Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated Filer | ☐ | Non-Accelerated Filer | ☐ | |||||||||||||
Smaller Reporting Company | Emerging Growth Company |
Page No. | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
ASC | Accounting Standards Codification | ||||
ASU | Accounting Standards Update | ||||
Bank | First Merchants Bank, a wholly-owned subsidiary of the Corporation | ||||
CARES Act | Coronavirus Aid, Relief and Economic Security Act | ||||
CET1 | Common Equity Tier 1 | ||||
CMT | Constant Maturity Treasury | ||||
Corporation | First Merchants Corporation | ||||
COVID-19 | 2019 novel coronavirus disease, which was declared a pandemic by the World Health Organization on March 11, 2020. | ||||
Economic Impact Payments | Economic stimulus payments of up to $1,200 per adult and $500 per child, subject to eligibility requirements and certain limitations, as established under the CARES Act and distributed by the IRS. | ||||
ESPP | Employee Stock Purchase Plan | ||||
FASB | Financial Accounting Standards Board | ||||
FDIC | Federal Deposit Insurance Corporation | ||||
Federal Reserve | Board of Governors of the Federal Reserve System | ||||
FHLB | Federal Home Loan Bank | ||||
FOMC | Federal Open Market Committee, the monetary policymaking body of the Federal Reserve System. | ||||
FTE | Fully taxable equivalent | ||||
GAAP | Generally Accepted Accounting Principles | ||||
IRS | Internal Revenue Service | ||||
MBT | MBT Financial Corp., which was acquired by the Corporation on September 1, 2019 | ||||
OREO | Other real estate owned | ||||
PPP | Paycheck Protection Program, which was established by the CARES Act and implemented by the Small Business Administration to provide small business loans. | ||||
PPPL Facility | Paycheck Protection Program Liquidity Facility, which was established by the Federal Reserve. | ||||
RSA | Restricted Stock Awards | ||||
TEFRA | Tax Equity and Fiscal Responsibility Act |
September 30, 2020 | December 31, 2019 | ||||||||||
(Unaudited) | |||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Interest-bearing deposits | |||||||||||
Investment securities available for sale | |||||||||||
Investment securities held to maturity (fair value of $ | |||||||||||
Loans held for sale | |||||||||||
Loans, net of allowance for loan losses of $ | |||||||||||
Premises and equipment | |||||||||||
Federal Home Loan Bank stock | |||||||||||
Interest receivable | |||||||||||
Goodwill | |||||||||||
Other intangibles | |||||||||||
Cash surrender value of life insurance | |||||||||||
Other real estate owned | |||||||||||
Tax asset, deferred and receivable | |||||||||||
Other assets | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES | |||||||||||
Deposits: | |||||||||||
Noninterest-bearing | $ | $ | |||||||||
Interest-bearing | |||||||||||
Total Deposits | |||||||||||
Borrowings: | |||||||||||
Federal funds purchased | |||||||||||
Securities sold under repurchase agreements | |||||||||||
Federal Home Loan Bank advances | |||||||||||
Subordinated debentures and other borrowings | |||||||||||
Total Borrowings | |||||||||||
Interest payable | |||||||||||
Other liabilities | |||||||||||
Total Liabilities | |||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES | |||||||||||
STOCKHOLDERS' EQUITY | |||||||||||
Cumulative Preferred Stock, $ | |||||||||||
Authorized - | |||||||||||
Issued and outstanding - | |||||||||||
Common Stock, $ | |||||||||||
Authorized - | |||||||||||
Issued and outstanding - | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive income | |||||||||||
Total Stockholders' Equity | |||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
INTEREST INCOME | |||||||||||||||||||||||
Loans receivable: | |||||||||||||||||||||||
Taxable | $ | $ | $ | $ | |||||||||||||||||||
Tax exempt | |||||||||||||||||||||||
Investment securities: | |||||||||||||||||||||||
Taxable | |||||||||||||||||||||||
Tax exempt | |||||||||||||||||||||||
Deposits with financial institutions | |||||||||||||||||||||||
Federal Home Loan Bank stock | |||||||||||||||||||||||
Total Interest Income | |||||||||||||||||||||||
INTEREST EXPENSE | |||||||||||||||||||||||
Deposits | |||||||||||||||||||||||
Federal funds purchased | |||||||||||||||||||||||
Securities sold under repurchase agreements | |||||||||||||||||||||||
Federal Home Loan Bank advances | |||||||||||||||||||||||
Subordinated debentures and other borrowings | |||||||||||||||||||||||
Total Interest Expense | |||||||||||||||||||||||
NET INTEREST INCOME | |||||||||||||||||||||||
Provision for loan losses | |||||||||||||||||||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | |||||||||||||||||||||||
OTHER INCOME | |||||||||||||||||||||||
Service charges on deposit accounts | |||||||||||||||||||||||
Fiduciary and wealth management fees | |||||||||||||||||||||||
Card payment fees | |||||||||||||||||||||||
Net gains and fees on sales of loans | |||||||||||||||||||||||
Derivative hedge fees | |||||||||||||||||||||||
Other customer fees | |||||||||||||||||||||||
Increase in cash surrender value of life insurance | |||||||||||||||||||||||
Gains on life insurance benefits | |||||||||||||||||||||||
Net realized gains on sales of available for sale securities | |||||||||||||||||||||||
Other income | |||||||||||||||||||||||
Total Other Income | |||||||||||||||||||||||
OTHER EXPENSES | |||||||||||||||||||||||
Salaries and employee benefits | |||||||||||||||||||||||
Net occupancy | |||||||||||||||||||||||
Equipment | |||||||||||||||||||||||
Marketing | |||||||||||||||||||||||
Outside data processing fees | |||||||||||||||||||||||
Printing and office supplies | |||||||||||||||||||||||
Intangible asset amortization | |||||||||||||||||||||||
FDIC assessments | ( | ||||||||||||||||||||||
Other real estate owned and foreclosure expenses | |||||||||||||||||||||||
Professional and other outside services | |||||||||||||||||||||||
Other expenses | |||||||||||||||||||||||
Total Other Expenses | |||||||||||||||||||||||
INCOME BEFORE INCOME TAX | |||||||||||||||||||||||
Income tax expense | |||||||||||||||||||||||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | $ | $ | $ | |||||||||||||||||||
Per Share Data: | |||||||||||||||||||||||
Basic Net Income Available to Common Stockholders | $ | $ | $ | $ | |||||||||||||||||||
Diluted Net Income Available to Common Stockholders | $ | $ | $ | $ | |||||||||||||||||||
Cash Dividends Paid | $ | $ | $ | $ | |||||||||||||||||||
Average Diluted Shares Outstanding (in thousands) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
Unrealized holding gain (loss) on securities available for sale arising during the period, net of tax of $ | |||||||||||||||||||||||
Unrealized gain (loss) on cash flow hedges arising during the period, net of tax of $ | ( | ( | ( | ||||||||||||||||||||
Reclassification adjustment for net gains included in net income, net of tax of $ | ( | ( | ( | ( | |||||||||||||||||||
Total other comprehensive income, net of tax | |||||||||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Three Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred | Common Stock | Additional | Accumulated Other | ||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Paid in Capital | Retained Earnings | Comprehensive Income | Total | ||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2020 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock ($ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Stock issued under employee benefit plans | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Stock issued under dividend reinvestment and stock purchase plan | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Restricted shares withheld for taxes | — | — | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Balances, September 30, 2020 | $ | $ | $ | $ | $ | $ |
Three Months Ended September 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred | Common Stock | Additional | Accumulated Other | ||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Paid in Capital | Retained Earnings | Comprehensive Loss | Total | ||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2019 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock ($ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock related to acquisition | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | — | — | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Stock issued under employee benefit plans | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Stock issued under dividend reinvestment and stock purchase plan | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Stock options exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Balances, September 30, 2019 | $ | $ | $ | $ | $ | $ |
Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred | Common Stock | Additional | Accumulated Other | ||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Paid in Capital | Retained Earnings | Comprehensive Income | Total | ||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2019 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock ($ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | — | — | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Stock issued under employee benefit plans | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Stock issued under dividend reinvestment and stock purchase plan | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Stock options exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Restricted shares withheld for taxes | — | — | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Balances, September 30, 2020 | $ | $ | $ | $ | $ | $ |
Nine Months Ended September 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred | Common Stock | Additional | Accumulated Other | ||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Paid in Capital | Retained Earnings | Comprehensive Loss | Total | ||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2018 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Cash dividends on common stock ($ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock related to acquisition | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Stock issued under employee benefit plans | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Stock issued under dividend reinvestment and stock purchase plan | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Stock options exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Restricted shares withheld for taxes | — | — | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Balances, September 30, 2019 | $ | $ | $ | $ | $ | $ |
Nine Months Ended | |||||||||||
September 30, 2020 | September 30, 2019 | ||||||||||
Cash Flow From Operating Activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Provision for loan losses | |||||||||||
Depreciation and amortization | |||||||||||
Change in deferred taxes | ( | ( | |||||||||
Share-based compensation | |||||||||||
Loans originated for sale | ( | ( | |||||||||
Proceeds from sales of loans held for sale | |||||||||||
Gains on sales of loans held for sale | ( | ( | |||||||||
Gains on sales of securities available for sale | ( | ( | |||||||||
Increase in cash surrender of life insurance | ( | ( | |||||||||
Gains on life insurance benefits | ( | ( | |||||||||
Change in interest receivable | ( | ( | |||||||||
Change in interest payable | ( | ||||||||||
Other adjustments | |||||||||||
Net cash provided by operating activities | |||||||||||
Cash Flows from Investing Activities: | |||||||||||
Net change in interest-bearing deposits | ( | ||||||||||
Purchases of: | |||||||||||
Securities available for sale | ( | ( | |||||||||
Securities held to maturity | ( | ( | |||||||||
Proceeds from sales of securities available for sale | |||||||||||
Proceeds from maturities of: | |||||||||||
Securities available for sale | |||||||||||
Securities held to maturity | |||||||||||
Net change in loans | ( | ( | |||||||||
Net cash and cash equivalents received in acquisition | |||||||||||
Proceeds from the sale of other real estate owned | |||||||||||
Proceeds from life insurance benefits | |||||||||||
Other adjustments | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash Flows from Financing Activities: | |||||||||||
Net change in : | |||||||||||
Demand and savings deposits | |||||||||||
Certificates of deposit and other time deposits | ( | ||||||||||
Borrowings | |||||||||||
Repayment of borrowings | ( | ( | |||||||||
Cash dividends on common stock | ( | ( | |||||||||
Stock issued under employee benefit plans | |||||||||||
Stock issued under dividend reinvestment and stock purchase plans | |||||||||||
Stock options exercised | |||||||||||
Restricted shares withheld for taxes | ( | ( | |||||||||
Repurchase of common stock | ( | ( | |||||||||
Net cash provided by financing activities | |||||||||||
Net Change in Cash and Cash Equivalents | ( | ||||||||||
Cash and Cash Equivalents, January 1 | |||||||||||
Cash and Cash Equivalents, September 30 | $ | $ | |||||||||
Additional cash flow information: | |||||||||||
Interest paid | $ | $ | |||||||||
Income tax paid (refunded) | |||||||||||
Loans transferred to other real estate owned | |||||||||||
Fixed assets transferred to other real estate owned | |||||||||||
Non-cash investing activities using trade date accounting | |||||||||||
ROU assets obtained in exchange for new operating lease liabilities | |||||||||||
In conjunction with the acquisitions, liabilities were assumed as follows: | |||||||||||
Fair value of assets acquired | $ | $ | |||||||||
Cash paid in acquisition | ( | ||||||||||
Less: Common stock issued | |||||||||||
Liabilities assumed | $ | $ |
Fair Value | ||||||||
Cash and cash equivalents | $ | |||||||
Interest-bearing time deposits | ||||||||
Investment securities | ||||||||
Loans | ||||||||
Premises and equipment | ||||||||
Federal Home Loan Bank stock | ||||||||
Interest receivable | ||||||||
Cash surrender value of life insurance | ||||||||
Tax asset, deferred and receivable | ||||||||
Other assets | ||||||||
Deposits | ( | |||||||
Securities sold under repurchase agreements | ( | |||||||
Federal Home Loan Bank advances | ( | |||||||
Other liabilities | ( | |||||||
Net tangible assets acquired | ||||||||
Core deposit intangible | ||||||||
Goodwill | ||||||||
Purchase price | $ |
Fair Value of Acquired Loans at Acquisition Date | Gross Contractual Amounts Receivable at Acquisition Date | Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected | |||||||||||||||
Acquired receivables subject to ASC 310-30 | $ | $ | $ | ||||||||||||||
Acquired receivables not subject to ASC 310-30 | $ | $ | $ |
2019 | ||||||||
Total revenue (net interest income plus other income) | $ | |||||||
Net income available to common shareholders | $ | |||||||
Earnings per share: | ||||||||
Basic | $ | |||||||
Diluted | $ | |||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
Available for sale at September 30, 2020 | |||||||||||||||||||||||
U.S. Treasury | $ | $ | $ | $ | |||||||||||||||||||
U.S. Government-sponsored agency securities | |||||||||||||||||||||||
State and municipal | |||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities | |||||||||||||||||||||||
Corporate obligations | |||||||||||||||||||||||
Total available for sale | |||||||||||||||||||||||
Held to maturity at September 30, 2020 | |||||||||||||||||||||||
U.S. Government-sponsored agency securities | |||||||||||||||||||||||
State and municipal | |||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities | |||||||||||||||||||||||
Foreign investment | |||||||||||||||||||||||
Total held to maturity | |||||||||||||||||||||||
Total Investment Securities | $ | $ | $ | $ |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
Available for sale at December 31, 2019 | |||||||||||||||||||||||
U.S. Government-sponsored agency securities | $ | $ | $ | $ | |||||||||||||||||||
State and municipal | |||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities | |||||||||||||||||||||||
Corporate obligations | |||||||||||||||||||||||
Total available for sale | |||||||||||||||||||||||
Held to maturity at December 31, 2019 | |||||||||||||||||||||||
U.S. Government-sponsored agency securities | |||||||||||||||||||||||
State and municipal | |||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities | |||||||||||||||||||||||
Foreign investment | |||||||||||||||||||||||
Total held to maturity | |||||||||||||||||||||||
Total Investment Securities | $ | $ | $ | $ |
Available for Sale | Held to Maturity | ||||||||||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||
Maturity Distribution at September 30, 2020: | |||||||||||||||||||||||
Due in one year or less | $ | $ | $ | $ | |||||||||||||||||||
Due after one through five years | |||||||||||||||||||||||
Due after five through ten years | |||||||||||||||||||||||
Due after ten years | |||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities | |||||||||||||||||||||||
Total Investment Securities | $ | $ | $ | $ |
Available for Sale | Held to Maturity | ||||||||||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||
Maturity Distribution at December 31, 2019 | |||||||||||||||||||||||
Due in one year or less | $ | $ | $ | $ | |||||||||||||||||||
Due after one through five years | |||||||||||||||||||||||
Due after five through ten years | |||||||||||||||||||||||
Due after ten years | |||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities | |||||||||||||||||||||||
Total Investment Securities | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Sales and Redemptions of Available for Sale Securities: | |||||||||||||||||||||||
Gross gains | $ | $ | $ | $ | |||||||||||||||||||
Gross losses | |||||||||||||||||||||||
Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||
Temporarily Impaired Available for Sale Securities at September 30, 2020 | |||||||||||||||||||||||||||||||||||
State and municipal | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Total Temporarily Impaired Available for Sale Securities | |||||||||||||||||||||||||||||||||||
Temporarily Impaired Held to Maturity Securities at September 30,2020 | |||||||||||||||||||||||||||||||||||
U.S. Government-sponsored agency securities | |||||||||||||||||||||||||||||||||||
State and municipal | |||||||||||||||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities | |||||||||||||||||||||||||||||||||||
Foreign investment | |||||||||||||||||||||||||||||||||||
Total Temporarily Impaired Held to Maturity Securities | |||||||||||||||||||||||||||||||||||
Total Temporarily Impaired Investment Securities | $ | $ | $ | $ | $ | $ |
Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||
Temporarily Impaired Available for Sale Securities at December 31, 2019 | |||||||||||||||||||||||||||||||||||
State and municipal | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities | |||||||||||||||||||||||||||||||||||
Total Temporarily Impaired Available for Sale Securities | |||||||||||||||||||||||||||||||||||
Temporarily Impaired Held to Maturity Securities at December 31, 2019 | |||||||||||||||||||||||||||||||||||
U.S. Government-sponsored agency securities | |||||||||||||||||||||||||||||||||||
State and municipal | |||||||||||||||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities | |||||||||||||||||||||||||||||||||||
Total Temporarily Impaired Held to Maturity Securities | |||||||||||||||||||||||||||||||||||
Total Temporarily Impaired Investment Securities | $ | $ | $ | $ | $ | $ |
September 30, 2020 | December 31, 2019 | ||||||||||
Investments reported at less than historical cost: | |||||||||||
Historical cost | $ | $ | |||||||||
Fair value | |||||||||||
Gross unrealized losses | $ | $ | |||||||||
Percent of the Corporation's investment portfolio | % | % |
September 30, 2020 | December 31, 2019 | ||||||||||
Commercial and industrial loans | $ | $ | |||||||||
Agricultural production financing and other loans to farmers | |||||||||||
Real estate loans: | |||||||||||
Construction | |||||||||||
Commercial and farmland | |||||||||||
Residential | |||||||||||
Home equity | |||||||||||
Individuals' loans for household and other personal expenditures | |||||||||||
Public finance and other commercial loans | |||||||||||
Loans | |||||||||||
Allowance for loan losses | ( | ( | |||||||||
Net Loans | $ | $ |
Three Months Ended September 30, 2020 | |||||||||||||||||||||||||||||
Commercial | Commercial Real Estate | Consumer | Residential | Total | |||||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||
Balances, June 30, 2020 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Provision for losses | |||||||||||||||||||||||||||||
Recoveries on loans | |||||||||||||||||||||||||||||
Loans charged off | ( | ( | ( | ( | |||||||||||||||||||||||||
Balances, September 30, 2020 | $ | $ | $ | $ | $ |
Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||
Commercial | Commercial Real Estate | Consumer | Residential | Total | |||||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||
Balances, December 31, 2019 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Provision for losses | |||||||||||||||||||||||||||||
Recoveries on loans | |||||||||||||||||||||||||||||
Loans charged off | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Balances, September 30, 2020 | $ | $ | $ | $ | $ |
Three Months Ended September 30, 2019 | |||||||||||||||||||||||||||||
Commercial | Commercial Real Estate | Consumer | Residential | Total | |||||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||
Balances, June 30, 2019 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Provision for losses | |||||||||||||||||||||||||||||
Recoveries on loans | |||||||||||||||||||||||||||||
Loans charged off | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Balances, September 30, 2019 | $ | $ | $ | $ | $ |
Nine Months Ended September 30, 2019 | |||||||||||||||||||||||||||||
Commercial | Commercial Real Estate | Consumer | Residential | Total | |||||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||
Balances, December 31, 2018 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Provision for losses | |||||||||||||||||||||||||||||
Recoveries on loans | |||||||||||||||||||||||||||||
Loans charged off | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Balances, September 30, 2019 | $ | $ | $ | $ | $ |
September 30, 2020 | |||||||||||||||||||||||||||||
Commercial | Commercial Real Estate | Consumer | Residential | Total | |||||||||||||||||||||||||
Allowance Balances: | |||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Collectively evaluated for impairment | |||||||||||||||||||||||||||||
Total Allowance for Loan Losses | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Loan Balances: | |||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Collectively evaluated for impairment | |||||||||||||||||||||||||||||
Loans acquired with deteriorated credit quality | — | ||||||||||||||||||||||||||||
Loans | $ | $ | $ | $ | $ |
December 31, 2019 | |||||||||||||||||||||||||||||
Commercial | Commercial Real Estate | Consumer | Residential | Total | |||||||||||||||||||||||||
