Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 13, 2019 | |
Document And Entity Information Abstract | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Entity Registrant Name | Meridian Corp | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 6,405,600 | |
Entity Central Index Key | 0001750735 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
CONSOLIDATED BALANCE SHEETS | ||
Cash and due from banks | $ 40,267 | $ 23,159 |
Federal funds sold | 265 | 793 |
Cash and cash equivalents | 40,532 | 23,952 |
Securities available-for-sale (amortized cost of $48,276 and $50,942 as of June 30, 2019 and December 31, 2018) | 52,757 | 50,428 |
Securities held-to-maturity (fair value of $12,480 and $12,655 as of June 30, 2019 and December 31, 2018) | 8,814 | 12,741 |
Mortgage loans held for sale (amortized cost of $39,066 and $37,337 as of June 30, 2019 and December 31, 2018) | 48,615 | 37,695 |
Loans, net of fees and costs (includes $12,381 and $11,422 of loans at fair value, amortized cost of $12,012 and $11,466 as of June 30, 2019 and December 31, 2018) | 935,858 | 838,106 |
Allowance for loan and lease losses | (9,312) | (8,053) |
Loans, net of the allowance for loan and lease losses | 926,546 | 830,053 |
Restricted investment in bank stock | 8,237 | 7,002 |
Bank premises and equipment, net | 8,929 | 9,638 |
Bank owned life insurance | 11,787 | 11,569 |
Accrued interest receivable | 3,155 | 2,889 |
Other real estate owned | 120 | |
Deferred income taxes (Footnote 1) | 1,803 | 1,728 |
Goodwill and intangible assets | 4,841 | 5,046 |
Other assets | 10,801 | 4,739 |
Total assets | 1,126,937 | 997,480 |
Deposits: | ||
Noninterest bearing | 129,302 | 126,150 |
Interest-bearing | 729,159 | 625,980 |
Total deposits | 858,461 | 752,130 |
Short-term borrowings | 128,465 | 114,300 |
Long-term debt | 3,123 | 6,238 |
Subordinated debentures | 9,176 | 9,239 |
Accrued interest payable | 669 | 305 |
Other liabilities (Footnote 1) | 9,271 | 5,716 |
Total liabilities | 1,009,165 | 887,928 |
Stockholders’ equity: | ||
Common stock, $1 par value. Authorized 10,000,000 shares; issued and outstanding 6,406,996 and 6,406,795 as of June 30, 2019 and December 31, 2018 | 6,408 | 6,407 |
Surplus | 80,192 | 79,919 |
Retained earnings (Footnote 1) | 30,961 | 23,616 |
Accumulated other comprehensive loss | 211 | (390) |
Total stockholders’ equity | 117,772 | 109,552 |
Total liabilities and stockholders’ equity | $ 1,126,937 | $ 997,480 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
CONSOLIDATED BALANCE SHEETS | ||
Available-for-sale, Amortized Cost | $ 52,496 | $ 50,942 |
Securities held-to-maturity | 9,028 | 12,655 |
Mortgage loans held for sale, amortized cost | 48,339 | 37,337 |
Loans at fair value | 11,278 | 11,422 |
Loans at amortized cost | $ 10,934 | $ 11,466 |
Common stock, par value | $ 1 | $ 1 |
Common stock, Authorized shares | 10,000,000 | 10,000,000 |
Common Stock, Shares, Issued | 6,407,685 | 6,406,795 |
Common Stock, Shares, Outstanding | 6,407,685 | 6,406,795 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Interest income: | ||||
Loans, including fees | $ 13,152 | $ 11,218 | $ 37,686 | $ 31,217 |
Securities: | ||||
Taxable | 336 | 213 | 892 | 549 |
Tax-exempt | 64 | 112 | 273 | 336 |
Cash and cash equivalents | 38 | 30 | 136 | 75 |
Total interest income | 13,590 | 11,573 | 38,987 | 32,177 |
Interest expense: | ||||
Deposits | 3,633 | 2,485 | 10,584 | 6,171 |
Borrowings | 683 | 710 | 1,731 | 1,790 |
Total interest expense | 4,316 | 3,195 | 12,315 | 7,961 |
Net interest income | 9,274 | 8,378 | 26,672 | 24,216 |
Provision for loan losses | 705 | 291 | 938 | 1,258 |
Net interest income after provision for loan losses | 8,569 | 8,087 | 25,734 | 22,958 |
Non-interest income: | ||||
Mortgage banking income | 7,910 | 8,274 | 19,139 | 20,407 |
Wealth management income | 922 | 930 | 2,698 | 2,996 |
SBA loan income | 645 | 1,160 | ||
Earnings on investment in life insurance | 74 | 74 | 218 | 225 |
Net change in the fair value of derivative instruments | 70 | (16) | 59 | |
Net change in the fair value of loans held-for-sale | 54 | (300) | (82) | (241) |
Net change in the fair value of loans held-for-investment | (24) | (103) | 390 | (289) |
Gain on sale of investment securities available-for-sale | 74 | 212 | ||
Service charges | 28 | 27 | 82 | 87 |
Other | 131 | 195 | 387 | 1,647 |
Total non-interest income | 9,814 | 9,167 | 24,188 | 24,891 |
Non-interest expenses: | ||||
Salaries and employee benefits | 9,319 | 8,901 | 25,789 | 26,719 |
Occupancy and equipment | 946 | 920 | 2,845 | 2,870 |
Loan expenses | 758 | 769 | 1,877 | 1,962 |
Professional fees | 820 | 714 | 2,000 | 1,670 |
Advertising and promotion | 574 | 590 | 1,769 | 1,802 |
Data processing | 343 | 334 | 990 | 924 |
Information technology | 334 | 268 | 919 | 836 |
Communications | 155 | 197 | 510 | 683 |
Other | 903 | 1,060 | 3,813 | 2,923 |
Total non-interest expenses | 14,152 | 13,753 | 40,512 | 40,389 |
Income before income taxes | 4,231 | 3,501 | 9,410 | 7,460 |
Income tax expense | 914 | 774 | 2,065 | 1,661 |
Net income | $ 3,317 | $ 2,727 | $ 7,345 | $ 5,799 |
Basic earnings per common share | $ 0.52 | $ 0.43 | $ 1.15 | $ 0.91 |
Diluted earnings per common share | $ 0.52 | $ 0.42 | $ 1.14 | $ 0.90 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income: | $ 3,317 | $ 2,727 | $ 7,345 | $ 5,799 |
Net change in unrealized gains (losses) on investment securities available for sale: | ||||
Net unrealized gains (losses) arising during the period, net of tax (benefit) expense of $17, ($57), $219, and ($155), respectively | 64 | (171) | 767 | (510) |
Less: reclassification adjustment for net (gains) on sales realized in net income, net of tax (expense) benefit of ($16), $0, ($47), and $0, respectively | (58) | (166) | ||
Unrealized investment gains (losses), net of tax expense (benefit) of $1, ($57), $172, and ($155), respectively | 6 | (171) | 601 | (510) |
Total other comprehensive income (loss) | 6 | (171) | 601 | (510) |
Total comprehensive income | $ 3,323 | $ 2,556 | $ 7,946 | $ 5,289 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Tax (benefit) expense on unrealized (losses) gains arising during the period | $ 17 | $ (57) | $ 219 | $ (155) |
Tax expense on reclassification adjustment for net gains on sales realized in net income | (16) | 0 | (47) | 0 |
Tax (benefit) expense on unrealized investment gains (losses) | $ 1 | $ (57) | $ 172 | $ (155) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Common stock | Surplus | Retained Earnings | Accumulated Other Comprehensive Income (loss) | Total |
Balance beginning of the period (Footnote 1) at Dec. 31, 2017 | $ 6,392 | $ 79,501 | $ 15,453 | $ (298) | $ 101,048 |
Comprehensive income: | |||||
Net income | 1,270 | 1,270 | |||
Change in unrealized gains on securities available-for-sale, net of tax | (276) | (276) | |||
Total comprehensive income | 994 | ||||
Compensation expense related to stock option grants | 3 | 3 | |||
Balance ending of the period at Mar. 31, 2018 | 6,392 | 79,504 | 16,723 | (574) | 102,045 |
Balance beginning of the period (Footnote 1) at Dec. 31, 2017 | 6,392 | 79,501 | 15,453 | (298) | 101,048 |
Comprehensive income: | |||||
Net income | 5,799 | ||||
Change in unrealized gains on securities available-for-sale, net of tax | (510) | ||||
Total comprehensive income | 5,289 | ||||
Balance ending of the period at Sep. 30, 2018 | 6,407 | 79,852 | 21,252 | (808) | 106,703 |
Balance beginning of the period (Footnote 1) at Mar. 31, 2018 | 6,392 | 79,504 | 16,723 | (574) | 102,045 |
Comprehensive income: | |||||
Net income | 1,802 | 1,802 | |||
Change in unrealized gains on securities available-for-sale, net of tax | (63) | (63) | |||
Total comprehensive income | 1,739 | ||||
Share-based awards and exercises | 9 | 9 | |||
Compensation expense related to stock option grants | 272 | 272 | |||
Balance ending of the period at Jun. 30, 2018 | 6,401 | 79,776 | 18,525 | (637) | 104,065 |
Comprehensive income: | |||||
Net income | 2,727 | 2,727 | |||
Change in unrealized gains on securities available-for-sale, net of tax | (171) | (171) | |||
Total comprehensive income | 2,556 | ||||
Share-based awards and exercises | 6 | 6 | |||
Compensation expense related to stock option grants | 76 | 76 | |||
Balance ending of the period at Sep. 30, 2018 | 6,407 | 79,852 | 21,252 | (808) | 106,703 |
Balance beginning of the period (Footnote 1) at Dec. 31, 2018 | 6,407 | 79,919 | 23,616 | (390) | 109,552 |
Comprehensive income: | |||||
Net income | 2,006 | 2,006 | |||
Change in unrealized gains on securities available-for-sale, net of tax | 373 | 373 | |||
Total comprehensive income | 2,379 | ||||
Compensation expense related to stock option grants | 61 | 61 | |||
Balance ending of the period at Mar. 31, 2019 | 6,407 | 79,980 | 25,622 | (17) | 111,992 |
Balance beginning of the period (Footnote 1) at Dec. 31, 2018 | 6,407 | 79,919 | 23,616 | (390) | 109,552 |
Comprehensive income: | |||||
Net income | 7,345 | ||||
Change in unrealized gains on securities available-for-sale, net of tax | 601 | ||||
Total comprehensive income | 7,946 | ||||
Balance ending of the period at Sep. 30, 2019 | 6,408 | 80,192 | 30,961 | 211 | 117,772 |
Balance beginning of the period (Footnote 1) at Mar. 31, 2019 | 6,407 | 79,980 | 25,622 | (17) | 111,992 |
Comprehensive income: | |||||
Net income | 2,022 | 2,022 | |||
Change in unrealized gains on securities available-for-sale, net of tax | 222 | 222 | |||
Total comprehensive income | 2,244 | ||||
Compensation expense related to stock option grants | 143 | 143 | |||
Balance ending of the period at Jun. 30, 2019 | 6,407 | 80,123 | 27,644 | 205 | 114,379 |
Comprehensive income: | |||||
Net income | 3,317 | 3,317 | |||
Change in unrealized gains on securities available-for-sale, net of tax | 6 | 6 | |||
Total comprehensive income | 3,323 | ||||
Share-based awards and exercises | 1 | 7 | 8 | ||
Compensation expense related to stock option grants | 62 | 62 | |||
Balance ending of the period at Sep. 30, 2019 | $ 6,408 | $ 80,192 | $ 30,961 | $ 211 | $ 117,772 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
Net income | $ 7,345 | $ 5,799 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Gain on sale of investment securities | (212) | |
Depreciation and amortization | 1,559 | 1,088 |
Loss on disposal of premises and equipment | 14 | |
Provision for loan losses | 938 | 1,258 |
Compensation expense for stock options | 266 | 351 |
Net change in fair value of loans held for sale | 82 | 241 |
Net change in fair value of derivative instruments | 16 | (59) |
Net change in fair value of contingent assets | 177 | |
Gain on sale of OREO | (57) | |
SBA income | (1,160) | |
Proceeds from sale of loans | 432,831 | 513,259 |
Loans originated for sale | (421,092) | (492,113) |
Mortgage banking income | (19,139) | (20,407) |
Increase in accrued interest receivable | (266) | (377) |
Decrease (increase) in other assets | 91 | (110) |
Earnings from investment in life insurance | (218) | (225) |
Deferred income tax (benefit) (Footnote 1) | (249) | (465) |
Increase in accrued interest payable | 364 | 137 |
Increase in other liabilities (Footnote 1) | 3,249 | 1,184 |
Net cash provided (used) by operating activities | 4,419 | 9,681 |
Activity in available-for-sale securities: | ||
Maturities, repayments and calls | 11,090 | 4,080 |
Sales | 19,366 | |
Purchases | (29,027) | (12,768) |
Proceeds from sale of OREO | 494 | |
Settlement of forward contracts | (85) | (21) |
(Increase) Decrease in restricted stock | (1,235) | 2,233 |
Net increase in loans | (104,640) | (107,068) |
Purchases of premises and equipment | (634) | (1,499) |
Proceeds from settlement of loans | 2,766 | |
Net cash used in investing activities | (105,165) | (111,783) |
Cash flows from financing activities: | ||
Net increase in deposits | 106,331 | 154,818 |
Increase (Decrease) in short term borrowings | 14,165 | (57,795) |
Repayments of long term debt (FHLB advances) | (2,702) | |
Repayment of long term debt (Acquisition note) | (413) | (619) |
Repayment of long term debt (Subordinated debt) | (63) | (4,000) |
Share based awards and exercises | 8 | 15 |
Net cash provided by financing activities | 117,326 | 92,419 |
Net change in cash and cash equivalents | 16,580 | (9,683) |
Cash and cash equivalents at beginning of period | 23,952 | 35,506 |
Cash and cash equivalents at end of period | 40,532 | 25,823 |
Supplemental disclosure of cash flow information: | ||
Interest | 11,951 | 7,392 |
Income taxes | 1,539 | 1,565 |
Supplemental disclosure of cash flow information: | ||
Transfers from loans and leases to real estate owned | 120 | |
Transfers from loans held for sale to loans held for investment | 3,602 | |
Net loans sold, not settled | $ (5,580) | $ 4,490 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2019 | |
Basis of Presentation | |
Basis of Presentation | MERIDIAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Basis of Presentation Meridian Corporation (the “Corporation”) was incorporated on June 8, 2009, by and at the direction of the board of directors of Meridian Bank (the “Bank”) for the sole purpose of acquiring the Bank and serving as the Bank’s parent bank holding company. On August 24, 2018, the Corporation acquired the Bank in a merger and reorganization effected under Pennsylvania law and in accordance with the terms of a Plan of Merger and Reorganization dated April 26, 2018 (the “Agreement”). Pursuant to the Agreement, on August 24, 2018 at 5:00 p.m. all of the outstanding shares of the Bank’s $1.00 par value common stock formerly held by its shareholders was converted into and exchanged for one newly issued share of the Corporation’s par value common stock, and the Bank became a subsidiary of the Corporation. Because the Bank and the Corporation were entities under common control, this exchange of shares between entities under common control resulted in the retrospective combination of the Bank and the Corporation for all periods presented as if the combination had been in effect since inception of common control. As the Corporation had no assets, liabilities, revenues, expenses or operations prior to August 24, 2018, the historical financial statements of the Bank are the historical financial statements of the combined entity. The Corporation’s unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial position and the results of operations for the interim periods presented have been included. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Amounts subject to significant estimates are items such as the allowance for loan losses and lending related commitments, the fair value of financial instruments, other-than-temporary impairments of investment securities, and the valuations of goodwill and intangible assets. These unaudited consolidated financial statements should be read in conjunction with the Corporation’s filings with the Securities and Exchange Commission (including our Annual Report on Form 10-K for the year ended December 31, 2018) and, for periods prior to the completion of the holding company reorganization, the Bank’s filings with the FDIC, including the Bank’s annual report on Form 10-K for the year ended December 31, 2017, and subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K that update or provide information in addition to the information included in Form 10-K and Form 10-Q filings, if any. Certain prior period amounts have been reclassified to conform with current period presentation. Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results for the year ended December 31, 2019 or for any other period. During the quarter-ended March 31, 2019, the Corporation identified and corrected an immaterial error related to Maryland state licensing requirements for mortgage loan originations by our Mortgage division. As the result of our mortgage operations not being fully compliant with Maryland licensing law, we agreed to reimburse consumers approximately $474 thousand in interest and certain fees on loans originated, in addition to paying a fine of $12 thousand to resolve the matter. The Corporation has revised its comparative consolidated financial statements in the amount of $407 thousand, or $315 thousand net of tax, for periods prior to January 1, 2018 related to interest and fees on loans. The error correction impacted beginning retained earnings, deferred tax assets and other liabilities as of January 1, 2018, as shown below. The following table summarizes the impacts of the correction on the consolidated balance sheet as of January 1, 2018: (dollars in thousands, except per share data) Reported Corrections Revised Deferred income taxes $ 1,312 92 1,404 Other liabilities 5,426 407 5,833 Retained earnings 15,768 (315) 15,453 The following table summarizes the impacts of the correction on the consolidated balance sheet as of December 31, 2018: (dollars in thousands, except per share data) Reported Corrections Revised Deferred income taxes $ 1,728 Other liabilities 5,716 Retained earnings (315) 23,616 The following table summarizes the impacts of the corrections to our capital ratios as of December 31, 2018: December 31, 2018 - as reported To be well capitalized under For capital adequacy prompt corrective action Actual purposes * provisions (dollars in thousands): Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) $ 122,577 $ 71,577 $ 89,472 Common equity tier 1 capital (to risk-weighted assets) 105,196 40,262 58,157 Tier 1 capital (to risk-weighted assets) 105,196 53,683 71,577 Tier 1 capital (to average assets) 105,196 37,578 46,972 December 31, 2018 - as revised To be well capitalized under For capital adequacy prompt corrective action Actual purposes * provisions (dollars in thousands): Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) $ 122,262 $ 88,362 $ 89,481 Common equity tier 1 capital (to risk-weighted assets) 104,881 57,044 58,163 Tier 1 capital (to risk-weighted assets) 104,881 70,466 71,585 Tier 1 capital (to average assets) 104,881 37,581 46,977 * |
Earnings per Common Share
Earnings per Common Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings per Common Share | |
Earnings per Common Share | (2) Earnings per Common Share Basic earnings per common share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding during the period. Diluted earnings per common share takes into account the potential dilution computed pursuant to the treasury stock method that could occur if stock options were exercised and converted into common stock. The effects of stock options are excluded from the computation of diluted earnings per share in periods in which the effect would be anti-dilutive. Three Months Ended Nine Months Ended September 30, September 30, (dollars in thousands, except per share data) 2019 2018 2019 2018 Numerator: Net income available to common stockholders $ 3,317 2,727 $ 7,345 5,799 Denominator for basic earnings per share - weighted average shares outstanding 6,407 6,402 6,407 6,395 Effect of dilutive common shares 30 28 29 31 Denominator for diluted earnings per share - adjusted weighted average shares outstanding 6,437 6,430 6,436 6,426 Basic earnings per share $ 0.52 0.43 $ 1.15 0.91 Diluted earnings per share $ 0.52 0.42 $ 1.14 0.90 Antidilutive shares excluded from computation of average dilutive earnings per share 199 116 199 116 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Other Intangibles | |
Goodwill and Other Intangibles | (3) Goodwill and Other Intangibles The Corporation’s goodwill and intangible assets related to the acquisition of HJ Wealth in April 2017 are detailed below: Balance Balance Amortization December 31, Amortization September 30, Period (dollars in thousands) 2018 Expense 2019 (in years) Goodwill - Wealth $ 899 — 899 Indefinite Total Goodwill 899 — 899 Intangible assets - trade name 266 — 266 Indefinite Intangible assets - customer relationships 3,727 (153) 3,574 20 Intangible assets - non competition agreements 154 (52) 102 4 Total Intangible Assets 4,147 (205) 3,942 Total $ 5,046 (205) 4,841 Accumulated amortization on intangible assets was $682 thousand and $409 thousand as of September 30, 2019 and 2018, respectively. The Corporation performed its annual review of goodwill and identifiable intangible assets in accordance with ASC 350, “Intangibles - Goodwill and Other” as of December 31, 2018. For the period from January 1, 2019 through September 30, 2019, the Corporation determined there were no events that would necessitate impairment testing of goodwill and other intangible assets. |
Securities
Securities | 9 Months Ended |
Sep. 30, 2019 | |
Securities | |
