Loans and Leases | Loans and Leases Summary of Major Loan and Lease Categories At September 30, 2019 (Dollars in thousands) Originated Acquired Total Commercial, financial and agricultural $ 943,713 $ 15,440 $ 959,153 Real estate-commercial 1,736,904 191,946 1,928,850 Real estate-construction 221,845 — 221,845 Real estate-residential secured for business purpose 315,984 44,737 360,721 Real estate-residential secured for personal purpose 388,643 43,545 432,188 Real estate-home equity secured for personal purpose 170,486 7,168 177,654 Loans to individuals 30,575 140 30,715 Lease financings 140,807 — 140,807 Total loans and leases held for investment, net of deferred income $ 3,948,957 $ 302,976 $ 4,251,933 Imputed interest on lease financings, included in the above table $ (15,369) $ — $ (15,369) Net deferred costs, included in the above table 6,243 — 6,243 Overdraft deposits included in the above table 149 — 149 At December 31, 2018 (Dollars in thousands) Originated Acquired Total Commercial, financial and agricultural $ 913,166 $ 24,519 $ 937,685 Real estate-commercial 1,507,579 233,625 1,741,204 Real estate-construction 215,513 — 215,513 Real estate-residential secured for business purpose 302,393 60,403 362,796 Real estate-residential secured for personal purpose 338,451 49,959 388,410 Real estate-home equity secured for personal purpose 177,523 8,728 186,251 Loans to individuals 32,617 142 32,759 Lease financings 141,956 — 141,956 Total loans and leases held for investment, net of deferred income $ 3,629,198 $ 377,376 $ 4,006,574 Imputed interest on lease financings, included in the above table $ (15,118) $ — $ (15,118) Net deferred costs, included in the above table 3,930 — 3,930 Overdraft deposits included in the above table 139 — 139 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 September 30, 2019 totaled $303.0 million, including $268.2 million of loans from the Fox Chase acquisition and $34.8 million from the Valley Green Bank acquisition. At September 30, 2019, loans acquired with deteriorated credit quality, or acquired credit impaired loans, totaled $568 thousand representing $60 thousand from the Fox Chase acquisition and $508 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 September 30, 2019 and December 31, 2018 were as follows: (Dollars in thousands) At September 30, 2019 At December 31, 2018 Outstanding principal balance $ 664 $ 893 Carrying amount 568 695 Reserve for loan losses — — The following table presents the changes in accretable yield on acquired credit impaired loans: Nine Months Ended September 30, (Dollars in thousands) 2019 2018 Beginning of period $ — $ 11 Reclassification from nonaccretable discount 317 453 Accretable yield amortized to interest income (317) (464) End of period $ — $ — 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, acquired credit impaired loans and nonaccrual loans and leases at September 30, 2019 and December 31, 2018: Accruing Loans and Leases (Dollars in thousands) 30-59 60-89 90 Days Total Current Total Accruing Loans and Leases Acquired Credit Impaired Nonaccrual Loans and Leases Total Loans At September 30, 2019 Commercial, financial and agricultural $ 1,591 $ 751 $ — $ 2,342 $ 954,578 $ 956,920 $ — $ 2,233 $ 959,153 Real estate—commercial real estate and construction: Commercial real estate 4,556 1,102 760 6,418 1,894,202 1,900,620 206 28,024 1,928,850 Construction 185 — — 185 221,404 221,589 — 256 221,845 Real estate—residential and home equity: Residential secured for business purpose 2,293 1,441 1,109 4,843 352,689 357,532 302 2,887 360,721 Residential secured for personal purpose 1,553 133 — 1,686 428,355 430,041 60 2,087 432,188 Home equity secured for personal purpose 665 — — 665 175,610 176,275 — 1,379 177,654 Loans to individuals 156 48 129 333 30,380 30,713 — 2 30,715 Lease financings 534 1,394 490 2,418 137,889 140,307 — 500 140,807 Total $ 11,533 $ 4,869 $ 2,488 $ 18,890 $ 4,195,107 $ 4,213,997 $ 568 $ 37,368 $ 4,251,933 At December 31, 2018 Commercial, financial and agricultural $ 1,043 $ 122 $ — $ 1,165 $ 933,155 $ 934,320 $ — $ 3,365 $ 937,685 