Allowance Balances: | |||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Collectively evaluated for impairment | |||||||||||||||||||||||||||||
Total Allowance for Loan Losses | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Loan Balances: | |||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Collectively evaluated for impairment | |||||||||||||||||||||||||||||
Loans acquired with deteriorated credit quality | — | ||||||||||||||||||||||||||||
Loans | $ | $ | $ | $ | $ |
September 30, 2020 | December 31, 2019 | ||||||||||
Commercial and industrial loans | $ | $ | |||||||||
Agriculture production financing and other loans to farmers | |||||||||||
Real estate loans: | |||||||||||
Construction | |||||||||||
Commercial and farmland | |||||||||||
Residential | |||||||||||
Home equity | |||||||||||
Individuals' loans for household and other personal expenditures | |||||||||||
Public finance and other commercial loans | — | — | |||||||||
Total | $ | $ |
September 30, 2020 | |||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Related Allowance | |||||||||||||||
Impaired loans with no related allowance: | |||||||||||||||||
Commercial and industrial loans | $ | $ | $ | — | |||||||||||||
Agriculture production financing and other loans to farmers | — | ||||||||||||||||
Real estate Loans: | |||||||||||||||||
Commercial and farmland | — | ||||||||||||||||
Residential | — | ||||||||||||||||
Individuals' loans for household and other personal expenditures | — | ||||||||||||||||
Total | $ | $ | $ | — | |||||||||||||
Impaired loans with related allowance: | |||||||||||||||||
Commercial and industrial loans | $ | $ | $ | ||||||||||||||
Real estate Loans: | |||||||||||||||||
Commercial and farmland | |||||||||||||||||
Residential | |||||||||||||||||
Home equity | |||||||||||||||||
Total | $ | $ | $ | ||||||||||||||
Total Impaired Loans | $ | $ | $ |
December 31, 2019 | |||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Related Allowance | |||||||||||||||
Impaired loans with no related allowance: | |||||||||||||||||
Commercial and industrial loans | $ | $ | $ | — | |||||||||||||
Agriculture production financing and other loans to farmers | — | ||||||||||||||||
Real estate Loans: | |||||||||||||||||
Construction | — | ||||||||||||||||
Commercial and farmland | — | ||||||||||||||||
Residential | — | ||||||||||||||||
Total | $ | $ | $ | — | |||||||||||||
Impaired loans with related allowance: | |||||||||||||||||
Real estate Loans: | |||||||||||||||||
Commercial and farmland | $ | $ | $ | ||||||||||||||
Residential | |||||||||||||||||
Home equity | |||||||||||||||||
Individuals' loans for household and other personal expenditures | |||||||||||||||||
Total | $ | $ | $ | ||||||||||||||
Total Impaired Loans | $ | $ | $ |
Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 | ||||||||||||||||||||||
Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | ||||||||||||||||||||
Impaired loans with no related allowance: | |||||||||||||||||||||||
Commercial and industrial loans | $ | $ | $ | $ | |||||||||||||||||||
Real estate Loans: | |||||||||||||||||||||||
Commercial and farmland | |||||||||||||||||||||||
Residential | |||||||||||||||||||||||
Individuals' loans for household and other personal expenditures | — | ||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Impaired loans with related allowance: | |||||||||||||||||||||||
Commercial and industrial loans | $ | $ | $ | $ | |||||||||||||||||||
Real estate Loans: | |||||||||||||||||||||||
Commercial and farmland | — | — | |||||||||||||||||||||
Residential | |||||||||||||||||||||||
Home equity | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Total Impaired Loans | $ | $ | $ | $ |
Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | ||||||||||||||||||||||
Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | ||||||||||||||||||||
Impaired loans with no related allowance: | |||||||||||||||||||||||
Commercial and industrial loans | $ | $ | $ | $ | |||||||||||||||||||
Agriculture production financing and other loans to farmers | |||||||||||||||||||||||
Real estate Loans: | |||||||||||||||||||||||
Construction | |||||||||||||||||||||||
Commercial and farmland | |||||||||||||||||||||||
Residential | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Impaired loans with related allowance: | |||||||||||||||||||||||
Commercial and industrial loans | $ | $ | — | $ | $ | ||||||||||||||||||
Agriculture production financing and other loans to farmers | — | — | |||||||||||||||||||||
Real estate Loans: | |||||||||||||||||||||||
Commercial and farmland | — | ||||||||||||||||||||||
Residential | |||||||||||||||||||||||
Home equity | |||||||||||||||||||||||
Individuals' loans for household and other personal expenditures | — | ||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Total Impaired Loans | $ | $ | $ | $ |
o | the likelihood that a loan will be paid from the primary source of repayment is uncertain or financial deterioration is underway and very close attention is warranted to ensure that the loan is collected without loss, |
o | the primary source of repayment is gone, and the Corporation is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees, |
o | loans have a distinct possibility that the Corporation will sustain some loss if deficiencies are not corrected, |
o | unusual courses of action are needed to maintain a high probability of repayment, |
o | the borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments, |
o | the Corporation is forced into a subordinated or unsecured position due to flaws in documentation, |
o | loans have been restructured so that payment schedules, terms and collateral represent concessions to the borrower when compared to the normal loan terms, |
o | the Corporation is seriously contemplating foreclosure or legal action due to the apparent deterioration of the loan, and |
o | there is significant deterioration in market conditions to which the borrower is highly vulnerable. |
September 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial Pass | Commercial Special Mention | Commercial Substandard | Commercial Doubtful | Commercial Loss | Consumer Performing | Consumer Non-Performing | Total | ||||||||||||||||||||||||||||||||||||||||
Commercial and industrial loans | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Agriculture production financing and other loans to farmers | |||||||||||||||||||||||||||||||||||||||||||||||
Real estate Loans: | |||||||||||||||||||||||||||||||||||||||||||||||
Construction | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial and farmland | |||||||||||||||||||||||||||||||||||||||||||||||
Residential | |||||||||||||||||||||||||||||||||||||||||||||||
Home equity | |||||||||||||||||||||||||||||||||||||||||||||||
Individuals' loans for household and other personal expenditures | |||||||||||||||||||||||||||||||||||||||||||||||
Public finance and other commercial loans | |||||||||||||||||||||||||||||||||||||||||||||||
Loans | $ | $ | $ | $ | $ | $ | $ | $ |
December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial Pass | Commercial Special Mention | Commercial Substandard | Commercial Doubtful | Commercial Loss | Consumer Performing | Consumer Non-Performing | Total | ||||||||||||||||||||||||||||||||||||||||
Commercial and industrial loans | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Agriculture production financing and other loans to farmers | |||||||||||||||||||||||||||||||||||||||||||||||
Real estate Loans: | |||||||||||||||||||||||||||||||||||||||||||||||
Construction | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial and farmland | |||||||||||||||||||||||||||||||||||||||||||||||
Residential | |||||||||||||||||||||||||||||||||||||||||||||||
Home equity | |||||||||||||||||||||||||||||||||||||||||||||||
Individuals' loans for household and other personal expenditures | |||||||||||||||||||||||||||||||||||||||||||||||
Public finance and other commercial loans | |||||||||||||||||||||||||||||||||||||||||||||||
Loans | $ | $ | $ | $ | $ | $ | $ | $ |
September 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Current | 30-59 Days Past Due | 60-89 Days Past Due | Loans 90 Days or More Past Due And Accruing | Non-Accrual | Total Past Due & Non-Accrual | Total | |||||||||||||||||||||||||||||||||||
Commercial and industrial loans | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Agriculture production financing and other loans to farmers | |||||||||||||||||||||||||||||||||||||||||
Real estate loans: | |||||||||||||||||||||||||||||||||||||||||
Construction | |||||||||||||||||||||||||||||||||||||||||
Commercial and farmland | |||||||||||||||||||||||||||||||||||||||||
Residential | |||||||||||||||||||||||||||||||||||||||||
Home equity | |||||||||||||||||||||||||||||||||||||||||
Individuals' loans for household and other personal expenditures | |||||||||||||||||||||||||||||||||||||||||
Public finance and other commercial loans | |||||||||||||||||||||||||||||||||||||||||
Loans | $ | $ | $ | $ | $ | $ | $ |
December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||
Current | 30-59 Days Past Due | 60-89 Days Past Due | Loans 90 Days or More Past Due And Accruing | Non-Accrual | Total Past Due & Non-Accrual | Total | |||||||||||||||||||||||||||||||||||
Commercial and industrial loans | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Agriculture production financing and other loans to farmers | |||||||||||||||||||||||||||||||||||||||||
Real estate loans: | |||||||||||||||||||||||||||||||||||||||||
Construction | |||||||||||||||||||||||||||||||||||||||||
Commercial and farmland | |||||||||||||||||||||||||||||||||||||||||
Residential | |||||||||||||||||||||||||||||||||||||||||
Home equity | |||||||||||||||||||||||||||||||||||||||||
Individuals' loans for household and other personal expenditures | |||||||||||||||||||||||||||||||||||||||||
Public finance and other commercial loans | — | ||||||||||||||||||||||||||||||||||||||||
Loans | $ | $ | $ | $ | $ | $ | $ |
Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 | ||||||||||||||||||||||||||||||||||
Pre-Modification Recorded Balance | Post-Modification Recorded Balance | Number of Loans | Pre-Modification Recorded Balance | Post-Modification Recorded Balance | Number of Loans | ||||||||||||||||||||||||||||||
Commercial and industrial loans | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
Real estate loans: | |||||||||||||||||||||||||||||||||||
Commercial and farmland | |||||||||||||||||||||||||||||||||||
Residential | |||||||||||||||||||||||||||||||||||
Home equity | |||||||||||||||||||||||||||||||||||
Individuals' loans for household and other personal expenditures | |||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | ||||||||||||||||||||||||||||||||||
Pre-Modification Recorded Balance | Post-Modification Recorded Balance | Number of Loans | Pre-Modification Recorded Balance | Post-Modification Recorded Balance | Number of Loans | ||||||||||||||||||||||||||||||
Real estate loans: | |||||||||||||||||||||||||||||||||||
Residential | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended September 30, 2020 | |||||||||||||||||||||||
Term Modification | Rate Modification | Combination | Total Modification | ||||||||||||||||||||
Real estate loans: | |||||||||||||||||||||||
Residential | $ | $ | $ | — | $ | ||||||||||||||||||
Home equity | — | ||||||||||||||||||||||
Individuals' loans for household and other personal expenditures | — | ||||||||||||||||||||||
Total | $ | $ | $ | $ |
Nine Months Ended September 30, 2020 | |||||||||||||||||||||||
Term Modification | Rate Modification | Combination | Total Modification | ||||||||||||||||||||
Commercial and industrial loans | $ | $ | — | $ | $ | ||||||||||||||||||
Real estate loans: | |||||||||||||||||||||||
Commercial and farmland | — | ||||||||||||||||||||||
Residential | |||||||||||||||||||||||
Home Equity | — | ||||||||||||||||||||||
Individuals' loans for household and other personal expenditures | — | ||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended September 30, 2019 | |||||||||||||||||||||||
Term Modification | Rate Modification | Combination | Total Modification | ||||||||||||||||||||
Real estate loans: | |||||||||||||||||||||||
Residential | $ | — | $ | — | $ | $ | |||||||||||||||||
Total | $ | — | $ | — | $ | $ |
Nine Months Ended September 30, 2019 | |||||||||||||||||||||||
Term Modification | Rate Modification | Combination | Total Modification | ||||||||||||||||||||
Real estate loans: | |||||||||||||||||||||||
Residential | $ | — | $ | $ | $ | ||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 | ||||||||||||||||||||||
Number of Loans | Recorded Balance | Number of Loans | Recorded Balance | ||||||||||||||||||||
Commercial and industrial loans | $ | $ | |||||||||||||||||||||
Real estate loans: | |||||||||||||||||||||||
Commercial and farmland | |||||||||||||||||||||||
Total | $ | $ |
Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | ||||||||||||||||||||||
Number of Loans | Recorded Balance | Number of Loans | Recorded Balance | ||||||||||||||||||||
Real estate loans: | |||||||||||||||||||||||
Commercial and farmland | $ | $ | |||||||||||||||||||||
Total | $ | $ |
Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 | ||||||||||
Accretable yield beginning balance | $ | $ | |||||||||
Additions | $ | ||||||||||
Accretion | ( | ( | |||||||||
Reclassification from nonaccretable | |||||||||||
Disposals | ( | ||||||||||
Accretable yield ending balance | $ | $ |
Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | ||||||||||
Accretable yield beginning balance | $ | $ | |||||||||
Additions | |||||||||||
Accretion | ( | ( | |||||||||
Reclassification from nonaccretable | |||||||||||
Disposals | ( | ( | |||||||||
Accretable yield ending balance | $ | $ | |||||||||
MBT | |||||
Contractually required payments receivable at acquisition date | $ | ||||
Nonaccretable difference | |||||
Expected cash flows at acquisition date | |||||
Accretable difference | |||||
Basis in loans at acquisition date | $ |
2019 | |||||
Balance, January 1 | $ | ||||
Goodwill acquired | |||||
Measurement period adjustment | |||||
Balance, December 31 | $ |
September 30, 2020 | December 31, 2019 | ||||||||||
Gross carrying amount | $ | $ | |||||||||
Core deposit intangibles acquired | |||||||||||
Accumulated amortization | ( | ( | |||||||||
Total core deposit intangibles | $ | $ |
Amortization Expense | |||||
2020 | $ | ||||
2021 | |||||
2022 | |||||
2023 | |||||
2024 | |||||
After 2024 | |||||
$ |
Asset Derivatives | Liability Derivatives | ||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||||||||||||||||||||||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest rate contracts | Other Assets | $ | Other Assets | $ | Other Liabilities | $ | Other Liabilities | $ | |||||||||||||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest rate contracts | Other Assets | $ | Other Assets | $ | Other Liabilities | $ | Other Liabilities | $ |
Derivatives in Cash Flow Hedging Relationships | Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative (Effective Portion) | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | ||||||||||||||||||||
Interest Rate Products | $ | $ | ( | $ | ( | $ | ( |
Derivatives Designated as Hedging Instruments under FASB ASC 815-10 | Location of Gain (Loss) Recognized Income on Derivative | Amount of Gain (Loss) Reclassed from Other Comprehensive Income into Income (Effective Portion) | ||||||||||||||||||
Three Months Ended September 30, 2020 | Three Months Ended September 30, 2019 | |||||||||||||||||||
Interest rate contracts | Interest Expense | $ | ( | $ | ( |
Derivatives Designated as Hedging Instruments under FASB ASC 815-10 | Location of Gain (Loss) Recognized Income on Derivative | Amount of Gain (Loss) Reclassed from Other Comprehensive Income into Income (Effective Portion) | ||||||||||||||||||
Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | |||||||||||||||||||
Interest rate contracts | Interest Expense | $ | ( | $ | ( |
Fair Value Measurements Using: | |||||||||||||||||||||||
September 30, 2020 | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
Available for sale securities: | |||||||||||||||||||||||
U.S. Treasury | $ | $ | $ | $ | |||||||||||||||||||
U.S. Government-sponsored agency securities | |||||||||||||||||||||||
State and municipal | |||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities | |||||||||||||||||||||||
Corporate obligations | |||||||||||||||||||||||
Interest rate swap asset | |||||||||||||||||||||||
Interest rate swap liability |
Fair Value Measurements Using: | |||||||||||||||||||||||
December 31, 2019 | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
Available for sale securities: | |||||||||||||||||||||||
U.S. Government-sponsored agency securities | $ | $ | $ | $ | |||||||||||||||||||
State and municipal | |||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities | |||||||||||||||||||||||
Corporate obligations | |||||||||||||||||||||||
Interest rate swap asset | |||||||||||||||||||||||
Interest rate swap liability |
Available for Sale Securities | |||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | ||||||||||||||||||||
Balance at beginning of the period | $ | $ | $ | $ | |||||||||||||||||||
Included in other comprehensive income | |||||||||||||||||||||||
Principal payments | ( | ( | ( | ( | |||||||||||||||||||
Ending balance | $ | $ | $ | $ |
Fair Value Measurements Using | ||||||||||||||||||||||||||
September 30, 2020 | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||
Impaired loans (collateral dependent) | $ | $ | $ | $ | ||||||||||||||||||||||
Other real estate owned |
Fair Value Measurements Using | ||||||||||||||||||||||||||
December 31, 2019 | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||
Impaired loans (collateral dependent) | $ | $ | $ | $ | ||||||||||||||||||||||
Other real estate owned |
September 30, 2020 | Fair Value | Valuation Technique | Unobservable Inputs | Range (Weighted-Average) | |||||||||||||||||||
State and municipal securities | $ | Discounted cash flow | Maturity/Call date | ||||||||||||||||||||
US Muni BQ curve | |||||||||||||||||||||||
Discount rate | |||||||||||||||||||||||
Weighted-average coupon | % | ||||||||||||||||||||||
Corporate obligations and U.S. Government-sponsored mortgage-backed securities | $ | Discounted cash flow | Risk free rate | ||||||||||||||||||||
plus premium for illiquidity | plus | ||||||||||||||||||||||
Weighted-average coupon | % | ||||||||||||||||||||||
Impaired loans (collateral dependent) | $ | Collateral based measurements | Discount to reflect current market conditions and ultimate collectability | ||||||||||||||||||||
Weighted-average discount by loan balance | |||||||||||||||||||||||
Other real estate owned | $ | Appraisals | Discount to reflect current market conditions | ||||||||||||||||||||
Weighted-average discount of other real estate owned balance | % |
December 31, 2019 | Fair Value | Valuation Technique | Unobservable Inputs | Range (Weighted-Average) | |||||||||||||||||||
State and municipal securities | $ | Discounted cash flow | Maturity/Call date | ||||||||||||||||||||
US Muni BQ curve | |||||||||||||||||||||||
Discount rate | |||||||||||||||||||||||
Weighted-average coupon | % | ||||||||||||||||||||||
Corporate obligations and U.S Government-sponsored mortgage-backed securities | $ | Discounted cash flow | Risk free rate | ||||||||||||||||||||
plus premium for illiquidity | plus | ||||||||||||||||||||||
Weighted-average coupon | % | ||||||||||||||||||||||
Impaired loans (collateral dependent) | $ | Collateral based measurements | Discount to reflect current market conditions and ultimate collectability | ||||||||||||||||||||
Weighted-average discount by loan balance | % | ||||||||||||||||||||||
Other real estate owned | $ | Appraisals | Discount to reflect current market conditions | ||||||||||||||||||||
Weighted-average discount of other real estate owned balance | % |
September 30, 2020 | |||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||||||||||
Carrying Amount | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Interest-bearing deposits | |||||||||||||||||||||||
Investment securities available for sale | |||||||||||||||||||||||
Investment securities held to maturity | |||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||
Loans | |||||||||||||||||||||||
Federal Home Loan Bank stock | |||||||||||||||||||||||
Interest rate swap asset | |||||||||||||||||||||||
Interest receivable | |||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Deposits | $ | $ | $ | $ | |||||||||||||||||||
Borrowings: | |||||||||||||||||||||||
Federal funds purchased | |||||||||||||||||||||||
Securities sold under repurchase agreements | |||||||||||||||||||||||
Federal Home Loan Bank advances | |||||||||||||||||||||||
Subordinated debentures and other borrowings | |||||||||||||||||||||||
Interest rate swap liability | |||||||||||||||||||||||
Interest payable | |||||||||||||||||||||||
December 31, 2019 | |||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||||||||||
Carrying Amount | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Interest-bearing deposits | |||||||||||||||||||||||
Investment securities available for sale | |||||||||||||||||||||||
Investment securities held to maturity | |||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||
Loans | |||||||||||||||||||||||
Federal Home Loan Bank stock | |||||||||||||||||||||||
Interest rate swap asset | |||||||||||||||||||||||
Interest receivable | |||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Deposits | $ | $ | $ | $ | |||||||||||||||||||
Borrowings: | |||||||||||||||||||||||
Federal funds purchased | |||||||||||||||||||||||
Securities sold under repurchase agreements | |||||||||||||||||||||||
Federal Home Loan Bank advances | |||||||||||||||||||||||
Subordinated debentures and other borrowings | |||||||||||||||||||||||
Interest rate swap liability | |||||||||||||||||||||||
Interest payable |
September 30, 2020 | |||||||||||||||||||||||||||||
Remaining Contractual Maturity of the Agreements | |||||||||||||||||||||||||||||
Overnight and Continuous | Up to 30 Days | 30-90 Days | Greater Than 90 Days | Total | |||||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities | $ | $ | $ | $ | $ |
December 31, 2019 | |||||||||||||||||||||||||||||
Remaining Contractual Maturity of the Agreements | |||||||||||||||||||||||||||||
Overnight and Continuous | Up to 30 Days | 30-90 Days | Greater Than 90 Days | Total | |||||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities | $ | $ | $ | $ | $ |
Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||
Unrealized Gains (Losses) on Securities Available for Sale | Unrealized Gains (Losses) on Cash Flow Hedges | Unrealized Gains (Losses) on Defined Benefit Plans | Total | ||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | ( | $ | ( | $ | |||||||||||||||||
Other comprehensive income before reclassifications | ( | ||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | ( | ( | |||||||||||||||||||||
Period change | ( | ||||||||||||||||||||||