Securities | (4) Securities The amortized cost and fair value of securities as of September 30, 2019 and December 31, 2018 are as follows: September 30, 2019 Gross Gross Amortized unrealized unrealized Fair (dollars in thousands) cost gains losses value Securities available-for-sale: U.S. asset backed securities $ 8,919 (39) 8,882 U.S. government agency mortgage-backed securities 12,843 103 (46) 12,900 U.S. government agency collateralized mortgage obligations 29,734 357 (130) 29,961 Investments in mutual funds 1,000 14 - 1,014 Total securities available-for-sale $ 52,496 476 (215) 52,757 Securities held to maturity: State and municipal securities 8,814 214 — 9,028 Total securities held-to-maturity $ 8,814 214 — 9,028 December 31, 2018 Gross Gross Amortized unrealized unrealized Fair (dollars in thousands) cost gains losses value Securities available-for-sale: U.S. government agency mortgage-backed securities $ 24,092 45 (271) 23,866 U.S. government agency collateralized mortgage obligations 14,754 52 (142) 14,664 State and municipal securities 11,096 22 (199) 10,919 Investments in mutual funds 1,000 — (21) 979 Total securities available-for-sale $ 50,942 119 (633) 50,428 Securities held to maturity: U.S. Treasuries $ 1,991 — (13) 1,978 State and municipal securities 10,750 17 (90) 10,677 Total securities held-to-maturity $ 12,741 17 (103) 12,655 At September 30, 2019, the Corporation had seven U.S. government sponsored agency mortgage‑backed securities, thirteen U.S. government sponsored agency collateralized mortgage obligations, and five U.S. asset backed securities in unrealized loss positions. At December 31, 2018, the Corporation had twenty-four U.S. government sponsored agency mortgage‑backed securities, twelve U.S. government sponsored agency collateralized mortgage obligations, twenty-six state and municipal securities, one mutual fund, and two U.S. treasuries in unrealized loss positions. Although the Corporation’s investment portfolio overall is in a net unrealized gain position at September 30, 2019, the temporary impairment in the above noted securities is primarily the result of changes in market interest rates subsequent to purchase and the Corporation does not intend to sell these securities prior to recovery and it is more likely than not that the Corporation will not be required to sell these securities prior to recovery to satisfy liquidity needs, and therefore, no securities are deemed to be other‑than‑temporarily impaired. The following table shows the Corporation’s investment gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position at September 30, 2019 and December 31, 2018: September 30, 2019 Less than 12 Months 12 Months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (dollars in thousands) value losses value losses value losses Securities available-for-sale: U.S. asset backed securities (39) — — (39) U.S. government agency mortgage-backed securities $ (9) (37) 5,103 (46) U.S. government agency collateralized mortgage obligations (88) (42) 15,454 (130) Total securities available-for-sale $ 21,468 (136) 5,931 (79) 27,399 (215) December 31, 2018 Less than 12 Months 12 Months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (dollars in thousands) value losses value losses value losses Securities available-for-sale: U.S. government agency mortgage-backed securities $ 2,354 (6) 15,223 (265) 17,577 (271) U.S. government agency collateralized mortgage obligations 2,636 (14) 5,620 (128) 8,256 (142) State and municipal securities 957 (11) 8,746 (188) 9,703 (199) Investments in mutual funds 980 (21) — — 980 (21) Total securities available-for-sale $ 6,927 (52) 29,589 (581) 36,516 (633) Securities held-to-maturity: U.S. Treasuries $ — — 1,978 (13) 1,978 (13) State and municipal securities 1,545 (5) 4,783 (85) 6,328 (90) Total securities held-to-maturity $ 1,545 (5) 6,761 (98) 8,306 (103) The amortized cost and carrying value of securities at September 30, 2019 and December 31, 2018 are shown below by contractual maturities. Actual maturities may differ from contractual maturities as issuers may have the right to call or repay obligations with or without call or prepayment penalties. September 30, 2019 December 31, 2018 Available-for-sale Held-to-maturity Available-for-sale Held-to-maturity Amortized Fair Amortized Fair Amortized Fair Amortized Fair (dollars in thousands) cost value cost value cost value cost value Investment securities: Due in one year or less $ — — — — $ 906 902 1,991 1,978 Due after one year through five years — — 4,258 4,316 1,236 1,226 3,154 3,148 Due after five years through ten years — — 4,556 4,712 6,411 6,290 7,596 7,529 Due after ten years 8,919 8,882 — — 2,543 2,501 — — Subtotal 8,919 8,882 8,814 9,028 11,096 10,919 12,741 12,655 Mortgage-related securities 42,577 42,861 — — 38,846 38,530 — — Mutual funds with no stated maturity 1,000 1,014 — — 1,000 979 — — Total $ 52,496 52,757 8,814 9,028 $ 50,942 50,428 12,741 12,655 |
Loans Receivable
Loans Receivable | 9 Months Ended |
Sep. 30, 2019 | |
Loans Receivable | |
Loans Receivable | (5) Loans Receivable Loans and leases outstanding at September 30, 2019 and December 31, 2018 are detailed by category as follows: September 30, December 31, (dollars in thousands) 2019 2018 Mortgage loans held for sale $ 48,615 37,695 Real estate loans: Commercial mortgage 357,418 325,393 Home equity lines and loans 83,412 82,286 Residential mortgage (1) 56,272 53,360 Construction 154,463 116,906 Total real estate loans 651,565 577,945 Commercial and industrial 284,376 259,806 Consumer 984 701 Leases, net 828 1,335 Total portfolio loans and leases 937,753 839,787 Total loans and leases $ 986,368 877,482 Loans with predetermined rates $ 294,297 264,376 Loans with adjustable or floating rates 692,071 613,106 Total loans and leases $ 986,368 877,482 Net deferred loan origination (fees) costs $ (1,895) (1,681) (1) Includes $11,278 and $11,422 of loans at fair value as of September 30, 2019 and December 31, 2018, respectively. Components of the net investment in leases at September 30, 2019 and December 31, 2018 are detailed as follows: September 30, December 31, (dollars in thousands) 2019 2018 Minimum lease payments receivable $ 869 1,420 Unearned lease income (41) (85) Total $ 828 1,335 Age Analysis of Past Due Loans and Leases The following tables present an aging of the Corporation’s loan and lease portfolio as of September 30, 2019 and December 31, 2018, respectively: Total 90+ days Accruing Nonaccrual September 30, 2019 30-89 days past due and Total past Loans and loans and Total loans Delinquency (dollars in thousands) past due still accruing due Current leases leases and leases percentage Commercial mortgage $ — — — 355,869 355,869 1,549 357,418 0.43 % Home equity lines and loans 592 — 592 82,563 83,155 257 83,412 1.02 Residential mortgage (1) — — — 54,574 54,574 1,698 56,272 3.02 Construction 1,519 — 1,519 152,944 154,463 — 154,463 0.98 Commercial and industrial 394 — 394 283,556 283,950 426 284,376 0.29 Consumer — — — 984 984 — 984 — Leases 123 — 123 705 828 — 828 14.86 Total $ 2,628 — 2,628 931,195 933,823 3,930 937,753 0.70 % (1) Includes $11,278 of loans at fair value as of September 30, 2019 ($10,437 of current, $ 0 of 30-89 days past due and $841 of nonaccrual). Total 90+ days Accruing Nonaccrual December 31, 2018 30-89 days past due and Total past Loans and loans and Total loans Delinquency (dollars in thousands) past due still accruing due Current leases leases and leases percentage Commercial mortgage $ — — — 324,169 324,169 1,224 325,393 0.38 % Home equity lines and loans 348 — 348 81,855 82,203 83 82,286 0.52 Residential mortgage (1) 195 — 195 51,018 51,213 2,147 53,360 4.39 Construction — — — 116,906 116,906 — 116,906 — Commercial and industrial 217 — 217 259,112 259,329 477 259,806 0.27 Consumer — — — 701 701 — 701 — Leases 49 — 49 1,286 1,335 — 1,335 3.67 Total $ 809 — 809 835,047 835,856 3,931 839,787 0.56 % (1) Includes $11,422 of loans at fair value as of December 31, 2018 ($10,098 of current, $187 of 30-89 days past due and $1,137 of nonaccrual). |
Allowance for Loan Losses (the
Allowance for Loan Losses (the "Allowance") | 9 Months Ended |
Sep. 30, 2019 | |
Allowance for Loan Losses (the Allowance) | |
Allowance for Loan Losses (the Allowance) | (6) Allowance for Loan Losses (the “Allowance”) The Allowance is established through provisions for loan losses charged against income. Loans deemed to be uncollectible are charged against the Allowance, and subsequent recoveries, if any, are credited to the Allowance. The Allowance is maintained at a level considered adequate to provide for losses that are probable and estimable. Management’s periodic evaluation of the adequacy of the Allowance is based on known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is subjective as it requires material estimates that may be susceptible to significant revisions as more information becomes available. Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment The following tables detail the roll‑forward of the Corporation’s Allowance, by portfolio segment, for the three and nine month periods ended September 30, 2019 and 2018, respectively: Balance, Balance, (dollars in thousands) June 30, 2019 Charge-offs Recoveries Provision September 30, 2019 Commercial mortgage $ 3,197 — 1 257 3,455 Home Equity lines and loans 354 — 2 (28) 328 Residential mortgage 200 — 2 (30) 172 Construction 2,033 — — 136 2,169 Commercial and industrial 2,830 (30) 6 369 3,175 Consumer 4 — 1 1 6 Leases 7 — — — 7 Total $ 8,625 (30) 12 705 9,312 Balance, Balance, (dollars in thousands) December 31, 2018 Charge-offs Recoveries Provision September 30, 2019 Commercial mortgage $ 3,209 — 6 240 3,455 Home Equity lines and loans 323 — 10 (5) 328 Residential mortgage 191 — 4 (23) 172 Construction 1,627 — — 542 2,169 Commercial and industrial 2,690 (30) 328 187 3,175 Consumer 3 — 3 — 6 Leases 10 — — (3) 7 Total $ 8,053 (30) 351 938 9,312 Balance, Balance, (dollars in thousands) June 30, 2018 Charge-offs Recoveries Provision September 30, 2018 Commercial mortgage $ 3,011 — 2 140 3,153 Home Equity lines and loans 269 — 10 37 316 Residential mortgage 166 — — 14 180 Construction 1,438 — — 59 1,497 Commercial and industrial 2,559 (50) 8 41 2,558 Consumer 3 — 1 — 4 Leases 3 — — — 3 Total $ 7,449 (50) 21 291 7,711 Balance, Balance, (dollars in thousands) December 31, 2017 Charge-offs Recoveries Provision September 30, 2018 Commercial mortgage $ 2,434 — 6 713 3,153 Home Equity lines and loans 280 (137) 14 159 316 Residential mortgage 82 — 61 37 180 Construction 1,689 — — (192) 1,497 Commercial and industrial 2,214 (244) 41 547 2,558 Consumer 5 — 3 (4) 4 Leases 5 — — (2) 3 Total $ 6,709 (381) 125 1,258 7,711 Allowance for Loan and Lease Losses Allocated by Portfolio Segment The following tables detail the allocation of the allowance for loan and lease losses and the carrying value for loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of September 30, 2019 and December 31, 2018. Allowance on loans and leases Carrying value of loans and leases Individually Collectively Individually Collectively September 30, 2019 evaluated evaluated evaluated evaluated (dollars in thousands) for impairment for impairment Total for impairment for impairment Total Commercial mortgage $ — 3,455 3,455 $ 2,204 355,214 357,418 Home Equity lines and loans 2 326 328 255 83,157 83,412 Residential mortgage — 172 172 855 44,138 44,993 Construction — 2,169 2,169 1,262 153,201 154,463 Commercial and industrial 124 3,051 3,175 1,389 282,987 284,376 Consumer — 6 6 — 984 984 Leases — 7 7 — 828 828 Total $ 126 9,186 9,312 $ 5,965 920,509 926,474 (1) Allowance on loans and leases Carrying value of loans and leases Individually Collectively Individually Collectively December 31, 2018 evaluated evaluated evaluated evaluated (dollars in thousands) for impairment for impairment Total for impairment for impairment Total Commercial mortgage $ — 3,209 3,209 $ 1,929 323,464 325,393 Home Equity lines and loans — 323 323 83 82,203 82,286 Residential mortgage — 191 191 969 40,969 41,938 Construction — 1,627 1,627 1,281 115,625 116,906 Commercial and industrial 103 2,587 2,690 1,537 258,269 259,806 Consumer — 3 3 — 701 701 Leases — 10 10 — 1,335 1,335 Total $ 103 7,950 8,053 $ 5,799 822,566 828,365 (1) (1) Excludes deferred fees and loans carried at fair value. Loans and Leases by Credit Ratings As part of the process of determining the Allowance to the different segments of the loan and lease portfolio, management considers certain credit quality indicators. For the commercial mortgage, construction and commercial and industrial loan segments, periodic reviews of the individual loans are performed by management. The results of these reviews are reflected in the risk grade assigned to each loan. These internally assigned grades are as follows: · Pass - Loans considered to be satisfactory with no indications of deterioration. · Special mention – Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. · Substandard – Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. · Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing factors, conditions, and values, highly questionable and improbable. Loan balances classified as doubtful have been reduced by partial charge-offs and are carried at their net realizable values. The following tables detail the carrying value of loans and leases by portfolio segment based on the credit quality indicators used to determine the allowance for loan and lease losses as of September 30, 2019 and December 31, 2018: September 30, 2019 Special (dollars in thousands) Pass mention Substandard Doubtful Total Commercial mortgage $ 350,027 3,437 3,954 — 357,418 Home equity lines and loans 83,155 — 257 — 83,412 Construction 151,663 2,774 26 — 154,463 Commercial and industrial 262,217 8,399 13,760 — 284,376 Total $ 847,062 14,610 17,997 — 879,669 December 31, 2018 Special (dollars in thousands) Pass mention Substandard Doubtful Total Commercial mortgage $ 320,130 3,713 1,550 — 325,393 Home equity lines and loans 82,121 — 165 — 82,286 Construction 114,249 2,657 — — 116,906 Commercial and industrial 239,181 12,620 7,975 30 259,806 Total $ 755,681 18,990 9,690 30 784,391 In addition to credit quality indicators as shown in the above tables, allowance allocations for residential mortgages, consumer loans and leases are also applied based on their performance status as of September 30, 2019 and December 31, 2018. No troubled debt restructurings performing according to modified terms are included in performing residential mortgages below as of September 30, 2019 and December 31, 2018. September 30, 2019 December 31, 2018 (dollars in thousands) Performing Nonperforming Total Performing Nonperforming Total Residential mortgage $ 44,138 855 44,993 $ 40,969 969 41,938 Consumer 984 — 984 701 — 701 Leases 828 — 828 1,335 — 1,335 Total $ 45,950 855 46,805 $ 43,005 969 43,974 There were six nonperforming residential mortgage loans at September 30, 2019 and December 31, 2018 with a combined outstanding principal balance of $1.2 million and $1.9 million, respectively, which were carried at fair value and not included in the table above. Impaired Loans The following tables detail the recorded investment and principal balance of impaired loans by portfolio segment, their related allowance for loan and lease losses and interest income recognized for the periods. At September 30, 2019 At December 31, 2018 Average Average Recorded Principal Related recorded Recorded Principal Related recorded (dollars in thousands) investment balance allowance investment investment balance allowance investment Impaired loans with related allowance: Commercial mortgage $ — — — — — — — — Commercial and industrial 559 559 124 566 676 679 103 680 Home equity lines and loans 255 255 2 256 — — — — Residential mortgage — — — — — — — — Construction — — — — — — — — Total 814 814 126 822 676 679 103 680 Impaired loans without related allowance: Commercial mortgage $ 2,204 2,713 — 2,272 1,929 2,379 — 1,982 Commercial and industrial 830 876 — 864 861 945 — 885 Home equity lines and loans — — — — 83 89 — 84 Residential mortgage 855 855 — 857 969 978 — 978 Construction 1,262 1,263 — 1,286 1,281 1,281 — 1,293 Total 5,151 5,707 — 5,279 5,123 5,672 — 5,222 Grand Total $ 5,965 6,521 126 6,101 5,799 6,351 103 5,902 Interest income recognized on performing impaired loans amounted to $50 thousand and $93 thousand for the three months ended September 30, 2019 and 2018, respectively, and $152 thousand and $218 thousand for the nine months ended September 30, 2019 and 2018, respectively. Troubled Debt Restructuring The restructuring of a loan is considered a “troubled debt restructuring” (“TDR”) if both of the following conditions are met: (i) the borrower is experiencing financial difficulties, and (ii) the creditor has granted a concession. The most common concessions granted include one or more modifications to the terms of the debt, such as (a) a reduction in the interest rate for the remaining life of the debt, (b) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk, (c) a temporary period of interest-only payments, (d) a reduction in the contractual payment amount for either a short period or remaining term of the loan, and (e) for leases, a reduced lease payment. A less common concession granted is the forgiveness of a portion of the principal. The determination of whether a borrower is experiencing financial difficulties takes into account not only the current financial condition of the borrower, but also the potential financial condition of the borrower were a concession not granted. The determination of whether a concession has been granted is subjective in nature. For example, simply extending the term of a loan at its original interest rate or even at a higher interest rate could be interpreted as a concession unless the borrower could readily obtain similar credit terms from a different lender. The balance of TDRs at September 30, 2019 and December 31, 2018 are as follows: September 30, December 31, (dollars in thousands) 2019 2018 TDRs included in nonperforming loans and leases $ 1,133 1,219 TDRs in compliance with modified terms 2,880 3,047 Total TDRs $ 4,013 4,266 There were no loan and lease modifications granted during the three and nine months ended September 30, 2019 that were categorized as TDRs. The following tables present information regarding loan and lease modifications granted during the three and nine months ended September 30, 2018 that were categorized as TDRs: For the Three Months Ended September 30, 2018 Pre-Modification Post-Modification Outstanding Outstanding Number of Recorded Recorded Related (dollar in thousands) Contracts Investment Investment Allowance Real Estate: Land and Construction 1 796 796 — Total 1 $ 796 $ 796 $ — For the Nine Months Ended September 30, 2018 Pre-Modification Post-Modification Outstanding Outstanding Number of Recorded Recorded Related (dollar in thousands) Contracts Investment Investment Allowance Real Estate: Land and Construction 2 2,410 2,410 — Commercial and industrial 1 120 120 — Total 3 $ 2,530 $ 2,530 $ — No loan and lease modifications granted during the three and nine months ended September 30, 2019 and 2018 subsequently defaulted during the same time period. The following table presents information regarding the number of contracts by type of loan and lease modifications granted during the three and nine months ended September 30, 2018: For the Three Months Ended For the Nine Months Ended September 30, 2018 September 30, 2018 Interest Rate Interest Rate Loan Term Change and Loan Loan Term Change and Loan Extension Term Extension Extension Term Extension Real Estate: Land and Construction 1 — 2 — Commercial and industrial — — — 1 Total 1 — 2 1 |
Short-Term Borrowings and Long
Short-Term Borrowings and Long -Term Debt | 9 Months Ended |
Sep. 30, 2019 | |
Short-Term Borrowings and Long-Term Debt | |
Short-Term Borrowings and Long-Term Debt | (7) Short-Term Borrowings and Long‑Term Debt The Corporation’s short‑term borrowings generally consist of federal funds purchased and short‑term borrowings extended under agreements with the Federal Home Loan Bank of Pittsburgh (“FHLB”). The Corporation has two unsecured Federal Funds borrowing facilities with correspondent banks: one of $24 million and one of $15 million. Federal funds purchased generally represent one-day borrowings. The Corporation had no Federal Funds purchased at September 30, 2019 and December 31, 2018. The Corporation also has a facility with the Federal Reserve discount window of $9.6 million. This facility is fully secured by investment securities and loans. There were no borrowings under this facility at September 30, 2019 or at December 31, 2018. Short‑term borrowings as of September 30, 2019 consisted of short‑term advances from the FHLB of Pittsburgh in the amount of $119.7 million with interest at 2.08%, $3.1 million with an original term of 3 years with interest at 2.03%, $5.0 million with an original term of 7 years with interest at 2.76%, and the note payable related to the acquisition of HJ Wealth of $619 thousand with an original term of 3 years with interest at 3.00%. Short‑term borrowings as of December 31, 2018 consisted of short-term advances from the FHLB of Pittsburgh in the amount of $112.5 million with interest at 2.62%, and $1.8 million with an original term of 4 years and interest at 1.70%. Long‑term debt at September 30, 2019 and December 31, 2018 consisted of the following fixed rate notes: Balance as of Maturity Interest September 30, December 31, (dollars in thousands) date rate 2019 2018 Mid-term Repo-fixed 06/28/21 1.88 % 3,123 — Mid-term Repo-fixed 08/10/20 2.76 — 5,000 Acquisition Purchase Note (1) 04/01/20 3.00 — 1,238 Total $ 3,123 6,238 (1) The acquisition purchase note for the Wealth division is classified as short-term borrowing at September 30, 2019. The FHLB of Pittsburgh has also issued $101.5 million of letters of credit to the Corporation for the benefit of the Corporation’s public deposit funds and loan customers. These letters of credit expire by June 19, 2020. The Corporation has a maximum borrowing capacity with the FHLB of $496.3 million as of September 30, 2019 and $437.2 million as of December 31, 2018. All advances and letters of credit from the FHLB are secured by a blanket lien on non-pledged, mortgage-related loans and securities as part of the Corporation’s borrowing agreement with the FHLB. |
