Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 16, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 0-6233 | |
Entity Incorporation, State or Country Code | IN | |
Entity Tax Identification Number | 35-1068133 | |
Entity Address, Address Line One | 100 North Michigan Street | |
Entity Address, City or Town | South Bend, | |
Entity Address, State or Province | IN | |
Entity Address, Postal Zip Code | 46601 | |
City Area Code | 574 | |
Local Phone Number | 235-2000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock - without par value | |
Trading Symbol | SRCE | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 25,553,644 | |
Entity Registrant Name | 1st Source Corp | |
Entity Central Index Key | 0000034782 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF FINA
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and due from banks | $ 62,575 | $ 67,215 |
Federal funds sold and interest bearing deposits with other banks | 91,641 | 16,150 |
Investment securities available-for-sale | 1,083,427 | 1,040,583 |
Other investments | 27,674 | 28,414 |
Mortgages held for sale | 20,990 | 20,277 |
Loans and leases - net of unearned discount | ||
Loans and leases | 5,627,036 | 5,085,527 |
Reserve for loan and lease losses | (136,817) | (111,254) |
Net loans and leases | 5,490,219 | 4,974,273 |
Equipment owned under operating leases, net | 79,703 | 111,684 |
Net premises and equipment | 49,933 | 52,219 |
Goodwill and intangible assets | 83,953 | 83,971 |
Accrued income and other assets | 300,834 | 227,990 |
Total assets | 7,290,949 | 6,622,776 |
Deposits: | ||
Noninterest-bearing demand | 1,720,768 | 1,216,834 |
Interest-bearing deposits: | ||
Interest-bearing demand | 1,885,771 | 1,677,200 |
Savings | 992,320 | 814,794 |
Time | 1,297,996 | 1,648,498 |
Total interest-bearing deposits | 4,176,087 | 4,140,492 |
Total deposits | 5,896,855 | 5,357,326 |
Short-term borrowings: | ||
Federal funds purchased and securities sold under agreements to repurchase | 158,834 | 120,459 |
Other short-term borrowings | 6,740 | 25,434 |
Total short-term borrowings | 165,574 | 145,893 |
Long-term debt and mandatorily redeemable securities | 81,659 | 71,639 |
Subordinated notes | 58,764 | 58,764 |
Accrued expenses and other liabilities | 173,082 | 140,518 |
Total liabilities | 6,375,934 | 5,774,140 |
SHAREHOLDERS' EQUITY | ||
Preferred stock; no par value Authorized 10,000,000 shares; none issued or outstanding | 0 | 0 |
Common stock; no par value Authorized 40,000,000 shares; issued 28,205,674 at September 30, 2020 and December 31, 2019 | 436,538 | 436,538 |
Retained earnings | 497,419 | 463,269 |
Cost of common stock in treasury (2,652,030 shares at September 30, 2020 and 2,696,200 shares at December 31, 2019) | (75,861) | (76,702) |
Accumulated other comprehensive income | 19,658 | 5,172 |
Total shareholders’ equity | 877,754 | 828,277 |
Noncontrolling interests | 37,261 | 20,359 |
Total equity | 915,015 | 848,636 |
Total liabilities and equity | $ 7,290,949 | $ 6,622,776 |
Preferred stock; no par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, Authorized shares | 10,000,000 | 10,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock; no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, Authorized shares | 40,000,000 | 40,000,000 |
Common stock, issued shares | 28,205,674 | 28,205,674 |
Cost of common stock in treasury, shares | 2,652,030 | 2,696,200 |
Commercial and agricultural | ||
Loans and leases - net of unearned discount | ||
Loans and leases | $ 1,681,519 | $ 1,132,791 |
Reserve for loan and lease losses | (25,070) | (23,671) |
Auto and light truck | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 527,582 | 588,807 |
Reserve for loan and lease losses | (25,249) | (14,400) |
Medium and heavy duty truck | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 271,248 | 294,824 |
Reserve for loan and lease losses | (4,457) | (4,612) |
Aircraft | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 806,162 | 784,040 |
Reserve for loan and lease losses | (32,245) | (31,058) |
Construction equipment | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 723,596 | 705,451 |
Reserve for loan and lease losses | (22,803) | (14,120) |
Commercial real estate | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 961,550 | 908,177 |
Reserve for loan and lease losses | (21,749) | (18,350) |
Residential real estate and home equity | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 519,881 | 532,003 |
Reserve for loan and lease losses | (3,732) | (3,609) |
Consumer | ||
Loans and leases - net of unearned discount | ||
Loans and leases | 135,498 | 139,434 |
Reserve for loan and lease losses | $ (1,512) | $ (1,434) |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Interest income: | ||||
Loans and leases | $ 58,318 | $ 66,807 | $ 178,659 | $ 195,089 |
Investment securities, taxable | 4,103 | 5,056 | 14,140 | 15,757 |
Investment securities, tax-exempt | 207 | 316 | 703 | 1,054 |
Other | 289 | 497 | 951 | 1,434 |
Total interest income | 62,917 | 72,676 | 194,453 | 213,334 |
Interest expense: | ||||
Deposits | 6,532 | 13,524 | 25,648 | 37,972 |
Short-term borrowings | 83 | 293 | 427 | 1,764 |
Subordinated notes | 824 | 914 | 2,543 | 2,770 |
Long-term debt and mandatorily redeemable securities | 610 | 750 | 2,122 | 2,258 |
Total interest expense | 8,049 | 15,481 | 30,740 | 44,764 |
Net interest income | 54,868 | 57,195 | 163,713 | 168,570 |
Provision for loan and lease losses | 9,303 | 3,717 | 31,031 | 12,882 |
Net interest income after provision for loan and lease losses | 45,565 | 53,478 | 132,682 | 155,688 |
Noninterest income: | ||||
Mortgage banking | 6,474 | 1,362 | 12,125 | 3,297 |
Insurance commissions | 1,825 | 1,603 | 5,401 | 5,295 |
Equipment rental | 5,593 | 7,578 | 18,213 | 23,369 |
Gains on investment securities available-for-sale | 0 | 0 | 279 | 0 |
Other | 2,641 | 3,621 | 8,452 | 9,378 |
Total noninterest income | 28,041 | 25,765 | 77,904 | 75,553 |
Noninterest expense: | ||||
Salaries and employee benefits | 25,609 | 24,434 | 74,009 | 71,716 |
Net occupancy | 2,512 | 2,635 | 7,737 | 7,888 |
Furniture and equipment | 6,247 | 6,027 | 18,912 | 18,340 |
Professional fees | 2,041 | 1,603 | 4,741 | 4,907 |
Supplies and communication | 1,305 | 1,643 | 4,329 | 4,744 |
FDIC and other insurance | 868 | 260 | 1,755 | 1,513 |
Business development and marketing | 923 | 1,844 | 3,403 | 4,471 |
Loan and lease collection and repossession | 1,054 | 697 | 2,655 | 2,288 |
Other | 1,790 | 1,765 | 5,599 | 4,674 |
Total noninterest expense | 47,043 | 47,106 | 138,403 | 139,663 |
Income before income taxes | 26,563 | 32,137 | 72,183 | 91,578 |
Income tax expense | 6,509 | 7,689 | 17,185 | 21,517 |
Net income | 20,054 | 24,448 | 54,998 | 70,061 |
Net loss (income) attributable to noncontrolling interests | 4 | (10) | (25) | (42) |
Net income available to common shareholders | $ 20,058 | $ 24,438 | $ 54,973 | $ 70,019 |
Per common share: | ||||
Basic net income per common share (in dollars per share) | $ 0.78 | $ 0.95 | $ 2.14 | $ 2.72 |
Diluted net income per common share (in dollars per share) | 0.78 | 0.95 | 2.14 | 2.72 |
Cash dividends (in dollars per share) | $ 0.28 | $ 0.27 | $ 0.85 | $ 0.81 |
Basic weighted average common shares outstanding (in shares) | 25,552,374 | 25,520,035 | 25,538,910 | 25,630,771 |
Diluted weighted average common shares outstanding (in shares) | 25,552,374 | 25,520,035 | 25,538,910 | 25,630,771 |
Trust and wealth advisory | ||||
Noninterest income: | ||||
Trust and wealth advisory, service charges on deposit accounts, and debit card income | $ 5,153 | $ 4,982 | $ 15,590 | $ 15,423 |
Service charges on deposit accounts | ||||
Noninterest income: | ||||
Trust and wealth advisory, service charges on deposit accounts, and debit card income | 2,336 | 2,892 | 6,851 | 8,175 |
Debit card | ||||
Noninterest income: | ||||
Trust and wealth advisory, service charges on deposit accounts, and debit card income | 4,019 | 3,727 | 10,993 | 10,616 |
Leased equipment | ||||
Noninterest expense: | ||||
Depreciation - leased equipment | $ 4,694 | $ 6,198 | $ 15,263 | $ 19,122 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 20,054 | $ 24,448 | $ 54,998 | $ 70,061 |
Other comprehensive income (loss): | ||||
Unrealized (depreciation) appreciation of available-for-sale securities | (303) | 2,920 | 19,360 | 20,161 |
Reclassification adjustment for realized gains included in net income | 0 | 0 | (279) | 0 |
Income tax effect | 73 | (703) | (4,595) | (4,855) |
Other comprehensive (loss) income, net of tax | (230) | 2,217 | 14,486 | 15,306 |
Comprehensive income | 19,824 | 26,665 | 69,484 | 85,367 |
Comprehensive loss (income) attributable to noncontrolling interests | 4 | (10) | (25) | (42) |
Comprehensive income available to common shareholders | $ 19,828 | $ 26,655 | $ 69,459 | $ 85,325 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Cumulative Effect, Period of Adoption, Adjusted Balance | Common Stock | Common StockCumulative Effect, Period of Adoption, Adjusted Balance | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Retained EarningsCumulative Effect, Period of Adoption, Adjusted Balance | Cost of Common Stock in Treasury | Cost of Common Stock in TreasuryCumulative Effect, Period of Adoption, Adjusted Balance | Accumulated Other Comprehensive Income (Loss), Net | Accumulated Other Comprehensive Income (Loss), NetCumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Income (Loss), NetCumulative Effect, Period of Adoption, Adjusted Balance | Total Shareholders' Equity | Total Shareholders' EquityCumulative Effect, Period of Adoption, Adjustment | Total Shareholders' EquityCumulative Effect, Period of Adoption, Adjusted Balance | Noncontrolling Interests | Noncontrolling InterestsCumulative Effect, Period of Adoption, Adjusted Balance |
Balance at Dec. 31, 2018 | $ 763,590 | $ (301) | $ 763,289 | $ 436,538 | $ 436,538 | $ 398,980 | $ (301) | $ 398,679 | $ (62,760) | $ (62,760) | $ (10,676) | $ 0 | $ (10,676) | $ 762,082 | $ (301) | $ 761,781 | $ 1,508 | $ 1,508 |
Increase (Decrease) in Shareholders' Equity | ||||||||||||||||||
Net income | 70,061 | 70,019 | 70,019 | 42 | ||||||||||||||
Other comprehensive (loss) income | 15,306 | 15,306 | 15,306 | |||||||||||||||
Issuance of 3,289 and 3,544 common shares under stock based compensation awards for the three months ended September 30, 2020 and 2019, respectively and 44,170 and 50,815 common shares under stock based compensation awards for the nine months ended September 30, 2020 and 2019, respectively | 1,970 | 841 | 1,129 | 1,970 | ||||||||||||||
Cost of 0 and 30,000 shares of common stock acquired for treasury for the three months ended September 30, 2020 and 2019, respectively and 0 and 325,787 shares of common stock acquired for treasury for the nine months ended September 30, 2020 and 2019, respectively | (15,085) | (15,085) | (15,085) | |||||||||||||||
Common stock dividend ($0.28 and $0.27 per share for the three months ended September 30, 2020 and 2019, respectively and $0.85 and $0.81 per share for the nine months ended September 30, 2020 and 2019, respectively) | (20,824) | (20,824) | (20,824) | |||||||||||||||
Contributions from noncontrolling interests | 18,363 | 0 | 18,363 | |||||||||||||||
Distributions to noncontrolling interests | $ (38) | 0 | (38) | |||||||||||||||