Balance at September 30, 2020 | $ | $ | ( | $ | ( | $ | |||||||||||||||||
Balance at December 31, 2018 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other comprehensive income before reclassifications | ( | ||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | ( | ( | |||||||||||||||||||||
Period change | ( | ||||||||||||||||||||||
Balance at September 30, 2019 | $ | $ | ( | $ | ( | $ |
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) For the Three Months Ended September 30, | ||||||||||||||||||||
Details about Accumulated Other Comprehensive Income (Loss) Components | 2020 | 2019 | Affected Line Item in the Statements of Income | |||||||||||||||||
Unrealized gains (losses) on available for sale securities (1) | ||||||||||||||||||||
Realized securities gains reclassified into income | $ | $ | Other income - net realized gains on sales of available for sale securities | |||||||||||||||||
Related income tax expense | ( | ( | Income tax expense | |||||||||||||||||
$ | $ | |||||||||||||||||||
Unrealized gains (losses) on cash flow hedges (2) | ||||||||||||||||||||
Interest rate contracts | $ | ( | $ | ( | Interest expense - subordinated debentures and term loans | |||||||||||||||
Related income tax benefit | Income tax expense | |||||||||||||||||||
$ | ( | $ | ( | |||||||||||||||||
Total reclassifications for the period, net of tax | $ | $ |
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) For the Nine Months Ended September 30, | ||||||||||||||||||||
Details about Accumulated Other Comprehensive Income (Loss) Components | 2020 | 2019 | Affected Line Item in the Statements of Income | |||||||||||||||||
Unrealized gains (losses) on available for sale securities (1) | ||||||||||||||||||||
Realized securities gains reclassified into income | $ | $ | Other income - net realized gains on sales of available for sale securities | |||||||||||||||||
Related income tax expense | ( | ( | Income tax expense | |||||||||||||||||
$ | $ | |||||||||||||||||||
Unrealized gains (losses) on cash flow hedges (2) | ||||||||||||||||||||
Interest rate contracts | $ | ( | $ | ( | Interest expense - subordinated debentures and term loans | |||||||||||||||
Related income tax benefit | Income tax expense | |||||||||||||||||||
$ | ( | $ | ( | |||||||||||||||||
Total reclassifications for the period, net of tax | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Stock and ESPP Options | |||||||||||||||||||||||
Pre-tax compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Income tax expense (benefit) | ( | ( | |||||||||||||||||||||
Stock and ESPP option expense, net of income taxes | $ | $ | $ | $ | |||||||||||||||||||
Restricted Stock Awards | |||||||||||||||||||||||
Pre-tax compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Income tax expense (benefit) | ( | ( | ( | ||||||||||||||||||||
Restricted stock awards expense, net of income taxes | $ | $ | $ | $ | |||||||||||||||||||
Total Share-Based Compensation | |||||||||||||||||||||||
Pre-tax compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Income tax expense (benefit) | ( | ( | ( | ||||||||||||||||||||
Total share-based compensation expense, net of income taxes | $ | $ | $ | $ |
Number of Shares | Weighted-Average Exercise Price | Weighted Average Remaining Contractual Term (in Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Outstanding at January 1, 2020 | $ | ||||||||||||||||||||||
Exercised | ( | $ | |||||||||||||||||||||
Outstanding September 30, 2020 | $ | $ | |||||||||||||||||||||
Vested and Expected to Vest at September 30,2020 | $ | $ | |||||||||||||||||||||
Exercisable at September 30, 2020 | $ | $ |
Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||
Unvested RSAs at January 1, 2020 | $ | ||||||||||
Granted | $ | ||||||||||
Vested | ( | $ | |||||||||
Forfeited | ( | $ | |||||||||
Unvested RSAs at September 30, 2020 | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Reconciliation of Federal Statutory to Actual Tax Expense: | |||||||||||||||||||||||
Federal statutory income tax at 21% | $ | $ | $ | $ | |||||||||||||||||||
Tax-exempt interest income | ( | ( | ( | ( | |||||||||||||||||||
Share-based compensation | ( | ( | |||||||||||||||||||||
Tax-exempt earnings and gains on life insurance | ( | ( | ( | ( | |||||||||||||||||||
Tax credits | ( | ( | ( | ( | |||||||||||||||||||
CARES Act - NOL carryback rate differential | ( | ||||||||||||||||||||||
Other | |||||||||||||||||||||||
Actual Tax Expense | $ | $ | $ | $ | |||||||||||||||||||
Effective Tax Rate | % | % | % | % |
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||||||||
Net Income | Weighted-Average Shares | Per Share Amount | Net Income | Weighted-Average Shares | Per Share Amount | ||||||||||||||||||||||||||||||
Net income available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
Effect of potentially dilutive stock options and restricted stock awards | |||||||||||||||||||||||||||||||||||
Diluted net income per share | $ | $ | $ | $ |
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||||||||
Net Income | Weighted-Average Shares | Per Share Amount | Net Income | Weighted-Average Shares | Per Share Amount | ||||||||||||||||||||||||||||||
Net income available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
Effect of potentially dilutive stock options and restricted stock awards | |||||||||||||||||||||||||||||||||||
Diluted net income per share | $ | $ | $ | $ |
(Dollars in Thousands) | Three Months Ended | ||||||||||||||||||||||||||||||||||
September 30, 2020 | September 30, 2019 | ||||||||||||||||||||||||||||||||||
Average Balance | Interest Income / Expense | Average Rate | Average Balance | Interest Income / Expense | Average Rate | ||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||
Interest-bearing deposits | $ | 301,529 | $ | 90 | 0.12 | % | $ | 262,082 | $ | 1,363 | 2.06 | % | |||||||||||||||||||||||
Federal Home Loan Bank stock | 28,736 | 248 | 3.45 | 24,633 | 355 | 5.76 | |||||||||||||||||||||||||||||
Investment Securities: (1) | |||||||||||||||||||||||||||||||||||
Taxable | 1,258,690 | 5,399 | 1.72 | 1,104,612 | 6,729 | 2.44 | |||||||||||||||||||||||||||||
Tax-Exempt (2) | 1,499,463 | 13,837 | 3.69 | 1,027,528 | 10,551 | 4.11 | |||||||||||||||||||||||||||||
Total Investment Securities | 2,758,153 | 19,236 | 2.79 | 2,132,140 | 17,280 | 3.24 | |||||||||||||||||||||||||||||
Loans held for sale | 24,705 | 257 | 4.16 | 21,913 | 274 | 5.00 | |||||||||||||||||||||||||||||
Loans: (3) | |||||||||||||||||||||||||||||||||||
Commercial | 6,965,837 | 66,826 | 3.84 | 5,674,956 | 77,370 | 5.45 | |||||||||||||||||||||||||||||
Real Estate Mortgage | 887,661 | 9,996 | 4.50 | 822,874 | 9,518 | 4.63 | |||||||||||||||||||||||||||||
Installment | 693,363 | 7,083 | 4.09 | 715,428 | 9,688 | 5.42 | |||||||||||||||||||||||||||||
Tax-Exempt (2) | 681,273 | 6,829 | 4.01 | 538,157 | 5,696 | 4.23 | |||||||||||||||||||||||||||||
Total Loans | 9,252,839 | 90,991 | 3.93 | 7,773,328 | 102,546 | 5.28 | |||||||||||||||||||||||||||||
Total Earning Assets | 12,341,257 | 110,565 | 3.58 | % | 10,192,183 | 121,544 | 4.77 | % | |||||||||||||||||||||||||||
Net unrealized gain (loss) on securities available for sale | 70,277 | 30,353 | |||||||||||||||||||||||||||||||||
Allowance for loan losses | (125,150) | (80,918) | |||||||||||||||||||||||||||||||||
Cash and cash equivalents | 169,539 | 143,266 | |||||||||||||||||||||||||||||||||
Premises and equipment | 113,216 | 99,021 | |||||||||||||||||||||||||||||||||
Other assets | 1,091,679 | 893,837 | |||||||||||||||||||||||||||||||||
Total Assets | $ | 13,660,818 | $ | 11,277,742 | |||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||||||||||||||||
Interest-bearing deposits | $ | 4,098,017 | $ | 3,890 | 0.38 | % | $ | 3,134,675 | $ | 9,285 | 1.18 | % | |||||||||||||||||||||||
Money market deposits | 1,813,392 | 1,167 | 0.26 | 1,307,647 | 3,766 | 1.14 | |||||||||||||||||||||||||||||
Savings deposits | 1,574,700 | 583 | 0.15 | 1,244,859 | 2,523 | 0.80 | |||||||||||||||||||||||||||||
Certificates and other time deposits | 1,267,152 | 4,136 | 1.31 | 1,736,759 | 9,256 | 2.11 | |||||||||||||||||||||||||||||
Total Interest-bearing Deposits | 8,753,261 | 9,776 | 0.45 | 7,423,940 | 24,830 | 1.33 | |||||||||||||||||||||||||||||
Borrowings | 733,757 | 3,528 | 1.92 | 660,107 | 4,370 | 2.59 | |||||||||||||||||||||||||||||
Total Interest-bearing Liabilities | 9,487,018 | 13,304 | 0.56 | 8,084,047 | 29,200 | 1.43 | |||||||||||||||||||||||||||||
Noninterest-bearing deposits | 2,191,460 | 1,498,282 | |||||||||||||||||||||||||||||||||
Other liabilities | 151,040 | 98,818 | |||||||||||||||||||||||||||||||||
Total Liabilities | 11,829,518 | 9,681,147 | |||||||||||||||||||||||||||||||||
Stockholders' Equity | 1,831,300 | 1,596,595 | |||||||||||||||||||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 13,660,818 | 13,304 | $ | 11,277,742 | 29,200 | |||||||||||||||||||||||||||||
Net Interest Income (FTE) | $ | 97,261 | $ | 92,344 | |||||||||||||||||||||||||||||||
Net Interest Spread (FTE) (4) | 3.02 | % | 3.34 | % | |||||||||||||||||||||||||||||||
Net Interest Margin (FTE): | |||||||||||||||||||||||||||||||||||
Interest Income (FTE) / Average Earning Assets | 3.58 | % | 4.77 | % | |||||||||||||||||||||||||||||||
Interest Expense / Average Earning Assets | 0.43 | % | 1.15 | % | |||||||||||||||||||||||||||||||
Net Interest Margin (FTE) (5) | 3.15 | % | 3.62 | % | |||||||||||||||||||||||||||||||
(1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed utilizing a 30/360 day basis. | |||||||||||||||||||||||||||||||||||
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2020 and 2019. These totals equal $4,340 and $3,412 for the three months ended September 30, 2020 and 2019, respectively. | |||||||||||||||||||||||||||||||||||
(3) Non-accruing loans have been included in the average balances. | |||||||||||||||||||||||||||||||||||
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities. | |||||||||||||||||||||||||||||||||||
(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets. |
(Dollars in Thousands) | Nine Months Ended | ||||||||||||||||||||||||||||||||||
September 30, 2020 | September 30, 2019 | ||||||||||||||||||||||||||||||||||
Average Balance | Interest Income / Expense | Average Rate | Average Balance | Interest Income / Expense | Average Rate | ||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||
Interest-bearing deposits | $ | 280,038 | $ | 799 | 0.38 | % | $ | 184,640 | $ | 3,022 | 2.18 | % | |||||||||||||||||||||||
Federal Home Loan Bank stock | 28,736 | 828 | 3.84 | 24,603 | 1,028 | 5.57 | |||||||||||||||||||||||||||||
Investment Securities: (1) | |||||||||||||||||||||||||||||||||||
Taxable | 1,302,943 | 19,177 | 1.96 | 1,021,102 | 19,822 | 2.59 | |||||||||||||||||||||||||||||
Tax-Exempt (2) | 1,342,477 | 38,335 | 3.81 | 923,030 | 28,684 | 4.14 | |||||||||||||||||||||||||||||
Total Investment Securities | 2,645,420 | 57,512 | 2.90 | 1,944,132 | 48,506 | 3.33 | |||||||||||||||||||||||||||||
Loans held for sale | 17,175 | 581 | 4.51 | 13,618 | 512 | 5.01 | |||||||||||||||||||||||||||||
Loans: (3) | |||||||||||||||||||||||||||||||||||
Commercial | 6,698,042 | 213,241 | 4.24 | 5,469,377 | 224,766 | 5.48 | |||||||||||||||||||||||||||||
Real Estate Mortgage | 882,911 | 30,520 | 4.61 | 778,778 | 26,526 | 4.54 | |||||||||||||||||||||||||||||
Installment | 725,596 | 23,784 | 4.37 | 686,055 | 28,351 | 5.51 | |||||||||||||||||||||||||||||
Tax-Exempt (2) | 663,921 | 20,341 | 4.09 | 517,082 | 16,325 | 4.21 | |||||||||||||||||||||||||||||
Total Loans | 8,987,645 | 288,467 | 4.28 | 7,464,910 | 296,480 | 5.30 | |||||||||||||||||||||||||||||
Total Earning Assets | 11,941,839 | 347,606 | 3.88 | % | 9,618,285 | 349,036 | 4.84 | % | |||||||||||||||||||||||||||
Net unrealized gain on securities available for sale | 58,623 | 12,856 | |||||||||||||||||||||||||||||||||
Allowance for loan losses | (104,465) | (81,172) | |||||||||||||||||||||||||||||||||
Cash and cash equivalents | 210,778 | 130,587 | |||||||||||||||||||||||||||||||||
Premises and equipment | 113,517 | 94,628 | |||||||||||||||||||||||||||||||||
Other assets | 1,077,497 | 848,480 | |||||||||||||||||||||||||||||||||
Total Assets | $ | 13,297,789 | $ | 10,623,664 | |||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||||||||||||||||
Interest-bearing deposits | $ | 3,880,489 | $ | 16,351 | 0.56 | % | $ | 2,921,762 | $ | 24,844 | 1.13 | % | |||||||||||||||||||||||
Money market deposits | 1,674,622 | 6,647 | 0.53 | 1,222,860 | 10,057 | 1.10 | |||||||||||||||||||||||||||||
Savings deposits | 1,507,269 | 3,007 | 0.27 | 1,187,173 | 7,315 | 0.82 | |||||||||||||||||||||||||||||
Certificates and other time deposits | 1,476,499 | 18,226 | 1.65 | 1,652,141 | 25,295 | 2.04 | |||||||||||||||||||||||||||||
Total Interest-bearing Deposits | 8,538,879 | 44,231 | 0.69 | 6,983,936 | 67,511 | 1.29 | |||||||||||||||||||||||||||||
Borrowings | 796,836 | 11,237 | 1.88 | 636,295 | 12,997 | 2.72 | |||||||||||||||||||||||||||||
Total Interest-bearing Liabilities | 9,335,715 | 55,468 | 0.79 | 7,620,231 | 80,508 | 1.41 | |||||||||||||||||||||||||||||
Noninterest-bearing deposits | 2,002,898 | 1,413,120 | |||||||||||||||||||||||||||||||||
Other liabilities | 144,705 | 87,839 | |||||||||||||||||||||||||||||||||
Total Liabilities | 11,483,318 | 9,121,190 | |||||||||||||||||||||||||||||||||
Stockholders' Equity | 1,814,471 | 1,502,474 | |||||||||||||||||||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 13,297,789 | 55,468 | $ | 10,623,664 | 80,508 | |||||||||||||||||||||||||||||
Net Interest Income (FTE) | $ | 292,138 | $ | 268,528 | |||||||||||||||||||||||||||||||
Net Interest Spread (FTE) (4) | 3.09 | % | 3.43 | % | |||||||||||||||||||||||||||||||
Net Interest Margin (FTE): | |||||||||||||||||||||||||||||||||||
Interest Income (FTE) / Average Earning Assets | 3.88 | % | 4.84 | % | |||||||||||||||||||||||||||||||
Interest Expense / Average Earning Assets | 0.62 | % | 1.12 | % | |||||||||||||||||||||||||||||||
Net Interest Margin (FTE) (5) | 3.26 | % | 3.72 | % | |||||||||||||||||||||||||||||||
(1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed utilizing a 30/360 day basis. | |||||||||||||||||||||||||||||||||||
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2020 and 2019. These totals equal $12,322 and $9,452 for the nine months ended September 30, 2020 and 2019, respectively. | |||||||||||||||||||||||||||||||||||
(3) Non-accruing loans have been included in the average balances. | |||||||||||||||||||||||||||||||||||
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities. | |||||||||||||||||||||||||||||||||||
(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets. |
Prompt Corrective Action Thresholds | |||||||||||||||||||||||||||||||||||
Actual | Basel III Minimum Capital Required | Well Capitalized | |||||||||||||||||||||||||||||||||
September 30, 2020 | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||||||
Total risk-based capital to risk-weighted assets | |||||||||||||||||||||||||||||||||||
First Merchants Corporation | $ | 1,438,331 | 14.38 | % | $ | 1,050,092 | 10.50 | % | N/A | N/A | |||||||||||||||||||||||||
First Merchants Bank | 1,400,114 | 13.96 | 1,053,455 | 10.50 | $ | 1,003,291 | 10.00 | % | |||||||||||||||||||||||||||
Tier 1 capital to risk-weighted assets | |||||||||||||||||||||||||||||||||||
First Merchants Corporation | $ | 1,248,299 | 12.48 | % | $ | 850,075 | 8.50 | % | N/A | N/A | |||||||||||||||||||||||||
First Merchants Bank | 1,274,686 | 12.71 | 852,797 | 8.50 | $ | 802,633 | 8.00 | % | |||||||||||||||||||||||||||
CET1 capital to risk-weighted assets | |||||||||||||||||||||||||||||||||||
First Merchants Corporation | $ | 1,201,991 | 12.02 | % | $ | 700,061 | 7.00 | % | N/A | N/A | |||||||||||||||||||||||||
First Merchants Bank | 1,274,686 | 12.71 | 702,304 | 7.00 | $ | 652,139 | 6.50 | % | |||||||||||||||||||||||||||
Tier 1 capital to average assets | |||||||||||||||||||||||||||||||||||
First Merchants Corporation | $ | 1,248,299 | 9.53 | % | $ | 523,790 | 4.00 | % | N/A | N/A | |||||||||||||||||||||||||
First Merchants Bank | 1,274,686 | 9.75 | 522,926 | 4.00 | $ | 653,657 | 5.00 | % | |||||||||||||||||||||||||||
Prompt Corrective Action Thresholds | |||||||||||||||||||||||||||||||||||
Actual | Basel III Minimum Capital Required | Well Capitalized | |||||||||||||||||||||||||||||||||
December 31, 2019 | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||||||
Total risk-based capital to risk-weighted assets | |||||||||||||||||||||||||||||||||||
First Merchants Corporation | $ | 1,400,617 | 14.29 | % | $ | 1,028,930 | 10.50 | % | N/A | N/A | |||||||||||||||||||||||||
First Merchants Bank | 1,267,649 | 12.87 | 1,033,926 | 10.50 | $ | 984,691 | 10.00 | % | |||||||||||||||||||||||||||
Tier 1 capital to risk weighted assets | |||||||||||||||||||||||||||||||||||
First Merchants Corporation | $ | 1,255,333 | 12.81 | % | $ | 832,943 | 8.50 | % | N/A | N/A | |||||||||||||||||||||||||
First Merchants Bank | 1,187,365 | 12.06 | 836,988 | 8.50 | $ | 787,753 | 8.00 | % | |||||||||||||||||||||||||||
CET1 capital to risk-weighted assets | |||||||||||||||||||||||||||||||||||
First Merchants Corporation | $ | 1,188,970 | 12.13 | % | $ | 685,953 | 7.00 | % | N/A | N/A | |||||||||||||||||||||||||
First Merchants Bank | 1,187,365 | 12.06 | 689,284 | 7.00 | $ | 640,049 | 6.50 | % | |||||||||||||||||||||||||||
Tier 1 capital to average assets | |||||||||||||||||||||||||||||||||||
First Merchants Corporation | $ | 1,255,333 | 10.54 | % | $ | 476,383 | 4.00 | % | N/A | N/A | |||||||||||||||||||||||||
First Merchants Bank | 1,187,365 | 9.99 | 475,564 | 4.00 | $ | 594,455 | 5.00 | % |
September 30, 2020 | December 31, 2019 | ||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | First Merchants Corporation | First Merchants Bank | First Merchants Corporation | First Merchants Bank | |||||||||||||||||||
Total Risk-Based Capital | |||||||||||||||||||||||
Total Stockholders' Equity (GAAP) | $ | 1,833,656 | $ | 1,908,858 | $ | 1,786,437 | $ | 1,787,006 | |||||||||||||||
Adjust for Accumulated Other Comprehensive (Income) Loss (1) | (65,468) | (68,423) | (27,874) | (30,495) | |||||||||||||||||||
Less: Preferred Stock | (125) | (125) | (125) | (125) | |||||||||||||||||||
Add: Qualifying Capital Securities | 46,308 | — | 66,363 | — | |||||||||||||||||||
Less: Disallowed Goodwill and Intangible Assets | (566,072) | (565,624) | (569,468) | (569,021) | |||||||||||||||||||
Total Tier 1 Capital (Regulatory) | 1,248,299 | 1,274,686 | 1,255,333 | 1,187,365 | |||||||||||||||||||
Qualifying Subordinated Debentures | 65,000 | — | 65,000 | — | |||||||||||||||||||
Allowance for Loan Losses Includible in Tier 2 Capital | 125,032 | 125,428 | 80,284 | 80,284 | |||||||||||||||||||
Total Risk-Based Capital (Regulatory) | $ | 1,438,331 | $ | 1,400,114 | $ | 1,400,617 | $ | 1,267,649 | |||||||||||||||
Net Risk-Weighted Assets (Regulatory) | $ | 10,000,878 | $ | 10,032,908 | $ | 9,799,329 | $ | 9,849,913 | |||||||||||||||
Average Assets (Regulatory) | $ | 13,094,746 | $ | 13,073,145 | $ | 11,909,571 | $ | 11,889,092 | |||||||||||||||
Total Risk-Based Capital Ratio (Regulatory) | 14.38 | % | 13.96 | % | 14.29 | % | 12.87 | % | |||||||||||||||
Tier 1 Capital to Risk-Weighted Assets | 12.48 | % | 12.71 | % | 12.81 | % | 12.05 | % | |||||||||||||||
Tier 1 Capital to Average Assets | 9.53 | % | 9.75 | % | 10.54 | % | 9.99 | % | |||||||||||||||
CET1 Capital Ratio | |||||||||||||||||||||||
Total Tier 1 Capital (Regulatory) | $ | 1,248,299 | $ | 1,274,686 | $ | 1,255,333 | $ | 1,187,365 | |||||||||||||||
Less: Qualified Capital Securities | (46,308) | — | (66,363) | — | |||||||||||||||||||
CET1 Capital (Regulatory) | $ | 1,201,991 | $ | 1,274,686 | $ | 1,188,970 | $ | 1,187,365 | |||||||||||||||
Net Risk-Weighted Assets (Regulatory) | $ | 10,000,878 | $ | 10,032,908 | $ | 9,799,329 | $ | 9,849,913 | |||||||||||||||
CET1 Capital Ratio (Regulatory) | 12.02 | % | 12.71 | % | 12.13 | % | 12.05 | % |
Tangible Common Equity to Tangible Assets (non-GAAP) | |||||||||||
(Dollars in thousands, except per share amounts) | September 30, 2020 | December 31, 2019 | |||||||||
Total Stockholders' Equity (GAAP) | $ | 1,833,656 | $ | 1,786,437 | |||||||
Less: Cumulative preferred stock (GAAP) | (125) | (125) | |||||||||
Less: Intangible assets (GAAP) | (574,369) | (578,881) | |||||||||
Tangible common equity (non-GAAP) | $ | 1,259,162 | $ | 1,207,431 | |||||||
Total assets (GAAP) | $ | 13,737,350 | $ | 12,457,254 | |||||||
Less: Intangible assets (GAAP) | (574,369) | (578,881) | |||||||||
Tangible assets (non-GAAP) | $ | 13,162,981 | $ | 11,878,373 | |||||||
Stockholders' Equity to Assets (GAAP) | 13.35 | % | 14.34 | % | |||||||
Tangible common equity to tangible assets (non-GAAP) | 9.57 | % | 10.16 | % | |||||||
Tangible common equity (non-GAAP) | $ | 1,259,162 | $ | 1,207,431 | |||||||
Plus: Tax Benefit of intangibles (non-GAAP) | 6,292 | 7,257 | |||||||||
Tangible common equity, net of tax (non-GAAP) | $ | 1,265,454 | $ | 1,214,688 | |||||||
Common Stock outstanding | 53,892 | 55,368 | |||||||||
Book Value (GAAP) | $ | 34.02 | $ | 32.26 | |||||||
Tangible book value - common (non-GAAP) | $ | 23.48 | $ | 21.94 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Average goodwill (GAAP) | $ | 543,919 | $ | 477,260 | $ | 543,919 | $ | 456,107 | |||||||||||||||
Average core deposit intangible (GAAP) | 31,357 | 26,193 | 32,851 | 24,088 | |||||||||||||||||||
Average deferred tax on CDI (GAAP) | (6,478) | (5,405) | (6,806) | (4,956) | |||||||||||||||||||
Intangible adjustment (non-GAAP) | $ | 568,798 | $ | 498,048 | $ | 569,964 | $ | 475,239 | |||||||||||||||
Average stockholders' equity (GAAP) | $ | 1,831,300 | $ | 1,596,595 | $ | 1,814,471 | $ | 1,502,474 | |||||||||||||||
Average cumulative preferred stock (GAAP) | (125) | (125) | (125) | (125) | |||||||||||||||||||
Intangible adjustment (non-GAAP) | (568,798) | (498,048) | (569,964) | (475,239) | |||||||||||||||||||
Average tangible capital (non-GAAP) | $ | 1,262,377 | $ | 1,098,422 | $ | 1,244,382 | $ | 1,027,110 | |||||||||||||||
Average assets (GAAP) | $ | 13,660,818 | $ | 11,277,742 | $ | 13,297,789 | $ | 10,623,664 | |||||||||||||||
Intangible adjustment (non-GAAP) | (568,798) | (498,048) | (569,964) | (475,239) | |||||||||||||||||||
Average tangible assets (non-GAAP) | $ | 13,092,020 | $ | 10,779,694 | $ | 12,727,825 | $ | 10,148,425 | |||||||||||||||
Net income available to common stockholders (GAAP) | $ | 36,210 | $ | 36,757 | $ | 103,465 | $ | 116,630 | |||||||||||||||
CDI amortization, net of tax (GAAP) | 1,174 | 1,071 | 3,564 | 3,480 | |||||||||||||||||||
Tangible net income available to common stockholders (non-GAAP) | $ | 37,384 | $ | 37,828 | $ | 107,029 | $ | 120,110 | |||||||||||||||
Per Share Data: | |||||||||||||||||||||||
Diluted net income available to common stockholders (GAAP) | $ | 0.67 | $ | 0.71 | $ | 1.91 | $ | 2.32 | |||||||||||||||
Diluted tangible net income available to common stockholders (non-GAAP) | $ | 0.69 | $ | 0.73 | $ | 1.97 | $ | 2.39 | |||||||||||||||
Ratios: | |||||||||||||||||||||||
Return on average GAAP capital (ROE) | 7.91 | % | 9.21 | % | 7.60 | % | 10.35 | % | |||||||||||||||
