Loans and Leases | Loans and Leases Summary of Major Loan and Lease Categories At March 31, 2018 (Dollars in thousands) Originated Acquired Total Commercial, financial and agricultural $ 856,250 $ 51,688 $ 907,938 Real estate-commercial 1,293,496 291,324 1,584,820 Real estate-construction 180,681 4,452 185,133 Real estate-residential secured for business purpose 251,188 82,173 333,361 Real estate-residential secured for personal purpose 278,990 58,183 337,173 Real estate-home equity secured for personal purpose 172,121 11,347 183,468 Loans to individuals 28,112 143 28,255 Lease financings 129,740 — 129,740 Total loans and leases held for investment, net of deferred income $ 3,190,578 $ 499,310 $ 3,689,888 Unearned lease income, included in the above table $ (14,153 ) $ — $ (14,153 ) Net deferred costs, included in the above table 4,436 — 4,436 Overdraft deposits included in the above table 396 — 396 At December 31, 2017 (Dollars in thousands) Originated Acquired Total Commercial, financial and agricultural $ 833,100 $ 63,111 $ 896,211 Real estate-commercial 1,235,681 306,460 1,542,141 Real estate-construction 171,244 4,592 175,836 Real estate-residential secured for business purpose 250,800 91,167 341,967 Real estate-residential secured for personal purpose 260,654 60,920 321,574 Real estate-home equity secured for personal purpose 171,884 12,386 184,270 Loans to individuals 28,156 144 28,300 Lease financings 129,768 — 129,768 Total loans and leases held for investment, net of deferred income $ 3,081,287 $ 538,780 $ 3,620,067 Unearned lease income, included in the above table $ (14,243 ) $ — $ (14,243 ) Net deferred costs, included in the above table 4,669 — 4,669 Overdraft deposits included in the above table 222 — 222 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, 2018 totaled $499.3 million , including $400.1 million of loans from the Fox Chase acquisition and $99.2 million from the Valley Green Bank acquisition. At March 31, 2018 , loans acquired with deteriorated credit quality, or acquired credit impaired loans, totaled $1.5 million representing $733 thousand from the Fox Chase acquisition and $792 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, 2018 and December 31, 2017 were as follows: (Dollars in thousands) At March 31, 2018 At December 31, 2017 Outstanding principal balance $ 2,197 $ 2,325 Carrying amount 1,525 1,583 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) 2018 2017 Beginning of period $ 11 $ 50 Reclassification from nonaccretable discount 81 107 Accretable discount amortized to interest income (87 ) (116 ) Disposals — (4 ) End of period $ 5 $ 37 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, 2018 and December 31, 2017 : (Dollars in thousands) 30-59 60-89 90 Days Total Current Acquired Credit Impaired Total Loans Recorded At March 31, 2018 Commercial, financial and agricultural $ 663 $ 187 $ 2,763 $ 3,613 $ 903,947 $ 378 $ 907,938 $ — Real estate—commercial real estate and construction: Commercial real estate 1,564 174 4,347 6,085 1,578,379 356 1,584,820 — Construction 1,168 — — 1,168 183,965 — 185,133 — Real estate—residential and home equity: Residential secured for business purpose 1,164 — 962 2,126 330,649 586 333,361 — Residential secured for personal purpose 3,575 — 826 4,401 332,567 205 337,173 569 Home equity secured for personal purpose 1,335 74 1,110 2,519 180,949 — 183,468 955 Loans to individuals 153 53 644 850 27,405 — 28,255 644 Lease financings 1,225 635 127 1,987 127,753 — 129,740 127 Total $ 10,847 $ 1,123 $ 10,779 $ 22,749 $ 3,665,614 $ 1,525 $ 3,689,888 $ 2,295 At December 31, 2017 Commercial, financial and agricultural $ 2,182 $ 1,440 $ 1,509 $ 5,131 $ 890,658 $ 422 $ 896,211 $ — Real estate—commercial real estate and construction: Commercial real estate 733 548 1,410 2,691 1,539,094 356 1,542,141 — Construction 1,970 — 365 2,335 173,501 — 175,836 — Real estate—residential and home equity: Residential secured for business purpose 1,651 315 1,355 3,321 338,061 585 341,967 162 Residential