(

)

Recently Issued Accounting Pronouncements

February 2016,

FASB issued ASU

No.

2016

02,

Leases

, which requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize on the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for lease term. The new guidance is effective for annual and interim reporting periods beginning after

December 15, 2018.

The standard should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. Bancorp has evaluated existing lease commitments and will record a right-of-use asset and lease liability upon adoption. Bancorp’s financial condition and results of operations are

not

otherwise expected to be impacted. The FASB issued additional ASUs updating ASU

2016

02.

Bancorp is including these ASUs in its evaluation and implementation efforts relative to ASU

2006

02.

ASU

2018

10,

Codification Improvements to Topic

842:

Leases

which affects narrow aspects of the guidance.

ASU

2018

11,

Leases (Topic

842

): Targeted Improvements

, which modifies acceptable transition methods so that entities

may

recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption as opposed to applying a modified retrospective transition method.

June 2016,

FASB issued ASU

2016

13,

Measurement of Credit Losses on Financial Instruments

, which significantly changes the way entities recognize impairment of many financial assets by requiring immediate recognition of estimated credit losses expected to occur over their remaining life. This standard will likely have a significant impact on the way Bancorp recognizes credit impairment on loans. Under current US GAAP, credit impairment losses are determined using an incurred-loss model, which recognizes credit losses only when it is probable that all contractual cash flows will

not

be collected. The initial recognition of loss under CECL differs from current US GAAP because recognition of credit losses will

not

be based on any triggering event. This should generally result in credit impairment being recognized earlier and immediately after the financial asset is originated or purchased. Bancorp continues to evaluate existing accounting processes, internal controls, and technology capabilities to determine what additional changes will be needed to address the new requirements. These processes and controls require significant judgment, collection and analysis of additional data, and use of estimates. Technology and other resources have been upgraded or modified to capture additional data to support the accounting and disclosure requirements. The new guidance is effective for annual and interim reporting periods beginning after

December 15, 2019.

While the impact of implementing the CECL model cannot be quantified at this time, Bancorp expects to recognize a

one

-time cumulative-effect adjustment to the allowance in the

first

quarter of

2020,

consistent with interagency guidance issued in

2016.

January 2017,

the FASB issued ASU

2017

04,

Intangibles—Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment,

which requires an entity to

longer perform a hypothetical purchase price allocation to measure goodwill impairment. Instead, impairment will be measured using the difference between the carrying amount and the fair value of the reporting unit. The changes are effective for public business entities that are SEC filers, for annual and interim periods in fiscal years beginning after

December 15, 2019.

All entities

may

early adopt the standard for goodwill impairment tests with measurement dates after

January 1, 2017.

Bancorp does

not

expect adoption of this standard to have a significant impact on the consolidated financial statements of the Company.

August 2017,

the FASB issued ASU

2017

12,

Derivatives and Hedging (Topic

815

); Targeted Improvements for Accounting for Hedging Activities

, which amends the hedge accounting recognition and presentation requirements under ASC

815.

This ASU is effective for public business entities for annual and interim periods in fiscal years beginning after

December 15, 2018.

Early adoption of this standard is permitted upon its issuance. Bancorp does

not

expect adoption of this standard to have a significant impact on the consolidated financial statements of the Company.

February 2018,

FASB issued ASU

2018

03,

Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic

825

):Recognition and Measurement of Financial Assets and Financial Liabilities

, which makes technical corrections to certain aspects of ASU

2016

regarding recognition of financial assets and liabilities. Transition guidance is provided for equity securities without a readily determinable fair value. This ASU is effective for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal periods. Public business entities with fiscal years beginning between

December 15, 2017

and

June 15, 2018,

are

not

required to adopt the amendments until the interim period beginning after

June 15, 2018.

Bancorp does

not

expect adoption of this standard to have a significant impact on the consolidated financial statements of the Company.

June 2018,

FASB issued ASU

2018

07,

Compensation-Stock Compensation (Topic

718

): Improvements to Nonemployee Share-Based Payment Accounting

, which expands the scope of topic

718

to include share-based payment transactions for acquiring goods and services from nonemployees. Consistent with the accounting for employee share-based payment awards, nonemployee share-based payment awards will be measured at grant-date fair value of the equity instruments obligated to be issued when the good has been delivered or the service rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. This ASU is effective for all entities for fiscal years beginning after

December 15, 2019,

and interim periods within fiscal years beginning after

December 15, 2020.

Early adoption is permitted. Bancorp does

not

expect adoption of this standard to have a significant impact on the consolidated financial statements of the company.