since such time. For that reason, no stock-based compensation related to Stock Options was recognized in the Consolidated Financial Statements for the three and six months ended June 30, 2015 and 2014. As of June 30, 2015, all Stock Options granted and not previously forfeited have vested. The benefits of tax deductions as a result of disqualifying dispositions upon exercise of stock options are recognized as a financing cash flow.

Restricted Stock

Under the Plan, the Corporation may grant restricted shares to plan participants, subject to forfeiture upon the occurrence of certain events until the dates specified in the participant’s award agreement. While the restricted shares are subject to forfeiture, the participant may exercise full voting rights and will receive all dividends and other distributions paid with respect to the restricted shares. The restricted shares granted under the Plan are subject to graded vesting. Compensation expense is recognized over the requisite service period of generally four years for the entire award on a straight-line basis. Upon vesting of restricted share awards, the benefit of tax deductions in excess of recognized compensation expense is recognized as a financing cash flow activity.

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Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity

Stock Option activity for the year ended December 31, 2014 and six months ended June 30, 2015 was as follows:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Outstanding at December 31, 2013	51,000		$	24.24	0.88
Granted	—		—
Exercised	(39,000	)	24.00
Expired	—		—
Forfeited	—		—
Outstanding at December 31, 2014	12,000		$	25.00	0.13
Exercisable at December 31, 2014	12,000		$	25.00	0.13
Outstanding as of December 31, 2014	12,000		$	25.00	0.13
Granted	—		—
Exercised	(12,000	)	25.00
Expired	—		—
Forfeited	—		—
Outstanding as of June 30, 2015	—		$	—
Exercisable at June 30, 2015	—		$	—

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

Restricted share activity for the year ended December 31, 2014 and the six months ended June 30, 2015 was as follows:

	Number of Restricted Shares		Weighted Average Grant-Date Fair Value
Nonvested balance as of December 31, 2013	84,709		$	23.10
Granted	32,261		44.98
Vested	(39,471	)	19.71
Forfeited	—		—
Nonvested balance as of December 31, 2014	77,499		33.94
Granted	500		46.60
Vested	(913	)	44.23
Forfeited	(4,469	)	31.37
Nonvested balance as of June 30, 2015	72,617		$	34.05

Schedule of Share-based Compensation Expense

For the three and six months ended June 30, 2015 and 2014, share-based compensation expense related to restricted stock included in the Consolidated Statements of Income was as follows:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2015		2014		2015		2014
	(In Thousands)
Share-based compensation expense	$	215	$	196	$	449	$	389

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Loans by Credit Quality Indicator) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Financing Receivable, Recorded Investment
Commercial real estate — owner occupied	$ 169,768	$ 163,884
Commercial real estate — non-owner occupied	400,018	417,962
Construction and land development	140,318	121,160
Multi-family	86,912	72,578
1-4 family	47,091	36,182
Total commercial real estate	844,107	811,766
Commercial and industrial	454,868	416,654
Direct financing leases, net	28,723	34,165
Home equity and second mortgages	9,466	7,866
Other	14,547	11,341
Total consumer and other	24,013	19,207
Total gross loans and leases receivable	$ 1,351,711	$ 1,281,792	$ 1,008,615
Category as a % of total portfolio	100.00%	100.00%
Category I
Financing Receivable, Recorded Investment
Commercial real estate — owner occupied	$ 137,582	$ 131,094
Commercial real estate — non-owner occupied	372,874	378,671
Construction and land development	121,404	100,934
Multi-family	85,641	70,897
1-4 family	37,919	25,997
Total commercial real estate	755,420	707,593
Commercial and industrial	407,737	383,755
Direct financing leases, net	26,633	32,756
Home equity and second mortgages	8,359	7,039
Other	13,856	10,570
Total consumer and other	22,215	17,609
Total gross loans and leases receivable	$ 1,212,005	$ 1,141,713
Category as a % of total portfolio	89.66%	89.07%
Category II
Financing Receivable, Recorded Investment
Commercial real estate — owner occupied	$ 18,053	$ 15,592
Commercial real estate — non-owner occupied	24,903	20,823
Construction and land development	8,370	8,193
Multi-family	367	751
1-4 family	4,755	5,278
Total commercial real estate	56,448	50,637
Commercial and industrial	10,501	18,524
Direct financing leases, net	1,382	1,120
Home equity and second mortgages	447	205
Other	0	50
Total consumer and other	447	255
Total gross loans and leases receivable	$ 68,778	$ 70,536
Category as a % of total portfolio	5.09%	5.50%
Category III
Financing Receivable, Recorded Investment
Commercial real estate — owner occupied	$ 13,480	$ 16,621
Commercial real estate — non-owner occupied	1,334	17,498
Construction and land development	5,927	6,876
Multi-family	894	913
1-4 family	2,057	3,336
Total commercial real estate	23,692	45,244
Commercial and industrial	29,224	12,026
Direct financing leases, net	708	289
Home equity and second mortgages	162	189
Other	0	0
Total consumer and other	162	189
Total gross loans and leases receivable	$ 53,786	$ 57,748
Category as a % of total portfolio	3.98%	4.51%
Category IV
Financing Receivable, Recorded Investment
Commercial real estate — owner occupied	$ 653	$ 577
Commercial real estate — non-owner occupied	907	970
Construction and land development	4,617	5,157
Multi-family	10	17
1-4 family	2,360	1,571
Total commercial real estate	8,547	8,292
Commercial and industrial	7,406	2,349
Direct financing leases, net	0	0
Home equity and second mortgages	498	433
Other	691	721
Total consumer and other	1,189	1,154
Total gross loans and leases receivable	$ 17,142	$ 11,795
Category as a % of total portfolio	1.27%	0.92%

