Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | Midland States Bancorp, Inc. | |
Entity Central Index Key | 1,466,026 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 19,098,890 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and due from banks | $ 180,807 | $ 189,543 |
Federal funds sold | 2,765 | 1,173 |
Cash and cash equivalents | 183,572 | 190,716 |
Investment securities available for sale, at fair value | 396,985 | 246,339 |
Investment securities held to maturity, at amortized cost (fair value of $75,142 and $81,952 at September 30, 2017 and December 31, 2016, respectively) | 70,867 | 78,672 |
Loans | 3,157,972 | 2,319,976 |
Allowance for loan losses | (16,861) | (14,862) |
Total loans, net | 3,141,111 | 2,305,114 |
Loans held for sale, at fair value | 35,874 | 70,565 |
Premises and equipment, net | 80,941 | 66,692 |
Other real estate owned | 6,379 | 3,560 |
Nonmarketable equity securities | 34,391 | 19,485 |
Accrued interest receivable | 11,673 | 8,202 |
Mortgage servicing rights, at lower of cost or market | 56,299 | 68,008 |
Mortgage servicing rights held for sale | 10,618 | |
Intangible assets | 17,966 | 7,187 |
Goodwill | 97,351 | 48,836 |
Cash surrender value of life insurance policies | 112,591 | 74,226 |
Accrued income taxes receivable | 2,209 | 5,862 |
Deferred tax assets, net | 22,845 | |
Other assets | 66,089 | 40,259 |
Total assets | 4,347,761 | 3,233,723 |
Deposits: | ||
Noninterest-bearing | 674,118 | 562,333 |
Interest-bearing | 2,440,349 | 1,842,033 |
Total deposits | 3,114,467 | 2,404,366 |
Short-term borrowings | 153,443 | 131,557 |
FHLB advances and other borrowings | 488,870 | 237,518 |
Subordinated debt | 54,581 | 54,508 |
Trust preferred debentures | 45,267 | 37,405 |
Accrued interest payable | 2,355 | 1,045 |
Deferred tax liabilities, net | 8,598 | |
Other liabilities | 38,089 | 36,956 |
Total liabilities | 3,897,072 | 2,911,953 |
Shareholder's Equity: | ||
Preferred stock, Series H, $2 par value, $1,000 per share liquidation value; 2,636 shares authorized, issued and outstanding at September 30, 2017 | 3,015 | |
Common stock, $0.01 par value; 40,000,000 shares authorized; 19,093,153 and 15,483,499 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 191 | 155 |
Capital surplus | 329,934 | 209,712 |
Retained earnings | 116,373 | 112,513 |
Accumulated other comprehensive income (loss) | 1,176 | (610) |
Total shareholders' equity | 450,689 | 321,770 |
Total liabilities and shareholders' equity | $ 4,347,761 | $ 3,233,723 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
CONSOLIDATED BALANCE SHEETS | ||
Investment securities held to maturity | $ 75,142,000 | $ 81,952,000 |
Liquidation value | $ 1,000 | $ 1,000 |
Preferred stock, par value | $ 2 | $ 2 |
Preferred stock, shares authorized | 2,636 | |
Preferred stock, shares issued | 2,636 | |
Preferred stock, shares outstanding | 2,636 | |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 19,093,153 | 15,483,499 |
Common stock, shares outstanding | 19,093,153 | 15,483,499 |
CONSOLIDATED STATEMENT OF INCOM
CONSOLIDATED STATEMENT OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Loans: | ||||
Taxable | $ 38,689 | $ 26,047 | $ 97,016 | $ 75,741 |
Tax exempt | 313 | 254 | 953 | 899 |
Loans held for sale | 438 | 858 | 1,926 | 2,401 |
Investment securities: | ||||
Taxable | 1,905 | 2,766 | 4,705 | 8,222 |
Tax exempt | 963 | 892 | 2,820 | 2,739 |
Nonmarketable equity securities | 331 | 174 | 788 | 504 |
Federal funds sold and cash investments | 607 | 195 | 1,405 | 762 |
Total interest income | 43,246 | 31,186 | 109,613 | 91,268 |
Interest expense: | ||||
Deposits | 3,377 | 2,189 | 8,570 | 6,701 |
Short-term borrowings | 100 | 81 | 262 | 217 |
FHLB advances and other borrowings | 1,494 | 306 | 2,901 | 698 |
Subordinated debt | 873 | 873 | 2,619 | 2,985 |
Trust preferred debentures | 637 | 472 | 1,635 | 1,373 |
Total interest expense | 6,481 | 3,921 | 15,987 | 11,974 |
Net interest income | 36,765 | 27,265 | 93,626 | 79,294 |
Provision for loan losses | 1,489 | 1,392 | 3,480 | 3,146 |
Net interest income after provision for loan losses | 35,276 | 25,873 | 90,146 | 76,148 |
Noninterest income: | ||||
Commercial FHA revenue | 3,777 | 3,260 | 14,625 | 18,360 |
Residential mortgage banking revenue | 2,317 | 4,990 | 7,563 | 7,148 |
Wealth management revenue | 3,475 | 1,941 | 9,754 | 5,596 |
Service charges on deposit accounts | 2,133 | 1,044 | 4,147 | 2,916 |
Interchange revenue | 1,724 | 920 | 3,816 | 2,829 |
FDIC loss-sharing expense | (1,661) | |||
Gain on sales of investment securities, net | 98 | 39 | 219 | 315 |
Other-than-temporary impairment on investment securities | (824) | |||
Gain on sales of other real estate owned | 22 | 33 | 54 | 112 |
Other income | 1,857 | 2,710 | 5,186 | 6,781 |
Total noninterest income | 15,403 | 14,937 | 45,364 | 41,572 |
Noninterest expense: | ||||
Salaries and employee benefits | 22,411 | 16,568 | 61,368 | 48,967 |
Occupancy and equipment | 4,144 | 3,271 | 10,800 | 9,815 |
Data processing | 5,786 | 2,586 | 11,531 | 7,830 |
FDIC insurance | 565 | 388 | 1,403 | 1,350 |
Professional | 4,151 | 1,877 | 10,285 | 5,151 |
Marketing | 1,070 | 717 | 2,517 | 2,009 |
Communications | 723 | 546 | 1,655 | 1,609 |
Loan expense | 629 | 314 | 1,531 | 1,351 |
Other real estate owned | 146 | 179 | 725 | 748 |
Amortization of intangible assets | 1,187 | 514 | 2,291 | 1,613 |
Loss on mortgage service rights held for sale | (3,617) | (3,617) | ||
Other expense | 3,934 | 1,697 | 9,082 | 6,756 |
Total noninterest expense | 48,363 | 28,657 | 116,805 | 87,199 |
Income before income taxes | 2,316 | 12,153 | 18,705 | 30,521 |
Income taxes | 280 | 4,102 | 4,640 | 10,562 |
Net income | 2,036 | 8,051 | 14,065 | 19,959 |
Preferred stock dividend and premium amortization | 27 | 46 | ||
Net income available to common shareholders | $ 2,009 | $ 8,051 | $ 14,019 | $ 19,959 |
Per common share data: | ||||
Basic earnings per common share | $ 0.10 | $ 0.51 | $ 0.81 | $ 1.46 |
Diluted earnings per common share | $ 0.10 | $ 0.51 | $ 0.78 | $ 1.43 |
Weighted average common shares outstanding | 19,265,409 | 15,578,703 | 17,274,746 | 13,637,997 |
Weighted average diluted common shares outstanding | 19,704,217 | 15,858,273 | 17,797,235 | 13,902,664 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 2,036 | $ 8,051 | $ 14,065 | $ 19,959 |
Investment securities available for sale: | ||||
Unrealized gains (losses) that occurred during the period | 305 | (233) | 3,245 | 5,789 |
Reclassification adjustment for realized net gains on sales of investment securities included in net income | (98) | (39) | (219) | (315) |
Income tax effect | (94) | 110 | (1,188) | (2,203) |
Change in investment securities available for sale, net of tax | 113 | (162) | 1,838 | 3,271 |
Investment securities held to maturity: | ||||
Amortization of unrealized gain on investment securities transferred from available-for-sale | (25) | (3) | (83) | (42) |
Income tax effect | 9 | 1 | 31 | 17 |
Change in investment securities held to maturity, net of tax | (16) | (2) | (52) | (25) |
Cash flow hedges: | ||||
Change in fair value of interest rate swap | 32 | 93 | ||
Income tax effect | (13) | (38) | ||
Change in cash flow hedges, net of tax | 19 | 55 | ||
Other comprehensive income (loss), net of tax | 97 | (145) | 1,786 | 3,301 |
Total comprehensive income | $ 2,133 | $ 7,906 | $ 15,851 | $ 23,260 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | CedarPointCommon stock | CedarPointCapital surplus | CedarPoint | CentruePreferred stock. | CentrueCommon stock | CentrueCapital surplus | Centrue | Preferred stock. | Common stock | Capital surplus | Retained earnings | Accumulated other comprehensive (loss) income | Total |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Cumulative effect of change in accounting principle | Adjustments for New Accounting Principle, Early Adoption [Member] | Accounting Standards Update 2016-09 [Member] | $ 87 | $ (87) | |||||||||||
Beginning Balance (Scenario, Previously Reported [Member]) at Dec. 31, 2015 | $ 118 | 135,822 | 90,911 | $ 6,029 | $ 232,880 | ||||||||
Beginning Balance at Dec. 31, 2015 | 118 | 135,909 | 90,824 | 6,029 | 232,880 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net income | 19,959 | 19,959 | |||||||||||
Compensation expense for stock option grants | 315 | 315 | |||||||||||
Amortization of restricted stock awards | 387 | 387 | |||||||||||
Common dividends declared | (7,057) | (7,057) | |||||||||||
Initial public offering of 3,590,065 shares of common stock, net of issuance costs | 36 | 71,439 | 71,475 | ||||||||||
Issuance of common stock under employee benefits plans | 489 | 489 | |||||||||||
Other comprehensive income | 3,301 | 3,301 | |||||||||||
Ending Balance at Sep. 30, 2016 | 154 | 208,539 | 103,726 | 9,330 | 321,749 | ||||||||
Beginning Balance at Dec. 31, 2016 | 155 | 209,712 | 112,513 | (610) | 321,770 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net income | 14,065 | 14,065 | |||||||||||
Compensation expense for stock option grants | 413 | 413 | |||||||||||
Amortization of restricted stock awards | 599 | 599 | |||||||||||
Preferred dividends declared | (102) | (102) | |||||||||||
Amortization of preferred stock premium | $ (56) | 56 | 56 | ||||||||||
Common dividends declared | (10,159) | (10,159) | |||||||||||
Acquisition | $ 1 | $ 3,350 | $ 3,351 | $ 3,071 | $ 32 | $ 112,480 | $ 115,583 | ||||||
Issuance of common stock under employee benefits plans | 3 | 3,380 | 3,383 | ||||||||||
Other comprehensive income | 1,786 | 1,786 | |||||||||||
Ending Balance at Sep. 30, 2017 | $ 3,015 | $ 191 | $ 329,934 | $ 116,373 | $ 1,176 | $ 450,689 |
CONSOLIDATED STATEMENTS OF SHA7
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Common dividend declared, per share | $ 0.60 | $ 0.54 |
IPO | ||
Common stock shares | 3,590,065 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 14,065,000 | $ 19,959,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for loan losses | 3,480,000 | 3,146,000 |
Depreciation on premises and equipment | 3,666,000 | 3,816,000 |
Amortization of intangible assets | 2,291,000 | 1,613,000 |
FDIC loss-sharing expense | 1,661,000 | |
Amortization of restricted stock awards | 599,000 | 387,000 |
Compensation expense for stock option grants | 413,000 | 315,000 |
Increase in cash surrender value of life insurance | (2,016,000) | (1,547,000) |
Investment securities amortization, net | 1,358,000 | 840,000 |
Other-than-temporary impairment on investment securities | 824,000 | |
Gain on sales of investment securities, net | (219,000) | (315,000) |
Gain on sales of other real estate owned | (54,000) | (112,000) |
Write-down of other real estate owned | 171,000 | 219,000 |
Origination of loans held for sale | (630,601,000) | (894,445,000) |
Proceeds from sales of loans held for sale | 679,217,000 | 907,306,000 |
Gain on loans sold and held for sale | (20,844,000) | (28,827,000) |
Amortization of mortgage servicing rights | 4,254,000 | 4,410,000 |
Impairment of mortgage servicing rights | 1,830,000 | 6,093,000 |
Loss on mortgage service rights held for sale | 3,617,000 | |
Net change in operating assets and liabilities: | ||
Accrued interest receivable | (1,095,000) | (1,114,000) |
Accrued interest payable | 1,035,000 | 896,000 |
Accrued income taxes receivable | 3,653,000 | 7,304,000 |
Other assets | 159,000 | 460,000 |
Other liabilities | (2,341,000) | (2,620,000) |
Net cash provided by operating activities | 62,638,000 | 30,269,000 |
Investment securities available for sale: | ||
Purchases | (221,617,000) | (64,396,000) |
Sales | 11,250,000 | 31,191,000 |
Maturities and payments | 192,791,000 | 22,038,000 |
Investment securities held to maturity: | ||
Purchases | (2,929,000) | (2,401,000) |
Maturities | 10,480,000 | 6,646,000 |
Net increase in loans | (160,266,000) | (325,009,000) |
Purchases of premises and equipment | (5,261,000) | (1,410,000) |
Purchase of bank-owned life insurance | (20,000,000) | |
Purchases of nonmarketable equity securities | (16,575,000) | (3,428,000) |
Sales of nonmarketable equity securities | 9,837,000 | 90,000 |
Proceeds from sales of other real estate owned | 4,525,000 | 4,423,000 |
Net cash paid in acquisitions | (18,519,000) | |
Net cash used in investing activities | (196,284,000) | (352,256,000) |
Cash flows from financing activities: | ||
Net (decrease) increase in deposits | (29,766,000) | 52,384,000 |
Net increase in short-term borrowings | 7,452,000 | 30,751,000 |
Proceeds from FHLB borrowings | 347,357,000 | 850,000,000 |
Payments made on FHLB borrowings | (229,857,000) | (652,500,000) |
Proceeds from other borrowings, net of issuance costs | 39,964,000 | |
Payments made on other borrowings | (1,770,000) | |
Payments made on subordinated debt | (8,000,000) | |
Cash dividends paid on common stock | (10,159,000) | (7,057,000) |
Cash dividends paid on preferred stock | (102,000) | |
Proceeds from issuance of common stock in initial public offering, net of issuance costs | 71,475,000 | |
Proceeds from issuance of common stock under employee benefit plans | 3,383,000 | 489,000 |
Net cash provided by financing activities | 126,502,000 | 337,542,000 |
Net (decrease) increase in cash and cash equivalents | (7,144,000) | 15,555,000 |
Cash and cash equivalents: | ||
Beginning of period | 190,716,000 | 212,475,000 |
End of period | 183,572,000 | 228,030,000 |
Cash payments for: | ||
Interest paid on deposits and borrowed funds | 14,677,000 | 11,078,000 |
Income tax paid | 637,000 | 157,000 |
Supplemental disclosures of noncash investing and financing activities: | ||
Transfer of loans to other real estate owned | 2,659,000 | $ 4,245,000 |
Transfer of premises and equipment to assets held for sale | 2,858,000 | |
Transfer of mortgage servicing rights at lower of cost or market to mortgage servicing rights held for sale | $ 10,618,000 |
BUSINESS DESCRIPTION
BUSINESS DESCRIPTION | 9 Months Ended |
Sep. 30, 2017 | |
BUSINESS DESCRIPTION | |
BUSINESS DESCRIPTION | Note 1 – Midland States Bancorp, Inc. (the “Company,” “we,” “our,” or “us”) is a diversified financial holding company headquartered in Effingham, Illinois. Our 136-year old banking subsidiary, Midland States Bank (the “Bank”), has branches across Illinois and in Missouri and Colorado, and provides a broad array of traditional community banking and other complementary financial services, including commercial lending, residential mortgage origination, wealth management, merchant services and prime consumer lending. We also originate and service government sponsored mortgages for multifamily and healthcare facilities through our subsidiary, Love Funding Corporation (“Love Funding”), based in Washington, D.C. and operate a commercial equipment leasing business on a nationwide basis through our subsidiary, Heartland Business Credit Corporation (“Business Credit”), based in Denver, Colorado. On June 9, 2017, we completed the acquisition of Centrue Financial Corporation (“Centrue”) and its banking subsidiary, Centrue Bank, as more fully described in Note 3 to the consolidated financial statements. Through the Centrue acquisition, we greatly expanded our commercial and retail banking presence in northern and central Illinois. Our principal business activity has been lending to and accepting deposits from individuals, businesses, municipalities and other entities. We have derived income principally from interest earned on loans and leases and, to a lesser extent, from interest and dividends earned on investment securities. We have also derived income from noninterest sources, such as: fees received in connection with various lending and deposit services; wealth management services; residential mortgage loan originations, sales and servicing; and, from time to time, gains on sales of assets. Our income sources also include Love Funding’s commercial Federal Housing Administration (“FHA”) loan origination and servicing income. Our principal expenses include interest expense on deposits and borrowings, operating expenses, such as salaries and employee benefits, occupancy and equipment expenses, data processing costs, professional fees and other noninterest expenses, provisions for loan losses and income tax expense. Initial Public Offering On May 24, 2016, we completed our initial public offering and received gross proceeds of $67.0 million for the 3,044,252 shares of common stock sold by us in the offering. On June 6, 2016, we received additional gross proceeds of $12.0 million for the 545,813 shares of common stock sold when the underwriters fully exercised their option to purchase additional shares of common stock. After deducting underwriting discounts and offering expenses, we received total net proceeds of $71.5 million from the initial public offering. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2 – Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements of the Company are unaudited and should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (the “SEC”) on March 10, 2017. The consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) and conform to predominant practices within the banking industry. Management of the Company has made a number of estimates and assumptions related to the reporting of assets and liabilities to prepare the consolidated financial statements in conformity with GAAP. Actual results may differ from those estimates. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation of the results of operations for the interim periods presented herein, have been included. Certain reclassifications of 2016 amounts have been made to conform to the 2017 presentation. Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. Principles of Consolidation The consolidated financial statements include the accounts of the parent company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Assets held for customers in a fiduciary or agency capacity, other than trust cash on deposit with the Bank, are not assets of the Company and, accordingly, are not included in the accompanying unaudited consolidated financial statements. The Company operates through its principal wholly owned banking subsidiary, Midland States Bank. The Bank operates through its branch banking offices and principal subsidiaries: Love Funding and Business Credit. Summary of Significant Accounting Policies Mortgage Servicing Rights Held for Sale. Mortgage servicing rights held for sale consist of residential mortgage servicing rights that management has committed to a plan to sell and has the ability to sell them to a buyer in their present condition. Mortgage servicing rights held for sale are carried at the lower of their carrying value or fair value less estimated costs to sell. Decreases in the valuation of mortgage servicing rights held for sale are included in loss on mortgage servicing rights held for sale in the consolidated statements of income. Impact of Recently Issued Accounting Standards FASB Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”; FASB ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”; FASB ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”; FASB ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”; FASB ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” – In May 2014, the Financial Accounting Standards Board (the “FASB”) amended existing guidance related to revenue from contracts with customers. This amendment supersedes and replaces nearly all existing revenue recognition guidance, including industry-specific guidance, establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. In addition, this amendment specifies the accounting for some costs to obtain or fulfill a contract with a customer. These amendments are effective for us for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that period. The Company’s revenue is primarily comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASU 2014-09. The Company has determined the result of applying ASU 2014-09 to the individual revenue streams affected, as well as on an aggregate basis, will not be material to the Company’s consolidated financial statements. The Company continues to evaluate the impact of the disclosure requirements associated with ASU 2014-09. FASB ASU 2016-02, “Leases (Topic 842)” – In February 2016, the FASB issued ASU No. 2016-02, “ Leases (Topic 842) .” This update revises the model to assess how a lease should be classified and provides guidance for lessees and lessors, when presenting right-of-use assets and lease liabilities on the balance sheet. This update is effective for us on January 1, 2019, with early adoption permitted. We have not yet decided whether we will early adopt the new standard. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available. The Company has developed a project plan for evaluating the provisions of the new lease standard, but has not yet determined the overall impact of the new guidance on the Company’s consolidated financial statements. The Company is continuing to evaluate the pending adoption of ASU 2016-02 and its impact on the Company’s consolidated financial statements. FASB ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” – In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The objective of this update is to improve financial reporting by providing timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will use forward-looking information to better understand their credit loss estimates. For public companies that are filers with the SEC, this update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application is permitted for any organization for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We have formed a committee that is assessing our data and system needs and are evaluating the impact of adopting the new guidance. While the Company generally expects to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, the Company cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the Company’s consolidated financial statements. The Company is continuing to evaluate the potential impact on the Company’s consolidated financial statements. FASB ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” – In August 2016, the FASB issued ASU No. 2016-15, “ Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which amends FASB Accounting Standards Codification (“ASC”) 230 to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. For public business entities, this update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early application is permitted for any organization in any interim period or fiscal year. The Company elected to early adopt the new guidance in the first quarter of 2017. Adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. FASB ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities” – In March 2017, the FASB issued ASU No. 2017-08, “ Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” This guidance shortens the amortization period for premiums on certain callable debt securities to the earliest call date, rather than contractual maturity date as currently required under GAAP. For public business entities, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application is permitted for any organization in any interim period or fiscal year. The Company elected to early adopt the new guidance in the first quarter of 2017. Adoption of the ASU did not have a material impact on the Company’s consolidated financial statements. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2017 | |
ACQUISITIONS | |
ACQUISITIONS | Note 3 – Acquisitions Centrue Financial Corporation On June 9, 2017, the Company completed its acquisition of Centrue and its banking subsidiary, Centrue Bank, which operated 20 full-service banking centers located principally in northern Illinois. In the aggregate, the Company acquired Centrue for approximately $176.6 million, which consisted of approximately $61.0 million in cash and the issuance of 3,219,238 shares of the Company’s common stock, 181 shares of Series G preferred stock and 2,635.5462 shares of Series H preferred stock. This acquisition was accounted for under the acquisition method of accounting. Accordingly, the Company recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values. Through September 30, 2017, transaction and integration costs of $15.0 million associated with the acquisition have been expensed as incurred. Under the acquisition method of accounting, the consideration paid is allocated to net tangible and intangible assets based on current estimated fair values on the date of acquisition. During the third quarter of 2017, the Company updated the preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which required a measurement period adjustment of $169,000 to increase goodwill. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change, the consideration paid for the acquisition is allocated as follows (in thousands): Assets acquired: Cash and cash equivalents $ 42,461 Investment securities available for sale 149,013 Loans 681,870 Loans held for sale 531 Premises and equipment 17,147 Other real estate owned 4,759 Nonmarketable equity securities 8,168 Accrued interest receivable 2,376 Mortgage servicing rights 1,933 Intangible assets 11,070 Cash surrender value of life insurance policies 36,349 Deferred tax assets, net 33,461 Other assets 2,256 Total assets acquired 991,394 Liabilities assumed: Deposits 739,867 Short-term borrowings 14,434 FHLB advances and other borrowings 95,332 Trust preferred debentures 7,565 Accrued interest payable 275 Other liabilities 3,429 Total liabilities assumed 860,902 Net assets acquired 130,492 Goodwill 46,087 Total consideration paid $ 176,579 Prior to the end of the one year measurement period for finalizing the consideration paid allocation, if information becomes available which would indicate adjustments are required to the allocation, such adjustments will be included in the allocation in the reporting period in which the adjustment amounts are determined. Goodwill of $46.1 million arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of Centrue into the Company. The goodwill is assigned as part of the Company’s Banking reporting unit. The portion of the consideration paid allocated to goodwill will not be deductible for tax purposes. The identifiable assets acquired included the establishment of $11.1 million in core deposit intangibles, which are being amortized on an accelerated basis over an estimated useful life of eight years. Acquired loan data for Centrue can be found in the table below (in thousands): Best Estimate at Acquisition Date of Fair Value Gross Contractual Contractual Cash of Acquired Loans Amounts Receivable Flows Not Expected at Acquisition Date at Acquisition Date to be Collected Acquired receivables subject to ASC 310-30 $ 13,352 $ 20,719 $ 5,256 Acquired receivables not subject to ASC 310-30 668,518 821,338 4,518 The following table provides the unaudited pro forma information for the results of operations for three and nine months ended September 30, 2017 and 2016, as if the acquisition had occurred on January 1, 2016 (in thousands, except per share data). The pro forma results combine the historical results of Centrue with the Company’s consolidated statements of income, adjusted for the impact of the application of the acquisition method of accounting including loan discount accretion, intangible assets amortization, and deposit and trust preferred securities premium accretion, net of taxes. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results of operations had the acquisition actually occurred on January 1, 2016. No assumptions have been applied to the pro forma results of operations regarding revenue enhancements, expense efficiencies or asset dispositions. Only the acquisition related expenses that have been incurred as of September 30, 2017 are included in net income in the table below. Acquisition related expenses that were recognized and are included in the pro forma net income for the three and nine months ended September 30, 2017 totaled $7.3 million and $15.0 million, respectively, on a pre-tax basis. Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Revenue (1) $ 52,168 $ 52,139 $ 156,851 $ 152,532 Net income 2,036 8,850 15,299 23,490 Diluted earnings per common share $ 0.10 $ 0.46 $ 0.71 $ 1.37 (1) Net interest income plus noninterest income CedarPoint Investment Advisors, Inc. On March 28, 2017, the Company acquired all of the outstanding capital stock of CedarPoint Investment Advisors, Inc. (“CedarPoint”), an SEC registered investment advisory firm, pursuant to an Agreement and Plan of Merger, dated as of March 15, 2017. CedarPoint had approximately $180.0 million of assets under administration. The Company acquired CedarPoint for $3.7 million, which consisted of the issuance of 102,000 shares of the Company’s common stock and an accrual in other liabilities of $345,000 for the fair value of 18,000 shares that will be held in a special purpose escrow account (the “escrow shares”) as additional consideration until at least March 31, 2019. Payout of the escrow shares is contingent on CedarPoint reaching certain target revenue levels. Intangible assets recognized as a result of the transaction consisted of approximately $2.4 million in goodwill and $2.0 million in customer relationship intangibles. The customer relationship intangibles are being amortized on a straight-line basis over 12 years. Acquisition of Wealth Management Assets On November 10, 2016, the Bank completed its acquisition of approximately $400.0 million in wealth management assets from Sterling National Bank of Yonkers, New York (“Sterling”) for approximately $5.2 million in cash. Intangible assets recognized as a result of the transaction consisted of approximately $2.3 million in goodwill and $2.3 million in customer relationship intangibles. The customer relationship intangibles are being amortized on a straight-line basis over 20 years. |
INVESTMENT SECURITIES AVAILABLE
INVESTMENT SECURITIES AVAILABLE FOR SALE | 9 Months Ended |
Sep. 30, 2017 | |
Available for sale | |
Schedule of Available-for-sale Securities [Line Items] | |
Investment securities | Note 4 – Investment Securities Available for Sale Investment securities classified as available for sale as of September 30, 2017 and December 31, 2016 are as follows (in thousands): September 30, 2017 Gross Gross Amortized unrealized unrealized Fair cost gains losses value U.S. Treasury securities $ 47,979 $ — $ 72 $ 47,907 Government sponsored entity debt securities 19,290 104 5 19,389 Agency mortgage-backed securities 229,382 1,103 631 229,854 State and municipal securities 39,385 376 45 39,716 Corporate securities 56,404 1,070 167 57,307 Equity securities 2,705 115 8 2,812 Total $ 395,145 $ 2,768 $ 928 $ 396,985 December 31, 2016 Gross Gross Amortized unrealized unrealized Fair cost gains losses value U.S. Treasury securities $ 75,973 $ — $ 72 $ 75,901 Government sponsored entity debt securities 7,653 57 22 7,688 Agency mortgage-backed securities 90,629 373 932 90,070 Non-agency mortgage-backed securities 1 — — 1 State and municipal securities 25,826 15 567 25,274 Corporate securities 47,443 403 441 47,405 Total $ 247,525 $ 848 $ 2,034 $ 246,339 Unrealized losses and fair values for investment securities available for sale as of September 30, 2017 and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are summarized as follows (in thousands): September 30, 2017 Less than 12 Months 12 Months or more Total Fair Unrealized Fair Unrealized Fair Unrealized value loss value loss value loss U.S. Treasury securities $ 42,936 $ 47 $ 4,971 $ 25 $ 47,907 $ 72 Government sponsored entity debt securities 6,467 5 — — 6,467 5 Agency mortgage-backed securities 50,978 370 10,569 261 61,547 631 State and municipal securities 4,609 14 2,569 31 7,178 45 Corporate securities 4,957 52 5,412 115 10,369 167 Equity securities 2,606 8 — — 2,606 8 Total $ 112,553 $ 496 $ 23,521 $ 432 $ 136,074 $ 928 December 31, 2016 Less than 12 Months 12 Months or more Total Fair Unrealized Fair Unrealized Fair Unrealized value loss value loss value loss U.S. Treasury securities $ 75,901 $ 72 $ — $ — $ 75,901 $ 72 Government sponsored entity debt securities 4,107 22 — — 4,107 22 Agency mortgage-backed securities 57,882 930 402 2 58,284 932 State and municipal securities 20,215 567 — — 20,215 567 Corporate securities 11,111 334 8,312 107 19,423 441 Total $ 169,216 $ 1,925 $ 8,714 $ 109 $ 177,930 $ 2,034 For all of the above investment securities, the unrealized losses are generally due to changes in interest rates and continued financial market stress, and unrealized losses are considered to be temporary. We evaluate securities for other-than-temporary impairment (“OTTI”) on a quarterly basis, at a minimum, and more frequently when economic or market concerns warrant such evaluation. In estimating OTTI losses, we consider the severity and duration of the impairment; the financial condition and near-term prospects of the issuer, which for debt securities considers external credit ratings and recent downgrades; and the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value. At September 30, 2017, 63 investment securities available for sale had unrealized losses with aggregate depreciation of 0.68% from their amortized cost basis. The unrealized losses relate principally to the fluctuations in the current interest rate environment. In analyzing an issuer’s financial condition, we consider whether the securities are issued by the federal government or its agencies and whether downgrades by bond rating agencies have occurred. The Company does not have the intent to sell and it is not more likely than not that it will be required to sell a security in an unrealized loss position; therefore, the Company does not consider these securities to be other than temporarily impaired at September 30, 2017. For the three and nine months ended September 30, 2017, there was no OTTI recognized on investment securities available for sale. During the three and nine months ended September 30, 2016, the Company recognized $0 and $824,000, respectively, of OTTI on its investment securities available for sale. The amortized cost and fair value of the available-for-sale investment securities as of September 30, 2017 are shown by expected maturity in the following table (in thousands). Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Fair cost value Debt securities: Within one year $ 37,340 $ 37,307 After one year through five years 235,754 236,319 After five years through ten years 102,922 104,113 After ten years 16,424 16,434 Equity securities 2,705 2,812 Total $ 395,145 $ 396,985 Proceeds from the sale of securities available for sale were $2.7 million and $11.3 million for the three and nine months ended September 30, 2017, respectively. Gross realized gains from the sale of securities available for sale were $98,000 and $219,000 for the three and nine months ended September 30, 2017, respectively. There were no gross realized losses for the three and nine months ended September 30, 2017. Proceeds from the sale of securities available for sale were $865,000 and $31.2 million for the three and nine months ended September 30, 2016, respectively. Gross realized gains from the sale of securities available for sale were $39,000 and $315,000 for the three and nine months ended September 30, 2016, respectively. There were no gross realized losses for the three and nine months ended September 30, 2016. |