Return on average tangible capital | 11.85 | % | 13.78 | % | 11.47 | % | 15.59 | % | |||||||||||||||
Return on average assets (ROA) | 1.06 | % | 1.30 | % | 1.04 | % | 1.46 | % | |||||||||||||||
Return on average tangible assets | 1.14 | % | 1.40 | % | 1.12 | % | 1.58 | % |
(Dollars in Thousands) | September 30, 2020 | December 31, 2019 | ||||||||||||
Non-Performing Assets: | ||||||||||||||
Non-accrual loans | $ | 56,739 | $ | 15,949 | ||||||||||
Renegotiated loans | 2,677 | 841 | ||||||||||||
Non-performing loans (NPL) | 59,416 | 16,790 | ||||||||||||
OREO and Repossessions | 6,984 | 7,527 | ||||||||||||
Non-performing assets (NPA) | 66,400 | 24,317 | ||||||||||||
Loans 90-days or more delinquent and still accruing | 1,330 | 69 | ||||||||||||
NPAs and loans 90-days or more delinquent | $ | 67,730 | $ | 24,386 | ||||||||||
Impaired Loans | $ | 52,484 | $ | 11,709 |
(Dollars in Thousands) | September 30, 2020 | December 31, 2019 | |||||||||
Non-performing assets and loans 90-days or more delinquent: | |||||||||||
Commercial and industrial loans | $ | 5,950 | $ | 1,259 | |||||||
Agricultural production financing and other loans to farmers | 1,100 | 183 | |||||||||
Real estate loans: | |||||||||||
Construction | 6,340 | 7,191 | |||||||||
Commercial and farmland | 43,740 | 7,103 | |||||||||
Residential | 7,581 | 6,810 | |||||||||
Home equity | 2,912 | 1,795 | |||||||||
Individuals' loans for household and other personal expenditures | 65 | 45 | |||||||||
Public finance and other commercial loans | 42 | — | |||||||||
Non-performing assets and loans 90-days or more delinquent: | $ | 67,730 | $ | 24,386 |
September 30, 2020 | |||||||||||
Recorded Balance | Number of Loans | ||||||||||
Commercial and industrial loans | $ | 29,735 | 33 | ||||||||
Agriculture production financing and other loans to farmers | 265 | 2 | |||||||||
Real estate loans: | |||||||||||
Construction | 3,093 | 1 | |||||||||
Commercial and farmland | 134,435 | 62 | |||||||||
Residential | 6,815 | 50 | |||||||||
Home equity | 1,286 | 11 | |||||||||
Individuals' loans for household and other personal expenditures | 305 | 20 | |||||||||
Total | $ | 175,934 | 179 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(Dollars in Thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Net charge-offs (Recoveries): | |||||||||||||||||||||||
Commercial and industrial loans | $ | 6,702 | $ | 23 | $ | 6,862 | $ | (130) | |||||||||||||||
Agricultural production financing and other loans to farmers | (72) | (3) | (67) | 13 | |||||||||||||||||||
Real estate loans: | |||||||||||||||||||||||
Construction | — | 1,007 | (37) | 1,226 | |||||||||||||||||||
Commercial and farmland | (46) | (72) | (10) | 876 | |||||||||||||||||||
Residential | 19 | 8 | 50 | 62 | |||||||||||||||||||
Home equity | 296 | 25 | 616 | (44) | |||||||||||||||||||
Individuals' loans for household and other personal expenditures | 38 | 4 | 335 | 39 | |||||||||||||||||||
Public finance and other commercial loans | — | 311 | — | 239 | |||||||||||||||||||
Total net charge-offs | $ | 6,937 | $ | 1,303 | $ | 7,749 | $ | 2,281 |
(Dollars in Thousands) | Remaining 2020 | 2021 | 2022 | 2023 | 2024 | 2025 and after | ASC 805 fair value adjustments at acquisition | Total | |||||||||||||||||||||||||||||||||||||||
Operating leases | $ | 913 | $ | 3,458 | $ | 3,331 | $ | 2,937 | $ | 2,867 | $ | 10,277 | $ | — | $ | 23,783 | |||||||||||||||||||||||||||||||
Federal funds purchased | 80,000 | — | — | — | — | — | — | 80,000 | |||||||||||||||||||||||||||||||||||||||
Securities sold under repurchase agreements | 187,732 | — | — | — | — | — | — | 187,732 | |||||||||||||||||||||||||||||||||||||||
Federal Home Loan Bank advances | 20,024 | 55,097 | 75,097 | 115,097 | 97 | 134,110 | — | 399,522 | |||||||||||||||||||||||||||||||||||||||
Subordinated debentures and other borrowings | — | — | — | — | — | 122,012 | (3,692) | 118,320 | |||||||||||||||||||||||||||||||||||||||
Total | $ | 288,669 | $ | 58,555 | $ | 78,428 | $ | 118,034 | $ | 2,964 | $ | 266,399 | $ | (3,692) | $ | 809,357 |
(Dollars in Thousands) | September 30, 2020 | ||||
Amounts of commitments: | |||||
Loan commitments to extend credit | $ | 3,462,258 | |||
Standby and commercial letters of credit | 31,908 | ||||
$ | 3,494,166 |
September 30, 2020 | ||||||||||||||
RISING | FALLING | |||||||||||||
Driver Rates | (200 Basis Points) | (100 Basis Points) | ||||||||||||
Prime | 200 | — | ||||||||||||
Federal funds | 200 | — | ||||||||||||
One-year CMT | 200 | (4) | ||||||||||||
Three-year CMT | 200 | (4) | ||||||||||||
Five-year CMT | 200 | (5) | ||||||||||||
CD's | 200 | (16) | ||||||||||||
FHLB advances | 200 | (1) |
September 30, 2020 | ||||||||||||||||||||
RISING | FALLING | |||||||||||||||||||
(Dollars in Thousands) | Base | (200 Basis Points) | (100 Basis Points) | |||||||||||||||||
Net interest income | $ | 348,659 | $ | 367,460 | $ | 352,237 | ||||||||||||||
Variance from base | $ | 18,800 | $ | 3,577 | ||||||||||||||||
Percent of change from base | 5.4 | % | 1.0 | % |
December 31, 2019 | ||||||||||||||
RISING | FALLING | |||||||||||||
Driver Rates | (200 Basis Points) | (100 Basis Points) | ||||||||||||
Prime | 200 | (100) | ||||||||||||
Federal funds | 200 | (100) | ||||||||||||
One-year CMT | 200 | (100) | ||||||||||||
Three-year CMT | 200 | (100) | ||||||||||||
Five-year CMT | 200 | (100) | ||||||||||||
CD's | 200 | (24) | ||||||||||||
FHLB advances | 200 | (89) |
December 31, 2019 | ||||||||||||||||||||
RISING | FALLING | |||||||||||||||||||
(Dollars in Thousands) | Base | (200 Basis Points) | (100 Basis Points) | |||||||||||||||||
Net interest income | $ | 368,024 | $ | 389,367 | $ | 355,191 | ||||||||||||||
Variance from base | $ | 21,343 | $ | (12,833) | ||||||||||||||||
Percent of change from base | 5.8 | % | (3.5) | % |
(Dollars in Thousands) | September 30, 2020 | December 31, 2019 | ||||||||||||
Interest-bearing deposits | $ | 273,936 | $ | 118,263 | ||||||||||
Investment securities available for sale | 1,824,160 | 1,790,025 | ||||||||||||
Investment securities held to maturity | 1,109,126 | 806,038 | ||||||||||||
Loans held for sale | 3,183 | 9,037 | ||||||||||||
Loans | 9,243,833 | 8,459,310 | ||||||||||||
Federal Home Loan Bank stock | 28,736 | 28,736 | ||||||||||||
Total | $ | 12,482,974 | $ | 11,211,409 |
Period | Total Number of Shares Purchased (i) | Average Price Paid per Share | Total Number of Shares Purchased as part of Publicly announced Plans or Programs | Maximum Number of Shares that may yet be Purchased Under the Plans or Programs | ||||||||||||||||||||||
July, 2020 | 35,668 | $ | 24.43 | — | — | |||||||||||||||||||||
August, 2020 | 275 | $ | 26.36 | — | — | |||||||||||||||||||||
September, 2020 | 422 | $ | 24.40 | — | — |
Exhibit No: | Description of Exhibits: | ||||
3.1 | |||||
3.2 | |||||
4.1 | |||||
4.2 | |||||
4.3 | |||||
4.4 | |||||
4.5 | |||||
4.6 | |||||
10.1 | |||||
31.1 | |||||
31.2 | |||||
32 | |||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (2) | ||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document (2) | ||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document (2) | ||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (2) | ||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document (2) | ||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (2) | ||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101) | ||||
(1) Management contract or compensatory plan. | |||||
(2) Filed herewith. | |||||
(3) Furnished herewith. |
First Merchants Corporation | |||||
(Registrant) | |||||
November 9, 2020 | By: /s/ Michael C. Rechin | ||||
Michael C. Rechin | |||||
President and Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
November 9, 2020 | By: /s/ Mark K. Hardwick | ||||
Mark K. Hardwick | |||||
Executive Vice President, | |||||
Chief Financial Officer and Chief Operating Officer | |||||
(Principal Financial and Accounting Officer) |
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Investment securities held to maturity - fair value | $ 1,152,518 | $ 827,566 |
Loans - allowance for loan losses | $ 126,726 | $ 80,284 |
Preferred Stock, par value (in dollars per share) | $ 1,000 | $ 1,000 |
Preferred Stock, liquidation value per share (in dollars per share) | $ 1,000 | $ 1,000 |
Preferred Stock, authorized (in shares) | 600 | 600 |
Preferred Stock, issued (in shares) | 125 | 125 |
Preferred Stock, outstanding (in shares) | 125 | 125 |
Common Stock, stated value (in dollars per share) | $ 0.125 | $ 0.125 |
Common Stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common Stock, issued (in shares) | 53,891,733 | 55,368,482 |
Common Stock, outstanding (in shares) | 53,891,733 | 55,368,482 |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 36,210 | $ 36,757 | $ 103,465 | $ 116,630 |
Other comprehensive income (loss), net of tax: | ||||
Unrealized holding gain (loss) on securities available for sale arising during the period, net of tax of $749, $3,034, $12,156, and $13,436 | 2,819 | 11,415 | 45,729 | 50,545 |
Unrealized gain (loss) on cash flow hedges arising during the period, net of tax of $1, $37, $305, and $267 | 7 | (141) | (1,146) | (1,003) |
Reclassification adjustment for net gains included in net income, net of tax of $320, $61, $1,857, and $657 | (1,203) | (228) | (6,989) | (2,472) |
Total other comprehensive income, net of tax | 1,623 | 11,046 | 37,594 | 47,070 |
Comprehensive income | $ 37,833 | $ 47,803 | $ 141,059 | $ 163,700 |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
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Statement of Comprehensive Income [Abstract] | ||||
Unrealized holding gain (loss) on securities available for sale arising during the period, tax | $ 749 | $ 3,034 | $ 12,156 | $ 13,436 |
Unrealized gain (loss) on cash flow hedges arising during the period, tax | 1 | (37) | (305) | (267) |
Reclassification adjustment for net losses (gains) included in net income, tax | $ 320 | $ 61 | $ 1,857 | $ 657 |
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
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Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends on common stock (in dollars per share) | $ 0.26 | $ 0.26 | $ 0.78 | $ 0.74 |
General |
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Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | GENERAL Financial Statement Preparation The significant accounting policies followed by the Corporation and its wholly-owned subsidiaries for interim financial reporting are consistent with the accounting policies followed for annual financial reporting. All adjustments, which are of a normal recurring nature and are in the opinion of management necessary for a fair statement of the results for the periods reported, have been included in the accompanying Consolidated Condensed Financial Statements. The Consolidated Condensed Balance Sheet of the Corporation as of December 31, 2019, has been derived from the audited consolidated balance sheet of the Corporation as of that date. Certain information and note disclosures normally included in the Corporation’s annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission. The results of operations for the three and nine months ended September 30, 2020, are not necessarily indicative of the results to be expected for the year. Reclassifications have been made to prior financial statements to conform to the current financial statement presentation. These reclassifications had no effect on net income. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses and fair value of financial instruments. The uncertainties related to the coronavirus disease 2019 ("COVID-19") could cause significant changes to these estimates compared to what was known at the time these financial statements were prepared. Impact of COVID-19 On January 30, 2020, the World Health Organization (“WHO”) announced that the outbreak of COVID-19 constituted a public health emergency of international concern. On March 11, 2020, WHO declared COVID-19 to be a global pandemic and, on March 13, 2020, the President of the United States declared the COVID-19 outbreak a national emergency. The health concerns relating to the COVID-19 outbreak and related governmental actions taken to reduce the spread of the virus have significantly impacted the global economy (including the states and local economies in which the Corporation operates), disrupted supply chains, lowered equity market valuations, and created significant volatility and disruption in financial markets. The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place or total lock-down orders and business limitations and shutdowns. As a result of the shelter in place mandates in effect early in the second quarter of 2020, commercial activity throughout our geographic footprint, as well as nationally, decreased significantly during 2020. Most states have reopened, albeit under limited capacities and under other social distancing restrictions; however, commercial activity has not returned to the levels existing prior to the outbreak of the pandemic. Such measures have significantly contributed to rising unemployment and negatively impacted consumer and business spending. As a result, the demand for the Corporation’s products and services has been, and will continue to be, significantly impacted. Recent Accounting Changes Adopted in 2020 FASB Accounting Standards Updates No. 2018-15 - Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract Summary - The FASB issued Accounting Standards Update (ASU) No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which reduces complexity for the accounting for costs of implementing a cloud computing service arrangement. This standard aligns the accounting for implementation costs of hosting arrangements, regardless of whether they convey a license to the hosted software. The ASU aligns the following requirements for capitalizing implementation costs: •Those incurred in a hosting arrangement that is a service contract, and •Those incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). For calendar-year public companies, the changes were effective for fiscal years beginning after December 15, 2019. The Corporation adopted the standard in the first quarter of 2020 and adoption of the standard did not have a significant effect on the Corporation’s consolidated financial statements. FASB Accounting Standards Updates No. 2018-14 - Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans Summary - The FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, that applies to all employers that sponsor defined benefit pension or other postretirement plans. The amendments modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Disclosure Requirements Deleted •The amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year. •The amount and timing of plan assets expected to be returned to the employer. •Related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan. •For public entities, the effects of a one-percentage-point change in assumed health care cost trend rates on the (a) aggregate of the service and interest cost components of net periodic benefit costs and (b) benefit obligation for postretirement health care benefits. Disclosure Requirements Added •An explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The amendments also clarify the disclosure requirements in paragraph 715-20-50-3, which state that the following information for defined benefit pension plans should be disclosed: •The projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets, and •The accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets. ASU No. 2018-14 is effective for fiscal years ending after December 15, 2020, for public business entities and for fiscal years ending after December 15, 2021, for all other entities. Early adoption is permitted for all entities. The Corporation adopted the standard in the first quarter of 2020 and adoption of the standard did not have a significant effect on the Corporation’s consolidated financial statements. FASB Accounting Standards Updates No. 2018-13 - Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement Summary - The FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. ASU No. 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820. Certain disclosure requirements related to transfers between Level 1 and Level 2 of the fair value hierarchy and Level 3 valuation process were removed from Topic 820. Disclosures were also added to Topic 820 for changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. In addition, the amendments eliminate "at a minimum" from the phrase “an entity shall disclose at a minimum” to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements. The amendments in ASU No. 2018-13 were effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty were applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments were applied retrospectively to all periods presented upon their effective date. Early adoption was permitted. An entity was permitted to early adopt any removed or modified disclosures upon issuance of ASU No. 2018-13 and delay adoption of the additional disclosures until their effective date. The Corporation adopted the standard in the first quarter of 2020 and adoption of the standard did not have a significant effect on the Corporation’s disclosures. FASB Accounting Standards Updates No. 2017-04 - Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. Summary - The FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill, which simplifies how an entity is required to test goodwill for impairment. To simplify the subsequent measurement of goodwill, the ASU eliminates Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, the income tax effects of tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the qualitative impairment test is necessary. The amendments were applied on a prospective basis. The Corporation adopted ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill, January 1, 2020 and assessed the recent economic impact and market conditions from the COVID-19 pandemic. At September 30, 2020, the Corporation performed a goodwill impairment test which included various valuation considerations including comparable peer data, precedent transaction comparables, discounted cash flow analysis, overall financial performance, share price of the Corporation's common stock and other factors. The testing resulted in a conclusion that it was not more likely than not that the fair value of the Corporation had declined below its carrying value; therefore, goodwill was not impaired at September 30, 2020. Goodwill assessments are highly sensitive to economic projections and the related assumptions used by management. In the event of a prolonged economic downturn or further deterioration in the economic outlook, continued assessments of our goodwill balance will likely be required in future periods. Details of the goodwill impairment test are included in NOTE 6. GOODWILL of these Notes to Consolidated Condensed Financial Statements. Guidance on Non-TDR Loan Modifications due to COVID-19 On March 22, 2020, a statement was issued by the Bank's banking regulators and titled the “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” (the "Interagency Statement") that encourages financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19. Additionally, Section 4013 of the CARES Act further provides that a qualified loan modification is exempt by law from classification as a troubled debt restructure as defined by GAAP, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak under the National Emergencies Act (50 U.S.C. 1601 et seq.) terminates. The Interagency Statement was subsequently revised on April 7, 2020 to clarify the interaction of the original guidance with Section 4013 of the CARES Act, as well as setting forth the banking regulators’ views on consumer protection considerations. In accordance with such guidance, the Bank has offered short-term modifications made in response to COVID-19 to borrowers who were current and otherwise not past due. These included short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. As of September 30, 2020, approximately $176 million of loan balances remained in deferral. Details of the Corporation's modifications are included in the "LOAN QUALITY/PROVISION FOR LOAN LOSSES" section of Management's Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q. New Accounting Pronouncements Not Yet Adopted The Corporation continually monitors potential accounting changes and pronouncements. The following pronouncements have been deemed to have the most applicability to the Corporation's financial statements: FASB Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Summary - The FASB issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This new guidance was issued to address concerns that current generally accepted accounting principles (GAAP) restricts the ability to record credit losses that are expected, but do not yet meet the “probable” threshold by replacing the current “incurred loss” model for recognizing credit losses with an “expected life of loan loss” model referred to as the Current Expected Credit Loss (CECL) model. Under the CECL model, certain financial assets carried at amortized cost, such as loans held for investment and held-to-maturity debt securities, are required to be presented at the net amount expected to be collected. The measurement of expected credit losses is to be based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the “incurred loss” model required under current GAAP, which delays recognition until it is probable a loss has been incurred. The change could materially affect how the allowance for loan losses is determined and cause a charge/credit to earnings through the provision for loan losses. Such could create volatility in earnings and could adversely affect the financial condition of the Corporation. The ASU is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Pursuant to the CARES Act and the related joint statement of federal banking regulators (which also became effective as of March 27, 2020), and consistent with guidance from the SEC and FASB, the Corporation has elected to delay implementation of ASU No. 2016-13, which would have become effective for the Corporation as of January 1, 2020. As discussed above, ASU No. 2016-13 provides for the replacement of the incurred loss model for recording the allowance for loan losses with CECL. However, as a result of the Corporation’s election, its first, second and third quarter 2020 financial statements have been prepared under the existing incurred loss model. As the temporary relief applicable to the Corporation’s compliance with CECL will end no later than December 31, 2020, the Corporation will implement CECL during the fourth quarter of 2020. The Corporation has developed models that satisfy the requirements of the new standard which will be governed by a system of internal controls and a cross-functional working group