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Securities (Held-to-Maturity Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule of Held-to-maturity Securities
Amortized cost	$ 39,428	$ 41,563
Gross unrecognized holding gains	125	216
Gross unrecognized holding losses	(134)	(85)
Estimated Fair Value	39,419	41,694
U.S. Government agency obligations - government-sponsored enterprises
Schedule of Held-to-maturity Securities
Amortized cost	1,494	1,490
Gross unrecognized holding gains	4	0
Gross unrecognized holding losses	(9)	(17)
Estimated Fair Value	1,489	1,473
Municipal obligations
Schedule of Held-to-maturity Securities
Amortized cost	16,063	16,088
Gross unrecognized holding gains	48	85
Gross unrecognized holding losses	(40)	(18)
Estimated Fair Value	16,071	16,155
Collateralized mortgage obligations - government issued
Schedule of Held-to-maturity Securities
Amortized cost	13,106	14,505
Gross unrecognized holding gains	73	57
Gross unrecognized holding losses	(39)	(31)
Estimated Fair Value	13,140	14,531
Collateralized mortgage obligations - government-sponsored enterprises
Schedule of Held-to-maturity Securities
Amortized cost	8,765	9,480
Gross unrecognized holding gains	0	74
Gross unrecognized holding losses	(46)	(19)
Estimated Fair Value	$ 8,719	$ 9,535

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Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 3,858	$ 3,505	$ 8,050	$ 6,842
Other comprehensive income, before tax
Unrealized securities (losses) gains arising during the period	(910)	1,793	(145)	2,142
Unrealized losses transferred to held-to-maturity	0	874	0	874
Amortization of net unrealized losses transferred from available-for-sale	64	25	127	25
Income tax benefit (expense)	327	(364)	7	(499)
Comprehensive income	$ 3,339	$ 4,085	$ 8,039	$ 7,636

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Earnings Per Common Share

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Common Share

Earnings Per Common Share

Earnings per common share are computed using the two-class method. Basic earnings per common share are computed by dividing net income allocated to common shares by the weighted average number of shares outstanding during the applicable period, excluding outstanding participating securities. Participating securities include unvested restricted shares. Unvested restricted shares are considered participating securities because holders of these securities receive non-forfeitable dividends at the same rate as holders of the Corporation’s common stock. Diluted earnings per share are computed by dividing net income allocated to common shares adjusted for reallocation of undistributed earnings of unvested restricted shares by the weighted average number of shares determined for the basic earnings per common share computation plus the dilutive effect of common stock equivalents using the treasury stock method.

For both the three and six month periods ending June 30, 2015 and 2014, there were no average anti-dilutive employee share-based awards.

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2015		2014		2015		2014
	(Dollars in Thousands, Except Per Share Data)
Basic earnings per common share
Net income	$	3,858	$	3,505	$	8,050	$	6,842
Less: earnings allocated to participating securities	65		75		138		147
Basic earnings allocated to common shareholders	$	3,793	$	3,430	$	7,912	$	6,695
Weighted-average common shares outstanding, excluding participating securities	4,261,127		3,860,087		4,261,218		3,859,795
Basic earnings per common share	$	0.89	$	0.89	$	1.86	$	1.73
Diluted earnings per common share
Earnings allocated to common shareholders	$	3,793	$	3,430	$	7,912	$	6,695
Reallocation of undistributed earnings	—		—		—		—
Diluted earnings allocated to common shareholders	$	3,793	$	3,430	$	7,912	$	6,695
Weighted-average common shares outstanding, excluding participating securities	4,261,127		3,860,087		4,261,218		3,859,795
Dilutive effect of share-based awards	—		23,268		1,121		22,203
Weighted-average diluted common shares outstanding, excluding participating securities	4,261,127		3,883,355		4,262,339		3,881,998
Diluted earnings per common share	$	0.89	$	0.88	$	1.86	$	1.72