INVESTMENT SECURITIES HELD TO M
INVESTMENT SECURITIES HELD TO MATURITY | 9 Months Ended |
Sep. 30, 2017 | |
Held to maturity | |
Schedule of Held-to-maturity Securities [Line Items] | |
Investment securities | Note 5 – Investment Securities Held to Maturity Investment securities classified as held to maturity as of September 30, 2017 and December 31, 2016 are as follows (in thousands): September 30, 2017 Gross Gross Amortized unrecognized unrecognized Fair cost gains losses value State and municipal securities $ 70,867 $ 4,381 $ 106 $ 75,142 December 31, 2016 Gross Gross Amortized unrecognized unrecognized Fair cost gains losses value State and municipal securities $ 78,672 $ 3,517 $ 237 $ 81,952 Unrecognized losses and fair value for investment securities held to maturity as of September 30, 2017 and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrecognized loss position, are summarized as follows (in thousands): September 30, 2017 Less than 12 Months 12 Months or more Total Fair Unrecognized Fair Unrecognized Fair Unrecognized value loss value loss value loss State and municipal securities $ 3,343 $ 32 $ 3,490 $ 74 $ 6,833 $ 106 December 31, 2016 Less than 12 Months 12 Months or more Total Fair Unrecognized Fair Unrecognized Fair Unrecognized value loss value loss value loss State and municipal securities $ 13,991 $ 140 $ 2,699 $ 97 $ 16,690 $ 237 For all of the above investment securities, the unrecognized losses are generally due to changes in interest rates and continued financial market stress and unrecognized losses are considered to be temporary. We evaluate securities for OTTI on a quarterly basis, at a minimum, and more frequently when economic or market concerns warrant such evaluation. In estimating OTTI losses, we consider the severity and duration of the impairment; the financial condition and near-term prospects of the issuer, which for debt securities considers external credit ratings and recent downgrades; and the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value. At September 30, 2017, 27 investment securities held to maturity had unrecognized losses with aggregate depreciation of 1.53% from their amortized cost basis. The unrecognized losses relate principally to the fluctuations in the current interest rate environment. In analyzing an issuer’s financial condition, we consider who issued the securities and whether downgrades by bond rating agencies have occurred. The Company does not have the intent to sell and it is not more likely than not that it will be required to sell a security in an unrecognized loss position; therefore, the Company does not consider these securities to be other than temporarily impaired at September 30, 2017. The amortized cost and fair value of investment securities held to maturity as of September 30, 2017, by contractual maturity, are as follows (in thousands): Amortized Fair cost value Within one year $ 871 $ 877 After one year through five years 19,055 19,709 After five years through ten years 35,164 38,478 After ten years 15,777 16,078 Total $ 70,867 $ 75,142 |
LOANS
LOANS | 9 Months Ended |
Sep. 30, 2017 | |
LOANS | |
LOANS | Note 6 – Loans The following table presents total loans outstanding by portfolio, which includes non-purchased credit impaired (“Non-PCI”) loans and purchased credit impaired (“PCI”) loans, as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Non-PCI PCI Non-PCI PCI Loans Loans (1) Total Loans Loans (1) Total Loans: Commercial $ 510,457 $ 3,087 $ 513,544 $ 454,310 $ 3,517 $ 457,827 Commercial real estate 1,456,620 15,664 1,472,284 963,895 5,720 969,615 Construction and land development 181,763 750 182,513 165,175 12,150 177,325 Total commercial loans 2,148,840 19,501 2,168,341 1,583,380 21,387 1,604,767 Residential real estate 438,973 6,774 445,747 247,156 6,557 253,713 Consumer 342,863 175 343,038 269,705 312 270,017 Lease financing 200,846 — 200,846 191,479 — 191,479 Total loans $ 3,131,522 $ 26,450 $ 3,157,972 $ 2,291,720 $ 28,256 $ 2,319,976 (1) The unpaid principal balance for PCI loans totaled $38.9 million and $34.6 million as of September 30, 2017 and December 31, 2016, respectively. Total loans include net deferred loan fees of $11.4 million and $3.1 million at September 30, 2017 and December 31, 2016, respectively, and unearned discounts of $20.7 million within the lease financing portfolio at both September 30, 2017 and December 31, 2016. At September 30, 2017 and December 31, 2016, the Company had commercial and residential loans held for sale totaling $35.9 million and $70.6 million, respectively. During the three and nine months ended September 30, 2017, the Company sold commercial and residential real estate loans with proceeds totaling $206.2 million and $679.2 million, respectively, and sold commercial and residential real estate loans with proceeds totaling $450.9 million and $907.3 million for the comparable periods in 2016, respectively. The Company monitors and assesses the credit risk of its loan portfolio using the classes set forth below. These classes also represent the segments by which the Company monitors the performance of its loan portfolio and estimates its allowance for loan losses. Commercial —Loans to varying types of businesses, including municipalities, school districts and nonprofit organizations, for the purpose of supporting working capital, operational needs and term financing of equipment. Repayment of such loans is generally provided through operating cash flows of the business. Commercial loans are predominantly secured by equipment, inventory, accounts receivable, and other sources of repayment. Commercial real estate —Loans secured by real estate occupied by the borrower for ongoing operations, including loans to borrowers engaged in agricultural production, and non-owner occupied real estate leased to one or more tenants, including commercial office, industrial, special purpose, retail and multi-family residential real estate loans. Construction and land development —Secured loans for the construction of business and residential properties. Real estate construction loans often convert to a commercial real estate loan at the completion of the construction period. Secured development loans are made to borrowers for the purpose of infrastructure improvements to vacant land to create finished marketable residential and commercial lots/land. Most land development loans are originated with the intention that the loans will be paid through the sale of developed lots/land by the developers within twelve months of the completion date. Interest reserves may be established on real estate construction loans. Residential real estate —Loans secured by residential properties that generally do not qualify for secondary market sale; however, the risk to return and/or overall relationship are considered acceptable to the Company. This category also includes loans whereby consumers utilize equity in their personal residence, generally through a second mortgage, as collateral to secure the loan. Consumer —Loans to consumers primarily for the purpose of home improvements and acquiring automobiles, recreational vehicles and boats. Consumer loans consist of relatively small amounts that are spread across many individual borrowers. Lease financing —Indirect financing leases to small businesses for purchases of business equipment. All indirect financing leases require monthly payments, and the weighted average maturity of our leases is less than four years. Commercial, commercial real estate, and construction and land development loans are collectively referred to as the Company’s commercial loan portfolio, while residential real estate and consumer loans and lease financing receivables are collectively referred to as the Company’s other loan portfolio. We have extended loans to certain of our directors, executive officers, principal shareholders and their affiliates. These loans were made in the ordinary course of business upon normal terms, including collateralization and interest rates prevailing at the time, and did not involve more than the normal risk of repayment by the borrower. The aggregate loans outstanding to the directors, executive officers, principal shareholders and their affiliates totaled $26.5 million at both September 30, 2017 and December 31, 2016. During the three and nine months ended September 30, 2017, there were $982,000 and $4.0 million, respectively, of new loans and other additions, while repayments and other reductions totaled $948,000 and $4.0 million, respectively. Credit Quality Monitoring The Company maintains loan policies and credit underwriting standards as part of the process of managing credit risk. These standards include making loans generally within the Company’s four main regions, which include eastern, northern and southern Illinois and the St. Louis metropolitan area. Our equipment leasing business, based in Denver, provides financing to business customers across the country. The Company has a loan approval process involving underwriting and individual and group loan approval authorities to consider credit quality and loss exposure at loan origination. The loans in the Company’s commercial loan portfolio are risk rated at origination based on the grading system set forth below. All loan authority is based on the aggregate credit to a borrower and its related entities. The Company’s consumer loan portfolio is primarily comprised of both secured and unsecured loans that are relatively small and are evaluated at origination on a centralized basis against standardized underwriting criteria. The ongoing measurement of credit quality of the consumer loan portfolio is largely done on an exception basis. If payments are made on schedule, as agreed, then no further monitoring is performed. However, if delinquency occurs, the delinquent loans are turned over to the Company’s Consumer Collections Group for resolution. Credit quality for the entire consumer loan portfolio is measured by the periodic delinquency rate, nonaccrual amounts and actual losses incurred. Loans in the commercial loan portfolio tend to be larger and more complex than those in the other loan portfolio, and therefore, are subject to more intensive monitoring. All loans in the commercial loan portfolio have an assigned relationship manager, and most borrowers provide periodic financial and operating information that allows the relationship managers to stay abreast of credit quality during the life of the loans. The risk ratings of loans in the commercial loan portfolio are reassessed at least annually, with loans below an acceptable risk rating reassessed more frequently and reviewed by various individuals within the Company at least quarterly. The Company maintains a centralized independent loan review function that monitors the approval process and ongoing asset quality of the loan portfolio, including the accuracy of loan grades. The Company also maintains an independent appraisal review function that participates in the review of all appraisals obtained by the Company. Credit Quality Indicators The Company uses a ten grade risk rating system to monitor the ongoing credit quality of its commercial loan portfolio. These loan grades rank the credit quality of a borrower by measuring liquidity, debt capacity, and coverage and payment behavior as shown in the borrower’s financial statements. The risk grades also measure the quality of the borrower’s management and the repayment support offered by any guarantors. The Company considers all loans with Risk Grades of 1 – 6 as acceptable credit risks and structures and manages such relationships accordingly. Periodic financial and operating data combined with regular loan officer interactions are deemed adequate to monitor borrower performance. Loans with Risk Grades of 7 are considered “watch credits” and the frequency of loan officer contact and receipt of financial data is increased to stay abreast of borrower performance. Loans with Risk Grades of 8 – 10 are considered problematic and require special care. Further, loans with Risk Grades of 7 – 10 are managed and monitored regularly through a number of processes, procedures and committees, including oversight by a loan administration committee comprised of executive and senior management of the Company, which includes highly structured reporting of financial and operating data, intensive loan officer intervention and strategies to exit, as well as potential management by the Company’s Special Assets Group. Loans not graded in the commercial loan portfolio are small loans that are monitored by aging status and payment activity. The following table presents the recorded investment of the commercial loan portfolio (excluding PCI loans) by risk category as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Commercial Construction Commercial Construction Real and Land Real and Land Commercial Estate Development Total Commercial Estate Development Total Acceptable credit quality $ 474,513 $ 1,408,398 $ 174,115 $ 2,057,026 $ 426,560 $ 925,244 $ 159,702 $ 1,511,506 Special mention 16,543 9,121 — 25,664 10,930 8,735 — 19,665 Substandard 17,695 13,639 — 31,334 12,649 21,178 450 34,277 Substandard – nonaccrual 1,469 21,454 — 22,923 3,559 7,145 21 10,725 Doubtful — — — — — — — — Not graded 237 4,008 7,648 11,893 612 1,593 5,002 7,207 Total (excluding PCI) $ 510,457 $ 1,456,620 $ 181,763 $ 2,148,840 $ 454,310 $ 963,895 $ 165,175 $ 1,583,380 The Company evaluates the credit quality of its other loan portfolio based primarily on the aging status of the loan and payment activity. Accordingly, loans on nonaccrual status, any loan past due 90 days or more and still accruing interest, and loans modified under troubled debt restructurings are considered to be impaired for purposes of credit quality evaluation. The following table presents the recorded investment of our other loan portfolio (excluding PCI loans) based on the credit risk profile of loans that are performing and loans that are impaired as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Residential Lease Residential Lease Real Estate Consumer Financing Total Real Estate Consumer Financing Total Performing $ 433,653 $ 342,586 $ 199,784 $ 976,023 $ 242,127 $ 269,492 $ 190,148 $ 701,767 Impaired 5,320 277 1,062 6,659 5,029 213 1,331 6,573 Total (excluding PCI) $ 438,973 $ 342,863 $ 200,846 $ 982,682 $ 247,156 $ 269,705 $ 191,479 $ 708,340 Impaired Loans Impaired loans include loans on nonaccrual status, any loan past due 90 days or more and still accruing interest and loans modified under troubled debt restructurings. Impaired loans at September 30, 2017 and December 31, 2016 do not include $26.5 million and $28.3 million, respectively, of PCI loans. The risk of credit loss on acquired loans was recognized as part of the fair value adjustment at the acquisition date. A summary of impaired loans (excluding PCI loans) as of September 30, 2017 and December 31, 2016 is as follows (in thousands): September 30, December 31, 2017 2016 Nonaccrual loans: Commercial $ 1,469 $ 3,559 Commercial real estate 21,454 7,145 Construction and land development — 21 Residential real estate 4,355 4,629 Consumer 273 187 Lease financing 1,062 1,330 Total nonaccrual loans 28,613 16,871 Accruing loans contractually past due 90 days or more as to interest or principal payments: Commercial 2,212 2,378 Commercial real estate — — Construction and land development 45 — Residential real estate 193 — Consumer 4 26 Lease financing — 1 Total accruing loans contractually past due 90 days or more as to interest or principal payments 2,454 2,405 Loans modified under troubled debt restructurings and still accruing: Commercial 319 611 Commercial real estate 1,214 11,253 Construction and land development 59 63 Residential real estate 772 400 Consumer — — Lease financing — — Total loans modified under troubled debt restructurings and still accruing 2,364 12,327 Total impaired loans (excluding PCI) $ 33,431 $ 31,603 There was no interest income recognized on nonaccrual loans during the three and nine months ended September 30, 2017 and 2016 while the loans were in nonaccrual status. Additional interest income that would have been recorded on nonaccrual loans had they been current in accordance with their original terms was $124,000 and $532,000 for the three and nine months ended September 30, 2017, respectively, and $243,000 and $484,000 for the three and nine months ended September 30, 2016, respectively. The Company recognized interest income on commercial and commercial real estate loans modified under troubled debt restructurings of $40,000 and $59,000 for the three and nine months ended September 30, 2017, respectively, and $90,000 and $196,000 for the comparable periods in 2016, respectively. The following table presents impaired loans (excluding PCI loans) by portfolio and related valuation allowance as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Unpaid Related Unpaid Related Recorded Principal Valuation Recorded Principal Valuation Investment Balance Allowance Investment Balance Allowance Impaired loans with a valuation allowance: Commercial $ 3,047 $ 3,111 $ 500 $ 3,877 $ 3,888 $ 882 Commercial real estate 16,454 17,540 3,570 2,142 2,331 309 Construction and land development 104 104 10 84 84 8 Residential real estate 3,056 3,634 490 3,735 4,404 604 Consumer 277 289 31 213 190 23 Lease financing 757 757 186 1,331 1,331 356 Total impaired loans with a valuation allowance 23,695 25,435 4,787 11,382 12,228 2,182 Impaired loans with no related valuation allowance: Commercial 953 5,874 — 2,671 7,567 — Commercial real estate 6,214 8,291 — 16,256 17,058 — Construction and land development — 813 — — — — Residential real estate 2,264 2,500 — 1,294 1,462 — Consumer — — — — 26 — Lease financing 305 305 — — — — Total impaired loans with no related valuation allowance 9,736 17,783 — 20,221 26,113 — Total impaired loans: Commercial 4,000 8,985 500 6,548 11,455 882 Commercial real estate 22,668 25,831 3,570 18,398 19,389 309 Construction and land development 104 917 10 84 84 8 Residential real estate 5,320 6,134 490 5,029 5,866 604 Consumer 277 289 31 213 216 23 Lease financing 1,062 1,062 186 1,331 1,331 356 Total impaired loans (excluding PCI) $ 33,431 $ $ 4,787 $ 31,603 $ 38,341 $ 2,182 The difference between a loan’s recorded investment and the unpaid principal balance represents: (1) a partial charge-off resulting from a confirmed loss due to the value of the collateral securing the loan being below the loan’s principal balance and management’s assessment that the full collection of the loan balance is not likely and/or (2) payments received on nonaccrual loans that are fully applied to principal on the loan’s recorded investment as compared to being applied to principal and interest on the unpaid customer principal and interest balance. The difference between the recorded investment and the unpaid principal balance on loans was $9.8 million and $6.7 million at September 30, 2017 and December 31, 2016, respectively. The average balance of impaired loans (excluding PCI loans) and interest income recognized on impaired loans during the three months ended September 30, 2017 and 2016 are included in the table below (in thousands): Three Months Ended September 30, 2017 2016 Interest Income Interest Income Average Recognized Average Recognized Recorded While on Recorded While on Investment Impaired Status Investment Impaired Status Impaired loans with a valuation allowance: Commercial $ 3,054 $ 6 $ 6,426 $ 23 Commercial real estate 16,243 34 2,170 65 Construction and land development 104 2 65 3 Residential real estate 3,090 9 3,157 13 Consumer 289 — 115 — Lease financing 757 — 727 — Total impaired loans with a valuation allowance 23,537 51 12,660 104 Impaired loans with no related valuation allowance: Commercial 2,912 — 439 2 Commercial real estate 6,238 — 15,610 — Construction and land development — — — — Residential real estate 2,276 2 1,341 1 Consumer — — 91 — Lease financing 305 — — — Total impaired loans with no related valuation allowance 11,731 2 17,481 3 Total impaired loans: Commercial 5,966 6 6,865 25 Commercial real estate 22,481 34 17,780 65 Construction and land development 104 2 65 3 Residential real estate 5,366 11 4,498 14 Consumer 289 — 206 — Lease financing 1,062 — 727 — Total impaired loans (excluding PCI) $ 35,268 $ 53 $ 30,141 $ 107 The average balance of impaired loans (excluding PCI loans) and interest income recognized on impaired loans during the nine months ended September 30, 2017 and 2016 are included in the table below (in thousands): Nine Months Ended September 30, 2017 2016 Interest Income Interest Income Average Recognized Average Recognized Recorded While on Recorded While on Investment Impaired Status Investment Impaired Status Impaired loans with a valuation allowance: Commercial $ 3,068 $ 8 $ 8,115 $ 24 Commercial real estate 16,808 51 2,273 115 Construction and land development 106 3 66 6 Residential real estate 3,032 12 3,234 24 Consumer 311 — 118 — Lease financing 757 — 727 — Total impaired loans with a valuation allowance 24,082 74 14,533 169 Impaired loans with no related valuation allowance: Commercial 3,199 — 313 1 Commercial real estate 6,332 — 15,742 56 Construction and land development — — — — Residential real estate 2,174 3 1,364 3 Consumer — — 91 — Lease financing 305 — — — Total impaired loans with no related valuation allowance 12,010 3 17,510 60 Total impaired loans: Commercial 6,267 8 8,428 25 Commercial real estate 23,140 51 18,015 171 Construction and land development 106 3 66 6 Residential real estate 5,206 15 4,598 27 Consumer 311 — 209 — Lease financing 1,062 — 727 — Total impaired loans (excluding PCI) $ 36,092 $ 77 $ 32,043 $ 229 The following table presents the aging status of the recorded investment in loans by portfolio (excluding PCI loans) as of September 30, 2017 (in thousands): Accruing Loans 30-59 60-89 Past Due Days Days 90 Days Nonaccrual Total Total Past Due Past Due or More Loans Past Due Current Loans Commercial $ 3,395 $ 2,161 $ 2,212 $ 1,469 $ 9,237 $ 501,220 $ 510,457 Commercial real estate 364 1,044 — 21,454 22,862 1,433,758 1,456,620 Construction and land development 115 67 45 — 227 181,536 181,763 Residential real estate 2,271 228 193 4,355 7,047 431,926 438,973 Consumer 2,055 1,228 4 273 3,560 339,303 342,863 Lease financing 598 — — 1,062 1,660 199,186 200,846 Total (excluding PCI) $ 8,798 $ 4,728 $ 2,454 $ 28,613 $ 44,593 $ 3,086,929 $ 3,131,522 The following table presents the aging status of the recorded investment in loans by portfolio (excluding PCI loans) as of December 31, 2016 (in thousands): Accruing Loans 30-59 60-89 Past Due Days Days 90 Days Nonaccrual Total Total Past Due Past Due or More Loans Past Due Current Loans Commercial $ 3,326 $ 138 $ 2,378 $ 3,559 $ 9,401 $ 444,909 $ 454,310 Commercial real estate 648 787 — 7,145 8,580 955,315 963,895 Construction and land development — — — 21 21 165,154 165,175 Residential real estate 3,472 13 — 4,629 8,114 239,042 247,156 Consumer 1,701 588 26 187 2,502 267,203 269,705 Lease financing 94 — 1 1,330 1,425 190,054 191,479 Total (excluding PCI) $ 9,241 $ 1,526 $ 2,405 $ 16,871 $ 30,043 $ 2,261,677 $ 2,291,720 Troubled Debt Restructurings A loan is categorized as a troubled debt restructuring (“TDR”) if a concession is granted to provide for a reduction of either interest or principal due to deterioration in the financial condition of the borrower. TDRs can take the form of a reduction of the stated interest rate, splitting a loan into separate loans with market terms on one loan and concessionary terms on the other loans, receipts of assets from a debtor in partial or full satisfaction of a loan, the extension of the maturity date or dates at a stated interest rate lower than the current market rate for new debt with similar risk, the reduction of the face amount or maturity of the debt as stated in the instrument or other agreement, the reduction of accrued interest, the release of a personal guarantee in a bankruptcy situation or any other concessionary type of renegotiated debt. Loans are not classified as TDRs when the modification is short-term or results in only an insignificant delay or shortfall in the payments to be received. Loans modified as TDRs for commercial and commercial real estate loans generally consist of allowing commercial borrowers to defer scheduled principal payments and make interest only payments for a specified period of time at the stated interest rate of the original loan agreement or lower payments due to a modification of the loans’ contractual terms. TDRs that continue to accrue interest and are greater than $50,000 are individually evaluated for impairment, on a quarterly basis, and transferred to nonaccrual status when it is probable that any remaining principal and interest payments due on the loan will not be collected in accordance with the contractual terms of the loan. TDRs that subsequently default are individually evaluated for impairment at the time of default. The allowance for loan losses on TDRs totaled $2.4 million and $203,000 as of September 30, 2017 and December 31, 2016, respectively. The Company had no unfunded commitments in connection with TDRs at September 30, 2017 and December 31, 2016. The Company’s TDRs are identified on a case-by-case basis in connection with the ongoing loan collection processes. The following table presents TDRs by loan portfolio (excluding PCI loans) as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Accruing (1) Non-accrual (2) Total Accruing (1) Non-accrual (2) Total Commercial $ 319 $ — $ 319 $ 611 $ — $ 611 Commercial real estate 1,214 14,812 16,026 11,253 5,098 16,351 Construction and land development 59 — 59 63 — 63 Residential real estate 772 614 1,386 400 527 927 Consumer — — — — — — Lease financing — — — — — — Total loans (excluding PCI) $ 2,364 $ 15,426 $ 17,790 $ 12,327 $ 5,625 $ 17,952 (1) These loans are still accruing interest. (2) These loans are included in non-accrual loans in the preceding tables. The following table presents a summary of loans by portfolio that were restructured during the three and nine months ended September 30, 2017 and the loans by portfolio that were modified as TDRs within the previous twelve months that subsequently defaulted during the three and nine months ended September 30, 2017 (dollars in thousands): Commercial Loan Portfolio Other Loan Portfolio Commercial Construction Residential Real and Land Real Lease Commercial Estate Development Estate Consumer Financing Total For the Three Months Ended September 30, 2017: Troubled debt restructurings: Number of loans — — — 1 — — 1 Pre-modification outstanding balance $ — $ — $ — $ 91 $ — $ — $ 91 Post-modification outstanding balance — — — 90 — — 90 Troubled debt restructurings that subsequently defaulted Number of loans — — — — — — — Recorded balance $ — $ — $ — $ — $ — $ — $ — For the Nine Months Ended September 30, 2017: Troubled debt restructurings: Number of loans 1 — — 3 — — 4 Pre-modification outstanding balance $ 362 $ — $ — $ 475 $ — $ — $ 837 Post-modification outstanding balance 339 — — 474 — — 813 Troubled debt restructurings that subsequently defaulted Number of loans — — — — — — — Recorded balance $ — $ — $ — $ — $ — $ — $ — The following table presents a summary of loans by portfolio that were restructured during the three and nine months ended September 30, 2016 and the loans by portfolio that were modified as TDRs within the previous twelve months that subsequently defaulted during the three and nine months ended September 30, 2016 (dollars in thousands): Commercial Loan Portfolio Other Loan Portfolio Commercial Construction Residential Real and Land Real Lease Commercial Estate Development Estate Consumer Financing Total For the Three Months Ended September 30, 2016: Troubled debt restructurings: Number of loans — 2 — — — — 2 Pre-modification outstanding balance $ — $ 10,207 $ — $ — $ — $ — $ 10,207 Post-modification outstanding balance — 10,207 — — — — 10,207 Troubled debt restructurings that subsequently defaulted Number of loans — — — — — — — Recorded balance $ — $ — $ — $ — $ — $ — $ — For the Nine Months Ended September 30, 2016: Troubled debt restructurings: Number of loans 3 2 — — — — 5 Pre-modification outstanding balance $ 685 $ 10,207 $ — $ — $ — $ — $ 10,892 Post-modification outstanding balance 647 10,207 — — — — 10,854 Troubled debt restructurings that subsequently defaulted Number of loans — — — — — — — Recorded balance $ — $ — $ — $ — $ — $ — $ — Purchased Credit Impaired Loans Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date without a carryover of the related allowance for loan losses. PCI loans are purchased loans that have evidence of credit deterioration since origination, and it is probable at the date of acquisition that the Company will not collect all contractually required principal and interest payments. Evidence of credit quality deterioration as of the purchase date may include factors such as past due and nonaccrual status. The difference between contractually required principal and interest at acquisition and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference. Subsequent decreases to the expected cash flows will generally result in impairment, which is recorded as provision for loan losses in the consolidated statements of income. Subsequent increases in cash flows result in a reversal of the provision for loan losses to the extent of prior charges or a reclassification of the difference from non-accretable to accretable with a positive impact on interest income. Further, any excess cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of such cash flows. Accretion recorded as loan interest income totaled $1.1 million and $4.3 million during the three and nine months ended September 30, 2017, respectively, and $1.8 million and $7.1 million during the three and nine months ended September 30, 2016, respectively. Accretable yield of PCI loans, or income expected to be collected, is as follows (in thousands): Nine Months Ended September 30, 2017 2016 Balance, beginning of period $ 9,035 $ 10,526 New loans purchased – Centrue acquisition 2,111 — Accretion (4,276) (7,066) Other adjustments (including maturities, charge-offs and impact of changes in timing of expected cash flows) (1,558) (96) Reclassification from non-accretable 1,519 4,302 Balance, end of period $ 6,831 $ 7,666 Allowance for Loan Losses The Company’s loan portfolio is principally comprised of commercial, commercial real estate, construction and land development, residential real estate and consumer loans and lease financing receivables. The principal risks to each category of loans are as follows: Commercial – The principal risk of commercial loans is that these loans are primarily made based on the identified cash flow of the borrower and secondarily on the collateral underlying the loans. Most often, this collateral consists of accounts receivable, inventory and equipment. Inventory and equipment may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business. If the cash flow from business operations is reduced, the borrower’s ability to repay the loan may be impaired. As such, repayment of such loans is often more sensitive than other types of loans to adverse conditions in the general economy. Commercial real estate – As with commercial loans, repayment of commercial real estate loans is often dependent on the borrower’s ability to make repayment from the cash flow of the commercial venture. While commercial real estate loans are collateralized by the borrower’s underlying real estate, foreclosure on such assets may be more difficult than with other types of collateralized loans because of the possible effect the foreclosure would have on the borrower’s business, and property values may tend to be partially based upon the value of the business situated on the property. Construction and land development – Construction and land development lending involves additional risks not generally present in other types of lending because funds are advanced upon the estimated future value of the project, which is uncertain prior to its completion and at the time the loan is made, and costs may exceed realizable values in declining real estate markets. Moreover, if the estimate of the value of the completed project proves to be overstated or market values or rental rates decline, the collateral may prove to be inadequate security for the repayment of the loan. Additional funds may also be required to complete the project, and the project may have to be held for an unspecified period of time before a disposition can occur. Residential real estate – The principal risk to residential real estate lending is associated with residential loans not sold into the secondary market. In such cases, the value of the underlying property may have deteriorated as a result of a change in the residential real estate market, and the borrower may have little incentive to repay the loan or continue living in the property. Additionally, in areas with high vacancy rates, reselling the property without substantial loss may be difficult. Consumer – The repayment of consumer loans is typically dependent on the borrower remaining employed through the life of the loan, as well as the possibility that the collateral underlying the loan may not be adequately maintained by the borrower. Lease financing – Our indirect financing leases are primarily for business equipment leased to varying types of small businesses. If the cash flow from business operations is reduced, the business’s ability to repay may become impaired. Changes in the allowance for loan losses for the three and nine months ended September 30, 2017 and 2016 are as follows (in thousands): Three Months Ended September 30, 2017 2016 Non-PCI PCI Non-PCI PCI Loans Loans Total Loans Loans Total Balance, beginning of period $ 14,037 $ 1,387 $ 15,424 $ 13,629 $ 1,123 $ 14,752 Provision for loan losses 1,435 54 1,489 1,156 236 1,392 Loan charge-offs (335) — (335) (806) (58) (864) Loan recoveries 278 5 283 250 29 279 Net loan (charge-offs) recoveries (57) 5 (52) (556) (29) (585) Balance, end of period $ 15,415 $ 1,446 $ 16,861 $ 14,229 $ 1,330 $ 15,559 Nine Months Ended September 30, 2017 2016 Non-PCI PCI Non-PCI PCI Loans Loans Total Loans Loans Total Balance, beginning of period $ 13,744 $ 1,118 $ 14,862 $ 14,093 $ 1,895 $ 15,988 Provision for loan losses 3,260 220 3,480 3,752 (606) 3,146 Loan charge-offs (2,856) — (2,856) (4,228) (58) (4,286) Loan recoveries 1,267 108 1,375 612 99 711 Net loan (charge-offs) recoveries (1,589) 108 (1,481) (3,616) 41 (3,575) Balance, end of period $ 15,415 $ 1,446 $ 16,861 $ 14,229 $ 1,330 $ 15,559 The following table represents, by loan portfolio, a summary of changes in the allowance for loan losses for the three and nine months ended September 30, 2017 and 2016 (in thousands): Commercial Loan Portfolio Other Loan Portfolio Commercial Construction Residential Real and Land Real Lease Commercial Estate Development Estate Consumer Financing Total Changes in allowance for loan losses for the three months ended September 30, 2017: Beginning balance $ 5,381 $ 3,996 $ 147 |