Issuance of common shares under stock based compensation awards (in shares) | 50,815 | |||||||||||||||||
Common stock acquired for treasury (in shares) | 325,787 | |||||||||||||||||
Cash dividends (in dollars per share) | $ 0.81 | |||||||||||||||||
Balance at Sep. 30, 2019 | $ 833,042 | 436,538 | 448,715 | (76,716) | 4,630 | 813,167 | 19,875 | |||||||||||
Balance at Jun. 30, 2019 | 804,686 | 436,538 | 431,091 | (75,380) | 2,413 | 794,662 | 10,024 | |||||||||||
Increase (Decrease) in Shareholders' Equity | ||||||||||||||||||
Net income | 24,448 | 24,438 | 24,438 | 10 | ||||||||||||||
Other comprehensive (loss) income | 2,217 | 2,217 | 2,217 | |||||||||||||||
Issuance of 3,289 and 3,544 common shares under stock based compensation awards for the three months ended September 30, 2020 and 2019, respectively and 44,170 and 50,815 common shares under stock based compensation awards for the nine months ended September 30, 2020 and 2019, respectively | 161 | 91 | 70 | 161 | ||||||||||||||
Cost of 0 and 30,000 shares of common stock acquired for treasury for the three months ended September 30, 2020 and 2019, respectively and 0 and 325,787 shares of common stock acquired for treasury for the nine months ended September 30, 2020 and 2019, respectively | (1,406) | (1,406) | (1,406) | |||||||||||||||
Common stock dividend ($0.28 and $0.27 per share for the three months ended September 30, 2020 and 2019, respectively and $0.85 and $0.81 per share for the nine months ended September 30, 2020 and 2019, respectively) | (6,905) | (6,905) | (6,905) | |||||||||||||||
Contributions from noncontrolling interests | 9,879 | 0 | 9,879 | |||||||||||||||
Distributions to noncontrolling interests | $ (38) | 0 | (38) | |||||||||||||||
Issuance of common shares under stock based compensation awards (in shares) | 3,544 | |||||||||||||||||
Common stock acquired for treasury (in shares) | 30,000 | |||||||||||||||||
Cash dividends (in dollars per share) | $ 0.27 | |||||||||||||||||
Balance at Sep. 30, 2019 | $ 833,042 | 436,538 | 448,715 | (76,716) | 4,630 | 813,167 | 19,875 | |||||||||||
Balance at Dec. 31, 2019 | 848,636 | 436,538 | 463,269 | (76,702) | 5,172 | 828,277 | 20,359 | |||||||||||
Increase (Decrease) in Shareholders' Equity | ||||||||||||||||||
Net income | 54,998 | 54,973 | 54,973 | 25 | ||||||||||||||
Other comprehensive (loss) income | 14,486 | 14,486 | 14,486 | |||||||||||||||
Issuance of 3,289 and 3,544 common shares under stock based compensation awards for the three months ended September 30, 2020 and 2019, respectively and 44,170 and 50,815 common shares under stock based compensation awards for the nine months ended September 30, 2020 and 2019, respectively | 1,775 | 934 | 841 | 1,775 | ||||||||||||||
Cost of 0 and 30,000 shares of common stock acquired for treasury for the three months ended September 30, 2020 and 2019, respectively and 0 and 325,787 shares of common stock acquired for treasury for the nine months ended September 30, 2020 and 2019, respectively | 0 | 0 | 0 | |||||||||||||||
Common stock dividend ($0.28 and $0.27 per share for the three months ended September 30, 2020 and 2019, respectively and $0.85 and $0.81 per share for the nine months ended September 30, 2020 and 2019, respectively) | (21,757) | (21,757) | (21,757) | |||||||||||||||
Contributions from noncontrolling interests | 17,369 | 0 | 17,369 | |||||||||||||||
Distributions to noncontrolling interests | $ (492) | 0 | (492) | |||||||||||||||
Issuance of common shares under stock based compensation awards (in shares) | 44,170 | |||||||||||||||||
Common stock acquired for treasury (in shares) | 0 | |||||||||||||||||
Cash dividends (in dollars per share) | $ 0.85 | |||||||||||||||||
Balance at Sep. 30, 2020 | $ 915,015 | 436,538 | 497,419 | (75,861) | 19,658 | 877,754 | 37,261 | |||||||||||
Balance at Jun. 30, 2020 | 901,653 | 436,538 | 484,491 | (75,922) | 19,888 | 864,995 | 36,658 | |||||||||||
Increase (Decrease) in Shareholders' Equity | ||||||||||||||||||
Net income | 20,054 | 20,058 | 20,058 | (4) | ||||||||||||||
Other comprehensive (loss) income | (230) | (230) | (230) | |||||||||||||||
Issuance of 3,289 and 3,544 common shares under stock based compensation awards for the three months ended September 30, 2020 and 2019, respectively and 44,170 and 50,815 common shares under stock based compensation awards for the nine months ended September 30, 2020 and 2019, respectively | 113 | 52 | 61 | 113 | ||||||||||||||
Cost of 0 and 30,000 shares of common stock acquired for treasury for the three months ended September 30, 2020 and 2019, respectively and 0 and 325,787 shares of common stock acquired for treasury for the nine months ended September 30, 2020 and 2019, respectively | 0 | 0 | 0 | |||||||||||||||
Common stock dividend ($0.28 and $0.27 per share for the three months ended September 30, 2020 and 2019, respectively and $0.85 and $0.81 per share for the nine months ended September 30, 2020 and 2019, respectively) | (7,182) | (7,182) | (7,182) | |||||||||||||||
Contributions from noncontrolling interests | 928 | 0 | 928 | |||||||||||||||
Distributions to noncontrolling interests | $ (321) | 0 | (321) | |||||||||||||||
Issuance of common shares under stock based compensation awards (in shares) | 3,289 | |||||||||||||||||
Common stock acquired for treasury (in shares) | 0 | |||||||||||||||||
Cash dividends (in dollars per share) | $ 0.28 | |||||||||||||||||
Balance at Sep. 30, 2020 | $ 915,015 | $ 436,538 | $ 497,419 | $ (75,861) | $ 19,658 | $ 877,754 | $ 37,261 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Net income | $ 54,998 | $ 70,061 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for loan and lease losses | 31,031 | 12,882 |
Depreciation of premises and equipment | 4,255 | 4,412 |
Stock-based compensation | 2,377 | 2,069 |
Amortization of investment securities premiums and accretion of discounts, net | 4,238 | 2,857 |
Amortization of mortgage servicing rights | 1,757 | 879 |
Mortgage servicing rights impairments | 808 | 0 |
Amortization of right of use assets | 2,115 | 2,348 |
Deferred income taxes | (10,509) | (4,586) |
Gains on investment securities available-for-sale | (279) | 0 |
Originations of loans held for sale, net of principal collected | (248,639) | (100,903) |
Proceeds from the sales of loans held for sale | 258,253 | 85,400 |
Net gain on sale of loans held for sale | (10,327) | (1,861) |
Net gain on sale of other real estate and repossessions | (73) | (473) |
Net gain on sale of premises and equipment | 0 | (1,289) |
Change in interest receivable | (2,440) | (1,717) |
Change in interest payable | (6,271) | 5,885 |
Change in other assets | 2,312 | 7,889 |
Change in other liabilities | (2,906) | 8,763 |
Other | 1,049 | 1,348 |
Net change in operating activities | 97,012 | 113,086 |
Investing activities: | ||
Proceeds from sales of investment securities available-for-sale | 8,403 | 0 |
Proceeds from maturities and paydowns of investment securities available-for-sale | 301,050 | 128,257 |
Purchases of investment securities available-for-sale | (337,175) | (153,310) |
Net change in partnership investments | (31,298) | (29,823) |
Net change in other investments | 740 | 0 |
Loans sold or participated to others | 10,722 | 50,140 |
Proceeds from principal payments on direct finance leases | 35,384 | 56,798 |
Proceeds from PPP lender origination fees | 19,375 | 0 |
Net change in loans and leases | (615,427) | (386,170) |
Net change in equipment owned under operating leases | 16,691 | (3,975) |
Purchases of premises and equipment | (1,988) | (6,091) |
Proceeds from disposal of premises and equipment | 19 | 3,427 |
Proceeds from sales of other real estate and repossessions | 6,303 | 9,522 |
Net Cash Provided by (Used in) Investing Activities | (587,201) | (331,225) |
Financing activities: | ||
Net change in demand deposits and savings accounts | 890,031 | 17,518 |
Net change in time deposits | (350,502) | (251,839) |
Net change in short-term borrowings | 19,681 | (2,193) |
Proceeds from issuance of long-term debt | 10,000 | 0 |
Payments on long-term debt | (2,710) | (2,499) |
Stock issued under stock purchase plans | 39 | 49 |
Acquisition of treasury stock | 0 | (15,085) |
Net change in noncontrolling interests | 16,877 | 18,325 |
Cash dividends paid on common stock | (22,376) | (21,409) |
Net change in financing activities | 561,040 | 246,545 |
Net change in cash and cash equivalents | 70,851 | 28,406 |
Cash and cash equivalents, beginning of year | 83,365 | 99,079 |
Cash and cash equivalents, end of period | 154,216 | 127,485 |
Non-cash transactions: | ||
Loans transferred to other real estate and repossessed assets | 2,969 | 10,740 |
Common stock matching contribution to Employee Stock Ownership and Profit Sharing Plan | 622 | 300 |
Right of use assets obtained in exchange for lease obligations | 253 | 16,006 |
Leased equipment | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation of equipment owned and leased to others | $ 15,263 | $ 19,122 |
Accounting Policies
Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Accounting Policies | Accounting Policies 1st Source Corporation is a bank holding company headquartered in South Bend, Indiana that provides, through its subsidiaries (collectively referred to as “1st Source” or “the Company”), a broad array of financial products and services. Basis of Presentation – The accompanying unaudited consolidated financial statements reflect all adjustments (all of which are normal and recurring in nature) which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position, the results of operations, changes in comprehensive income (loss), changes in shareholders’ equity, and cash flows for the periods presented. These unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission (SEC) and, therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been omitted. The Notes to the Consolidated Financial Statements appearing in 1st Source Corporation’s Annual Report on Form 10-K (2019 Annual Report), which include descriptions of significant accounting policies, should be read in conjunction with these interim financial statements. The Consolidated Statement of Financial Condition at December 31, 2019 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation. Use of Estimates in the Preparation of Financial Statements – Financial statements prepared in accordance with GAAP require the Company 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 income and expense during the reporting period. Actual results could differ from those estimates. Loans and Leases – Loans are stated at the principal amount outstanding, net of unamortized deferred loan origination fees and costs and net of unearned income. Interest income is accrued as earned based on unpaid principal balances. Origination fees and direct loan and lease origination costs are deferred, and the net amount amortized to interest income over the estimated life of the related loan or lease. Loan commitment fees are deferred and amortized into other income over the commitment period. Direct financing leases are carried at the aggregate of lease payments plus estimated residual value of the leased property, net of unamortized deferred lease origination fees and costs and unearned income. Interest income on direct financing leases is recognized over the term of the lease to achieve a constant periodic rate of return on the outstanding investment. Effective January 1, 2019, as part of the new leasing standard, only those costs incurred as a direct result of closing a lease transaction can be capitalized. All existing deferrals will continue to be amortized over the estimated life of the lease while all new incremental direct costs will be expensed immediately. The accrual of interest on loans and leases is discontinued when a loan or lease becomes contractually delinquent for 90 days, or when an individual analysis of a borrower’s credit worthiness indicates a credit should be placed on nonperforming status, except for residential mortgage loans and consumer loans that are well secured and in the process of collection. Residential mortgage loans are placed on nonaccrual at the time the loan is placed in foreclosure. When interest accruals are discontinued, interest credited to income in the current year is reversed and interest accrued in the prior year is charged to the reserve for loan and lease losses. However, in some cases, the Company may elect to continue the accrual of interest when the net realizable value of collateral is sufficient to cover the principal and accrued interest. When a loan or lease is classified as nonaccrual and the future collectability of the recorded loan or lease balance is doubtful, collections on interest and principal are applied as a reduction to principal outstanding. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured, which is typically evidenced by a sustained repayment performance of at least six months. A loan or lease is considered impaired, based on current information and events, if it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan or lease agreement. Interest on impaired loans and leases, which are not classified as nonaccrual, is recognized on the accrual basis. The Company evaluates loans and leases exceeding $100,000 for impairment and establishes a specific reserve as a component of the reserve for loan and lease losses when it is probable all amounts due will not be collected pursuant to the contractual terms of the loan or lease and the recorded investment in the loan or lease exceeds its fair value. Loans and leases that have been modified and economic concessions have been granted to borrowers who have experienced financial difficulties are considered a troubled debt restructuring (TDR) and, by definition, are deemed an impaired loan. These concessions typically result from the Company’s loss mitigation activities and may include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructuring and typically are returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period of at least six months. When the Company modifies loans and leases in a TDR, it evaluates any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan or lease agreement, or uses the current fair value of the collateral, less selling costs for collateral dependent loans. If the Company determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through a reserve for loan and lease losses estimate or a charge-off to the reserve for loan and lease losses. In periods subsequent to modification, the Company evaluates all TDRs, including those that have payment defaults, for possible impairment and recognizes impairment through the reserve for loan and lease losses. On March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which provides entities with optional temporary relief from certain accounting and financial reporting requirements under U.S. GAAP. Section 4013 of the CARES Act allows financial institutions to suspend application of certain TDR accounting guidance for loan and lease modifications related to the COVID-19 pandemic made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the end of the COVID-19 national emergency, provided certain criteria are met. This relief can be applied to loan and lease modifications for borrowers that were not more than 30 days past due as of December 31, 2019 and to loan and lease modifications that defer or delay the payment of principal or interest, or change the interest rate on the loan. The Company chose to apply this relief to eligible loan and lease modifications. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Nonrefundable Fees and Other Costs: In October 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-08 “Codification Improvements to Subtopic 310-20, Receivables–Nonrefundable Fees and Other Costs.” This ASU clarifies that an entity should reevaluate whether a callable debt security is within the scope of ASC paragraph 310-20-35-33 for each reporting period. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early application is not permitted. All entities should apply ASU 2020-08 on a prospective basis as of the beginning of the period of adoption for existing or newly purchased callable debt securities. The Company is assessing ASU 2020-08 and its impact its accounting and disclosures. Reference Rate Reform: In March 2020, the FASB issued ASU No. 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is implementing a transition plan to identify and modify its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR. The Company is continuing to assess ASU 2020-04 and its impact on the Company’s transition away from LIBOR for its loan and other financial instruments. Partnership Investments and Derivatives: In January 2020, the FASB issued ASU No. 2020-01 “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” These amendments, among other things, clarify that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments-Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendments also clarify that, when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early application is permitted, including early adoption in an interim period. An entity should apply ASU 2020-01 prospectively at the beginning of the interim period that includes the adoption date. The Company has assessed ASU 2020-01 and does not expect it to have a material impact on its accounting and disclosures. Income Taxes: In December 2019, the FASB issued ASU 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” These amendments remove specific exceptions to the general principles in Topic 740 in GAAP. It eliminates the need for an organization to analyze whether the following apply in a given period: exception to the incremental approach for intraperiod tax allocation; exceptions to accounting for basis differences where there are ownership changes in foreign investments; and exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. It also improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP for: franchise taxes that are partially based on income; transactions with a government that result in a step up in the tax basis of goodwill; separate financial statements of legal entities that are not subject to tax; and enacts changes in tax laws in interim periods. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company has assessed ASU 2019-12 and does not expect it to have a material impact on its accounting and disclosures. Measurement of Credit Losses on Financial Instruments: In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments (CECL).” The provisions of ASU 2016-13 were issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 eliminate the probable incurred loss recognition in current GAAP and reflect an entity’s current estimate of all expected credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the financial assets. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. The FASB issued additional ASUs containing clarifying guidance, transition relief provisions and minor updates to the original ASU. These include ASU 2018-19 (issued November 2018), ASU 2019-04 (issued April 2019), ASU 2019-05 (issued May 2019), ASU 2019-10 (issued November 2019), ASU 2019-11 (issued November 2019), ASU 2020-02 (issued February 2020) and ASU 2020-03 (issued March 2020). ASU 2016-13 and subsequent ASUs are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. This amendment is required to be adopted using a modified retrospective approach with a cumulative-effect adjustment to beginning retained earnings, as of the beginning of the first reporting period in which the guidance is effective. As previously disclosed, the Company formed a cross-functional team to work through its implementation plan. The Company’s cross-functional team is substantially complete with the assessment and documentation of processes, internal controls, data and model validation testing, parallel testing, qualitative factors and forecast periods as well as model development. The Company implemented a third-party software solution to assist in the application of the new standard including portfolio segmentation according to shared risk characteristics and modeling methodologies. The Company had finalized the formal review and approval process and the results of its CECL estimate as of year-end but has elected to delay its adoption of ASU 2016-13, as provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, until the date on which the national emergency related to the COVID-19 outbreak is terminated or December 31, 2020, whichever occurs first. Upon adoption of ASU 2016-13, the Company will recognize a one-time cumulative effect adjustment through retained earnings of $2.58 million to increase its allowance for credit losses and $0.78 million to increase the unfunded loan commitment liability as of January 1, 2020. As of September 30, 2020, the Company estimates an additional increase to its allowance for credit losses of between $0 million and $2 million which will be recognized through earnings upon adoption. Upon adopting ASU 2016-13, the Company will not record an allowance as of January 1, 2020 with respect to its available-for-sale debt securities as the majority of these securities are government agency-backed securities for which the risk of loss is minimal. The adoption of ASU 2016-13 is not expected to have a significant impact on the Company’s regulatory capital ratios. |
Investment Securities
Investment Securities | 9 Months Ended |