consisting of accounting, finance, and credit administration personnel. The loan portfolio was pooled into ten loan segments with similar risk characteristics for which the probability of default/loss given default methodology will be applied. The Corporation intends to utilize a one-year economic forecast period then revert to historical macroeconomic levels for the remaining life of the portfolio. A baseline macroeconomic scenario, along with other scenarios, will be used to develop a range of estimated credit losses for which to determine the best estimate within. The Corporation will record a one-time cumulative-effect adjustment to retained earnings, net of income taxes, on the consolidated balance sheet as of the beginning of the adoption period. If adopted with retrospective measurement to January 1, 2020, the allowance will increase by 55-65 percent from December 31, 2019 because it will cover expected credit losses over the life of the loan portfolio, which approximates four years, and it includes all purchased loans that were previously excluded from the allowance for loan losses calculation. CECL also requires the establishment of a reserve for potential losses from unfunded commitments that is recorded in other liabilities, separate from allowance for credit losses, which is estimated to be approximately $18 million. FASB Accounting Standards Update No. 2019-11 - Codification Improvements to (Topic 326): Financial Instruments - Credit Losses Summary - The FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses in order to address issues raised by stakeholders during the implementation of ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments. Among other narrow-scope improvements, the new ASU clarifies guidance around how to report expected recoveries. “Expected recoveries” describes a situation in which an organization recognizes a full or partial write-off of the amortized cost basis of a financial asset, but then later determines that the amount written off, or a portion of that amount, will in fact be recovered. While applying the credit losses standard, stakeholders questioned whether expected recoveries were permitted on assets that had already shown credit deterioration at the time of purchase (also known as PCD assets). In response to this question, the ASU permits organizations to record expected recoveries on PCD assets. In addition to other narrow technical improvements, the ASU also reinforces existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities. The ASU includes effective dates and transition requirements that vary depending on whether or not an entity has already adopted ASU No. 2016-13. As discussed above, pursuant to the CARES Act, the Corporation elected to defer the adoption of CECL. As the temporary relief applicable to the Corporation’s compliance with CECL will end no later than December 31, 2020, the Corporation will implement CECL during the fourth quarter of 2020. FASB Accounting Standards Updates - No. 2020-04 - Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Summary - The FASB issued ASU No. 2020-04 to provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. LIBOR and other interbank offered rates are widely used benchmarks or reference rates in the United States and globally. Trillions of dollars in loans, derivatives, and other financial contracts reference LIBOR, the benchmark interest rate banks use to make short-term loans to each other. With global capital markets expected to move away from LIBOR and other interbank offered rates and move toward rates that are more observable or transaction based and less susceptible to manipulation, the FASB launched a broad project in late 2018 to address potential accounting challenges expected to arise from the transition. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU is intended to help stakeholders during the global market-wide reference rate transition period. Entities may apply this ASU as of the beginning of an interim period that includes the March 12, 2020 issuance date of the ASU, through December 31, 2022. The Corporation expects to adopt the practical expedients included in the ASU prior to December 31, 2022. The Corporation is implementing a transition plan to identify and modify its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR. The Corporation is assessing ASU 2020-04 and its impact on the Corporation's transition away from LIBOR for its loans and other financial instruments.
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Acquisition | ACQUISITION MBT Financial Corp. On September 1, 2019, the Corporation acquired 100 percent of MBT. MBT, a Michigan corporation, merged with and into the Corporation, whereupon the separate corporate existence of MBT ceased and the Corporation survived. Immediately following the merger, MBT's wholly-owned subsidiary, Monroe Bank & Trust, merged with and into the Bank, with the Bank continuing as the surviving bank. MBT was headquartered in Monroe, Michigan and had 20 banking centers serving the Monroe market. Pursuant to the merger agreement, each MBT shareholder received 0.275 shares of the Corporation's common stock for each outstanding share of MBT common stock held. The Corporation issued approximately 6.4 million shares of common stock, which was valued at approximately $229.9 million. The Corporation engaged in this transaction with the expectation that it would be accretive to income and add a new market area in Michigan that has a demographic profile consistent with many of the current Indiana and Ohio markets served by the Bank. Goodwill resulted from this transaction due to the expected synergies and economies of scale. Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change based on the timing of the transaction, the purchase price for the MBT acquisition is detailed in the following table.
Of the total purchase price, $16,527,000 was allocated to a core deposit intangible, which will be amortized over its estimated life of 10 years. The remaining purchase price was allocated to goodwill, which is not deductible for tax purposes. Acquired loan data for MBT is included in the following table:
Purchased loans with evidence of credit deterioration since origination and for which it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments are accounted for under ASC 310-30, Loans Acquired with Deteriorated Credit Quality. The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference. The accretable portion of the fair value discount or premium is the difference between the expected cash flows and the net present value of expected cash flows, with such difference accreted into earnings over the term of the loans. Pro Forma Financial Information The results of operations of MBT have been included in the Corporation's consolidated financial statements since the acquisition date. The following table includes pro forma results for the year ended December 31, 2019 as if the MBT acquisition occurred as of the beginning of the period presented.
The pro forma information includes adjustments for interest income on loans and investments, interest expense on deposits and borrowings, premises expense for banking centers acquired and amortization of intangibles arising from the transaction and the related income tax effects. The pro forma information for the year ended December 31, 2019 includes operating revenue from MBT of $19.7 million since the date of acquisition. Additionally $19.7 million, net of tax, of non-recurring expenses directly attributable to the MBT acquisition were included in the year ended December 31, 2019 pro forma information. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that actually would have been achieved had the acquisition been consummated as of that time, or intended to be a projection of future results.
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | INVESTMENT SECURITIES The amortized cost, gross unrealized gains, gross unrealized losses and approximate market value of the Corporation's investment securities at the dates indicated were:
The increase in unrealized gains from December 31, 2019 to September 30, 2020 is primarily due to interest rate declines. The longer term points on the yield curve have declined since year-end which increases the fair value of securities in the portfolio. The amortized cost and fair value of available for sale and held to maturity securities at September 30, 2020 and December 31, 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
The carrying value of securities pledged as collateral, to secure borrowings and for other purposes, was $989,906,000 at September 30, 2020, and $503,427,000 at December 31, 2019. In order to facilitate the funding of PPP loans, the Bank pledged securities to the Discount Window at the Federal Reserve Bank resulting in the increase in pledged securities at September 30, 2020 compared to December 31, 2019. The book value of securities sold under agreements to repurchase amounted to $177,543,000 at September 30, 2020, and $182,856,000 at December 31, 2019. Gross gains on the sales and redemptions of available for sale securities for the three and nine months ended September 30, 2020 and 2019 are shown below.
The following tables show the Corporation’s gross unrealized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position at September 30, 2020, and December 31, 2019:
Certain investments in debt and equity securities are reported in the financial statements at an amount less than their historical cost as indicated in the table below.
The Corporation's management believes the decline in fair value for these securities was temporary. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income during the period the other-than-temporary-impairment ("OTTI") is identified. The Corporation’s management has evaluated all securities with unrealized losses for OTTI and concluded no OTTI existed at September 30, 2020. In determining the fair value of the investment securities portfolio, the Corporation utilizes a third party for portfolio accounting services, including market value input, for those securities classified as Level 1 and Level 2 in the fair value hierarchy. The Corporation has obtained an understanding of what inputs are being used by the vendor in pricing the portfolio and how the vendor classified these securities based upon these inputs. From these discussions, the Corporation’s management is comfortable that the classifications are proper. The Corporation has gained trust in the data for two reasons: (a) independent spot testing of the data is conducted by the Corporation through obtaining market quotes from various brokers on a periodic basis; and (b) actual gains or loss resulting from the sale of certain securities has proven the data to be accurate over time. Fair value of securities classified as Level 3 in the valuation hierarchy was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active. State and Municipal Securities, U.S. Government-Sponsored Agency Securities and Foreign Investment Securities The unrealized losses on the Corporation's investments in securities of state and political subdivisions, U.S. Government-Sponsored Agency securities and foreign investment securities were caused by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Corporation does not consider those investments to be other-than-temporarily impaired at September 30, 2020. The state and municipal securities portfolio contains unrealized losses of $187,000 on thirteen securities and $1,240,000 on seventy-one securities in the available for sale and held to maturity portfolios, respectively. At September 30, 2020, the Corporation had little to no exposure to municipal bonds related to entertainment receipts, student housing, parking facilities, airports, nursing homes or public transit. The U.S. Government-Sponsored Agency securities portfolio contains no unrealized losses in the available for sale portfolio, and unrealized losses of $33,000 on two securities in the held to maturity portfolio. The foreign investment securities portfolio contains no unrealized losses in the available for sale portfolio, and an unrealized loss of $2,000 on one security in the held to maturity portfolio. U.S. Government-Sponsored Mortgage-Backed Securities The unrealized losses on the Corporation's investment in mortgage-backed securities were a result of interest rate changes. The Corporation expects to recover the amortized cost basis over the term of the securities. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Corporation does not consider those investments to be other-than-temporarily impaired at September 30, 2020. The mortgage-backed securities portfolio contains no unrealized losses in the available for sale portfolio, and an unrealized loss of $3,000 on one security in the held to maturity portfolio. All these securities are issued by a U.S. government-sponsored entity and have an implicit or explicit government guarantee. The slowing of prepayments and the forbearance programs resulting from the financial impacts of COVID-19 could increase bond duration and potentially improve market values on these securities.
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Loans and Allowance |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Allowance | LOANS AND ALLOWANCE Loans are stated at the amount of unpaid principal, reduced by deferred income (net of costs). Interest on loans is recognized using the simple interest method on the daily balances of the principal amounts outstanding. Loan origination fees, net of direct loan origination costs, and commitment fees are deferred and amortized as an adjustment to yield over the life of the loan, or over the commitment period, as applicable. The Corporation’s primary lending focus is small business and middle market commercial, commercial real estate and residential real estate, which results in portfolio diversification. The following tables show the composition of the loan portfolio, the allowance for loan losses and credit quality characteristics by collateral classification, excluding loans held for sale. Loans held for sale as of September 30, 2020, and December 31, 2019, were $3,183,000 and $9,037,000, respectively. The following table illustrates the composition of the Corporation’s loan portfolio by loan class for the periods indicated:
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law, providing an approximately $2 trillion stimulus package that includes direct payments to individual taxpayers, economic stimulus to significantly impacted industry sectors, emergency funding for hospitals and providers, small business loans, increased unemployment benefits, and a variety of tax incentives. For small businesses, eligible nonprofits and certain others, the CARES Act established a Paycheck Protection Program (“PPP”), which is administered by the Small Business Administration (“SBA”). On April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act was enacted. Among other things, this legislation amends the initial CARES Act program by raising the appropriation level for PPP loans from $349 billion to $670 billion. The PPP was further modified on June 5, 2020 with the adoption of the Paycheck Protection Program Flexibility Act ("the Flexibility Act"), which extended the maturity date for PPP loans from two years to five years for loans disbursed on or after the date of enactment of the Flexibility Act. For PPP loans disbursed prior to such enactment, the Flexibility Act permits the borrower and lender to mutually agree to extend the term of the loan to five years. The Bank has actively participated in assisting its customers with applications for resources through the program. PPP loans earn interest at a fixed rate of 1 percent and primarily have a two year term. The Bank anticipates that the majority of these loans will ultimately be forgiven, in whole or in part, by the SBA as, in accordance with the terms of the PPP, the loans are fully guaranteed by the SBA. As of September 30, 2020, the Bank had funded over 5,200 PPP loans, primarily in the commercial and industrial loan class, totaling $901.4 million, net of deferred processing fees and costs of $21.5 million. The Bank borrowed from the Paycheck Protection Program Liquidity Facility ("PPPL Facility") to supplement liquidity to fund the PPP loans in the second quarter 2020. At September 30, 2020, the Corporation did not have an outstanding balance with the PPPL Facility. Allowance, Credit Quality and Loan Portfolio The original implementation date of the Current Expected Credit Loss (CECL) model for calculating the Allowance for Credit Losses guided by FASB Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit losses on Financial Instruments was January 1, 2020. Pursuant to the CARES Act and the related joint statement of federal banking regulators (which also became effective as of March 27, 2020), and consistent with guidance from the SEC and FASB, the Corporation elected to delay implementation of ASU No. 2016-13. As discussed below, ASU No. 2016-13, provides for the replacement of the incurred loss model for recording the allowance for loan losses with CECL. However, as a result of the Corporation’s election, its 2020 financial statements have been prepared under the existing incurred loss model. As the temporary relief applicable to the Corporation’s compliance with CECL will end no later than December 31, 2020, the Corporation will implement CECL during the fourth quarter of 2020. The Corporation maintains an allowance for loan losses to cover probable credit losses identified during its loan review process. Management believes the allowance for loan losses is adequate to cover probable losses inherent in the loan portfolio at September 30, 2020. The process for determining the adequacy of the allowance for loan losses is critical to the Corporation’s financial results. It requires management to make difficult, subjective and complex judgments to estimate the effect of uncertain matters. The allowance for loan losses considers current factors, including economic conditions and ongoing internal and external examinations, and will increase or decrease as deemed necessary to ensure it remains adequate. In addition, the allowance as a percentage of charge-offs and nonperforming loans will change at different points in time based on credit performance, portfolio mix and collateral values. The allowance for loan losses is maintained through the provision for loan losses, which is a charge against earnings. The allowance is increased by provision expense and decreased by charge-offs less recoveries. All charge-offs are approved by the Bank's senior credit officers and in accordance with established policies. The Bank charges off a loan when a determination is made that all or a portion of the loan is uncollectable. The amount provided for loan losses in a given period may be greater than or less than net loan losses experienced during the period, and is based on management’s judgment as to the appropriate level of the allowance for loan losses. The determination of the provision amount is based on management’s ongoing review and evaluation of the loan portfolio, including an internally administered loan "watch" list and independent loan reviews. The evaluation takes into consideration identified credit problems, the possibility of losses inherent in the loan portfolio that are not specifically identified and management’s judgment as to the impact of the current environment and economic conditions on the portfolio. The allowance consists of specific impairment reserves as required by ASC 310-10-35, a component for historical losses in accordance with ASC 450 and the consideration of current environmental factors in accordance with ASC 450. A loan is deemed impaired when, based on current information or events, it is probable that all amounts due of principal and interest according to the contractual terms of the loan agreement will not be collected. The historical loss allocation for loans not deemed impaired according to ASC 450 is the product of the volume of loans within the non-impaired criticized and non-criticized risk grade classifications, each segmented by call code, and the historical loss factor for each respective classification and call code segment. The historical loss factors are based upon actual loss experience within each risk and call code classification. The historical look back period for non-criticized loans looks to the most recent rolling-four-quarter average and aligns with the look back period for non-impaired criticized loans. Each of the rolling four quarter periods used to obtain the average, include all charge-offs for the previous twelve-month period, therefore the historical look back period includes seven quarters. The resulting allocation is reflective of current conditions. Criticized loans are grouped based on the risk grade assigned to the loan. Loans with a special mention grade but not impaired are assigned a loss factor, and loans with a classified grade but not impaired are assigned a separate loss factor. The loss factor computation for this allocation includes a segmented historical loss migration analysis of risk grades to charge-off. In addition to the specific reserves and historical loss components of the allowance, consideration is given to various environmental factors to ensure that losses inherent in the portfolio are reflected in the allowance for loan losses. The environmental component adjusts the historical loss allocations for non-impaired loans to reflect relevant current conditions that, in management's opinion, have an impact on loss recognition. Environmental factors that management reviews in the analysis include: national and local economic trends and conditions; trends in growth in the loan portfolio and growth in higher risk areas; levels of, and trends in, delinquencies and non-accruals; experience and depth of lending management and staff; adequacy of, and adherence to, lending policies and procedures including those for underwriting; industry concentrations of credit; and adequacy of risk identification systems and controls through the internal loan review and internal audit processes. In conformance with ASC 805 and ASC 820, purchased loans are recorded at the acquisition date fair value. Such loans are included in the allowance to the extent a specific impairment is identified that exceeds the fair value adjustment on an impaired loan or the historical loss and environmental factor analysis indicates losses inherent in a purchased portfolio exceeds the fair value adjustment on the portion of the purchased portfolio not deemed impaired. The following tables summarize changes in the allowance for loan losses by loan segment for the three and nine months ended September 30, 2020 and September 30, 2019:
The tables below show the Corporation’s allowance for loan losses and loan portfolio by loan segment as of the periods indicated.