MORTGAGE SERVICING RIGHTS
MORTGAGE SERVICING RIGHTS | 9 Months Ended |
Sep. 30, 2017 | |
MORTGAGE SERVICING RIGHTS | |
MORTGAGE SERVICING RIGHTS | Note 7 – Mortgage Servicing Rights At September 30, 2017 and December 31, 2016, the Company serviced mortgage loans for others totaling $5.95 billion and $5.64 billion, respectively. A summary of mortgage loans serviced for others as of September 30, 2017 and December 31, 2016 is as follows (in thousands): September 30, December 31, 2017 2016 Commercial FHA mortgage loans $ 3,895,455 $ 3,811,066 Residential mortgage loans 2,053,933 1,833,443 Total loans serviced for others $ 5,949,388 $ 5,644,509 Changes in our mortgage servicing rights were as follows for the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Mortgage servicing rights: Balance, beginning of period $ 75,705 $ 68,395 $ 71,710 $ 67,218 Servicing rights acquired – residential mortgage loans — — 1,933 — Servicing rights transferred to held for sale - residential mortgage loans (16,229) — (16,229) — Servicing rights capitalized – commercial FHA mortgage loans 1,432 3,506 5,020 5,777 Servicing rights capitalized – residential mortgage loans 435 1,125 1,656 2,764 Amortization – commercial FHA mortgage loans (650) (592) (1,928) (1,741) Amortization – residential mortgage loans (857) (1,085) (2,326) (2,669) Balance, end of period 59,836 71,349 59,836 71,349 Valuation allowances: Balance, beginning of period 5,428 5,587 3,702 567 Additions 104 1,073 1,942 6,301 Reductions — — (112) (208) Servicing rights transferred to held for sale - residential mortgage loans (1,995) — (1,995) — Balance, end of period 3,537 6,660 3,537 6,660 Mortgage servicing rights, net $ 56,299 $ 64,689 $ 56,299 $ 64,689 Fair value: At beginning of period $ 70,277 $ 62,960 $ 68,008 $ 66,700 At end of period $ 56,299 $ 64,689 $ 56,299 $ 64,689 During the third quarter of 2017, the Company transferred $14.2 million of residential mortgage servicing rights, net of valuation allowance, to mortgage servicing rights held for sale. The Company has committed to a plan to sell certain residential mortgage servicing rights and has the ability to sell them to a buyer in their present condition. During the three and nine months ended September 30, 2017, the Company recognized a $3.6 million loss on mortgage servicing rights held for sale to reflect them at the lower of their carrying value or fair value less estimated costs to sell. As a result of recognizing this loss, mortgage servicing rights held for sale had a net carrying value of $10.6 million at September 30, 2017. The following table is a summary of key assumptions, representing both general economic and other published information and the weighted average characteristics of the commercial and residential portfolios, used in the valuation of servicing rights at September 30, 2017 and December 31, 2016. Assumptions used in the prepayment rate consider many factors as appropriate, including lockouts, balloons, prepayment penalties, interest rate ranges, delinquencies and geographic location. The discount rate is based on an average pre‑tax internal rate of return utilized by market participants in pricing the servicing portfolios. Significant increases or decreases in any one of these assumptions would result in a significantly lower or higher fair value measurement. Remaining Servicing Interest Years to Prepayment Servicing Discount Fee Rate Maturity Rate Cost Rate September 30, 2017: Commercial FHA mortgage loans 0.13 % 3.67 % 30.3 8.25 % $ 1,000 10 - 12 % Residential mortgage loans 0.26 % 3.93 % 22.6 11.52 % $ 67 9 - 11 % December 31, 2016: Commercial FHA mortgage loans 0.13 % 3.72 % 30.2 8.31 % $ 1,000 10 - 13 % Residential mortgage loans 0.26 % 3.89 % 24.2 9.72 % $ 60 9 - 11 % We recognize revenue from servicing commercial FHA and residential mortgages as earned based on the specific contractual terms. This revenue, along with amortization of and changes in impairment on servicing rights, is reported in commercial FHA revenue and residential mortgage banking revenue in the consolidated statements of income. Mortgage servicing rights do not trade in an active market with readily observable prices. The fair value of mortgage servicing rights and their sensitivity to changes in interest rates is influenced by the mix of the servicing portfolio and characteristics of each segment of the portfolio. The Company’s servicing portfolio consists of the distinct portfolios of government-insured residential and commercial mortgages and conventional residential mortgages. T he fair value of our servicing rights is estimated by using a cash flow valuation model which calculates the present value of estimated future net servicing cash flows, taking into consideration expected mortgage loan prepayment rates, discount rates, cost to service, contractual servicing fee income, ancillary income, late fees , replacement reserves and other economic factors that are determined based on current market conditions. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2017 | |
GOODWILL AND INTANGIBLE ASSETS | |
GOODWILL AND INTANGIBLE ASSETS | Note 8 – Goodwill and Intangible Assets At September 30, 2017 and December 31, 2016, goodwill totaled $97.4 million and $48.8 million, respectively. Goodwill increased $46.1 million as a result of the acquisition of Centrue on June 9, 2017 and $2.4 million as a result of the acquisition of CedarPoint on March 28, 2017, as further discussed in Note 3 to the consolidated financial statements. The Company’s intangible assets, consisting of core deposit and customer relationship intangibles, as of September 30, 2017 and December 31, 2016 are summarized as follows (in thousands): September 30, 2017 December 31, 2016 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Total Amount Amortization Total Core deposit intangibles $ 31,612 $ (17,998) $ 13,614 $ 20,542 $ (16,181) $ 4,361 Customer relationship intangibles 7,471 (3,119) 4,352 5,471 (2,645) 2,826 Total intangible assets $ 39,083 $ (21,117) $ 17,966 $ 26,013 $ (18,826) $ 7,187 In conjunction with the acquisition of Centrue on June 9, 2017, we recorded $11.1 million of core deposit intangibles, which are being amortized on an accelerated basis over an estimated useful life of eight years, as further discussed in Note 3 to the consolidated financial statements. In conjunction with the acquisition of CedarPoint on March 28, 2017, we recorded $2.0 million of customer relationship intangibles, which are being amortized on a straight-line basis over 12 years, as further discussed in Note 3 to the consolidated financial statements. Amortization of intangible assets was $1.2 million and $2.3 million for the three and nine months ended September 30, 2017, respectively, and $514,000 and $1.6 million for the comparable periods in 2016, respectively. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 9 Months Ended |
Sep. 30, 2017 | |
DERIVATIVE INSTRUMENTS | |
DERIVATIVE INSTRUMENTS | Note 9 – Derivative Instruments As part of the Company’s overall management of interest rate sensitivity, the Company utilizes derivative instruments to minimize significant, unanticipated earnings fluctuations caused by interest rate volatility, including interest rate lock commitments and forward commitments to sell mortgage-backed securities. Interest Rate Lock Commitments / Forward Commitments to Sell Mortgage-Backed Securities Derivative instruments issued by the Company consist of interest rate lock commitments to originate fixed-rate loans to be sold. Commitments to originate fixed-rate loans consist of commercial and residential real estate loans. The interest rate lock commitments and loans held for sale are hedged with forward contracts to sell mortgage-backed securities. The fair value of the interest rate lock commitments and forward contracts to sell mortgage-backed securities are included in other assets or other liabilities in the consolidated balance sheets. Changes in the fair value of derivative financial instruments are recognized in commercial FHA revenue and residential mortgage banking revenue in the consolidated statements of income. The following table summarizes the interest rate lock commitments and forward commitments to sell mortgage-backed securities held by the Company, their notional amount, estimated fair values and the location in which the derivative instruments are reported in the consolidated balances sheets at September 30, 2017 and December 31, 2016 (in thousands): Notional Amount Fair Value Gain September 30, December 31, September 30, December 31, 2017 2016 2017 2016 Derivative Instruments (included in Other Assets): Interest rate lock commitments $ 337,280 $ 264,359 $ 6,421 $ 6,253 Forward commitments to sell mortgage-backed securities 349,945 301,788 5 125 Total $ 687,225 $ 566,147 $ 6,426 $ 6,378 Net losses of $1.1 million and net gains of $48,000 were recognized on derivative instruments for the three and nine months ended September 30, 2017, respectively. Net losses of $5.2 million and net gains of $527,000 were recognized on derivative instruments for the three and nine months ended September 30, 2016, respectively. Net gains and losses on derivative instruments were recognized in commercial FHA revenue and residential mortgage banking revenue in the consolidated statements of income. Interest Rate Swap Contracts The Company entered into derivative instruments related to interest rate swap contracts sold to commercial customers who wish to modify their interest rate sensitivity. These swaps are offset by contracts simultaneously purchased by the Company from other financial dealer institutions with mirror-image terms. Because of the mirror-image terms of the offsetting contracts, in addition to collateral provisions which mitigate the impact of non-performance risk, changes in the fair value subsequent to initial recognition have a minimal effect on earnings. These derivative contracts do not qualify for hedge accounting. The notional amounts of these customer derivative instruments and the offsetting counterparty derivative instruments were $10.1 million at September 30, 2017. The fair value of the customer derivative instruments and the offsetting counterparty derivative instruments was $121,000 at September 30, 2017, which are included in other assets and other liabilities, respectively, on the consolidated balance sheets. |
DEPOSITS
DEPOSITS | 9 Months Ended |
Sep. 30, 2017 | |
Deposits [Abstract] | |
DEPOSITS | Note 10 – Deposits The following table summarizes the classification of deposits as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, 2017 2016 Noninterest-bearing demand $ 674,118 $ 562,333 Interest-bearing: Checking 800,649 656,248 Money market 633,844 399,851 Savings 278,977 166,910 Time 726,879 619,024 Total deposits $ 3,114,467 $ 2,404,366 |
SHORT-TERM BORROWINGS
SHORT-TERM BORROWINGS | 9 Months Ended |
Sep. 30, 2017 | |
SHORT-TERM BORROWINGS | |
SHORT-TERM BORROWINGS | Note 11 – Short-Term Borrowings The following table presents the distribution of short-term borrowings and related weighted average interest rates as of and for the nine months ended September 30, 2017 and as of and for the year ended December 31, 2016 (in thousands): Repurchase Agreements September 30, December 31, 2017 2016 Outstanding at period-end $ 153,443 $ 131,557 Average amount outstanding 157,388 130,228 Maximum amount outstanding at any month end 183,327 168,369 Weighted average interest rate: During period 0.22 % 0.23 % End of period 0.23 % 0.21 % At September 30, 2017, the Company had federal funds lines of credit totaling $55.0 million. The lines of credit were unused at September 30, 2017. Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature within one to four days from the transaction date. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction, which represents the amount of the Bank’s obligation. The Bank may be required to provide additional collateral based on the fair value of the underlying securities. Investment securities with a carrying amount of $185.7 million and $140.0 million at September 30, 2017 and December 31, 2016, respectively, were pledged for securities sold under agreements to repurchase. The Company had lines of credit of $23.2 million and $35.1 million at September 30, 2017 and December 31, 2016, respectively, from the Federal Reserve Discount Window. The lines are collateralized by a collateral agreement with respect to a pool of commercial real estate loans totaling $31.5 million and $43.3 million at September 30, 2017 and December 31, 2016, respectively. There were no outstanding borrowings at September 30, 2017 and December 31, 2016. |
FHLB ADVANCES AND OTHER BORROWI
FHLB ADVANCES AND OTHER BORROWINGS | 9 Months Ended |
Sep. 30, 2017 | |
FHLB ADVANCES AND OTHER BORROWINGS | |
FHLB ADVANCES AND OTHER BORROWINGS | Note 12 – FHLB Advances and Other Borrowings The following table summarizes our Federal Home Loan Bank (“FHLB”) advances and other borrowings as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, 2017 2016 Midland States Bancorp, Inc. Term loan - variable interest rate equal to LIBOR plus 2.25%, which was 3.50% at September 30, 2017 – maturing through May 25, 2020 $ 38,539 $ — Series G redeemable preferred stock - 181 shares at $1,000 per share 181 — Midland States Bank FHLB advances – fixed rate, fixed term of $176.0 million and $112.5 million, at rates averaging 1.28% and 1.00% at September 30, 2017 and December 31, 2016, respectively – maturing through June 2021, and putable fixed rate of $235.0 million and $125.0 million at rates averaging 1.10% and 0.79% at September 30, 2017 and December 31, 2016, respectively, – maturing through August 2023 with call provisions through June 2019 411,144 237,500 FHLB advances – variable rate, fixed term, at rates averaging 0.85% at September 30, 2017 – maturing through March 2018 39,000 — Other 6 18 Total FHLB advances and other borrowings $ 488,870 $ 237,518 On May 25, 2017, the Company entered into a loan agreement with another bank for a revolving line of credit in the original principal amount of up to $10.0 million and a term loan in the original principal amount of $40.0 million. The revolving line of credit matures on May 24, 2018 and pays a variable rate of interest equal to one-month LIBOR plus 2.00%. There were no advances made on the line of credit as of September 30, 2017. The term loan matures on May 25, 2020 and pays a variable rate of interest equal to one-month LIBOR plus 2.25%. Beginning September 1, 2017, the Company was required to begin making quarterly principal and interest payments on the term loan of $1.4 million with the remaining principal and any unpaid interest due at maturity. The loan is unsecured with a negative pledge of shares of the Company’s common stock. The loan agreement contains financial covenants that require the Company to maintain a minimum total capital to risk-weighted assets ratio, a minimum adjusted loan loss reserves to nonperforming loans ratio, a minimum fixed charge coverage ratio and a maximum percentage of nonperforming assets to tangible capital. At September 30, 2017, the Company was in compliance with each of these financial covenants. In conjunction with the acquisition of Centrue on June 9, 2017, as further discussed in Note 3 to the consolidated financial statements, each share of Centrue’s Series B preferred stock was converted into the right to receive a share of a newly created series of Series G preferred stock of the Company, and was recorded at fair value of $181,000 at the time of acquisition. The Bank’s advances from the FHLB are collateralized by a blanket collateral agreement of qualifying mortgage and home equity line of credit loans and certain commercial real estate loans totaling approximately $1.63 billion and $1.18 billion at September 30, 2017 and December 31, 2016, respectively. |
SUBORDINATED DEBT
SUBORDINATED DEBT | 9 Months Ended |
Sep. 30, 2017 | |
SUBORDINATED DEBT | |
SUBORDINATED DEBT | Note 13 – Subordinated Debt The following table summarizes the Company’s subordinated debt as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, 2017 2016 Subordinated debt issued June 2015 – fixed interest rate of 6.00% for the first five years through June 2020 and a variable interest rate equivalent to three month LIBOR plus 4.35% thereafter, $40,325 maturing June 18, 2025 $ 39,783 $ 39,729 Subordinated debt issued June 2015 – fixed interest rate of 6.50%, $15,000 maturing June 18, 2025 14,798 14,779 Total subordinated debt $ 54,581 $ 54,508 |
TRUST PREFERRED DEBENTURES
TRUST PREFERRED DEBENTURES | 9 Months Ended |
Sep. 30, 2017 | |
TRUST PREFERRED DEBENTURES. | |
TRUST PREFERRED DEBENTURES | Note 14 – Trust Preferred Debentures The following table summarizes the Company’s trust preferred debentures as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, 2017 2016 Grant Park Statutory Trust I – variable interest rate equal to LIBOR plus 2.85%, which was 4.16% and 3.74%, at September 30, 2017 and December 31, 2016, respectively – $3,000 maturing January 23, 2034 $ 2,043 $ 1,996 Midland States Preferred Securities Trust – variable interest rate equal to LIBOR plus 2.75%, which was 4.06% and 3.63% at September 30, 2017 and December 31, 2016, respectively – $10,000 maturing April 23, 2034 9,959 9,957 Love Savings/Heartland Capital Trust III – variable interest rate equal to LIBOR plus 1.75%, which was 3.07% and 2.71% at September 30, 2017 and December 31, 2016, respectively – $20,000 maturing December 31, 2036 13,253 13,141 Love Savings/Heartland Capital Trust IV – variable interest rate equal to LIBOR plus 1.47%, which was 2.79% and 2.42% at September 30, 2017 and December 31, 2016, respectively – $20,000 maturing September 6, 2037 12,425 12,311 Centrue Statutory Trust II - variable interest rate equal to LIBOR plus 2.65%, which was 3.97% at September 30, 2017 - $10,000 maturing June 17, 2034 7,587 — Total trust preferred debentures $ 45,267 $ 37,405 In conjunction with the acquisition of Centrue on June 9, 2017, as further discussed in Note 3 to the consolidated financial statements, the Company assumed $10.0 million of subordinated debentures that were recorded at fair value of $7.6 million at the time of acquisition. In April 2004, the Centrue Statutory Trust II (“Centrue Trust II”) issued 10,000 shares of preferred securities with a liquidation amount of $1,000 per preferred security. Centrue issued $10.0 million of subordinated debentures to Centrue Trust II in exchange for ownership of all the common securities of the trust. The Company is not considered the primary beneficiary of Centrue Trust II, therefore, the trust is not consolidated in the Company’s consolidated financial statements, but rather the subordinated debentures are shown as a liability, and the Company’s investment in the common stock of Centrue Trust II of $310,000 is included in other assets. |
PREFERRED STOCK
PREFERRED STOCK | 9 Months Ended |
Sep. 30, 2017 | |
Preferred Stock | |
PREFERRED STOCK | Note 15 – Preferred Stock Series G Preferred Stock In conjunction with the acquisition of Centrue on June 9, 2017, as previously discussed in Note 3 to the consolidated financial statements, each share of Centrue’s Series B preferred stock was converted into the right to receive a share of a newly created series of Series G preferred stock of the Company, which are shown in FHLB advances and other borrowings in Note 12 to the consolidated financial statements. Preferential cumulative cash dividends are payable quarterly at an annual rate of $60.00 per share. Dividends accrue on each share of Series G preferred stock from the date of issuance and from day to day, thereafter, whether or not earned or declared. Fixed Rate Non-Voting Perpetual Non-Cumulative Preferred Stock, Series H Each share of Centrue’s Series D preferred stock was converted into the right to receive a share of a newly created series of Series H preferred stock of the Company, and was recorded at fair value of $3.1 million at the time of acquisition. Dividends are payable at a fixed rate of 12.5% per annum, payable quarterly and are non-cumulative. No dividends may be paid on shares of common stock, shares of preferred stock that rank junior to Series H preferred stock (other than dividends payable solely in shares of common stock), or shares of preferred stock that rank on parity with Series H preferred stock, if a dividend is not paid in full on the Series H preferred stock, for a period of three calendar quarters from the date of the missing dividend payment date. The Company has the option to redeem, in whole or in part, the shares of Series H preferred stock at any time after July 29, 2019. The per share price payable by the Company for such shares of Series H preferred stock will be equal to $1,000 per share, plus any accrued but unpaid dividends. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share | |
EARNINGS PER SHARE | Note 16 – Earnings Per Share Earnings per share are calculated utilizing the two‑class method. Basic earnings per share are calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per share are calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of shares adjusted for the dilutive effect of common stock awards using the treasury stock method (outstanding stock options and unvested restricted stock) and common stock warrants. Presented below are the calculations for basic and diluted earnings per common share for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands, except per share data): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Net income $ 2,036 $ 8,051 $ 14,065 $ 19,959 Preferred stock dividends (83) — (102) Amortization of preferred stock premium 56 — 56 — Net income available to common equity 2,009 8,051 14,019 19,959 Common shareholder dividends (3,818) (2,773) (10,100) (7,022) Unvested restricted stock award dividends (19) (12) (59) (35) Undistributed earnings to unvested restricted stock awards — (26) (21) (69) Undistributed earnings to common shareholders $ (1,828) $ 5,240 $ 3,839 $ 12,833 Basic Distributed earnings to common shareholders $ 3,818 $ 2,773 $ 10,100 $ 7,022 Undistributed earnings to common shareholders (1,828) 5,240 3,839 12,833 Total common shareholders earnings, basic $ 1,990 $ 8,013 $ 13,939 $ 19,855 Diluted Distributed earnings to common shareholders $ 3,818 $ 2,773 $ 10,100 $ 7,022 Undistributed earnings to common shareholders (1,828) 5,240 3,839 12,833 Total common shareholders earnings 1,990 8,013 13,939 19,855 Add back: Undistributed earnings reallocated from unvested restricted stock awards — — 1 1 Total common shareholders earnings, diluted $ 1,990 $ 8,013 $ 13,940 $ 19,856 Weighted average common shares outstanding, basic 19,265,409 15,578,703 17,274,746 13,637,997 Options and warrants 438,808 279,570 522,489 264,667 Weighted average common shares outstanding, diluted 19,704,217 15,858,273 17,797,235 13,902,664 Basic earnings per common share $ 0.10 $ 0.51 $ 0.81 $ 1.46 Diluted earnings per common share 0.10 0.51 0.78 1.43 |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2017 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | Note 17 – Fair Value of Financial Instruments ASC 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value including a three‑level valuation hierarchy, and expands disclosures about fair value measurements. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting assumptions that a market participant would use when pricing an asset or liability. The hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows: · Level 1: Unadjusted quoted prices for identical assets or liabilities traded in active markets. · Level 2: Observable inputs other than Level 1, including quoted prices for similar assets and liabilities in active markets, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data, either directly or indirectly, for substantially the full term of the financial instrument. · Level 3: Inputs to a valuation methodology that is unobservable, supported by little or no market activity, and significant to the fair value measurement. These valuation methodologies generally include pricing models, discounted cash flow models, or a determination of fair value that requires significant management judgment or estimation. This category also includes observable inputs from a pricing service not corroborated by observable market data, such as pricing corporate securities. Fair value is used on a recurring basis to account for securities available for sale and derivative instruments, and for financial assets for which the Company has elected the fair value option. For assets and liabilities measured at the lower of cost or fair value, the fair value measurement criteria may or may not be met during a reporting period and such measurements are therefore considered “nonrecurring” for purposes of disclosing our fair value measurements. Fair value is used on a nonrecurring basis to adjust carrying values for impaired loans and other real estate owned and also to record impairment on certain assets, such as mortgage servicing rights, goodwill, intangible assets and other long-lived assets. Assets and liabilities measured and recorded at fair value, including financial assets for which the Company has elected the fair value option, on a recurring and nonrecurring basis as of September 30, 2017 and December 31, 2016, are summarized below (in thousands): September 30, 2017 Quoted prices in active Significant markets other Significant for identical observable unobservable assets inputs inputs Total (Level 1) (Level 2) (Level 3) Assets and liabilities measured at fair value on a recurring basis: Assets Securities available for sale: U.S. Treasury securities $ 47,907 $ 47,907 $ — $ — Government sponsored entity debt securities 19,389 — 19,389 — Agency mortgage-backed securities 229,854 — 229,854 — State and municipal securities 39,716 — 39,716 — Corporate securities 57,307 — 52,558 4,749 Equity securities 2,812 — 2,812 — Loans held for sale 35,874 — 35,874 — Interest rate lock commitments 6,421 — 6,421 — Forward commitments to sell mortgage-backed securities 5 — 5 — Interest rate swap contracts 121 — 121 — Total $ 439,406 $ 47,907 $ 386,750 $ 4,749 Liabilities Interest rate swap contracts $ 121 $ — $ 121 $ — Assets measured at fair value on a non-recurring basis: Mortgage servicing rights $ 56,299 $ — $ — $ 56,299 Mortgage servicing rights held for sale 10,618 — — 10,618 Impaired loans 18,311 — 6,227 12,084 Assets held for sale 2,858 — 2,858 — December 31, 2016 Quoted prices in active Significant markets other Significant for identical observable unobservable assets inputs inputs Total (Level 1) (Level 2) (Level) 3 Assets and liabilities measured at fair value on a recurring basis: Assets Securities available for sale: U.S. Treasury securities $ 75,901 $ 75,901 $ — $ — Government sponsored entity debt securities 7,688 — 7,688 — Agency mortgage-backed securities 90,070 — 90,070 — Non-agency mortgage-backed securities 1 — — 1 State and municipal securities 25,274 — 25,274 — Corporate securities 47,405 — 39,925 7,480 Loans held for sale 70,565 — 70,565 — Interest rate lock commitments 6,253 — 6,253 — Forward commitments to sell mortgage-backed securities 125 — 125 — Total $ 323,282 $ 75,901 $ 239,900 $ 7,481 Liabilities None Assets measured at fair value on a non-recurring basis: Impaired loans $ 10,202 $ — $ 6,635 $ 3,567 Other real estate owned 165 — 165 — Assets held for sale 1,550 — 1,550 — The following table presents losses recognized on assets measured on a non‑recurring basis for the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Mortgage servicing rights $ 104 $ 1,073 $ 1,830 $ 6,093 Mortgage servicing rights held for sale 3,617 — 3,617 — Impaired loans 1 144 564 310 Other real estate owned — 4 180 219 Assets held for sale — — 1,130 — Total loss on assets measured on a nonrecurring basis $ 3,722 $ 1,221 $ 7,321 $ 6,622 The following table presents activity for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2017 (in thousands): Non-Agency Corporate Mortgage-Backed Securities Securities Three Months Nine Months Three Months Nine Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2017 2017 Balance, beginning of period $ 4,740 $ 7,480 $ — $ 1 Total realized in earnings (1) 54 235 — — Total unrealized in other comprehensive income — 242 — — Net settlements (principal and interest) (45) (3,208) — (1) Balance, end of period $ 4,749 $ 4,749 $ — $ — (1) Amounts included in interest income from investment securities taxable in the consolidated statements of income. The following table presents activity for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2016 (in thousands). Non-Agency Corporate Mortgage-Backed Securities Securities Three Months Nine Months Three Months Nine Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2016 2016 Balance, beginning of period $ 9,765 $ — $ 2 $ — Transferred from Level 2 — 6,749 — 2 Transferred to Level 2 (2,000) (2,000) — — Purchases of investment securities recognized as Level 3 — 3,000 — — Total realized in earnings (1) 93 251 — — Total unrealized in other comprehensive income (294) (296) — — Net settlements (principal and interest) (84) (224) (1) (1) Balance, end of period $ 7,480 $ 7,480 $ 1 $ 1 (1) Amounts included in interest income from investment securities taxable in the consolidated statements of income. ASC Topic 825, Financial Instruments , requires disclosure of the estimated fair value of certain financial instruments and the methods and significant assumptions used to estimate such fair values. Additionally, certain financial instruments and all nonfinancial instruments are excluded from the applicable disclosure requirements. The following tables are a summary of the carrying values and fair value estimates of certain financial instruments as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 Quoted prices in active Significant markets other Significant for identical observable unobservable Carrying assets inputs inputs Amount Fair Value (Level 1) (Level 2) (Level 3) Assets Cash and due from banks $ 180,807 $ 180,807 $ 180,807 $ — $ — Federal funds sold 2,765 2,765 2,765 — — Investment securities available for sale 396,985 396,985 47,907 344,329 4,749 Investment securities held to maturity 70,867 75,142 — 75,142 — Nonmarketable equity securities 34,391 N/A N/A N/A N/A Loans, net 3,141,111 3,142,910 — — 3,142,910 Loans held for sale 35,874 35,874 — 35,874 — Accrued interest receivable 11,673 11,673 — 11,673 — Interest rate lock commitments 6,421 6,421 — 6,421 — Forward commitments to sell mortgage-backed securities 5 5 — 5 — Interest rate swap contracts 121 121 — 121 — Liabilities Deposits $ 3,114,467 $ 3,112,541 $ — $ 3,112,541 $ — Short-term borrowings 153,443 153,443 — 153,443 — FHLB and other borrowings 488,870 488,196 — 488,196 — Subordinated debt 54,581 50,055 — 50,055 — Trust preferred debentures 45,267 43,114 — 43,114 — Accrued interest payable 2,355 2,355 — 2,355 — Interest rate swap contracts 121 121 — 121 — December 31, 2016 Quoted prices in active Significant markets other Significant for identical observable unobservable Carrying assets inputs inputs Amount Fair Value (Level 1) (Level 2) (Level 3) Assets Cash and due from banks $ 189,543 $ 189,543 $ 189,543 $ — $ — Federal funds sold 1,173 1,173 1,173 — — Investment securities available for sale 246,339 246,339 75,901 162,957 7,481 Investment securities held to maturity 78,672 81,952 — 81,952 — Nonmarketable equity securities 19,485 N/A N/A N/A N/A Loans, net 2,305,114 2,305,206 — — 2,305,206 Loans held for sale 70,565 70,565 — 70,565 — Accrued interest receivable 8,202 8,202 — 8,202 — Interest rate lock commitments 6,253 6,253 — 6,253 — Forward commitments to sell mortgage-backed securities 125 125 — 125 — Liabilities Deposits $ 2,404,366 $ 2,404,231 $ — $ 2,404,231 $ — Short-term borrowings 131,557 131,557 — 131,557 — FHLB and other borrowings 237,518 236,736 — 236,736 — Subordinated debt 54,508 49,692 — 49,692 — Trust preferred debentures 37,405 33,054 — 33,054 — Accrued interest payable 1,045 1,045 — 1,045 — The following is a description of the valuation methodologies used to measure our assets recorded at fair value (under ASC Topic 820) and for estimating fair value for financial instruments not recorded at fair value (under ASC Topic 825): Cash and due from banks and federal funds sold. The carrying amounts are assumed to be the fair value because of the liquidity of these instruments. Investment securities available for sale. Investment securities available for sale are measured and carried at fair value on a recurring basis. Unrealized gains and losses on investment securities available for sale are reported as a component of accumulated other comprehensive income in the consolidated balance sheets. For investment securities available for sale where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). In determining the fair value of investment securities available for sale categorized as Level 2, we obtain a report from a nationally recognized broker‑dealer detailing the fair value of each investment security we hold as of each reporting date. The broker‑dealer uses observable market information to value our fixed income securities, with the primary source being a nationally recognized pricing service. The fair value of the municipal securities is based on a proprietary model maintained by the broker‑dealer. We review all of the broker‑dealer supplied quotes on the securities we own as of the reporting date for reasonableness based on our understanding of the marketplace, and we consider any credit issues related to the bonds. As we have not made any adjustments to the market quotes provided to us and they are based on observable market data, they have been categorized as Level 2 within the fair value hierarchy. For investment securities available for sale where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). During the nine months ended September 30, 2016, $6.7 million of corporate securities and $2,000 of non-agency mortgage backed securities were transferred from Level 2 to Level 3 because observable market inputs were not available and the securities were not actively traded; therefore, the fair value was determined utilizing third-party valuation services through consensus pricing. There were no investment securities available for sale transferred from Level 2 to Level 3 during the three and nine months ended September 30, 2017. Corporate securities classified as Level 3 are not actively traded, and as a result, fair value is determined utilizing third-party valuation services through consensus pricing. The significant unobservable input used in the fair value measurement of Level 3 corporate securities is net market price (range of -2.0% to 2.5%; weighted average of 1.5%). Significant changes in any of the inputs in isolation would result in a significant change to the fair value measurement. Net market price generally increases when market interest rates decline and declines when market interest rates increase. During both the three and nine months ended September 30, 2016, $2.0 million of corporate securities were transferred from Level 3 to Level 2 because a more liquid market for these securities had developed and prices supported by observable market inputs had become available. Investment securities held to maturity. Investment securities held to maturity are those debt instruments which the Company has the positive intent and ability to hold until maturity. Securities held to maturity are recorded at cost, adjusted for the amortization of premiums or accretion of discounts. For investment securities held to maturity where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). In determining the fair value of investment securities held to maturity categorized as Level 2, we obtain a report from a nationally recognized broker‑dealer detailing the fair value of each investment security we hold as of each reporting date. The fair value of the municipal securities is based on a proprietary model maintained by the broker‑dealer. We review all of the broker‑dealer supplied quotes on the securities we own as of the reporting date for reasonableness based on our understanding of the marketplace, and we consider any credit issues related to the bonds. As we have not made any adjustments to the market quotes provided to us and they are based on observable market data, they have been categorized as Level 2 within the fair value hierarchy. Nonmarketable equity securities. Nonmarketable equity securities are primarily FHLB and Federal Reserve Bank stock. The Company is a member of the FHLB and the Federal Reserve System. The carrying value is our basis because it is not practical to determine the fair value due to restrictions placed on transferability. Loans. Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type and further segmented into fixed and adjustable rate interest terms and by credit risk categories. The fair value estimates do not take into consideration the value of the loan portfolio in the event the loans have to be sold outside the parameters of normal operating activities. The fair value of performing fixed rate loans is estimated by discounting scheduled cash flows through the estimated maturity using estimated market prepayment speeds and estimated market discount rates that reflect the credit and interest rate risk inherent in the loans. The estimated market discount rates used for performing fixed rate loans are the Company’s current offering rates for comparable instruments with similar terms. The fair value of performing adjustable rate loans is estimated by discounting scheduled cash flows through the next repricing date. As these loans reprice frequently at market rates and the credit risk is not considered to be greater than normal, the market value is typically close to the carrying amount of these loans. The method of estimating fair value does not incorporate the exit‑price concept of fair value prescribed by ASC Topic 820. Impaired loans. Impaired loans are measured and recorded at fair value on a non-recurring basis. All of our nonaccrual loans and restructured loans are considered impaired and are reviewed individually for the amount of impairment, if any. Most of our loans are collateral dependent and, accordingly, we measure impaired loans based on the estimated fair value of such collateral. The fair value of each loan’s collateral is generally based on estimated market prices from an independently prepared appraisal, which is then adjusted for the cost related to liquidating such collateral; such valuation inputs result in a nonrecurring fair value measurement that is categorized as a Level 2 measurement. When adjustments are made to an appraised value to reflect various factors such as the age of the appraisal or known changes in the market or the collateral, such valuation inputs are considered unobservable and the fair value measurement is categorized as a Level 3 measurement. The impaired loans categorized as Level 3 also include unsecured loans and other secured loans whose fair values are based significantly on unobservable inputs such as the strength of a guarantor, cash flows discounted at the effective loan rate, and management’s judgment. The loan balances shown in the above tables represent nonaccrual and restructured loans for which impairment was recognized during the three and nine months ended September 30, 2017 and 2016. The amounts shown as losses represent, for the loan balances shown, the impairment recognized during those same years. Loans held for sale. Loans held for sale are carried at fair value, determined individually, as of the balance sheet date. Fair value measurements on loans held for sale are based on quoted market prices for similar loans in the secondary market. Other real estate owned. The fair value of foreclosed real estate is generally based on estimated market prices from independently prepared current appraisals or negotiated sales prices with potential buyers; such valuation inputs result in a fair value measurement that is categorized as a Level 2 measurement on a nonrecurring basis. When a current appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value as a result of known changes in the market or the collateral and there is no observable market price, such valuation inputs result in a fair value measurement that is categorized as a Level 3 measurement. To the extent a negotiated sales price or reduced listing price represents a significant discount to an observable market price, such valuation input would result in a fair value measurement that is also considered a Level 3 measurement. Assets held for sale. Assets held for sale represent the fair value of the banking facilities that are expected to be sold as a result of the branch network optimization plan that was announced in November 2016. The fair value of the assets held for sale was based on estimated market prices from independently prepared current appraisals. Such valuation inputs result in a fair value measurement that is categorized as a Level 2 measurement on a nonrecurring basis. Accrued interest receivable. The carrying amounts approximate their fair values. Deposits. Deposits are carried at historical cost. The fair value of deposits with no stated maturity, such as noninterest‑bearing demand deposits, money market, savings and checking accounts, is equal to the amount payable on demand as of the balance sheet date. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. Short-term borrowings. Short-term borrowings consist of repurchase agreements. These borrowings typically have terms of less than 30 days, and therefore, their carrying amounts are a reasonable estimate of fair value. FHLB advances and other borrowings and subordinated debt. Borrowings are carried at amortized cost. The fair value of fixed rate borrowings is calculated by discounting scheduled cash flows through the estimated maturity or call dates using estimated market discount rates that reflect rates offered at that time for borrowings with similar remaining maturities and other characteristics. Trust preferred debentures. Debentures are carried at amortized cost. The fair value of variable rate debentures is calculated by discounting scheduled cash flows through the estimated maturity or call dates using estimated market discount rates that reflect spreads offered at that time for borrowings with similar remaining maturities and other characteristics. Accrued interest payable. The carrying amounts approximate their fair values. Derivative financial instruments. The Company enters into interest rate lock commitments which are agreements to originate mortgage loans whereby the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. These commitments are carried at fair value in other assets on the consolidated balance sheet with changes in fair value reflected in commercial FHA revenue and residential mortgage banking revenue in the consolidated statements of income. The Company also has forward loan sales commitments related to its interest rate lock commitments and its loans held for sale. These commitments are carried at fair value in other assets or other liabilities on the consolidated balance sheets with changes in fair value reflected in commercial FHA revenue and residential mortgage banking revenue in the consolidated statements of income. The interest rate swaps are carried at fair value on a recurring basis based upon the amounts required to settle the contracts. |
COMMITMENTS, CONTINGENCIES AND
COMMITMENTS, CONTINGENCIES AND CREDIT RISK | 9 Months Ended |
Sep. 30, 2017 | |
COMMITMENTS, CONTINGENCIES AND CREDIT RISK | |
COMMITMENTS, CONTINGENCIES AND CREDIT RISK | Note 18 – Commitments, Contingencies and Credit Risk In the normal course of business, there are outstanding various contingent liabilities such as claims and legal actions, which are not reflected in the consolidated financial statements. No material losses are anticipated as a result of these actions or claims. We are a party to financial instruments with off-balance‑sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The contract amounts of those instruments reflect the extent of involvement we have in particular classes of financial instruments. Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank used the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The commitments are principally tied to variable rates. Loan commitments as of September 30, 2017 and December 31, 2016 are as follows (in thousands): September 30, December 31, 2017 2016 Commitments to extend credit $ 605,419 $ 483,345 Financial guarantees – standby letters of credit 71,616 89,233 The Company sells residential mortgage loans to investors in the normal course of business. Residential mortgage loans sold to others are predominantly conventional residential first lien mortgages originated under our usual underwriting procedures, and are sold on a nonrecourse basis, primarily to government-sponsored enterprises (“GSEs”). The Company’s agreements to sell residential mortgage loans in the normal course of business usually require certain representations and warranties on the underlying loans sold, related to credit information, loan documentation, collateral, and insurability. Subsequent to being sold, if a material underwriting deficiency or documentation defect is discovered, the Company may be obligated to repurchase the loan or reimburse the GSEs for losses incurred. The make-whole requests and any related risk of loss under the representations and warranties are largely driven by borrower performance. The Company establishes a mortgage repurchase liability related to these events that reflect management’s estimate of losses on loans for which the Company could have a repurchase obligation based on a combination of factors. Such factors incorporate the volume of loans sold in 2017 and years prior, borrower default expectations, historical investor repurchase demand and appeals success rates, and estimated loss severity. Loans repurchased from investors are initially recorded at fair value, which becomes the Company’s new accounting basis. Any difference between the loan’s fair value and the outstanding principal amount is charged or credited to the mortgage repurchase liability, as appropriate. Subsequent to repurchase, such loans are carried in loans receivable. The Company incurred losses as a result of make-whole requests and loan repurchases totaling $17,000 for both the three and nine months ended September 30, 2017, and $83,000 for the nine months ended September 30, 2016. There were no losses incurred for the three months ended September 30, 2016. The liability for unresolved repurchase demands totaled $366,000 and $329,000 at September 30, 2017 and December 31, 2016, respectively. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2017 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | Note 19 – Segment Information Our business segments are defined as Banking, Commercial FHA Origination and Servicing, and Other. The reportable business segments are consistent with the internal reporting and evaluation of the principle lines of business of the Company. The banking segment provides a wide range of financial products and services to consumers and businesses, including commercial, commercial real estate, mortgage and other consumer loan products; commercial equipment leasing; mortgage loan sales and servicing; letters of credit; various types of deposit products, including checking, savings and time deposit accounts; merchant services; and corporate treasury management services. The commercial FHA origination and servicing segment provides for the origination and servicing of government sponsored mortgages for multifamily and healthcare facilities. The other segment includes the operating results of the parent company, our wealth management business unit, our captive insurance business unit, and the elimination of intercompany transactions. Wealth management activities consist of trust and fiduciary services, brokerage and retirement planning services. Selected business segment financial information as of and for the three and nine months ended September 30, 2017 and 2016 were as follows (in thousands): Commercial FHA Origination and Banking Servicing Other Total Three Months Ended September 30, 2017 Net interest income (expense) $ 38,598 $ (79) $ (1,754) $ 36,765 Provision for loan losses 1,489 — — 1,489 Noninterest income 8,571 3,966 2,866 15,403 Noninterest expense 42,425 3,910 2,028 48,363 Income (loss) before income taxes (benefit) 3,255 (23) (916) 2,316 Income taxes (benefit) 996 (9) (707) 280 Net income (loss) $ 2,259 $ (14) $ (209) $ 2,036 Total assets $ 4,370,600 $ 121,514 $ (144,353) $ 4,347,761 Three Months Ended September 30, 2016 Net interest income (expense) $ 28,394 $ 215 $ (1,344) $ 27,265 Provision for loan losses 1,392 — — 1,392 Noninterest income 9,714 3,557 1,666 14,937 Noninterest expense 23,640 3,511 1,506 28,657 Income (loss) before income taxes (benefit) 13,076 261 (1,184) 12,153 Income taxes (benefit) 4,573 104 (575) 4,102 Net income (loss) $ 8,503 $ 157 $ (609) $ 8,051 Total assets $ 3,252,421 $ 100,516 $ (105,210) $ 3,247,727 Commercial FHA Origination and Banking Servicing Other Total Nine Months Ended September 30, 2017 Net interest income (expense) $ 97,580 $ 325 $ (4,279) $ 93,626 Provision for loan losses 3,480 — — 3,480 Noninterest income 24,339 15,189 5,836 45,364 Noninterest expense 99,214 11,639 5,952 116,805 Income (loss) before income taxes (benefit) 19,225 3,875 (4,395) 18,705 Income taxes (benefit) 4,870 1,550 (1,780) 4,640 Net income (loss) $ 14,355 $ 2,325 $ (2,615) $ 14,065 Total assets $ 4,370,600 $ 121,514 $ (144,353) $ 4,347,761 Nine Months Ended September 30, 2016 Net interest income (expense) $ 82,939 $ 712 $ (4,357) $ 79,294 Provision for loan losses 3,146 — — 3,146 Noninterest income 21,347 19,212 1,013 41,572 Noninterest expense 69,784 12,203 5,212 87,199 Income (loss) before income taxes (benefit) 31,356 7,721 (8,556) 30,521 Income taxes (benefit) 9,348 3,088 (1,874) 10,562 Net income (loss) $ 22,008 $ 4,633 $ (6,682) $ 19,959 Total assets $ 3,252,421 $ 100,516 $ (105,210) $ 3,247,727 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2017 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | Note 20 – Related Party Transactions A member of our board of directors has an ownership interest in the office building located in Clayton, Missouri and three of the Bank’s full-service branch facilities. During the three and nine months ended September 30, 2017, the Company paid rent on these facilities of $166,000 and $553,000, respectively, and $165,000 and $540,000 for the comparable periods in 2016, respectively. A member of our board of directors is an executive and board member of a company we utilize for relationship and marketplace studies. During the nine months ended September 30, 2017, the Company paid $116,000 for these services. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2017 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | Note 21 – Subsequent Events On October 16, 2017, the Company announced that it had entered into a definitive agreement to acquire Alpine Bancorporation, Inc. (“Alpine”) for estimated total consideration of approximately $181.0 million, consisting of $33.3 million in cash (the “Cash Consideration”) and an aggregate of 4,463,200 shares of Midland common stock (the “Stock Consideration”). Alpine, the parent company of Alpine Bank & Trust is headquartered in Belvidere, Illinois, and operates 19 locations in northern Illinois. As of June 30, 2017, Alpine had total assets of $1.28 billion, gross loans of $830.2 million and total deposits of $1.14 billion. Under the terms of the definitive agreement, upon consummation of the transaction, holders of Alpine common stock will have the right to receive a pro rata share of the Cash Consideration and a pro rate share of the Stock Consideration, subject to potential adjustment based on Alpine’s tangible stockholders’ equity as of the month-end preceding the closing date. Based on an assumed value of $33.10 per share of Midland common stock, which was the closing price on NASDAQ on the trading day preceding the announcement of the transaction, the Company estimates the value of the total consideration will be $181.0 million, although the actual value of the total consideration will be higher or lower to the extent the trading price of Company common stock at closing differs from $33.10 per share. The transaction is expected to close during the first quarter of 2018, subject to the receipt of regulatory approvals, the approval of Alpine’s and the Company’s shareholders, and the satisfaction of other customary closing conditions. On October 13, 2017, the Company issued, through a private placement, $40.0 million aggregate principal amount of subordinated debentures with a maturity date of October 15, 2027. The subordinated debentures bear a fixed rate of interest of 6.25% for the first five years, payable semiannually in arrears beginning April 15, 2018, and a floating rate of interest equal to the three-month LIBOR plus 422.9 basis points thereafter, payable quarterly in arrears beginning January 15, 2023. The subordinated debentures will be redeemable by the Company, in whole or in part, on or after October 15, 2022, and are not subject to redemption at the option of the holders. The value of the subordinated debentures is expected to be reduced by approximately $0.6 million related to debt issuance costs, which will be amortized on a straight line basis through the maturity of the subordinated debentures. The subordinated debentures will be included in Tier 2 capital (with certain limitations applicable) under current regulatory guidelines and interpretations. |
BASIS OF PRESENTATION AND SUM30
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The consolidated financial statements of the Company are unaudited and should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (the “SEC”) on March 10, 2017. The consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) and conform to predominant practices within the banking industry. Management of the Company has made a number of estimates and assumptions related to the reporting of assets and liabilities to prepare the consolidated financial statements in conformity with GAAP. Actual results may differ from those estimates. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation of the results of operations for the interim periods presented herein, have been included. Certain reclassifications of 2016 amounts have been made to conform to the 2017 presentation. Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the parent company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Assets held for customers in a fiduciary or agency capacity, other than trust cash on deposit with the Bank, are not assets of the Company and, accordingly, are not included in the accompanying unaudited consolidated financial statements. The Company operates through its principal wholly owned banking subsidiary, Midland States Bank. The Bank operates through its branch banking offices and principal subsidiaries: Love Funding and Business Credit. Summary of Significant Accounting Policies Mortgage Servicing Rights Held for Sale. Mortgage servicing rights held for sale consist of residential mortgage servicing rights that management has committed to a plan to sell and has the ability to sell them to a buyer in their present condition. Mortgage servicing rights held for sale are carried at the lower of their carrying value or fair value less estimated costs to sell. Decreases in the valuation of mortgage servicing rights held for sale are included in loss on mortgage servicing rights held for sale in the consolidated statements of income. |
Impact of Recently Issued Accounting Standards | Impact of Recently Issued Accounting Standards FASB Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”; FASB ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”; FASB ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”; FASB ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”; FASB ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” – In May 2014, the Financial Accounting Standards Board (the “FASB”) amended existing guidance related to revenue from contracts with customers. This amendment supersedes and replaces nearly all existing revenue recognition guidance, including industry-specific guidance, establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. In addition, this amendment specifies the accounting for some costs to obtain or fulfill a contract with a customer. These amendments are effective for us for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that period. The Company’s revenue is primarily comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASU 2014-09. The Company has determined the result of applying ASU 2014-09 to the individual revenue streams affected, as well as on an aggregate basis, will not be material to the Company’s consolidated financial statements. The Company continues to evaluate the impact of the disclosure requirements associated with ASU 2014-09. FASB ASU 2016-02, “Leases (Topic 842)” – In February 2016, the FASB issued ASU No. 2016-02, “ Leases (Topic 842) .” This update revises the model to assess how a lease should be classified and provides guidance for lessees and lessors, when presenting right-of-use assets and lease liabilities on the balance sheet. This update is effective for us on January 1, 2019, with early adoption permitted. We have not yet decided whether we will early adopt the new standard. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available. The Company has developed a project plan for evaluating the provisions of the new lease standard, but has not yet determined the overall impact of the new guidance on the Company’s consolidated financial statements. The Company is continuing to evaluate the pending adoption of ASU 2016-02 and its impact on the Company’s consolidated financial statements. FASB ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” – In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The objective of this update is to improve financial reporting by providing timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will use forward-looking information to better understand their credit loss estimates. For public companies that are filers with the SEC, this update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application is permitted for any organization for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We have formed a committee that is assessing our data and system needs and are evaluating the impact of adopting the new guidance. While the Company generally expects to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, the Company cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the Company’s consolidated financial statements. The Company is continuing to evaluate the potential impact on the Company’s consolidated financial statements. FASB ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” – In August 2016, the FASB issued ASU No. 2016-15, “ Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which amends FASB Accounting Standards Codification (“ASC”) 230 to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. For public business entities, this update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early application is permitted for any organization in any interim period or fiscal year. The Company elected to early adopt the new guidance in the first quarter of 2017. Adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. FASB ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities” – In March 2017, the FASB issued ASU No. 2017-08, “ Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” This guidance shortens the amortization period for premiums on certain callable debt securities to the earliest call date, rather than contractual maturity date as currently required under GAAP. For public business entities, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application is permitted for any organization in any interim period or fiscal year. The Company elected to early adopt the new guidance in the first quarter of 2017. Adoption of the ASU did not have a material impact on the Company’s consolidated financial statements. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
ACQUISITIONS | |
Schedule of allocation of consideration | Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change, the consideration paid for the acquisition is allocated as follows (in thousands): Assets acquired: Cash and cash equivalents $ 42,461 Investment securities available for sale 149,013 Loans 681,870 Loans held for sale 531 Premises and equipment 17,147 Other real estate owned 4,759 Nonmarketable equity securities 8,168 Accrued interest receivable 2,376 Mortgage servicing rights 1,933 Intangible assets 11,070 Cash surrender value of life insurance policies 36,349 Deferred tax assets, net 33,461 Other assets 2,256 Total assets acquired 991,394 Liabilities assumed: Deposits 739,867 Short-term borrowings 14,434 FHLB advances and other borrowings 95,332 Trust preferred debentures 7,565 Accrued interest payable 275 Other liabilities 3,429 Total liabilities assumed 860,902 Net assets acquired 130,492 Goodwill 46,087 Total consideration paid $ 176,579 |
Schedule of acquired loan data | Acquired loan data for Centrue can be found in the table below (in thousands): Best Estimate at Acquisition Date of Fair Value Gross Contractual Contractual Cash of Acquired Loans Amounts Receivable Flows Not Expected at Acquisition Date at Acquisition Date to be Collected Acquired receivables subject to ASC 310-30 $ 13,352 $ 20,719 $ 5,256 Acquired receivables not subject to ASC 310-30 668,518 821,338 4,518 |
Schedule of unaudited pro-forma information | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Revenue (1) $ 52,168 $ 52,139 $ 156,851 $ 152,532 Net income 2,036 8,850 15,299 23,490 Diluted earnings per common share $ 0.10 $ 0.46 $ 0.71 $ 1.37 (1) Net interest income plus noninterest income |
INVESTMENT SECURITIES AVAILAB32
INVESTMENT SECURITIES AVAILABLE FOR SALE (Tables) - Available for sale | 9 Months Ended |
Sep. 30, 2017 | |
Schedule of Available-for-sale Securities [Line Items] | |
Schedule of investment securities classified as available for sale | Investment securities classified as available for sale as of September 30, 2017 and December 31, 2016 are as follows (in thousands): September 30, 2017 Gross Gross Amortized unrealized unrealized Fair cost gains losses value U.S. Treasury securities $ 47,979 $ — $ 72 $ 47,907 Government sponsored entity debt securities 19,290 104 5 19,389 Agency mortgage-backed securities 229,382 1,103 631 229,854 State and municipal securities 39,385 376 45 39,716 Corporate securities 56,404 1,070 167 57,307 Equity securities 2,705 115 8 2,812 Total $ 395,145 $ 2,768 $ 928 $ 396,985 December 31, 2016 Gross Gross Amortized unrealized unrealized Fair cost gains losses value U.S. Treasury securities $ 75,973 $ — $ 72 $ 75,901 Government sponsored entity debt securities 7,653 57 22 7,688 Agency mortgage-backed securities 90,629 373 932 90,070 Non-agency mortgage-backed securities 1 — — 1 State and municipal securities 25,826 15 567 25,274 Corporate securities 47,443 403 441 47,405 Total $ 247,525 $ 848 $ 2,034 $ 246,339 |
Schedule of unrealized losses and fair values for investment securities | Unrealized losses and fair values for investment securities available for sale as of September 30, 2017 and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are summarized as follows (in thousands): September 30, 2017 Less than 12 Months 12 Months or more Total Fair Unrealized Fair Unrealized Fair Unrealized value loss value loss value loss U.S. Treasury securities $ 42,936 $ 47 $ 4,971 $ 25 $ 47,907 $ 72 Government sponsored entity debt securities 6,467 5 — — 6,467 5 Agency mortgage-backed securities 50,978 370 10,569 261 61,547 631 State and municipal securities 4,609 14 2,569 31 7,178 45 Corporate securities 4,957 52 5,412 115 10,369 167 Equity securities 2,606 8 — — 2,606 8 Total $ 112,553 $ 496 $ 23,521 $ 432 $ 136,074 $ 928 December 31, 2016 Less than 12 Months 12 Months or more Total Fair Unrealized Fair Unrealized Fair Unrealized value loss value loss value loss U.S. Treasury securities $ 75,901 $ 72 $ — $ — $ 75,901 $ 72 Government sponsored entity debt securities 4,107 22 — — 4,107 22 Agency mortgage-backed securities 57,882 930 402 2 58,284 932 State and municipal securities 20,215 567 — — 20,215 567 Corporate securities 11,111 334 8,312 107 19,423 441 Total $ 169,216 $ 1,925 $ 8,714 $ 109 $ 177,930 $ 2,034 |
Contractual maturity of amortized cost and fair value | Amortized Fair cost value Debt securities: Within one year $ 37,340 $ 37,307 After one year through five years 235,754 236,319 After five years through ten years 102,922 104,113 After ten years 16,424 16,434 Equity securities 2,705 2,812 Total $ 395,145 $ 396,985 |
INVESTMENT SECURITIES HELD TO33
INVESTMENT SECURITIES HELD TO MATURITY (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Schedule of Held-to-maturity Securities [Line Items] | |
Schedule of investment securities classified as held to maturity | Investment securities classified as held to maturity as of September 30, 2017 and December 31, 2016 are as follows (in thousands): September 30, 2017 Gross Gross Amortized unrecognized unrecognized Fair cost gains losses value State and municipal securities $ 70,867 $ 4,381 $ 106 $ 75,142 December 31, 2016 Gross Gross Amortized unrecognized unrecognized Fair cost gains losses value State and municipal securities $ 78,672 $ 3,517 $ 237 $ 81,952 |