Sep. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment Securities | Investment Securities Available-For-Sale The following table shows investment securities available-for-sale. (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value September 30, 2020 U.S. Treasury and Federal agencies securities $ 557,262 $ 10,954 $ (208) $ 568,008 U.S. States and political subdivisions securities 66,323 2,423 (13) 68,733 Mortgage-backed securities — Federal agencies 392,427 11,154 (91) 403,490 Corporate debt securities 40,822 1,674 — 42,496 Foreign government and other securities 700 — — 700 Total debt securities available-for-sale $ 1,057,534 $ 26,205 $ (312) $ 1,083,427 December 31, 2019 U.S. Treasury and Federal agencies securities $ 524,896 $ 2,538 $ (470) $ 526,964 U.S. States and political subdivisions securities 83,566 1,048 (109) 84,505 Mortgage-backed securities — Federal agencies 372,458 3,948 (1,017) 375,389 Corporate debt securities 52,151 890 (16) 53,025 Foreign government and other securities 700 — — 700 Total debt securities available-for-sale $ 1,033,771 $ 8,424 $ (1,612) $ 1,040,583 At September 30, 2020 and December 31, 2019, the residential mortgage-backed securities held by the Company consisted primarily of GNMA, FNMA and FHLMC pass-through certificates which are guaranteed by those respective agencies of the United States government (Government Sponsored Enterprise, GSEs). The following table shows the contractual maturities of investments in debt securities available-for-sale at September 30, 2020. Expected maturities will differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. (Dollars in thousands) Amortized Cost Fair Value Due in one year or less $ 126,626 $ 127,388 Due after one year through five years 454,199 468,075 Due after five years through ten years 83,702 83,903 Due after ten years 580 571 Mortgage-backed securities 392,427 403,490 Total debt securities available-for-sale $ 1,057,534 $ 1,083,427 The following table summarizes gross unrealized losses and fair value by investment category and age. At September 30, 2020, the Company’s available-for-sale securities portfolio consisted of 600 securities, 35 of which were in an unrealized loss position. Less than 12 Months 12 months or Longer Total (Dollars in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses September 30, 2020 U.S. Treasury and Federal agencies securities $ 47,792 $ (208) $ — $ — $ 47,792 $ (208) U.S. States and political subdivisions securities 857 (13) — — 857 (13) Mortgage-backed securities - Federal agencies 45,256 (85) 3,245 (6) 48,501 (91) Corporate debt securities — — — — — — Foreign government and other securities 200 — — — 200 — Total debt securities available-for-sale $ 94,105 $ (306) $ 3,245 $ (6) $ 97,350 $ (312) December 31, 2019 U.S. Treasury and Federal agencies securities $ 87,352 $ (171) $ 69,053 $ (299) $ 156,405 $ (470) U.S. States and political subdivisions securities 9,283 (107) 1,042 (2) 10,325 (109) Mortgage-backed securities - Federal agencies 81,951 (383) 51,165 (634) 133,116 (1,017) Corporate debt securities — — 8,091 (16) 8,091 (16) Foreign government and other securities — — — — — — Total debt securities available-for-sale $ 178,586 $ (661) $ 129,351 $ (951) $ 307,937 $ (1,612) The initial indication of potential other-than-temporary-impairment (OTTI) for debt securities is a decline in fair value below amortized cost. Quarterly, the impaired securities are analyzed on a qualitative and quantitative basis in determining OTTI. Declines in the fair value of debt securities available-for-sale below their cost that are deemed to be other-than-temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of impairment related to other factors is recognized in other comprehensive income. In estimating OTTI losses, the Company considers among other things, (i) the length of time and the extent to which fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) whether it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. At September 30, 2020, the Company does not have the intent to sell any of the debt securities available-for-sale in the table above and believes that it is more likely than not, that it will not have to sell any such securities before an anticipated recovery of cost. Primarily the unrealized losses on debt securities are due to increases in market rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover on all debt securities as they approach their maturity date or re-pricing date or if market yields for such investments decline. The Company does not believe any of the securities are impaired due to reasons of credit quality. The following table shows the gross realized gains and losses from the available-for-sale debt securities portfolio. Realized gains and losses of all securities are computed using the specific identification cost basis. Three Months Ended Nine Months Ended (Dollars in thousands) 2020 2019 2020 2019 Gross realized gains $ — $ — $ 285 $ — Gross realized losses — — (6) — OTTI losses — — — — Net realized gains (losses) $ — $ — $ 279 $ — At September 30, 2020 and December 31, 2019, investment securities available-for-sale with carrying values of $371.45 million and $281.38 million, respectively, were pledged as collateral for security repurchase agreements and for other purposes. |
Loan and Lease Financings
Loan and Lease Financings | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Loan and Lease Financings | Loan and Lease Financings The Company evaluates loans and leases for credit quality at least annually but more frequently if certain circumstances occur (such as material new information which becomes available and indicates a potential change in credit risk). The Company uses two methods to assess credit risk: loan or lease credit quality grades and credit risk classifications. The purpose of the loan or lease credit quality grade is to document the degree of risk associated with individual credits as well as inform management of the degree of risk in the portfolio taken as a whole. Credit risk classifications are used to categorize loans by degree of risk and to designate individual or committee approval authorities for higher risk credits at the time of origination. Credit risk classifications include categories for: Acceptable, Marginal, Special Attention, Special Risk, Restricted by Policy, Regulated and Prohibited by Law. All loans and leases, except residential real estate and home equity loans and consumer loans, are assigned credit quality grades on a scale from 1 to 12 with grade 1 representing superior credit quality. The criteria used to assign grades to extensions of credit that exhibit potential problems or well-defined weaknesses are primarily based upon the degree of risk and the likelihood of orderly repayment, and their effect on the Company’s safety and soundness. Loans or leases graded 7 or weaker are considered “special attention” credits and, as such, relationships in excess of $100,000 are reviewed quarterly as part of management’s evaluation of the appropriateness of the reserve for loan and lease losses. Grade 7 credits are defined as “watch” and contain greater than average credit risk and are monitored to limit the exposure to increased risk; grade 8 credits are “special mention” and, following regulatory guidelines, are defined as having potential weaknesses that deserve management’s close attention. Credits that exhibit well-defined weaknesses and a distinct possibility of loss are considered “classified” and are graded 9 through 12 corresponding to the regulatory definitions of “substandard” (grades 9 and 10) and the more severe “doubtful” (grade 11) and “loss” (grade 12). The following table shows the credit quality grades of the recorded investment in loans and leases, segregated by class. Credit Quality Grades (Dollars in thousands) 1-6 7-12 Total September 30, 2020 Commercial and agricultural $ 1,617,272 $ 64,247 $ 1,681,519 Auto and light truck 470,744 56,838 527,582 Medium and heavy duty truck 269,070 2,178 271,248 Aircraft 782,656 23,506 806,162 Construction equipment 671,254 52,342 723,596 Commercial real estate 932,782 28,768 961,550 Total $ 4,743,778 $ 227,879 $ 4,971,657 December 31, 2019 Commercial and agricultural $ 1,080,933 $ 51,858 $ 1,132,791 Auto and light truck 569,234 19,573 588,807 Medium and heavy duty truck 293,736 1,088 294,824 Aircraft 764,564 19,476 784,040 Construction equipment 668,076 37,375 705,451 Commercial real estate 888,154 20,023 908,177 Total $ 4,264,697 $ 149,393 $ 4,414,090 *Paycheck Protection Program (PPP) loans are included in the Commercial and agricultural category in the Grades 1-6 column above. For residential real estate and home equity and consumer loans, credit quality is based on the aging status of the loan and by payment activity. The following table shows the recorded investment in residential real estate and home equity and consumer loans by performing or nonperforming status. Nonperforming loans are those loans which are on nonaccrual status or are 90 days or more past due. (Dollars in thousands) Performing Nonperforming Total September 30, 2020 Residential real estate and home equity $ 518,127 $ 1,754 $ 519,881 Consumer 135,074 424 135,498 Total $ 653,201 $ 2,178 $ 655,379 December 31, 2019 Residential real estate and home equity $ 529,557 $ 2,446 $ 532,003 Consumer 138,951 483 139,434 Total $ 668,508 $ 2,929 $ 671,437 The following table shows the recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status. (Dollars in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due and Accruing Total Nonaccrual Total September 30, 2020 Commercial and agricultural $ 1,679,388 $ 49 $ 574 $ — $ 1,680,011 $ 1,508 $ 1,681,519 Auto and light truck 488,688 682 302 — 489,672 37,910 527,582 Medium and heavy duty truck 270,211 93 — — 270,304 944 271,248 Aircraft 793,451 6,837 3,921 — 804,209 1,953 806,162 Construction equipment 697,020 1,633 321 — 698,974 24,622 723,596 Commercial real estate 959,816 173 — — 959,989 1,561 961,550 Residential real estate and home equity 517,233 875 19 80 518,207 1,674 519,881 Consumer 134,222 779 73 1 135,075 423 135,498 Total $ 5,540,029 $ 11,121 $ 5,210 $ 81 $ 5,556,441 $ 70,595 $ 5,627,036 December 31, 2019 Commercial and agricultural $ 1,131,704 $ 118 $ — $ — $ 1,131,822 $ 969 $ 1,132,791 Auto and light truck 586,212 1,268 77 — 587,557 1,250 588,807 Medium and heavy duty truck 293,736 14 — — 293,750 1,074 294,824 Aircraft 772,846 7,026 3,293 — 783,165 875 784,040 Construction equipment 702,671 819 609 — 704,099 1,352 705,451 Commercial real estate 906,468 58 — — 906,526 1,651 908,177 Residential real estate and home equity 528,844 561 152 257 529,814 2,189 532,003 Consumer 138,132 632 187 54 139,005 429 139,434 Total $ 5,060,613 $ 10,496 $ 4,318 $ 311 $ 5,075,738 $ 9,789 $ 5,085,527 The following table shows impaired loans and leases, segregated by class, and the corresponding reserve for impaired loan and lease losses. (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Reserve September 30, 2020 With no related reserve recorded: Commercial and agricultural $ 768 $ 768 $ — Auto and light truck 20,094 20,094 — Medium and heavy duty truck 830 830 — Aircraft 1,953 1,953 — Construction equipment 5,312 5,312 — Commercial real estate 1,354 1,354 — Residential real estate and home equity — — — Consumer — — — Total with no related reserve recorded 30,311 30,311 — With a reserve recorded: Commercial and agricultural 6,647 6,647 1,554 Auto and light truck 16,980 16,980 7,517 Medium and heavy duty truck 114 114 34 Aircraft — — — Construction equipment 12,910 12,910 7,966 Commercial real estate — — — Residential real estate and home equity 331 333 111 Consumer — — — Total with a reserve recorded 36,982 36,984 17,182 Total impaired loans $ 67,293 $ 67,295 $ 17,182 December 31, 2019 With no related reserve recorded: Commercial and agricultural $ 218 $ 218 $ — Auto and light truck 853 853 — Medium and heavy duty truck 1,074 1,074 — Aircraft 875 875 — Construction equipment 615 615 — Commercial real estate 1,487 1,487 — Residential real estate and home equity — — — Consumer — — — Total with no related reserve recorded 5,122 5,122 — With a reserve recorded: Commercial and agricultural 10,366 10,366 3,003 Auto and light truck 278 278 30 Medium and heavy duty truck — — — Aircraft — — — Construction equipment 736 736 75 Commercial real estate — — — Residential real estate and home equity 337 339 117 Consumer — — — Total with a reserve recorded 11,717 11,719 3,225 Total impaired loans $ 16,839 $ 16,841 $ 3,225 The following table shows average recorded investment and interest income recognized on impaired loans and leases, segregated by class. