Loans and Leases | Loans and Leases Summary of Major Loan and Lease Categories At March 31, 2017 (Dollars in thousands) Originated Acquired Total Commercial, financial and agricultural $ 750,342 $ 90,629 $ 840,971 Real estate-commercial 1,013,978 389,690 1,403,668 Real estate-construction 170,178 11,409 181,587 Real estate-residential secured for business purpose 180,830 111,402 292,232 Real estate-residential secured for personal purpose 220,543 74,889 295,432 Real estate-home equity secured for personal purpose 154,363 12,736 167,099 Loans to individuals 27,915 148 28,063 Lease financings 132,864 — 132,864 Total loans and leases held for investment, net of deferred income $ 2,651,013 $ 690,903 $ 3,341,916 Unearned lease income, included in the above table $ (15,524 ) $ — $ (15,524 ) Net deferred costs, included in the above table 4,418 — 4,418 Overdraft deposits included in the above table 73 — 73 At December 31, 2016 (Dollars in thousands) Originated Acquired Total Commercial, financial and agricultural $ 663,221 $ 160,045 $ 823,266 Real estate-commercial 909,581 465,368 1,374,949 Real estate-construction 142,891 31,953 174,844 Real estate-residential secured for business purpose 151,931 142,137 294,068 Real estate-residential secured for personal purpose 210,377 80,431 290,808 Real estate-home equity secured for personal purpose 147,982 14,857 162,839 Loans to individuals 30,110 263 30,373 Lease financings 134,739 — 134,739 Total loans and leases held for investment, net of deferred income $ 2,390,832 $ 895,054 $ 3,285,886 Unearned lease income, included in the above table $ (15,970 ) $ — $ (15,970 ) Net deferred costs, included in the above table 4,503 — 4,503 Overdraft deposits included in the above table 84 — 84 Overdraft deposits are re-classified as loans and are included in the total loans and leases on the balance sheet. The carrying amount of acquired loans at March 31, 2017 totaled $690.9 million , including $535.7 million of loans from the Fox Chase acquisition and $155.2 million from the Valley Green Bank acquisition. At March 31, 2017 , loans acquired with deteriorated credit quality, or acquired credit impaired loans, were $5.8 million from the Fox Chase acquisition and $788 thousand from the Valley Green Bank acquisition. Acquired credit impaired loans are accounted for in accordance with Accounting Standards Codification (ASC) Topic 310-30. The outstanding principal balance and carrying amount for acquired credit impaired loans at March 31, 2017 and December 31, 2016 were as follows: (Dollars in thousands) At March 31, 2017 At December 31, 2016 Outstanding principal balance $ 8,007 $ 8,993 Carrying amount 6,616 7,352 Allowance for loan losses — — The following table presents the changes in accretable yield on acquired credit impaired loans: Three Months Ended March 31, (Dollars in thousands) 2017 2016 Beginning of period $ 50 $ 144 Reclassification from nonaccretable discount 107 46 Accretable discount amortized to interest income (116 ) (74 ) Disposals (4 ) — End of period $ 37 $ 116 Age Analysis of Past Due Loans and Leases The following presents, by class of loans and leases, an aging of past due loans and leases, loans and leases which are current and the recorded investment in loans and leases 90 days or more past due which are accruing interest at March 31, 2017 and December 31, 2016 : (Dollars in thousands) 30-59 60-89 90 Days Total Current Acquired Credit Impaired Total Loans Recorded At March 31, 2017 Commercial, financial and agricultural $ 1,466 $ — $ 1,548 $ 3,014 $ 837,397 $ 560 $ 840,971 $ — Real estate—commercial real estate and construction: Commercial real estate 4,606 47 1,466 6,119 1,392,288 5,261 1,403,668 — Construction — 365 — 365 181,222 — 181,587 — Real estate—residential