secured for personal purpose 4,368 1,118 23 5,509 315,845 220 321,574 — Home equity secured for personal purpose 1,414 333 464 2,211 182,059 — 184,270 148 Loans to individuals 221 139 195 555 27,745 — 28,300 195 Lease financings 1,143 392 1,855 3,390 126,378 — 129,768 256 Total $ 13,682 $ 4,285 $ 7,176 $ 25,143 $ 3,593,341 $ 1,583 $ 3,620,067 $ 761 Nonperforming Loans and Leases The following presents, by class of loans and leases, nonperforming loans and leases at March 31, 2018 and December 31, 2017 . Nonperforming loans exclude acquired credit impaired loans from Fox Chase and Valley Green. At March 31, 2018 At December 31, 2017 (Dollars in thousands) Nonaccrual Accruing Loans and Total Nonperforming Nonaccrual Accruing Loans and Total Nonperforming Commercial, financial and agricultural $ 4,192 $ 796 $ — $ 4,988 $ 4,448 $ 921 $ — $ 5,369 Real estate—commercial real estate and construction: Commercial real estate 19,014 — — 19,014 4,285 10,266 — 14,551 Construction — — — — 365 — — 365 Real estate—residential and home equity: Residential secured for business purpose 1,565 195 — 1,760 2,843 206 162 3,211 Residential secured for personal purpose 594 41 569 1,204 466 42 — 508 Home equity secured for personal purpose 649 — 955 1,604 511 — 148 659 Loans to individuals — — 644 644 — — 195 195 Lease financings 1,680 — 127 1,807 1,599 — 256 1,855 Total $ 27,694 $ 1,032 $ 2,295 $ 31,021 $ 14,517 $ 11,435 $ 761 $ 26,713 * Includes nonaccrual troubled debt restructured loans and lease modifications of $1.7 million and $2.5 million at March 31, 2018 and December 31, 2017 , respectively. Accruing troubled debt restructuring loans of $11.4 million at December 31, 2017 includes balances of $10.3 million related to one borrower which were classified as troubled debt restructurings as the related loans were granted amortization period extensions. These troubled debt restructured loans were returned to performing status during the first quarter of 2018 as the borrower was in compliance with the modified terms of the restructurings for the required time period. At March 31, 2018, commercial real estate nonaccrual loans and leases includes a $12.3 million loan that was placed on nonaccrual status during the current quarter. A specific reserve of $656 thousand was recorded for this loan as of March 31, 2018. 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, 2018 and December 31, 2017 . 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. Loans with a relationship balance of less than $1 million are reviewed on a performance basis, with the primary monitored metrics being delinquency (60 days or more past due) and revolving stagnancy. Loans with relationships greater than $1 million are reviewed at least annually. Loan relationships exceeding $15 million or classified as special mention or substandard are reviewed at least quarterly, or more frequently based on management’s discretion. 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, 2018 Grade: 1. Cash secured/ 2. Fully secured $ 2,257 $ 399 $ 17,935 $ — $ 20,591 3. Strong 15,010 1,779 — — 16,789 4. Satisfactory 19,252 25,858 — 271 45,381 5. Acceptable 605,721 1,001,237 73,203 215,138 1,895,299 6. Pre-watch 196,721 239,815 87,030 30,898 554,464 7. Special Mention 6,939 13,117 2,513 1,024 23,593 8. Substandard 10,350 11,291 — 3,857 25,498 9. Doubtful — — — — — 10.Loss — — — — — Total $ 856,250 $ 1,293,496 $ 180,681 $ 251,188 $ 2,581,615 At December 31, 2017 Grade: 1. Cash secured/ 2. Fully secured $ 2,521 $ — $ 20,420 $ — $ 22,941 3. Strong 9,206 1,821 — — 11,027 4. Satisfactory 30,283 26,950 — 274 57,507 5. Acceptable 593,205 960,258 76,899 215,750 1,846,112 6. Pre-watch 179,990 209,844 72,168 29,738 491,740 7. Special Mention 4,027 12,974 1,392 296 18,689 8. Substandard 13,868 23,834 365 4,742 42,809 9. Doubtful — — — — — 10.Loss — — — — — Total $ 833,100 $ 1,235,681 $ 171,244 $ 250,800 $ 2,490,825 The following table presents classifications for acquired loans: (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Total