Servicing Assets
Servicing Assets | 9 Months Ended |
Sep. 30, 2019 | |
Servicing Assets | |
Servicing Assets | (8) Servicing Assets The Corporation sells certain residential mortgage loans and the guaranteed portion of certain Small Business Administration (“SBA”) loans to third parties and retains servicing rights and receives servicing fees. All such transfers are accounted for as sales. When the Corporation sells a residential mortgage loan, it does not retain any portion of that loan and its continuing involvement in such transfers is limited to certain servicing responsibilities. While the Corporation may retain a portion of certain sold SBA loans, its continuing involvement in the portion of the loan that was sold is limited to certain servicing responsibilities. When the contractual servicing fees on loans sold with servicing retained are expected to be more than adequate compensation to a servicer for performing the servicing, a capitalized servicing asset is recognized. The Corporation accounts for the transfers and servicing of financial assets in accordance with ASC 860, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. Residential Mortgage Loans The mortgage servicing rights (“MSRs”) are amortized to non-interest expense in proportion to, and over the period of, the estimated future net servicing life of the underlying assets. MSR’s are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the MSR. The Corporation serviced $45.1 million and $15.8 million of residential mortgage loans as of September 30, 2019 and 2018, respectively. During the three and nine months ended September 30, 2019, the Corporation recognized servicing fee income of $107 thousand and $198 thousand, respectively, compared to $90 thousand and $152 thousand during the three and nine months ended September 30, 2018, respectively. Changes in the MSR balance are summarized as follows: Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2019 2018 2019 2018 Balance at beginning of the period $ 236 62 $ 232 — Servicing rights capitalized 107 89 198 152 Amortization of servicing rights (17) (3) (39) (4) Change in valuation allowance (12) — (77) — Balance at end of the period $ 314 148 $ 314 148 Activity in the valuation allowance for MSR’s was as follows: Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2019 2018 2019 2018 Valuation allowance, beginning of period $ (65) — $ — — Impairment (12) — (77) — Recovery — — — — Valuation allowance, end of period $ (77) — $ (77) — The Corporation uses assumptions and estimates in determining the fair value of MSRs. These assumptions include prepayment speeds and discount rates. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. At September 30, 2019, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 16.02% and a discount rate equal to 9.25%. At September 30, 2018, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 11.78% and a discount rate equal to 9.5%. At September 30, 2019 and September 30, 2018, the sensitivity of the current fair value of the residential mortgage servicing rights to immediate 10% and 20% favorable and unfavorable changes in key economic assumptions are included in the following table. (dollars in thousands) September 30, 2019 December 31, 2018 Fair value of residential mortgage servicing rights $ 314 $ 213 Weighted average life (years) 7.4 3.4 Prepayment speed Impact on fair value: 10% adverse change $ (16) $ (9) 20% adverse change (30) (17) Discount rate Impact on fair value: 10% adverse change $ (9) $ (8) 20% adverse change (18) (15) The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change. SBA Loans SBA loan servicing assets are amortized to non-interest expense in proportion to, and over the period of, the estimated future net servicing life of the underlying assets. SBA loan servicing assets are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the SBA loan servicing asset. The Corporation serviced $15.4 million of SBA loans, as of September 30, 2019 and no SBA loans, as of September 30, 2018. During the three and nine months ended September 30, 2019, the Corporation recognized servicing fee income of $8 thousand in both periods. Changes in the SBA loan servicing asset balance are summarized as follows: Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2019 2018 2019 2018 Balance at beginning of the period $ 133 — $ — — Servicing rights capitalized 198 — 331 — Amortization of servicing rights (6) — (6) — Change in valuation allowance (4) — (4) — Balance at end of the period $ 321 — $ 321 — Activity in the valuation allowance for SBA loan servicing assets was as follows: Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2019 2018 2019 2018 Valuation allowance, beginning of period $ — — $ — — Impairment (4) — (4) — Recovery — — — — Valuation allowance, end of period $ (4) — $ (4) — The Corporation uses assumptions and estimates in determining the fair value of SBA loan servicing rights. These assumptions include prepayment speeds, discount rates, and other assumptions. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. At September 30, 2019, the key assumptions used to determine the fair value of the Corporation’s SBA loan servicing rights included a lifetime constant prepayment rate equal to 10.34%, and a discount rate equal to 8.88%. The Corporation did not service SBA loans at September 30, 2018. At September 30, 2019, the sensitivity of the current fair value of the SBA loan servicing rights to immediate 10% and 20% favorable and unfavorable changes in key economic assumptions are included in the following table. (dollars in thousands) September 30, 2019 Fair value of SBA loan servicing rights $ 321 Weighted average life (years) 4.5 Prepayment speed Impact on fair value: 10% adverse change $ (11) 20% adverse change (21) Discount rate Impact on fair value: 10% adverse change $ (9) 20% adverse change (18) The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the SBA servicing rights is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change. |
Fair Value Measurements and Dis
Fair Value Measurements and Disclosures | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Measurements and Disclosures | |
Fair Value Measurements and Disclosures | (9) Fair Value Measurements and Disclosures The Corporation uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of a financial instrument is the 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. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Corporation’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation techniques or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. In accordance with this guidance, the Corporation groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation. For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2019 and December 31, 2018 are as follows: September 30, 2019 (dollars in thousands) Total Level 1 Level 2 Level 3 Securities available for sale: U.S. government agency mortgage-backed securities $ 12,900 — 12,900 — U.S. government agency collateralized mortgage obligations 29,961 — 29,961 — Investments in mutual funds and other equity securities 9,896 — 9,896 — Mortgage loans held-for-sale 48,615 — 48,615 — Mortgage loans held-for-investment 11,278 — 11,278 — Mortgage servicing rights 314 — — 314 SBA loan servicing rights 321 — — 321 Interest rate lock commitments 283 — — 283 Customer derivatives - Interest rate swaps 500 — 500 — Total $ 114,068 — 113,150 918 December 31, 2018 (dollars in thousands) Total Level 1 Level 2 Level 3 Securities available for sale: U.S. government agency mortgage-backed securities $ 23,866 — 23,866 — U.S. government agency collateralized mortgage obligations 14,664 — 14,664 — State and municipal securities 10,919 — 10,919 — Investments in mutual funds and other equity securities 979 — 979 — Mortgage loans held-for-sale 37,695 — 37,695 — Mortgage loans held-for-investment 11,422 — 11,422 — Mortgage servicing rights 213 — — 213 Interest rate lock commitments 310 — — 310 Customer derivatives - Interest rate swaps 141 — 141 — Total $ 100,209 — 99,686 523 For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2019 and December 31, 2018 are as follows: September 30, 2019 (dollars in thousands) Total Level 1 Level 2 Level 3 Impaired loans (1) $ 5,965 — — 5,965 Other real estate owned (2) 120 — — 120 Total $ 6,085 — — 6,085 December 31, 2018 (dollars in thousands) Total Level 1 Level 2 Level 3 Impaired loans (1) $ 5,799 — — 5,799 Other real estate owned (2) — — — — Total $ 5,799 — — 5,799 (1) Impaired loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input is significant to the fair value measurements. (2) Real estate properties acquired through, or in lieu of, foreclosure are to be sold and are carried at fair value less estimated cost to sell. Fair value is based upon independent market prices or appraised value of the property. These assets are included in Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement. Appraised values may be discounted based on management’s expertise, historical knowledge, changes in market conditions from the time of valuation and/or estimated costs to sell. Below is management’s estimate of the fair value of all financial instruments, whether carried at cost or fair value on the Corporation’s balance sheet. The following information should not be interpreted as an estimate of the fair value of the entire Corporation since a fair value calculation is only provided for a limited portion of the Corporation’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Corporation’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair value of the Corporation’s financial instruments: (a) Cash and Cash Equivalents The carrying amounts reported in the balance sheet for cash and short‑term instruments approximate those assets’ fair values. (b) Securities The fair value of securities available‑for‑sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. (c) Mortgage Loans Held for Sale The fair value of mortgage loans held for sale is based on secondary market prices. (d) Loans Receivable The fair value of loans receivable is estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate‑risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair value below is not reflective of an exit price. (e) Mortgage Loans Held for Investment The fair value of mortgage loans held for investment is based on the price secondary markets are currently offering for similar loans using observable market data . (f) Servicing Rights The Corporation determines the fair value of its servicing rights by estimating the amount and timing of future cash flows associated with the servicing rights and discounting the cash flows using market discount rates. The valuation included the application of certain assumptions made by management, including discount rates, prepayment projections, and prevailing assumptions used in the marketplace at the time of the valuation. (g) Impaired Loans Impaired loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third‑party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. (h) Restricted Investment in Bank Stock The carrying amount of restricted investment in bank stock approximates fair value, and considers the limited marketability of such securities. (i) Accrued Interest Receivable and Payable The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value. (j) Deposit Liabilities The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed‑rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits. (k) Short‑Term Borrowings The carrying amounts of short‑term borrowings approximate their fair values. (l) Long‑Term Debt Fair values of FHLB advances and the acquisition purchase note payable are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party. (m) Subordinated Debt Fair values of junior subordinated debt are estimated using discounted cash flow analysis, based on market rates currently offered on such debt with similar credit risk characteristics, terms and remaining maturity. (n) Off‑Balance Sheet Financial Instruments Off-balance sheet instruments are primarily comprised of loan commitments, which are generally priced at market at the time of funding. Fees on commitments to extend credit and stand-by letters of credit are deemed to be immaterial and these instruments are expected to be settled at face value or expire unused. It is impractical to assign any fair value to these instruments and as a result they are not included in the table below. Fair values assigned to the notional value of interest rate lock commitments and forward sale contracts are based on market quotes. (o) Derivative Financial Instruments The f air value of forward commitments and interest rate swaps is based on market pricing and therefore are considered Level 2. Derivatives classified as Level 3 consist of interest rate lock commitments related to mortgage loan commitments. The determination of fair value includes assumptions related to the likelihood that a commitment will ultimately result in a closed loan, which is a significant unobservable assumption. A significant increase or decrease in the external market price would result in a significantly higher or lower fair value measurement. The estimated fair values of the Corporation’s financial instruments at September 30, 2019 and December 31, 2018 are as follows: September 30, 2019 December 31, 2018 Fair Value Carrying Carrying (dollars in thousands) Hierarchy Level amount Fair value amount Fair value Financial assets: Cash and cash equivalents Level 1 $ 40,532 40,532 23,952 23,952 Securities available-for-sale Level 2 52,757 52,757 50,428 50,428 Securities held-to-maturity Level 2 8,814 9,028 12,741 12,655 Mortgage loans held-for-sale Level 2 48,615 48,615 37,695 37,695 Loans receivable, net Level 3 935,858 933,285 818,631 820,512 Mortgage loans held-for-investment Level 2 11,278 11,278 11,422 11,422 Interest rate lock commitments Level 3 283 283 310 310 Forward commitments Level 2 30 30 — — Restricted investment in bank stock Level 3 8,237 8,237 7,002 7,002 Mortgage servicing rights Level 3 314 314 232 213 SBA loan servicing rights Level 3 321 321 — — Accrued interest receivable Level 3 3,155 3,155 2,889 2,889 Customer derivatives - Interest rate swaps Level 2 500 500 141 141 Financial liabilities: Deposits Level 2 858,461 896,000 752,130 744,300 Short-term borrowings Level 2 128,466 128,467 114,300 114,300 Long-term debt Level 2 3,123 3,123 6,238 6,240 Subordinated debentures Level 2 9,176 9,792 9,239 9,396 Accrued interest payable Level 2 669 669 305 305 Interest rate lock commitments Level 3 81 81 40 40 Forward commitments Level 2 105 105 176 176 Customer derivatives - Interest rate swaps Level 2 568 568 161 161 Notional Notional Off-balance sheet financial instruments: amount Fair value amount Fair value Commitments to extend credit Level 2 $ 327,788 283 290,614 310 Letters of credit Level 2 9,750 — 5,158 — The following table includes a rollforward of interest rate lock commitments for which the Corporation utilized Level 3 inputs to determine fair value on a recurring basis for the three and nine month peiods ended September 30, 2019 and 2018. Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Balance at beginning of the period $ 375 586 $ 310 344 (Decrease) increase in value (92) (80) (27) 162 Balance at end of the period $ 283 506 $ 283 506 Significant Valuation Techniques for Level 3 interest rate lock Fair Value Unobservable Range of Weighted commitments as of September 30, 2019 Level 3 Valuation Technique Input Inputs Average Interest rate lock commitments $ 283 Market comparable pricing Pull through 1 - 99 % 91.70 % A realized gain of $101 thousand and a realized gain of $138 thousand due to changes in the fair value of interest rate lock commitments which are classified as Level 3 assets and liabilities for the three months ended September 30, 2019 and 2018, respectively, and realized gains of $67 thousand and $114 thousand for the nine months ended September 30, 2019 and 2018, respectively, are recorded in non-interest income as net change in the fair value of derivative instruments in the Corporation’s consolidated statements of income. Refer to note 8 – servicing assets for a rollforward of servicing assets for which the Corporation utilized Level 3 inputs to determine fair value on a recurring basis for the three and nine month peiods ended September 30, 2019 and 2018. |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | (10) Derivative Financial Instruments Risk Management Objective of Using Derivatives The Corporation is exposed to certain risk arising from both its business operations and economic conditions. The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Corporation enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Corporation’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation’s known or expected cash receipts and its known or expected cash payments principally related to the Corporation’s lending function. Mortgage Banking Derivatives In connection with its mortgage banking activities, the Corporation enters into commitments to originate certain fixed rate residential mortgage loans for customers, also referred to as interest rate locks. In addition, the Corporation enters into forward commitments for the future sales or purchases of mortgage-backed securities to or from third-party counterparties to hedge the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. Forward sales commitments may also be in the form of commitments to sell individual mortgage loans or interest rate locks at a fixed price at a future date. The amount necessary to settle each interest rate lock is based on the price that secondary market investors would pay for loans with similar characteristics, including interest rate and term, as of the date fair value is measured. Interest rate lock commitments and forward commitments are recorded within other assets/liabilities on the consolidated balance sheets, with changes in fair values during the period recorded within net change in the fair value of derivative instruments on the unaudited consolidated statements of income. Customer Derivatives – Interest Rate Swaps Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain customers to swap a fixed rate product for a variable rate product, or vice versa. The Corporation executes interest rate derivatives with commercial banking customers to facilitate their respective risk management strategies. Those interest rate derivatives are simultaneously hedged by offsetting derivatives that the Corporation executes with a third party, such that the Corporation minimizes its net interest rate risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings. The following table presents a summary of the notional amounts and fair values of derivative financial instruments: September 30, 2019 December 31, 2018 (dollars in thousands) Balance Sheet Line Item Notional Asset Notional Asset Interest Rate Lock Commitments Positive fair values Other assets $ 37,105 283 27,188 310 Negative fair values Other liabilities 14,102 (81) 6,218 (40) Total 51,207 202 33,406 270 Forward Commitments Positive fair values Other assets 11,000 30 — — Negative fair values Other liabilities 41,000 (105) 26,500 (176) Total 52,000 (75) 26,500 (176) Customer Derivatives - Interest Rate Swaps Positive fair values Other assets 3,287 500 3,330 141 Negative fair values Other liabilities 3,287 (568) 3,330 (161) Total 6,574 (68) 6,660 (20) Total derivative financial instruments $ 109,781 59 66,566 74 Interest rate lock commitments are considered Level 3 in the fair value hierarchy, while the forward commitments and interest rate swaps are considered Level 2 in the fair value hierarchy. The following table presents a summary of the fair value gains and losses on derivative financial instruments: Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2019 2018 2019 2018 Interest Rate Lock Commitments $ (102) (224) $ (68) (110) Forward Commitments 124 293 101 168 Customer Derivatives - Interest Rate Swaps (22) — (48) — Net fair value gains (losses) on derivative financial instruments $ — 69 $ (15) 58 Realized gains/(losses) on derivatives were ($299) thousand and ($170) thousand for the three months ended September 30, 2019 and 2018, respectively, and ($792) and $534 thousand for the nine months ended September 30, 2019 and 2018, respectively, and are included in other non-interest income in the unaudited consolidated statements of income. |