Held to maturity | |
Schedule of Held-to-maturity Securities [Line Items] | |
Schedule of unrealized losses and fair values for investment securities | Unrecognized losses and fair value for investment securities held to maturity as of September 30, 2017 and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrecognized loss position, are summarized as follows (in thousands): September 30, 2017 Less than 12 Months 12 Months or more Total Fair Unrecognized Fair Unrecognized Fair Unrecognized value loss value loss value loss State and municipal securities $ 3,343 $ 32 $ 3,490 $ 74 $ 6,833 $ 106 December 31, 2016 Less than 12 Months 12 Months or more Total Fair Unrecognized Fair Unrecognized Fair Unrecognized value loss value loss value loss State and municipal securities $ 13,991 $ 140 $ 2,699 $ 97 $ 16,690 $ 237 |
Contractual maturity of amortized cost and fair value | The amortized cost and fair value of investment securities held to maturity as of September 30, 2017, by contractual maturity, are as follows (in thousands): Amortized Fair cost value Within one year $ 871 $ 877 After one year through five years 19,055 19,709 After five years through ten years 35,164 38,478 After ten years 15,777 16,078 Total $ 70,867 $ 75,142 |
LOANS (Tables)
LOANS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
LOANS | |
Summary of loans | The following table presents total loans outstanding by portfolio, which includes non-purchased credit impaired (“Non-PCI”) loans and purchased credit impaired (“PCI”) loans, as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Non-PCI PCI Non-PCI PCI Loans Loans (1) Total Loans Loans (1) Total Loans: Commercial $ 510,457 $ 3,087 $ 513,544 $ 454,310 $ 3,517 $ 457,827 Commercial real estate 1,456,620 15,664 1,472,284 963,895 5,720 969,615 Construction and land development 181,763 750 182,513 165,175 12,150 177,325 Total commercial loans 2,148,840 19,501 2,168,341 1,583,380 21,387 1,604,767 Residential real estate 438,973 6,774 445,747 247,156 6,557 253,713 Consumer 342,863 175 343,038 269,705 312 270,017 Lease financing 200,846 — 200,846 191,479 — 191,479 Total loans $ 3,131,522 $ 26,450 $ 3,157,972 $ 2,291,720 $ 28,256 $ 2,319,976 (1) The unpaid principal balance for PCI loans totaled $38.9 million and $34.6 million as of September 30, 2017 and December 31, 2016, respectively. |
Summary of recorded investment (excluding PCI loans) by risk category | The following table presents the recorded investment of the commercial loan portfolio (excluding PCI loans) by risk category as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Commercial Construction Commercial Construction Real and Land Real and Land Commercial Estate Development Total Commercial Estate Development Total Acceptable credit quality $ 474,513 $ 1,408,398 $ 174,115 $ 2,057,026 $ 426,560 $ 925,244 $ 159,702 $ 1,511,506 Special mention 16,543 9,121 — 25,664 10,930 8,735 — 19,665 Substandard 17,695 13,639 — 31,334 12,649 21,178 450 34,277 Substandard – nonaccrual 1,469 21,454 — 22,923 3,559 7,145 21 10,725 Doubtful — — — — — — — — Not graded 237 4,008 7,648 11,893 612 1,593 5,002 7,207 Total (excluding PCI) $ 510,457 $ 1,456,620 $ 181,763 $ 2,148,840 $ 454,310 $ 963,895 $ 165,175 $ 1,583,380 The Company evaluates the credit quality of its other loan portfolio based primarily on the aging status of the loan and payment activity. Accordingly, loans on nonaccrual status, any loan past due 90 days or more and still accruing interest, and loans modified under troubled debt restructurings are considered to be impaired for purposes of credit quality evaluation. The following table presents the recorded investment of our other loan portfolio (excluding PCI loans) based on the credit risk profile of loans that are performing and loans that are impaired as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Residential Lease Residential Lease Real Estate Consumer Financing Total Real Estate Consumer Financing Total Performing $ 433,653 $ 342,586 $ 199,784 $ 976,023 $ 242,127 $ 269,492 $ 190,148 $ 701,767 Impaired 5,320 277 1,062 6,659 5,029 213 1,331 6,573 Total (excluding PCI) $ 438,973 $ 342,863 $ 200,846 $ 982,682 $ 247,156 $ 269,705 $ 191,479 $ 708,340 |
Summary of impaired loans (excluding PCI loans) | A summary of impaired loans (excluding PCI loans) as of September 30, 2017 and December 31, 2016 is as follows (in thousands): September 30, December 31, 2017 2016 Nonaccrual loans: Commercial $ 1,469 $ 3,559 Commercial real estate 21,454 7,145 Construction and land development — 21 Residential real estate 4,355 4,629 Consumer 273 187 Lease financing 1,062 1,330 Total nonaccrual loans 28,613 16,871 Accruing loans contractually past due 90 days or more as to interest or principal payments: Commercial 2,212 2,378 Commercial real estate — — Construction and land development 45 — Residential real estate 193 — Consumer 4 26 Lease financing — 1 Total accruing loans contractually past due 90 days or more as to interest or principal payments 2,454 2,405 Loans modified under troubled debt restructurings and still accruing: Commercial 319 611 Commercial real estate 1,214 11,253 Construction and land development 59 63 Residential real estate 772 400 Consumer — — Lease financing — — Total loans modified under troubled debt restructurings and still accruing 2,364 12,327 Total impaired loans (excluding PCI) $ 33,431 $ 31,603 There was no interest income recognized on nonaccrual loans during the three and nine months ended September 30, 2017 and 2016 while the loans were in nonaccrual status. Additional interest income that would have been recorded on nonaccrual loans had they been current in accordance with their original terms was $124,000 and $532,000 for the three and nine months ended September 30, 2017, respectively, and $243,000 and $484,000 for the three and nine months ended September 30, 2016, respectively. The Company recognized interest income on commercial and commercial real estate loans modified under troubled debt restructurings of $40,000 and $59,000 for the three and nine months ended September 30, 2017, respectively, and $90,000 and $196,000 for the comparable periods in 2016, respectively. The following table presents impaired loans (excluding PCI loans) by portfolio and related valuation allowance as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Unpaid Related Unpaid Related Recorded Principal Valuation Recorded Principal Valuation Investment Balance Allowance Investment Balance Allowance Impaired loans with a valuation allowance: Commercial $ 3,047 $ 3,111 $ 500 $ 3,877 $ 3,888 $ 882 Commercial real estate 16,454 17,540 3,570 2,142 2,331 309 Construction and land development 104 104 10 84 84 8 Residential real estate 3,056 3,634 490 3,735 4,404 604 Consumer 277 289 31 213 190 23 Lease financing 757 757 186 1,331 1,331 356 Total impaired loans with a valuation allowance 23,695 25,435 4,787 11,382 12,228 2,182 Impaired loans with no related valuation allowance: Commercial 953 5,874 — 2,671 7,567 — Commercial real estate 6,214 8,291 — 16,256 17,058 — Construction and land development — 813 — — — — Residential real estate 2,264 2,500 — 1,294 1,462 — Consumer — — — — 26 — Lease financing 305 305 — — — — Total impaired loans with no related valuation allowance 9,736 17,783 — 20,221 26,113 — Total impaired loans: Commercial 4,000 8,985 500 6,548 11,455 882 Commercial real estate 22,668 25,831 3,570 18,398 19,389 309 Construction and land development 104 917 10 84 84 8 Residential real estate 5,320 6,134 490 5,029 5,866 604 Consumer 277 289 31 213 216 23 Lease financing 1,062 1,062 186 1,331 1,331 356 Total impaired loans (excluding PCI) $ 33,431 $ $ 4,787 $ 31,603 $ 38,341 $ 2,182 The difference between a loan’s recorded investment and the unpaid principal balance represents: (1) a partial charge-off resulting from a confirmed loss due to the value of the collateral securing the loan being below the loan’s principal balance and management’s assessment that the full collection of the loan balance is not likely and/or (2) payments received on nonaccrual loans that are fully applied to principal on the loan’s recorded investment as compared to being applied to principal and interest on the unpaid customer principal and interest balance. The difference between the recorded investment and the unpaid principal balance on loans was $9.8 million and $6.7 million at September 30, 2017 and December 31, 2016, respectively. The average balance of impaired loans (excluding PCI loans) and interest income recognized on impaired loans during the three months ended September 30, 2017 and 2016 are included in the table below (in thousands): Three Months Ended September 30, 2017 2016 Interest Income Interest Income Average Recognized Average Recognized Recorded While on Recorded While on Investment Impaired Status Investment Impaired Status Impaired loans with a valuation allowance: Commercial $ 3,054 $ 6 $ 6,426 $ 23 Commercial real estate 16,243 34 2,170 65 Construction and land development 104 2 65 3 Residential real estate 3,090 9 3,157 13 Consumer 289 — 115 — Lease financing 757 — 727 — Total impaired loans with a valuation allowance 23,537 51 12,660 104 Impaired loans with no related valuation allowance: Commercial 2,912 — 439 2 Commercial real estate 6,238 — 15,610 — Construction and land development — — — — Residential real estate 2,276 2 1,341 1 Consumer — — 91 — Lease financing 305 — — — Total impaired loans with no related valuation allowance 11,731 2 17,481 3 Total impaired loans: Commercial 5,966 6 6,865 25 Commercial real estate 22,481 34 17,780 65 Construction and land development 104 2 65 3 Residential real estate 5,366 11 4,498 14 Consumer 289 — 206 — Lease financing 1,062 — 727 — Total impaired loans (excluding PCI) $ 35,268 $ 53 $ 30,141 $ 107 The average balance of impaired loans (excluding PCI loans) and interest income recognized on impaired loans during the nine months ended September 30, 2017 and 2016 are included in the table below (in thousands): Nine Months Ended September 30, 2017 2016 Interest Income Interest Income Average Recognized Average Recognized Recorded While on Recorded While on Investment Impaired Status Investment Impaired Status Impaired loans with a valuation allowance: Commercial $ 3,068 $ 8 $ 8,115 $ 24 Commercial real estate 16,808 51 2,273 115 Construction and land development 106 3 66 6 Residential real estate 3,032 12 3,234 24 Consumer 311 — 118 — Lease financing 757 — 727 — Total impaired loans with a valuation allowance 24,082 74 14,533 169 Impaired loans with no related valuation allowance: Commercial 3,199 — 313 1 Commercial real estate 6,332 — 15,742 56 Construction and land development — — — — Residential real estate 2,174 3 1,364 3 Consumer — — 91 — Lease financing 305 — — — Total impaired loans with no related valuation allowance 12,010 3 17,510 60 Total impaired loans: Commercial 6,267 8 8,428 25 Commercial real estate 23,140 51 18,015 171 Construction and land development 106 3 66 6 Residential real estate 5,206 15 4,598 27 Consumer 311 — 209 — Lease financing 1,062 — 727 — Total impaired loans (excluding PCI) $ 36,092 $ 77 $ 32,043 $ 229 |
Summary of aging status of recorded investments in loans by portfolio (excluding PCI loans) | The following table presents the aging status of the recorded investment in loans by portfolio (excluding PCI loans) as of September 30, 2017 (in thousands): Accruing Loans 30-59 60-89 Past Due Days Days 90 Days Nonaccrual Total Total Past Due Past Due or More Loans Past Due Current Loans Commercial $ 3,395 $ 2,161 $ 2,212 $ 1,469 $ 9,237 $ 501,220 $ 510,457 Commercial real estate 364 1,044 — 21,454 22,862 1,433,758 1,456,620 Construction and land development 115 67 45 — 227 181,536 181,763 Residential real estate 2,271 228 193 4,355 7,047 431,926 438,973 Consumer 2,055 1,228 4 273 3,560 339,303 342,863 Lease financing 598 — — 1,062 1,660 199,186 200,846 Total (excluding PCI) $ 8,798 $ 4,728 $ 2,454 $ 28,613 $ 44,593 $ 3,086,929 $ 3,131,522 The following table presents the aging status of the recorded investment in loans by portfolio (excluding PCI loans) as of December 31, 2016 (in thousands): Accruing Loans 30-59 60-89 Past Due Days Days 90 Days Nonaccrual Total Total Past Due Past Due or More Loans Past Due Current Loans Commercial $ 3,326 $ 138 $ 2,378 $ 3,559 $ 9,401 $ 444,909 $ 454,310 Commercial real estate 648 787 — 7,145 8,580 955,315 963,895 Construction and land development — — — 21 21 165,154 165,175 Residential real estate 3,472 13 — 4,629 8,114 239,042 247,156 Consumer 1,701 588 26 187 2,502 267,203 269,705 Lease financing 94 — 1 1,330 1,425 190,054 191,479 Total (excluding PCI) $ 9,241 $ 1,526 $ 2,405 $ 16,871 $ 30,043 $ 2,261,677 $ 2,291,720 |
Summary of TDRs loans | The following table presents TDRs by loan portfolio (excluding PCI loans) as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Accruing (1) Non-accrual (2) Total Accruing (1) Non-accrual (2) Total Commercial $ 319 $ — $ 319 $ 611 $ — $ 611 Commercial real estate 1,214 14,812 16,026 11,253 5,098 16,351 Construction and land development 59 — 59 63 — 63 Residential real estate 772 614 1,386 400 527 927 Consumer — — — — — — Lease financing — — — — — — Total loans (excluding PCI) $ 2,364 $ 15,426 $ 17,790 $ 12,327 $ 5,625 $ 17,952 (1) These loans are still accruing interest. (2) These loans are included in non-accrual loans in the preceding tables. The following table presents a summary of loans by portfolio that were restructured during the three and nine months ended September 30, 2017 and the loans by portfolio that were modified as TDRs within the previous twelve months that subsequently defaulted during the three and nine months ended September 30, 2017 (dollars in thousands): Commercial Loan Portfolio Other Loan Portfolio Commercial Construction Residential Real and Land Real Lease Commercial Estate Development Estate Consumer Financing Total For the Three Months Ended September 30, 2017: Troubled debt restructurings: Number of loans — — — 1 — — 1 Pre-modification outstanding balance $ — $ — $ — $ 91 $ — $ — $ 91 Post-modification outstanding balance — — — 90 — — 90 Troubled debt restructurings that subsequently defaulted Number of loans — — — — — — — Recorded balance $ — $ — $ — $ — $ — $ — $ — For the Nine Months Ended September 30, 2017: Troubled debt restructurings: Number of loans 1 — — 3 — — 4 Pre-modification outstanding balance $ 362 $ — $ — $ 475 $ — $ — $ 837 Post-modification outstanding balance 339 — — 474 — — 813 Troubled debt restructurings that subsequently defaulted Number of loans — — — — — — — Recorded balance $ — $ — $ — $ — $ — $ — $ — The following table presents a summary of loans by portfolio that were restructured during the three and nine months ended September 30, 2016 and the loans by portfolio that were modified as TDRs within the previous twelve months that subsequently defaulted during the three and nine months ended September 30, 2016 (dollars in thousands): Commercial Loan Portfolio Other Loan Portfolio Commercial Construction Residential Real and Land Real Lease Commercial Estate Development Estate Consumer Financing Total For the Three Months Ended September 30, 2016: Troubled debt restructurings: Number of loans — 2 — — — — 2 Pre-modification outstanding balance $ — $ 10,207 $ — $ — $ — $ — $ 10,207 Post-modification outstanding balance — 10,207 — — — — 10,207 Troubled debt restructurings that subsequently defaulted Number of loans — — — — — — — Recorded balance $ — $ — $ — $ — $ — $ — $ — For the Nine Months Ended September 30, 2016: Troubled debt restructurings: Number of loans 3 2 — — — — 5 Pre-modification outstanding balance $ 685 $ 10,207 $ — $ — $ — $ — $ 10,892 Post-modification outstanding balance 647 10,207 — — — — 10,854 Troubled debt restructurings that subsequently defaulted Number of loans — — — — — — — Recorded balance $ — $ — $ — $ — $ — $ — $ — |
Summary of changes in accretable yield for PCI loans | Accretable yield of PCI loans, or income expected to be collected, is as follows (in thousands): Nine Months Ended September 30, 2017 2016 Balance, beginning of period $ 9,035 $ 10,526 New loans purchased – Centrue acquisition 2,111 — Accretion (4,276) (7,066) Other adjustments (including maturities, charge-offs and impact of changes in timing of expected cash flows) (1,558) (96) Reclassification from non-accretable 1,519 4,302 Balance, end of period $ 6,831 $ 7,666 |
Summary of changes in allowance for loan losses | Changes in the allowance for loan losses for the three and nine months ended September 30, 2017 and 2016 are as follows (in thousands): Three Months Ended September 30, 2017 2016 Non-PCI PCI Non-PCI PCI Loans Loans Total Loans Loans Total Balance, beginning of period $ 14,037 $ 1,387 $ 15,424 $ 13,629 $ 1,123 $ 14,752 Provision for loan losses 1,435 54 1,489 1,156 236 1,392 Loan charge-offs (335) — (335) (806) (58) (864) Loan recoveries 278 5 283 250 29 279 Net loan (charge-offs) recoveries (57) 5 (52) (556) (29) (585) Balance, end of period $ 15,415 $ 1,446 $ 16,861 $ 14,229 $ 1,330 $ 15,559 Nine Months Ended September 30, 2017 2016 Non-PCI PCI Non-PCI PCI Loans Loans Total Loans Loans Total Balance, beginning of period $ 13,744 $ 1,118 $ 14,862 $ 14,093 $ 1,895 $ 15,988 Provision for loan losses 3,260 220 3,480 3,752 (606) 3,146 Loan charge-offs (2,856) — (2,856) (4,228) (58) (4,286) Loan recoveries 1,267 108 1,375 612 99 711 Net loan (charge-offs) recoveries (1,589) 108 (1,481) (3,616) 41 (3,575) Balance, end of period $ 15,415 $ 1,446 $ 16,861 $ 14,229 $ 1,330 $ 15,559 |
Summary of changes in allowance for loan losses, by loan portfolio | The following table represents, by loan portfolio, a summary of changes in the allowance for loan losses for the three and nine months ended September 30, 2017 and 2016 (in thousands): Commercial Loan Portfolio Other Loan Portfolio Commercial Construction Residential Real and Land Real Lease Commercial Estate Development Estate Consumer Financing Total Changes in allowance for loan losses for the three months ended September 30, 2017: Beginning balance $ 5,381 $ 3,996 $ 147 $ 3,377 $ 1,385 $ 1,138 $ 15,424 Provision for loan losses (745) 2,715 55 (433) (92) (11) 1,489 Charge-offs — — — (128) (105) (102) (335) Recoveries 54 56 13 47 81 32 283 Ending balance $ 4,690 $ 6,767 $ 215 $ 2,863 $ 1,269 $ 1,057 $ 16,861 Changes in allowance for loan losses for the three months ended September 30, 2016: Beginning balance $ 6,186 $ 3,511 $ 569 $ 2,584 $ 827 $ 1,075 $ 14,752 Provision for loan losses 1,216 (12) (271) 220 326 (87) 1,392 Charge-offs (251) (214) (1) (153) (91) (154) (864) Recoveries 36 129 13 32 20 49 279 Ending balance $ 7,187 $ 3,414 $ 310 $ 2,683 $ 1,082 $ 883 $ 15,559 Changes in allowance for loan losses for the nine months ended September 30, 2017: Beginning balance $ 5,920 $ 3,225 $ 345 $ 2,929 $ 930 $ 1,513 $ 14,862 Provision for loan losses (630) 3,577 (178) 113 678 (80) 3,480 Charge-offs (737) (470) — (455) (536) (658) (2,856) Recoveries 137 435 48 276 197 282 1,375 Ending balance $ 4,690 $ 6,767 $ 215 $ 2,863 $ 1,269 $ 1,057 $ 16,861 Changes in allowance for loan losses for the nine months ended September 30, 2016: Beginning balance $ 6,917 $ 5,179 $ 435 $ 2,120 $ 749 $ 588 $ 15,988 Provision for loan losses 2,619 (1,520) (154) 886 479 836 3,146 Charge-offs (2,513) (461) (1) (454) (225) (632) (4,286) Recoveries 164 216 30 131 79 91 711 Ending balance $ 7,187 $ 3,414 $ 310 $ 2,683 $ 1,082 $ 883 $ 15,559 The following table represents, by loan portfolio, details regarding the balance in the allowance for loan losses and the recorded investment in loans as of September 30, 2017 and December 31, 2016 by impairment evaluation method (in thousands): Commercial Loan Portfolio Other Loan Portfolio Commercial Construction Residential Real and Land Real Lease Commercial Estate Development Estate Consumer Financing Total September 30, 2017: Allowance for loan losses: Loans individually evaluated for impairment $ 212 $ 3,549 $ 5 $ 248 $ — $ 115 $ 4,129 Loans collectively evaluated for impairment 288 21 5 242 31 71 658 Non-impaired loans collectively evaluated for impairment 3,702 2,872 204 1,893 1,086 871 10,628 Loans acquired with deteriorated credit quality (1) 488 325 1 480 152 — 1,446 Total allowance for loan losses $ 4,690 $ 6,767 $ 215 $ 2,863 $ 1,269 $ 1,057 $ 16,861 Recorded investment (loan balance): Impaired loans individually evaluated for impairment $ 1,384 $ 22,482 $ 59 $ 3,124 $ — $ 420 $ 27,469 Impaired loans collectively evaluated for impairment 2,616 186 45 2,196 277 642 5,962 Non-impaired loans collectively evaluated for impairment 506,457 1,433,952 181,659 433,653 342,586 199,784 3,098,091 Loans acquired with deteriorated credit quality (1) 3,087 15,664 750 6,774 175 — 26,450 Total recorded investment (loan balance) $ 513,544 $ 1,472,284 $ 182,513 $ 445,747 $ 343,038 $ 200,846 $ 3,157,972 December 31, 2016: Allowance for loan losses: Loans individually evaluated for impairment $ 878 $ 296 $ 6 $ 379 $ — $ 285 $ 1,844 Loans collectively evaluated for impairment 4 13 2 225 23 71 338 Non-impaired loans collectively evaluated for impairment 4,539 2,684 337 1,968 877 1,157 11,562 Loans acquired with deteriorated credit quality (1) 499 232 — 357 30 — 1,118 Total allowance for loan losses $ 5,920 $ 3,225 $ 345 $ 2,929 $ 930 $ 1,513 $ 14,862 Recorded investment (loan balance): Impaired loans individually evaluated for impairment $ 6,504 $ 18,275 $ 63 $ 2,920 $ — $ 670 $ 28,432 Impaired loans collectively evaluated for impairment 44 123 21 2,109 213 661 3,171 Non-impaired loans collectively evaluated for impairment 447,762 945,497 165,091 242,127 269,492 190,148 2,260,117 Loans acquired with deteriorated credit quality (1) 3,517 5,720 12,150 6,557 312 — 28,256 Total recorded investment (loan balance) $ 457,827 $ 969,615 $ 177,325 $ 253,713 $ 270,017 $ 191,479 $ 2,319,976 Loans acquired with deteriorated credit quality were originally recorded at fair value at the acquisition date and the risk of credit loss was recognized at that date based on estimates of expected cash flows. |
MORTGAGE SERVICING RIGHTS (Tabl
MORTGAGE SERVICING RIGHTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
MORTGAGE SERVICING RIGHTS | |
Schedule of other mortgage notes serviced and changes in our mortgage servicing rights | A summary of mortgage loans serviced for others as of September 30, 2017 and December 31, 2016 is as follows (in thousands): September 30, December 31, 2017 2016 Commercial FHA mortgage loans $ 3,895,455 $ 3,811,066 Residential mortgage loans 2,053,933 1,833,443 Total loans serviced for others $ 5,949,388 $ 5,644,509 Changes in our mortgage servicing rights were as follows for the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Mortgage servicing rights: Balance, beginning of period $ 75,705 $ 68,395 $ 71,710 $ 67,218 Servicing rights acquired – residential mortgage loans — — 1,933 — Servicing rights transferred to held for sale - residential mortgage loans (16,229) — (16,229) — Servicing rights capitalized – commercial FHA mortgage loans 1,432 3,506 5,020 5,777 Servicing rights capitalized – residential mortgage loans 435 1,125 1,656 2,764 Amortization – commercial FHA mortgage loans (650) (592) (1,928) (1,741) Amortization – residential mortgage loans (857) (1,085) (2,326) (2,669) Balance, end of period 59,836 71,349 59,836 71,349 Valuation allowances: Balance, beginning of period 5,428 5,587 3,702 567 Additions 104 1,073 1,942 6,301 Reductions — — (112) (208) Servicing rights transferred to held for sale - residential mortgage loans (1,995) — (1,995) — Balance, end of period 3,537 6,660 3,537 6,660 Mortgage servicing rights, net $ 56,299 $ 64,689 $ 56,299 $ 64,689 Fair value: At beginning of period $ 70,277 $ 62,960 $ 68,008 $ 66,700 At end of period $ 56,299 $ 64,689 $ 56,299 $ 64,689 |
Schedule of summary of key assumptions | Remaining Servicing Interest Years to Prepayment Servicing Discount Fee Rate Maturity Rate Cost Rate September 30, 2017: Commercial FHA mortgage loans 0.13 % 3.67 % 30.3 8.25 % $ 1,000 10 - 12 % Residential mortgage loans 0.26 % 3.93 % 22.6 11.52 % $ 67 9 - 11 % December 31, 2016: Commercial FHA mortgage loans 0.13 % 3.72 % 30.2 8.31 % $ 1,000 10 - 13 % Residential mortgage loans 0.26 % 3.89 % 24.2 9.72 % $ 60 9 - 11 % |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
GOODWILL AND INTANGIBLE ASSETS | |
Schedule of intangible assets | The Company’s intangible assets, consisting of core deposit and customer relationship intangibles, as of September 30, 2017 and December 31, 2016 are summarized as follows (in thousands): September 30, 2017 December 31, 2016 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Total Amount Amortization Total Core deposit intangibles $ 31,612 $ (17,998) $ 13,614 $ 20,542 $ (16,181) $ 4,361 Customer relationship intangibles 7,471 (3,119) 4,352 5,471 (2,645) 2,826 Total intangible assets $ 39,083 $ (21,117) $ 17,966 $ 26,013 $ (18,826) $ 7,187 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
DERIVATIVE INSTRUMENTS | |
Schedule of derivative instruments, fair value and notional amounts | The following table summarizes the interest rate lock commitments and forward commitments to sell mortgage-backed securities held by the Company, their notional amount, estimated fair values and the location in which the derivative instruments are reported in the consolidated balances sheets at September 30, 2017 and December 31, 2016 (in thousands): Notional Amount Fair Value Gain September 30, December 31, September 30, December 31, 2017 2016 2017 2016 Derivative Instruments (included in Other Assets): Interest rate lock commitments $ 337,280 $ 264,359 $ 6,421 $ 6,253 Forward commitments to sell mortgage-backed securities 349,945 301,788 5 125 Total $ 687,225 $ 566,147 $ 6,426 $ 6,378 |
DEPOSITS (Tables)
DEPOSITS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Deposits [Abstract] | |
Schedule Of interest and non interest bearing deposits | The following table summarizes the classification of deposits as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, 2017 2016 Noninterest-bearing demand $ 674,118 $ 562,333 Interest-bearing: Checking 800,649 656,248 Money market 633,844 399,851 Savings 278,977 166,910 Time 726,879 619,024 Total deposits $ 3,114,467 $ 2,404,366 |
SHORT-TERM BORROWINGS (Tables)
SHORT-TERM BORROWINGS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
SHORT-TERM BORROWINGS | |
Schedule of short term borrowings | The following table presents the distribution of short-term borrowings and related weighted average interest rates as of and for the nine months ended September 30, 2017 and as of and for the year ended December 31, 2016 (in thousands): Repurchase Agreements September 30, December 31, 2017 2016 Outstanding at period-end $ 153,443 $ 131,557 Average amount outstanding 157,388 130,228 Maximum amount outstanding at any month end 183,327 168,369 Weighted average interest rate: During period 0.22 % 0.23 % End of period 0.23 % 0.21 % |
FHLB ADVANCES AND OTHER BORRO40
FHLB ADVANCES AND OTHER BORROWINGS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
FHLB ADVANCES AND OTHER BORROWINGS | |
Schedule of Federal Home Loan Bank (FHLB) advances | The following table summarizes our Federal Home Loan Bank (“FHLB”) advances and other borrowings as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, 2017 2016 Midland States Bancorp, Inc. Term loan - variable interest rate equal to LIBOR plus 2.25%, which was 3.50% at September 30, 2017 – maturing through May 25, 2020 $ 38,539 $ — Series G redeemable preferred stock - 181 shares at $1,000 per share 181 — Midland States Bank FHLB advances – fixed rate, fixed term of $176.0 million and $112.5 million, at rates averaging 1.28% and 1.00% at September 30, 2017 and December 31, 2016, respectively – maturing through June 2021, and putable fixed rate of $235.0 million and $125.0 million at rates averaging 1.10% and 0.79% at September 30, 2017 and December 31, 2016, respectively, – maturing through August 2023 with call provisions through June 2019 411,144 237,500 FHLB advances – variable rate, fixed term, at rates averaging 0.85% at September 30, 2017 – maturing through March 2018 39,000 — Other 6 18 Total FHLB advances and other borrowings $ 488,870 $ 237,518 |
SUBORDINATED DEBT (Tables)
SUBORDINATED DEBT (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
SUBORDINATED DEBT | |
Schedule of summary of company's subordinated debt | The following table summarizes the Company’s subordinated debt as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, 2017 2016 Subordinated debt issued June 2015 – fixed interest rate of 6.00% for the first five years through June 2020 and a variable interest rate equivalent to three month LIBOR plus 4.35% thereafter, $40,325 maturing June 18, 2025 $ 39,783 $ 39,729 Subordinated debt issued June 2015 – fixed interest rate of 6.50%, $15,000 maturing June 18, 2025 14,798 14,779 Total subordinated debt $ 54,581 $ 54,508 |
TRUST PREFERRED DEBENTURES (Tab
TRUST PREFERRED DEBENTURES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
TRUST PREFERRED DEBENTURES. | |
Summary of trust preferred debentures | The following table summarizes the Company’s trust preferred debentures as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, 2017 2016 Grant Park Statutory Trust I – variable interest rate equal to LIBOR plus 2.85%, which was 4.16% and 3.74%, at September 30, 2017 and December 31, 2016, respectively – $3,000 maturing January 23, 2034 $ 2,043 $ 1,996 Midland States Preferred Securities Trust – variable interest rate equal to LIBOR plus 2.75%, which was 4.06% and 3.63% at September 30, 2017 and December 31, 2016, respectively – $10,000 maturing April 23, 2034 9,959 9,957 Love Savings/Heartland Capital Trust III – variable interest rate equal to LIBOR plus 1.75%, which was 3.07% and 2.71% at September 30, 2017 and December 31, 2016, respectively – $20,000 maturing December 31, 2036 13,253 13,141 Love Savings/Heartland Capital Trust IV – variable interest rate equal to LIBOR plus 1.47%, which was 2.79% and 2.42% at September 30, 2017 and December 31, 2016, respectively – $20,000 maturing September 6, 2037 12,425 12,311 Centrue Statutory Trust II - variable interest rate equal to LIBOR plus 2.65%, which was 3.97% at September 30, 2017 - $10,000 maturing June 17, 2034 7,587 — Total trust preferred debentures $ 45,267 $ 37,405 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share | |
Schedule of basic and diluted earnings per common share | Presented below are the calculations for basic and diluted earnings per common share for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands, except per share data): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Net income $ 2,036 $ 8,051 $ 14,065 $ 19,959 Preferred stock dividends (83) — (102) Amortization of preferred stock premium 56 — 56 — Net income available to common equity 2,009 8,051 14,019 19,959 Common shareholder dividends (3,818) (2,773) (10,100) (7,022) Unvested restricted stock award dividends (19) (12) (59) (35) Undistributed earnings to unvested restricted stock awards — (26) (21) (69) Undistributed earnings to common shareholders $ (1,828) $ 5,240 $ 3,839 $ 12,833 Basic Distributed earnings to common shareholders $ 3,818 $ 2,773 $ 10,100 $ 7,022 Undistributed earnings to common shareholders (1,828) 5,240 3,839 12,833 Total common shareholders earnings, basic $ 1,990 $ 8,013 $ 13,939 $ 19,855 Diluted Distributed earnings to common shareholders $ 3,818 $ 2,773 $ 10,100 $ 7,022 Undistributed earnings to common shareholders (1,828) 5,240 3,839 12,833 Total common shareholders earnings 1,990 8,013 13,939 19,855 Add back: Undistributed earnings reallocated from unvested restricted stock awards — — 1 1 Total common shareholders earnings, diluted $ 1,990 $ 8,013 $ 13,940 $ 19,856 Weighted average common shares outstanding, basic 19,265,409 15,578,703 17,274,746 13,637,997 Options and warrants 438,808 279,570 522,489 264,667 Weighted average common shares outstanding, diluted 19,704,217 15,858,273 17,797,235 13,902,664 Basic earnings per common share $ 0.10 $ 0.51 $ 0.81 $ 1.46 Diluted earnings per common share 0.10 0.51 0.78 1.43 |
FAIR VALUE OF FINANCIAL INSTR44
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
Schedule of assets and liabilities measured and recorded at fair value | Assets and liabilities measured and recorded at fair value, including financial assets for which the Company has elected the fair value option, on a recurring and nonrecurring basis as of September 30, 2017 and December 31, 2016, are summarized below (in thousands): September 30, 2017 Quoted prices in active Significant markets other Significant for identical observable unobservable assets inputs inputs Total (Level 1) (Level 2) (Level 3) Assets and liabilities measured at fair value on a recurring basis: Assets Securities available for sale: U.S. Treasury securities $ 47,907 $ 47,907 $ — $ — Government sponsored entity debt securities 19,389 — 19,389 — Agency mortgage-backed securities 229,854 — 229,854 — State and municipal securities 39,716 — 39,716 — Corporate securities 57,307 — 52,558 4,749 Equity securities 2,812 — 2,812 — Loans held for sale 35,874 — 35,874 — Interest rate lock commitments 6,421 — 6,421 — Forward commitments to sell mortgage-backed securities 5 — 5 — Interest rate swap contracts 121 — 121 — Total $ 439,406 $ 47,907 $ 386,750 $ 4,749 Liabilities Interest rate swap contracts $ 121 $ — $ 121 $ — Assets measured at fair value on a non-recurring basis: Mortgage servicing rights $ 56,299 $ — $ — $ 56,299 Mortgage servicing rights held for sale 10,618 — — 10,618 Impaired loans 18,311 — 6,227 12,084 Assets held for sale 2,858 — 2,858 — December 31, 2016 Quoted prices in active Significant markets other Significant for identical observable unobservable assets inputs inputs Total (Level 1) (Level 2) (Level) 3 Assets and liabilities measured at fair value on a recurring basis: Assets Securities available for sale: U.S. Treasury securities $ 75,901 $ 75,901 $ — $ — Government sponsored entity debt securities 7,688 — 7,688 — Agency mortgage-backed securities 90,070 — 90,070 — Non-agency mortgage-backed securities 1 — — 1 State and municipal securities 25,274 — 25,274 — Corporate securities 47,405 — 39,925 7,480 Loans held for sale 70,565 — 70,565 — Interest rate lock commitments 6,253 — 6,253 — Forward commitments to sell mortgage-backed securities 125 — 125 — Total $ 323,282 $ 75,901 $ 239,900 $ 7,481 Liabilities None Assets measured at fair value on a non-recurring basis: Impaired loans $ 10,202 $ — $ 6,635 $ 3,567 Other real estate owned 165 — 165 — Assets held for sale 1,550 — 1,550 — |