Real estate—commercial real estate and construction: Commercial real estate 4,995 1,538 — 6,533 1,716,251 1,722,784 206 18,214 1,741,204 Construction 2,163 — — 2,163 213,244 215,407 — 106 215,513 Real estate—residential and home equity: Residential secured for business purpose 2,497 728 — 3,225 357,827 361,052 426 1,318 362,796 Residential secured for personal purpose 2,334 — — 2,334 384,426 386,760 63 1,587 388,410 Home equity secured for personal purpose 305 96 — 401 184,402 184,803 — 1,448 186,251 Loans to individuals 207 29 55 291 32,468 32,759 — — 32,759 Lease financings 2,460 411 137 3,008 138,778 141,786 — 170 141,956 Total $ 16,004 $ 2,924 $ 192 $ 19,120 $ 3,960,551 $ 3,979,671 $ 695 $ 26,208 $ 4,006,574 Nonperforming Loans and Leases The following presents, by class of loans and leases, nonperforming loans and leases at September 30, 2019 and December 31, 2018. Nonperforming loans exclude acquired credit impaired loans from Fox Chase and Valley Green. At September 30, 2019 At December 31, 2018 (Dollars in thousands) Nonaccrual Accruing Loans and Total Nonperforming Nonaccrual Accruing Loans and Total Nonperforming Commercial, financial and agricultural $ 2,233 $ — $ — $ 2,233 $ 3,365 $ 382 $ — $ 3,747 Real estate—commercial real estate and construction: Commercial real estate 28,024 — 760 28,784 18,214 — — 18,214 Construction 256 — — 256 106 — — 106 Real estate—residential and home equity: Residential secured for business purpose 2,887 — 1,109 3,996 1,318 160 — 1,478 Residential secured for personal purpose 2,087 — — 2,087 1,587 — — 1,587 Home equity secured for personal purpose 1,379 54 — 1,433 1,448 — — 1,448 Loans to individuals 2 — 129 131 — — 55 55 Lease financings 500 — 490 990 170 — 137 307 Total $ 37,368 $ 54 $ 2,488 $ 39,910 $ 26,208 $ 542 $ 192 $ 26,942 * Includes nonaccrual troubled debt restructured loans of $2.3 million and $1.3 million at September 30, 2019 and December 31, 2018, respectively. Credit Quality Indicators The following tables present by class, the recorded investment in loans and leases held for investment by credit quality indicator at September 30, 2019 and December 31, 2018. The Corporation employs a risk rating system related to the credit quality of commercial loans and residential real estate loans secured for a business purpose. 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). Loans with relationships greater than $1 million are reviewed at least annually. Loan relationships with a higher risk profile or classified as special mention or substandard are reviewed at least quarterly, or more frequently based on management’s discretion. 1. Pass—Loans considered satisfactory with no indications of deterioration 2. Special Mention—Potential weakness that deserves management's close attention 3. Substandard—Well-defined weakness or weaknesses that jeopardize the liquidation of the debt 4. Doubtful—Collection or liquidation in-full, on the basis of current existing facts, conditions and values, highly questionable and improbable 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 September 30, 2019 Grade: 1. Pass $ 907,186 $ 1,690,123 $ 219,656 $ 310,514 $ 3,127,479 2. Special Mention 18,924 23,667 1,932 1,541 46,064 3. Substandard 17,603 23,114 257 3,929 44,903 4. Doubtful — — — — — Total $ 943,713 $ 1,736,904 $ 221,845 $ 315,984 $ 3,218,446 At December 31, 2018 Grade: 1. Pass $ 882,736 $ 1,455,234 $ 215,407 $ 298,356 $ 2,851,733 2. Special Mention 23,287 31,791 — 721 55,799 3. Substandard 7,143 20,554 106 3,316 31,119 4. Doubtful — — — — — Total $ 913,166 $ 1,507,579 $ 215,513 $ 302,393 $ 2,938,651 The following table presents classifications for acquired loans: (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Total At September 30, 2019 Grade: 1. Pass $ 15,440 $ 178,997 $ — $ 44,220 $ 238,657 2. Special Mention — 1,316 — — 1,316 3. Substandard — 11,633 — 517 12,150 4. Doubtful — — — — — Total $ 15,440 $ 191,946 $ — $ 44,737 $ 252,123 December 31, 2018 Grade: 1. Pass $ 24,450 $ 220,911 $ — $ 59,567 $ 304,928 2. Special Mention — — — — — 3. Substandard 69 12,714 — 836 13,619 