Loans individually evaluated for impairment are comprised of commercial and consumer loans deemed impaired in accordance with ASC 310-10. This includes loans acquired with deteriorated credit quality totaling $3,738,000 with $116,000 of related allowance for loan losses at September 30, 2020 and $2,819,000 with $124,000 related allowance for loan losses at December 31, 2019. The risk characteristics of the Corporation’s material portfolio segments are as follows: Commercial Commercial lending is primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the tangible assets being financed such as equipment or real estate or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. Other loans may be unsecured, secured but under-collateralized or otherwise made on the basis of the enterprise value of an organization. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. Commercial real estate These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. Management monitors and evaluates commercial real estate loans based on collateral and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans. Consumer and Residential With respect to residential loans that are secured by 1-4 family residences and are typically owner occupied, the Corporation generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans are unsecured such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment on loans secured by 1-4 family residences can be impacted by changes in property values. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers. Loans are reclassified to a non-accruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest. When the interest accrual is discontinued, all unpaid accrued interest is reversed against earnings when considered uncollectable. Payments subsequently received on non-accrual loans are applied to principal. A loan is returned to accrual status when principal and interest are no longer past due and collectability is probable, typically after a minimum of six consecutive months of performance. Payments received on impaired accruing or delinquent loans are applied to interest income as accrued. The following table summarizes the Corporation’s non-accrual loans by loan class as of the periods indicated:
Non-accrual loans increased $40.8 million from December 31, 2019. An increase of $36.0 million was attributed to the commercial and farmland segment, specifically non-owner occupied commercial real estate, as three relationships were moved to non-accrual during the second and third quarters of 2020. These three relationships involve four properties, three of which total $31.2 million in the senior living sector and the fourth totaled $3.4 million in the self-storage sector. Additionally, $4.7 million of the increase in non-accrual loans was in the commercial and industrial loans segment. This largest portion of this increase was due to the addition of a $2.8 million loan in the university logo apparel sports industry. Impaired loans include loans deemed impaired according to the guidance set forth in ASC 310-10. Commercial loans under $500,000 and consumer loans, with the exception of troubled debt restructures, are not individually evaluated for impairment. Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral dependent loans. If the impaired loan is identified as collateral dependent, then the fair value method for measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor, which includes selling costs if applicable, to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions. The following tables show the composition of the Corporation’s impaired loans, related allowance and interest income recognized while impaired by loan class as of the periods indicated:
Impaired loans in the above tables do not include loans accounted for under ASC 310-30, or any other loan, unless deemed impaired in accordance with ASC 310-10. As part of the ongoing monitoring of the credit quality of the Corporation's loan portfolio, management tracks certain credit quality indicators including trends related to: (i) the level of criticized commercial loans, (ii) net charge-offs, (iii) non-performing loans, (iv) covenant failures and (v) the general national and local economic conditions. The Corporation utilizes a risk grading of pass, special mention, substandard, doubtful and loss to assess the overall credit quality of large commercial loans. All large commercial credit grades are reviewed at a minimum of once a year for pass grade loans. Loans with grades below pass are reviewed more frequently depending on the grade. A description of the general characteristics of these grades is as follows: •Pass - Loans that are considered to be of acceptable credit quality. •Special Mention - Loans which possess some credit deficiency or potential weakness, which deserves close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Corporation's credit position at some future date. Special mention assets are not adversely classified and do not expose the Corporation to sufficient risk to warrant adverse classification. The key distinctions of this category's classification are that it is indicative of an unwarranted level of risk; and weaknesses are considered “potential”, not “defined”, impairments to the primary source of repayment. Examples include businesses that may be suffering from inadequate management, loss of key personnel or significant customer or litigation. •Substandard - A substandard loan is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have a well-defined weakness that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Other characteristics may include:
•Doubtful - Loans that have all of the weaknesses of those classified as Substandard. However, based on currently existing facts, conditions and values, these weaknesses make full collection of principal highly questionable and improbable. Other credit characteristics may include considerable doubt as to the quality of the secondary sources of repayment. The possibility of loss is high, but because of certain important pending factors that may strengthen the loan, loss classification is deferred until the exact status of repayment is known. •Loss – Loans that are considered uncollectable and of such little value that continuing to carry them as an asset is not warranted. Loans will be classified as Loss when it is neither practical not desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future. The following tables summarize the credit quality of the Corporation’s loan portfolio, by loan class for the periods indicated. Consumer non-performing loans include accruing consumer loans 90-days or more delinquent and consumer non-accrual loans. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified date. Loans that evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected are included in the applicable categories below.
The tables below show a past due aging of the Corporation’s loan portfolio, by loan class, as of September 30, 2020, and December 31, 2019:
As shown in the tables above, the level of total loan delinquencies has increased $14.7 million during the first nine months of 2020. The increases were primarily related to the 60-89 days past due commercial and farmland category, which increased $9.9 million due to one relationship, and the 30-59 days past due construction category, which increased $5.9 million due primarily to one $7.5 million relationship. On occasion, borrowers experience declines in income and cash flow. As a result, these borrowers seek to reduce contractual cash outlays including debt payments. Concurrently, in an effort to preserve and protect its earning assets, specifically troubled loans, the Corporation works to maintain its relationship with certain customers who are experiencing financial difficulty by contractually modifying the borrower's debt agreement with the Corporation. On March 22, 2020, a statement was issued by the Bank's banking regulators and titled the “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” (the "Interagency Statement") that encourages financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19. Additionally, Section 4013 of the CARES Act further provides that a qualified loan modification is exempt by law from classification as a troubled debt restructure as defined by GAAP, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak under the National Emergencies Act (50 U.S.C. 1601 et seq.) terminates. The Interagency Statement was subsequently revised on April 7, 2020 to clarify the interaction of the original guidance with Section 4013 of the CARES Act, as well as setting forth the banking regulators’ views on consumer protection considerations. In accordance with such guidance, the Bank has offered short-term modifications made in response to COVID-19 to borrowers who were current and otherwise not past due. These included short-term, typically 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. These loans are not considered troubled debt restructures under the applicable guidance at September 30, 2020. Details of the Corporation's modifications are included in the "LOAN QUALITY/PROVISION FOR LOAN LOSSES" section of Management's Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q. In certain loan restructuring situations, the Corporation may grant a concession to a debtor experiencing financial difficulty, resulting in a troubled debt restructuring. A concession is deemed to be granted when, as a result of the restructuring, the Corporation does not expect to collect all original amounts due, including interest accrued at the original contract rate. If the payment of principal at original maturity is primarily dependent on the value of collateral, the current value of the collateral is considered in determining whether the principal will be repaid. The following tables summarize troubled debt restructures at the time of modification that occurred during the periods indicated:
Loans secured by residential real estate made up 88 percent and 63 percent of the post-modification balance of troubled debt restructured loans made in the three and nine months ended September 30, 2020, respectively. Loans secured by residential real estate made up 100 percent of the post-modification balance of troubled debt restructured loans made in the three and nine months ended September 30, 2019. The following tables summarize by modification type, the recorded investment of troubled debt restructures as of September 30, 2020 and 2019, that occurred during the periods indicated:
The following tables summarize troubled debt restructures that occurred during the twelve months ended September 30, 2020 and 2019, that subsequently defaulted during the period indicated and remained in default at period end. A loan is considered in default if it is 30-days or more past due.
For potential consumer loan restructures, impairment evaluation occurs prior to modification. Any subsequent impairment is typically addressed through the charge-off process, or may be addressed through a specific reserve. Consumer troubled debt loan restructures are generally included in the general historical allowance for loan loss at the post modification balance. Consumer non-accrual and delinquent troubled debt loan restructures are also considered in the calculation of the non-accrual and delinquency trend environmental allowance allocation. Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $5,059,000 and $1,033,000 at September 30, 2020 and December 31, 2019, respectively. Commercial troubled debt restructured loans that are risk graded special mention, substandard, doubtful or loss are individually evaluated for impairment under ASC 310. Any resulting specific reserves are included in the allowance for loan losses. Commercial troubled debt loan restructures 30-89 days delinquent are included in the calculation of the delinquency trend environmental allocation in the allowance for loan losses. With the exception of the acquired loans excluded from the allowance for loan losses, all commercial non-impaired loans, including non-accrual and 90-days or more delinquent, are included in the ASC 450 loss estimate.
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Purchased Credit Impaired Loans |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchased Credit Impaired Loans | PURCHASED CREDIT IMPAIRED LOANS Purchased Credit Impaired Loans are included in NOTE 4. LOANS AND ALLOWANCE of these Notes to Consolidated Condensed Financial Statements. As described in NOTE 4, purchased loans are recorded at the acquisition date fair value, which could result in a fair value discount or premium. Purchased loans with evidence of credit deterioration since origination and for which it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments are accounted for under ASC 310-30, Loans Acquired with Deteriorated Credit Quality. The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference. The accretable portion of the fair value discount or premium is the difference between the expected cash flows and the net present value of expected cash flows, with such difference accreted into earnings over the term of the loans. The carrying amount of Purchased Credit Impaired Loans as of September 30, 2020 was $11.2 million with allowance for loan loss of $116,000. The carrying amount of Purchased Credit Impaired Loans as of December 31, 2019 was $16.1 million with $124,000 of related allowance for loan losses. As customer cash flow expectations improve, nonaccretable yield can be reclassified to accretable yield. The accretable yield, or income expected to be collected, and reclassifications from nonaccretable, are identified in the table below.
The following table presents loans acquired, as of the acquisition date, during the nine months ended September 30, 2019, for which it was probable that all contractually required payments would not be collected. There were no loans acquired during the nine months ended September 30, 2020.
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Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Goodwill | GOODWILL Goodwill is recorded on the acquisition date of an entity. During the one-year measurement period, the Corporation may record subsequent adjustments to goodwill for provisional amounts recorded at the acquisition date. The MBT acquisition on September, 1, 2019 resulted in $98,563,000 of goodwill, which includes a measurement period adjustment of $719,000. Details regarding the MBT acquisition are discussed in NOTE 2. ACQUISITION of these Notes to Consolidated Condensed Financial Statements. There have been no changes in goodwill since December 31, 2019, resulting in a goodwill balance of $543,918,000 as of September 30, 2020.
The Corporation reviews goodwill annually for impairment, or more frequently if events or circumstances indicate the carrying value might be impaired. The impairment analysis compares the estimated fair value of the Corporation (the reporting unit) with the Corporation's net book value. The Corporation performed its annual impairment test of goodwill as of October 1, 2019. On January 1, 2020, the Corporation adopted ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill. Subsequent to the October 1, 2019 impairment test and adoption of ASU 2017-04, the Corporation experienced a decline in market capitalization as a result of a decline in the share price of the Corporation's common stock. At March 31, 2020 and June 30, 2020, the Corporation assessed the economic impact and market conditions from the COVID-19 pandemic. Additionally, the Corporation assessed the general uncertainty as to the full extent of the COVID-19 pandemic and its effect on economic recovery and concluded goodwill was not impaired in either period. At September 30, 2020, the Corporation performed an additional goodwill impairment test which included various valuation considerations including comparable peer data, precedent transaction comparables, discounted cash flow analysis, overall financial performance, share price of the Corporation's common stock and other factors. The testing resulted in a conclusion that it was not more likely than not that the fair value of the Corporation had declined below its carrying value; therefore, goodwill was not impaired at September 30, 2020. Goodwill assessments are highly sensitive to economic projections and the related assumptions used by management. In the event of a prolonged economic downturn or further deterioration in the economic outlook, continued assessments of our goodwill balance will likely be required in future periods.
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Core Deposit Intangibles |
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Core Deposit Intangibles | CORE DEPOSIT INTANGIBLES Core deposit intangibles are recorded on the acquisition date of an entity. During the one-year measurement period, the Corporation may record subsequent adjustments to these intangibles for provisional amounts recorded at the acquisition date. The MBT acquisition on September 1, 2019 resulted in a core deposit intangible of $16,527,000. Details regarding the MBT acquisition are discussed in NOTE 2. ACQUISITION of these Notes to Consolidated Condensed Financial Statements. The carrying basis and accumulated amortization of recognized core deposit intangibles are noted below.
The core deposit intangibles are being amortized primarily on an accelerated basis over their estimated useful lives, generally over a period of ten years. Intangible asset amortization expense for the three and nine months ended September 30, 2020 was $1,486,000 and $4,511,000, respectively, compared to $1,356,000 and $4,404,000, respectively, for the three and nine months ended September 30, 2019. Estimated future amortization expense is summarized as follows:
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Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | DERIVATIVE FINANCIAL INSTRUMENTS Risk Management Objective of Using Derivatives The Corporation is exposed to certain risks arising from both its business operations and economic conditions. The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and through the use of derivative financial instruments. Specifically, the Corporation enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Corporation’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation’s known or expected cash payments principally related to certain variable-rate liabilities. The Corporation also has derivatives that are a result of a service the Corporation provides to certain qualifying customers, and, therefore, are not used to manage interest rate risk in the Corporation’s assets or liabilities. The Corporation manages a matched book with respect to its derivative instruments offered as a part of this service to its customers in order to minimize its net risk exposure resulting from such transactions. Cash Flow Hedges of Interest Rate Risk The Corporation’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Corporation primarily uses interest rate swaps and interest rate caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the payment of fixed amounts to a counterparty in exchange for the Corporation receiving variable payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. As of September 30, 2020, the Corporation had three interest rate swaps with a notional amount of $36.0 million that were designated as cash flow hedges. As of December 31, 2019, the Corporation had four interest rate swaps with a notional amount of $46.0 million that were designated as cash flow hedges. A $10.0 million interest rate swap used to hedge the variable cash outflows associated with a Federal Home Loan Bank advance matured in the third quarter of 2020. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2020, $26.0 million of the interest rate swaps were used to hedge the variable cash outflows (LIBOR-based) associated with existing trust preferred securities when the outflows converted from a fixed rate to variable rate in September of 2012. In addition, the remaining $10.0 million of interest rate swaps were used to hedge the variable cash outflows (LIBOR-based) associated with one Federal Home Loan Bank advance. During the three and nine months ended September 30, 2020 and 2019, the Corporation did not recognize any ineffectiveness. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Corporation's variable-rate liabilities. During the next twelve months, the Corporation expects to reclassify $1,016,000 from accumulated other comprehensive income to interest expense. Non-designated Hedges The Corporation does not use derivatives for trading or speculative purposes. Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain customers. The Corporation executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Corporation executes with a third party, such that the Corporation minimizes its net risk exposure resulting from such transactions. As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. As of September 30, 2020 and December 31, 2019, the notional amount of customer-facing swaps was approximately $878,640,000 and $692,287,000, respectively. These amounts are offset with third party counterparties, as described above. Fair Values of Derivative Instruments on the Balance Sheet The table below presents the fair value of the Corporation’s derivative financial instruments, as well as their classification on the Balance Sheet, as of September 30, 2020, and December 31, 2019.
The Corporation's derivative asset and derivative liability relating to interest rate contracts increased $54.2 million and $55.0 million, respectively, from December 31, 2019. The increases are primarily due to a $176.4 million increase in the related outstanding notional balance. Additionally, yield curve rates used for valuation purposes were lower at each term point as of September 30, 2020 compared to December 31, 2019. This was primarily the result of investors seeking the safety of U.S. Treasuries, coupled with Federal Reserve purchases of U.S. Treasuries, as containment efforts related to the COVID-19 outbreak began to significantly reduce economic activity. The amount of gain (loss) recognized in other comprehensive income is included in the table below for the periods indicated.
Effect of Derivative Instruments on the Income Statement The Corporation did not recognize any gains or losses from derivative financial instruments in the Consolidated Condensed Statements of Income for the three and nine months ended September 30, 2020 and 2019. The amount of gain (loss) reclassified from other comprehensive income into income is included in the table below for the periods indicated.
The Corporation’s exposure to credit risk occurs because of nonperformance by its counterparties. The counterparties approved by the Corporation are usually financial institutions, which are well capitalized and have credit ratings through Moody’s and/or Standard & Poor’s at or above investment grade. The Corporation’s control of such risk is through quarterly financial reviews, comparing mark-to-market values with policy limitations, credit ratings and collateral pledging. Credit-risk-related Contingent Features The Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation fails to maintain its status as a well or adequately capitalized institution, then the Corporation could be required to terminate or fully collateralize all outstanding derivative contracts. Additionally, the Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Corporation could also be declared in default on its derivative obligations. As of September 30, 2020, the termination value of derivatives in a net liability position related to these agreements was $81,962,000. As of September 30, 2020, the Corporation has minimum collateral posting thresholds with certain of its derivative counterparties and has posted collateral of $75,415,000. While the Corporation did not breach any of these provisions as of September 30, 2020, if it had, the Corporation could have been required to settle its obligations under the agreements at their termination value.
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Disclosures About Fair Value of Assets and Liabilities |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosures About Fair Value of Assets and Liabilities | DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES The Corporation used fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The accounting guidance defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 applies only when other guidance requires or permits assets or liabilities to be measured at fair value; it does not expand the use of fair value in any new circumstances. As defined in ASC 820, fair value is the price to sell an asset or transfer a liability in an orderly transaction between market participants. It represents an exit price at the measurement date. Market participants are buyers and sellers, who are independent, knowledgeable, and willing and able to transact in the principal (or most advantageous) market for the asset or liability being measured. Current market conditions, including imbalances between supply and demand, are considered in determining fair value. The Corporation values its assets and liabilities in the principal market where it sells the particular asset or transfers the liability with the greatest volume and level of activity. In the absence of a principal market, the valuation is based on the most advantageous market for the asset or liability (i.e., the market where the asset could be sold or the liability transferred at a price that maximizes the amount to be received for the asset or minimizes the amount to be paid to transfer the liability). Valuation inputs refer to the assumptions market participants would use in pricing a given asset or liability. Inputs can be observable or unobservable. Observable inputs are those assumptions which market participants would use in pricing the particular asset or liability. These inputs are based on market data and are obtained from a source independent of the Corporation. Unobservable inputs are assumptions based on the Corporation’s own information or estimate of assumptions used by market participants in pricing the asset or liability. Unobservable inputs are based on the best and most current information available on the measurement date. All inputs, whether observable or unobservable, are ranked in accordance with a prescribed fair value hierarchy which gives the highest ranking to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest ranking to unobservable inputs for which there is little or no market activity (Level 3). Fair values for assets or liabilities classified as Level 2 are based on one or a combination of the following factors: (i) quoted prices for similar assets; (ii) observable inputs for the asset or liability, such as interest rates or yield curves; or (iii) inputs derived principally from or corroborated by observable market data. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Corporation considers an input to be significant if it drives 10 percent or more of the total fair value of a particular asset or liability. RECURRING MEASUREMENTS Assets and liabilities are considered to be measured at fair value on a recurring basis if fair value is measured regularly (i.e., daily, weekly, monthly or quarterly). Recurring valuation occurs at a minimum on the measurement date. Assets and liabilities are considered to be measured at fair value on a nonrecurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the balance sheet. Generally, nonrecurring valuation is the result of the application of other accounting pronouncements which require assets or liabilities to be assessed for impairment or recorded at the lower of cost or fair value. The fair value of assets or liabilities transferred in or out of Level 3 is measured on the transfer date, with any additional changes in fair value subsequent to the transfer considered to be realized or unrealized gains or losses. Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy. Investment Securities Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. The Corporation currently has no securities classified within Level 1 of the hierarchy. Where significant observable inputs, other than Level 1 quoted prices, are available, securities are classified within Level 2 of the valuation hierarchy. Level 2 securities include U.S. treasury securities, government-sponsored agency and mortgage-backed securities, state and municipal securities and corporate obligations securities. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and include state and municipal securities, government-sponsored mortgage-backed securities and corporate obligations securities. Level 3 fair value for securities was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active. Third party vendors compile prices from various sources and may apply such techniques as matrix pricing to determine the value of identical or similar investment securities (Level 2). Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities. Any investment security not valued based upon the methods above are considered Level 3. Interest Rate Derivative Agreements See information regarding the Corporation’s interest rate derivative products in NOTE 8. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Condensed Financial Statements. The following table presents the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the ASC 820 fair value hierarchy in which the fair value measurements fall at September 30, 2020, and December 31, 2019.