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (Dollars in thousands) Average Interest Average Interest Average Interest Average Interest Commercial and agricultural $ 8,989 $ 1 $ 5,177 $ 68 $ 7,393 $ 139 $ 4,026 $ 81 Auto and light truck 32,369 — 1,793 — 14,632 — 3,196 — Medium and heavy duty truck 985 — — — 1,011 — 205 — Aircraft 1,957 — 593 — 2,015 — 2,542 — Construction equipment 15,543 — 1,838 — 12,541 4 1,728 — Commercial real estate 1,306 — 1,595 — 1,235 — 1,763 — Residential real estate and home equity 332 4 340 4 334 11 341 14 Consumer — — — — — — — — Total $ 61,481 $ 5 $ 11,336 $ 72 $ 39,161 $ 154 $ 13,801 $ 95 There were no loan and lease modifications classified as troubled debt restructurings (TDR) during the three months ended September 30, 2020 and two nonperforming loan and lease modifications classified as TDR during the nine months ended September 30, 2020. There was one performing loan and lease modification classified as a TDR during the three months ended September 30, 2019 and two (one performing and one nonperforming) loan and lease modifications classified as TDR during the nine months ended September 30, 2019. The TDRs during 2020 were the result of issues that predated the COVID-19 pandemic. The classification between nonperforming and performing is determined at the time of modification. Modification programs focus on extending maturity dates or modifying payment patterns with most TDRs experiencing a combination of concessions. Modifications do not result in the contractual forgiveness of principal or interest. There were no modifications during the three and nine months ended September 30, 2020 and one modification during the three and nine months ended September 30, 2019 that resulted in an interest rate below market rate. Consequently, the financial impact of the modification was immaterial. There were no TDRs which had payment defaults within the twelve months following modification during the three months ended September 30, 2020 and 2019, respectively. There were no TDRs which had a payment default within the twelve months following modification during the nine months ended September 30, 2020 and one TDR which had a payment default within the twelve months following modification during the nine months ended September 30, 2019. Default occurs when a loan or lease is 90 days or more past due under the modified terms or transferred to nonaccrual. The following table shows the recorded investment of loans and leases classified as troubled debt restructurings as of September 30, 2020 and December 31, 2019. (Dollars in thousands) September 30, December 31, Performing TDRs $ 331 $ 10,238 Nonperforming TDRs 14,503 486 Total TDRs $ 14,834 $ 10,724 |
Reserve for Loan and Lease Loss
Reserve for Loan and Lease Losses | 9 Months Ended |
Sep. 30, 2020 | |
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract] | |
Reserve for Loan and Lease Losses | Reserve for Loan and Lease LossesThe reserve for loan and lease loss methodology has been consistently applied for several years, with enhancements instituted periodically. Reserve ratios are reviewed quarterly and revised periodically to reflect recent loss history and to incorporate current risks and trends which may not be recognized in historical data. As the historical charge-off analysis is updated, the Company reviews the look-back periods for each business loan portfolio. Furthermore, a thorough analysis of charge-offs, non-performing asset levels, special attention outstandings and delinquency is performed in order to review portfolio trends and other factors, including specific industry risks and economic conditions, which may have an impact on the reserves and reserve ratios applied to various portfolios. The Company adjusts the calculated historical based ratio as a result of the analysis of environmental factors, principally economic risk and concentration risk. Key economic factors affecting the portfolios are growth in gross domestic product, unemployment rates, housing market trends, commodity prices, inflation and global economic and political issues. Concentration risk is impacted primarily by geographic concentration in Northern Indiana and Southwestern Lower Michigan in the business banking and commercial real estate portfolios and by collateral concentration in the specialty finance portfolios and exposure to foreign markets by geographic risk. The reserve for loan and lease losses is maintained at a level believed to be appropriate by the Company to absorb probable losses inherent in the loan and lease portfolio. The determination of the reserve requires significant judgment reflecting the Company’s best estimate of probable loan and lease losses related to specifically identified impaired loans and leases as well as probable losses in the remainder of the various loan and lease portfolios. For purposes of determining the reserve, the Company has segmented loans and leases into classes based on the associated risk within these segments. The Company has determined that eight classes exist within the loan and lease portfolio. The methodology for assessing the appropriateness of the reserve consists of several key elements, which include: specific reserves for impaired loans, formula reserves for each business lending division portfolio including percentage allocations for special attention loans and leases not deemed impaired, and reserves for pooled homogeneous loans and leases. The Company’s evaluation is based upon a continuing review of these portfolios, estimates of customer performance, collateral values and dispositions, and assessments of economic and geopolitical events, all of which are subject to judgment and will change. The following table shows the changes in the reserve for loan and lease losses, segregated by class, for the three months ended September 30, 2020 and 2019. (Dollars in thousands) Commercial and Auto and Medium and Aircraft Construction Commercial Residential Consumer Total September 30, 2020 Balance, beginning of period $ 29,007 $ 17,371 $ 4,649 $ 31,101 $ 23,872 $ 19,936 $ 3,821 $ 1,526 $ 131,283 Charge-offs 182 4,382 — — 21 36 61 210 4,892 Recoveries 231 263 — 191 347 15 1 75 1,123 Net charge-offs (recoveries) (49) 4,119 — (191) (326) 21 60 135 3,769 Provision (recovery of provision) (3,986) 11,997 (192) 953 (1,395) 1,834 (29) 121 9,303 Balance, end of period $ 25,070 $ 25,249 $ 4,457 $ 32,245 $ 22,803 $ 21,749 $ 3,732 $ 1,512 $ 136,817 September 30, 2019 Balance, beginning of period $ 19,052 $ 16,341 $ 4,671 $ 31,918 $ 12,284 $ 15,757 $ 3,518 $ 1,370 $ 104,911 Charge-offs 83 61 — 65 19 — 4 705 937 Recoveries 438 57 — 614 17 6 40 78 1,250 Net charge-offs (recoveries) (355) 4 — (549) 2 (6) (36) 627 (313) Provision (recovery of provision) 2,823 (610) (87) (429) 370 970 12 668 3,717 Balance, end of period $ 22,230 $ 15,727 $ 4,584 $ 32,038 $ 12,652 $ 16,733 $ 3,566 $ 1,411 $ 108,941 The following table shows the changes in the reserve for loan and lease losses, segregated by class, for the nine months ended September 30, 2020 and 2019. (Dollars in thousands) Commercial and Auto and Medium and Aircraft Construction Commercial Residential Consumer Total September 30, 2020 Balance, beginning of period $ 23,671 $ 14,400 $ 4,612 $ 31,058 $ 14,120 $ 18,350 $ 3,609 $ 1,434 $ 111,254 Charge-offs 753 4,416 — 840 1,582 37 74 640 8,342 Recoveries 533 403 — 694 937 43 31 233 2,874 Net charge-offs (recoveries) 220 4,013 — 146 645 (6) 43 407 5,468 Provision (recovery of provision) 1,619 14,862 (155) 1,333 9,328 3,393 166 485 31,031 Balance, end of period $ 25,070 $ 25,249 $ 4,457 $ 32,245 $ 22,803 $ 21,749 $ 3,732 $ 1,512 $ 136,817 September 30, 2019 Balance, beginning of period $ 17,063 $ 14,689 $ 4,303 $ 33,047 $ 10,922 $ 15,705 $ 3,425 $ 1,315 $ 100,469 Charge-offs 171 527 1,132 3,066 215 — 25 1,268 6,404 Recoveries 500 86 — 916 136 66 46 244 1,994 Net charge-offs (recoveries) (329) 441 1,132 2,150 79 (66) (21) 1,024 4,410 Provision (recovery of provision) 4,838 1,479 1,413 1,141 1,809 962 120 1,120 12,882 Balance, end of period $ 22,230 $ 15,727 $ 4,584 $ 32,038 $ 12,652 $ 16,733 $ 3,566 $ 1,411 $ 108,941 The following table shows the reserve for loan and lease losses and recorded investment in loans and leases, segregated by class, separated between individually and collectively evaluated for impairment as of September 30, 2020 and December 31, 2019. (Dollars in thousands) Commercial and Auto and Medium and Aircraft Construction Commercial Residential Consumer Total September 30, 2020 Reserve for loan and lease losses Ending balance, individually evaluated for impairment $ 1,554 $ 7,517 $ 34 $ — $ 7,966 $ — $ 111 $ — $ 17,182 Ending balance, collectively evaluated for impairment 23,516 17,732 4,423 32,245 14,837 21,749 3,621 1,512 119,635 Total reserve for loan and lease losses $ 25,070 $ 25,249 $ 4,457 $ 32,245 $ 22,803 $ 21,749 $ 3,732 $ 1,512 $ 136,817 Recorded investment in loans Ending balance, individually evaluated for impairment $ 7,415 $ 37,074 $ 944 $ 1,953 $ 18,222 $ 1,354 $ 331 $ — $ 67,293 Ending balance, collectively evaluated for impairment 1,674,104 490,508 270,304 804,209 705,374 960,196 519,550 135,498 5,559,743 Total recorded investment in loans $ 1,681,519 $ 527,582 $ 271,248 $ 806,162 $ 723,596 $ 961,550 $ 519,881 $ 135,498 $ 5,627,036 December 31, 2019 Reserve for loan and lease losses Ending balance, individually evaluated for impairment $ 3,003 $ 30 $ — $ — $ 75 $ — $ 117 $ — $ 3,225 Ending balance, collectively evaluated for impairment 20,668 14,370 4,612 31,058 14,045 18,350 3,492 1,434 108,029 Total reserve for loan and lease losses $ 23,671 $ 14,400 $ 4,612 $ 31,058 $ 14,120 $ 18,350 $ 3,609 $ 1,434 $ 111,254 Recorded investment in loans Ending balance, individually evaluated for impairment $ 10,584 $ 1,131 $ 1,074 $ 875 $ 1,351 $ 1,487 $ 337 $ — $ 16,839 Ending balance, collectively evaluated for impairment 1,122,207 587,676 293,750 783,165 704,100 906,690 531,666 139,434 5,068,688 Total recorded investment in loans $ 1,132,791 $ 588,807 $ 294,824 $ 784,040 $ 705,451 $ 908,177 $ 532,003 $ 139,434 $ 5,085,527 |
Lease Investments