Schedule of losses recognized on assets measured on a non-recurring basis | December 31, 2016 Quoted prices in active Significant markets other Significant for identical observable unobservable assets inputs inputs Total (Level 1) (Level 2) (Level) 3 Assets and liabilities measured at fair value on a recurring basis: Assets Securities available for sale: U.S. Treasury securities $ 75,901 $ 75,901 $ — $ — Government sponsored entity debt securities 7,688 — 7,688 — Agency mortgage-backed securities 90,070 — 90,070 — Non-agency mortgage-backed securities 1 — — 1 State and municipal securities 25,274 — 25,274 — Corporate securities 47,405 — 39,925 7,480 Loans held for sale 70,565 — 70,565 — Interest rate lock commitments 6,253 — 6,253 — Forward commitments to sell mortgage-backed securities 125 — 125 — Total $ 323,282 $ 75,901 $ 239,900 $ 7,481 Liabilities None Assets measured at fair value on a non-recurring basis: Impaired loans $ 10,202 $ — $ 6,635 $ 3,567 Other real estate owned 165 — 165 — Assets held for sale 1,550 — 1,550 — The following table presents losses recognized on assets measured on a non‑recurring basis for the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Mortgage servicing rights $ 104 $ 1,073 $ 1,830 $ 6,093 Mortgage servicing rights held for sale 3,617 — 3,617 — Impaired loans 1 144 564 310 Other real estate owned — 4 180 219 Assets held for sale — — 1,130 — Total loss on assets measured on a nonrecurring basis $ 3,722 $ 1,221 $ 7,321 $ 6,622 |
Schedule presenting activity for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) | The following table presents activity for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2017 (in thousands): Non-Agency Corporate Mortgage-Backed Securities Securities Three Months Nine Months Three Months Nine Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2017 2017 Balance, beginning of period $ 4,740 $ 7,480 $ — $ 1 Total realized in earnings (1) 54 235 — — Total unrealized in other comprehensive income — 242 — — Net settlements (principal and interest) (45) (3,208) — (1) Balance, end of period $ 4,749 $ 4,749 $ — $ — (1) Amounts included in interest income from investment securities taxable in the consolidated statements of income. The following table presents activity for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2016 (in thousands). Non-Agency Corporate Mortgage-Backed Securities Securities Three Months Nine Months Three Months Nine Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2016 2016 Balance, beginning of period $ 9,765 $ — $ 2 $ — Transferred from Level 2 — 6,749 — 2 Transferred to Level 2 (2,000) (2,000) — — Purchases of investment securities recognized as Level 3 — 3,000 — — Total realized in earnings (1) 93 251 — — Total unrealized in other comprehensive income (294) (296) — — Net settlements (principal and interest) (84) (224) (1) (1) Balance, end of period $ 7,480 $ 7,480 $ 1 $ 1 (1) Amounts included in interest income from investment securities taxable in the consolidated statements of income. |
Tabular presentation of summary of the carrying values and fair value estimates of certain financial instruments | The following tables are a summary of the carrying values and fair value estimates of certain financial instruments as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 Quoted prices in active Significant markets other Significant for identical observable unobservable Carrying assets inputs inputs Amount Fair Value (Level 1) (Level 2) (Level 3) Assets Cash and due from banks $ 180,807 $ 180,807 $ 180,807 $ — $ — Federal funds sold 2,765 2,765 2,765 — — Investment securities available for sale 396,985 396,985 47,907 344,329 4,749 Investment securities held to maturity 70,867 75,142 — 75,142 — Nonmarketable equity securities 34,391 N/A N/A N/A N/A Loans, net 3,141,111 3,142,910 — — 3,142,910 Loans held for sale 35,874 35,874 — 35,874 — Accrued interest receivable 11,673 11,673 — 11,673 — Interest rate lock commitments 6,421 6,421 — 6,421 — Forward commitments to sell mortgage-backed securities 5 5 — 5 — Interest rate swap contracts 121 121 — 121 — Liabilities Deposits $ 3,114,467 $ 3,112,541 $ — $ 3,112,541 $ — Short-term borrowings 153,443 153,443 — 153,443 — FHLB and other borrowings 488,870 488,196 — 488,196 — Subordinated debt 54,581 50,055 — 50,055 — Trust preferred debentures 45,267 43,114 — 43,114 — Accrued interest payable 2,355 2,355 — 2,355 — Interest rate swap contracts 121 121 — 121 — December 31, 2016 Quoted prices in active Significant markets other Significant for identical observable unobservable Carrying assets inputs inputs Amount Fair Value (Level 1) (Level 2) (Level 3) Assets Cash and due from banks $ 189,543 $ 189,543 $ 189,543 $ — $ — Federal funds sold 1,173 1,173 1,173 — — Investment securities available for sale 246,339 246,339 75,901 162,957 7,481 Investment securities held to maturity 78,672 81,952 — 81,952 — Nonmarketable equity securities 19,485 N/A N/A N/A N/A Loans, net 2,305,114 2,305,206 — — 2,305,206 Loans held for sale 70,565 70,565 — 70,565 — Accrued interest receivable 8,202 8,202 — 8,202 — Interest rate lock commitments 6,253 6,253 — 6,253 — Forward commitments to sell mortgage-backed securities 125 125 — 125 — Liabilities Deposits $ 2,404,366 $ 2,404,231 $ — $ 2,404,231 $ — Short-term borrowings 131,557 131,557 — 131,557 — FHLB and other borrowings 237,518 236,736 — 236,736 — Subordinated debt 54,508 49,692 — 49,692 — Trust preferred debentures 37,405 33,054 — 33,054 — Accrued interest payable 1,045 1,045 — 1,045 — |
COMMITMENTS, CONTINGENCIES AN45
COMMITMENTS, CONTINGENCIES AND CREDIT RISK (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
COMMITMENTS, CONTINGENCIES AND CREDIT RISK | |
Schedule of Loan Commitments | Loan commitments as of September 30, 2017 and December 31, 2016 are as follows (in thousands): September 30, December 31, 2017 2016 Commitments to extend credit $ 605,419 $ 483,345 Financial guarantees – standby letters of credit 71,616 89,233 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
SEGMENT INFORMATION | |
Schedule of segment financial information | Selected business segment financial information as of and for the three and nine months ended September 30, 2017 and 2016 were as follows (in thousands): Commercial FHA Origination and Banking Servicing Other Total Three Months Ended September 30, 2017 Net interest income (expense) $ 38,598 $ (79) $ (1,754) $ 36,765 Provision for loan losses 1,489 — — 1,489 Noninterest income 8,571 3,966 2,866 15,403 Noninterest expense 42,425 3,910 2,028 48,363 Income (loss) before income taxes (benefit) 3,255 (23) (916) 2,316 Income taxes (benefit) 996 (9) (707) 280 Net income (loss) $ 2,259 $ (14) $ (209) $ 2,036 Total assets $ 4,370,600 $ 121,514 $ (144,353) $ 4,347,761 Three Months Ended September 30, 2016 Net interest income (expense) $ 28,394 $ 215 $ (1,344) $ 27,265 Provision for loan losses 1,392 — — 1,392 Noninterest income 9,714 3,557 1,666 14,937 Noninterest expense 23,640 3,511 1,506 28,657 Income (loss) before income taxes (benefit) 13,076 261 (1,184) 12,153 Income taxes (benefit) 4,573 104 (575) 4,102 Net income (loss) $ 8,503 $ 157 $ (609) $ 8,051 Total assets $ 3,252,421 $ 100,516 $ (105,210) $ 3,247,727 Commercial FHA Origination and Banking Servicing Other Total Nine Months Ended September 30, 2017 Net interest income (expense) $ 97,580 $ 325 $ (4,279) $ 93,626 Provision for loan losses 3,480 — — 3,480 Noninterest income 24,339 15,189 5,836 45,364 Noninterest expense 99,214 11,639 5,952 116,805 Income (loss) before income taxes (benefit) 19,225 3,875 (4,395) 18,705 Income taxes (benefit) 4,870 1,550 (1,780) 4,640 Net income (loss) $ 14,355 $ 2,325 $ (2,615) $ 14,065 Total assets $ 4,370,600 $ 121,514 $ (144,353) $ 4,347,761 Nine Months Ended September 30, 2016 Net interest income (expense) $ 82,939 $ 712 $ (4,357) $ 79,294 Provision for loan losses 3,146 — — 3,146 Noninterest income 21,347 19,212 1,013 41,572 Noninterest expense 69,784 12,203 5,212 87,199 Income (loss) before income taxes (benefit) 31,356 7,721 (8,556) 30,521 Income taxes (benefit) 9,348 3,088 (1,874) 10,562 Net income (loss) $ 22,008 $ 4,633 $ (6,682) $ 19,959 Total assets $ 3,252,421 $ 100,516 $ (105,210) $ 3,247,727 |
BUSINESS DESCRIPTION (Details)
BUSINESS DESCRIPTION (Details) - USD ($) $ in Millions | Jun. 06, 2016 | Jun. 06, 2016 | May 24, 2016 | Sep. 30, 2017 | Dec. 31, 2016 |
Common Stock, Shares, Issued | 19,093,153 | 15,483,499 | |||
Proceeds from the IPO | $ 71.5 | ||||
Unused Elements [Abstract] | |||||
Number of year old of the banking subsidiary | 136 years | ||||
IPO | |||||
Common Stock, Shares, Issued | 3,044,252 | ||||
Proceeds from the IPO | $ 67 | ||||
Over-Allotment Option [Member] | |||||
Common Stock, Shares, Issued | 545,813 | 545,813 | |||
Proceeds from the IPO | $ 12 |
ACQUISITIONS - Centrue Financia
ACQUISITIONS - Centrue Financial Corp (Details) | Jun. 09, 2017USD ($)itemshares | Sep. 30, 2017USD ($)$ / shares | Sep. 30, 2016USD ($)$ / shares | Sep. 30, 2017USD ($)$ / shares | Sep. 30, 2016USD ($)$ / shares | Dec. 31, 2016USD ($) |
Business Acquisition | ||||||
Amortization of Intangible Assets | $ 1,187,000 | $ 514,000 | $ 2,291,000 | $ 1,613,000 | ||
Liabilities assumed: | ||||||
Goodwill | 97,351,000 | 97,351,000 | $ 48,836,000 | |||
Centrue | ||||||
Business Acquisition | ||||||
Number of banking centers | item | 20 | |||||
Total consideration | $ 176,600,000 | |||||
Cash consideration | 61,000,000 | |||||
Transaction and integration costs | 15,000,000 | 15,000,000 | ||||
Adjustment to increase goodwill | 169,000 | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | ||||||
Cash and cash equivalents | 42,461,000 | |||||
Investment securities available for sale | 149,013,000 | |||||
Loans | 681,870,000 | |||||
Loans held for sale | 531,000 | |||||
Premises and equipment | 17,147,000 | |||||
Other real estate owned | 4,759,000 | |||||
Nonmarketable equity securities | 8,168,000 | |||||
Accrued interest receivable | 2,376,000 | |||||
Mortgage servicing rights | 1,933,000 | |||||
Intangible assets | 11,070,000 | |||||
Cash surrender value of life insurance policies | 36,349,000 | |||||
Deferred tax assets, net | 33,461,000 | |||||
Other assets | 2,256,000 | |||||
Total assets acquired | 991,394,000 | |||||
Liabilities assumed: | ||||||
Deposits | 739,867,000 | |||||
Short-term borrowings | 14,434,000 | |||||
FHLB advances and other borrowings | 95,332,000 | |||||
Trust preferred debentures | 7,565,000 | |||||
Accrued interest payable | 275,000 | |||||
Other liabilities | 3,429,000 | |||||
Total liabilities assumed | 860,902,000 | |||||
Net assets acquired | 130,492,000 | |||||
Goodwill | 46,087,000 | |||||
Total consideration paid | $ 176,579,000 | |||||
Business Acquisition, Pro Forma Information | ||||||
Revenue (1) | 52,168,000 | 52,139,000 | 156,851,000 | 152,532,000 | ||
Net income | $ 2,036,000 | $ 8,850,000 | $ 15,299,000 | $ 23,490,000 | ||
Diluted earnings per common share | $ / shares | $ 0.10 | $ 0.46 | $ 0.71 | $ 1.37 | ||
Acquisition related costs | $ 7,300,000 | $ 15,000,000 | ||||
Centrue | Core deposits | ||||||
Business Acquisition | ||||||
Amortization period | 8 years | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | ||||||
Intangible assets | $ 11,100,000 | |||||
Centrue | Common stock | ||||||
Business Acquisition | ||||||
Share consideration | shares | 3,219,238 | |||||
Centrue | Series G Preferred Stock | ||||||
Business Acquisition | ||||||
Share consideration | shares | 181 | |||||
Centrue | Series H Preferred Stock | ||||||
Business Acquisition | ||||||
Share consideration | shares | 2,635.5462 | |||||
Acquired receivables subject to ASC 310-30 | Centrue | ||||||
Acquired loan data | ||||||
Fair value of acquired loans at acquisition date | 13,352,000 | 13,352,000 | ||||
Gross contractual amounts receivable at acquisition date | 20,719,000 | 20,719,000 | ||||
Best estimate at acquisition date of contractual cash flows not expected to be collected | 5,256,000 | 5,256,000 | ||||
Acquired receivables not subject to ASC 310-30 [member] | Centrue | ||||||
Acquired loan data | ||||||
Fair value of acquired loans at acquisition date | 668,518,000 | 668,518,000 | ||||
Gross contractual amounts receivable at acquisition date | 821,338,000 | 821,338,000 | ||||
Best estimate at acquisition date of contractual cash flows not expected to be collected | $ 4,518,000 | $ 4,518,000 |
ACQUISITIONS - CedarPoint (Deta
ACQUISITIONS - CedarPoint (Details) - USD ($) | Mar. 28, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Business Acquisition | |||
Goodwill | $ 97,351,000 | $ 48,836,000 | |
CedarPoint | |||
Business Acquisition | |||
Assets under administration | $ 180,000,000 | ||
Total consideration | 3,700,000 | ||
Additional consideration as accrual in other liabilities | $ 345,000 | ||
Consideration transferred, shares, in escrow | 18,000 | ||
Goodwill | $ 2,400,000 | ||
CedarPoint | Customer relationship | |||
Business Acquisition | |||
Intangible assets | $ 2,000,000 | ||
Amortization period | 12 years | ||
Common stock | CedarPoint | Customer relationship | |||
Business Acquisition | |||
Share consideration | 102,000 |
ACQUISITIONS - Sterling (Detail
ACQUISITIONS - Sterling (Details) - USD ($) $ in Thousands | Nov. 10, 2016 | Sep. 30, 2017 | Dec. 31, 2016 |
Business Acquisition | |||
Goodwill | $ 97,351 | $ 48,836 | |
Sterling | |||
Business Acquisition | |||
Assets under administration | $ 400,000 | ||
Cash transferred | 5,200 | ||
Goodwill | 2,300 | ||
Sterling | Customer relationship | |||
Business Acquisition | |||
Intangible assets | $ 2,300 | ||
Amortization period | 20 years |
INVESTMENT SECURITIES AVAILAB51
INVESTMENT SECURITIES AVAILABLE FOR SALE - Classified (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Investment securities classified as available for sale | |||||
Amortized cost | $ 395,145,000 | $ 395,145,000 | $ 247,525,000 | ||
Gross unrealized gains | 2,768,000 | 2,768,000 | 848,000 | ||
Gross unrealized losses | 928,000 | 928,000 | 2,034,000 | ||
Investment securities available for sale | 396,985,000 | 396,985,000 | 246,339,000 | ||
Available-for-sale Securities | 396,985,000 | 396,985,000 | 246,339,000 | ||
Available-for-sale Securities, Gross Realized Gains | 98,000 | $ 39,000 | 219,000 | $ 315,000 | |
U.S. Treasury securities | |||||
Investment securities classified as available for sale | |||||
Amortized cost | 47,979,000 | 47,979,000 | 75,973,000 | ||
Gross unrealized losses | 72,000 | 72,000 | 72,000 | ||
Investment securities available for sale | 47,907,000 | 47,907,000 | 75,901,000 | ||
Available-for-sale Securities | 47,907,000 | 47,907,000 | 75,901,000 | ||
Government sponsored entity debt securities | |||||
Investment securities classified as available for sale | |||||
Amortized cost | 19,290,000 | 19,290,000 | 7,653,000 | ||
Gross unrealized gains | 104,000 | 104,000 | 57,000 | ||
Gross unrealized losses | 5,000 | 5,000 | 22,000 | ||
Investment securities available for sale | 19,389,000 | 19,389,000 | 7,688,000 | ||
Available-for-sale Securities | 19,389,000 | 19,389,000 | 7,688,000 | ||
Agency mortgage-backed securities | |||||
Investment securities classified as available for sale | |||||
Amortized cost | 229,382,000 | 229,382,000 | 90,629,000 | ||
Gross unrealized gains | 1,103,000 | 1,103,000 | 373,000 | ||
Gross unrealized losses | 631,000 | 631,000 | 932,000 | ||
Investment securities available for sale | 229,854,000 | 229,854,000 | 90,070,000 | ||
Available-for-sale Securities | 229,854,000 | 229,854,000 | 90,070,000 | ||
Non-agency mortgage-backed securities | |||||
Investment securities classified as available for sale | |||||
Amortized cost | 1,000 | ||||
Investment securities available for sale | 1,000 | ||||
Available-for-sale Securities | 1,000 | ||||
State and municipal securities | |||||
Investment securities classified as available for sale | |||||
Amortized cost | 39,385,000 | 39,385,000 | 25,826,000 | ||
Gross unrealized gains | 376,000 | 376,000 | 15,000 | ||
Gross unrealized losses | 45,000 | 45,000 | 567,000 | ||
Investment securities available for sale | 39,716,000 | 39,716,000 | 25,274,000 | ||
Available-for-sale Securities | 39,716,000 | 39,716,000 | 25,274,000 | ||
Corporate securities | |||||
Investment securities classified as available for sale | |||||
Amortized cost | 56,404,000 | 56,404,000 | 47,443,000 | ||
Gross unrealized gains | 1,070,000 | 1,070,000 | 403,000 | ||
Gross unrealized losses | 167,000 | 167,000 | 441,000 | ||
Investment securities available for sale | 57,307,000 | 57,307,000 | 47,405,000 | ||
Available-for-sale Securities | 57,307,000 | 57,307,000 | $ 47,405,000 | ||
Equity securities | |||||
Investment securities classified as available for sale | |||||
Amortized cost | 2,705,000 | 2,705,000 | |||
Gross unrealized gains | 115,000 | 115,000 | |||
Gross unrealized losses | 8,000 | 8,000 | |||
Investment securities available for sale | 2,812,000 | 2,812,000 | |||
Available-for-sale Securities | $ 2,812,000 | $ 2,812,000 |
INVESTMENT SECURITIES AVAILAB52
INVESTMENT SECURITIES AVAILABLE FOR SALE - Continuous unrealized loss position (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017USD ($)item | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)item | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Securities available for sale: | |||||
Less than 12 Months, Fair value | $ 112,553,000 | $ 112,553,000 | $ 169,216,000 | ||
Less than 12 Months, Unrealized loss | 496,000 | 1,925,000 | |||
12 Months or more, Fair value | 23,521,000 | 23,521,000 | 8,714,000 | ||
12 Months or more, Unrealized loss | 432,000 | 109,000 | |||
Total, Fair value | $ 136,074,000 | 136,074,000 | 177,930,000 | ||
Total, Unrealized loss | $ 928,000 | 2,034,000 | |||
Unrealized loss | |||||
Number of securities, unrealized losses | item | 63 | 63 | |||
Aggregate depreciation | 0.68% | 0.68% | |||
Other than temporary impairment: | |||||
Other than temporary impairment, recognized as losses | $ 0 | $ 0 | $ 0 | $ 824,000 | |
U.S. Treasury securities | |||||
Securities available for sale: | |||||
Less than 12 Months, Fair value | 42,936,000 | 42,936,000 | 75,901,000 | ||
Less than 12 Months, Unrealized loss | 47,000 | 72,000 | |||
12 Months or more, Fair value | 4,971,000 | 4,971,000 | |||
12 Months or more, Unrealized loss | 25,000 | ||||
Total, Fair value | 47,907,000 | 47,907,000 | 75,901,000 | ||
Total, Unrealized loss | 72,000 | 72,000 | |||
Government sponsored entity debt securities | |||||
Securities available for sale: | |||||
Less than 12 Months, Fair value | 6,467,000 | 6,467,000 | 4,107,000 | ||
Less than 12 Months, Unrealized loss | 5,000 | 22,000 | |||
Total, Fair value | 6,467,000 | 6,467,000 | 4,107,000 | ||
Total, Unrealized loss | 5,000 | 22,000 | |||
Agency mortgage-backed securities | |||||
Securities available for sale: | |||||
Less than 12 Months, Fair value | 50,978,000 | 50,978,000 | 57,882,000 | ||
Less than 12 Months, Unrealized loss | 370,000 | 930,000 | |||
12 Months or more, Fair value | 10,569,000 | 10,569,000 | 402,000 | ||
12 Months or more, Unrealized loss | 261,000 | 2,000 | |||
Total, Fair value | 61,547,000 | 61,547,000 | 58,284,000 | ||
Total, Unrealized loss | 631,000 | 932,000 | |||
State and municipal securities | |||||
Securities available for sale: | |||||
Less than 12 Months, Fair value | 4,609,000 | 4,609,000 | 20,215,000 | ||
Less than 12 Months, Unrealized loss | 14,000 | 567,000 | |||
12 Months or more, Fair value | 2,569,000 | 2,569,000 | |||
12 Months or more, Unrealized loss | 31,000 | ||||
Total, Fair value | 7,178,000 | 7,178,000 | 20,215,000 | ||
Total, Unrealized loss | 45,000 | 567,000 | |||
Corporate securities | |||||
Securities available for sale: | |||||
Less than 12 Months, Fair value | 4,957,000 | 4,957,000 | 11,111,000 | ||
Less than 12 Months, Unrealized loss | 52,000 | 334,000 | |||
12 Months or more, Fair value | 5,412,000 | 5,412,000 | 8,312,000 | ||
12 Months or more, Unrealized loss | 115,000 | 107,000 | |||
Total, Fair value | 10,369,000 | 10,369,000 | 19,423,000 | ||
Total, Unrealized loss | 167,000 | $ 441,000 | |||
Equity securities | |||||
Securities available for sale: | |||||
Less than 12 Months, Fair value | 2,606,000 | 2,606,000 | |||
Less than 12 Months, Unrealized loss | 8,000 | ||||
Total, Fair value | $ 2,606,000 | 2,606,000 | |||
Total, Unrealized loss | $ 8,000 |
INVESTMENT SECURITIES AVAILAB53
INVESTMENT SECURITIES AVAILABLE FOR SALE - Amortized cost and fair value (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Amortized cost of available-for-sale securities, by contractual maturity | ||||
Within one year | $ 37,340,000 | $ 37,340,000 | ||
One to five years | 235,754,000 | 235,754,000 | ||
Five to ten years | 102,922,000 | 102,922,000 | ||
After ten years | 16,424,000 | 16,424,000 | ||
Equity securities | 2,705,000 | 2,705,000 | ||
Total, single maturity date | 395,145,000 | 395,145,000 | ||
Fair Value of available-for-sale securities, by contractual maturity | ||||
Within one year | 37,307,000 | 37,307,000 | ||
One to five years | 236,319,000 | 236,319,000 | ||
Five to ten years | 104,113,000 | 104,113,000 | ||
After ten years | 16,434,000 | 16,434,000 | ||
Equity Securities | 2,812,000 | 2,812,000 | ||
Total, single maturity date | 396,985,000 | 396,985,000 | ||
Proceeds from Sale of Available-for-sale Securities | ||||
Proceed from sales | 2,700,000 | $ 865,000 | 11,250,000 | $ 31,191,000 |
Gross realized gains/losses | ||||
Gross realized gains | 98,000 | 39,000 | 219,000 | 315,000 |
Gross realized losses | $ 0 | $ 0 | $ 0 | $ 0 |
INVESTMENT SECURITIES HELD TO54
INVESTMENT SECURITIES HELD TO MATURITY - Classified (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized cost | $ 70,867 | $ 78,672 |
Fair value | 75,142 | 81,952 |
State and municipal securities | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized cost | 70,867 | 78,672 |
Gross unrecognized gains | 4,381 | 3,517 |
Gross unrecognized losses | 106 | 237 |
Fair value | $ 75,142 | $ 81,952 |
INVESTMENT SECURITIES HELD TO55
INVESTMENT SECURITIES HELD TO MATURITY - Continuous unrealized loss position (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017USD ($)item | Dec. 31, 2016USD ($) | |
Unrecognized loss | ||
Number of securities, unrecognized losses | item | 27 | |
Aggregate depreciation | 1.53% | |
State and municipal securities | ||
Securities held to maturity: | ||
Less than 12 Months, Fair value | $ 3,343 | $ 13,991 |
Less than 12 Months, Unrecognized loss | 32 | 140 |
12 Months or more, Fair value | 3,490 | 2,699 |
12 Months or more, Unrecognized loss | 74 | 97 |
Total, Fair value | 6,833 | 16,690 |
Total, Unrealized loss | $ 106 | $ 237 |
INVESTMENT SECURITIES HELD TO56
INVESTMENT SECURITIES HELD TO MATURITY - Amortized cost and fair value (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Amortized cost of held-to-maturity securities, by contractual maturity | ||
Within one year | $ 871 | |
One to five years | 19,055 | |
Five to ten years | 35,164 | |
After ten years | 15,777 | |
Amortized cost | 70,867 | $ 78,672 |
Fair Value of held-to-maturity securities, by contractual maturity | ||
Within one year | 877 | |
One to five years | 19,709 | |
Five to ten years | 38,478 | |
After ten years | 16,078 | |
Fair value | $ 75,142 | $ 81,952 |
LOANS - Covered and noncovered
LOANS - Covered and noncovered loans (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Covered and noncovered loans | ||
Non-covered loans | $ 3,141,111 | $ 2,305,114 |
Loans | 3,157,972 | 2,319,976 |
Non-PCI loans | ||
Covered and noncovered loans | ||
Loans | 3,131,522 | 2,291,720 |
PCI loans | ||
Covered and noncovered loans | ||
Loans | 26,450 | 28,256 |
Customer outstanding balances | 38,900 | 34,600 |
Commercial loan portfolio | ||
Covered and noncovered loans | ||
Loans | 2,168,341 | 1,604,767 |
Commercial loan portfolio | Non-PCI loans | ||
Covered and noncovered loans | ||
Loans | 2,148,840 | 1,583,380 |
Commercial loan portfolio | PCI loans | ||
Covered and noncovered loans | ||
Loans | 19,501 | 21,387 |
Other loan portfolio | Non-PCI loans | ||
Covered and noncovered loans | ||
Loans | 982,682 | 708,340 |
Commercial | Commercial loan portfolio | ||
Covered and noncovered loans | ||
Loans | 513,544 | 457,827 |
Commercial | Commercial loan portfolio | Non-PCI loans | ||
Covered and noncovered loans | ||
Loans | 510,457 | 454,310 |
Commercial | Commercial loan portfolio | PCI loans | ||
Covered and noncovered loans | ||
Loans | 3,087 | 3,517 |
Commercial real estate | Commercial loan portfolio | ||
Covered and noncovered loans | ||
Loans | 1,472,284 | 969,615 |
Commercial real estate | Commercial loan portfolio | Non-PCI loans | ||
Covered and noncovered loans | ||
Loans | 1,456,620 | 963,895 |
Commercial real estate | Commercial loan portfolio | PCI loans | ||
Covered and noncovered loans | ||
Loans | 15,664 | 5,720 |
Construction and land development | Commercial loan portfolio | ||
Covered and noncovered loans | ||
Loans | 182,513 | 177,325 |
Construction and land development | Commercial loan portfolio | Non-PCI loans | ||
Covered and noncovered loans | ||
Loans | 181,763 | 165,175 |
Construction and land development | Commercial loan portfolio | PCI loans | ||
Covered and noncovered loans | ||
Loans | 750 | 12,150 |
Residential real estate | Other loan portfolio | ||
Covered and noncovered loans | ||
Loans | 445,747 | 253,713 |
Residential real estate | Other loan portfolio | Non-PCI loans | ||
Covered and noncovered loans | ||
Loans | 438,973 | 247,156 |
Residential real estate | Other loan portfolio | PCI loans | ||
Covered and noncovered loans | ||
Loans | 6,774 | 6,557 |
Consumer | Other loan portfolio | ||
Covered and noncovered loans | ||
Loans | 343,038 | 270,017 |
Consumer | Other loan portfolio | Non-PCI loans | ||
Covered and noncovered loans | ||
Loans | 342,863 | 269,705 |
Consumer | Other loan portfolio | PCI loans | ||
Covered and noncovered loans | ||
Loans | 175 | 312 |
Lease financing | Other loan portfolio | ||
Covered and noncovered loans | ||
Loans | 200,846 | 191,479 |
Lease financing | Other loan portfolio | Non-PCI loans | ||
Covered and noncovered loans | ||
Loans | $ 200,846 | $ 191,479 |
LOANS - Summary of loans (Detai
LOANS - Summary of loans (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Summary of loans | |||||
Loans and Leases Receivable, Gross, Total | $ 3,157,972,000 | $ 3,157,972,000 | $ 2,319,976,000 | ||
Loans, additional information | |||||
Net deferred loan fees | 11,400,000 | 11,400,000 | 3,100,000 | ||
Unearned discounts | 20,700,000 | 20,700,000 | |||
Loans held for sale | 35,874,000 | 35,874,000 | 70,565,000 | ||
Proceeds from sales of loans held for sale | 679,217,000 | $ 907,306,000 | |||
Directors, executive officers, principal shareholders and affiliates | |||||
Loans to certain directors, executive officers, principal shareholders and their affiliates: | |||||
Loans outstanding to related parties | 26,500,000 | 26,500,000 | 26,500,000 | ||
New loans to related parties and other additions | 982,000 | 4,000,000 | |||
Repayments from related parties and other reductions | 948,000 | 4,000,000 | |||
Loans and Leases Receivable, Related Parties, Collections | 948,000 | 4,000,000 | |||
Commercial loan portfolio | |||||
Summary of loans | |||||
Loans and Leases Receivable, Gross, Total | 2,168,341,000 | 2,168,341,000 | 1,604,767,000 | ||
Commercial loan portfolio | Commercial | |||||
Summary of loans | |||||
Loans and Leases Receivable, Gross, Total | 513,544,000 | 513,544,000 | 457,827,000 | ||
Commercial loan portfolio | Commercial real estate | |||||
Summary of loans | |||||
Loans and Leases Receivable, Gross, Total | 1,472,284,000 | 1,472,284,000 | 969,615,000 | ||
Commercial loan portfolio | Construction and land development | |||||
Summary of loans | |||||
Loans and Leases Receivable, Gross, Total | 182,513,000 | $ 182,513,000 | 177,325,000 | ||
Other loan portfolio | Maximum | |||||
Loans, additional information | |||||
Term of lease | 4 years | ||||
Other loan portfolio | Residential real estate | |||||
Summary of loans | |||||
Loans and Leases Receivable, Gross, Total | 445,747,000 | $ 445,747,000 | 253,713,000 | ||
Other loan portfolio | Consumer | |||||
Summary of loans | |||||
Loans and Leases Receivable, Gross, Total | 343,038,000 | 343,038,000 | 270,017,000 | ||
Other loan portfolio | Lease financing | |||||
Summary of loans | |||||
Loans and Leases Receivable, Gross, Total | 200,846,000 | 200,846,000 | 191,479,000 | ||
Commercial and Residential Loan | |||||
Loans, additional information | |||||
Loans held for sale | 35,900,000 | 35,900,000 | $ 70,600,000 | ||
Proceeds from sales of loans held for sale | $ 206,200,000 | $ 450,900,000 | $ 679,200,000 | $ 907,300,000 |
LOANS - Risk category (Details)
LOANS - Risk category (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017USD ($)region | Dec. 31, 2016USD ($) | |
Risk category | ||
Number of main regions | region | 4 | |
Loans and Leases Receivable, Gross, Total | $ 3,157,972 | $ 2,319,976 |
Commercial loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 2,168,341 | 1,604,767 |
Non-PCI loans | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 3,131,522 | 2,291,720 |
Non-PCI loans | Commercial loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 2,148,840 | 1,583,380 |
Non-PCI loans | Commercial loan portfolio | Acceptable credit quality | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 2,057,026 | 1,511,506 |
Non-PCI loans | Commercial loan portfolio | Special mention | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 25,664 | 19,665 |
Non-PCI loans | Commercial loan portfolio | Substandard | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 31,334 | 34,277 |
Non-PCI loans | Commercial loan portfolio | Substandard - nonaccrual | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 22,923 | 10,725 |
Non-PCI loans | Commercial loan portfolio | Not graded | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 11,893 | 7,207 |
Non-PCI loans | Other loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 982,682 | 708,340 |
Non-PCI loans | Other loan portfolio | Performing | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 976,023 | 701,767 |
Non-PCI loans | Other loan portfolio | Impaired | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 6,659 | 6,573 |
Commercial | Commercial loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 513,544 | 457,827 |
Commercial | Non-PCI loans | Commercial loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 510,457 | 454,310 |
Commercial | Non-PCI loans | Commercial loan portfolio | Acceptable credit quality | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 474,513 | 426,560 |
Commercial | Non-PCI loans | Commercial loan portfolio | Special mention | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 16,543 | 10,930 |
Commercial | Non-PCI loans | Commercial loan portfolio | Substandard | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 17,695 | 12,649 |
Commercial | Non-PCI loans | Commercial loan portfolio | Substandard - nonaccrual | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 1,469 | 3,559 |
Commercial | Non-PCI loans | Commercial loan portfolio | Not graded | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 237 | 612 |
Commercial real estate | Commercial loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 1,472,284 | 969,615 |
Commercial real estate | Non-PCI loans | Commercial loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 1,456,620 | 963,895 |
Commercial real estate | Non-PCI loans | Commercial loan portfolio | Acceptable credit quality | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 1,408,398 | 925,244 |
Commercial real estate | Non-PCI loans | Commercial loan portfolio | Special mention | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 9,121 | 8,735 |
Commercial real estate | Non-PCI loans | Commercial loan portfolio | Substandard | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 13,639 | 21,178 |
Commercial real estate | Non-PCI loans | Commercial loan portfolio | Substandard - nonaccrual | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 21,454 | 7,145 |
Commercial real estate | Non-PCI loans | Commercial loan portfolio | Not graded | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 4,008 | 1,593 |
Construction and land development | Commercial loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 182,513 | 177,325 |
Construction and land development | Non-PCI loans | Commercial loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 181,763 | 165,175 |
Construction and land development | Non-PCI loans | Commercial loan portfolio | Acceptable credit quality | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 174,115 | 159,702 |
Construction and land development | Non-PCI loans | Commercial loan portfolio | Substandard | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 450 | |
Construction and land development | Non-PCI loans | Commercial loan portfolio | Substandard - nonaccrual | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 21 | |
Construction and land development | Non-PCI loans | Commercial loan portfolio | Not graded | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 7,648 | 5,002 |
Residential real estate | Other loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 445,747 | 253,713 |
Residential real estate | Non-PCI loans | Other loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 438,973 | 247,156 |
Residential real estate | Non-PCI loans | Other loan portfolio | Performing | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 433,653 | 242,127 |