There were no gains or losses included in earnings that were attributable to the changes in unrealized gains or losses related to assets or liabilities held at September 30, 2020 or December 31, 2019. Level 3 Reconciliation The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheets using significant unobservable Level 3 inputs for the three and nine months ended September 30, 2020 and 2019.
Transfers Between Levels There were no transfers in or out of Level 3 for the three and nine months ended September 30, 2020 and 2019. Nonrecurring Measurements Following is a description of valuation methodologies used for instruments measured at fair value on a non-recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy for September 30, 2020, and December 31, 2019.
Impaired Loans (collateral dependent) Loans for which it is probable that the Corporation will not collect all principal and interest due according to contractual terms are measured for impairment. Allowable methods for determining the amount of impairment include estimating fair value of the collateral for collateral dependent loans. If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations cause the allowance for loan losses to increase, such increase is reported as a component of the provision for loan losses. Loan losses are charged against the allowance when management believes the uncollectability of the loan is confirmed. During 2019 and 2020, certain impaired loans were partially charged off or re-evaluated. Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method. Other Real Estate Owned The fair value for impaired loans and other real estate owned is measured based on the value of the collateral securing those loans or real estate and is determined using several methods. The fair value of real estate is generally determined based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a discounted cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and/or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions. Unobservable (Level 3) Inputs The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill, at September 30, 2020 and December 31, 2019.
The following is a discussion of the sensitivity of significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement and how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement. State and Municipal Securities, Corporate Obligations and U.S. Government-sponsored Mortgage-Backed Securities The significant unobservable inputs used in the fair value measurement of the Corporation's state and municipal securities, corporate obligations and U.S. Government-sponsored mortgage-backed securities are premiums for unrated securities and marketability discounts. Significant increases or decreases in either of those inputs in isolation would result in a significantly lower or higher fair value measurement. Generally, changes in either of those inputs will not affect the other input. Fair Value of Financial Instruments The following table presents estimated fair values of the Corporation’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2020, and December 31, 2019.
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Transfers Accounted for as Secured Borrowings |
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Transfers Accounted for as Secured Borrowings | TRANSFERS ACCOUNTED FOR AS SECURED BORROWINGS The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of September 30, 2020 and December 31, 2019 were:
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table summarizes the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, as of September 30, 2020 and 2019:
The following tables present the reclassification adjustments out of accumulated other comprehensive income (loss) that were included in net income in the Consolidated Condensed Statements of Income for the three and nine months ended September 30, 2020 and 2019.
(1) For additional detail related to unrealized gains (losses) on available for sale securities and related amounts reclassified from accumulated other comprehensive income see NOTE 3. INVESTMENT SECURITIES of these Notes to Consolidated Condensed Financial Statements. (2) For additional detail related to unrealized gains (losses) on cash flow hedges and related amounts reclassified from accumulated other comprehensive income see NOTE 8. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Condensed Financial Statements.
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Share-Based Compensation |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | SHARE-BASED COMPENSATION Stock options and RSAs have been issued to directors, officers and other management employees under the Corporation's 2009 Long-term Equity Incentive Plan, the 2019 Long-term Equity Incentive Plan, and the Equity Compensation Plan for Non-Employee Directors. The stock options, which have a ten year life, become 100 percent vested based on time ranging from one year to two years and are fully exercisable when vested. Option exercise prices equal the Corporation's common stock closing price on NASDAQ on the date of grant. The RSAs issued to employees and non-employee directors provide for the issuance of shares of the Corporation's common stock at no cost to the holder and generally vest after 3 years. The RSAs vest only if the employee is actively employed by the Corporation on the vesting date and, therefore, any unvested shares are forfeited. For non-employee directors, the RSAs vest only if the non-employee director remains as an active board member on the vesting date and, therefore, any unvested shares are forfeited. The RSAs for employees and non-employee directors are either immediately vested at retirement, disability or death, or, continue to vest after retirement, disability or death, depending on the plan under which the shares were granted. The Corporation’s 2009 ESPP and 2019 ESPP provide eligible employees of the Corporation and its subsidiaries an opportunity to purchase shares of common stock of the Corporation through quarterly offerings financed by payroll deductions. The price of the stock to be paid by the employees shall be equal to 85 percent of the average of the closing price of the Corporation’s common stock on each trading day during the offering period. However, in no event shall such purchase price be less than the lesser of an amount equal to 85 percent of the market price of the Corporation’s stock on the offering date or an amount equal to 85 percent of the market value on the date of purchase. Common stock purchases are made quarterly and are paid through advance payroll deductions up to a calendar year maximum of $25,000. The 2009 ESPP expired on June 30, 2019. Compensation expense related to unvested share-based awards is recorded by recognizing the unamortized grant date fair value of these awards over the remaining service periods of those awards, with no change in historical reported fair values and earnings. Awards are valued at fair value in accordance with provisions of share-based compensation guidance and are recognized on a straight-line basis over the service periods of each award. To complete the exercise of vested stock options, RSA’s and ESPP options, the Corporation generally issues new shares from its authorized but unissued share pool. Share-based compensation for the three and nine months ended September 30, 2020 was $1,135,000 and $3,568,000, respectively, compared to $1,062,000 and $2,887,000, respectively, for the three and nine months ended September 30, 2019. Share-based compensation has been recognized as a component of salaries and benefits expense in the accompanying Consolidated Condensed Statements of Income. Share-based compensation expense recognized in the Consolidated Condensed Statements of Income is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Share-based compensation guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods, if actual forfeitures differ from those estimates. Pre-vesting forfeitures were estimated to be approximately 0.4 percent for the nine months ended September 30, 2020, based on historical experience. The following table summarizes the components of the Corporation's share-based compensation awards recorded as an expense and the income tax benefit of such awards.
As of September 30, 2020, unrecognized compensation expense related to RSAs was $7,726,000 and is expected to be recognized over a weighted-average period of 1.91 years. The Corporation did not have any unrecognized compensation expense related to stock options as of September 30, 2020. Stock option activity under the Corporation's stock option plans as of September 30, 2020 and changes during the nine months ended September 30, 2020, were as follows:
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Corporation's closing stock price on the last trading day of the first nine months of 2020 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their stock options on September 30, 2020. The amount of aggregate intrinsic value will change based on the fair market value of the Corporation's common stock. The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2020 and 2019 was $197,000 and $355,000, respectively. Cash receipts of stock options exercised during this same period were $83,000 and $121,000, respectively. The following table summarizes information on unvested RSAs outstanding as of September 30, 2020:
The grant date fair value of ESPP options was estimated to be approximately $23,000 at the beginning of the July 1, 2020 quarterly offering period. The ESPP options vested during the three months ending September 30, 2020, leaving no unrecognized compensation expense related to unvested ESPP options at September 30, 2020.
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Income Tax |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax | INCOME TAX The following table summarizes the major components creating differences between income taxes at the federal statutory and the effective tax rate recorded in the consolidated statements of income for the three and nine months ended September 30, 2020 and 2019:
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Net Income Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Share | NET INCOME PER SHARE Basic net income per share is computed by dividing net income by the weighted-average shares outstanding during the reporting period. Diluted net income per share is computed by dividing net income by the combination of the weighted-average shares outstanding during the reporting period and all potentially dilutive common shares. Potentially dilutive common shares include stock options and RSAs issued under the Corporation's share-based compensation plans. Potentially dilutive common shares are excluded from the computation of diluted earnings per share in the periods where the effect would be antidilutive. The following table reconciles basic and diluted net income per share for the three and nine months ended September 30, 2020 and 2019.
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General Litigation and Regulatory Examinations |
9 Months Ended |
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Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
General Litigation and Regulatory Examinations | GENERAL LITIGATION AND REGULATORY EXAMINATIONS The Corporation is subject to claims and lawsuits that arise primarily in the ordinary course of business. Additionally, the Corporation is subject to periodic examinations by various regulatory agencies. It is the general opinion of management that the disposition or ultimate resolution of such claims, lawsuits, and examinations will not have a material adverse effect on the consolidated financial position, results of operations and cash flow of the Corporation.
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Subsequent Event |
9 Months Ended |
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Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | SUBSEQUENT EVENT On November 6, 2020, the Bank entered into a definitive agreement with Hoosier Trust Company, an Indiana trust company (“Hoosier”), pursuant to which Hoosier will merge with and into the Bank. The consideration to be paid to the shareholders of Hoosier at closing is $3,225,000 in cash. The merger, which remains subject to required regulatory approvals, is expected to close in the first quarter of 2021.
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General (Policies) |
9 Months Ended |
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Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recent Accounting Changes Adopted in 2020 and New Accounting Pronouncements Not Yet Adopted | Recent Accounting Changes Adopted in 2020 FASB Accounting Standards Updates No. 2018-15 - Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract Summary - The FASB issued Accounting Standards Update (ASU) No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which reduces complexity for the accounting for costs of implementing a cloud computing service arrangement. This standard aligns the accounting for implementation costs of hosting arrangements, regardless of whether they convey a license to the hosted software. The ASU aligns the following requirements for capitalizing implementation costs: •Those incurred in a hosting arrangement that is a service contract, and •Those incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). For calendar-year public companies, the changes were effective for fiscal years beginning after December 15, 2019. The Corporation adopted the standard in the first quarter of 2020 and adoption of the standard did not have a significant effect on the Corporation’s consolidated financial statements. FASB Accounting Standards Updates No. 2018-14 - Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans Summary - The FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, that applies to all employers that sponsor defined benefit pension or other postretirement plans. The amendments modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Disclosure Requirements Deleted •The amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year. •The amount and timing of plan assets expected to be returned to the employer. •Related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan. •For public entities, the effects of a one-percentage-point change in assumed health care cost trend rates on the (a) aggregate of the service and interest cost components of net periodic benefit costs and (b) benefit obligation for postretirement health care benefits. Disclosure Requirements Added •An explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The amendments also clarify the disclosure requirements in paragraph 715-20-50-3, which state that the following information for defined benefit pension plans should be disclosed: •The projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets, and •The accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets. ASU No. 2018-14 is effective for fiscal years ending after December 15, 2020, for public business entities and for fiscal years ending after December 15, 2021, for all other entities. Early adoption is permitted for all entities. The Corporation adopted the standard in the first quarter of 2020 and adoption of the standard did not have a significant effect on the Corporation’s consolidated financial statements. FASB Accounting Standards Updates No. 2018-13 - Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement Summary - The FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. ASU No. 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820. Certain disclosure requirements related to transfers between Level 1 and Level 2 of the fair value hierarchy and Level 3 valuation process were removed from Topic 820. Disclosures were also added to Topic 820 for changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. In addition, the amendments eliminate "at a minimum" from the phrase “an entity shall disclose at a minimum” to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements. The amendments in ASU No. 2018-13 were effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty were applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments were applied retrospectively to all periods presented upon their effective date. Early adoption was permitted. An entity was permitted to early adopt any removed or modified disclosures upon issuance of ASU No. 2018-13 and delay adoption of the additional disclosures until their effective date. The Corporation adopted the standard in the first quarter of 2020 and adoption of the standard did not have a significant effect on the Corporation’s disclosures. FASB Accounting Standards Updates No. 2017-04 - Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. Summary - The FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill, which simplifies how an entity is required to test goodwill for impairment. To simplify the subsequent measurement of goodwill, the ASU eliminates Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, the income tax effects of tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the qualitative impairment test is necessary. The amendments were applied on a prospective basis. The Corporation adopted ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill, January 1, 2020 and assessed the recent economic impact and market conditions from the COVID-19 pandemic. At September 30, 2020, the Corporation performed a goodwill impairment test which included various valuation considerations including comparable peer data, precedent transaction comparables, discounted cash flow analysis, overall financial performance, share price of the Corporation's common stock and other factors. The testing resulted in a conclusion that it was not more likely than not that the fair value of the Corporation had declined below its carrying value; therefore, goodwill was not impaired at September 30, 2020. Goodwill assessments are highly sensitive to economic projections and the related assumptions used by management. In the event of a prolonged economic downturn or further deterioration in the economic outlook, continued assessments of our goodwill balance will likely be required in future periods. Details of the goodwill impairment test are included in NOTE 6. GOODWILL of these Notes to Consolidated Condensed Financial Statements. Guidance on Non-TDR Loan Modifications due to COVID-19 On March 22, 2020, a statement was issued by the Bank's banking regulators and titled the “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” (the "Interagency Statement") that encourages financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19. Additionally, Section 4013 of the CARES Act further provides that a qualified loan modification is exempt by law from classification as a troubled debt restructure as defined by GAAP, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak under the National Emergencies Act (50 U.S.C. 1601 et seq.) terminates. The Interagency Statement was subsequently revised on April 7, 2020 to clarify the interaction of the original guidance with Section 4013 of the CARES Act, as well as setting forth the banking regulators’ views on consumer protection considerations. In accordance with such guidance, the Bank has offered short-term modifications made in response to COVID-19 to borrowers who were current and otherwise not past due. These included short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. As of September 30, 2020, approximately $176 million of loan balances remained in deferral. Details of the Corporation's modifications are included in the "LOAN QUALITY/PROVISION FOR LOAN LOSSES" section of Management's Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q. New Accounting Pronouncements Not Yet Adopted The Corporation continually monitors potential accounting changes and pronouncements. The following pronouncements have been deemed to have the most applicability to the Corporation's financial statements: FASB Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Summary - The FASB issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This new guidance was issued to address concerns that current generally accepted accounting principles (GAAP) restricts the ability to record credit losses that are expected, but do not yet meet the “probable” threshold by replacing the current “incurred loss” model for recognizing credit losses with an “expected life of loan loss” model referred to as the Current Expected Credit Loss (CECL) model. Under the CECL model, certain financial assets carried at amortized cost, such as loans held for investment and held-to-maturity debt securities, are required to be presented at the net amount expected to be collected. The measurement of expected credit losses is to be based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the “incurred loss” model required under current GAAP, which delays recognition until it is probable a loss has been incurred. The change could materially affect how the allowance for loan losses is determined and cause a charge/credit to earnings through the provision for loan losses. Such could create volatility in earnings and could adversely affect the financial condition of the Corporation. The ASU is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Pursuant to the CARES Act and the related joint statement of federal banking regulators (which also became effective as of March 27, 2020), and consistent with guidance from the SEC and FASB, the Corporation has elected to delay implementation of ASU No. 2016-13, which would have become effective for the Corporation as of January 1, 2020. As discussed above, ASU No. 2016-13 provides for the replacement of the incurred loss model for recording the allowance for loan losses with CECL. However, as a result of the Corporation’s election, its first, second and third quarter 2020 financial statements have been prepared under the existing incurred loss model. As the temporary relief applicable to the Corporation’s compliance with CECL will end no later than December 31, 2020, the Corporation will implement CECL during the fourth quarter of 2020. The Corporation has developed models that satisfy the requirements of the new standard which will be governed by a system of internal controls and a cross-functional working group consisting of accounting, finance, and credit administration personnel. The loan portfolio was pooled into ten loan segments with similar risk characteristics for which the probability of default/loss given default methodology will be applied. The Corporation intends to utilize a one-year economic forecast period then revert to historical macroeconomic levels for the remaining life of the portfolio. A baseline macroeconomic scenario, along with other scenarios, will be used to develop a range of estimated credit losses for which to determine the best estimate within. The Corporation will record a one-time cumulative-effect adjustment to retained earnings, net of income taxes, on the consolidated balance sheet as of the beginning of the adoption period. If adopted with retrospective measurement to January 1, 2020, the allowance will increase by 55-65 percent from December 31, 2019 because it will cover expected credit losses over the life of the loan portfolio, which approximates four years, and it includes all purchased loans that were previously excluded from the allowance for loan losses calculation. CECL also requires the establishment of a reserve for potential losses from unfunded commitments that is recorded in other liabilities, separate from allowance for credit losses, which is estimated to be approximately $18 million. FASB Accounting Standards Update No. 2019-11 - Codification Improvements to (Topic 326): Financial Instruments - Credit Losses Summary - The FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses in order to address issues raised by stakeholders during the implementation of ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments. Among other narrow-scope improvements, the new ASU clarifies guidance around how to report expected recoveries. “Expected recoveries” describes a situation in which an organization recognizes a full or partial write-off of the amortized cost basis of a financial asset, but then later determines that the amount written off, or a portion of that amount, will in fact be recovered. While applying the credit losses standard, stakeholders questioned whether expected recoveries were permitted on assets that had already shown credit deterioration at the time of purchase (also known as PCD assets). In response to this question, the ASU permits organizations to record expected recoveries on PCD assets. In addition to other narrow technical improvements, the ASU also reinforces existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities. The ASU includes effective dates and transition requirements that vary depending on whether or not an entity has already adopted ASU No. 2016-13. As discussed above, pursuant to the CARES Act, the Corporation elected to defer the adoption of CECL. As the temporary relief applicable to the Corporation’s compliance with CECL will end no later than December 31, 2020, the Corporation will implement CECL during the fourth quarter of 2020. FASB Accounting Standards Updates - No. 2020-04 - Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Summary - The FASB issued ASU No. 2020-04 to provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. LIBOR and other interbank offered rates are widely used benchmarks or reference rates in the United States and globally. Trillions of dollars in loans, derivatives, and other financial contracts reference LIBOR, the benchmark interest rate banks use to make short-term loans to each other. With global capital markets expected to move away from LIBOR and other interbank offered rates and move toward rates that are more observable or transaction based and less susceptible to manipulation, the FASB launched a broad project in late 2018 to address potential accounting challenges expected to arise from the transition. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU is intended to help stakeholders during the global market-wide reference rate transition period. Entities may apply this ASU as of the beginning of an interim period that includes the March 12, 2020 issuance date of the ASU, through December 31, 2022. The Corporation expects to adopt the practical expedients included in the ASU prior to December 31, 2022. The Corporation is implementing a transition plan to identify and modify its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR. The Corporation is assessing ASU 2020-04 and its impact on the Corporation's transition away from LIBOR for its loans and other financial instruments.
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Acquisition (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of preliminary valuations of the fair value of assets acquired and liabilities assumed | Based on valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change based on the timing of the transaction, the purchase price for the MBT acquisition is detailed in the following table.
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Schedule of acquired loan data | Acquired loan data for MBT is included in the following table:
The following table presents loans acquired, as of the acquisition date, during the nine months ended September 30, 2019, for which it was probable that all contractually required payments would not be collected. There were no loans acquired during the nine months ended September 30, 2020.
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Schedule of pro forma financial information | The results of operations of MBT have been included in the Corporation's consolidated financial statements since the acquisition date. The following table includes pro forma results for the year ended December 31, 2019 as if the MBT acquisition occurred as of the beginning of the period presented.
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Investment Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of amortized cost, gross unrealized gains, gross unrealized losses and approximate fair value of investment securities | The amortized cost, gross unrealized gains, gross unrealized losses and approximate market value of the Corporation's investment securities at the dates indicated were:
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Schedule of amortized cost and fair value of available for sale securities and held to maturity securities | The amortized cost and fair value of available for sale and held to maturity securities at September 30, 2020 and December 31, 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
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Schedule of gross gains on sales and redemptions of available for sale securities | Gross gains on the sales and redemptions of available for sale securities for the three and nine months ended September 30, 2020 and 2019 are shown below.