Lease Investments | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Lease Investments | Lease Investments As a lessor, the Company’s loan and lease portfolio includes direct finance leases, which are included in commercial and agricultural, auto and light truck, medium and heavy duty truck, aircraft, and construction equipment on the Consolidated Statements of Financial Condition. The Company also finances various types of construction equipment, medium and heavy duty trucks, automobiles and other equipment under leases classified as operating leases, which are included in Equipment Owned Under Operating Leases, net, on the Consolidated Statements of Financial Condition. The following table shows interest income recognized from direct finance lease payments and operating lease equipment rental income and related depreciation expense. Three Months Ended Nine Months Ended (Dollars in thousands) 2020 2019 2020 2019 Direct finance leases: Interest income on lease receivable $ 1,880 $ 2,280 $ 6,310 $ 8,699 Operating leases: Income related to lease payments $ 5,593 $ 7,578 $ 18,213 $ 23,369 Depreciation expense 4,694 6,198 15,263 19,122 Income related to reimbursements from lessees for personal property tax on operating leased equipment for the three months ended September 30, 2020 and 2019 was $0.02 million and $0.15 million, respectively and for the nine months ended September 30, 2020 and 2019 was $0.44 million and $0.50 million, respectively. Expense related to personal property tax payments on operating leased equipment for the three months ended September 30, 2020 and 2019 was $0.02 million and $0.15 million, respectively and for the nine months ended September 30, 2020 and 2019 was $0.44 million and $0.50 million, respectively. |
Mortgage Servicing Rights
Mortgage Servicing Rights | 9 Months Ended |
Sep. 30, 2020 | |
Transfers and Servicing of Financial Assets [Abstract] | |
Mortgage Servicing Rights | Mortgage Servicing Rights The Company recognizes the rights to service residential mortgage loans for others as separate assets, whether the servicing rights are acquired through a separate purchase or through the sale of originated loans with servicing rights retained. The Company allocates a portion of the total proceeds of a mortgage loan to servicing rights based on the relative fair value. The unpaid principal balance of residential mortgage loans serviced for third parties was $808.14 million and $740.91 million at September 30, 2020 and December 31, 2019, respectively. Mortgage servicing rights (MSRs) are evaluated for impairment at each reporting date. For purposes of impairment measurement, MSRs are stratified based on the predominant risk characteristics of the underlying servicing, principally by loan type. If temporary impairment exists within a tranche, a valuation allowance is established through a charge to income equal to the amount by which the carrying value exceeds the fair value. If it is later determined all or a portion of the temporary impairment no longer exists for a particular tranche, the valuation allowance is reduced through a recovery of income. The following table shows changes in the carrying value of MSRs and the associated valuation allowance. Three Months Ended Nine Months Ended (Dollars in thousands) 2020 2019 2020 2019 Mortgage servicing rights: Balance at beginning of period $ 4,294 $ 4,141 $ 4,200 $ 4,283 Additions 897 318 2,094 703 Amortization (654) (352) (1,757) (879) Sales — — — — Carrying value before valuation allowance at end of period 4,537 4,107 4,537 4,107 Valuation allowance: Balance at beginning of period (546) — — — Impairment charges (262) — (808) — Balance at end of period $ (808) $ — $ (808) $ — Net carrying value of mortgage servicing rights at end of period $ 3,729 $ 4,107 $ 3,729 $ 4,107 Fair value of mortgage servicing rights at end of period $ 4,000 $ 5,722 $ 4,000 $ 5,722 At September 30, 2020 and 2019, the fair value of MSRs exceeded the carrying value reported in the Consolidated Statements of Financial Condition by $0.27 million and $1.62 million, respectively. This difference represents increases in the fair value of certain MSRs that could not be recorded above cost basis. Mortgage loan contractual servicing fees, including late fees and ancillary income, were $0.81 million and $0.68 million for the three months ended September 30, 2020 and 2019, respectively. Mortgage loan contractual servicing fees, including late fees and ancillary income, were $2.31 million and $1.93 million for the nine months ended September 30, 2020 and 2019, respectively. Mortgage loan contractual servicing fees are included in Mortgage Banking on the Consolidated Statements of Income. |
Commitments and Financial Instr
Commitments and Financial Instruments with Off-Balance-Sheet Risk | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Financial Instruments with Off-Balance-Sheet Risk | Commitments and Financial Instruments with Off-Balance-Sheet Risk Financial Instruments with Off-Balance-Sheet Risk — 1st Source and its subsidiaries are parties to financial instruments with off-balance-sheet risk in the normal course of business. These off-balance-sheet financial instruments include commitments to originate and sell loans and standby letters of credit. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Statements of Financial Condition. The following table shows financial instruments whose contract amounts represent credit risk. (Dollars in thousands) September 30, 2020 December 31, 2019 Amounts of commitments: Loan commitments to extend credit $ 1,121,554 $ 1,095,054 Standby letters of credit $ 25,231 $ 27,549 Commercial and similar letters of credit $ 3,526 $ 2,332 The exposure to credit loss in the event of nonperformance by the other party to the financial instruments for loan commitments and standby letters of credit is represented by the dollar amount of those instruments. The Company uses the same credit policies and collateral requirements in making commitments and conditional obligations as it does for on-balance-sheet instruments. The Company grants mortgage loan commitments to borrowers, subject to normal loan underwriting standards. The interest rate risk associated with these loan commitments is managed by entering into contracts for future deliveries of loans. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Standby letters of credit are conditional commitments that guarantee the performance of a client to a third party. The credit risk involved in and collateral obtained when issuing standby letters of credit is essentially the same as that involved in extending loan commitments to clients. Standby letters of credit generally have terms ranging from two months to one year. Commercial letters of credit are issued specifically to facilitate commerce and typically result in the commitment being drawn on when the underlying transaction is consummated between the customer and the third party. Commercial letters of credit generally have terms ranging from two months to six months. |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments Commitments to originate residential mortgage loans held for sale and forward commitments to sell residential mortgage loans are considered derivative instruments. See Note 8 for further information. The Company has certain interest rate derivative positions that are not designated as hedging instruments. Derivative assets and liabilities are recorded at fair value on the Consolidated Statements of Financial Condition and do not take into account the effects of master netting agreements. Master netting agreements allow the Company to settle all derivative contracts held with a single counterparty on a net basis, and to offset net derivative positions with related collateral, where applicable. These derivative positions relate to transactions in which the Company enters into an interest rate swap with a client while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each transaction, the Company agrees to pay interest to the client on a notional amount at a variable interest rate and receive interest from the client on the same notional amount at a fixed interest rate. At the same time, the Company agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the client to effectively convert a variable rate loan to a fixed rate. Because the terms of the swaps with the customers and the other financial institutions offset each other, with the only difference being counterparty credit risk, changes in the fair value of the underlying derivative contracts are not materially different and do not significantly impact the Company’s results of operations. The following table shows the amounts of non-hedging derivative financial instruments. Asset derivatives Liability derivatives (Dollars in thousands) Notional or contractual amount Statement of Financial Condition classification Fair value Statement of Financial Condition classification Fair value September 30, 2020 Interest rate swap contracts $ 1,139,493 Other assets $ 53,027 Other liabilities $ 53,988 Loan commitments 51,834 Mortgages held for sale 2,477 N/A — Forward contracts - mortgage loan 57,187 N/A — Mortgages held for sale 75 Total $ 1,248,514 $ 55,504 $ 54,063 December 31, 2019 Interest rate swap contracts $ 1,074,809 Other assets $ 21,975 Other liabilities $ 22,352 Loan commitments 9,950 Mortgages held for sale 185 N/A — Forward contracts - mortgage loan 23,632 N/A — Mortgages held for sale 38 Total $ 1,108,391 $ 22,160 $ 22,390 The following table shows the amounts included in the Consolidated Statements of Income for non-hedging derivative financial instruments. Gain (loss) Three Months Ended Nine Months Ended (Dollars in thousands) Statement of Income classification 2020 2019 2020 2019 Interest rate swap contracts Other expense $ 50 $ (129) $ (583) $ (378) Interest rate swap contracts Other income 23 272 560 1,056 Loan commitments Mortgage banking 1,406 (6) 2,292 86 Forward contracts - mortgage loan Mortgage banking 26 157 (37) 118 Total $ 1,505 $ 294 $ 2,232 $ 882 The following table shows the offsetting of financial assets and derivative assets. Gross Amounts Not Offset in the Statement of Financial Condition (Dollars in thousands) Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Assets Presented in the Statement of Financial Condition Financial Instruments Cash Collateral Received Net Amount September 30, 2020 Interest rate swaps $ 57,457 $ 4,430 $ 53,027 $ — $ — $ 53,027 December 31, 2019 Interest rate swaps $ 22,279 $ 304 $ 21,975 $ — $ — $ 21,975 The following table shows the offsetting of financial liabilities and derivative liabilities. Gross Amounts Not Offset in the Statement of Financial Condition (Dollars in thousands) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Liabilities Presented in the Statement of Financial Condition Financial Instruments Cash Collateral Pledged Net Amount September 30, 2020 Interest rate swaps $ 58,418 $ 4,430 $ 53,988 $ 53,891 $ — $ 97 Repurchase agreements 158,834 — 158,834 158,834 — — Total $ 217,252 $ 4,430 $ 212,822 $ 212,725 $ — $ 97 December 31, 2019 Interest rate swaps $ 22,656 $ 304 $ 22,352 $ 23,482 $ — $ (1,130) Repurchase agreements 120,459 — 120,459 120,459 — — Total $ 143,115 $ 304 $ 142,811 $ 143,941 $ — $ (1,130) If a default in performance of any obligation of a repurchase agreement occurs, each party will set-off property held in respect of transactions against obligations owing in respect of any other transactions. At September 30, 2020 and December 31, 2019, repurchase agreements had a remaining contractual maturity of $157.83 million and $119.45 million in overnight and $1.00 million and $1.01 million in up to 30 days, respectively and were collateralized by U.S. Treasury and Federal agencies securities. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2020 | |
Variable Interest Entities [Abstract] | |