Segments
Segments | 9 Months Ended |
Sep. 30, 2019 | |
Segments | |
Segments | (11) Segments ASC Topic 280 – Segment Reporting identifies operating segments as components of an enterprise which are evaluated regularly by the Corporation’s Chief Operating Decision Maker, our Chief Executive Officer, in deciding how to allocate resources and assess performance. The Corporation has applied the aggregation criterion set forth in this codification to the results of its operations. Our Banking segment consists of commercial and retail banking. The Banking segment generates interest income from its lending (including leasing) and investing activities and is dependent on the gathering of lower cost deposits from its branch network or borrowed funds from other sources for funding its loans, resulting in the generation of net interest income. The Banking segment also derives revenues from other sources including gains on the sale of available for sale investment securities, gains on the sale of loans, service charges on deposit accounts, cash sweep fees, overdraft fees, BOLI income. Meridian Wealth Partners (“Wealth”), a registered investment advisor and wholly-owned subsidiary of the Bank, provides a comprehensive array of wealth management services and products and the trusted guidance to help its clients and our banking customers prepare for the future. The unit generates non-interest income through advisory fees. Meridian’s mortgage banking segment (“Mortgage”) consists of one central loan production facility and several loan production offices located throughout the Delaware Valley. The Mortgage segment originates 1 – 4 family residential mortgages for sale, including servicing to third party investors, or for our loan portfolio. The unit generates net interest income on the loans it originates, earns margin income (primarily gain on sales), as well as other fee income. The table below summarizes income and expenses, directly attributable to each business line, which has been included in the statement of operations. Three Months Ended September 30, 2019 Three Months Ended September 30, 2018 (dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Net interest income $ 9,203 4 67 9,274 $ 8,107 71 200 8,378 Provision for loan losses 705 — — 705 291 — — 291 Net interest income after provision 8,498 4 67 8,569 7,816 71 200 8,087 Non-interest Income Mortgage banking income 74 — 7,836 7,910 105 — 8,169 8,274 Wealth management income 31 891 — 922 59 871 — 930 SBA income 645 — — 645 — — — — Net change in fair values (23) — 53 30 — — (333) (333) Other 534 — (227) 307 363 — (67) 296 Total non-interest income 1,261 891 7,662 9,814 527 871 7,769 9,167 Non-interest Expense Salaries and employee benefits 4,248 564 4,507 9,319 3,264 445 5,192 8,901 Occupancy and equipment 530 34 382 946 521 29 370 920 Professional fees 410 2 408 820 590 9 115 714 Advertising and promotion 344 94 136 574 301 111 178 590 Other 1,393 140 960 2,493 1,259 314 1,055 2,628 Total non-interest expense 6,925 834 6,393 14,152 5,935 908 6,910 13,753 Operating Margin $ 2,834 61 1,336 4,231 $ 2,408 34 1,059 3,501 Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018 (dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Net interest income $ 26,437 68 167 26,672 $ 23,597 217 402 24,216 Provision for loan losses 938 — — 938 1,258 — — 1,258 Net interest income after provision 25,499 68 167 25,734 22,339 217 402 22,958 Non-interest Income Mortgage banking income 175 — 18,964 19,139 148 — 20,259 20,407 Wealth management income 110 2,588 — 2,698 149 2,847 — 2,996 SBA income 1,160 — — 1,160 — — — — Net change in fair values (49) — 341 292 — — (471) (471) Other 1,409 — (510) 899 1,136 — 823 1,959 Total non-interest income 2,805 2,588 18,795 24,188 1,433 2,847 20,611 24,891 Non-interest Expense Salaries and employee benefits 11,988 1,681 12,120 25,789 10,390 1,373 14,956 26,719 Occupancy and equipment 1,588 93 1,164 2,845 1,599 99 1,172 2,870 Professional fees 1,116 11 873 2,000 1,325 20 325 1,670 Advertising and promotion 1,084 57 628 1,769 917 319 566 1,802 Other 4,546 426 3,137 8,109 3,827 613 2,888 7,328 Total non-interest expense 20,322 2,268 17,922 40,512 18,058 2,424 19,907 40,389 Operating Margin $ 7,982 388 1,040 9,410 $ 5,714 640 1,106 7,460 |
Recent Litigation
Recent Litigation | 9 Months Ended |
Sep. 30, 2019 | |
Recent Litigation | |
Recent Litigation | (12) Recent Litigation On November 21, 2017, three former employees of the mortgage-banking division of the Bank filed suit in the United States District Court for the Eastern District of Pennsylvania, Juan Jordan et al. v. Meridian Bank, Thomas Campbell and Christopher Annas , against the Bank purporting to be a class and collective action seeking unpaid and overtime wages under the Fair Labor Standards Act of 1938, the New Jersey Wage and Hour Law, and the Pennsylvania Minimum Wage Act of 1968 on behalf of similarly situated plaintiffs. In September 2019, plaintiffs’ counsel and the Bank agreed to move forward with non-binding mediation. Although the Bank believes it had strong and meritorious defenses, given the expense and inconvenience of litigation, on July 24, 2019 through mediation, the Bank reached an agreement in principle with the plaintiffs to settle this litigation for $990 thousand in total. The Bank has a litigation reserve of $990 thousand at September 30, 2019. The parties have submitted their negotiated settlement agreement to the court, and it awaits final court approval. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2019 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | (13) Recent Accounting Pronouncements As an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), Meridian Corporation is permitted an extended transition period for complying with new or revised accounting standards affecting public companies. We will remain an emerging growth company until the earliest of (i) the end of the fiscal year during which we have total annual gross revenues of $1,070,000,000 or more, (ii) the end of the fiscal year following the fifth anniversary of the completion of our initial offering, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt and (iv) the end of the fiscal year in which the market value of our equity securities that are held by non-affiliates exceeds $700 million as of June 30 of that year. We have elected to take advantage of this extended transition period, which means that the financial statements included herein, as well as any financial statements that we file in the future, will not be subject to all new or revised accounting standards generally applicable to public companies for the transition period for so long as we remain an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period under the JOBS Act. If we do so, we will prominently disclose this decision in the first periodic report following our decision, and such decision is irrevocable. As a filer under the JOBS Act, we will implement new accounting standards subject to the effective dates required for non-public entities. FASB ASU 2014‑09 (Topic 606), “Revenue from Contracts with Customers” Issued in May 2014, ASU 2014‑09 will require an entity to recognize revenue when it transfers promised goods or services to customers using a five-step model that requires entities to exercise judgment when considering the terms of the contracts. In August 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015‑14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. This amendment defers the effective date of ASU 2014‑09 by one year. In March 2016, the FASB issued ASU 2016‑ 08”, “Principal versus Agent Considerations (Reporting Gross versus Net),” which amends the principal versus agent guidance and clarifies that the analysis must focus on whether the entity has control of the goods or services before they are transferred to the customer. In addition, the FASB issued ASU Nos. 2016‑20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” and 2016‑12, “Narrow-Scope Improvements and Practical Expedients”, both of which provide additional clarification of certain provisions in Topic 606. These Accounting Standards Codification (“ASC”) updates are effective for public companies for annual reporting periods beginning after December 15, 2017, but early adoption is permitted. Early adoption is permitted only as of annual reporting periods after December 15, 2016. The standard permits the use of either the ‘retrospective’ or ‘retrospectively with the cumulative effect’ transition method. For non-public companies, the ASC updates are effective for annual reporting periods beginning after December 15, 2018, and interim periods beginning after December 15, 2019. The Corporation’s revenue is the sum of net interest income and non-interest income. The scope of the guidance excludes nearly all net interest income as well as many other revenues for financial assets and liabilities including loans, leases, securities, and derivatives. The Corporation performed a review and determined that the majority of non-interest income revenue streams are within the scope of the new standard. Non-interest income streams that are out of scope of the new standard include BOLI, sales of investment securities, mortgage banking activities, and certain items within service charges and other income. Management is finalizing a review of contracts related to service charges on deposits, investment advisory commissions and fee income, and certain items within other service charges and other income to make an assessment of the potential impact of this ASU. The Corporation will adopt this ASU as of December 31, 2019. FASB ASU 2017-05 (Topic 610), “Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets” Issued in February 2017, ASU 2017-05 provides clarification of the scope of ASC 610-20. Specifically, the new guidance clarifies that ASC 610-20 applies to nonfinancial assets which do not meet the definition of a business or not-for-profit activity. Further, the new guidance clarifies that a financial asset is within the scope of ASC 610-20 if it meets the definition of an in-substance nonfinancial asset which is defined as a financial asset promised to a counterparty in a contract where substantially all of the assets promised are nonfinancial. Finally, the new guidance clarifies that each distinct nonfinancial asset and insubstance nonfinancial asset should be derecognized when the counterparty obtains control of it. Management is currently assessing the potential impact of ASU. The Corporation will adopt this ASU as of December 31, 2019. FASB ASU 2017‑01 (Topic 805), “Business Combinations” Issued in January 2017, ASU 2017‑01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. ASU 2017‑01 is effective for public companies for annual periods beginning after December 15, 2017 including interim periods within those periods, while for non-public companies the ASU is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The Corporation will adopt this ASU as of December 31, 2019 and does not expect the adoption of this ASU to have a material impact on our Consolidated Financial Statements and related disclosures. FASB ASU 2016‑15 (Topic 320), “Classification of Certain Cash Receipts and Cash Payments” Issued in August 2016, ASU 2016‑15 provides guidance on eight specific cash flow issues and their disclosure in the consolidated statements of cash flows. The issues addressed include debt prepayment, settlement of zero-coupon debt, contingent consideration in business combinations, proceeds from settlement of insurance claims, proceeds from settlement of BOLI, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the Predominance principle. ASU 2016‑15 is effective for public companies for the annual and interim periods in fiscal years beginning after December 15, 2017, with early adoption permitted. For non-public companies ASU 2016‑15 is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The Corporation will adopt this ASU as of December 31, 2019 and does not expect the adoption of this ASU to have a material impact on our Consolidated Financial Statements and related disclosures. FASB ASU 2016‑13 (Topic 326), “Measurement of Credit Losses on Financial Instruments” Issued in June 2016, ASU 2016‑13 significantly changes how companies measure and recognize credit impairment for many financial assets. This ASU requires businesses and other organizations to measure the current expected credit losses (“CECL”) on financial assets, such as loans, net investments in leases, certain debt securities, bond insurance and other receivables. The amendments affect entities holding financial assets and net investments in leases that are not accounted for at fair value through net income. Current GAAP requires an incurred loss methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. The amendments in this ASU replace the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonableness and supportable information to inform credit loss estimates. An entity should apply the amendments through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (modified retrospective approach). Acquired credit impaired loans for which the guidance in Accounting Standards Codification (ASC) Topic 310-30 has been previously applied should prospectively apply the guidance in this ASU. A prospective transition approach is required for debt securities for which an other-than-temporary impairment has been recognized before the effective date. ASU 2016‑13 is effective for public companies for the annual and interim periods in fiscal years beginning after December 15, 2019, with early adoption permitted. For non-public companies the ASU is effective for fiscal years and interim periods beginning after December 15, 2022, or January 1, 2023 for the Corporation. The Corporation has assembled a cross-functional team from Finance, Credit, and IT that is leading the implementation efforts to evaluate the impact of this guidance on the Corporation's Consolidated Financial Statements and related disclosures, internal systems, accounting policies, processes and related internal controls. FASB ASU 2016‑02 (Topic 842), “Leases” Issued in February 2016, ASU 2016‑02 revises the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. ASU 2016‑02 is effective for public companies for the first interim period within annual periods beginning after December 15, 2018, with early adoption permitted. For non-public companies the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within the fiscal years beginning after December 31, 2020. In July 2018 ASU 2018-11 was issued which creates a new, optional transition method for implementing ASU 2016-02 and a lessor practical expedient for separating lease and non-lease components and has the same effective date as ASU 2016-02. Under the optional transition method of ASU 2018-11, the Corporation may initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Corporation is evaluating the effects that ASU 2016‑02 and ASU 2018-11 will have on our Consolidated Financial Statements and related disclosures and expects to adopt these ASU’s as of December 31, 2021. FASB ASU 2016‑01 (Subtopic 825‑10), “Financial Instruments – Overall, Recognition and Measurement of Financial Assets and Financial Liabilities” Issued in January 2016, ASU 2016‑01 provides that equity investments will be measured at fair value with changes in fair value recognized in net income. When fair value is not readily determinable, an entity may elect to measure the equity investment at cost, minus impairment, plus or minus any change in the investment’s observable price. For financial liabilities that are measured at fair value, the amendment requires an entity to present separately, in other comprehensive income, any change in fair value resulting from a change in instrument-specific credit risk. For public companies, ASU 2016‑01 will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For non-public companies the ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within the fiscal years beginning after December 31, 2019. Early adoption is permitted. Entities may apply this guidance on a prospective or retrospective basis. ASU 2018‑03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825‑10) clarifies certain aspects of ASU 2016‑01 and has the same effective dates for non-public companies. The Corporation is evaluating the effects that ASU 2016‑01 and ASU 2018‑03 will have on our Consolidated Financial Statements and related disclosures upon our adoption as of December 31, 2019. FASB ASU 2017‑08 (Subtopic 310‑20), “Nonrefundable Fees and Other Costs (Subtopic 310‑20): Premium Amortization on Purchased Callable Debt Securities” Issued in March 2017, ASU 2017‑08 shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendment requires the premium to be amortized to the earliest call date. The amendment does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public business entities, the amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. For non-public companies the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within the fiscal years beginning after December 31, 2020. The Corporation is evaluating the effect that ASU 2017‑08 will have on our Consolidated Financial Statements and related disclosures upon our adoption as of December 31, 2019. FASB ASU 2017‑12 (Subtopic 815), “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities” Issued in August 2017, ASU 2017‑12 better aligns hedge accounting with an organization’s risk management activities in the financial statements. In addition, the ASU simplifies the application of hedge accounting guidance in areas where practice issues exist. Specifically, the proposed ASU eases the requirements for effectiveness testing, hedge documentation and application of the shortcut and the critical terms match methods. Entities would be permitted to designate contractually specified components as the hedged risk in a cash flow hedge involving the purchase or sale of nonfinancial assets or variable rate financial instruments. In addition, entities would no longer separately measure and report hedge ineffectiveness. Also, entities, may choose refined measurement techniques to determine the changes in fair value of the hedged item in fair value hedges of benchmark interest rate risk. For public business entities, the ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. Early application is permitted in any interim period after issuance of the ASU for existing hedging relationships on the date of adoption and the effect of adoption should be reflected as of the beginning of the fiscal year of adoption (that is, the initial application date). The Corporation has evaluated ASU 2017‑12, and has determined it has no current hedging strategies for which it plans to implement the ASU but we will consider the impact of the ASU on future hedging strategies that may arise. FASB ASU 2018-16 (Subtopic 815), “Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes” In October 2018 ASU 2018-16 was issued. The new guidance applies to all entities that elect to apply hedge accounting to benchmark interest rate hedges under Topic 815. It permits the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes in addition to the existing applicable rates. The guidance is required to be adopted concurrently with ASU 2017-12, on a prospective basis for qualifying new or redesignated hedging relationships entered into on or after adoption. The Corporation will adopt this ASU as of December 31, 2020 and does not anticipate the adoption of this ASU to have a material impact on our Consolidated Financial Statements and related disclosures. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Basis of Presentation | |
Summarized the impacts of the correction | The following table summarizes the impacts of the correction on the consolidated balance sheet as of January 1, 2018: (dollars in thousands, except per share data) Reported Corrections Revised Deferred income taxes $ 1,312 92 1,404 Other liabilities 5,426 407 5,833 Retained earnings 15,768 (315) 15,453 The following table summarizes the impacts of the correction on the consolidated balance sheet as of December 31, 2018: (dollars in thousands, except per share data) Reported Corrections Revised Deferred income taxes $ 1,728 Other liabilities 5,716 Retained earnings (315) 23,616 The following table summarizes the impacts of the corrections to our capital ratios as of December 31, 2018: December 31, 2018 - as reported To be well capitalized under For capital adequacy prompt corrective action Actual purposes * provisions (dollars in thousands): Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) $ 122,577 $ 71,577 $ 89,472 Common equity tier 1 capital (to risk-weighted assets) 105,196 40,262 58,157 Tier 1 capital (to risk-weighted assets) 105,196 53,683 71,577 Tier 1 capital (to average assets) 105,196 37,578 46,972 December 31, 2018 - as revised To be well capitalized under For capital adequacy prompt corrective action Actual purposes * provisions (dollars in thousands): Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) $ 122,262 $ 88,362 $ 89,481 Common equity tier 1 capital (to risk-weighted assets) 104,881 57,044 58,163 Tier 1 capital (to risk-weighted assets) 104,881 70,466 71,585 Tier 1 capital (to average assets) 104,881 37,581 46,977 * |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings per Common Share | |