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FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable (Composition of Borrowed Funds) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Composition of Borrowed Funds [Line Items]
Borrowed funds	$ 57,716	$ 44,309
Borrowed funds, average balance	$ 51,253	$ 29,020
Borrowed funds, interest rate during period	5.68%	7.24%
Long-term borrowings
Composition of Borrowed Funds [Line Items]
Borrowed funds	$ 39,706	$ 42,299
Short-term borrowings
Composition of Borrowed Funds [Line Items]
Borrowed funds	18,010	2,010
Federal funds purchased
Composition of Borrowed Funds [Line Items]
Borrowed funds	0	0
Borrowed funds, average balance	$ 224	$ 237
Borrowed funds, interest rate during period	0.81%	0.82%
FHLB advances and other borrowings
Composition of Borrowed Funds [Line Items]
Borrowed funds	$ 22,965	$ 10,058
Borrowed funds, average balance	$ 16,770	$ 5,093
Borrowed funds, interest rate during period	0.99%	0.56%
Line of credit
Composition of Borrowed Funds [Line Items]
Borrowed funds	$ 1,510	$ 1,010
Borrowed funds, average balance	$ 1,018	$ 13
Borrowed funds, interest rate during period	3.17%	3.30%
Subordinated notes payable
Composition of Borrowed Funds [Line Items]
Borrowed funds	$ 22,926	$ 22,926
Borrowed funds, average balance	$ 22,926	$ 13,362
Borrowed funds, interest rate during period	6.96%	7.07%
Junior subordinated notes
Composition of Borrowed Funds [Line Items]
Borrowed funds	$ 10,315	$ 10,315
Borrowed funds, average balance	$ 10,315	$ 10,315
Borrowed funds, interest rate during period	10.70%	10.78%

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Securities (Tables)

6 Months Ended

Jun. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale Securities

The amortized cost and estimated fair value of securities available-for-sale and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:

	As of June 30, 2015
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses			Estimated fair value
	(In Thousands)
Available-for-sale:
U.S. Government agency obligations - government-sponsored enterprises	$	8,047	$	13	$	(37	)	$	8,023
Municipal obligations	3,254		4		(11		)	3,247
Asset-backed securities	1,441		4		—			1,445
Collateralized mortgage obligations - government issued	54,918		1,178		(114		)	55,982
Collateralized mortgage obligations - government-sponsored enterprises	77,765		233		(353		)	77,645
	$	145,425	$	1,432	$	(515	)	$	146,342

	As of December 31, 2014
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses			Estimated fair value
	(In Thousands)
Available-for-sale:
U.S. Government agency obligations - government-sponsored enterprises	$	9,046	$	—	$	(81	)	$	8,965
Municipal obligations	573		5		—			578
Asset-backed securities	1,514		$	—	(4		)	1,510
Collateralized mortgage obligations - government issued	67,740		1,390		(256		)	68,874
Collateralized mortgage obligations - government-sponsored enterprises	64,763		234		(226		)	64,771
	$	143,636	$	1,629	$	(567	)	$	144,698

Schedule of Held-to-maturity Securities

The amortized cost and estimated fair value of securities held-to-maturity and the corresponding amounts of gross unrecognized gains and losses were as follows:

	As of June 30, 2015
	Amortized cost		Gross unrecognized holding gains		Gross unrecognized holding losses			Estimated fair value
	(In Thousands)
Held-to-maturity:
U.S. Government agency obligations - government-sponsored enterprises	$	1,494	$	4	$	(9	)	$	1,489
Municipal obligations	16,063		48		(40		)	16,071
Collateralized mortgage obligations - government issued	13,106		73		(39		)	13,140
Collateralized mortgage obligations - government-sponsored enterprises	8,765		—		(46		)	8,719
	$	39,428	$	125	$	(134	)	$	39,419

	As of December 31, 2014
	Amortized cost		Gross unrecognized holding gains		Gross unrecognized holding losses			Estimated fair value
	(In Thousands)
Held-to-maturity:
U.S. Government agency obligations - government-sponsored enterprises	$	1,490	$	—	$	(17	)	$	1,473
Municipal obligations	16,088		85		(18		)	16,155
Collateralized mortgage obligations - government issued	14,505		57		(31		)	14,531
Collateralized mortgage obligations - government-sponsored enterprises	9,480		74		(19		)	9,535
	$	41,563	$	216	$	(85	)	$	41,694

Investments Classified by Contractual Maturity

The amortized cost and estimated fair value of securities by contractual maturity at June 30, 2015 are shown below. Actual maturities may differ from contractual maturities because issuers have the right to call or prepay certain obligations without call or prepayment penalties.