and home equity: Residential secured for business purpose 1,700 1,227 1,328 4,255 287,395 582 292,232 — Residential secured for personal purpose 2,125 — 767 2,892 292,327 213 295,432 508 Home equity secured for personal purpose 471 343 459 1,273 165,826 — 167,099 109 Loans to individuals 266 38 142 446 27,617 — 28,063 142 Lease financings 5,948 822 5,721 12,491 120,373 — 132,864 160 Total $ 16,582 $ 2,842 $ 11,431 $ 30,855 $ 3,304,445 $ 6,616 $ 3,341,916 $ 919 At December 31, 2016 Commercial, financial and agricultural $ 1,536 $ 256 $ 1,335 $ 3,127 $ 819,550 $ 589 $ 823,266 $ — Real estate—commercial real estate and construction: Commercial real estate 1,482 1,560 2,591 5,633 1,363,606 5,710 1,374,949 — Construction 202 — — 202 174,642 — 174,844 — Real estate—residential and home equity: Residential secured for business purpose 1,390 428 1,539 3,357 289,927 784 294,068 — Residential secured for personal purpose 3,243 905 879 5,027 285,512 269 290,808 481 Home equity secured for personal purpose 717 142 521 1,380 161,459 — 162,839 171 Loans to individuals 324 95 142 561 29,812 — 30,373 142 Lease financings 1,731 1,418 729 3,878 130,861 — 134,739 193 Total $ 10,625 $ 4,804 $ 7,736 $ 23,165 $ 3,255,369 $ 7,352 $ 3,285,886 $ 987 Non-Performing Loans and Leases The following presents, by class of loans and leases, non-performing loans and leases at March 31, 2017 and December 31, 2016 : At March 31, 2017 At December 31, 2016 (Dollars in thousands) Nonaccrual Accruing Loans and Total Non- Nonaccrual Accruing Loans and Total Non- Commercial, financial and agricultural $ 5,305 $ 954 $ — $ 6,259 $ 5,746 $ 967 $ — $ 6,713 Real estate—commercial real estate and construction: Commercial real estate 4,133 1,506 — 5,639 5,651 1,519 — 7,170 Real estate—residential and home equity: Residential secured for business purpose 3,845 316 — 4,161 4,898 766 — 5,664 Residential secured for personal purpose 514 42 508 1,064 560 — 481 1,041 Home equity secured for personal purpose 498 — 109 607 525 — 171 696 Loans to individuals — — 142 142 — — 142 142 Lease financings 5,561 — 160 5,721 536 — 193 729 Total $ 19,856 $ 2,818 $ 919 $ 23,593 $ 17,916 $ 3,252 $ 987 $ 22,155 * Includes nonaccrual troubled debt restructured loans and lease modifications of $1.7 million and $1.8 million at March 31, 2017 and December 31, 2016 , respectively. The increase in nonaccrual lease financings represents software leases totaling $5.0 million under a vendor referral program. These leases are personally guaranteed by high net worth individuals. During the first quarter of 2017, the lessees stopped making payments due to disputes with the vendor, and Univest Capital, Inc., a subsidiary of the Corporation, filed legal complaints to pursue collection of all amounts owed. A complaint was subsequently filed against Univest Capital Inc. and certain other defendants on March 28, 2017 by one of the lessees in federal court in Texas seeking, among other things, class action certification and a declaration that the contracts and related guarantees are null and void. Univest Capital, Inc. has not been served with the complaint, and the plaintiff has been directed to file an amended complaint on or before May 5, 2017. As of the filing date, the outcome of the matter is neither probable nor estimable. Credit Quality Indicators The following tables present by class, the recorded investment in loans and leases held for investment by credit quality indicator at March 31, 2017 and December 31, 2016 . The Corporation employs a ten (10) grade risk rating system related to the credit quality of commercial loans and residential real estate loans secured for a business purpose of which the first six categories are pass categories (credits not adversely rated). The following is a description of the internal risk ratings and the likelihood of loss related to each risk rating. 