At March 31, 2018 Grade: 1. Cash secured/ 2. Fully secured $ 1,125 $ — $ — $ — $ 1,125 3. Strong — — — — — 4. Satisfactory 118 463 — — 581 5. Acceptable 39,143 173,731 — 67,954 280,828 6. Pre-watch 8,496 97,057 4,452 12,738 122,743 7. Special Mention 891 4,504 — — 5,395 8. Substandard 1,915 15,569 — 1,481 18,965 9. Doubtful — — — — — 10.Loss — — — — — Total $ 51,688 $ 291,324 $ 4,452 $ 82,173 $ 429,637 December 31, 2017 Grade: 1. Cash secured/ 2. Fully secured $ 1,120 $ — $ — $ — $ 1,120 3. Strong — — — — — 4. Satisfactory 125 482 — — 607 5. Acceptable 49,949 183,490 — 73,402 306,841 6. Pre-watch 6,183 98,977 4,592 15,861 125,613 7. Special Mention 1,007 17,028 — — 18,035 8. Substandard 4,727 6,483 — 1,904 13,114 9. Doubtful — — — — — 10.Loss — — — — — Total $ 63,111 $ 306,460 $ 4,592 $ 91,167 $ 465,330 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, 2018 Performing $ 278,357 $ 171,597 $ 27,468 $ 127,933 $ 605,355 Nonperforming 633 524 644 1,807 3,608 Total $ 278,990 $ 172,121 $ 28,112 $ 129,740 $ 608,963 At December 31, 2017 Performing $ 260,589 $ 171,527 $ 27,961 $ 127,913 $ 587,990 Nonperforming 65 357 195 1,855 2,472 Total $ 260,654 $ 171,884 $ 28,156 $ 129,768 $ 590,462 The following table presents classifications for acquired loans: (Dollars in thousands) Real Estate— Real Estate— Loans to Lease Total At March 31, 2018 Performing $ 57,612 $ 10,267 $ 143 $ — $ 68,022 Nonperforming 571 1,080 — — 1,651 Total $ 58,183 $ 11,347 $ 143 $ — $ 69,673 At December 31, 2017 Performing $ 60,477 $ 12,084 $ 144 $ — $ 72,705 Nonperforming 443 302 — — 745 Total $ 60,920 $ 12,386 $ 144 $ — $ 73,450 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 for the three months ended March 31, 2018 and 2017 : (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Loans to Lease Unallocated Total Three Months Ended March 31, 2018 Reserve for loan and lease losses: Beginning balance $ 6,742 $ 9,839 $ 1,661 $ 1,754 $ 373 $ 1,132 $ 54 $ 21,555 Charge-offs (601 ) (40 ) — — (92 ) (136 ) N/A (869 ) Recoveries 226 73 251 57 30 34 N/A 671 Provision (recovery of provision) 575 1,306 (41 ) 96 61 49 6 2,052 Provision for acquired credit impaired loans — — — 1 — — — 1 Ending balance $ 6,942 $ 11,178 $ 1,871 $ 1,908 $ 372 $ 1,079 $ 60 $ 23,410 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 N/A – Not applicable The following presents, by portfolio segment, a summary of 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 at March 31, 2018 and 2017 : (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Loans to Lease Unallocated Total At March 31, 2018 Reserve for loan and lease losses: Ending balance: individually evaluated for impairment $ 34 $ 684 $ 14 $ — $ — $ — N/A $ 732 Ending balance: collectively evaluated for impairment 6,776 10,378 1,815 1,908 372 1,079 60 22,388 Ending balance: acquired credit impaired loans evaluated for impairment 132 116 42 — — — — 290 Total ending balance $ 6,942 $ 11,178 $ 1,871 $ 1,908 $ 372 $ 1,079 $ 60 $ 23,410 Loans and leases held for investment: Ending balance: individually evaluated for impairment $ 6,560 $ 30,573 $ 2,173 $ 1,284 $ — $ 1,250 $ 41,840 Ending balance: collectively evaluated for impairment 849,690 1,441,709 249,015 449,827 28,112 128,490 3,146,843 Loans measured at fair value — 1,895 — — — — 1,895 Acquired non-credit impaired loans 51,310 295,420 81,587 69,325 143 — 497,785 Acquired credit impaired loans 378 356 586 205 — — 1,525 Total ending balance $ 907,938 $ 1,769,953 $ 333,361 $ 520,641 $ 28,255 $ 129,740 $ 3,689,888 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 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 (excludes Lease Financings) 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, 2018 and December 31, 2017 . The impaired loans exclude acquired credit impaired loans. At March 31, 2018 At December 31, 2017 (Dollars in thousands) Recorded Unpaid Related Recorded Unpaid Related Impaired loans with no related reserve recorded: Commercial, financial and agricultural $ 4,683 $ 5,518 $ 