Residential real estate | Non-PCI loans | Other loan portfolio | Impaired | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 5,320 | 5,029 |
Consumer | Other loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 343,038 | 270,017 |
Consumer | Non-PCI loans | Other loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 342,863 | 269,705 |
Consumer | Non-PCI loans | Other loan portfolio | Performing | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 342,586 | 269,492 |
Consumer | Non-PCI loans | Other loan portfolio | Impaired | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 277 | 213 |
Lease financing | Other loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 200,846 | 191,479 |
Lease financing | Non-PCI loans | Other loan portfolio | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 200,846 | 191,479 |
Lease financing | Non-PCI loans | Other loan portfolio | Performing | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | 199,784 | 190,148 |
Lease financing | Non-PCI loans | Other loan portfolio | Impaired | ||
Risk category | ||
Loans and Leases Receivable, Gross, Total | $ 1,062 | $ 1,331 |
LOANS - Impaired Loans (Details
LOANS - Impaired Loans (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Summary of impaired loans | |||||
Loans modified under troubled debt restructuring | $ 17,790,000 | $ 17,790,000 | $ 17,952,000 | ||
Interest income : | |||||
Interest income recognized on nonaccrual loans | 0 | $ 0 | 0 | $ 0 | |
Additional interest income that would have been recorded had they been current | 124,000 | 243,000 | 532,000 | 484,000 | |
Recognized interest income on loans modified under troubled debt restructurings | 40,000 | $ 90,000 | 59,000 | $ 196,000 | |
Non-PCI loans | |||||
Summary of impaired loans | |||||
Nonaccrual loans | 28,613,000 | 28,613,000 | 16,871,000 | ||
Non-PCI loans | Impaired | |||||
Summary of impaired loans | |||||
Nonaccrual loans | 28,613,000 | 28,613,000 | 16,871,000 | ||
Accruing loans contractually past due 90 days or more as to interest or principal payments | 2,454,000 | 2,454,000 | 2,405,000 | ||
Loans modified under troubled debt restructuring | 2,364,000 | 2,364,000 | 12,327,000 | ||
Total impaired loans | 33,431,000 | 33,431,000 | 31,603,000 | ||
PCI loans | |||||
Summary of impaired loans | |||||
Total impaired loans | 26,500,000 | 26,500,000 | 28,300,000 | ||
Commercial | Commercial loan portfolio | Non-PCI loans | |||||
Summary of impaired loans | |||||
Nonaccrual loans | 1,469,000 | 1,469,000 | 3,559,000 | ||
Loans modified under troubled debt restructuring | 319,000 | 319,000 | 611,000 | ||
Commercial | Commercial loan portfolio | Non-PCI loans | Impaired | |||||
Summary of impaired loans | |||||
Nonaccrual loans | 1,469,000 | 1,469,000 | 3,559,000 | ||
Accruing loans contractually past due 90 days or more as to interest or principal payments | 2,212,000 | 2,212,000 | 2,378,000 | ||
Loans modified under troubled debt restructuring | 319,000 | 319,000 | 611,000 | ||
Total impaired loans | 4,000,000 | 4,000,000 | 6,548,000 | ||
Commercial real estate | Commercial loan portfolio | Non-PCI loans | |||||
Summary of impaired loans | |||||
Nonaccrual loans | 21,454,000 | 21,454,000 | 7,145,000 | ||
Loans modified under troubled debt restructuring | 16,026,000 | 16,026,000 | 16,351,000 | ||
Commercial real estate | Commercial loan portfolio | Non-PCI loans | Impaired | |||||
Summary of impaired loans | |||||
Nonaccrual loans | 21,454,000 | 21,454,000 | 7,145,000 | ||
Loans modified under troubled debt restructuring | 1,214,000 | 1,214,000 | 11,253,000 | ||
Total impaired loans | 22,668,000 | 22,668,000 | 18,398,000 | ||
Construction and land development | Commercial loan portfolio | Non-PCI loans | |||||
Summary of impaired loans | |||||
Nonaccrual loans | 21,000 | ||||
Loans modified under troubled debt restructuring | 59,000 | 59,000 | 63,000 | ||
Construction and land development | Commercial loan portfolio | Non-PCI loans | Impaired | |||||
Summary of impaired loans | |||||
Nonaccrual loans | 21,000 | ||||
Accruing loans contractually past due 90 days or more as to interest or principal payments | 45,000 | 45,000 | |||
Loans modified under troubled debt restructuring | 59,000 | 59,000 | 63,000 | ||
Total impaired loans | 104,000 | 104,000 | 84,000 | ||
Residential real estate | Other loan portfolio | Non-PCI loans | |||||
Summary of impaired loans | |||||
Nonaccrual loans | 4,355,000 | 4,355,000 | 4,629,000 | ||
Loans modified under troubled debt restructuring | 1,386,000 | 1,386,000 | 927,000 | ||
Residential real estate | Other loan portfolio | Non-PCI loans | Impaired | |||||
Summary of impaired loans | |||||
Nonaccrual loans | 4,355,000 | 4,355,000 | 4,629,000 | ||
Accruing loans contractually past due 90 days or more as to interest or principal payments | 193,000 | 193,000 | |||
Loans modified under troubled debt restructuring | 772,000 | 772,000 | 400,000 | ||
Total impaired loans | 5,320,000 | 5,320,000 | 5,029,000 | ||
Consumer | Other loan portfolio | Non-PCI loans | |||||
Summary of impaired loans | |||||
Nonaccrual loans | 273,000 | 273,000 | 187,000 | ||
Consumer | Other loan portfolio | Non-PCI loans | Impaired | |||||
Summary of impaired loans | |||||
Nonaccrual loans | 273,000 | 273,000 | 187,000 | ||
Accruing loans contractually past due 90 days or more as to interest or principal payments | 4,000 | 4,000 | 26,000 | ||
Total impaired loans | 277,000 | 277,000 | 213,000 | ||
Lease financing | Other loan portfolio | Non-PCI loans | |||||
Summary of impaired loans | |||||
Nonaccrual loans | 1,062,000 | 1,062,000 | 1,330,000 | ||
Lease financing | Other loan portfolio | Non-PCI loans | Impaired | |||||
Summary of impaired loans | |||||
Nonaccrual loans | 1,062,000 | 1,062,000 | 1,330,000 | ||
Accruing loans contractually past due 90 days or more as to interest or principal payments | 1,000 | ||||
Total impaired loans | $ 1,062,000 | $ 1,062,000 | $ 1,331,000 |
LOANS - Impaired Loans Individu
LOANS - Impaired Loans Individually Evaluated (excluding PCI loans) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Impaired loans (excluding PCI loans) by portfolio | |||||
Difference between the recorded investment and unpaid principal balance | $ 9,800 | $ 9,800 | $ 6,700 | ||
Impaired | Non-PCI loans | |||||
Impaired loans (excluding PCI loans) by portfolio | |||||
With a valuation allowance, Recorded Investment | 23,695 | 23,695 | 11,382 | ||
With a valuation allowance, Unpaid Principal Balance | 25,435 | 25,435 | 12,228 | ||
With a valuation allowance, Average Annual Recorded Investment | 23,537 | $ 12,660 | 24,082 | $ 14,533 | |
With a related valuation allowance, Interest Income Recognized while on Impaired Status | 51 | 104 | 74 | 169 | |
With no related valuation allowance, Recorded Investment | 9,736 | 9,736 | 20,221 | ||
With no related valuation allowance, Unpaid Principal Balance | 17,783 | 17,783 | 26,113 | ||
With no related valuation allowance, Average Annual Recorded Investment | 11,731 | 17,481 | 12,010 | 17,510 | |
With no related valuation allowance, Interest Income Recognized while on Impaired Status | 2 | 3 | 3 | 60 | |
Total impaired loans | 33,431 | 33,431 | 31,603 | ||
Total, Unpaid Principal Balance | 43,218 | 43,218 | 38,341 | ||
Total, Related Valuation Allowance | 4,787 | 4,787 | 2,182 | ||
Total, Average Annual Recorded Investment | 35,268 | 30,141 | 36,092 | 32,043 | |
Total, Interest Income Recognized While on Impaired Status | 53 | 107 | 77 | 229 | |
Commercial | Impaired | Commercial loan portfolio | Non-PCI loans | |||||
Impaired loans (excluding PCI loans) by portfolio | |||||
With a valuation allowance, Recorded Investment | 3,047 | 3,047 | 3,877 | ||
With a valuation allowance, Unpaid Principal Balance | 3,111 | 3,111 | 3,888 | ||
With a valuation allowance, Average Annual Recorded Investment | 3,054 | 6,426 | 3,068 | 8,115 | |
With a related valuation allowance, Interest Income Recognized while on Impaired Status | 6 | 23 | 8 | 24 | |
With no related valuation allowance, Recorded Investment | 953 | 953 | 2,671 | ||
With no related valuation allowance, Unpaid Principal Balance | 5,874 | 5,874 | 7,567 | ||
With no related valuation allowance, Average Annual Recorded Investment | 2,912 | 439 | 3,199 | 313 | |
With no related valuation allowance, Interest Income Recognized while on Impaired Status | 2 | 1 | |||
Total impaired loans | 4,000 | 4,000 | 6,548 | ||
Total, Unpaid Principal Balance | 8,985 | 8,985 | 11,455 | ||
Total, Related Valuation Allowance | 500 | 500 | 882 | ||
Total, Average Annual Recorded Investment | 5,966 | 6,865 | 6,267 | 8,428 | |
Total, Interest Income Recognized While on Impaired Status | 6 | 25 | 8 | 25 | |
Commercial real estate | Impaired | Commercial loan portfolio | Non-PCI loans | |||||
Impaired loans (excluding PCI loans) by portfolio | |||||
With a valuation allowance, Recorded Investment | 16,454 | 16,454 | 2,142 | ||
With a valuation allowance, Unpaid Principal Balance | 17,540 | 17,540 | 2,331 | ||
With a valuation allowance, Average Annual Recorded Investment | 16,243 | 2,170 | 16,808 | 2,273 | |
With a related valuation allowance, Interest Income Recognized while on Impaired Status | 34 | 65 | 51 | 115 | |
With no related valuation allowance, Recorded Investment | 6,214 | 6,214 | 16,256 | ||
With no related valuation allowance, Unpaid Principal Balance | 8,291 | 8,291 | 17,058 | ||
With no related valuation allowance, Average Annual Recorded Investment | 6,238 | 15,610 | 6,332 | 15,742 | |
With no related valuation allowance, Interest Income Recognized while on Impaired Status | 56 | ||||
Total impaired loans | 22,668 | 22,668 | 18,398 | ||
Total, Unpaid Principal Balance | 25,831 | 25,831 | 19,389 | ||
Total, Related Valuation Allowance | 3,570 | 3,570 | 309 | ||
Total, Average Annual Recorded Investment | 22,481 | 17,780 | 23,140 | 18,015 | |
Total, Interest Income Recognized While on Impaired Status | 34 | 65 | 51 | 171 | |
Construction and land development | Impaired | Commercial loan portfolio | Non-PCI loans | |||||
Impaired loans (excluding PCI loans) by portfolio | |||||
With a valuation allowance, Recorded Investment | 104 | 104 | 84 | ||
With a valuation allowance, Unpaid Principal Balance | 104 | 104 | 84 | ||
With a valuation allowance, Average Annual Recorded Investment | 104 | 65 | 106 | 66 | |
With a related valuation allowance, Interest Income Recognized while on Impaired Status | 2 | 3 | 3 | 6 | |
With no related valuation allowance, Unpaid Principal Balance | 813 | 813 | |||
Total impaired loans | 104 | 104 | 84 | ||
Total, Unpaid Principal Balance | 917 | 917 | 84 | ||
Total, Related Valuation Allowance | 10 | 10 | 8 | ||
Total, Average Annual Recorded Investment | 104 | 65 | 106 | 66 | |
Total, Interest Income Recognized While on Impaired Status | 2 | 3 | 3 | 6 | |
Residential real estate | Impaired | Other loan portfolio | Non-PCI loans | |||||
Impaired loans (excluding PCI loans) by portfolio | |||||
With a valuation allowance, Recorded Investment | 3,056 | 3,056 | 3,735 | ||
With a valuation allowance, Unpaid Principal Balance | 3,634 | 3,634 | 4,404 | ||
With a valuation allowance, Average Annual Recorded Investment | 3,090 | 3,157 | 3,032 | 3,234 | |
With a related valuation allowance, Interest Income Recognized while on Impaired Status | 9 | 13 | 12 | 24 | |
With no related valuation allowance, Recorded Investment | 2,264 | 2,264 | 1,294 | ||
With no related valuation allowance, Unpaid Principal Balance | 2,500 | 2,500 | 1,462 | ||
With no related valuation allowance, Average Annual Recorded Investment | 2,276 | 1,341 | 2,174 | 1,364 | |
With no related valuation allowance, Interest Income Recognized while on Impaired Status | 2 | 1 | 3 | 3 | |
Total impaired loans | 5,320 | 5,320 | 5,029 | ||
Total, Unpaid Principal Balance | 6,134 | 6,134 | 5,866 | ||
Total, Related Valuation Allowance | 490 | 490 | 604 | ||
Total, Average Annual Recorded Investment | 5,366 | 4,498 | 5,206 | 4,598 | |
Total, Interest Income Recognized While on Impaired Status | 11 | 14 | 15 | 27 | |
Consumer | Impaired | Other loan portfolio | Non-PCI loans | |||||
Impaired loans (excluding PCI loans) by portfolio | |||||
With a valuation allowance, Recorded Investment | 277 | 277 | 213 | ||
With a valuation allowance, Unpaid Principal Balance | 289 | 289 | 190 | ||
With a valuation allowance, Average Annual Recorded Investment | 289 | 115 | 311 | 118 | |
With no related valuation allowance, Unpaid Principal Balance | 26 | ||||
With no related valuation allowance, Average Annual Recorded Investment | 91 | 91 | |||
Total impaired loans | 277 | 277 | 213 | ||
Total, Unpaid Principal Balance | 289 | 289 | 216 | ||
Total, Related Valuation Allowance | 31 | 31 | 23 | ||
Total, Average Annual Recorded Investment | 289 | 206 | 311 | 209 | |
Lease financing | Impaired | Other loan portfolio | Non-PCI loans | |||||
Impaired loans (excluding PCI loans) by portfolio | |||||
With a valuation allowance, Recorded Investment | 757 | 757 | 1,331 | ||
With a valuation allowance, Unpaid Principal Balance | 757 | 757 | 1,331 | ||
With a valuation allowance, Average Annual Recorded Investment | 757 | 727 | 757 | 727 | |
With no related valuation allowance, Recorded Investment | 305 | 305 | |||
With no related valuation allowance, Unpaid Principal Balance | 305 | 305 | |||
With no related valuation allowance, Average Annual Recorded Investment | 305 | 305 | |||
Total impaired loans | 1,062 | 1,062 | 1,331 | ||
Total, Unpaid Principal Balance | 1,062 | 1,062 | 1,331 | ||
Total, Related Valuation Allowance | 186 | 186 | $ 356 | ||
Total, Average Annual Recorded Investment | $ 1,062 | $ 727 | $ 1,062 | $ 727 |
LOANS - Aging Status of recorde
LOANS - Aging Status of recorded investment (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Aging Status of recorded investment | ||
Loans and Leases Receivable, Gross, Total | $ 3,157,972 | $ 2,319,976 |
Non-PCI loans | ||
Aging Status of recorded investment | ||
Nonaccrual Loans | 28,613 | 16,871 |
Total Past Due | 44,593 | 30,043 |
Current | 3,086,929 | 2,261,677 |
Loans and Leases Receivable, Gross, Total | 3,131,522 | 2,291,720 |
Non-PCI loans | 31-59 Days Past Due | ||
Aging Status of recorded investment | ||
Past Due | 8,798 | 9,241 |
Non-PCI loans | 60-89 Days Past Due | ||
Aging Status of recorded investment | ||
Past Due | 4,728 | 1,526 |
Non-PCI loans | Accruing Loans past Due 90 Days or More | ||
Aging Status of recorded investment | ||
Past Due | 2,454 | 2,405 |
Commercial loan portfolio | ||
Aging Status of recorded investment | ||
Loans and Leases Receivable, Gross, Total | 2,168,341 | 1,604,767 |
Commercial loan portfolio | Non-PCI loans | ||
Aging Status of recorded investment | ||
Loans and Leases Receivable, Gross, Total | 2,148,840 | 1,583,380 |
Other loan portfolio | Non-PCI loans | ||
Aging Status of recorded investment | ||
Loans and Leases Receivable, Gross, Total | 982,682 | 708,340 |
Commercial | Commercial loan portfolio | ||
Aging Status of recorded investment | ||
Loans and Leases Receivable, Gross, Total | 513,544 | 457,827 |
Commercial | Commercial loan portfolio | Non-PCI loans | ||
Aging Status of recorded investment | ||
Nonaccrual Loans | 1,469 | 3,559 |
Total Past Due | 9,237 | 9,401 |
Current | 501,220 | 444,909 |
Loans and Leases Receivable, Gross, Total | 510,457 | 454,310 |
Commercial | Commercial loan portfolio | Non-PCI loans | 31-59 Days Past Due | ||
Aging Status of recorded investment | ||
Past Due | 3,395 | 3,326 |
Commercial | Commercial loan portfolio | Non-PCI loans | 60-89 Days Past Due | ||
Aging Status of recorded investment | ||
Past Due | 2,161 | 138 |
Commercial | Commercial loan portfolio | Non-PCI loans | Accruing Loans past Due 90 Days or More | ||
Aging Status of recorded investment | ||
Past Due | 2,212 | 2,378 |
Commercial real estate | Commercial loan portfolio | ||
Aging Status of recorded investment | ||
Loans and Leases Receivable, Gross, Total | 1,472,284 | 969,615 |
Commercial real estate | Commercial loan portfolio | Non-PCI loans | ||
Aging Status of recorded investment | ||
Nonaccrual Loans | 21,454 | 7,145 |
Total Past Due | 22,862 | 8,580 |
Current | 1,433,758 | 955,315 |
Loans and Leases Receivable, Gross, Total | 1,456,620 | 963,895 |
Commercial real estate | Commercial loan portfolio | Non-PCI loans | 31-59 Days Past Due | ||
Aging Status of recorded investment | ||
Past Due | 364 | 648 |
Commercial real estate | Commercial loan portfolio | Non-PCI loans | 60-89 Days Past Due | ||
Aging Status of recorded investment | ||
Past Due | 1,044 | 787 |
Construction and land development | Commercial loan portfolio | ||
Aging Status of recorded investment | ||
Loans and Leases Receivable, Gross, Total | 182,513 | 177,325 |
Construction and land development | Commercial loan portfolio | Non-PCI loans | ||
Aging Status of recorded investment | ||
Nonaccrual Loans | 21 | |
Total Past Due | 227 | 21 |
Current | 181,536 | 165,154 |
Loans and Leases Receivable, Gross, Total | 181,763 | 165,175 |
Construction and land development | Commercial loan portfolio | Non-PCI loans | 31-59 Days Past Due | ||
Aging Status of recorded investment | ||
Past Due | 115 | |
Construction and land development | Commercial loan portfolio | Non-PCI loans | 60-89 Days Past Due | ||
Aging Status of recorded investment | ||
Past Due | 67 | |
Construction and land development | Commercial loan portfolio | Non-PCI loans | Accruing Loans past Due 90 Days or More | ||
Aging Status of recorded investment | ||
Past Due | 45 | |
Residential real estate | Other loan portfolio | ||
Aging Status of recorded investment | ||
Loans and Leases Receivable, Gross, Total | 445,747 | 253,713 |
Residential real estate | Other loan portfolio | Non-PCI loans | ||
Aging Status of recorded investment | ||
Nonaccrual Loans | 4,355 | 4,629 |
Total Past Due | 7,047 | 8,114 |
Current | 431,926 | 239,042 |
Loans and Leases Receivable, Gross, Total | 438,973 | 247,156 |
Residential real estate | Other loan portfolio | Non-PCI loans | 31-59 Days Past Due | ||
Aging Status of recorded investment | ||
Past Due | 2,271 | 3,472 |
Residential real estate | Other loan portfolio | Non-PCI loans | 60-89 Days Past Due | ||
Aging Status of recorded investment | ||
Past Due | 228 | 13 |
Residential real estate | Other loan portfolio | Non-PCI loans | Accruing Loans past Due 90 Days or More | ||
Aging Status of recorded investment | ||
Past Due | 193 | |
Consumer | Other loan portfolio | ||
Aging Status of recorded investment | ||
Loans and Leases Receivable, Gross, Total | 343,038 | 270,017 |
Consumer | Other loan portfolio | Non-PCI loans | ||
Aging Status of recorded investment | ||
Nonaccrual Loans | 273 | 187 |
Total Past Due | 3,560 | 2,502 |
Current | 339,303 | 267,203 |
Loans and Leases Receivable, Gross, Total | 342,863 | 269,705 |
Consumer | Other loan portfolio | Non-PCI loans | 31-59 Days Past Due | ||
Aging Status of recorded investment | ||
Past Due | 2,055 | 1,701 |
Consumer | Other loan portfolio | Non-PCI loans | 60-89 Days Past Due | ||
Aging Status of recorded investment | ||
Past Due | 1,228 | 588 |
Consumer | Other loan portfolio | Non-PCI loans | Accruing Loans past Due 90 Days or More | ||
Aging Status of recorded investment | ||
Past Due | 4 | 26 |
Lease financing | Other loan portfolio | ||
Aging Status of recorded investment | ||
Loans and Leases Receivable, Gross, Total | 200,846 | 191,479 |
Lease financing | Other loan portfolio | Non-PCI loans | ||
Aging Status of recorded investment | ||
Nonaccrual Loans | 1,062 | 1,330 |
Total Past Due | 1,660 | 1,425 |
Current | 199,186 | 190,054 |
Loans and Leases Receivable, Gross, Total | 200,846 | 191,479 |
Lease financing | Other loan portfolio | Non-PCI loans | 31-59 Days Past Due | ||
Aging Status of recorded investment | ||
Past Due | $ 598 | 94 |
Lease financing | Other loan portfolio | Non-PCI loans | Accruing Loans past Due 90 Days or More | ||
Aging Status of recorded investment | ||
Past Due | $ 1 |
LOANS - TDRs by portfolio (Deta
LOANS - TDRs by portfolio (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Troubled debt restructuring | ||
Allowance for loan losses on TDRs | $ 2,400,000 | $ 203,000 |
Unfunded commitments | 0 | 0 |
TDRs by loan portfolio (excluding PCI loans): | ||
TDR's Accruing | 2,364,000 | 12,327,000 |
TDR's Nonaccrual | 15,426,000 | 5,625,000 |
Total | 17,790,000 | 17,952,000 |
Minimum | Performing | ||
Troubled debt restructuring | ||
TDRs, individually evaluated for impairment, threshold | 50,000 | |
Commercial | Commercial loan portfolio | Non-PCI loans | ||
TDRs by loan portfolio (excluding PCI loans): | ||
TDR's Accruing | 319,000 | 611,000 |
Total | 319,000 | 611,000 |
Commercial real estate | Commercial loan portfolio | Non-PCI loans | ||
TDRs by loan portfolio (excluding PCI loans): | ||
TDR's Accruing | 1,214,000 | 11,253,000 |
TDR's Nonaccrual | 14,812,000 | 5,098,000 |
Total | 16,026,000 | 16,351,000 |
Construction and land development | Commercial loan portfolio | Non-PCI loans | ||
TDRs by loan portfolio (excluding PCI loans): | ||
TDR's Accruing | 59,000 | 63,000 |
Total | 59,000 | 63,000 |
Residential real estate | Other loan portfolio | Non-PCI loans | ||
TDRs by loan portfolio (excluding PCI loans): | ||
TDR's Accruing | 772,000 | 400,000 |
TDR's Nonaccrual | 614,000 | 527,000 |
Total | $ 1,386,000 | $ 927,000 |
LOANS - TDRs by portfolio - res
LOANS - TDRs by portfolio - restructured and subsequently defaulted (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($)loan | Sep. 30, 2016USD ($)loan | Sep. 30, 2017USD ($)loan | Sep. 30, 2016USD ($)loan | |
Troubled debt restructurings: | ||||
Number of loans | loan | 1 | 2 | 4 | 5 |
Pre-modification outstanding balance | $ 91 | $ 10,207 | $ 837 | $ 10,892 |
Post-modification outstanding balance | $ 90 | $ 10,207 | $ 813 | $ 10,854 |
Commercial | Commercial loan portfolio | ||||
Troubled debt restructurings: | ||||
Number of loans | loan | 1 | 3 | ||
Pre-modification outstanding balance | $ 362 | $ 685 | ||
Post-modification outstanding balance | $ 339 | $ 647 | ||
Commercial real estate | Commercial loan portfolio | ||||
Troubled debt restructurings: | ||||
Number of loans | loan | 2 | 2 | ||
Pre-modification outstanding balance | $ 10,207 | $ 10,207 | ||
Post-modification outstanding balance | $ 10,207 | $ 10,207 | ||
Residential real estate | Other loan portfolio | ||||
Troubled debt restructurings: | ||||
Number of loans | loan | 1 | 3 | ||
Pre-modification outstanding balance | $ 91 | $ 475 | ||
Post-modification outstanding balance | $ 90 | $ 474 |
LOANS - PCI Loans - Changes in
LOANS - PCI Loans - Changes in the accretable yield for PCI loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Summary of loans | ||||
Accretion recorded as loan interest income | $ 35,276 | $ 25,873 | $ 90,146 | $ 76,148 |
PCI loans | ||||
Changes in the accretable yield for PCI loans | ||||
Balance, beginning of period | 9,035,000 | 10,526,000 | ||
New loans purchased - Centrue acquisition | 2,111,000 | |||
Accretion | (1,100) | (1,800) | (4,276,000) | (7,066,000) |
Other adjustments (including maturities, charge-offs and impact of changes in timing of expected cash flows) | (1,558,000) | (96,000) | ||
Reclassification from (to) non-accretable | 1,519,000 | 4,302,000 | ||
Balance, end of period | $ 6,831,000 | $ 7,666,000 | $ 6,831,000 | $ 7,666,000 |
LOANS - Allowance for loan loss
LOANS - Allowance for loan losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Changes in allowance for loan losses : | ||||
Beginning balance | $ 15,424 | $ 14,752 | $ 14,862 | $ 15,988 |
Provision for loan losses | 1,489 | 1,392 | 3,480 | 3,146 |
Allowance for Loan and Lease Losses Write-offs, Net [Abstract] | ||||
Loan charge-offs | (335) | (864) | (2,856) | (4,286) |
Loan recoveries | 283 | 279 | 1,375 | 711 |
Net loan (charge-offs) recoveries | (52) | (585) | (1,481) | (3,575) |
Ending balance | 16,861 | 15,559 | 16,861 | 15,559 |
Non-PCI loans | ||||
Changes in allowance for loan losses : | ||||
Beginning balance | 14,037 | 13,629 | 13,744 | 14,093 |
Provision for loan losses | 1,435 | 1,156 | 3,260 | 3,752 |
Allowance for Loan and Lease Losses Write-offs, Net [Abstract] | ||||
Loan charge-offs | (335) | (806) | (2,856) | (4,228) |
Loan recoveries | 278 | 250 | 1,267 | 612 |
Net loan (charge-offs) recoveries | (57) | (556) | (1,589) | (3,616) |
Ending balance | 15,415 | 14,229 | 15,415 | 14,229 |
PCI loans | ||||
Changes in allowance for loan losses : | ||||
Beginning balance | 1,387 | 1,123 | 1,118 | 1,895 |
Provision for loan losses | 54 | 236 | 220 | (606) |
Allowance for Loan and Lease Losses Write-offs, Net [Abstract] | ||||
Loan charge-offs | (58) | (58) | ||
Loan recoveries | 5 | 29 | 108 | 99 |
Net loan (charge-offs) recoveries | 5 | (29) | 108 | 41 |
Ending balance | $ 1,446 | $ 1,330 | $ 1,446 | $ 1,330 |
LOANS - Allowance for loan lo67
LOANS - Allowance for loan losses by loan portfolio and recorded investment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | |
Changes in allowance for loan losses : | ||||||
Beginning balance | $ 15,424 | $ 14,752 | $ 14,862 | $ 15,988 | ||
Provision for loan losses | 1,489 | 1,392 | 3,480 | 3,146 | ||
Charge-offs | (335) | (864) | (2,856) | (4,286) | ||
Recoveries | 283 | 279 | 1,375 | 711 | ||
Ending balance | 16,861 | 15,559 | 16,861 | 15,559 | ||
Allowance for loan losses balance at December 31, 2014 attributable to: | ||||||
Loans individually evaluated for impairment | $ 4,129 | $ 1,844 | ||||
Loans collectively evaluated for impairment | 658 | 338 | ||||
Non-impaired loans collectively evaluated for impairment | 10,628 | 11,562 | ||||
Loans acquired with deteriorated credit quality | 1,446 | 1,118 | ||||
Total | 15,424 | 14,752 | 14,862 | 15,988 | 16,861 | 14,862 |
Recorded investment (loan balance) at December 31, 2014: | ||||||
Impaired loans individually evaluated for impairment | 27,469 | 28,432 | ||||
Impaired loans collectively evaluated for impairment | 5,962 | 3,171 | ||||
Non-impaired loans collectively evaluated for impairment | 3,098,091 | 2,260,117 | ||||
Loans acquired with deteriorated credit quality | 26,450 | 28,256 | ||||
Loans and Leases Receivable, Gross, Total | 3,157,972 | 2,319,976 | ||||
Commercial loan portfolio | ||||||
Recorded investment (loan balance) at December 31, 2014: | ||||||
Loans and Leases Receivable, Gross, Total | 2,168,341 | 1,604,767 | ||||
Commercial | Commercial loan portfolio | ||||||
Changes in allowance for loan losses : | ||||||
Beginning balance | 5,381 | 6,186 | 5,920 | 6,917 | ||
Provision for loan losses | (745) | 1,216 | (630) | 2,619 | ||
Charge-offs | (251) | (737) | (2,513) | |||
Recoveries | 54 | 36 | 137 | 164 | ||
Ending balance | 4,690 | 7,187 | 4,690 | 7,187 | ||
Allowance for loan losses balance at December 31, 2014 attributable to: | ||||||
Loans individually evaluated for impairment | 212 | 878 | ||||
Loans collectively evaluated for impairment | 288 | 4 | ||||
Non-impaired loans collectively evaluated for impairment | 3,702 | 4,539 | ||||
Loans acquired with deteriorated credit quality | 488 | 499 | ||||
Total | 5,381 | 6,186 | 5,920 | 6,917 | 4,690 | 5,920 |
Recorded investment (loan balance) at December 31, 2014: | ||||||
Impaired loans individually evaluated for impairment | 1,384 | 6,504 | ||||
Impaired loans collectively evaluated for impairment | 2,616 | 44 | ||||
Non-impaired loans collectively evaluated for impairment | 506,457 | 447,762 | ||||
Loans acquired with deteriorated credit quality | 3,087 | 3,517 | ||||
Loans and Leases Receivable, Gross, Total | 513,544 | 457,827 | ||||
Commercial real estate | Commercial loan portfolio | ||||||
Changes in allowance for loan losses : | ||||||
Beginning balance | 3,996 | 3,511 | 3,225 | 5,179 | ||
Provision for loan losses | 2,715 | (12) | 3,577 | (1,520) | ||
Charge-offs | (214) | (470) | (461) | |||
Recoveries | 56 | 129 | 435 | 216 | ||
Ending balance | 6,767 | 3,414 | 6,767 | 3,414 | ||
Allowance for loan losses balance at December 31, 2014 attributable to: | ||||||
Loans individually evaluated for impairment | 3,549 | 296 | ||||
Loans collectively evaluated for impairment | 21 | 13 | ||||
Non-impaired loans collectively evaluated for impairment | 2,872 | 2,684 | ||||
Loans acquired with deteriorated credit quality | 325 | 232 | ||||
Total | 3,996 | 3,511 | 3,225 | 5,179 | 6,767 | 3,225 |
Recorded investment (loan balance) at December 31, 2014: | ||||||
Impaired loans individually evaluated for impairment | 22,482 | 18,275 | ||||
Impaired loans collectively evaluated for impairment | 186 | 123 | ||||
Non-impaired loans collectively evaluated for impairment | 1,433,952 | 945,497 | ||||
Loans acquired with deteriorated credit quality | 15,664 | 5,720 | ||||
Loans and Leases Receivable, Gross, Total | 1,472,284 | 969,615 | ||||
Construction and land development | Commercial loan portfolio | ||||||
Changes in allowance for loan losses : | ||||||
Beginning balance | 147 | 569 | 345 | 435 | ||
Provision for loan losses | 55 | (271) | (178) | (154) | ||
Charge-offs | (1) | (1) | ||||
Recoveries | 13 | 13 | 48 | 30 | ||
Ending balance | 215 | 310 | 215 | 310 | ||
Allowance for loan losses balance at December 31, 2014 attributable to: | ||||||
Loans individually evaluated for impairment | 5 | 6 | ||||
Loans collectively evaluated for impairment | 5 | 2 | ||||
Non-impaired loans collectively evaluated for impairment | 204 | 337 | ||||
Loans acquired with deteriorated credit quality | 1 | |||||
Total | 147 | 569 | 345 | 435 | 215 | 345 |
Recorded investment (loan balance) at December 31, 2014: | ||||||
Impaired loans individually evaluated for impairment | 59 | 63 | ||||
Impaired loans collectively evaluated for impairment | 45 | 21 | ||||
Non-impaired loans collectively evaluated for impairment | 181,659 | 165,091 | ||||
Loans acquired with deteriorated credit quality | 750 | 12,150 | ||||
Loans and Leases Receivable, Gross, Total | 182,513 | 177,325 | ||||
Residential real estate | Other loan portfolio | ||||||
Changes in allowance for loan losses : | ||||||
Beginning balance | 3,377 | 2,584 | 2,929 | 2,120 | ||
Provision for loan losses | (433) | 220 | 113 | 886 | ||
Charge-offs | (128) | (153) | (455) | (454) | ||
Recoveries | 47 | 32 | 276 | 131 | ||
Ending balance | 2,863 | 2,683 | 2,863 | 2,683 | ||
Allowance for loan losses balance at December 31, 2014 attributable to: | ||||||
Loans individually evaluated for impairment | 248 | 379 | ||||
Loans collectively evaluated for impairment | 242 | 225 | ||||
Non-impaired loans collectively evaluated for impairment | 1,893 | 1,968 | ||||
Loans acquired with deteriorated credit quality | 480 | 357 | ||||
Total | 3,377 | 2,584 | 2,929 | 2,120 | 2,863 | 2,929 |
Recorded investment (loan balance) at December 31, 2014: | ||||||
Impaired loans individually evaluated for impairment | 3,124 | 2,920 | ||||
Impaired loans collectively evaluated for impairment | 2,196 | 2,109 | ||||
Non-impaired loans collectively evaluated for impairment | 433,653 | 242,127 | ||||
Loans acquired with deteriorated credit quality | 6,774 | 6,557 | ||||
Loans and Leases Receivable, Gross, Total | 445,747 | 253,713 | ||||
Consumer | Other loan portfolio | ||||||
Changes in allowance for loan losses : | ||||||
Beginning balance | 1,385 | 827 | 930 | 749 | ||
Provision for loan losses | (92) | 326 | 678 | 479 | ||
Charge-offs | (105) | (91) | (536) | (225) | ||
Recoveries | 81 | 20 | 197 | 79 | ||
Ending balance | 1,269 | 1,082 | 1,269 | 1,082 | ||
Allowance for loan losses balance at December 31, 2014 attributable to: | ||||||
Loans collectively evaluated for impairment | 31 | 23 | ||||
Non-impaired loans collectively evaluated for impairment | 1,086 | 877 | ||||
Loans acquired with deteriorated credit quality | 152 | 30 | ||||
Total | 1,385 | 827 | 930 | 749 | 1,269 | 930 |
Recorded investment (loan balance) at December 31, 2014: | ||||||
Impaired loans collectively evaluated for impairment | 277 | 213 | ||||
Non-impaired loans collectively evaluated for impairment | 342,586 | 269,492 | ||||
Loans acquired with deteriorated credit quality | 175 | 312 | ||||
Loans and Leases Receivable, Gross, Total | 343,038 | 270,017 | ||||
Lease financing | Other loan portfolio | ||||||
Changes in allowance for loan losses : | ||||||
Beginning balance | 1,138 | 1,075 | 1,513 | 588 | ||
Provision for loan losses | (11) | (87) | (80) | 836 | ||
Charge-offs | (102) | (154) | (658) | (632) | ||
Recoveries | 32 | 49 | 282 | 91 | ||
Ending balance | 1,057 | 883 | 1,057 | 883 | ||
Allowance for loan losses balance at December 31, 2014 attributable to: | ||||||
Loans individually evaluated for impairment | 115 | 285 | ||||
Loans collectively evaluated for impairment | 71 | 71 | ||||
Non-impaired loans collectively evaluated for impairment | 871 | 1,157 | ||||
Total | $ 1,138 | $ 1,075 | $ 1,513 | $ 588 | 1,057 | 1,513 |
Recorded investment (loan balance) at December 31, 2014: | ||||||
Impaired loans individually evaluated for impairment | 420 | 670 | ||||
Impaired loans collectively evaluated for impairment | 642 | 661 | ||||
Non-impaired loans collectively evaluated for impairment | 199,784 | 190,148 | ||||
Loans and Leases Receivable, Gross, Total | $ 200,846 | $ 191,479 |
MORTGAGE SERVICING RIGHTS (Deta
MORTGAGE SERVICING RIGHTS (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Servicing Assets at Fair Value [Line Items] | ||
Total loans serviced for others | $ 5,949,388 | $ 5,644,509 |
Commercial FHA Mortgage Loans | ||
Servicing Assets at Fair Value [Line Items] | ||
Total loans serviced for others | 3,895,455 | 3,811,066 |
Residential mortgage loans | ||
Servicing Assets at Fair Value [Line Items] | ||
Total loans serviced for others | $ 2,053,933 | $ 1,833,443 |
MORTGAGE SERVICING RIGHTS - Cha
MORTGAGE SERVICING RIGHTS - Changes in MSR (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | |
Mortgage servicing rights: | ||||||||
Balance, beginning of period | $ 75,705 | $ 68,395 | $ 71,710 | $ 67,218 | ||||
Balance, end of period | 59,836 | 71,349 | 59,836 | 71,349 | ||||
Valuation allowances: | ||||||||
Balance, beginning of period | 5,428 | 5,587 | 3,702 | 567 | ||||
Additions | 104 | 1,073 | 1,942 | 6,301 | ||||
Reductions | (112) | (208) | ||||||