1. Cash Secured—No credit risk 2. Fully Secured—Negligible credit risk 3. Strong—Minimal credit risk 4. Satisfactory—Nominal credit risk 5. Acceptable—Moderate credit risk 6. Pre-Watch—Marginal, but stable credit risk 7. Special Mention—Potential weakness 8. Substandard—Well-defined weakness 9. Doubtful—Collection in-full improbable 10. Loss—Considered uncollectible Commercial Credit Exposure Credit Risk by Internally Assigned Grades The following table presents classifications for originated loans: (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Total At March 31, 2017 Grade: 1. Cash secured/ 2. Fully secured $ 1,579 $ — $ 16,754 $ — $ 18,333 3. Strong 11,641 2,001 — — 13,642 4. Satisfactory 16,479 39,513 — 361 56,353 5. Acceptable 552,555 767,428 116,973 156,111 1,593,067 6. Pre-watch 135,055 145,103 35,726 15,955 331,839 7. Special Mention 6,454 22,757 360 2,172 31,743 8. Substandard 26,579 37,176 365 6,231 70,351 9. Doubtful — — — — — 10.Loss — — — — — Total $ 750,342 $ 1,013,978 $ 170,178 $ 180,830 $ 2,115,328 At December 31, 2016 Grade: 1. Cash secured/ 2. Fully secured $ 272 $ — $ 13,714 $ 162 $ 14,148 3. Strong 14,980 2,045 — — 17,025 4. Satisfactory 35,529 38,861 — 367 74,757 5. Acceptable 465,675 676,212 110,650 133,716 1,386,253 6. Pre-watch 113,499 128,646 18,213 12,025 272,383 7. Special Mention 8,820 22,439 314 1,199 32,772 8. Substandard 24,446 41,378 — 4,462 70,286 9. Doubtful — — — — — 10.Loss — — — — — Total $ 663,221 $ 909,581 $ 142,891 $ 151,931 $ 1,867,624 The following table presents classifications for acquired loans: (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Total At March 31, 2017 Grade: 1. Cash secured/ 2. Fully secured $ — $ — $ — $ — $ — 3. Strong — — — — — 4. Satisfactory 4,385 825 — — 5,210 5. Acceptable 66,009 242,512 3,616 90,179 402,316 6. Pre-watch 13,129 128,832 7,793 15,701 165,455 7. Special Mention 1,774 6,715 — 2,229 10,718 8. Substandard 5,332 10,806 — 3,293 19,431 9. Doubtful — — — — — 10.Loss — — — — — Total $ 90,629 $ 389,690 $ 11,409 $ 111,402 $ 603,130 December 31, 2016 Grade: 1. Cash secured/ 2. Fully secured $ 583 $ — $ — $ — $ 583 3. Strong — — — — — 4. Satisfactory 4,399 1,018 — — 5,417 5. Acceptable 113,512 282,199 20,565 117,322 533,598 6. Pre-watch 31,697 163,623 11,388 14,405 221,113 7. Special Mention 73 7,705 — 6,245 14,023 8. Substandard 9,781 10,823 — 4,165 24,769 9. Doubtful — — — — — 10.Loss — — — — — Total $ 160,045 $ 465,368 $ 31,953 $ 142,137 $ 799,503 Credit Exposure—Real Estate—Residential Secured for Personal Purpose, Real Estate—Home Equity Secured for Personal Purpose, Loans to individuals, Lease Financing Credit Risk Profile by Payment Activity The Corporation monitors the credit risk profile by payment activity for the following classifications of loans and leases: residential real estate loans secured for a personal purpose, home equity loans secured for a personal purpose, loans to individuals and lease financings. Nonperforming loans and leases are loans and leases past due 90 days or more, loans and leases on nonaccrual of interest and troubled debt restructured loans and lease modifications. Performing loans and leases are reviewed only if the loan becomes 60 days or more past due. Nonperforming loans and leases are reviewed monthly. Performing loans and leases have a nominal to moderate risk of loss. The following table presents classifications for originated loans: (Dollars in thousands) Real Estate— Real Estate— Loans to Lease Total At March 31, 2017 Performing $ 220,036 $ 153,756 $ 27,773 $ 127,143 $ 528,708 Nonperforming 507 607 142 5,721 6,977 Total $ 220,543 $ 154,363 $ 27,915 $ 132,864 $ 535,685 At December 31, 2016 Performing $ 210,208 $ 147,286 $ 29,968 $ 134,010 $ 521,472 Nonperforming 169 696 142 729 1,736 Total $ 210,377 $ 147,982 $ 30,110 $ 134,739 $ 523,208 The following table presents classifications for acquired loans: (Dollars in thousands) Real Estate— Real Estate— Loans to Lease Total At March 31, 2017 Performing $ 74,332 $ 12,736 $ 148 $ — $ 87,216 Nonperforming 557 — — — 557 Total $ 74,889 $ 12,736 $ 148 $ — $ 87,773 At December 31, 2016 Performing $ 79,559 $ 14,857 $ 263 $ — $ 94,679 Nonperforming 872 — — — 872 Total $ 80,431 $ 14,857 $ 263 $ — $ 95,551 Reserve for Loan and Lease Losses and Recorded Investment in Loans and Leases The following presents, by portfolio segment, a summary of the activity in the reserve for loan and lease losses, the balance in the reserve for loan and lease losses disaggregated on the basis of impairment method and the recorded investment in loans and leases disaggregated on the basis of impairment method for the three months ended March 31, 2017 and 2016 : (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Loans to Lease Unallocated Total Three Months Ended March 31, 2017 Reserve for loan and lease losses: Beginning balance $ 7,037 $ 7,505 $ 774 $ 993 $ 364 $ 788 $ 38 $ 17,499 Charge-offs (178 ) — (42 ) (94 ) (126 ) (257 ) N/A (697 ) Recoveries 187 3 10 17 35 29 N/A 281 Provision (recovery of provision) 844 116 603 82 62 769 (34 ) 2,442 Provision for acquired credit impaired loans — — — 3 — — — 3 Ending balance $ 7,890 $ 7,624 $ 1,345 $ 1,001 $ 335 $ 1,329 $ 4 $ 19,528 Three Months Ended March 31, 2016 Reserve for loan and lease losses: Beginning balance $ 6,418 $ 6,572 $ 763 $ 1,575 $ 346 $ 1,042 $ 912 $ 17,628 Charge-offs (1,481 ) (26 ) (238 ) (46 ) (76 ) (205 ) N/A (2,072 ) Recoveries 450 7 19 17 33 44 N/A 570 Provision (recovery of provision) 243 (82 ) 203 (233 ) 53 41 102 327 Recovery of provision for acquired credit impaired loans — — — (1 ) — — — (1 ) Ending balance $ 5,630 $ 6,471 $ 747 $ 1,312 $ 356 $ 922 $ 1,014 $ 16,452 N/A – Not applicable (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Loans to Lease Unallocated Total At March 31, 2017 Reserve for loan and lease losses: Ending balance: individually evaluated for impairment $ 8 $ 26 $ 364 $ 1 $ — $ 580 N/A $ 979 Ending balance: collectively evaluated for impairment 7,882 7,598 981 1,000 335 749 4 18,549 Total ending balance $ 7,890 $ 7,624 $ 1,345 $ 1,001 $ 335 $ 1,329 $ 4 $ 19,528 Loans and leases held for investment: Ending balance: individually evaluated for impairment $ 9,524 $ 21,658 $ 5,178 $ 1,054 $ — $ 5,021 $ 42,435 Ending balance: collectively evaluated for impairment 740,818 1,160,406 175,652 373,852 27,915 127,843 2,606,486 Loans measured at fair value — 2,092 — — — — 2,092 Acquired non-credit impaired loans 90,069 395,838 110,820 87,412 148 — 684,287 Acquired credit impaired loans 560 5,261 582 213 — — 6,616 Total ending balance $ 840,971 $ 1,585,255 $ 292,232 $ 462,531 $ 28,063 $ 132,864 $ 3,341,916 At March 31, 2016 Reserve for loan and lease losses: Ending balance: individually evaluated for impairment $ 151 $ 140 $ 20 $ 30 $ — $ — N/A $ 341 Ending balance: collectively evaluated for impairment 5,479 6,323 727 1,282 356 922 1,014 16,103 Ending balance: acquired credit impaired loans evaluated for impairment — 8 — — — — — 8 Total ending balance $ 5,630 $ 6,471 $ 747 $ 1,312 $ 356 $ 922 $ 1,014 $ 16,452 Loans and leases held for investment: Ending balance: individually evaluated for impairment $ 12,977 $ 29,375 $ 3,618 $ 504 $ — $ — $ 46,474 Ending balance: collectively evaluated for impairment 473,135 821,684 99,973 314,885 28,140 125,814 1,863,631 Acquired non-credit impaired loans 21,207 122,415 113,923 14,058 281 — 271,884 Acquired credit impaired loans — 517 750 — — — 1,267 Total ending balance $ 507,319 $ 973,991 $ 218,264 $ 329,447 $ 28,421 $ 125,814 $ 2,183,256 N/A – Not applicable The Corporation records a provision for loan loss for the acquired non-impaired loans only when additional deterioration of the portfolio is identified over the projections utilized in the initial fair value analysis. After the acquisition measurement period, the present value of any decreases in expected cash flows of acquired credit impaired loans will generally result in an impairment charge recorded as a provision for loan loss, resulting in an increase to the allowance. Impaired Loans The following presents, by class of loans, the recorded investment and unpaid principal balance of impaired loans, the amounts of the impaired loans for which there is not a reserve for credit losses and the amounts for which there is a reserve for credit losses at March 31, 2017 and December 31, 2016 . The impaired loans exclude acquired credit impaired loans. At March 31, 2017 At December 31, 2016 (Dollars in thousands) Recorded Unpaid Related Recorded Unpaid Related Impaired loans with no related reserve recorded: Commercial, financial and agricultural $ 9,437 $ 10,960 $ 10,911 $ 12,561 Real estate—commercial real estate 21,062 21,906 24,469 25,342 Real estate—residential secured for business purpose 3,937 4,338 5,704 6,253 Real estate—residential secured for personal purpose 556 596 560 594 Real estate—home equity secured for personal purpose 441 445 525 528 Total impaired loans with no related reserve recorded $ 35,433 $ 38,245 $ 42,169 $ 45,278 Impaired loans with a reserve recorded: Commercial, financial and agricultural $ 87 $ 211 $ 8 $ 166 $ 166 $ 19 Real estate—commercial real estate 596 596 26 597 597 25 Real estate—residential secured for business purpose 1,241 1,519 364 983 1,105 191 Real estate—home equity secured for personal purpose 57 57 1 — — — Total impaired loans with a reserve recorded $ 1,981 $ 2,383 $ 399 $ 1,746 $ 1,868 $ 235 At March 31, 2017 At December 31, 2016 (Dollars in thousands) Recorded Unpaid Related Recorded Unpaid Related Total impaired loans: Commercial, financial and agricultural $ 9,524 $ 11,171 $ 8 $ 11,077 $ 12,727 $ 19 Real estate—commercial real estate 21,658 22,502 26 25,066 25,939 25 Real estate—residential secured for business purpose 5,178 5,857 364 6,687 7,358 191 Real estate—residential secured for personal purpose 556 596 — 560 594 — Real estate—home equity secured for personal purpose 498 502 1 525 528 — Total impaired loans $ 37,414 $ 40,628 $ 399 $ 43,915 $ 47,146 $ 235 Impaired loans include nonaccrual loans, accruing troubled debt restructured loans and other accruing impaired loans for which it is probable that not all principal and interest payments due will be collectible in accordance with the contractual terms. These loans are individually measured to determine the amount of potential impairment. The loans are reviewed for impairment based on the fair value of the collateral for collateral dependent loans and for certain loans based on discounted cash flows using the loans’ initial effective interest rates. Impaired loans include other accruing impaired loans of $20.3 million and $23.3 million at March 31, 2017 and December 31, 2016 , respectively. Specific reserves on other accruing impaired loans were $650 thousand and $84 thousand at March 31, 2017 and December 31, 2016 , respectively. The following presents by class of loans, the average recorded investment in impaired loans and an analysis of interest on impaired loans. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. Therefore, interest income on accruing impaired loans is recognized using the accrual method. Three Months Ended March 31, 2017 Three Months Ended March 31, 2016 (Dollars in thousands) Average Interest Additional Average Interest Additional Commercial, financial and agricultural $ 11,418 $ 43 $ 85 $ 13,569 $ 68 $ 95 Real estate—commercial real estate 23,949 233 73 29,212 305 70 Real estate—residential secured for business purpose 4,268 16 44 4,273 27 47 Real estate—residential secured for personal purpose 552 — 8 568 2 4 Real estate—home equity secured for personal purpose 525 — 5 177 — 2 Total $ 40,712 $ 292 $ 215 $ 47,799 $ 402 $ 218 * Includes interest income recognized on a cash basis for nonaccrual loans of $1 thousand and $7 thousand for the three months ended March 31, 2017 and 2016 , respectively and interest income recognized on the accrual method for accruing impaired loans of $291 thousand and $395 thousand for the three months ended March 31, 2017 and 2016 , respectively. Impaired Leases The Corporation had impaired leases of $5.0 million with related reserves of $580 thousand at March 31, 2017 . The Corporation had no impaired leases at December 31, 2016 . See discussion in Non-Performing Loans and Leases. Troubled Debt Restructured Loans The following presents, by class of loans, information regarding accruing and nonaccrual loans that were restructured: Three Months Ended March 31, 2017 Three Months Ended March 31, 2016 (Dollars in thousands) Number Pre- Post- Related Number Pre- Post- Related Accruing Troubled Debt Restructured Loans: Commercial, financial and agricultural — $ — $ — $ — 1 $ 1,545 $ 1,545 $ — Total — $ — $ — $ — 1 $ 1,545 $ 1,545 $ — Nonaccrual Troubled Debt Restructured Loans: Total — $ — $ — $ — — $ — $ — $ — The Corporation grants concessions primarily related to extensions of interest-only payment periods and an occasional payment modification. These modifications typically are for a short-term basis up to one year . The goal when restructuring a credit is to establish a reasonable period of time to provide cash flow relief to customers experiencing cash flow difficulties. Accruing troubled debt restructured loans are primarily comprised of loans on which interest is being accrued under the restructured terms, and the loans are current or less than ninety days past due . The following presents, by class of loans, information regarding the types of concessions granted on accruing and nonaccrual loans that were restructured during the three months ended March 31, 2017 and 2016 . Amortization Period Extension Total Concessions (Dollars in thousands) No. of Amount No. of Amount Three Months Ended March 31, 2017 Accruing Troubled Debt Restructured Loans: Total — $ — — $ — Nonaccrual Troubled Debt Restructured Loans: Total — $ — — $ — Three Months Ended March 31, 2016 Accruing Troubled Debt Restructured Loans: Commercial, financial and agricultural 1 $ 1,545 1 $ 1,545 Total 1 $ 1,545 1 $ 1,545 Nonaccrual Troubled Debt Restructured Loans: Total — $ — — $ — The following presents, by class of loans, information regarding accruing and nonaccrual troubled debt restructured loans, for which there were payment defaults within twelve months of the restructuring date: Three Months Ended March 31, 2017 2016 (Dollars in thousands) Number Recorded Number Recorded Accruing Troubled Debt Restructured Loans: Commercial, financial and agricultural — $ — 1 $ 50 Total — $ — 1 $ 50 Nonaccrual Troubled Debt Restructured Loans: Total — $ — — $ — The following presents, by class of loans, information regarding consumer mortgages collateralized by residential real estate property that are in the process of foreclosure at March 31, 2017 and December 31, 2016 : (Dollars in thousands) At March 31, 2017 At December 31, 2016 Real estate-home equity secured for personal purpose $ 180 $ 180 Total $ 180 $ 180 The Corporation held no foreclosed consumer residential real estate property at March 31, 2017 and December 31, 2016 . |