4. Doubtful — — — — — Total $ 24,519 $ 233,625 $ — $ 60,403 $ 318,547 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 September 30, 2019 Performing $ 387,449 $ 170,062 $ 30,444 $ 139,817 $ 727,772 Nonperforming 1,194 424 131 990 2,739 Total $ 388,643 $ 170,486 $ 30,575 $ 140,807 $ 730,511 At December 31, 2018 Performing $ 337,762 $ 177,139 $ 32,562 $ 141,649 $ 689,112 Nonperforming 689 384 55 307 1,435 Total $ 338,451 $ 177,523 $ 32,617 $ 141,956 $ 690,547 The following table presents classifications for acquired loans: (Dollars in thousands) Real Estate— Real Estate— Loans to Lease Total At September 30, 2019 Performing $ 42,652 $ 6,159 $ 140 $ — $ 48,951 Nonperforming 893 1,009 — — 1,902 Total $ 43,545 $ 7,168 $ 140 $ — $ 50,853 At December 31, 2018 Performing $ 49,061 $ 7,664 $ 142 $ — $ 56,867 Nonperforming 898 1,064 — — 1,962 Total $ 49,959 $ 8,728 $ 142 $ — $ 58,829 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 and nine months ended September 30, 2019 and 2018: (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Loans to Lease Unallocated Total Three Months Ended September 30, 2019 Reserve for loan and lease losses: Beginning balance $ 9,129 $ 15,478 $ 2,478 $ 3,518 $ 481 $ 1,241 $ 275 $ 32,600 Charge-offs (283) (251) — (183) (73) (54) N/A (844) Recoveries 182 1 98 4 20 71 N/A 376 Provision (recovery of provision) 222 593 103 273 47 (24) 310 1,524 Provision for acquired credit impaired loans — — 6 — — — — 6 Ending balance $ 9,250 $ 15,821 $ 2,685 $ 3,612 $ 475 $ 1,234 $ 585 $ 33,662 Three Months Ended September 30, 2018 Reserve for loan and lease losses: Beginning balance $ 7,258 $ 12,327 $ 2,004 $ 2,494 $ 447 $ 1,071 $ 51 $ 25,652 Charge-offs (904) — (30) — (82) (123) N/A (1,139) Recoveries 22 1 8 6 25 51 N/A 113 Provision 813 906 72 527 82 138 206 2,744 Provision for acquired credit impaired loans — — — 1 — — — 1 Ending balance $ 7,189 $ 13,234 $ 2,054 $ 3,028 $ 472 $ 1,137 $ 257 $ 27,371 Nine Months Ended September 30, 2019 Reserve for loan and lease losses: Beginning balance $ 7,983 $ 13,903 $ 2,236 $ 3,199 $ 484 $ 1,288 $ 271 $ 29,364 Charge-offs (1,769) (325) — (198) (209) (268) N/A (2,769) Recoveries 283 92 108 16 58 219 N/A 776 Provision (recovery of provision) 2,753 2,151 335 594 142 (5) 314 6,284 Provision for acquired credit impaired loans — — 6 1 — — — 7 Ending balance $ 9,250 $ 15,821 $ 2,685 $ 3,612 $ 475 $ 1,234 $ 585 $ 33,662 Nine Months Ended September 30, 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 (14,553) (40) (30) — (253) (428) N/A (15,304) Recoveries 271 74 266 71 71 160 N/A 913 Provision 14,729 3,361 157 1,201 281 273 203 20,205 Provision for acquired credit impaired loans — — — 2 — — — 2 Ending balance $ 7,189 $ 13,234 $ 2,054 $ 3,028 $ 472 $ 1,137 $ 257 $ 27,371 N/A – Not applicable The following presents, by portfolio segment, 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 September 30, 2019 and 2018: (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Loans to Lease Unallocated Total At September 30, 2019 Reserve for loan and lease losses: Ending balance: individually evaluated for impairment $ 390 $ 1,485 $ 414 $ 155 $ — $ — N/A $ 2,444 Ending balance: collectively evaluated for impairment 8,860 14,332 2,271 3,457 475 1,234 585 31,214 Ending balance: acquired non-credit impaired loans evaluated for impairment — 4 — — — — — 4 Total ending balance $ 9,250 $ 15,821 $ 2,685 $ 3,612 $ 475 $ 1,234 $ 585 $ 33,662 Loans and leases held for investment: Ending balance: individually evaluated for impairment (1) $ 2,233 $ 28,280 $ 2,887 $ 3,520 $ 2 $ 306 $ 37,228 Ending balance: collectively evaluated for impairment 941,480 1,941,575 313,307 557,512 30,573 140,501 3,924,948 Loans measured at fair value — 349 — — — — 349 Acquired non-impaired loans 15,440 180,285 44,225 48,750 140 — 288,840 Acquired credit impaired loans — 206 302 60 — — 568 Total ending balance $ 959,153 $ 2,150,695 $ 360,721 $ 609,842 $ 30,715 $ 140,807 $ 4,251,933 At September 30, 2018 Reserve for loan and lease losses: Ending balance: individually evaluated for impairment $ 211 $ 645 $ — $ 192 $ — $ — N/A $ 