Balance, end of period | 3,537 | 6,660 | 3,537 | 6,660 | ||||
Mortgage servicing rights, net | 56,299 | 64,689 | 56,299 | 64,689 | ||||
Fair Value | 56,299 | 64,689 | 56,299 | 64,689 | $ 70,277 | $ 68,008 | $ 62,960 | $ 66,700 |
Loss on mortgage service rights held for sale | (3,617) | (3,617) | ||||||
Servicing Rights Held For Sale | 10,618 | 10,618 | ||||||
Commercial FHA Mortgage Loans | ||||||||
Mortgage servicing rights: | ||||||||
Servicing rights capitalized | 1,432 | 3,506 | 5,020 | 5,777 | ||||
Amortization | (650) | (592) | (1,928) | (1,741) | ||||
Residential mortgage loans | ||||||||
Mortgage servicing rights: | ||||||||
Payments to Acquire Mortgage Servicing Rights (MSR) | 1,933 | |||||||
Servicing rights transferred to held for sale-residential mortgage loans | (16,229) | (16,229) | ||||||
Servicing rights capitalized | 435 | 1,125 | 1,656 | 2,764 | ||||
Amortization | (857) | $ (1,085) | (2,326) | $ (2,669) | ||||
Valuation allowances: | ||||||||
Servicing rights transferred to held for sale-residential mortgage loans | 1,995 | $ 1,995 | ||||||
Servicing asset transferred to mortgage servicing rights held for sale after net of valuation allowance | $ 14,200 |
MORTGAGE SERVICING RIGHTS - Sum
MORTGAGE SERVICING RIGHTS - Summary of key assumptions (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Commercial FHA Mortgage Loans | ||
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract] | ||
Servicing Fee | 0.13% | 0.13% |
Interest Rate | 3.67% | 3.72% |
Remaining Years to Maturity | 30 years 3 months 18 days | 30 years 2 months 12 days |
Prepayment Rate | 8.25% | 8.31% |
Servicing Cost | 1000.00% | 1000.00% |
Commercial FHA Mortgage Loans | Maximum | ||
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract] | ||
Discount Rate | 12.00% | 13.00% |
Commercial FHA Mortgage Loans | Minimum | ||
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract] | ||
Discount Rate | 10.00% | 10.00% |
Residential mortgage loans | ||
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract] | ||
Servicing Fee | 0.26% | 0.26% |
Interest Rate | 3.93% | 3.89% |
Remaining Years to Maturity | 22 years 7 months 6 days | 24 years 2 months 12 days |
Prepayment Rate | 11.52% | 9.72% |
Servicing Cost | 67.00% | 60.00% |
Residential mortgage loans | Maximum | ||
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract] | ||
Discount Rate | 11.00% | 11.00% |
Residential mortgage loans | Minimum | ||
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract] | ||
Discount Rate | 9.00% | 9.00% |
GOODWILL AND INTANGIBLE ASSET71
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | Jun. 09, 2017 | Mar. 28, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Goodwill [Line Items] | ||||
Goodwill | $ 97,351 | $ 48,836 | ||
CedarPoint | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 2,400 | |||
Amount of increase in goodwill | $ 2,400 | |||
Centrue | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 46,087 | |||
Amount of increase in goodwill | $ 46,100 |
GOODWILL AND INTANGIBLE ASSET72
GOODWILL AND INTANGIBLE ASSETS - Intangible assets (Details) - USD ($) $ in Thousands | Jun. 09, 2017 | Mar. 28, 2017 | Nov. 10, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Finite-lived intangible assets | ||||||||
Gross Carrying Amount | $ 39,083 | $ 39,083 | $ 26,013 | |||||
Accumulated Amortization | (21,117) | (21,117) | (18,826) | |||||
Total | 17,966 | 17,966 | 7,187 | |||||
Amortization of intangible assets | 1,187 | $ 514 | 2,291 | $ 1,613 | ||||
Estimated amortization expense of intangible assets | ||||||||
Total | 17,966 | 17,966 | 7,187 | |||||
Core deposits | ||||||||
Finite-lived intangible assets | ||||||||
Gross Carrying Amount | 31,612 | 31,612 | 20,542 | |||||
Accumulated Amortization | (17,998) | (17,998) | (16,181) | |||||
Total | 13,614 | 13,614 | 4,361 | |||||
Estimated amortization expense of intangible assets | ||||||||
Total | 13,614 | 13,614 | 4,361 | |||||
Customer relationship | ||||||||
Finite-lived intangible assets | ||||||||
Gross Carrying Amount | 7,471 | 7,471 | 5,471 | |||||
Accumulated Amortization | (3,119) | (3,119) | (2,645) | |||||
Total | 4,352 | 4,352 | 2,826 | |||||
Estimated amortization expense of intangible assets | ||||||||
Total | $ 4,352 | $ 4,352 | $ 2,826 | |||||
Sterling | Customer relationship | ||||||||
Finite-lived intangible assets | ||||||||
Intangible assets | $ 2,300 | |||||||
Amortization period | 20 years | |||||||
CedarPoint | Customer relationship | ||||||||
Finite-lived intangible assets | ||||||||
Intangible assets | $ 2,000 | |||||||
Amortization period | 12 years | |||||||
Centrue | ||||||||
Finite-lived intangible assets | ||||||||
Intangible assets | $ 11,070 | |||||||
Centrue | Core deposits | ||||||||
Finite-lived intangible assets | ||||||||
Intangible assets | $ 11,100 | |||||||
Amortization period | 8 years |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Fair value of the Company's derivative financial instruments as well as their classification on the consolidated statements of condition | |||||
Net (losses) gains recognized on derivative instruments | $ 1,100,000 | $ 5,200,000 | $ 48,000,000,000 | $ 527,000,000,000 | |
Other assets | |||||
Fair value of the Company's derivative financial instruments as well as their classification on the consolidated statements of condition | |||||
Notional amount, asset derivatives | 687,225,000 | 687,225,000 | $ 566,147,000 | ||
Fair value of asset derivatives | 6,426,000 | 6,426,000 | 6,378,000 | ||
Interest rate lock commitments | Other assets | |||||
Fair value of the Company's derivative financial instruments as well as their classification on the consolidated statements of condition | |||||
Notional amount, asset derivatives | 337,280,000 | 337,280,000 | 264,359,000 | ||
Fair value of asset derivatives | 6,421,000 | 6,421,000 | 6,253,000 | ||
Forward commitments to sell mortgage-backed securities | Other assets | |||||
Fair value of the Company's derivative financial instruments as well as their classification on the consolidated statements of condition | |||||
Notional amount, asset derivatives | 349,945,000 | 349,945,000 | 301,788,000 | ||
Fair value of asset derivatives | 5,000 | 5,000 | $ 125,000 | ||
Interest rate swap contracts | |||||
Fair value of the Company's derivative financial instruments as well as their classification on the consolidated statements of condition | |||||
Notional amount of interest rate swaps | 10,100,000 | 10,100,000 | |||
Interest rate swap contracts | Other assets | |||||
Fair value of the Company's derivative financial instruments as well as their classification on the consolidated statements of condition | |||||
Fair value of asset derivatives | 121,000 | 121,000 | |||
Interest rate swap contracts | Other liabilities. | |||||
Fair value of the Company's derivative financial instruments as well as their classification on the consolidated statements of condition | |||||
Fair value of liability derivatives | $ 121,000 | $ 121,000 |
DEPOSITS (Details)
DEPOSITS (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Classification of deposits | ||
Non-interest bearing demand | $ 674,118 | $ 562,333 |
Interest bearing: | ||
Checking | 800,649 | 656,248 |
Money market | 633,844 | 399,851 |
Savings | 278,977 | 166,910 |
Time | 726,879 | 619,024 |
Total deposits | $ 3,114,467 | $ 2,404,366 |
SHORT-TERM BORROWINGS (Details)
SHORT-TERM BORROWINGS (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Short-term Debt [Line Items] | ||
Outstanding at period-end | $ 153,443 | $ 131,557 |
Average amount outstanding | 157,388 | 130,228 |
Maximum amount outstanding at any month end | $ 183,327 | $ 168,369 |
Weighted average interest rate: | ||
During period | 0.22% | 0.23% |
End of period | 0.23% | 0.21% |
Short-term Debt, Other Disclosures [Abstract] | ||
Federal funds lines of credit | $ 55,000 | |
Line of credit | 0 | $ 0 |
Loans and Leases Receivable, Gross, Carrying Amount, Commercial | 1,630,000 | 1,180,000 |
Commercial real estate | ||
Short-term Debt, Other Disclosures [Abstract] | ||
Loans and Leases Receivable, Gross, Carrying Amount, Commercial | 31,500 | 43,300 |
Securities sold under repurchase agreement | ||
Short-term Debt, Other Disclosures [Abstract] | ||
Investment securities pledged/collateralized for secured borrowings | 185,700 | 140,000 |
Federal Reserve Discount Window | ||
Short-term Debt, Other Disclosures [Abstract] | ||
Line of credit | $ 23,200 | $ 35,100 |
FHLB ADVANCES AND OTHER BORRO76
FHLB ADVANCES AND OTHER BORROWINGS (Details) - USD ($) $ / shares in Units, $ in Thousands | May 25, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Total FHLB advances and other borrowings | $ 488,870 | $ 237,518 | |
Federal Home Loan Bank Advances, Interest Rate Information | |||
Preferred stock, shares issued | 2,636 | ||
Preferred stock, par value | $ 2 | $ 2 | |
Line of credit | $ 55,000 | ||
Advances | 0 | $ 0 | |
Principal payment on term loan | 1,400 | ||
Qualifying collateralized loans | $ 1,630,000 | $ 1,180,000 | |
Revolving Credit Facility [Member] | Maximum | |||
Federal Home Loan Bank Advances, Interest Rate Information | |||
Line of credit | $ 10,000 | ||
LIBOR | Revolving Credit Facility [Member] | |||
Federal Home Loan Bank Advances, Interest Rate Information | |||
Variable rate basis | one-month LIBOR | ||
Basis spread on variable rate | 2.00% | ||
Series G Preferred Stock | |||
Federal Home Loan Bank Advances, Interest Rate Information | |||
Preferred stock, shares issued | 181 | 181 | |
Preferred stock, par value | $ 1,000 | ||
Midland States Bancorp, Inc | Series G Preferred Stock | |||
Federal Home Loan Bank Advances, Interest Rate Information | |||
Long term debt | $ 181 | ||
Obligations under capital leases ? implicit interest rate of 1.70% ? maturing through July 2018 | Midland States Bank | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Total FHLB advances and other borrowings | 6 | $ 18 | |
Term loan | |||
Federal Home Loan Bank Advances, Interest Rate Information | |||
Face amount | $ 40,000 | ||
Term loan | LIBOR | |||
Federal Home Loan Bank Advances, Interest Rate Information | |||
Variable rate basis | one-month LIBOR | ||
Basis spread on variable rate | 2.25% | ||
Term loan | Midland States Bancorp, Inc | |||
Federal Home Loan Bank Advances, Interest Rate Information | |||
Long term debt | $ 38,539 | ||
Term loan | Midland States Bancorp, Inc | LIBOR | |||
Federal Home Loan Bank Advances, Interest Rate Information | |||
Basis spread on variable rate | 2.25% | ||
Interest rate during the period | 3.50% | ||
Fixed Rate Term Loan | Midland States Bank | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Total FHLB advances and other borrowings | $ 411,144 | 237,500 | |
Fixed rate, fixed term maturing through June 2021 | Midland States Bank | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Total FHLB advances and other borrowings | $ 176,000 | $ 112,500 | |
Federal Home Loan Bank Advances, Interest Rate Information | |||
FHLB advances interest rate | 1.28% | 1.00% | |
Putable fixed rate loan maturing through August 2023 | Midland States Bank | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Total FHLB advances and other borrowings | $ 235,000 | $ 125,000 | |
Federal Home Loan Bank Advances, Interest Rate Information | |||
FHLB advances interest rate | 1.10% | 0.79% | |
Variable rate, fixed term maturing through March 2018 | Midland States Bank | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Total FHLB advances and other borrowings | $ 39,000 | ||
Federal Home Loan Bank Advances, Interest Rate Information | |||
FHLB advances interest rate | 0.85% |
SUBORDINATED DEBT (Details)
SUBORDINATED DEBT (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Subordinated Borrowing [Line Items] | ||
Carrying amount | $ 54,581 | $ 54,508 |
Subordinate debt, $40,325 maturing June 18, 2025 | ||
Subordinated Borrowing [Line Items] | ||
Fixed interest rate | 6.00% | |
Face amount | $ 40,325 | |
Carrying amount | $ 39,783 | 39,729 |
Duration with fixed interest rate | 5 years | |
Subordinate debt, $40,325 maturing June 18, 2025 | LIBOR | ||
Subordinated Borrowing [Line Items] | ||
Variable interest rate (as a percent) | 4.35% | |
Variable rate basis | three month LIBOR | |
Subordinate debt, $15,000 maturing June 18, 2025 | ||
Subordinated Borrowing [Line Items] | ||
Fixed interest rate | 6.50% | |
Face amount | $ 15,000 | |
Carrying amount | $ 14,798 | $ 14,779 |
TRUST PREFERRED DEBNTURES (Deta
TRUST PREFERRED DEBNTURES (Details) - USD ($) | 9 Months Ended | |||||||
Sep. 30, 2017 | Jun. 09, 2017 | Dec. 31, 2016 | Jun. 05, 2013 | Jun. 07, 2007 | Nov. 30, 2006 | Apr. 30, 2004 | Mar. 26, 2004 | |
TRUST PREFERRED DEBENTURES | ||||||||
Trust preferred debentures | $ 45,267,000 | $ 37,405,000 | ||||||
Centrue | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Book value of subordinated debentures | $ 10,000,000 | |||||||
Liquidation amount per security | $ 1,000 | |||||||
Number of preferred securities issued | 10,000 | |||||||
Fair value of subordinated debentures | $ 7,600,000 | |||||||
Centrue Bank | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Trust preferred debentures | 7,587,000 | |||||||
Trust preferred debentures maturing January 23, 2034 | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Trust preferred debentures | $ 2,043,000 | $ 1,996,000 | ||||||
Trust preferred debentures maturing January 23, 2034 | Grant Park Trust | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Face amount | $ 3,000,000 | |||||||
Trust preferred debentures maturing January 23, 2034 | Grant Park Trust | LIBOR | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Variable interest rate (as a percent) | 2.85% | |||||||
Interest rate (as a percent) | 4.16% | 3.74% | ||||||
Trust preferred debentures maturing April 23, 2034 | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Trust preferred debentures | $ 9,959,000 | $ 9,957,000 | ||||||
Trust preferred debentures maturing April 23, 2034 | Midland Trust | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Face amount | $ 10,000,000 | |||||||
Trust preferred debentures maturing April 23, 2034 | Midland Trust | LIBOR | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Variable interest rate (as a percent) | 2.75% | |||||||
Interest rate (as a percent) | 4.06% | 3.63% | ||||||
Trust preferred debentures maturing December 31, 2036 | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Trust preferred debentures | $ 13,253,000 | $ 13,141,000 | ||||||
Trust preferred debentures maturing December 31, 2036 | LSHC Trust III | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Face amount | $ 20,000,000 | |||||||
Trust preferred debentures maturing December 31, 2036 | LSHC Trust III | LIBOR | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Variable interest rate (as a percent) | 1.75% | |||||||
Interest rate (as a percent) | 3.07% | 2.71% | ||||||
Trust preferred debentures maturing September 6, 2037 | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Trust preferred debentures | $ 12,425,000 | $ 12,311,000 | ||||||
Trust preferred debentures maturing September 6, 2037 | LSHC Trust IV | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Face amount | $ 20,000,000 | |||||||
Trust preferred debentures maturing September 6, 2037 | LSHC Trust IV | LIBOR | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Variable interest rate (as a percent) | 1.47% | |||||||
Interest rate (as a percent) | 2.79% | 2.42% | ||||||
Trust preferred debentures maturing April 22, 2034 | Centrue Bank | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Face amount | $ 10,000 | |||||||
Trust preferred debentures maturing April 22, 2034 | Centrue Bank | LIBOR | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Variable interest rate (as a percent) | 2.65% | |||||||
Interest rate (as a percent) | 3.97% | |||||||
Other assets | Centrue Bank | ||||||||
TRUST PREFERRED DEBENTURES | ||||||||
Company's investment in the common stock of trust | $ 310,000 |
PREFERRED STOCK (Details)
PREFERRED STOCK (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 09, 2017 | Sep. 30, 2017 |
Fair value of preferred stock issued | $ 3,015 | |
Series G Preferred Stock | ||
Dividend rate, per-dollar-amount | $ 60 | |
Series H Preferred Stock | ||
Fair value of preferred stock issued | $ 3,100 | |
Dividend rate | 12.50% | |
Redemption price per share | $ 1,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net income | $ 2,036 | $ 8,051 | $ 14,065 | $ 19,959 |
Preferred dividends declared | (83) | (102) | ||
Amortization of preferred stock premium | 56 | 56 | ||
Net income available to common shareholders | 2,009 | 8,051 | 14,019 | 19,959 |
Common shareholder dividends | (3,818) | (2,773) | (10,100) | (7,022) |
Unvested restricted stock award dividends | (19) | (12) | (59) | (35) |
Undistributed earnings to unvested restricted stock awards | (26) | (21) | (69) | |
Undistributed earnings to common shareholders | (1,828) | 5,240 | 3,839 | 12,833 |
Basic | ||||
Distributed earnings to common shareholders | 3,818 | 2,773 | 10,100 | 7,022 |
Undistributed earnings to common shareholders | (1,828) | 5,240 | 3,839 | 12,833 |
Net income | 2,009 | 8,051 | 14,019 | 19,959 |
Total common shareholders earnings | 1,990 | 8,013 | 13,939 | 19,855 |
Diluted | ||||
Distributed earnings to common shareholders | 3,818 | 2,773 | 10,100 | 7,022 |
Undistributed earnings to common shareholders | (1,828) | 5,240 | 3,839 | 12,833 |
Net income | 2,009 | 8,051 | 14,019 | 19,959 |
Add back: | ||||
Undistributed earnings reallocated from unvested restricted stock awards | 1 | 1 | ||
Total common shareholders earnings, diluted | $ 1,990 | $ 8,013 | $ 13,940 | $ 19,856 |
Weighted average common shares outstanding, basic (In shares) | 19,265,409 | 15,578,703 | 17,274,746 | 13,637,997 |
Weighted average common shares outstanding, diluted (In shares) | 19,704,217 | 15,858,273 | 17,797,235 | 13,902,664 |
Basic earnings per common share (In dollars per share) | $ 0.10 | $ 0.51 | $ 0.81 | $ 1.46 |
Diluted earnings per common share (In dollars per share) | $ 0.10 | $ 0.51 | $ 0.78 | $ 1.43 |
Options and warrants | ||||
Add back: | ||||
Options and warrants | 438,808 | 279,570 | 522,489 | 264,667 |
FAIR VALUE OF FINANCIAL INSTR81
FAIR VALUE OF FINANCIAL INSTRUMENTS - Recurring and Nonrecurring basis (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Available-for-sale Securities | $ 396,985 | $ 246,339 |
Assets measured at fair value on a non-recurring basis: | ||
Mortgage servicing rights held for sale | 10,618 | |
U.S. Treasury securities | ||
Assets | ||
Available-for-sale Securities | 47,907 | 75,901 |
Government sponsored entity debt securities | ||
Assets | ||
Available-for-sale Securities | 19,389 | 7,688 |
State and municipal securities | ||
Assets | ||
Available-for-sale Securities | 39,716 | 25,274 |
Corporate securities | ||
Assets | ||
Available-for-sale Securities | 57,307 | 47,405 |
Equity securities | ||
Assets | ||
Available-for-sale Securities | 2,812 | |
Level 1 | ||
Assets | ||
Available-for-sale Securities | 47,907 | 75,901 |
Level 2 | ||
Assets | ||
Available-for-sale Securities | 344,329 | 162,957 |
Loans held for sale | 35,874 | 70,565 |
Level 2 | Interest rate lock commitments | ||
Assets | ||
Derivative Assets | 6,421 | 6,253 |
Level 2 | Forward commitments to sell mortgage-backed securities | ||
Assets | ||
Derivative Assets | 5 | 125 |
Level 2 | Interest rate swap contracts | ||
Assets | ||
Derivative Assets | 121 | |
Liabilities | ||
Derivative liability | 121 | |
Level 3 | ||
Assets | ||
Available-for-sale Securities | 4,749 | 7,481 |
Recurring member | ||
Assets | ||
Loans held for sale | 35,874 | 70,565 |
Total Assets | 439,406 | 323,282 |
Assets measured at fair value on a non-recurring basis: | ||
Mortgage servicing rights held for sale | 10,618 | |
Assets held for sale | 2,858 | |
Recurring member | Interest rate lock commitments | ||
Assets | ||
Derivative Assets | 6,421 | 6,253 |
Recurring member | Forward commitments to sell mortgage-backed securities | ||
Assets | ||
Derivative Assets | 5 | 125 |
Recurring member | Interest rate swap contracts | ||
Assets | ||
Derivative Assets | 121 | |
Liabilities | ||
Derivative liability | 121 | |
Recurring member | U.S. Treasury securities | ||
Assets | ||
Available-for-sale Securities | 47,907 | 75,901 |
Recurring member | Government sponsored entity debt securities | ||
Assets | ||
Available-for-sale Securities | 19,389 | 7,688 |
Recurring member | Agency mortgage-backed securities | ||
Assets | ||
Available-for-sale Securities | 229,854 | 90,070 |
Recurring member | Non-agency mortgage-backed securities | ||
Assets | ||
Available-for-sale Securities | 1 | |
Recurring member | State and municipal securities | ||
Assets | ||
Available-for-sale Securities | 39,716 | 25,274 |
Recurring member | Corporate securities | ||
Assets | ||
Available-for-sale Securities | 57,307 | 47,405 |
Recurring member | Equity securities | ||
Assets | ||
Available-for-sale Securities | 2,812 | |
Recurring member | Level 1 | ||
Assets | ||
Total Assets | 47,907 | 75,901 |
Recurring member | Level 1 | U.S. Treasury securities | ||
Assets | ||
Available-for-sale Securities | 47,907 | 75,901 |
Recurring member | Level 2 | ||
Assets | ||
Loans held for sale | 35,874 | 70,565 |
Total Assets | 386,750 | 239,900 |
Assets measured at fair value on a non-recurring basis: | ||
Assets held for sale | 2,858 | |
Recurring member | Level 2 | Interest rate lock commitments | ||
Assets | ||
Derivative Assets | 6,421 | 6,253 |
Recurring member | Level 2 | Forward commitments to sell mortgage-backed securities | ||
Assets | ||
Derivative Assets | 5 | 125 |
Recurring member | Level 2 | Interest rate swap contracts | ||
Assets | ||
Derivative Assets | 121 | |
Liabilities | ||
Derivative liability | 121 | |
Recurring member | Level 2 | Government sponsored entity debt securities | ||
Assets | ||
Available-for-sale Securities | 19,389 | 7,688 |
Recurring member | Level 2 | Agency mortgage-backed securities | ||
Assets | ||
Available-for-sale Securities | 229,854 | 90,070 |
Recurring member | Level 2 | State and municipal securities | ||
Assets | ||
Available-for-sale Securities | 39,716 | 25,274 |
Recurring member | Level 2 | Corporate securities | ||
Assets | ||
Available-for-sale Securities | 52,558 | 39,925 |
Recurring member | Level 2 | Equity securities | ||
Assets | ||
Available-for-sale Securities | 2,812 | |
Recurring member | Level 3 | ||
Assets | ||
Total Assets | 4,749 | 7,481 |
Assets measured at fair value on a non-recurring basis: | ||
Mortgage servicing rights held for sale | 10,618 | |
Recurring member | Level 3 | Non-agency mortgage-backed securities | ||
Assets | ||
Available-for-sale Securities | 1 | |
Recurring member | Level 3 | Corporate securities | ||
Assets | ||
Available-for-sale Securities | 4,749 | 7,480 |
Non recurring member | ||
Assets measured at fair value on a non-recurring basis: | ||
Mortgage servicing rights | 56,299 | |
Impaired loans | 18,311 | 10,202 |
Other real estate owned | 165 | |
Assets held for sale | 1,550 | |
Non recurring member | Level 2 | ||
Assets measured at fair value on a non-recurring basis: | ||
Impaired loans | 6,227 | 6,635 |
Other real estate owned | 165 | |
Assets held for sale | 1,550 | |
Non recurring member | Level 3 | ||
Assets measured at fair value on a non-recurring basis: | ||
Mortgage servicing rights | 56,299 | |
Impaired loans | $ 12,084 | $ 3,567 |
FAIR VALUE OF FINANCIAL INSTR82
FAIR VALUE OF FINANCIAL INSTRUMENTS - Losses Recognized on Assets, Nonrecurring basis (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Losses recognized on assets measured on non-recurring basis | ||||
Mortgage servicing rights | $ 1,830 | $ 6,093 | ||
Mortgage servicing rights held for sale | $ 3,617 | 3,617 | ||
Non recurring member | ||||
Losses recognized on assets measured on non-recurring basis | ||||
Mortgage servicing rights | 104 | $ 1,073 | 1,830 | 6,093 |
Mortgage servicing rights held for sale | 3,617 | 3,617 | ||
Impaired loans | 1 | 144 | 564 | 310 |
Other real estate owned | 4 | 180 | 219 | |
Assets held for sale | 1,130 | |||
Total loss on assets measured on a nonrecurring basis | $ 3,722 | $ 1,221 | $ 7,321 | $ 6,622 |
FAIR VALUE OF FINANCIAL INSTR83
FAIR VALUE OF FINANCIAL INSTRUMENTS- Unobservable inputs (Level 3) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Corporate securities | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Beginning balance | $ 4,740,000 | $ 9,765,000 | $ 7,480,000 | |
Transferred from Level 2 | 0 | 0 | $ 6,749,000 | |
Transferred to Level 2 | (2,000,000) | (2,000,000) | ||
Purchases of investment securities recognized as Level 3 | 3,000,000 | |||
Total realized in earnings | 54,000 | (93,000) | 235,000 | (251,000) |
Total unrealized in other comprehensive income | (294,000) | 242,000 | (296,000) | |
Net settlements (principal and interest) | (45,000) | (84,000) | (3,208,000) | (224,000) |
Ending balance | $ 4,749,000 | 7,480,000 | 4,749,000 | 7,480,000 |
Non-agency mortgage-backed securities | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Beginning balance | 2,000 | 1,000 | ||
Transferred from Level 2 | 2,000 | |||
Net settlements (principal and interest) | (1,000) | $ (1,000) | (1,000) | |
Ending balance | $ 1,000 | $ 1,000 |
FAIR VALUE OF FINANCIAL INSTR84
FAIR VALUE OF FINANCIAL INSTRUMENTS- Carrying values and fair value (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Investment securities available for sale | $ 396,985 | $ 246,339 |
Investment securities held to maturity | 75,142 | 81,952 |
Accrued interest receivable | 11,673 | 8,202 |
Liabilities | ||
Trust preferred debentures | 45,267 | 37,405 |
Accrued interest payable | 2,355 | 1,045 |
Level 1 | ||
Assets | ||
Cash and due from banks | 180,807 | 189,543 |
Federal funds sold | 2,765 | 1,173 |
Investment securities available for sale | 47,907 | 75,901 |
Level 2 | ||
Assets | ||
Investment securities available for sale | 344,329 | 162,957 |
Investment securities held to maturity | 75,142 | 81,952 |
Loans held for sale | 35,874 | 70,565 |
Accrued interest receivable | 11,673 | 8,202 |
Liabilities | ||
Deposits | 3,112,541 | 2,404,231 |
Short-term borrowings | 153,443 | 131,557 |
FHLB and other borrowings | 488,196 | 236,736 |
Subordinated debt | 50,055 | 49,692 |
Trust preferred debentures | 43,114 | 33,054 |
Accrued interest payable | 2,355 | 1,045 |
Level 3 | ||
Assets | ||
Investment securities available for sale | 4,749 | 7,481 |
Loans, net | 3,142,910 | 2,305,206 |
Carrying value | ||
Assets | ||
Cash and due from banks | 180,807 | 189,543 |
Federal funds sold | 2,765 | 1,173 |
Investment securities available for sale | 396,985 | 246,339 |
Investment securities held to maturity | 70,867 | 78,672 |
Nonmarketable equity securities | 34,391 | 19,485 |
Loans, net | 3,141,111 | 2,305,114 |
Loans held for sale | 35,874 | 70,565 |
Accrued interest receivable | 11,673 | 8,202 |
Liabilities | ||
Deposits | 3,114,467 | 2,404,366 |
Short-term borrowings | 153,443 | 131,557 |
FHLB and other borrowings | 488,870 | 237,518 |
Subordinated debt | 54,581 | 54,508 |
Trust preferred debentures | 45,267 | 37,405 |
Accrued interest payable | 2,355 | 1,045 |
Fair value | ||
Assets | ||
Cash and due from banks | 180,807 | 189,543 |
Federal funds sold | 2,765 | 1,173 |
Investment securities available for sale | 396,985 | 246,339 |
Investment securities held to maturity | 75,142 | 81,952 |
Loans, net | 3,142,910 | 2,305,206 |
Loans held for sale | 35,874 | 70,565 |
Accrued interest receivable | 11,673 | 8,202 |
Liabilities | ||
Deposits | 3,112,541 | 2,404,231 |
Short-term borrowings | 153,443 | 131,557 |
FHLB and other borrowings | 488,196 | 236,736 |
Subordinated debt | 50,055 | 49,692 |
Trust preferred debentures | 43,114 | 33,054 |
Accrued interest payable | 2,355 | 1,045 |
Interest rate lock commitments | Level 2 | ||
Assets | ||
Derivative Assets | 6,421 | 6,253 |
Interest rate lock commitments | Carrying value | ||
Assets | ||
Derivative Assets | 6,421 | 6,253 |
Interest rate lock commitments | Fair value | ||
Assets | ||
Derivative Assets | 6,421 | 6,253 |
Forward commitments to sell mortgage-backed securities | Level 2 | ||
Assets | ||
Derivative Assets | 5 | 125 |
Forward commitments to sell mortgage-backed securities | Carrying value | ||
Assets | ||
Derivative Assets | 5 | 125 |
Forward commitments to sell mortgage-backed securities | Fair value | ||
Assets | ||
Derivative Assets | 5 | $ 125 |
Interest rate swap contracts | Level 2 | ||
Assets | ||
Derivative Assets | 121 | |
Liabilities | ||
Derivative Liability | 121 | |
Interest rate swap contracts | Carrying value | ||
Assets | ||
Derivative Assets | 121 | |
Liabilities | ||
Derivative Liability | 121 | |
Interest rate swap contracts | Fair value | ||
Assets | ||
Derivative Assets | 121 | |
Liabilities | ||
Derivative Liability | $ 121 |
FAIR VALUE OF FINANCIAL INSTR85
FAIR VALUE OF FINANCIAL INSTRUMENTS- Additional Information (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | |
Corporate securities | ||||
Fair value, additional information | ||||
AFS transferred to Level 3 | $ 0 | $ 0 | $ 6,749,000 | |
Transferred to Level 2 | $ 2,000,000 | 2,000,000 | ||
Corporate securities | Minimum | ||||
Fair value, additional information | ||||
Discount rate (negative) | 2 | |||
Corporate securities | Maximum | ||||
Fair value, additional information | ||||
Discount rate | 2.50% | |||
Corporate securities | Weighted average | ||||
Fair value, additional information | ||||
Discount rate | 1.50% | |||
Non-agency mortgage-backed securities | ||||
Fair value, additional information | ||||
AFS transferred to Level 3 | $ 2,000 |
COMMITMENTS, CONTINGENCIES AN86
COMMITMENTS, CONTINGENCIES AND CREDIT RISK - Maturities (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Anticipated material loss | $ 0 | $ 0 | |||
Losses as a result of make whole requests and loan repurchases | 17,000,000 | $ 0 | 17,000,000 | $ 83,000,000 | |
Liability for unresolved repurchase demands | 366,000 | 366,000 | $ 329,000 | ||
Commitments to extend credit | |||||
Loan commitments | 605,419,000 | 605,419,000 | 483,345,000 | ||
Financial guarantees - standby letters of credit | |||||
Loan commitments | $ 71,616,000 | $ 71,616,000 | $ 89,233,000 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||||
Net interest income (expense) | $ 36,765 | $ 27,265 | $ 93,626 | $ 79,294 | |
Provision for loan losses | 1,489 | 1,392 | 3,480 | 3,146 | |
Noninterest income | 15,403 | 14,937 | 45,364 | 41,572 | |
Noninterest expense | 48,363 | 28,657 | 116,805 | 87,199 | |
Income (loss) before income taxes (benefit) | 2,316 | 12,153 | 18,705 | 30,521 | |
Income taxes (benefit) | 280 | 4,102 | 4,640 | 10,562 | |
Net income | 2,036 | 8,051 | 14,065 | 19,959 | |
Total assets | 4,347,761 | 3,247,727 | 4,347,761 | 3,247,727 | $ 3,233,723 |
Banking | |||||
Segment Reporting Information [Line Items] | |||||
Net interest income (expense) | 38,598 | 28,394 | 97,580 | 82,939 | |
Provision for loan losses | 1,489 | 1,392 | 3,480 | 3,146 | |
Noninterest income | 8,571 | 9,714 | 24,339 | 21,347 | |
Noninterest expense | 42,425 | 23,640 | 99,214 | 69,784 | |
Income (loss) before income taxes (benefit) | 3,255 | 13,076 | 19,225 | 31,356 | |
Income taxes (benefit) | 996 | 4,573 | 4,870 | 9,348 | |
Net income | 2,259 | 8,503 | 14,355 | 22,008 | |
Total assets | 4,370,600 | 3,252,421 | 4,370,600 | 3,252,421 | |
Commercial FHA Origination and Servicing | |||||
Segment Reporting Information [Line Items] | |||||
Net interest income (expense) | (79) | 215 | 325 | 712 | |
Noninterest income | 3,966 | 3,557 | 15,189 | 19,212 | |
Noninterest expense | 3,910 | 3,511 | 11,639 | 12,203 | |
Income (loss) before income taxes (benefit) | (23) | 261 | 3,875 | 7,721 | |
Income taxes (benefit) | (9) | 104 | 1,550 | 3,088 | |
Net income | (14) | 157 | 2,325 | 4,633 | |
Total assets | 121,514 | 100,516 | 121,514 | 100,516 | |
Other | |||||
Segment Reporting Information [Line Items] | |||||
Net interest income (expense) | (1,754) | (1,344) | (4,279) | (4,357) | |
Noninterest income | 2,866 | 1,666 | 5,836 | 1,013 | |
Noninterest expense | 2,028 | 1,506 | 5,952 | 5,212 | |
Income (loss) before income taxes (benefit) | (916) | (1,184) | (4,395) | (8,556) | |
Income taxes (benefit) | (707) | (575) | (1,780) | (1,874) | |
Net income | (209) | (609) | (2,615) | (6,682) | |
Total assets | $ (144,353) | $ (105,210) | $ (144,353) | $ (105,210) |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)item | Sep. 30, 2016USD ($) | |
One Of The Board Of Directors | ||||
Related Party Transaction [Line Items] | ||||
Payments to related party | $ 116,000 | |||
Related Party Operating Lease Member | ||||
Related Party Transaction [Line Items] | ||||
Number of the bank's full-service branch facilities | item | 3 | |||
Payments to related party | $ 166,000 | $ 165,000 | $ 553,000 | $ 540,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Oct. 16, 2017USD ($)location$ / sharesshares | Oct. 13, 2017USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) |
Subsequent Event [Line Items] | |||||
Total assets | $ 4,347,761,000 | $ 3,233,723,000 | $ 3,247,727,000 | ||
Subordinated Debentures Maturing October 15 2027 | LIBOR | |||||
Subsequent Event [Line Items] | |||||
Variable rate basis | three-month LIBOR | ||||
Variable interest rate (as a percent) | 422.90% | ||||
Subsequent Events | |||||
Subsequent Event [Line Items] | |||||
Share Price | $ / shares | $ 33.10 | ||||
Subsequent Events | Subordinated Debentures Maturing October 15 2027 | |||||
Subsequent Event [Line Items] | |||||
Face amount | $ 40,000,000 | ||||
Interest rate | 6.25% | ||||
Period of debentures | 5 years | ||||
Finance cost | $ 600,000 | ||||
Subsequent Events | Alpine | |||||
Subsequent Event [Line Items] | |||||
Total consideration | $ 181,000,000 | ||||
Cash transferred | $ 33,300,000 | ||||
Number of service banking centers acquired | location | 19 | ||||
Total assets | $ 1,280,000,000 | ||||
Loans | 830,200,000 | ||||
Deposits | $ 1,140,000,000 | ||||
Subsequent Events | Alpine | Common stock | |||||
Subsequent Event [Line Items] | |||||
Shares issued | shares | 4,463,200 |