Schedule of basic and diluted earnings per common share | Three Months Ended Nine Months Ended September 30, September 30, (dollars in thousands, except per share data) 2019 2018 2019 2018 Numerator: Net income available to common stockholders $ 3,317 2,727 $ 7,345 5,799 Denominator for basic earnings per share - weighted average shares outstanding 6,407 6,402 6,407 6,395 Effect of dilutive common shares 30 28 29 31 Denominator for diluted earnings per share - adjusted weighted average shares outstanding 6,437 6,430 6,436 6,426 Basic earnings per share $ 0.52 0.43 $ 1.15 0.91 Diluted earnings per share $ 0.52 0.42 $ 1.14 0.90 Antidilutive shares excluded from computation of average dilutive earnings per share 199 116 199 116 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Other Intangibles | |
Schedule of goodwill and intangibles assets related to acquisition | Balance Balance Amortization December 31, Amortization September 30, Period (dollars in thousands) 2018 Expense 2019 (in years) Goodwill - Wealth $ 899 — 899 Indefinite Total Goodwill 899 — 899 Intangible assets - trade name 266 — 266 Indefinite Intangible assets - customer relationships 3,727 (153) 3,574 20 Intangible assets - non competition agreements 154 (52) 102 4 Total Intangible Assets 4,147 (205) 3,942 Total $ 5,046 (205) 4,841 |
Securities (Tables)
Securities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Securities | |
Schedule of amortized cost and fair value of securities | September 30, 2019 Gross Gross Amortized unrealized unrealized Fair (dollars in thousands) cost gains losses value Securities available-for-sale: U.S. asset backed securities $ 8,919 (39) 8,882 U.S. government agency mortgage-backed securities 12,843 103 (46) 12,900 U.S. government agency collateralized mortgage obligations 29,734 357 (130) 29,961 Investments in mutual funds 1,000 14 - 1,014 Total securities available-for-sale $ 52,496 476 (215) 52,757 Securities held to maturity: State and municipal securities 8,814 214 — 9,028 Total securities held-to-maturity $ 8,814 214 — 9,028 December 31, 2018 Gross Gross Amortized unrealized unrealized Fair (dollars in thousands) cost gains losses value Securities available-for-sale: U.S. government agency mortgage-backed securities $ 24,092 45 (271) 23,866 U.S. government agency collateralized mortgage obligations 14,754 52 (142) 14,664 State and municipal securities 11,096 22 (199) 10,919 Investments in mutual funds 1,000 — (21) 979 Total securities available-for-sale $ 50,942 119 (633) 50,428 Securities held to maturity: U.S. Treasuries $ 1,991 — (13) 1,978 State and municipal securities 10,750 17 (90) 10,677 Total securities held-to-maturity $ 12,741 17 (103) 12,655 |
Schedule of investment unrealized loss in continuous unrealized loss position | September 30, 2019 Less than 12 Months 12 Months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (dollars in thousands) value losses value losses value losses Securities available-for-sale: U.S. asset backed securities (39) — — (39) U.S. government agency mortgage-backed securities $ (9) (37) 5,103 (46) U.S. government agency collateralized mortgage obligations (88) (42) 15,454 (130) Total securities available-for-sale $ 21,468 (136) 5,931 (79) 27,399 (215) December 31, 2018 Less than 12 Months 12 Months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (dollars in thousands) value losses value losses value losses Securities available-for-sale: U.S. government agency mortgage-backed securities $ 2,354 (6) 15,223 (265) 17,577 (271) U.S. government agency collateralized mortgage obligations 2,636 (14) 5,620 (128) 8,256 (142) State and municipal securities 957 (11) 8,746 (188) 9,703 (199) Investments in mutual funds 980 (21) — — 980 (21) Total securities available-for-sale $ 6,927 (52) 29,589 (581) 36,516 (633) Securities held-to-maturity: U.S. Treasuries $ — — 1,978 (13) 1,978 (13) State and municipal securities 1,545 (5) 4,783 (85) 6,328 (90) Total securities held-to-maturity $ 1,545 (5) 6,761 (98) 8,306 (103) |
Schedule of amortized cost and fair value of held-to-maturity securities and available-for-sale securities by contractual maturity | September 30, 2019 December 31, 2018 Available-for-sale Held-to-maturity Available-for-sale Held-to-maturity Amortized Fair Amortized Fair Amortized Fair Amortized Fair (dollars in thousands) cost value cost value cost value cost value Investment securities: Due in one year or less $ — — — — $ 906 902 1,991 1,978 Due after one year through five years — — 4,258 4,316 1,236 1,226 3,154 3,148 Due after five years through ten years — — 4,556 4,712 6,411 6,290 7,596 7,529 Due after ten years 8,919 8,882 — — 2,543 2,501 — — Subtotal 8,919 8,882 8,814 9,028 11,096 10,919 12,741 12,655 Mortgage-related securities 42,577 42,861 — — 38,846 38,530 — — Mutual funds with no stated maturity 1,000 1,014 — — 1,000 979 — — Total $ 52,496 52,757 8,814 9,028 $ 50,942 50,428 12,741 12,655 |
Loans Receivable (Tables)
Loans Receivable (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Loans Receivable | |
Summary of loans and leases outstanding | September 30, December 31, (dollars in thousands) 2019 2018 Mortgage loans held for sale $ 48,615 37,695 Real estate loans: Commercial mortgage 357,418 325,393 Home equity lines and loans 83,412 82,286 Residential mortgage (1) 56,272 53,360 Construction 154,463 116,906 Total real estate loans 651,565 577,945 Commercial and industrial 284,376 259,806 Consumer 984 701 Leases, net 828 1,335 Total portfolio loans and leases 937,753 839,787 Total loans and leases $ 986,368 877,482 Loans with predetermined rates $ 294,297 264,376 Loans with adjustable or floating rates 692,071 613,106 Total loans and leases $ 986,368 877,482 Net deferred loan origination (fees) costs $ (1,895) (1,681) (1) Includes $11,278 and $11,422 of loans at fair value as of September 30, 2019 and December 31, 2018, respectively. |
Schedule of components of the net investment in leases | September 30, December 31, (dollars in thousands) 2019 2018 Minimum lease payments receivable $ 869 1,420 Unearned lease income (41) (85) Total $ 828 1,335 |
Schedule of age analysis of past due loans and leases | Total 90+ days Accruing Nonaccrual September 30, 2019 30-89 days past due and Total past Loans and loans and Total loans Delinquency (dollars in thousands) past due still accruing due Current leases leases and leases percentage Commercial mortgage $ — — — 355,869 355,869 1,549 357,418 0.43 % Home equity lines and loans 592 — 592 82,563 83,155 257 83,412 1.02 Residential mortgage (1) — — — 54,574 54,574 1,698 56,272 3.02 Construction 1,519 — 1,519 152,944 154,463 — 154,463 0.98 Commercial and industrial 394 — 394 283,556 283,950 426 284,376 0.29 Consumer — — — 984 984 — 984 — Leases 123 — 123 705 828 — 828 14.86 Total $ 2,628 — 2,628 931,195 933,823 3,930 937,753 0.70 % (1) Includes $11,278 of loans at fair value as of September 30, 2019 ($10,437 of current, $ 0 of 30-89 days past due and $841 of nonaccrual). Total 90+ days Accruing Nonaccrual December 31, 2018 30-89 days past due and Total past Loans and loans and Total loans Delinquency (dollars in thousands) past due still accruing due Current leases leases and leases percentage Commercial mortgage $ — — — 324,169 324,169 1,224 325,393 0.38 % Home equity lines and loans 348 — 348 81,855 82,203 83 82,286 0.52 Residential mortgage (1) 195 — 195 51,018 51,213 2,147 53,360 4.39 Construction — — — 116,906 116,906 — 116,906 — Commercial and industrial 217 — 217 259,112 259,329 477 259,806 0.27 Consumer — — — 701 701 — 701 — Leases 49 — 49 1,286 1,335 — 1,335 3.67 Total $ 809 — 809 835,047 835,856 3,931 839,787 0.56 % (1) Includes $11,422 of loans at fair value as of December 31, 2018 ($10,098 of current, $187 of 30-89 days past due and $1,137 of nonaccrual). |
Allowance for Loan Losses (th_2
Allowance for Loan Losses (the "Allowance") (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Allowance for Loan Losses (the Allowance) | |
Roll-forward of allowance for loan and lease losses by portfolio segment | Balance, Balance, (dollars in thousands) June 30, 2019 Charge-offs Recoveries Provision September 30, 2019 Commercial mortgage $ 3,197 — 1 257 3,455 Home Equity lines and loans 354 — 2 (28) 328 Residential mortgage 200 — 2 (30) 172 Construction 2,033 — — 136 2,169 Commercial and industrial 2,830 (30) 6 369 3,175 Consumer 4 — 1 1 6 Leases 7 — — — 7 Total $ 8,625 (30) 12 705 9,312 Balance, Balance, (dollars in thousands) December 31, 2018 Charge-offs Recoveries Provision September 30, 2019 Commercial mortgage $ 3,209 — 6 240 3,455 Home Equity lines and loans 323 — 10 (5) 328 Residential mortgage 191 — 4 (23) 172 Construction 1,627 — — 542 2,169 Commercial and industrial 2,690 (30) 328 187 3,175 Consumer 3 — 3 — 6 Leases 10 — — (3) 7 Total $ 8,053 (30) 351 938 9,312 Balance, Balance, (dollars in thousands) June 30, 2018 Charge-offs Recoveries Provision September 30, 2018 Commercial mortgage $ 3,011 — 2 140 3,153 Home Equity lines and loans 269 — 10 37 316 Residential mortgage 166 — — 14 180 Construction 1,438 — — 59 1,497 Commercial and industrial 2,559 (50) 8 41 2,558 Consumer 3 — 1 — 4 Leases 3 — — — 3 Total $ 7,449 (50) 21 291 7,711 Balance, Balance, (dollars in thousands) December 31, 2017 Charge-offs Recoveries Provision September 30, 2018 Commercial mortgage $ 2,434 — 6 713 3,153 Home Equity lines and loans 280 (137) 14 159 316 Residential mortgage 82 — 61 37 180 Construction 1,689 — — (192) 1,497 Commercial and industrial 2,214 (244) 41 547 2,558 Consumer 5 — 3 (4) 4 Leases 5 — — (2) 3 Total $ 6,709 (381) 125 1,258 7,711 |
Schedule of allocation of the allowance for loan and lease losses | Allowance on loans and leases Carrying value of loans and leases Individually Collectively Individually Collectively September 30, 2019 evaluated evaluated evaluated evaluated (dollars in thousands) for impairment for impairment Total for impairment for impairment Total Commercial mortgage $ — 3,455 3,455 $ 2,204 355,214 357,418 Home Equity lines and loans 2 326 328 255 83,157 83,412 Residential mortgage — 172 172 855 44,138 44,993 Construction — 2,169 2,169 1,262 153,201 154,463 Commercial and industrial 124 3,051 3,175 1,389 282,987 284,376 Consumer — 6 6 — 984 984 Leases — 7 7 — 828 828 Total $ 126 9,186 9,312 $ 5,965 920,509 926,474 (1) Allowance on loans and leases Carrying value of loans and leases Individually Collectively Individually Collectively December 31, 2018 evaluated evaluated evaluated evaluated (dollars in thousands) for impairment for impairment Total for impairment for impairment Total Commercial mortgage $ — 3,209 3,209 $ 1,929 323,464 325,393 Home Equity lines and loans — 323 323 83 82,203 82,286 Residential mortgage — 191 191 969 40,969 41,938 Construction — 1,627 1,627 1,281 115,625 116,906 Commercial and industrial 103 2,587 2,690 1,537 258,269 259,806 Consumer — 3 3 — 701 701 Leases — 10 10 — 1,335 1,335 Total $ 103 7,950 8,053 $ 5,799 822,566 828,365 (1) (1) Excludes deferred fees and loans carried at fair value. |
Schedule of carrying value of loans and leases by portfolio segment based on the credit quality indicators | September 30, 2019 Special (dollars in thousands) Pass mention Substandard Doubtful Total Commercial mortgage $ 350,027 3,437 3,954 — 357,418 Home equity lines and loans 83,155 — 257 — 83,412 Construction 151,663 2,774 26 — 154,463 Commercial and industrial 262,217 8,399 13,760 — 284,376 Total $ 847,062 14,610 17,997 — 879,669 December 31, 2018 Special (dollars in thousands) Pass mention Substandard Doubtful Total Commercial mortgage $ 320,130 3,713 1,550 — 325,393 Home equity lines and loans 82,121 — 165 — 82,286 Construction 114,249 2,657 — — 116,906 Commercial and industrial 239,181 12,620 7,975 30 259,806 Total $ 755,681 18,990 9,690 30 784,391 |
Schedule of allocations based on the credit quality indicators | September 30, 2019 December 31, 2018 (dollars in thousands) Performing Nonperforming Total Performing Nonperforming Total Residential mortgage $ 44,138 855 44,993 $ 40,969 969 41,938 Consumer 984 — 984 701 — 701 Leases 828 — 828 1,335 — 1,335 Total $ 45,950 855 46,805 $ 43,005 969 43,974 |
Schedule of recorded investment and principal balance of impaired loans | At September 30, 2019 At December 31, 2018 Average Average Recorded Principal Related recorded Recorded Principal Related recorded (dollars in thousands) investment balance allowance investment investment balance allowance investment Impaired loans with related allowance: Commercial mortgage $ — — — — — — — — Commercial and industrial 559 559 124 566 676 679 103 680 Home equity lines and loans 255 255 2 256 — — — — Residential mortgage — — — — — — — — Construction — — — — — — — — Total 814 814 126 822 676 679 103 680 Impaired loans without related allowance: Commercial mortgage $ 2,204 2,713 — 2,272 1,929 2,379 — 1,982 Commercial and industrial 830 876 — 864 861 945 — 885 Home equity lines and loans — — — — 83 89 — 84 Residential mortgage 855 855 — 857 969 978 — 978 Construction 1,262 1,263 — 1,286 1,281 1,281 — 1,293 Total 5,151 5,707 — 5,279 5,123 5,672 — 5,222 Grand Total $ 5,965 6,521 126 6,101 5,799 6,351 103 5,902 |
Schedule of balances of TDRs | September 30, December 31, (dollars in thousands) 2019 2018 TDRs included in nonperforming loans and leases $ 1,133 1,219 TDRs in compliance with modified terms 2,880 3,047 Total TDRs $ 4,013 4,266 |
Schedule of loan and lease modifications granted | For the Three Months Ended September 30, 2018 Pre-Modification Post-Modification Outstanding Outstanding Number of Recorded Recorded Related (dollar in thousands) Contracts Investment Investment Allowance Real Estate: Land and Construction 1 796 796 — Total 1 $ 796 $ 796 $ — For the Nine Months Ended September 30, 2018 Pre-Modification Post-Modification Outstanding Outstanding Number of Recorded Recorded Related (dollar in thousands) Contracts Investment Investment Allowance Real Estate: Land and Construction 2 2,410 2,410 — Commercial and industrial 1 120 120 — Total 3 $ 2,530 $ 2,530 $ — |
Schedule of type of number of contracts by type of loan and lease modifications | For the Three Months Ended For the Nine Months Ended September 30, 2018 September 30, 2018 Interest Rate Interest Rate Loan Term Change and Loan Loan Term Change and Loan Extension Term Extension Extension Term Extension Real Estate: Land and Construction 1 — 2 — Commercial and industrial — — — 1 Total 1 — 2 1 |
Short-Term Borrowings and Long-
Short-Term Borrowings and Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Short-Term Borrowings and Long-Term Debt | |
Schedule of long term debt | Balance as of Maturity Interest September 30, December 31, (dollars in thousands) date rate 2019 2018 Mid-term Repo-fixed 06/28/21 1.88 % 3,123 — Mid-term Repo-fixed 08/10/20 2.76 — 5,000 Acquisition Purchase Note (1) 04/01/20 3.00 — 1,238 Total $ 3,123 6,238 (1) The acquisition purchase note for the Wealth division is classified as short-term borrowing at September 30, 2019. |
Servicing Assets (Tables)
Servicing Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Mortgage Servicing Rights | |
Servicing Assets at Fair Value [Line Items] | |
Schedule of servicing assets | Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2019 2018 2019 2018 Balance at beginning of the period $ 236 62 $ 232 — Servicing rights capitalized 107 89 198 152 Amortization of servicing rights (17) (3) (39) (4) Change in valuation allowance (12) — (77) — Balance at end of the period $ 314 148 $ 314 148 |
Schedule of valuation allowance for servicing assets | Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2019 2018 2019 2018 Valuation allowance, beginning of period $ (65) — $ — — Impairment (12) — (77) — Recovery — — — — Valuation allowance, end of period $ (77) — $ (77) — |
Schedule of sensitivity of fair value of servicing assets | (dollars in thousands) September 30, 2019 December 31, 2018 Fair value of residential mortgage servicing rights $ 314 $ 213 Weighted average life (years) 7.4 3.4 Prepayment speed Impact on fair value: 10% adverse change $ (16) $ (9) 20% adverse change (30) (17) Discount rate Impact on fair value: 10% adverse change $ (9) $ (8) 20% adverse change (18) (15) |
SBA Loan Servicing Rights | |
Servicing Assets at Fair Value [Line Items] | |
Schedule of servicing assets | Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2019 2018 2019 2018 Balance at beginning of the period $ 133 — $ — — Servicing rights capitalized 198 — 331 — Amortization of servicing rights (6) — (6) — Change in valuation allowance (4) — (4) — Balance at end of the period $ 321 — $ 321 — |
Schedule of valuation allowance for servicing assets | Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2019 2018 2019 2018 Valuation allowance, beginning of period $ — — $ — — Impairment (4) — (4) — Recovery — — — — Valuation allowance, end of period $ (4) — $ (4) — |
Schedule of sensitivity of fair value of servicing assets | (dollars in thousands) September 30, 2019 Fair value of SBA loan servicing rights $ 321 Weighted average life (years) 4.5 Prepayment speed Impact on fair value: 10% adverse change $ (11) 20% adverse change (21) Discount rate Impact on fair value: 10% adverse change $ (9) 20% adverse change (18) |
Fair Value Measurements and D_2
Fair Value Measurements and Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Measurements and Disclosures | |
Schedule of financial assets measured at fair value on a recurring basis | September 30, 2019 (dollars in thousands) Total Level 1 Level 2 Level 3 Securities available for sale: U.S. government agency mortgage-backed securities $ 12,900 — 12,900 — U.S. government agency collateralized mortgage obligations 29,961 — 29,961 — Investments in mutual funds and other equity securities 9,896 — 9,896 — Mortgage loans held-for-sale 48,615 — 48,615 — Mortgage loans held-for-investment 11,278 — 11,278 — Mortgage servicing rights 314 — — 314 SBA loan servicing rights 321 — — 321 Interest rate lock commitments 283 — — 283 Customer derivatives - Interest rate swaps 500 — 500 — Total $ 114,068 — 113,150 918 December 31, 2018 (dollars in thousands) Total Level 1 Level 2 Level 3 Securities available for sale: U.S. government agency mortgage-backed securities $ 23,866 — 23,866 — U.S. government agency collateralized mortgage obligations 14,664 — 14,664 — State and municipal securities 10,919 — 10,919 — Investments in mutual funds and other equity securities 979 — 979 — Mortgage loans held-for-sale 37,695 — 37,695 — Mortgage loans held-for-investment 11,422 — 11,422 — Mortgage servicing rights 213 — — 213 Interest rate lock commitments 310 — — 310 Customer derivatives - Interest rate swaps 141 — 141 — Total $ 100,209 — 99,686 523 |
Schedule of financial assets measured at fair value on non-recurring basis | September 30, 2019 (dollars in thousands) Total Level 1 Level 2 Level 3 Impaired loans (1) $ 5,965 — — 5,965 Other real estate owned (2) 120 — — 120 Total $ 6,085 — — 6,085 December 31, 2018 (dollars in thousands) Total Level 1 Level 2 Level 3 Impaired loans (1) $ 5,799 — — 5,799 Other real estate owned (2) — — — — Total $ 5,799 — — 5,799 (1) Impaired loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input is significant to the fair value measurements. (2) Real estate properties acquired through, or in lieu of, foreclosure are to be sold and are carried at fair value less estimated cost to sell. Fair value is based upon independent market prices or appraised value of the property. These assets are included in Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement. Appraised values may be discounted based on management’s expertise, historical knowledge, changes in market conditions from the time of valuation and/or estimated costs to sell. |