1,048 Ending balance: collectively evaluated for impairment 6,978 12,504 2,014 2,836 472 1,137 257 26,198 Ending balance: acquired non-credit impaired loans evaluated for impairment — 85 40 — — — — 125 Total ending balance $ 7,189 $ 13,234 $ 2,054 $ 3,028 $ 472 $ 1,137 $ 257 $ 27,371 Loans and leases held for investment: Ending balance: individually evaluated for impairment (1) $ 4,889 $ 18,970 $ 1,588 $ 3,275 $ — $ 1,250 $ 29,972 Ending balance: collectively evaluated for impairment 862,856 1,623,458 278,588 504,381 32,096 134,758 3,436,137 Loans measured at fair value — 1,801 — — — — 1,801 Acquired non-impaired loans 26,395 245,345 65,707 59,770 142 — 397,359 Acquired credit impaired loans 182 206 448 64 — — 900 Total ending balance $ 894,322 $ 1,889,780 $ 346,331 $ 567,490 $ 32,238 $ 136,008 $ 3,866,169 (1) Includes $13.6 million and $15.3 million of acquired loans which were individually evaluated for impairment at September 30, 2019 and 2018, respectively. N/A – Not applicable The Corporation does not provide a reserve for loan loss for acquired loans unless 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. 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 September 30, 2019 and December 31, 2018. The impaired loans exclude acquired credit impaired loans. At September 30, 2019 At December 31, 2018 (Dollars in thousands) Recorded Unpaid Related Recorded Unpaid Related Impaired loans with no related reserve recorded: Commercial, financial and agricultural $ 1,223 $ 1,835 $ 2,776 $ 3,361 Real estate—commercial real estate 16,343 17,277 6,578 7,516 Real estate—construction 256 261 106 111 Real estate—residential secured for business purpose 797 978 1,478 1,660 Real estate—residential secured for personal purpose 1,533 1,731 863 911 Real estate—home equity secured for personal purpose 1,433 1,524 1,373 1,404 Loans to individuals 2 2 — — Total impaired loans with no related reserve recorded $ 21,587 $ 23,608 $ 13,174 $ 14,963 Impaired loans with a reserve recorded: Commercial, financial and agricultural $ 1,010 $ 1,010 $ 390 $ 971 $ 1,024 $ 413 Real estate—commercial real estate 11,681 12,436 1,485 11,637 12,162 675 Real estate—residential secured for business purpose 2,090 2,095 414 — — — Real estate—residential secured for personal purpose 554 554 155 724 724 252 Real estate—home equity secured for personal purpose — — — 75 75 75 Total impaired loans with a reserve recorded $ 15,335 $ 16,095 $ 2,444 $ 13,407 $ 13,985 $ 1,415 Total impaired loans: Commercial, financial and agricultural $ 2,233 $ 2,845 $ 390 $ 3,747 $ 4,385 $ 413 Real estate—commercial real estate 28,024 29,713 1,485 18,215 19,678 675 Real estate—construction 256 261 — 106 111 — Real estate—residential secured for business purpose 2,887 3,073 414 1,478 1,660 — Real estate—residential secured for personal purpose 2,087 2,285 155 1,587 1,635 252 Real estate—home equity secured for personal purpose 1,433 1,524 — 1,448 1,479 75 Loans to individuals 2 2 — — — — Total impaired loans $ 36,922 $ 39,703 $ 2,444 $ 26,581 $ 28,948 $ 1,415 Impaired loans include nonaccrual loans and accruing troubled debt restructured 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. 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 an accruing troubled debt restructured loan or 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 September 30, 2019 Three Months Ended September 30, 2018 (Dollars in thousands) Average Interest Additional Average Interest Additional Commercial, financial and agricultural $ 2,082 $ — $ 43 $ 5,671 $ 31 $ 58 Real estate—commercial real estate 19,818 — 284 19,878 22 261 Real estate—construction 219 — 8 108 — 2 Real estate—residential secured for business purpose 2,248 — 76 1,844 4 32 Real estate—residential secured for personal purpose 2,185 — 30 1,850 — 26 Real estate—home equity secured for personal purpose 1,313 — 19 1,507 — 21 Total $ 27,865 $ — $ 460 $ 30,858 $ 57 $ 400 * Includes interest income recognized on a cash basis for nonaccrual loans of $0 thousand and $5 thousand for the three months ended September 30, 2019 and 2018, respectively, and interest income recognized on the accrual method for accruing impaired loans of $0 thousand and $52 thousand for the three months ended September 30, 2019 and 2018, respectively. Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018 (Dollars in thousands) Average Interest Additional Average Interest Additional Commercial, financial and agricultural $ 2,764 $ 17 $ 146 $ 6,589 $ 103 $ 269 Real estate—commercial real estate 18,839 3 780 19,935 212 813 Real estate—construction 151 — 11 128 — 7 Real estate—residential secured for business purpose 1,750 — 132 2,018 14 79 Real estate—residential secured for personal purpose 1,907 — 84 1,064 3 70 Real estate—home equity secured for personal purpose 1,364 1 62 1,026 — 60 Total $ 26,775 $ 21 $ 1,215 $ 30,760 $ 332 $ 1,298 * Includes interest income recognized on a cash basis for nonaccrual loans of $15 thousand and $13 thousand for the nine months ended September 30, 2019 and 2018, respectively, and interest income recognized on the accrual method for accruing impaired loans of $6 thousand and $319 thousand for the nine months ended September 30, 2019 and 2018, respectively. Impaired Leases The Corporation had impaired leases of $306 thousand with no related reserves at September 30, 2019. The Corporation had no impaired leases at December 31, 2018. Troubled Debt Restructured Loans The following presents, by class of loans, information regarding accruing and nonaccrual loans that were restructured: Three Months Ended September 30, 2019 Three Months Ended September 30, 2018 (Dollars in thousands) Number Pre- Post- Related Number Pre- Post- Related Accruing Troubled Debt Restructured Loans: Total — $ — $ — $ — — $ — $ — $ — Nonaccrual Troubled Debt Restructured Loans: Commercial, financial and agricultural 1 $ 19 $ 19 $ — — $ — $ — $ — Total 1 $ 19 $ 19 $ — — $ — $ — $ — Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018 (Dollars in thousands) Number Pre- Post- Related Number Pre- Post- Related Accruing Troubled Debt Restructured Loans: Real estate—home equity secured for personal purpose 1 $ 55 $ 55 $ — — $ — $ — $ — Total 1 $ 55 $ 55 $ — — $ — $ — $ — Nonaccrual Troubled Debt Restructured Loans: Commercial, financial and agricultural* 3 $ 975 $ 975 $ — — $ — $ — $ — Real estate—commercial real estate* 1 1,313 1,313 — — — — — Real estate—residential secured for personal purpose — — — — 1 66 66 — Total 4 $ 2,288 $ 2,288 $ — 1 $ 66 $ 66 $ — * Three nonaccrual troubled debt restructured loans in the above table totaling $2.3 million were modified via the execution of a forbearance agreement during the nine months ended September 30, 2019. These loans relate to one borrower and were on nonaccrual status at the time of modification. 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 the types of concessions granted on accruing and nonaccrual loans that were restructured during the three and nine months ended September 30, 2019 and 2018. Maturity Date Amortization Period Extension Total Concessions (Dollars in thousands) No. of Amount No. of Amount No. of Amount Three Months Ended September 30, 2019 Accruing Troubled Debt Restructured Loans: Total — $ — — $ — — $ — Nonaccrual Troubled Debt Restructured Loans: Commercial, financial and agricultural 1 $ 19 — $ — 1 $ 19 Total 1 $ 19 — $ — 1 $ 19 Three Months Ended September 30, 2018 Accruing Troubled Debt Restructured Loans: Total — $ — — $ — — $ — Nonaccrual Troubled Debt Restructured Loans: Total — $ — — $ — — $ — Nine Months Ended September 30, 2019 Accruing Troubled Debt Restructured Loans: Real estate—home equity secured for personal purpose — — 1 $ 55 1 $ 55 Total — $ — 1 $ 55 1 $ 55 Nonaccrual Troubled Debt Restructured Loans: Commercial, financial and agricultural 1 $ 19 2 $ 956 3 $ 975 Real estate—commercial real estate — — 1 1,313 1 1,313 Total 1 $ 19 3 $ 2,269 4 $ 2,288 Nine Months Ended September 30, 2018 Accruing Troubled Debt Restructured Loans: Total — $ — — $ — — $ — Nonaccrual Troubled Debt Restructured Loans: Real estate—residential secured for personal purpose — $ — 1 $ 66 1 $ 66 Total — $ — 1 $ 66 1 $ 66 