7,019 $ 8,301 Real estate—commercial real estate 17,738 18,564 15,621 16,507 Real estate—construction — — 365 365 Real estate—residential secured for business purpose 1,697 1,819 3,430 4,620 Real estate—residential secured for personal purpose 635 691 508 566 Real estate—home equity secured for personal purpose 649 674 511 523 Total impaired loans with no related reserve recorded $ 25,402 $ 27,266 $ 27,454 $ 30,882 Impaired loans with a reserve recorded: Commercial, financial and agricultural $ 1,877 $ 2,336 $ 34 $ 60 $ 60 $ 31 Real estate—commercial real estate 12,835 12,929 684 933 933 99 Real estate—residential secured for business purpose 476 549 14 35 37 1 Total impaired loans with a reserve recorded $ 15,188 $ 15,814 $ 732 $ 1,028 $ 1,030 $ 131 Total impaired loans: Commercial, financial and agricultural $ 6,560 $ 7,854 $ 34 $ 7,079 $ 8,361 $ 31 Real estate—commercial real estate 30,573 31,493 684 16,554 17,440 99 Real estate—construction — — — 365 365 — Real estate—residential secured for business purpose 2,173 2,368 14 3,465 4,657 1 Real estate—residential secured for personal purpose 635 691 — 508 566 — Real estate—home equity secured for personal purpose 649 674 — 511 523 — Total impaired loans $ 40,590 $ 43,080 $ 732 $ 28,482 $ 31,912 $ 131 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 original 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 $3.3 million and $4.1 million at March 31, 2018 and December 31, 2017 , respectively. Specific reserves on other accruing impaired loans were $28 thousand and $99 thousand at March 31, 2018 and December 31, 2017 , 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, 2018 Three Months Ended March 31, 2017 (Dollars in thousands) Average Interest Additional Average Interest Additional Commercial, financial and agricultural $ 7,703 $ 40 $ 77 $ 11,418 $ 43 $ 85 Real estate—commercial real estate 19,916 172 287 23,949 233 73 Real estate—construction 183 — 2 — — — Real estate—residential secured for business purpose 2,217 5 24 4,268 16 44 Real estate—residential secured for personal purpose 544 1 11 552 — 8 Real estate—home equity secured for personal purpose 549 — 8 525 — 5 Total $ 31,112 $ 218 $ 409 $ 40,712 $ 292 $ 215 * Includes interest income recognized on a cash basis for nonaccrual loans of $6 thousand and $1 thousand for the three months ended March 31, 2018 and 2017 , respectively, and interest income recognized on the accrual method for accruing impaired loans of $212 thousand and $291 thousand for the three months ended March 31, 2018 and 2017 , respectively. Impaired Leases The Corporation had impaired leases of $1.3 million at March 31, 2018 and December 31, 2017 with no related reserves. See discussion in Reserve for Loan and Lease Losses and Recorded Investment in Loans and Leases. Troubled Debt Restructured Loans There were no loans restructured during the three months ended March 31, 2018 and March 31, 2017 . The Corporation grants concessions to existing borrowers primarily related to extensions of interest-only payment periods and an occasional payment modification. These modifications typically are for 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 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, 2018 2017 (Dollars in thousands) Number Recorded Number Recorded Accruing Troubled Debt Restructured Loans: Total — $ — — $ — Nonaccrual Troubled Debt Restructured Loans: Commercial, financial and agricultural 1 $ 953 — $ — Total 1 $ 953 — $ — 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, 2018 and December 31, 2017 : (Dollars in thousands) At March 31, 2018 At December 31, 2017 Real estate-residential secured for personal purpose $ 317 $ 31 Real estate-home equity secured for personal purpose 79 — Total $ 396 $ 31 The following presents foreclosed residential real estate property included in other real estate owned at March 31, 2018 and December 31, 2017 . (Dollars in thousands) At March 31, 2018 At December 31, 2017 Foreclosed residential real estate $ 80 $ 80 |