Schedule of estimated fair values of financial instruments | September 30, 2019 December 31, 2018 Fair Value Carrying Carrying (dollars in thousands) Hierarchy Level amount Fair value amount Fair value Financial assets: Cash and cash equivalents Level 1 $ 40,532 40,532 23,952 23,952 Securities available-for-sale Level 2 52,757 52,757 50,428 50,428 Securities held-to-maturity Level 2 8,814 9,028 12,741 12,655 Mortgage loans held-for-sale Level 2 48,615 48,615 37,695 37,695 Loans receivable, net Level 3 935,858 933,285 818,631 820,512 Mortgage loans held-for-investment Level 2 11,278 11,278 11,422 11,422 Interest rate lock commitments Level 3 283 283 310 310 Forward commitments Level 2 30 30 — — Restricted investment in bank stock Level 3 8,237 8,237 7,002 7,002 Mortgage servicing rights Level 3 314 314 232 213 SBA loan servicing rights Level 3 321 321 — — Accrued interest receivable Level 3 3,155 3,155 2,889 2,889 Customer derivatives - Interest rate swaps Level 2 500 500 141 141 Financial liabilities: Deposits Level 2 858,461 896,000 752,130 744,300 Short-term borrowings Level 2 128,466 128,467 114,300 114,300 Long-term debt Level 2 3,123 3,123 6,238 6,240 Subordinated debentures Level 2 9,176 9,792 9,239 9,396 Accrued interest payable Level 2 669 669 305 305 Interest rate lock commitments Level 3 81 81 40 40 Forward commitments Level 2 105 105 176 176 Customer derivatives - Interest rate swaps Level 2 568 568 161 161 Notional Notional Off-balance sheet financial instruments: amount Fair value amount Fair value Commitments to extend credit Level 2 $ 327,788 283 290,614 310 Letters of credit Level 2 9,750 — 5,158 — |
Schedule of level 3 inputs reconciliation | Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Balance at beginning of the period $ 375 586 $ 310 344 (Decrease) increase in value (92) (80) (27) 162 Balance at end of the period $ 283 506 $ 283 506 |
Schedule of measurement inputs | Significant Valuation Techniques for Level 3 interest rate lock Fair Value Unobservable Range of Weighted commitments as of September 30, 2019 Level 3 Valuation Technique Input Inputs Average Interest rate lock commitments $ 283 Market comparable pricing Pull through 1 - 99 % 91.70 % |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Financial Instruments | |
Summary of the notional amounts and fair values of derivative financial instruments | September 30, 2019 December 31, 2018 (dollars in thousands) Balance Sheet Line Item Notional Asset Notional Asset Interest Rate Lock Commitments Positive fair values Other assets $ 37,105 283 27,188 310 Negative fair values Other liabilities 14,102 (81) 6,218 (40) Total 51,207 202 33,406 270 Forward Commitments Positive fair values Other assets 11,000 30 — — Negative fair values Other liabilities 41,000 (105) 26,500 (176) Total 52,000 (75) 26,500 (176) Customer Derivatives - Interest Rate Swaps Positive fair values Other assets 3,287 500 3,330 141 Negative fair values Other liabilities 3,287 (568) 3,330 (161) Total 6,574 (68) 6,660 (20) Total derivative financial instruments $ 109,781 59 66,566 74 |
Summary of the fair value gains and losses on derivative financial instruments | Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2019 2018 2019 2018 Interest Rate Lock Commitments $ (102) (224) $ (68) (110) Forward Commitments 124 293 101 168 Customer Derivatives - Interest Rate Swaps (22) — (48) — Net fair value gains (losses) on derivative financial instruments $ — 69 $ (15) 58 |
Segment (Tables)
Segment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segments | |
Schedule of business segment financial information | Three Months Ended September 30, 2019 Three Months Ended September 30, 2018 (dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Net interest income $ 9,203 4 67 9,274 $ 8,107 71 200 8,378 Provision for loan losses 705 — — 705 291 — — 291 Net interest income after provision 8,498 4 67 8,569 7,816 71 200 8,087 Non-interest Income Mortgage banking income 74 — 7,836 7,910 105 — 8,169 8,274 Wealth management income 31 891 — 922 59 871 — 930 SBA income 645 — — 645 — — — — Net change in fair values (23) — 53 30 — — (333) (333) Other 534 — (227) 307 363 — (67) 296 Total non-interest income 1,261 891 7,662 9,814 527 871 7,769 9,167 Non-interest Expense Salaries and employee benefits 4,248 564 4,507 9,319 3,264 445 5,192 8,901 Occupancy and equipment 530 34 382 946 521 29 370 920 Professional fees 410 2 408 820 590 9 115 714 Advertising and promotion 344 94 136 574 301 111 178 590 Other 1,393 140 960 2,493 1,259 314 1,055 2,628 Total non-interest expense 6,925 834 6,393 14,152 5,935 908 6,910 13,753 Operating Margin $ 2,834 61 1,336 4,231 $ 2,408 34 1,059 3,501 Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018 (dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Net interest income $ 26,437 68 167 26,672 $ 23,597 217 402 24,216 Provision for loan losses 938 — — 938 1,258 — — 1,258 Net interest income after provision 25,499 68 167 25,734 22,339 217 402 22,958 Non-interest Income Mortgage banking income 175 — 18,964 19,139 148 — 20,259 20,407 Wealth management income 110 2,588 — 2,698 149 2,847 — 2,996 SBA income 1,160 — — 1,160 — — — — Net change in fair values (49) — 341 292 — — (471) (471) Other 1,409 — (510) 899 1,136 — 823 1,959 Total non-interest income 2,805 2,588 18,795 24,188 1,433 2,847 20,611 24,891 Non-interest Expense Salaries and employee benefits 11,988 1,681 12,120 25,789 10,390 1,373 14,956 26,719 Occupancy and equipment 1,588 93 1,164 2,845 1,599 99 1,172 2,870 Professional fees 1,116 11 873 2,000 1,325 20 325 1,670 Advertising and promotion 1,084 57 628 1,769 917 319 566 1,802 Other 4,546 426 3,137 8,109 3,827 613 2,888 7,328 Total non-interest expense 20,322 2,268 17,922 40,512 18,058 2,424 19,907 40,389 Operating Margin $ 7,982 388 1,040 9,410 $ 5,714 640 1,106 7,460 |
Basis of Presentation (Details)
Basis of Presentation (Details) | Aug. 24, 2018$ / shares | Sep. 30, 2019$ / shares | Dec. 31, 2018$ / shares |
Business Acquisition [Line Items] | |||
Common stock, par value | $ 1 | $ 1 | |
Share exchange ratio | 1 | ||
Meridian Bank | |||
Business Acquisition [Line Items] | |||
Common stock, par value | $ 1 |
Basis of Presentation - Impact
Basis of Presentation - Impact of Correction (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Sep. 30, 2019 | Dec. 31, 2018 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Mortgage interest and fees to be reimbursed | $ 474 | ||
Mortgage loan origination licensing error fine to Maryland | 12 | ||
Deferred income taxes | 1,404 | $ 1,803 | $ 1,728 |
Other liabilities | 5,833 | 9,271 | 5,716 |
Retained earnings | 15,453 | $ 30,961 | 23,616 |
Total capital (to risk-weighted assets) | |||
Actual, Amount | 122,262 | ||
For capital adequacy purpose, Amount | 88,362 | ||
To be well capitalized under prompt corrective action provisions, Amount | $ 89,481 | ||
Actual, Ratio | 13.66% | ||
For capital adequacy purpose, Ratio | 9.88% | ||
To be well capitalized under prompt corrective action provisions, Ratio | 10.00% | ||
Common equity tier 1 capital (to risk-weighted assets) | |||
Actual, Amount | $ 104,881 | ||
For capital adequacy purpose, Amount | 57,044 | ||
To be well capitalized under prompt corrective action provisions, Amount | $ 58,163 | ||
Actual, Ratio | 11.72% | ||
For capital adequacy purpose, Ratio | 6.38% | ||
To be well capitalized under prompt corrective action provisions, Ratio | 6.50% | ||
Tier 1 capital (to risk-weighted assets) | |||
Actual, Amount | $ 104,881 | ||
For capital adequacy purpose, Amount | 70,466 | ||
To be well capitalized under prompt corrective action provisions, Amount | $ 71,585 | ||
Actual, Ratio | 11.72% | ||
For capital adequacy purpose, Ratio | 7.88% | ||
To be well capitalized under prompt corrective action provisions, Ratio | 8.00% | ||
Tier 1 capital (to average assets) | |||
Actual, Amount | $ 104,881 | ||
For capital adequacy purpose, Amount | 37,581 | ||
To be well capitalized under prompt corrective action provisions, Amount | $ 46,977 | ||
Actual, Ratio | 11.16% | ||
For capital adequacy purpose, Ratio | 4.00% | ||
To be well capitalized under prompt corrective action provisions, Ratio | 5.00% | ||
Capital conservation buffer (as a percent) | 2.50% | 1.875% | |
Revision State Licensing Mortgage Loan Originations | Reported | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Deferred income taxes | 1,312 | $ 1,636 | |
Other liabilities | 5,426 | 5,309 | |
Retained earnings | 15,768 | 23,931 | |
Total capital (to risk-weighted assets) | |||
Actual, Amount | 122,577 | ||
For capital adequacy purpose, Amount | 71,577 | ||
To be well capitalized under prompt corrective action provisions, Amount | $ 89,472 | ||
Actual, Ratio | 13.70% | ||
For capital adequacy purpose, Ratio | 8.00% | ||
To be well capitalized under prompt corrective action provisions, Ratio | 10.00% | ||
Common equity tier 1 capital (to risk-weighted assets) | |||
Actual, Amount | $ 105,196 | ||
For capital adequacy purpose, Amount | 40,262 | ||
To be well capitalized under prompt corrective action provisions, Amount | $ 58,157 | ||
Actual, Ratio | 11.76% | ||
For capital adequacy purpose, Ratio | 4.50% | ||
To be well capitalized under prompt corrective action provisions, Ratio | 6.50% | ||
Tier 1 capital (to risk-weighted assets) | |||
Actual, Amount | $ 105,196 | ||
For capital adequacy purpose, Amount | 53,683 | ||
To be well capitalized under prompt corrective action provisions, Amount | $ 71,577 | ||
Actual, Ratio | 11.76% | ||
For capital adequacy purpose, Ratio | 6.00% | ||
To be well capitalized under prompt corrective action provisions, Ratio | 8.00% | ||
Tier 1 capital (to average assets) | |||
Actual, Amount | $ 105,196 | ||
For capital adequacy purpose, Amount | 37,578 | ||
To be well capitalized under prompt corrective action provisions, Amount | $ 46,972 | ||
Actual, Ratio | 11.20% | ||
For capital adequacy purpose, Ratio | 4.00% | ||
To be well capitalized under prompt corrective action provisions, Ratio | 5.00% | ||
Revision State Licensing Mortgage Loan Originations | Corrections | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Deferred income taxes | 92 | $ 92 | |
Other liabilities | 407 | 407 | |
Retained earnings | $ (315) | $ (315) |
Earnings per Common Share (Deta
Earnings per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Numerator: | ||||||||
Net income | $ 3,317 | $ 2,022 | $ 2,006 | $ 2,727 | $ 1,802 | $ 1,270 | $ 7,345 | $ 5,799 |
Denominator for basic earnings per share - weighted average shares outstanding | 6,407 | 6,402 | 6,407 | 6,395 | ||||
Effect of dilutive common shares | 30 | 28 | 29 | 31 | ||||
Denominator for diluted earnings per share - adjusted weighted average shares outstanding | 6,437 | 6,430 | 6,436 | 6,426 | ||||
Basic earnings per share (in dollars per share) | $ 0.52 | $ 0.43 | $ 1.15 | $ 0.91 | ||||
Diluted earnings per share (in dollars per share) | $ 0.52 | $ 0.42 | $ 1.14 | $ 0.90 | ||||
Antidilutive shares excluded from computation of average dilutive earnings per share | 199 | 116 | 199 | 116 |
Goodwill and Other Intangible_2
Goodwill and Other Intangibles (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | |
Goodwill and other intangibles rollforward | |||
Accumulated Amortization | $ 682 | $ 409 | |
Grand total | 4,841 | $ 5,046 | |
HJ Wealth | |||
Goodwill and other intangibles rollforward | |||
Goodwill, Beginning Balance | 899 | ||
Goodwill, Ending Balance | 899 | ||
Amortization expense | 205 | ||
Total Intangible Assets | 3,942 | 4,147 | |
Grand total | 4,841 | $ 5,046 | |
HJ Wealth | Trade name | |||
Goodwill and other intangibles rollforward | |||
Indefinite-lived Intangible Assets (Excluding Goodwill), Beginning Balance | 266 | ||
Indefinite-lived Intangible Assets (Excluding Goodwill), Ending Balance | 266 | ||
HJ Wealth | Customer relationships | |||
Goodwill and other intangibles rollforward | |||
Finite-Lived Intangible Assets, Net, Beginning Balance | 3,727 | ||
Amortization expense | 153 | ||
Finite-Lived Intangible Assets, Net, Ending Balance | $ 3,574 | ||
Amortization Period | 20 years | ||
HJ Wealth | Non competition agreements | |||
Goodwill and other intangibles rollforward | |||
Finite-Lived Intangible Assets, Net, Beginning Balance | $ 154 | ||
Amortization expense | 52 | ||
Finite-Lived Intangible Assets, Net, Ending Balance | $ 102 | ||
Amortization Period | 4 years |
Securities - Amortized cost and
Securities - Amortized cost and fair value (Details) $ in Thousands | Sep. 30, 2019USD ($)security | Dec. 31, 2018USD ($)security |
Securities available-for-sale: | ||
Available-for-sale, Amortized Cost | $ 52,496 | $ 50,942 |
Available-for-sale, Gross Unrealized Gains | 476 | 119 |
Available-for-sale, Gross Unrealized Losses | (215) | (633) |
Available-for-sale, Fair Value | 52,757 | 50,428 |
Securities held to maturity: | ||
Held-to-maturity, Amortized Cost | 8,814 | 12,741 |
Held-to-maturity, Gross Unrealized Gains | 214 | 17 |
Held-to-maturity, Gross Unrealized (Losses) | (103) | |
Fair Value | 9,028 | 12,655 |
U.S. asset backed securities | ||
Securities available-for-sale: | ||
Available-for-sale, Amortized Cost | 8,919 | |
Available-for-sale, Gross Unrealized Gains | 2 | |
Available-for-sale, Gross Unrealized Losses | (39) | |
Available-for-sale, Fair Value | $ 8,882 | |
Securities held to maturity: | ||
Number of securities in unrealized loss positions | security | 5 | |
U.S. government agency mortgage-backed securities | ||
Securities available-for-sale: | ||
Available-for-sale, Amortized Cost | $ 12,843 | 24,092 |
Available-for-sale, Gross Unrealized Gains | 103 | 45 |
Available-for-sale, Gross Unrealized Losses | (46) | (271) |
Available-for-sale, Fair Value | $ 12,900 | $ 23,866 |
Securities held to maturity: | ||
Number of securities in unrealized loss positions | security | 7 | 24 |
U.S. government agency collateralized mortgage obligations | ||
Securities available-for-sale: | ||
Available-for-sale, Amortized Cost | $ 29,734 | $ 14,754 |
Available-for-sale, Gross Unrealized Gains | 357 | 52 |
Available-for-sale, Gross Unrealized Losses | (130) | (142) |
Available-for-sale, Fair Value | $ 29,961 | $ 14,664 |
Securities held to maturity: | ||
Number of securities in unrealized loss positions | security | 13 | 12 |
State and municipal securities | ||
Securities available-for-sale: | ||
Available-for-sale, Amortized Cost | $ 11,096 | |
Available-for-sale, Gross Unrealized Gains | 22 | |
Available-for-sale, Gross Unrealized Losses | (199) | |
Available-for-sale, Fair Value | 10,919 | |
Securities held to maturity: | ||
Held-to-maturity, Amortized Cost | $ 8,814 | 10,750 |
Held-to-maturity, Gross Unrealized Gains | 214 | 17 |
Held-to-maturity, Gross Unrealized (Losses) | (90) | |
Fair Value | 9,028 | $ 10,677 |
Number of securities in unrealized loss positions | security | 26 | |
Investments in mutual funds | ||
Securities available-for-sale: | ||
Available-for-sale, Amortized Cost | 1,000 | $ 1,000 |
Available-for-sale, Gross Unrealized Gains | 14 | |
Available-for-sale, Gross Unrealized Losses | (21) | |
Available-for-sale, Fair Value | $ 1,014 | $ 979 |
Securities held to maturity: | ||
Number of securities in unrealized loss positions | security | 1 | |
U.S. Treasuries | ||
Securities held to maturity: | ||
Held-to-maturity, Amortized Cost | $ 1,991 | |
Held-to-maturity, Gross Unrealized (Losses) | (13) | |
Fair Value | $ 1,978 | |
Number of securities in unrealized loss positions | security | 2 |
Securities - Continuous Unreali
Securities - Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | $ 21,468 | $ 6,927 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 5,931 | 29,589 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Total | 27,399 | 36,516 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | (136) | (52) |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | (79) | (581) |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | (215) | (633) |
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value | ||
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 1,545 | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 6,761 | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, Total | 8,306 | |
Debt securities, Held-to-maturity securities, Continuous unrealized loss position, accumulated loss | ||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss | (5) | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | (98) | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | (103) | |
U.S. asset backed securities | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 6,842 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Total | 6,842 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | (39) | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | (39) | |
U.S. government agency mortgage-backed securities | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 1,926 | 2,354 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 3,177 | 15,223 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Total | 5,103 | 17,577 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | (9) | (6) |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | (37) | (265) |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | (46) | (271) |
U.S. government agency collateralized mortgage obligations | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 12,700 | 2,636 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 2,754 | 5,620 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Total | 15,454 | 8,256 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | (88) | (14) |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | (42) | (128) |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | $ (130) | (142) |
State and municipal securities | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 957 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 8,746 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Total | 9,703 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | (11) | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | (188) | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | (199) | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value | ||
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 1,545 | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 4,783 | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, Total | 6,328 | |
Debt securities, Held-to-maturity securities, Continuous unrealized loss position, accumulated loss | ||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss | (5) | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | (85) | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | (90) | |
Investments in mutual funds | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 980 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Total | 980 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | (21) | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | (21) | |
U.S. Treasuries | ||
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value | ||
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 1,978 | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, Total | 1,978 | |
Debt securities, Held-to-maturity securities, Continuous unrealized loss position, accumulated loss | ||
Held-to-maturity securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | (13) | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | $ (13) |
Securities - Contractual Maturi
Securities - Contractual Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Contractual Maturities, Available-for-sale, Amortized Cost | ||
Amortized Cost | $ 52,496 | $ 50,942 |
Contractual Maturities, Available-for-sale, Fair Value | ||
Fair Value | 52,757 | 50,428 |
Contractual Maturities, Held-to-maturity, Amortized Cost | ||
Amortized Cost | 8,814 | 12,741 |
Contractual Maturities, Held-to-maturity, Fair Value | ||
Fair Value | 9,028 | 12,655 |
State and municipal securities | ||
Contractual Maturities, Available-for-sale, Amortized Cost | ||
Due in one year or less | 906 | |
Due after one year through five years | 1,236 | |
Due after five years through ten years | 6,411 | |
Due after ten years | 8,919 | 2,543 |
Amortized Cost | 8,919 | 11,096 |
Contractual Maturities, Available-for-sale, Fair Value | ||
Due in one year or less | 902 | |
Due after one year through five years | 1,226 | |
Due after five years through ten year | 6,290 | |
Due after ten years | 8,882 | 2,501 |
Fair Value | 8,882 | 10,919 |
Contractual Maturities, Held-to-maturity, Amortized Cost | ||
Due in one year or less | 1,991 | |
Due after one year through five years | 4,258 | 3,154 |
Due after five years through ten years | 4,556 | 7,596 |
Amortized Cost | 8,814 | 10,750 |
Contractual Maturities, Held-to-maturity, Fair Value | ||
Due in one year or less | 1,978 | |
Due after one year through five years | 4,316 | 3,148 |
Due after five years through ten years | 4,712 | 7,529 |
Fair Value | 9,028 | 10,677 |
Mortgage-related securities | ||
Contractual Maturities, Available-for-sale, Amortized Cost | ||
Amortized Cost | 42,577 | 38,846 |
Contractual Maturities, Available-for-sale, Fair Value | ||
Fair Value | 42,861 | 38,530 |
Investments in mutual funds and other equity securities | ||
Contractual Maturities, Available-for-sale, Amortized Cost | ||
Amortized Cost | 1,000 | 1,000 |
Contractual Maturities, Available-for-sale, Fair Value | ||
Fair Value | $ 1,014 | $ 979 |
Loans Receivable - Loans and le
Loans Receivable - Loans and leases outstanding by category (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Loans Receivable | ||
Mortgage loans held for sale | $ 48,615 | $ 37,695 |
Total portfolio loans and leases | 937,753 | 839,787 |
Total loans and leases | 986,368 | 877,482 |
Net deferred loan origination (fees) costs | (1,895) | (1,681) |
Loans at fair value | 11,278 | 11,422 |
Commercial mortgage | ||
Loans Receivable | ||
Total portfolio loans and leases | 357,418 | 325,393 |