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 September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in thousands) Number Recorded Number Recorded 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 September 30, 2019 and December 31, 2018: (Dollars in thousands) At September 30, 2019 At December 31, 2018 Real estate-residential secured for personal purpose $ 714 $ 563 Real estate-home equity secured for personal purpose 1,134 1,134 Total $ 1,848 $ 1,697 The Corporation held no foreclosed residential real estate property at September 30, 2019 and December 31, 2018. Lease Financings In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)", and subsequent related updates, to revise the accounting for leases. The Corporation adopted this guidance effective January 1, 2019 on a modified retrospective basis at January 1, 2019. Additionally, the Corporation early adopted (ASU) No. 2019-01, "Codification Improvements" , as of January 1, 2019, which serves as an update to (ASU) No. 2016-02, and is effective for the first interim period within annual periods beginning after December 15, 2019, or January 1, 2020, for the Corporation. See Note 1, "Summary of Significant Accounting Policies - Accounting Pronouncements Adopted in 2019" for additional information. Lessor accounting was largely unchanged as a result of the standard. Additional disclosures required under the standard are included in the following section. The Corporation, through Univest Capital, Inc., an equipment financing business and a subsidiary of the Bank, provides lease financing to customers primarily in the form of sales-type leases with fixed payment terms and $1.00 buyout clauses. A minor number of contracts are classified as either direct financing leases or operating leases. The fair value of the identified assets within sales-type and direct financing leases are equal to the carrying amount such that there is no profit or loss recorded or deferred upon lease commencement. All receivables related to the equipment financing business are recorded within lease financings as of September 30, 2019. The primary risks that are involved with lease financing receivables are credit underwriting and borrower industry concentrations. The Corporation has strict underwriting, review and monitoring procedures in place to mitigate this risk. Risk also lies in the residual value of the underlying equipment. Residual values are subject to judgments as to the value of the underlying equipment that can be affected by changes in economic and market conditions and the financial viability of the residual guarantors and insurers. To the extent not guaranteed or assumed by a third party, or otherwise insured against, the Corporation bears the risk of ownership of the leased assets. This includes the risk that the actual value of the leased assets at the end of the lease term will be less than the residual value. The Corporation greatly reduces this risk by primarily using $1.00 buyout leases, in which the entire cost of the leased equipment is included in the contractual payments, leaving no residual payment at the end of the lease term for the majority of its lease portfolio. Lease financings are stated at net investment amount, consisting of the present value of lease payments and unguaranteed residual value, plus initial direct costs. Initial direct costs, comprised of commissions paid that would not have been incurred if the lease had not been obtained, are deferred and amortized over the life of the contract, and are presented within net interest income on leases. The following presents the schedule of minimum lease payments receivable: (Dollars in thousands) At September 30, 2019 At December 31, 2018 2019 (excluding the nine months ended September 30, 2019) $ 13,440 $ 55,201 2020 53,183 43,355 2021 40,004 29,678 2022 27,048 17,687 2023 14,254 6,674 Thereafter 5,374 1,975 Total future minimum lease payments receivable 153,303 154,570 Plus: Unguaranteed residual 817 600 Plus: Initial direct costs 2,056 1,904 Less: Imputed interest (15,369) (15,118) Lease financings $ 140,807 $ 141,956 |