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Schedule of investment securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position | The following tables show the Corporation’s gross unrealized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position at September 30, 2020, and December 31, 2019:
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Schedule of investments in debt and equity securities reported in the financial statements at an amount less than their historical cost | Certain investments in debt and equity securities are reported in the financial statements at an amount less than their historical cost as indicated in the table below.
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Loans and Allowance (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of composition of loan portfolio by loan class | The following table illustrates the composition of the Corporation’s loan portfolio by loan class for the periods indicated:
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Schedule of changes in allowance for loan losses | The following tables summarize changes in the allowance for loan losses by loan segment for the three and nine months ended September 30, 2020 and September 30, 2019:
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Schedule of allowance for credit losses and loan portfolio by loan segment | The tables below show the Corporation’s allowance for loan losses and loan portfolio by loan segment as of the periods indicated.
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Schedule of non-accrual loans by loan class | The following table summarizes the Corporation’s non-accrual loans by loan class as of the periods indicated:
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Schedule of composition of impaired loans by loan class | The following tables show the composition of the Corporation’s impaired loans, related allowance and interest income recognized while impaired by loan class as of the periods indicated:
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Schedule of credit quality of loan portfolio by loan class | The following tables summarize the credit quality of the Corporation’s loan portfolio, by loan class for the periods indicated. Consumer non-performing loans include accruing consumer loans 90-days or more delinquent and consumer non-accrual loans. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified date. Loans that evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected are included in the applicable categories below.
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Schedule of past due aging of loan portfolio by loan class | The tables below show a past due aging of the Corporation’s loan portfolio, by loan class, as of September 30, 2020, and December 31, 2019:
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Schedules of troubled debt restructurings | The following tables summarize troubled debt restructures at the time of modification that occurred during the periods indicated:
Loans secured by residential real estate made up 88 percent and 63 percent of the post-modification balance of troubled debt restructured loans made in the three and nine months ended September 30, 2020, respectively. Loans secured by residential real estate made up 100 percent of the post-modification balance of troubled debt restructured loans made in the three and nine months ended September 30, 2019. The following tables summarize by modification type, the recorded investment of troubled debt restructures as of September 30, 2020 and 2019, that occurred during the periods indicated:
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Schedule of troubled debt restructurings that subsequently defaulted | A loan is considered in default if it is 30-days or more past due.
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Purchased Credit Impaired Loans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accretable yield, or income expected to be collected, and reclassifications from nonaccretable yield | The accretable yield, or income expected to be collected, and reclassifications from nonaccretable, are identified in the table below.
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Schedule of acquired loan data | Acquired loan data for MBT is included in the following table:
The following table presents loans acquired, as of the acquisition date, during the nine months ended September 30, 2019, for which it was probable that all contractually required payments would not be collected. There were no loans acquired during the nine months ended September 30, 2020.
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Goodwill (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of goodwill |
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Core Deposit Intangibles (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of core deposit | The carrying basis and accumulated amortization of recognized core deposit intangibles are noted below.
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Schedule of estimated future amortization expense | Estimated future amortization expense is summarized as follows:
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Derivative Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value of derivative financial instruments and their classification on Balance Sheet | The table below presents the fair value of the Corporation’s derivative financial instruments, as well as their classification on the Balance Sheet, as of September 30, 2020, and December 31, 2019.
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Schedule of amount of gain (loss) recognized in other comprehensive income | The amount of gain (loss) recognized in other comprehensive income is included in the table below for the periods indicated.
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Schedule of derivative instruments, gain (loss) in Income Statement | The amount of gain (loss) reclassified from other comprehensive income into income is included in the table below for the periods indicated.
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Disclosures About Fair Value of Assets and Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value measurements of assets and liabilities recognized in Consolidated Condensed Balance Sheets measured at fair value | The following table presents the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the ASC 820 fair value hierarchy in which the fair value measurements fall at September 30, 2020, and December 31, 2019.
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Schedule of reconciliation of beginning and ending balances of recurring fair value measurements recognized in Consolidated Condensed Balance Sheets using significant unobservable Level 3 inputs | The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheets using significant unobservable Level 3 inputs for the three and nine months ended September 30, 2020 and 2019.
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Schedule of description of valuation methodologies used for instruments measured at fair value on a non-recurring basis and recognized in Consolidated Condensed Balance Sheets | Following is a description of valuation methodologies used for instruments measured at fair value on a non-recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy for September 30, 2020, and December 31, 2019.
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Schedule of unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements other than goodwill | The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill, at September 30, 2020 and December 31, 2019.
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Schedule of estimated fair values of financial instruments | The following table presents estimated fair values of the Corporation’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2020, and December 31, 2019.
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Transfers Accounted for as Secured Borrowings (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of collateral pledged for all repurchase agreements accounted for as secured borrowings | The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of September 30, 2020 and December 31, 2019 were:
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Accumulated Other Comprehensive Income (Loss) (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accumulated other comprehensive income (loss) | The following table summarizes the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, as of September 30, 2020 and 2019:
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Schedule of reclassification out of accumulated other comprehensive income (loss) | The following tables present the reclassification adjustments out of accumulated other comprehensive income (loss) that were included in net income in the Consolidated Condensed Statements of Income for the three and nine months ended September 30, 2020 and 2019.
(1) For additional detail related to unrealized gains (losses) on available for sale securities and related amounts reclassified from accumulated other comprehensive income see NOTE 3. INVESTMENT SECURITIES of these Notes to Consolidated Condensed Financial Statements. (2) For additional detail related to unrealized gains (losses) on cash flow hedges and related amounts reclassified from accumulated other comprehensive income see NOTE 8. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Condensed Financial Statements.
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Share-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of share-based compensation awards | The following table summarizes the components of the Corporation's share-based compensation awards recorded as an expense and the income tax benefit of such awards.
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Schedule of stock option activity under stock option plans | Stock option activity under the Corporation's stock option plans as of September 30, 2020 and changes during the nine months ended September 30, 2020, were as follows:
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Schedule of unvested RSAs outstanding | The following table summarizes information on unvested RSAs outstanding as of September 30, 2020:
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Income Tax (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of differences between income taxes at federal statutory tax rate and effective tax rate | The following table summarizes the major components creating differences between income taxes at the federal statutory and the effective tax rate recorded in the consolidated statements of income for the three and nine months ended September 30, 2020 and 2019:
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Net Income Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of basic and diluted net income per share | The following table reconciles basic and diluted net income per share for the three and nine months ended September 30, 2020 and 2019.
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Acquisition - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 543,918 | $ 543,918 | $ 445,355 | |
MBT | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 10,222 | |||
Interest-bearing time deposits | 281,228 | |||
Investment securities | 212,235 | |||
Loans | 732,578 | |||
Premises and equipment | 21,664 | |||
Federal Home Loan Bank stock | 4,148 | |||
Interest receivable | 3,361 | |||
Cash surrender value of life insurance | 59,545 | |||
Tax asset, deferred and receivable | 5,205 | |||
Other assets | 6,011 | |||
Deposits | (1,105,926) | |||
Securities sold under repurchase agreements | (94,760) | |||
Federal Home Loan Bank advances | (10,853) | |||
Other liabilities | (9,807) | |||
Net tangible assets acquired | 114,851 | |||
Core deposit intangible | 16,527 | |||
Goodwill | 98,563 | |||
Purchase price | $ 229,941 |
Acquisition - Schedule of Acquired Loan Data (Details) - MBT - USD ($) $ in Thousands |
Sep. 30, 2019 |
Sep. 01, 2019 |
---|---|---|
Business Acquisition [Line Items] | ||
Fair Value of Acquired Loans at Acquisition Date, Acquired receivables subject to ASC 310-30 | $ 3,531 | $ 3,531 |
Gross Contractual Amounts Receivable at Acquisition Date, Acquired receivables subject to ASC 310-30 | $ 6,840 | 6,840 |
Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected, Acquired receivables subject to ASC 310-30 | 2,733 | |
Fair Value of Acquired Loans at Acquisition Date, Acquired receivables not subject to ASC 310-30 | 729,047 | |
Gross Contractual Amounts Receivable at Acquisition Date, Acquired receivables not subject to ASC 310-30 | 907,210 | |
Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected, Acquired receivables not subject to ASC 310-30 | $ 14,722 |
Acquisition - Pro Forma Financial Information (Details) - MBT $ / shares in Units, $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2019
USD ($)
$ / shares
| |
Business Acquisition [Line Items] | |
Total revenue (net interest income plus other income) | $ | $ 474,891 |
Net income | $ | $ 161,228 |
Earnings per share: Basic (in dollars per share) | $ / shares | $ 2.89 |
Earnings per share: Diluted (in dollars per share) | $ / shares | $ 2.88 |
Investment Securities - Gross Gains on Sales and Redemptions of Available for Sale Securities (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Sales and Redemptions of Available for Sale Securities: | ||||
Gross gains | $ 1,836 | $ 393 | $ 9,516 | $ 3,376 |
Gross losses | $ 19 | $ 0 | $ 19 | $ 0 |
Investment Securities - Investments in Debt and Equity Securities Reported Less than Historical Cost (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Schedule of Investments [Line Items] | ||
Fair value | $ 156,394 | $ 395,416 |
Investments reported at less than historical cost | ||
Schedule of Investments [Line Items] | ||
Historical cost | 157,859 | 398,172 |
Fair value | 156,394 | 395,416 |
Gross unrealized losses | $ 1,465 | $ 2,756 |
Percent of the Corporation's investment portfolio | 9.40% | 15.20% |
Loans and Allowance - Changes in Allowance for Loan Losses by Loan Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Allowance for loan losses: | ||||
Beginning balance | $ 121,119 | $ 81,274 | $ 80,284 | $ 80,552 |
Provision for losses | 12,544 | 600 | 54,191 | 2,300 |
Recoveries on loans | 427 | 596 | 1,417 | 3,035 |
Loans charged off | (7,364) | (1,899) | (9,166) | (5,316) |
Ending balance | 126,726 | 80,571 | 126,726 | 80,571 |
Commercial | ||||
Allowance for loan losses: | ||||
Beginning balance | 44,678 | 33,202 | 32,902 | 32,657 |
Provision for losses | 7,299 | 130 | 19,240 | 466 |
Recoveries on loans | 197 | 149 | 746 | 1,035 |
Loans charged off | (6,827) | (480) | (7,541) | (1,157) |
Ending balance | 45,347 | 33,001 | 45,347 | 33,001 |
Commercial Real Estate | ||||
Allowance for loan losses: | ||||
Beginning balance | 46,918 | 29,531 | 28,778 | 29,609 |
Provision for losses | 2,990 | 370 | 21,129 | 1,459 |
Recoveries on loans | 46 | 143 | 271 | 1,166 |
Loans charged off | 0 | (1,078) | (224) | (3,268) |
Ending balance | 49,954 | 28,966 | 49,954 | 28,966 |
Consumer | ||||
Allowance for loan losses: | ||||
Beginning balance | 8,445 | 4,070 | 4,035 | 3,964 |
Provision for losses | 971 | 40 | 5,678 | 181 |
Recoveries on loans | 54 | 105 | 152 | 323 |
Loans charged off | (92) | (109) | (487) | (362) |
Ending balance | 9,378 | 4,106 | 9,378 | 4,106 |
Residential | ||||
Allowance for loan losses: | ||||
Beginning balance | 21,078 | 14,471 | 14,569 | 14,322 |
Provision for losses | 1,284 | 60 | 8,144 | 194 |
Recoveries on loans | 130 | 199 | 248 | 511 |
Loans charged off | (445) | (232) | (914) | (529) |
Ending balance | $ 22,047 | $ 14,498 | $ 22,047 | $ 14,498 |
Loans and Allowance - Subsequent Default (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020
USD ($)
loan
|
Sep. 30, 2019
USD ($)
loan
|
Sep. 30, 2020
USD ($)
loan
|
Sep. 30, 2019
USD ($)
loan
|
|
Financing Receivable, Troubled Debt Restructuring [Line Items] | ||||
Number of Loans | loan | 2 | 1 | 3 | 1 |
Recorded Balance | $ | $ 423 | $ 85 | $ 691 | $ 85 |
Commercial and industrial loans | ||||
Financing Receivable, Troubled Debt Restructuring [Line Items] | ||||
Number of Loans | loan | 1 | 2 | ||
Recorded Balance | $ | $ 317 | $ 585 | ||
Commercial and farmland | ||||
Financing Receivable, Troubled Debt Restructuring [Line Items] | ||||
Number of Loans | loan | 1 | 1 | 1 | 1 |
Recorded Balance | $ | $ 106 | $ 85 | $ 106 | $ 85 |
Purchased Credit Impaired Loans - Accretable Yield or Income Expected to be Collected (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
|
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | |||||
Accretable yield beginning balance | $ 1,546 | $ 1,914 | $ 2,132 | $ 2,143 | |
Additions | 0 | 576 | 0 | 576 | |
Accretion | (793) | (420) | (2,211) | (1,638) | |
Reclassification from nonaccretable | 511 | 374 | 1,350 | 1,363 | |
Disposals | 0 | (165) | (7) | (165) | |
Accretable yield ending balance | 1,264 | $ 2,279 | 1,264 | $ 2,279 | |
Loans acquired with deteriorated credit quality | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Loans acquired and accounted for under ASC 310-30, carrying amount | 11,200 | 11,200 | $ 16,100 | ||
Loans acquired and accounted for under ASC 310-30, allowance amount | $ 116 | $ 116 | $ 124 |
Purchased Credit Impaired Loans - Loans Acquired for Which Contractually Required Payments Would not be Collected (Details) - MBT - USD ($) $ in Thousands |
Sep. 30, 2019 |
Sep. 01, 2019 |
---|---|---|
Business Combination, Separately Recognized Transactions [Line Items] | ||
Contractually required payments receivable at acquisition date | $ 6,840 | $ 6,840 |
Nonaccretable difference | 2,733 | |
Expected cash flows at acquisition date | 4,107 | |
Accretable difference | 576 | |
Basis in loans at acquisition date | $ 3,531 | $ 3,531 |
Goodwill - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2019 |
Sep. 30, 2020 |
Sep. 01, 2019 |
Dec. 31, 2018 |
|
Goodwill [Line Items] | ||||
Goodwill | $ 543,918 | $ 543,918 | $ 445,355 | |
Measurement period adjustment | 719 | |||
MBT | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 98,563 | |||
Measurement period adjustment | $ 719 |
Goodwill - Schedule of Goodwill (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2019
USD ($)
| |
Goodwill [Roll Forward] | |
Balance, January 1 | $ 445,355 |
Goodwill acquired | 97,844 |
Measurement period adjustment | 719 |
Balance, Period end | $ 543,918 |
Core Deposit Intangibles - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 01, 2019 |
|
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible asset amortization | $ 1,486 | $ 1,356 | $ 4,511 | $ 4,404 | |
Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful life of core deposit intangibles and other intangibles | 10 years | ||||
MBT | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Core deposit intangible | $ 16,527 |
Core Deposit Intangibles - Schedule of Core Deposit and Other Intangibles (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2020 |
Dec. 31, 2019 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 102,396 | $ 85,869 |
Accumulated amortization | (71,945) | (67,434) |
Total core deposit intangibles | 30,451 | 34,962 |
Core deposit intangibles acquired | ||
Finite-Lived Intangible Assets [Line Items] | ||
Core deposit intangibles acquired | $ 0 | $ 16,527 |
Core Deposit Intangibles - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Amortization Expense | ||
2020 | $ 1,476 | |
2021 | 5,429 | |
2022 | 5,027 | |
2023 | 4,827 | |
2024 | 4,241 | |
After 2024 | 9,451 | |
Total core deposit intangibles | $ 30,451 | $ 34,962 |
Derivative Financial Instruments - Fair Value of Derivative Financial Instruments and Their Classification on Balance Sheet (Details) - Interest rate contracts - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Derivatives designated as hedging instruments | Other Assets | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | $ 0 | $ 0 |
Derivatives designated as hedging instruments | Other Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | 2,244 | 1,444 |
Derivatives not designated as hedging instruments | Other Assets | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 82,010 | 27,855 |
Derivatives not designated as hedging instruments | Other Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | $ 82,010 | $ 27,855 |
Derivative Financial Instruments - Effect of Derivative Financial Instruments on Other Comprehensive Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Designated as Hedging Instrument | Cash Flow Hedging | Interest Rate Products | ||||
Derivative [Line Items] | ||||
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative (Effective Portion) | $ 8 | $ (178) | $ (1,451) | $ (1,270) |
Derivative Financial Instruments - Effect of Derivative Financial Instruments on Income Statement (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Interest rate contracts | Derivatives designated as hedging instruments | Interest Expense | ||||
Derivative [Line Items] | ||||
Amount of Gain (Loss) Reclassified from Other Comprehensive Income into Income (Effective Portion) | $ (294) | $ (104) | $ (651) | $ (247) |
Disclosures About Fair Value of Assets and Liabilities - Reconciliation of Beginning and Ending Balances of Recurring Fair Value Measurements using Significant Unobservable Level 3 Inputs (Details) - Fair Value, Measurements, Recurring - Available for Sale Securities - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Available for Sale Securities | ||||
Balance at beginning of the period | $ 2,500 | $ 2,975 | $ 2,892 | $ 3,328 |
Included in other comprehensive income | 75 | 6 | 25 | 85 |
Principal payments | (88) | (85) | (430) | (517) |
Ending balance | $ 2,487 | $ 2,896 | $ 2,487 | $ 2,896 |
Disclosures About Fair Value of Assets and Liabilities - Transfers Between Levels (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Fair Value Disclosures [Abstract] | ||||
Transfers in or out of Level 3 | $ 0 | $ 0 | $ 0 | $ 0 |
Share-Based Compensation - Unvested RSAs Outstanding (Details) - RSAs |
9 Months Ended |
---|---|
Sep. 30, 2020
$ / shares
shares
| |
Number of Shares | |
Unvested RSAs, Beginning Balance (in shares) | shares | 351,048 |
Granted (in shares) | shares | 135,292 |
Vested (in shares) | shares | (116,520) |
Forfeited (in shares) | shares | (525) |
Unvested RSAs, Ending Balance (in shares) | shares | 369,295 |
Weighted-Average Grant Date Fair Value | |
Unvested RSAs, Beginning Balance (in dollars per share) | $ / shares | $ 40.67 |
Granted (in dollars per share) | $ / shares | 26.89 |
Vested (in dollars per share) | $ / shares | 40.46 |
Forfeited (in dollars per share) | $ / shares | 40.44 |
Unvested RSAs, Ending Balance (in dollars per share) | $ / shares | $ 36.17 |
Income Tax (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Reconciliation of Federal Statutory to Actual Tax Expense: | ||||
Federal statutory income tax at 21% | $ 8,785 | $ 9,050 | $ 24,612 | $ 28,908 |
Tax-exempt interest income | (3,403) | (2,637) | (9,624) | (7,307) |
Share-based compensation | 382 | (11) | 376 | (402) |
Tax-exempt earnings and gains on life insurance | (246) | (241) | (810) | (647) |
Tax credits | (55) | (61) | (205) | (202) |
CARES Act - NOL carryback rate differential | 0 | 0 | (1,178) | 0 |
Other | 158 | 237 | 563 | 677 |
Actual Tax Expense | $ 5,621 | $ 6,337 | $ 13,734 | $ 21,027 |
Effective Tax Rate | 13.40% | 14.70% | 11.70% | 15.30% |
Net Income Per Share - Reconciliation of Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Net Income | ||||
Net income available to common stockholders | $ 36,210 | $ 36,757 | $ 103,465 | $ 116,630 |
Diluted net income per share | $ 36,210 | $ 36,757 | $ 103,465 | $ 116,630 |
Weighted-Average Shares | ||||
Net income available to common stockholders (in shares) | 53,843,508 | 51,433,227 | 54,111,848 | 50,085,701 |
Effect of potentially dilutive stock options and restricted stock awards (in shares) | 127,090 | 136,330 | 166,034 | 141,679 |
Diluted net income per share (in shares) | 53,970,598 | 51,569,557 | 54,277,882 | 50,227,380 |
Per Share Amount | ||||
Net income available to common stockholders (in dollars per share) | $ 0.67 | $ 0.71 | $ 1.91 | $ 2.33 |
Diluted net income per share (in dollars per share) | $ 0.67 | $ 0.71 | $ 1.91 | $ 2.32 |
Net Income Per Share - Narrative (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Stock options not included in the earnings per share calculation (in shares) | 0 | 0 | 0 | 0 |
Subsequent Events (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Mar. 31, 2021 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Subsequent Event [Line Items] | |||
Cash paid in acquisition | $ 0 | $ 15 | |
Subsequent event | Hoosier | Forecast | |||
Subsequent Event [Line Items] | |||
Cash paid in acquisition | $ 3,225 |
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