Home equity lines and loans | ||
Loans Receivable | ||
Total portfolio loans and leases | 83,412 | 82,286 |
Residential mortgage | ||
Loans Receivable | ||
Total portfolio loans and leases | 56,272 | 53,360 |
Construction | ||
Loans Receivable | ||
Total portfolio loans and leases | 154,463 | 116,906 |
Commercial and industrial | ||
Loans Receivable | ||
Total portfolio loans and leases | 284,376 | 259,806 |
Consumer | ||
Loans Receivable | ||
Total portfolio loans and leases | 984 | 701 |
Leases, net | ||
Loans Receivable | ||
Total portfolio loans and leases | 828 | 1,335 |
Real estate loans | ||
Loans Receivable | ||
Total portfolio loans and leases | 651,565 | 577,945 |
Loans at fair value | 11,278 | 11,422 |
Real estate loans | Commercial mortgage | ||
Loans Receivable | ||
Total portfolio loans and leases | 357,418 | 325,393 |
Real estate loans | Home equity lines and loans | ||
Loans Receivable | ||
Total portfolio loans and leases | 83,412 | 82,286 |
Real estate loans | Residential mortgage | ||
Loans Receivable | ||
Total portfolio loans and leases | 56,272 | 53,360 |
Loans at fair value | 11,278 | 11,422 |
Real estate loans | Construction | ||
Loans Receivable | ||
Total portfolio loans and leases | $ 154,463 | $ 116,906 |
Loans Receivable - Loans and _2
Loans Receivable - Loans and leases outstanding by rate type (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Loans Receivable | ||
Loans with predetermined rates | $ 294,297 | $ 264,376 |
Loans with adjustable or floating rates | 692,071 | 613,106 |
Total loans and leases | 986,368 | 877,482 |
Net deferred loan origination (fees) costs | $ (1,895) | $ (1,681) |
Loans Receivable - Components o
Loans Receivable - Components of the net investment in leases (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Loans Receivable | ||
Minimum lease payments receivable | $ 869 | $ 1,420 |
Unearned lease income | (41) | (85) |
Total | $ 828 | $ 1,335 |
Loans Receivable - Age analysis
Loans Receivable - Age analysis of past due loans and leases (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Age Analysis of Past Due Loans and Leases | ||
Total past due | $ 2,628 | $ 809 |
Current | 931,195 | 835,047 |
Total Accruing Loans and leases | 933,823 | 835,856 |
Nonaccrual loans and leases | 3,930 | 3,931 |
Loans and Leases Receivable, Gross, Total | $ 937,753 | $ 839,787 |
Delinquency percentage | 0.70% | 0.56% |
Loans at fair value | $ 11,278 | $ 11,422 |
Commercial mortgage | ||
Age Analysis of Past Due Loans and Leases | ||
Current | 355,869 | 324,169 |
Total Accruing Loans and leases | 355,869 | 324,169 |
Nonaccrual loans and leases | 1,549 | 1,224 |
Loans and Leases Receivable, Gross, Total | $ 357,418 | $ 325,393 |
Delinquency percentage | 0.43% | 0.38% |
Home equity lines and loans | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | $ 592 | $ 348 |
Current | 82,563 | 81,855 |
Total Accruing Loans and leases | 83,155 | 82,203 |
Nonaccrual loans and leases | 257 | 83 |
Loans and Leases Receivable, Gross, Total | $ 83,412 | $ 82,286 |
Delinquency percentage | 1.02% | 0.52% |
Residential mortgage | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | $ 195 | |
Current | $ 54,574 | 51,018 |
Total Accruing Loans and leases | 54,574 | 51,213 |
Nonaccrual loans and leases | 1,698 | 2,147 |
Loans and Leases Receivable, Gross, Total | $ 56,272 | $ 53,360 |
Delinquency percentage | 3.02% | 4.39% |
Construction | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | $ 1,519 | |
Current | 152,944 | $ 116,906 |
Total Accruing Loans and leases | 154,463 | 116,906 |
Loans and Leases Receivable, Gross, Total | $ 154,463 | 116,906 |
Delinquency percentage | 0.98% | |
Commercial and industrial | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | $ 394 | 217 |
Current | 283,556 | 259,112 |
Total Accruing Loans and leases | 283,950 | 259,329 |
Nonaccrual loans and leases | 426 | 477 |
Loans and Leases Receivable, Gross, Total | $ 284,376 | $ 259,806 |
Delinquency percentage | 0.29% | 0.27% |
Consumer | ||
Age Analysis of Past Due Loans and Leases | ||
Current | $ 984 | $ 701 |
Total Accruing Loans and leases | 984 | 701 |
Loans and Leases Receivable, Gross, Total | 984 | 701 |
Leases, net | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | 123 | 49 |
Current | 705 | 1,286 |
Total Accruing Loans and leases | 828 | 1,335 |
Loans and Leases Receivable, Gross, Total | $ 828 | $ 1,335 |
Delinquency percentage | 14.86% | 3.67% |
Real estate loans | ||
Age Analysis of Past Due Loans and Leases | ||
Loans and Leases Receivable, Gross, Total | $ 651,565 | $ 577,945 |
Loans at fair value | 11,278 | 11,422 |
Real estate loans | Commercial mortgage | ||
Age Analysis of Past Due Loans and Leases | ||
Loans and Leases Receivable, Gross, Total | 357,418 | 325,393 |
Real estate loans | Home equity lines and loans | ||
Age Analysis of Past Due Loans and Leases | ||
Loans and Leases Receivable, Gross, Total | 83,412 | 82,286 |
Real estate loans | Residential mortgage | ||
Age Analysis of Past Due Loans and Leases | ||
Loans and Leases Receivable, Gross, Total | 56,272 | 53,360 |
Loans at fair value | 11,278 | 11,422 |
Real estate loans | Construction | ||
Age Analysis of Past Due Loans and Leases | ||
Loans and Leases Receivable, Gross, Total | 154,463 | 116,906 |
Current | Real estate loans | ||
Age Analysis of Past Due Loans and Leases | ||
Loans at fair value | 10,437 | 10,098 |
30-89 days past due | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | 2,628 | 809 |
30-89 days past due | Home equity lines and loans | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | 592 | 348 |
30-89 days past due | Residential mortgage | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | 195 | |
30-89 days past due | Construction | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | 1,519 | |
30-89 days past due | Commercial and industrial | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | 394 | 217 |
30-89 days past due | Leases, net | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | 123 | 49 |
30-89 days past due | Real estate loans | ||
Age Analysis of Past Due Loans and Leases | ||
Loans at fair value | 0 | 187 |
Nonaccrual | Real estate loans | ||
Age Analysis of Past Due Loans and Leases | ||
Loans at fair value | $ 841 | $ 1,137 |
Allowance for Loan Losses (th_3
Allowance for Loan Losses (the "Allowance") - Roll-forward of allowance by portfolio segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||||
Balance at beginning of period | $ 8,625 | $ 7,449 | $ 8,053 | $ 6,709 |
Charge-offs | (30) | (50) | (30) | (381) |
Recoveries | 12 | 21 | 351 | 125 |
Provision | 705 | 291 | 938 | 1,258 |
Balance at end of period | 9,312 | 7,711 | 9,312 | 7,711 |
Commercial mortgage | ||||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||||
Balance at beginning of period | 3,197 | 3,011 | 3,209 | 2,434 |
Recoveries | 1 | 2 | 6 | 6 |
Provision | 257 | 140 | 240 | 713 |
Balance at end of period | 3,455 | 3,153 | 3,455 | 3,153 |
Home equity lines and loans | ||||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||||
Balance at beginning of period | 354 | 269 | 323 | 280 |
Charge-offs | (137) | |||
Recoveries | 2 | 10 | 10 | 14 |
Provision | (28) | 37 | (5) | 159 |
Balance at end of period | 328 | 316 | 328 | 316 |
Residential mortgage | ||||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||||
Balance at beginning of period | 200 | 166 | 191 | 82 |
Recoveries | 2 | 4 | 61 | |
Provision | (30) | 14 | (23) | 37 |
Balance at end of period | 172 | 180 | 172 | 180 |
Construction | ||||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||||
Balance at beginning of period | 2,033 | 1,438 | 1,627 | 1,689 |
Provision | 136 | 59 | 542 | (192) |
Balance at end of period | 2,169 | 1,497 | 2,169 | 1,497 |
Commercial and industrial | ||||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||||
Balance at beginning of period | 2,830 | 2,559 | 2,690 | 2,214 |
Charge-offs | (30) | (50) | (30) | (244) |
Recoveries | 6 | 8 | 328 | 41 |
Provision | 369 | 41 | 187 | 547 |
Balance at end of period | 3,175 | 2,558 | 3,175 | 2,558 |
Consumer | ||||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||||
Balance at beginning of period | 4 | 3 | 3 | 5 |
Recoveries | 1 | 1 | 3 | 3 |
Provision | 1 | (4) | ||
Balance at end of period | 6 | 4 | 6 | 4 |
Leases, net | ||||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||||
Balance at beginning of period | 7 | 3 | 10 | 5 |
Provision | (3) | (2) | ||
Balance at end of period | $ 7 | $ 3 | $ 7 | $ 3 |
Allowance for Loan Losses (th_4
Allowance for Loan Losses (the "Allowance") - Allowance allocated by portfolio segment (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Impaired Loans | ||||||
Allowance on loans and leases individually evaluated for impairment | $ 126 | $ 103 | ||||
Allowance on loans and leases collectively evaluated for impairment | 9,186 | 7,950 | ||||
Total | 9,312 | $ 8,625 | 8,053 | $ 7,711 | $ 7,449 | $ 6,709 |
Carrying value of loans and leases individually evaluated for impairment | 5,965 | 5,799 | ||||
Carrying value of loans and leases collectively evaluated for impairment | 920,509 | 822,566 | ||||
Total | 926,474 | 828,365 | ||||
Commercial mortgage | ||||||
Impaired Loans | ||||||
Allowance on loans and leases collectively evaluated for impairment | 3,455 | 3,209 | ||||
Total | 3,455 | 3,197 | 3,209 | 3,153 | 3,011 | 2,434 |
Carrying value of loans and leases individually evaluated for impairment | 2,204 | 1,929 | ||||
Carrying value of loans and leases collectively evaluated for impairment | 355,214 | 323,464 | ||||
Total | 357,418 | 325,393 | ||||
Home equity lines and loans | ||||||
Impaired Loans | ||||||
Allowance on loans and leases individually evaluated for impairment | 2 | |||||
Allowance on loans and leases collectively evaluated for impairment | 326 | 323 | ||||
Total | 328 | 354 | 323 | 316 | 269 | 280 |
Carrying value of loans and leases individually evaluated for impairment | 255 | 83 | ||||
Carrying value of loans and leases collectively evaluated for impairment | 83,157 | 82,203 | ||||
Total | 83,412 | 82,286 | ||||
Residential mortgage | ||||||
Impaired Loans | ||||||
Allowance on loans and leases collectively evaluated for impairment | 172 | 191 | ||||
Total | 172 | 200 | 191 | 180 | 166 | 82 |
Carrying value of loans and leases individually evaluated for impairment | 855 | 969 | ||||
Carrying value of loans and leases collectively evaluated for impairment | 44,138 | 40,969 | ||||
Total | 44,993 | 41,938 | ||||
Construction | ||||||
Impaired Loans | ||||||
Allowance on loans and leases collectively evaluated for impairment | 2,169 | 1,627 | ||||
Total | 2,169 | 2,033 | 1,627 | 1,497 | 1,438 | 1,689 |
Carrying value of loans and leases individually evaluated for impairment | 1,262 | 1,281 | ||||
Carrying value of loans and leases collectively evaluated for impairment | 153,201 | 115,625 | ||||
Total | 154,463 | 116,906 | ||||
Commercial and industrial | ||||||
Impaired Loans | ||||||
Allowance on loans and leases individually evaluated for impairment | 124 | 103 | ||||
Allowance on loans and leases collectively evaluated for impairment | 3,051 | 2,587 | ||||
Total | 3,175 | 2,830 | 2,690 | 2,558 | 2,559 | 2,214 |
Carrying value of loans and leases individually evaluated for impairment | 1,389 | 1,537 | ||||
Carrying value of loans and leases collectively evaluated for impairment | 282,987 | 258,269 | ||||
Total | 284,376 | 259,806 | ||||
Consumer | ||||||
Impaired Loans | ||||||
Allowance on loans and leases collectively evaluated for impairment | 6 | 3 | ||||
Total | 6 | 4 | 3 | 4 | 3 | 5 |
Carrying value of loans and leases collectively evaluated for impairment | 984 | 701 | ||||
Total | 984 | 701 | ||||
Leases, net | ||||||
Impaired Loans | ||||||
Allowance on loans and leases collectively evaluated for impairment | 7 | 10 | ||||
Total | 7 | $ 7 | 10 | $ 3 | $ 3 | $ 5 |
Carrying value of loans and leases collectively evaluated for impairment | 828 | 1,335 | ||||
Total | $ 828 | $ 1,335 |
Allowance for Loan Losses (th_5
Allowance for Loan Losses (the "Allowance") - Carrying value based on credit quality indicators (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Evaluated based on credit quality indicators | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | $ 879,669 | $ 784,391 |
Pass | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 847,062 | 755,681 |
Special mention | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 14,610 | 18,990 |
Substandard | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 17,997 | 9,690 |
Doubtful | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 30 | |
Commercial mortgage | Evaluated based on credit quality indicators | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 357,418 | 325,393 |
Commercial mortgage | Pass | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 350,027 | 320,130 |
Commercial mortgage | Special mention | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 3,437 | 3,713 |
Commercial mortgage | Substandard | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 3,954 | 1,550 |
Home equity lines and loans | Evaluated based on credit quality indicators | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 83,412 | 82,286 |
Home equity lines and loans | Pass | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 83,155 | 82,121 |
Home equity lines and loans | Substandard | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 257 | 165 |
Construction | Evaluated based on credit quality indicators | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 154,463 | 116,906 |
Construction | Pass | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 151,663 | 114,249 |
Construction | Special mention | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 2,774 | 2,657 |
Construction | Substandard | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 26 | |
Commercial and industrial | Evaluated based on credit quality indicators | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 284,376 | 259,806 |
Commercial and industrial | Pass | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 262,217 | 239,181 |
Commercial and industrial | Special mention | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 8,399 | 12,620 |
Commercial and industrial | Substandard | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | $ 13,760 | 7,975 |
Commercial and industrial | Doubtful | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | $ 30 |
Allowance for Loan Losses (th_6
Allowance for Loan Losses (the "Allowance") - Carrying value based on performance status (Details) $ in Thousands | Sep. 30, 2019USD ($)item | Dec. 31, 2018USD ($)item |
Loans and Leases by Credit Ratings | ||
Troubled debt restructurings | $ 4,013 | $ 4,266 |
Carrying value of residential mortgage, consumer and leases | 46,805 | 43,974 |
Performing | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | 45,950 | 43,005 |
Nonperforming | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | 855 | 969 |
Residential mortgage | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | 44,993 | 41,938 |
Residential mortgage | Performing | ||
Loans and Leases by Credit Ratings | ||
Troubled debt restructurings | 0 | 0 |
Carrying value of residential mortgage, consumer and leases | 44,138 | 40,969 |
Residential mortgage | Nonperforming | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | $ 855 | $ 969 |
Number of loans | item | 6 | 6 |
Loans receivable, net | $ 1,200 | $ 1,900 |
Consumer | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | 984 | 701 |
Consumer | Performing | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | 984 | 701 |
Leases, net | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | 828 | 1,335 |
Leases, net | Performing | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | $ 828 | $ 1,335 |
Allowance for Loan Losses (th_7
Allowance for Loan Losses (the "Allowance") - Impaired loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Impaired loans with related allowance: | |||||
Recorded investment | $ 814 | $ 814 | $ 676 | ||
Principal balance | 814 | 814 | 679 | ||
Related allowance | 126 | 126 | 103 | ||
Average recorded investment | 822 | 680 | |||
Impaired loans without related allowance: | |||||
Recorded investment | 5,151 | 5,151 | 5,123 | ||
Principal balance | 5,707 | 5,707 | 5,672 | ||
Average recorded investment | 5,279 | 5,222 | |||
Grand Total | |||||
Recorded investment | 5,965 | 5,965 | 5,799 | ||
Principal balance | 6,521 | 6,521 | 6,351 | ||
Average recorded investment | 6,101 | 5,902 | |||
Interest income recognized on performing impaired loans | 50 | $ 93 | 152 | $ 218 | |
Commercial mortgage | |||||
Impaired loans without related allowance: | |||||
Recorded investment | 2,204 | 2,204 | 1,929 | ||
Principal balance | 2,713 | 2,713 | 2,379 | ||
Average recorded investment | 2,272 | 1,982 | |||
Commercial and industrial | |||||
Impaired loans with related allowance: | |||||
Recorded investment | 559 | 559 | 676 | ||
Principal balance | 559 | 559 | 679 | ||
Related allowance | 124 | 124 | 103 | ||
Average recorded investment | 566 | 680 | |||
Impaired loans without related allowance: | |||||
Recorded investment | 830 | 830 | 861 | ||
Principal balance | 876 | 876 | 945 | ||
Average recorded investment | 864 | 885 | |||
Home equity lines and loans | |||||
Impaired loans with related allowance: | |||||
Recorded investment | 255 | 255 | |||
Principal balance | 255 | 255 | |||
Related allowance | 2 | 2 | |||
Average recorded investment | 256 | ||||
Impaired loans without related allowance: | |||||
Recorded investment | 83 | ||||
Principal balance | 89 | ||||
Average recorded investment | 84 | ||||
Residential mortgage | |||||
Impaired loans without related allowance: | |||||
Recorded investment | 855 | 855 | 969 | ||
Principal balance | 855 | 855 | 978 | ||
Average recorded investment | 857 | 978 | |||
Construction | |||||
Impaired loans without related allowance: | |||||
Recorded investment | 1,262 | 1,262 | 1,281 | ||
Principal balance | $ 1,263 | 1,263 | 1,281 | ||
Average recorded investment | $ 1,286 | $ 1,293 |
Allowance for Loan Losses (th_8
Allowance for Loan Losses (the "Allowance") - Troubled debt restructuring (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Allowance for Loan Losses (the Allowance) | ||
TDRs included in nonperforming loans and leases | $ 1,133 | $ 1,219 |
TDRs in compliance with modified terms | 2,880 | 3,047 |
Total TDRs | $ 4,013 | $ 4,266 |
Allowance for Loan Losses (th_9
Allowance for Loan Losses (the "Allowance") - Loan and lease modifications granted categorized as TDRs (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($)contract | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($)contract | |
Loan and lease modifications | ||||
Number of Contracts | contract | 1 | 3 | ||
Pre-Modification Outstanding Recorded Investment | $ 0 | $ 796 | $ 0 | $ 2,530 |
Post-Modification Outstanding Recorded Investment | 796 | 2,530 | ||
Loan and lease modifications granted | 0 | 796 | 0 | 2,530 |
Loan and lease modifications granted and subsequently defaulted | $ 0 | $ 0 | $ 0 | $ 0 |
Land and Construction | ||||
Loan and lease modifications | ||||
Number of Contracts | contract | 1 | 2 | ||
Pre-Modification Outstanding Recorded Investment | $ 796 | $ 2,410 | ||
Post-Modification Outstanding Recorded Investment | 796 | 2,410 | ||
Loan and lease modifications granted | $ 796 | $ 2,410 | ||
Commercial and industrial | ||||
Loan and lease modifications | ||||
Number of Contracts | contract | 1 | |||
Pre-Modification Outstanding Recorded Investment | $ 120 | |||
Post-Modification Outstanding Recorded Investment | 120 | |||
Loan and lease modifications granted | $ 120 |
Allowance for Loan and Lease Lo
Allowance for Loan and Lease Losses (the "Allowance") - Loan and lease modifications made by type (Details) - contract | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Loan and lease modifications | ||
Number of Contracts | 1 | 3 |
Loan Term Extension | ||
Loan and lease modifications | ||
Number of Contracts | 1 | 2 |
Interest Rate Change and Loan Term Extension | ||
Loan and lease modifications | ||
Number of Contracts | 1 | |
Land and Construction | ||
Loan and lease modifications | ||
Number of Contracts | 1 | 2 |
Land and Construction | Loan Term Extension | ||
Loan and lease modifications | ||
Number of Contracts | 1 | 2 |
Commercial and industrial | ||
Loan and lease modifications | ||
Number of Contracts | 1 | |
Commercial and industrial | Interest Rate Change and Loan Term Extension | ||
Loan and lease modifications | ||
Number of Contracts | 1 |
Short-Term Borrowings and Lon_2
Short-Term Borrowings and Long-Term Debt - Short-term borrowings (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019USD ($)item | Dec. 31, 2018USD ($) | |
Short-Term Borrowings | ||
Short term borrowings | $ 128,465,000 | $ 114,300,000 |
Federal funds purchased | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Number of borrowing facilities | item | 2 | |
Short term borrowings | $ 0 | 0 |