	Available-for-Sale				Held-to-Maturity
	Amortized cost		Estimated fair value		Amortized cost		Estimated fair value
	(In Thousands)
Due in one year or less	$	—	$	—	$	—	$	—
Due in one year through five years	10,384		10,360		3,389		3,383
Due in five through ten years	84,949		85,407		13,668		13,681
Due in over ten years	50,092		50,575		22,371		22,355
	$	145,425	$	146,342	$	39,428	$	39,419

Schedule of Unrealized Loss on Investments [Table Text Block]

A summary of unrealized loss information for securities available-for-sale, categorized by security type follows:

	As of June 30, 2015
	Less than 12 months				12 months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(In Thousands)
Available-for-sale:
U.S. Government agency obligations - government-sponsored enterprises	$	999	$	1	$	3,714	$	36	$	4,713	$	37
Municipal obligations	2,423		11		—		—		2,423		11
Collateralized mortgage obligations - government issued	2,970		14		6,878		100		9,848		114
Collateralized mortgage obligations - government-sponsored enterprises	40,081		292		4,604		61		44,685		353
	$	46,473	$	318	$	15,196	$	197	$	61,669	$	515

	As of December 31, 2014
	Less than 12 months				12 months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(In Thousands)
Available-for-sale:
U.S. Government agency obligations - government-sponsored enterprises	$	3,486	$	12	$	5,479	$	69	$	8,965	$	81
Asset-backed securities	—		$	—	1,510		4		1,510		4
Collateralized mortgage obligations - government issued	9,201		50		9,536		206		18,737		256
Collateralized mortgage obligations - government-sponsored enterprises	29,498		97		4,993		129		34,491		226
	$	42,185	$	159	$	21,518	$	408	$	63,703	$	567

A summary of unrecognized loss information for securities held-to-maturity, categorized by security type follows:

	As of June 30, 2015
	Less than 12 months				12 months or longer				Total
	Fair value		Unrecognized losses		Fair value		Unrecognized losses		Fair value		Unrecognized losses
	(In Thousands)
Held-to-maturity:
U.S. Government agency obligations - government-sponsored enterprises	$	—	$	—	$	1,000	$	9	$	1,000	$	9
Municipal obligations	4,217		28		398		12		4,615		40
Collateralized mortgage obligations - government issued	6,426		39		—		—		6,426		39
Collateralized mortgage obligations - government-sponsored enterprises	8,765		46		—		—		8,765		46
	$	19,408	$	113	$	1,398	$	21	$	20,806	$	134

	As of December 31, 2014
	Less than 12 months				12 months or longer				Total
	Fair value		Unrecognized losses		Fair value		Unrecognized losses		Fair value		Unrecognized losses
	(In Thousands)
Held-to-maturity:
U.S. Government agency obligations - government-sponsored enterprises	$	1,490	$	17	$	—	$	—	$	1,490	$	17
Municipal obligations	2,222		18		—		—		2,222		18
Collateralized mortgage obligations - government issued	3,247		31		—		—		3,247		31
Collateralized mortgage obligations - government-sponsored enterprises	3,076		19		—		—		3,076		19
	$	10,035	$	85	$	—	$	—	$	10,035	$	85

XML

Label	Element	Value
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield	us-gaap_CertainLoansAcquiredInTransferNotAccountedForAsDebtSecuritiesAccretableYield	$ 683

XML

Share-Based Compensation (Share-Based Payment Plan Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based compensation	$ 215	$ 196	$ 449	$ 389

XML

Earnings Per Common Share (Policies)

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Share, Policy

Earnings per common share are computed using the two-class method. Basic earnings per common share are computed by dividing net income allocated to common shares by the weighted average number of shares outstanding during the applicable period, excluding outstanding participating securities. Participating securities include unvested restricted shares. Unvested restricted shares are considered participating securities because holders of these securities receive non-forfeitable dividends at the same rate as holders of the Corporation’s common stock. Diluted earnings per share are computed by dividing net income allocated to common shares adjusted for reallocation of undistributed earnings of unvested restricted shares by the weighted average number of shares determined for the basic earnings per common share computation plus the dilutive effect of common stock equivalents using the treasury stock method.