Federal funds purchased, facility one | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Maximum borrowing capacity | 24,000,000 | |
Federal funds purchased, facility two | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Maximum borrowing capacity | 15,000,000 | |
Federal Reserve discount window | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Maximum borrowing capacity | 9,600,000 | |
Short term borrowings | 0 | 0 |
Short-term borrowing with interest rate 2.08% | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Short term borrowings | $ 119,700,000 | |
Interest rate (as a percent) | 2.08% | |
Short-term borrowing with interest rate 2.03% | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Short term borrowings | $ 3,100,000 | |
Interest rate (as a percent) | 2.03% | |
Duration of debt (in years) | 3 years | |
Short-term borrowing with interest rate 2.76% | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Short term borrowings | $ 5,000,000 | |
Interest rate (as a percent) | 2.76% | |
Duration of debt (in years) | 7 years | |
Short-term borrowing with interest rate 3.00% | Federal Home Loan Bank of Pittsburgh | HJ Wealth | ||
Short-Term Borrowings | ||
Short term borrowings | $ 619,000 | |
Interest rate (as a percent) | 3.00% | |
Duration of debt (in years) | 3 years | |
Short-term borrowing with interest rate 1.70% | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Short term borrowings | $ 1,800,000 | |
Interest rate (as a percent) | 1.70% | |
Duration of debt (in years) | 4 years | |
Short-term borrowings with interest rate 2.62% | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Short term borrowings | $ 112,500,000 | |
Interest rate (as a percent) | 2.62% |
Short-Term Borrowings and Lon_3
Short-Term Borrowings and Long-Term Debt - Long-term debt (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Long Term Debt | ||
Long-term debt | $ 3,123 | $ 6,238 |
Federal Home Loan Bank of Pittsburgh | Mid-term Repo-fixed Maturing On 06/28/2021 | ||
Long Term Debt | ||
Fixed interest rate (as a percent) | 1.88% | 1.88% |
Long-term debt | $ 3,123 | |
Federal Home Loan Bank of Pittsburgh | Mid-term Repo-fixed Maturing On 08/10/2020 | ||
Long Term Debt | ||
Fixed interest rate (as a percent) | 2.76% | |
Long-term debt | $ 5,000 | |
Federal Home Loan Bank of Pittsburgh | Acquisition Purchase Note | ||
Long Term Debt | ||
Fixed interest rate (as a percent) | 3.00% | |
Long-term debt | 1,238 | |
Federal Home Loan Bank of Pittsburgh | Letters of credit | ||
Long Term Debt | ||
Proceeds from long term debt | $ 101,500 | |
Maximum borrowing capacity | $ 496,300 | $ 437,200 |
Servicing Assets - Residential
Servicing Assets - Residential Mortgage Loans (Details) - Mortgage Servicing Rights - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Servicing Assets at Fair Value [Line Items] | ||||
Loans serviced | $ 45,100 | $ 15,800 | $ 45,100 | $ 15,800 |
Servicing fee income | 107,000 | 198,000 | 90,000 | 152,000 |
Servicing Asset at Amortized Cost, Balance [Roll Forward] | ||||
Balance at beginning of the period | 236 | 62 | 232 | |
Servicing rights capitalized | 107 | 89 | 198 | 152 |
Amortization of servicing rights | (17) | (3) | (39) | (4) |
Change in valuation allowance | (12) | (77) | ||
Balance at end of the period | 314 | $ 148 | 314 | $ 148 |
Valuation Allowance for Impairment of Recognized Servicing Assets [Roll Forward] | ||||
Valuation allowance, beginning of period | 65 | |||
Impairment | (12) | (77) | ||
Valuation allowance, end of the period | $ 77 | $ 77 |
Servicing Assets - MSR Sensitiv
Servicing Assets - MSR Sensitivity Analysis (Details) - Mortgage Servicing Rights - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | ||
Fair value of residential mortgage servicing rights | $ 314 | $ 213 |
Weighted average life (years) | 7 years 4 months 24 days | 3 years 4 months 24 days |
Prepayment speed | 16.02% | 11.78% |
Impact on fair value of a 10% adverse change in prepayment speed | $ (16) | $ (9) |
Impact on fair value of a 20% adverse change in prepayment speed | $ (30) | $ (17) |
Discount rate | 9.25% | 9.50% |
Impact on fair value of a 10% adverse change in the discount rate | $ (9) | $ (8) |
Impact on fair value of a 20% adverse change in the discount rate | $ (18) | $ (15) |
Servicing Assets - SBA Loans (D
Servicing Assets - SBA Loans (Details) - SBA Loan Servicing Rights - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | |
Servicing Assets at Fair Value [Line Items] | |||
Loans serviced | $ 15,400 | $ 15,400 | $ 0 |
Servicing fee income | 8,000 | 8,000 | |
Servicing Asset at Amortized Cost, Balance [Roll Forward] | |||
Balance at beginning of the period | 133 | ||
Servicing rights capitalized | 198 | 331 | |
Amortization of servicing rights | (6) | (6) | |
Change in valuation allowance | (4) | (4) | |
Balance at end of the period | 321 | 321 | |
Valuation Allowance for Impairment of Recognized Servicing Assets [Roll Forward] | |||
Impairment | (4) | (4) | |
Valuation allowance, end of the period | $ (4) | $ (4) |
Servicing Assets - SBA Sensitiv
Servicing Assets - SBA Sensitivity Analysis (Details) - SBA Loan Servicing Rights $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | |
Fair value of SBA loan servicing rights | $ 321 |
Weighted average life (years) | 4 years 6 months |
Prepayment speed | 10.34% |
Impact on fair value of a 10% adverse change in prepayment speed | $ (11) |
Impact on fair value of a 20% adverse change in prepayment speed | $ (21) |
Discount rate | 8.88% |
Impact on fair value of a 10% adverse change in the discount rate | $ (9) |
Impact on fair value of a 20% adverse change in the discount rate | $ (18) |
Fair Value Measurements and D_3
Fair Value Measurements and Disclosures - Financial assets measured at fair value on a recurring basis (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Fair Value Measurements and Disclosures | ||
Securities available for sale | $ 52,757 | $ 50,428 |
Mortgage loans held-for-investment | 11,278 | 11,422 |
State and municipal securities | ||
Fair Value Measurements and Disclosures | ||
Securities available for sale | 8,882 | 10,919 |
Investments in mutual funds and other equity securities | ||
Fair Value Measurements and Disclosures | ||
Securities available for sale | 1,014 | 979 |
Interest rate lock commitments | ||
Fair Value Measurements and Disclosures | ||
Derivative assets, Fair value | 283 | |
Recurring | ||
Fair Value Measurements and Disclosures | ||
Mortgage loans held-for-sale | 48,615 | 37,695 |
Mortgage loans held-for-investment | 11,278 | 11,422 |
Mortgage servicing rights | 314 | 213 |
SBA loan servicing rights | 321 | |
Total | 114,068 | 100,209 |
Recurring | U.S. government agency mortgage-backed securities | ||
Fair Value Measurements and Disclosures | ||
Securities available for sale | 12,900 | 23,866 |
Recurring | U.S. government agency collateralized mortgage obligations | ||
Fair Value Measurements and Disclosures | ||
Securities available for sale | 29,961 | 14,664 |
Recurring | State and municipal securities | ||
Fair Value Measurements and Disclosures | ||
Securities available for sale | 10,919 | |
Recurring | Investments in mutual funds and other equity securities | ||
Fair Value Measurements and Disclosures | ||
Securities available for sale | 9,896 | 979 |
Recurring | Interest rate lock commitments | ||
Fair Value Measurements and Disclosures | ||
Derivative assets, Fair value | 283 | 310 |
Recurring | Customer derivatives - Interest rate swaps | ||
Fair Value Measurements and Disclosures | ||
Derivative assets, Fair value | 500 | 141 |
Recurring | Level 2 | ||
Fair Value Measurements and Disclosures | ||
Mortgage loans held-for-sale | 48,615 | 37,695 |
Mortgage loans held-for-investment | 11,278 | 11,422 |
Total | 113,150 | 99,686 |
Recurring | Level 2 | U.S. government agency mortgage-backed securities | ||
Fair Value Measurements and Disclosures | ||
Securities available for sale | 12,900 | 23,866 |
Recurring | Level 2 | U.S. government agency collateralized mortgage obligations | ||
Fair Value Measurements and Disclosures | ||
Securities available for sale | 29,961 | 14,664 |
Recurring | Level 2 | State and municipal securities | ||
Fair Value Measurements and Disclosures | ||
Securities available for sale | 10,919 | |
Recurring | Level 2 | Investments in mutual funds and other equity securities | ||
Fair Value Measurements and Disclosures | ||
Securities available for sale | 9,896 | 979 |
Recurring | Level 2 | Customer derivatives - Interest rate swaps | ||
Fair Value Measurements and Disclosures | ||
Derivative assets, Fair value | 500 | 141 |
Recurring | Level 3 | ||
Fair Value Measurements and Disclosures | ||
Mortgage servicing rights | 314 | 213 |
SBA loan servicing rights | 321 | |
Total | 918 | 523 |
Recurring | Level 3 | Interest rate lock commitments | ||
Fair Value Measurements and Disclosures | ||
Derivative assets, Fair value | $ 283 | $ 310 |
Fair Value Measurements and D_4
Fair Value Measurements and Disclosures - Financial assets measured at fair value on non-recurring basis (Details) - Nonrecurring - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Financial assets measured at fair value on a nonrecurring basis | ||
Impaired loans | $ 5,965 | $ 5,799 |
Other real estate owned | 120 | |
Total | 6,085 | 5,799 |
Level 3 | ||
Financial assets measured at fair value on a nonrecurring basis | ||
Impaired loans | 5,965 | 5,799 |
Other real estate owned | 120 | |
Total | $ 6,085 | $ 5,799 |
Fair Value Measurements and D_5
Fair Value Measurements and Disclosures - Estimated fair values of financial instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Financial assets: | ||
Securities available-for-sale | $ 52,757 | $ 50,428 |
Securities held-to-maturity | 9,028 | 12,655 |
Mortgage loans held-for-investment | 11,278 | 11,422 |
Interest rate lock commitments | ||
Financial assets: | ||
Derivative asset | 283 | |
Level 1 | Carrying amount | ||
Financial assets: | ||
Cash and cash equivalents | 40,532 | 23,952 |
Level 1 | Fair value | ||
Financial assets: | ||
Cash and cash equivalents | 40,532 | 23,952 |
Level 2 | Carrying amount | ||
Financial assets: | ||
Securities available-for-sale | 52,757 | 50,428 |
Securities held-to-maturity | 8,814 | 12,741 |
Mortgage loans held-for-sale | 48,615 | 37,695 |
Mortgage loans held-for-investment | 11,278 | 11,422 |
Financial liabilities: | ||
Deposits | 858,461 | 752,130 |
Short-term borrowings | 128,466 | 114,300 |
Long-term debt | 3,123 | 6,238 |
Subordinated debentures | 9,176 | 9,239 |
Accrued interest payable | 669 | 305 |
Level 2 | Carrying amount | Forward Commitments | ||
Financial assets: | ||
Derivative asset | 30 | |
Financial liabilities: | ||
Derivatives | 105 | 176 |
Level 2 | Carrying amount | Customer derivatives - Interest rate swaps | ||
Financial assets: | ||
Derivative asset | 500 | 141 |
Financial liabilities: | ||
Derivatives | 568 | 161 |
Level 2 | Fair value | ||
Financial assets: | ||
Securities available-for-sale | 52,757 | 50,428 |
Securities held-to-maturity | 9,028 | 12,655 |
Mortgage loans held-for-sale | 48,615 | 37,695 |
Mortgage loans held-for-investment | 11,278 | 11,422 |
Financial liabilities: | ||
Deposits | 896,000 | 744,300 |
Short-term borrowings | 128,467 | 114,300 |
Long-term debt | 3,123 | 6,240 |
Subordinated debentures | 9,792 | 9,396 |
Accrued interest payable | 669 | 305 |
Level 2 | Fair value | Forward Commitments | ||
Financial assets: | ||
Derivative asset | 30 | |
Financial liabilities: | ||
Derivatives | 105 | 176 |
Level 2 | Fair value | Customer derivatives - Interest rate swaps | ||
Financial assets: | ||
Derivative asset | 500 | 141 |
Financial liabilities: | ||
Derivatives | 568 | 161 |
Level 3 | Carrying amount | ||
Financial assets: | ||
Loans receivable, net | 935,858 | 818,631 |
Restricted investment in bank stock | 8,237 | 7,002 |
Mortgage servicing rights | 314 | 232 |
SBA loan servicing rights | 321 | |
Accrued interest receivable | 3,155 | 2,889 |
Level 3 | Carrying amount | Interest rate lock commitments | ||
Financial assets: | ||
Derivative asset | 283 | 310 |
Financial liabilities: | ||
Derivatives | 81 | 40 |
Level 3 | Fair value | ||
Financial assets: | ||
Loans receivable, net | 933,285 | 820,512 |
Restricted investment in bank stock | 8,237 | 7,002 |
Mortgage servicing rights | 314 | 213 |
SBA loan servicing rights | 321 | |
Accrued interest receivable | 3,155 | 2,889 |
Level 3 | Fair value | Interest rate lock commitments | ||
Financial assets: | ||
Derivative asset | 283 | 310 |
Financial liabilities: | ||
Derivatives | $ 81 | $ 40 |
Fair Value Measurements and D_6
Fair Value Measurements and Disclosures - Off-balance sheet financial instruments (Details) - Level 2 - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Carrying amount | Commitments to extend credit | ||
Off-balance sheet financial instruments: | ||
Off-balance sheet financial instruments | $ 327,788 | $ 290,614 |
Carrying amount | Letters of credit | ||
Off-balance sheet financial instruments: | ||
Off-balance sheet financial instruments | 9,750 | 5,158 |
Fair value | Commitments to extend credit | ||
Off-balance sheet financial instruments: | ||
Off-balance sheet financial instruments | $ 283 | $ 310 |
Fair Value Measurements and D_7
Fair Value Measurements and Disclosures - Fair value on a recurring basis (Details) - Interest rate lock commitments - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Balance at beginning of the period | $ 375 | $ 586 | $ 310 | $ 344 |
(Decrease) increase in value | (92) | (80) | (27) | 162 |
Balance at end of the period | $ 283 | $ 506 | $ 283 | $ 506 |
Fair Value Measurements and D_8
Fair Value Measurements and Disclosures - Valuation Techniques for Level 3 interest rate lock (Details) - Interest rate lock commitments $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Derivative asset | $ 283 | $ 283 | ||
Valuation technique extensible list | us-gaap:ValuationTechniqueConsensusPricingModelMember | us-gaap:ValuationTechniqueConsensusPricingModelMember | ||
Measurement input extensible list | mrbk:LoanOriginationSucessRateMember | mrbk:LoanOriginationSucessRateMember | ||
Gain in fair value of derivative assets | $ 101 | $ 138 | $ 67 | $ 114 |
Minimum | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Measurement input | 1 | 1 | ||
Maximum | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Measurement input | 99 | 99 | ||
Weighted Average | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Measurement input | 91.70 | 91.70 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Notional amounts and fair values of derivative financial instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Derivative Financial Instruments | ||
Notional Amount | $ 109,781 | $ 66,566 |
Asset (Liability) Fair Value | 59 | 74 |
Interest rate lock commitments | ||
Derivative Financial Instruments | ||
Notional Amount | 51,207 | 33,406 |
Asset (Liability) Fair Value | 202 | 270 |
Interest rate lock commitments | Other Assets | ||
Derivative Financial Instruments | ||
Notional Amount | 37,105 | 27,188 |
Asset (Liability) Fair Value | 283 | 310 |
Interest rate lock commitments | Other Liabilities | ||
Derivative Financial Instruments | ||
Notional Amount | 14,102 | 6,218 |
Asset (Liability) Fair Value | (81) | (40) |
Forward Commitments | ||
Derivative Financial Instruments | ||
Notional Amount | 52,000 | 26,500 |
Asset (Liability) Fair Value | (75) | (176) |
Forward Commitments | Other Assets | ||
Derivative Financial Instruments | ||
Notional Amount | 11,000 | |
Asset (Liability) Fair Value | 30 | |
Forward Commitments | Other Liabilities | ||
Derivative Financial Instruments | ||
Notional Amount | 41,000 | 26,500 |
Asset (Liability) Fair Value | (105) | (176) |
Customer derivatives - Interest rate swaps | ||
Derivative Financial Instruments | ||
Notional Amount | 6,574 | 6,660 |
Asset (Liability) Fair Value | (68) | (20) |
Customer derivatives - Interest rate swaps | Other Assets | ||
Derivative Financial Instruments | ||
Notional Amount | 3,287 | 3,330 |
Asset (Liability) Fair Value | 500 | 141 |
Customer derivatives - Interest rate swaps | Other Liabilities | ||
Derivative Financial Instruments | ||
Notional Amount | 3,287 | 3,330 |
Asset (Liability) Fair Value | $ (568) | $ (161) |
Derivative Financial Instrume_4
Derivative Financial Instruments - Fair value gains and losses on derivative financial instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Summary of the fair value gains and losses on derivative financial instruments | ||||
Net fair value gains (losses) on derivative financial instruments | $ 69 | $ (15) | $ 58 | |
Realized gains/(losses) on derivatives | $ (299) | (170) | (792) | 534 |
Interest rate lock commitments | ||||
Summary of the fair value gains and losses on derivative financial instruments | ||||
Net fair value gains (losses) on derivative financial instruments | (102) | (224) | (68) | (110) |
Forward Commitments | ||||
Summary of the fair value gains and losses on derivative financial instruments | ||||
Net fair value gains (losses) on derivative financial instruments | 124 | $ 293 | 101 | $ 168 |
Customer derivatives - Interest rate swaps | ||||
Summary of the fair value gains and losses on derivative financial instruments | ||||
Net fair value gains (losses) on derivative financial instruments | $ (22) | $ (48) |
Segment (Details)
Segment (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)loanfacility | Sep. 30, 2018USD ($) | |
Segments | ||||
Number of central loan production facilities | loanfacility | 1 | |||
Net-interest Income: | ||||
Net interest income | $ 9,274 | $ 8,378 | $ 26,672 | $ 24,216 |
Provision for loan losses | 705 | 291 | 938 | 1,258 |
Net interest income after provision | 8,569 | 8,087 | 25,734 | 22,958 |
Non-Interest Income: | ||||
Mortgage banking income | 7,910 | 8,274 | 19,139 | 20,407 |
Wealth management income | 922 | 930 | 2,698 | 2,996 |
SBA Income | 645 | 1,160 | ||
Net change in fair values | 30 | (333) | 292 | (471) |
Other | 307 | 296 | 899 | 1,959 |
Total non-interest income | 9,814 | 9,167 | 24,188 | 24,891 |
Non-interest Expenses: | ||||
Salaries and employee benefits | 9,319 | 8,901 | 25,789 | 26,719 |
Occupancy and equipment | 946 | 920 | 2,845 | 2,870 |
Professional fees | 820 | 714 | 2,000 | 1,670 |
Advertising and promotion | 574 | 590 | 1,769 | 1,802 |
Other | 2,493 | 2,628 | 8,109 | 7,328 |
Total non-interest expenses | 14,152 | 13,753 | 40,512 | 40,389 |
Operating Margin | 4,231 | 3,501 | 9,410 | 7,460 |
Bank | ||||
Net-interest Income: | ||||
Net interest income | 9,203 | 8,107 | 26,437 | 23,597 |
Provision for loan losses | 705 | 291 | 938 | 1,258 |
Net interest income after provision | 8,498 | 7,816 | 25,499 | 22,339 |
Non-Interest Income: | ||||
Mortgage banking income | 74 | 105 | 175 | 148 |
Wealth management income | 31 | 59 | 110 | 149 |
SBA Income | 645 | 1,160 | ||
Net change in fair values | (23) | (49) | ||
Other | 534 | 363 | 1,409 | 1,136 |
Total non-interest income | 1,261 | 527 | 2,805 | 1,433 |
Non-interest Expenses: | ||||
Salaries and employee benefits | 4,248 | 3,264 | 11,988 | 10,390 |
Occupancy and equipment | 530 | 521 | 1,588 | 1,599 |
Professional fees | 410 | 590 | 1,116 | 1,325 |
Advertising and promotion | 344 | 301 | 1,084 | 917 |
Other | 1,393 | 1,259 | 4,546 | 3,827 |
Total non-interest expenses | 6,925 | 5,935 | 20,322 | 18,058 |
Operating Margin | 2,834 | 2,408 | 7,982 | 5,714 |
Wealth | ||||
Net-interest Income: | ||||
Net interest income | 4 | 71 | 68 | 217 |
Net interest income after provision | 4 | 71 | 68 | 217 |
Non-Interest Income: | ||||
Wealth management income | 891 | 871 | 2,588 | 2,847 |
Total non-interest income | 891 | 871 | 2,588 | 2,847 |
Non-interest Expenses: | ||||
Salaries and employee benefits | 564 | 445 | 1,681 | 1,373 |
Occupancy and equipment | 34 | 29 | 93 | 99 |
Professional fees | 2 | 9 | 11 | 20 |
Advertising and promotion | 94 | 111 | 57 | 319 |
Other | 140 | 314 | 426 | 613 |
Total non-interest expenses | 834 | 908 | 2,268 | 2,424 |
Operating Margin | 61 | 34 | 388 | 640 |
Mortgage | ||||
Net-interest Income: | ||||
Net interest income | 67 | 200 | 167 | 402 |
Net interest income after provision | 67 | 200 | 167 | 402 |
Non-Interest Income: | ||||
Mortgage banking income | 7,836 | 8,169 | 18,964 | 20,259 |
Net change in fair values | 53 | (333) | 341 | (471) |
Other | (227) | (67) | (510) | 823 |
Total non-interest income | 7,662 | 7,769 | 18,795 | 20,611 |
Non-interest Expenses: | ||||
Salaries and employee benefits | 4,507 | 5,192 | 12,120 | 14,956 |
Occupancy and equipment | 382 | 370 | 1,164 | 1,172 |
Professional fees | 408 | 115 | 873 | 325 |
Advertising and promotion | 136 | 178 | 628 | 566 |
Other | 960 | 1,055 | 3,137 | 2,888 |
Total non-interest expenses | 6,393 | 6,910 | 17,922 | 19,907 |
Operating Margin | $ 1,336 | $ 1,059 | $ 1,040 | $ 1,106 |
Recent Litigation (Details)
Recent Litigation (Details) $ in Thousands | Jul. 24, 2019USD ($) | Nov. 21, 2017employee | Sep. 30, 2019USD ($) |
Recent Litigation | |||
Number of employees filed suit | employee | 3 | ||
Litigation reserve | $ 990 | ||
Litigation settlement agreed amount | $ 990 |