Variable Interest Entities Disclosure | Variable Interest Entities A variable interest entity (VIE) is a partnership, limited liability company, trust or other legal entity that meets any one of the following criteria: • The entity does not have sufficient equity to conduct its activities without additional subordinated financial support from another party. • The entity’s investors lack the power to direct the activities that most significantly affect the entity’s economic performance. • The entity’s at-risk holders do not have the obligation to absorb the losses or the right to receive residual returns. • The voting rights of some investors are not proportional to their economic interests in the entity, and substantially all of the entity’s activities involve, or are conducted on behalf of, investors with disproportionately few voting rights. The Company is involved in various entities that are considered to be VIEs. The Company’s investments in VIEs are primarily related to investments promoting affordable housing, community development and renewable energy sources. Some of these tax-advantaged investments support the Company’s regulatory compliance with the Community Reinvestment Act. The Company’s investments in these entities generate a return primarily through the realization of federal and state income tax credits, and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods. These tax credits are recognized as a reduction of tax expense or, for investments qualifying as investment tax credits, as a reduction to the related investment asset. The Company recognized federal income tax credits related to its affordable housing and community development tax-advantaged investments in tax expense of $0.43 million and $0.35 million for the three months ended September 30, 2020 and 2019, respectively and $1.29 million and $1.05 million for the nine months ended September 30, 2020 and 2019, respectively. The Company also recognized $0.00 million and $3.53 million of investment tax credits for the three months ended September 30, 2020 and 2019, respectively and $7.84 million and $9.08 million for the nine months ended September 30, 2020 and 2019, respectively. The Company is not required to consolidate VIEs in which it has concluded it does not have a controlling financial interest, and thus is not the primary beneficiary. In such cases, the Company does not have both the power to direct the entities’ most significant activities and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIEs. As a limited partner in these operating partnerships, we are allocated credits and deductions associated with the underlying properties. The Company has determined that it is not the primary beneficiary of these investments because the general partners have the power to direct activities that most significantly influence the economic performance of their respective partnerships. The Company’s investments in these unconsolidated VIEs are carried in Other Assets on the Consolidated Statements of Financial Condition. The Company’s unfunded capital and other commitments related to these unconsolidated VIEs are generally carried in Other Liabilities on the Consolidated Statements of Financial Condition. The Company’s maximum exposure to loss from these unconsolidated VIEs include the investment recorded on the Company’s Consolidated Statements of Financial Condition, net of unfunded capital commitments, and previously recorded tax credits which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level. While the Company believes potential losses from these investments are remote, the maximum exposure was determined by assuming a scenario where the community-based business, housing projects and renewable energy projects completely fail and do not meet certain taxing authority compliance requirements resulting in recapture of the related tax credits. The following table provides a summary of investments in affordable housing, community development and renewable energy VIEs that the Company has not consolidated. (Dollars in thousands) September 30, 2020 December 31, 2019 Investment carrying amount $ 47,719 $ 19,843 Unfunded capital and other commitments 41,409 17,420 Maximum exposure to loss 43,329 37,904 The Company is required to consolidate VIEs in which it has concluded it has significant involvement in and the ability to direct the activities that impact the entity’s economic performance. The Company is the managing general partner of entities to which it shares interest in tax-advantaged investments with third parties. At September 30, 2020 and December 31, 2019, approximately $52.55 million and $41.24 million of the Company’s assets and $11.17 million and $18.68 million of its liabilities included on the Consolidated Statements of Financial Condition were related to tax-advantaged investment VIEs which the Company has consolidated, respectively. The assets of the consolidated VIEs are reported in Other Assets, the liabilities are reported in Other Liabilities and the non-controlling interest is reported in Equity on the Consolidated Statements of Financial Condition. The assets of a particular VIE are the primary source of funds to settle its obligations. The creditors of the VIE do not have recourse to the general credit of the Company. The Company’s exposure to the consolidated VIE is generally limited to the carrying value of its variable interest plus any related tax credits previously recognized. Additionally, the Company sponsors one trust, 1st Source Master Trust (Capital Trust) of which 100% of the common equity is owned by the Company. The Capital Trust was formed in 2007 for the purpose of issuing corporation-obligated mandatorily redeemable capital securities (the capital securities) to third-party investors and investing the proceeds from the sale of the capital securities solely in junior subordinated debenture securities of the Company (the subordinated notes). The subordinated notes held by the Capital Trust are the sole assets of the Capital Trust. The Capital Trust qualifies as a variable interest entity for which the Company is not the primary beneficiary and therefore reported in the financial statements as an unconsolidated subsidiary. The junior subordinated debentures are reflected as subordinated notes in the Statements of Financial Condition with the corresponding interest distributions reflected as Interest Expense in the Statements of Income. The common shares issued by the Capital Trust are included in Other Assets in the Statements of Financial Condition. Distributions on the capital securities issued by the Capital Trust are payable quarterly at a rate per annum equal to the interest rate being earned by the Capital Trust on the subordinated notes held by the Capital Trust. The capital securities are subject to mandatory redemption, in whole or in part, upon repayment of the subordinated notes. The Company has entered into agreements which, taken collectively, fully and unconditionally guarantee the capital securities subject to the terms of each of the guarantees. The capital securities held by the Capital Trust qualify as Tier 1 capital under Federal Reserve Board guidelines. The following table shows subordinated notes at September 30, 2020. (Dollars in thousands) Amount of Subordinated Notes Interest Rate Maturity Date June 2007 issuance (1) $ 41,238 7.22 % 6/15/2037 August 2007 issuance (2) 17,526 1.73 % 9/15/2037 Total $ 58,764 (1) Fixed rate through life of debt. (2) 3-Month LIBOR +1.48% through remaining life of debt. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Earnings per common share is computed using the two-class method. Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the applicable period, excluding outstanding participating securities. Participating securities include non-vested restricted stock awards. Non-vested restricted stock awards are considered participating securities to the extent the holders of these securities receive non-forfeitable dividends at the same rate as holders of common stock. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method. Stock options, where the exercise price was greater than the average market price of the common shares, were excluded from the computation of diluted earnings per common share because the result would have been antidilutive. There were no stock options outstanding as of September 30, 2020 and 2019. The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share. Three Months Ended Nine Months Ended (Dollars in thousands - except per share amounts) 2020 2019 2020 2019 Distributed earnings allocated to common stock $ 7,166 $ 6,895 $ 21,714 $ 20,791 Undistributed earnings allocated to common stock 12,755 17,402 32,941 48,827 Net earnings allocated to common stock 19,921 24,297 54,655 69,618 Net earnings allocated to participating securities 137 141 318 401 Net income allocated to common stock and participating securities $ 20,058 $ 24,438 $ 54,973 $ 70,019 Weighted average shares outstanding for basic earnings per common share 25,552,374 25,520,035 25,538,910 25,630,771 Dilutive effect of stock compensation — — — — Weighted average shares outstanding for diluted earnings per common share 25,552,374 25,520,035 25,538,910 25,630,771 Basic earnings per common share $ 0.78 $ 0.95 $ 2.14 $ 2.72 Diluted earnings per common share $ 0.78 $ 0.95 $ 2.14 $ 2.72 |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Based Compensation | Stock Based Compensation As of September 30, 2020, the Company had four active stock-based employee compensation plans, which are more fully described in Note 16 of the Consolidated Financial Statements in 1st Source’s Annual Report on Form 10-K for the year ended December 31, 2019. These plans include three executive stock award plans, the Executive Incentive Plan, the Restricted Stock Award Plan, the Strategic Deployment Incentive Plan; and the Employee Stock Purchase Plan. The 2011 Stock Option Plan was approved by the shareholders on April 21, 2011 but the Company had not made any grants through September 30, 2020. Stock-based compensation expense for all stock-based compensation awards granted is based on the grant-date fair value. For all awards except stock option awards, the grant date fair value is either the fair market value per share or book value per share (corresponding to the type of stock awarded) as of the grant date. For stock option awards, the grant date fair value is estimated using the Black-Scholes option pricing model. For all awards, the Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, for which the Company uses the related vesting term. Total fair value of options vested and expensed was zero for the nine months ended September 30, 2020 and 2019. As of September 30, 2020 and 2019 there were no outstanding stock options. There were no stock options exercised during the nine months ended September 30, 2020 and 2019. All shares issued in connection with stock option exercises are issued from available treasury stock. As of September 30, 2020, there was $8.21 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 3.60 years. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2020 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income (Loss) The following table presents reclassifications out of accumulated other comprehensive income (loss) related to unrealized gains and losses on available-for-sale securities. Three Months Ended September 30, Nine Months Ended September 30, Affected Line Item in the Statements of Income (Dollars in thousands) 2020 2019 2020 2019 Realized gains included in net income $ — $ — $ 279 $ — Gains on investment securities available-for-sale — — 279 — Income before income taxes Tax effect — — (65) — Income tax expense Net of tax $ — $ — $ 214 $ — Net income |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The total amount of unrecognized tax benefits that would affect the effective tax rate if recognized was zero at September 30, 2020 and December 31, 2019. Interest and penalties are recognized through the income tax provision. For the three and nine months ended September 30, 2020 and 2019, the Company recognized no interest or penalties. There were no accrued interest and penalties at September 30, 2020 and December 31, 2019. Tax years that remain open and subject to audit include the federal 2016-2019 years and the Indiana 2016-2019 years. The Company does not anticipate a significant change in the amount of uncertain tax positions within the next 12 months. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company records certain assets and liabilities at fair value. Fair value is defined as 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 measurements are also utilized to determine the initial value of certain assets and liabilities, to perform impairment assessments, and for disclosure purposes. The Company uses quoted market prices and observable inputs to the maximum extent possible when measuring fair value. In the absence of quoted market prices, various valuation techniques are utilized to measure fair value. When possible, observable market data for identical or similar financial instruments is used in the valuation. When market data is not available, fair value is determined using valuation models that incorporate management’s estimates of the assumptions a market participant would use in pricing the asset or liability. Fair value measurements are classified within one of three levels based on the observability of the inputs used to determine fair value, as follows: • Level 1 — The valuation is based on quoted prices in active markets for identical instruments. • Level 2 — The valuation is based on observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. • Level 3 — The valuation is based on unobservable inputs that are supported by minimal or no market activity and that are significant to the fair value of the instrument. Level 3 valuations are typically performed using pricing models, discounted cash flow methodologies, or similar techniques that incorporate management’s own estimates of assumptions that market participants would use in pricing the instrument, or valuations that require significant management judgment or estimation. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company elected fair value accounting for mortgages held for sale and for its best-efforts forward sales commitments. The Company economically hedges its mortgages held for sale by either selling corresponding forward contracts on agency securities (free-standing derivatives) or obtaining best-efforts forward sales commitments with an investor to sell the loans at an agreed-upon price at the time the interest rate locks are issued to customers. The Company believes the election for mortgages held for sale will reduce certain timing differences and better match changes in the value of these assets with changes in the value of derivatives or best-best efforts forward sales commitments. At September 30, 2020 and December 31, 2019, all mortgages held for sale were carried at fair value. The following table shows the differences between the fair value carrying amount of mortgages held for sale measured at fair value and the aggregate unpaid principal amount the Company is contractually entitled to receive at maturity. (Dollars in thousands) Fair value carrying Aggregate Excess of fair value carrying amount over (under) unpaid principal September 30, 2020 Mortgages held for sale reported at fair value $ 20,990 $ 17,618 $ 3,372 (1) December 31, 2019 Mortgages held for sale reported at fair value $ 20,277 $ 19,890 $ 387 (1) (1) The excess of fair value carrying amount over (under) unpaid principal is included in mortgage banking income and includes changes in fair value at and subsequent to funding and gains and losses on the related loan commitment prior to funding. Financial Instruments on Recurring Basis: The following is a description of the valuation methodologies used for financial instruments measured at fair value on a recurring basis: Investment securities available-for-sale are valued primarily by a third party pricing agent. Prices supplied by the independent pricing agent, as well as their pricing methodologies and assumptions, are reviewed by the Company for reasonableness and to ensure such prices are aligned with market levels. In general, the Company’s investment securities do not possess a complex structure that could introduce greater valuation risk. The portfolio mainly consists of traditional investments including U.S. Treasury and Federal agencies securities, Federal agency mortgage pass-through securities, and general obligation and revenue municipal bonds. Pricing for such instruments is fairly generic and is easily obtained. On a quarterly basis, prices supplied by the pricing agent are validated by comparison to prices obtained from other third party sources for a material portion of the portfolio. The valuation policy and procedures for Level 3 fair value measurements of available-for-sale debt securities are decided through collaboration between management of the Corporate Accounting and Funds Management departments. The changes in fair value measurement for Level 3 securities are analyzed on a periodic basis under a collaborative framework with the aforementioned departments. The methodology and variables used for input are derived from the combination of observable and unobservable inputs. The unobservable inputs are determined through internal assumptions that may vary from period to period due to external factors, such as market movement and credit rating adjustments. Both the market and income valuation approaches are implemented using the following types of inputs: • U.S. treasuries are priced using the market approach and utilizing live data feeds from active market exchanges for identical securities. • Government-sponsored agency debt securities and corporate bonds are primarily priced using available market information through processes such as benchmark curves, market valuations of like securities, sector groupings and matrix pricing. • Other government-sponsored agency securities, mortgage-backed securities and some of the actively traded REMICs and CMOs, are primarily priced using available market information including benchmark yields, prepayment speeds, spreads and volatility of similar securities. • State and political subdivisions are largely grouped by characteristics, i.e., geographical data and source of revenue in trade dissemination systems. Since some securities are not traded daily and due to other grouping limitations, active market quotes are often obtained using benchmarking for like securities. Local direct placement municipal securities, with very little market activity, are priced using an appropriate market yield curve, which includes a credit spread assumption. Mortgages held for sale and the related loan commitments and forward contracts (hedges) are valued using a market value approach and utilizing an appropriate current market yield and a loan commitment closing rate based on historical analysis. Interest rate swap positions, both assets and liabilities, are valued by a third-party pricing agent using an income approach and utilizing models that use as their basis readily observable market parameters. This valuation process considers various factors including interest rate yield curves, time value and volatility factors. Validation of third party agent valuations is accomplished by comparing those values to the Company’s swap counterparty valuations. Management believes an adjustment is required to “mid-market” valuations for derivatives tied to its performing loan portfolio to recognize the imprecision and related exposure inherent in the process of estimating expected credit losses as well as velocity of deterioration evident with systemic risks embedded in these portfolios. Any change in the mid-market derivative valuation adjustment will be recognized immediately through the Consolidated Statements of Income. The following table shows the balance of assets and liabilities measured at fair value on a recurring basis. (Dollars in thousands) Level 1 Level 2 Level 3 Total September 30, 2020 Assets: Investment securities available-for-sale: U.S. Treasury and Federal agencies securities $ 76,298 $ 491,710 $ — $ 568,008 U.S. States and political subdivisions securities — 65,468 3,265 68,733 Mortgage-backed securities — Federal agencies — 403,490 — 403,490 Corporate debt securities — 42,496 — 42,496 Foreign government and other securities — 700 — 700 Total debt securities available-for-sale 76,298 1,003,864 3,265 1,083,427 Mortgages held for sale — 20,990 — 20,990 Accrued income and other assets (interest rate swap agreements) — 53,027 — 53,027 Total $ 76,298 $ 1,077,881 $ 3,265 $ 1,157,444 Liabilities: Accrued expenses and other liabilities (interest rate swap agreements) $ — $ 53,988 $ — $ 53,988 Total $ — $ 53,988 $ — $ 53,988 December 31, 2019 Assets: Investment securities available-for-sale: U.S. Treasury and Federal agencies securities $ 80,393 $ 446,571 $ — $ 526,964 U.S. States and political subdivisions securities — 82,213 2,292 84,505 Mortgage-backed securities — Federal agencies — 375,389 — 375,389 Corporate debt securities — 53,025 — 53,025 Foreign government and other securities — 700 — 700 Total debt securities available-for-sale 80,393 957,898 2,292 1,040,583 Mortgages held for sale — 20,277 — 20,277 Accrued income and other assets (interest rate swap agreements) — 21,975 — 21,975 Total $ 80,393 $ 1,000,150 $ 2,292 $ 1,082,835 Liabilities: Accrued expenses and other liabilities (interest rate swap agreements) $ — $ 22,352 $ — $ 22,352 Total $ — $ 22,352 $ — $ 22,352 The following table shows changes in Level 3 assets measured at fair value on a recurring basis for the quarter ended September 30, 2020 and 2019. (Dollars in thousands) U.S. States and Beginning balance July 1, 2020 $ 3,179 Total gains or losses (realized/unrealized): Included in earnings — Included in other comprehensive income 166 Purchases — Issuances — Sales — Settlements — Maturities (80) Transfers into Level 3 — Transfers out of Level 3 — Ending balance September 30, 2020 $ 3,265 Beginning balance July 1, 2019 $ 5,061 Total gains or losses (realized/unrealized): Included in earnings — Included in other comprehensive income (12) Purchases — Issuances — Sales — Settlements — Maturities (80) Transfers into Level 3 — Transfers out of Level 3 — Ending balance September 30, 2019 $ 4,969 There were no gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2020 or 2019. The following table shows the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a recurring basis. (Dollars in thousands) Fair Value Valuation Methodology Unobservable Inputs Range of Inputs Weighted Average September 30, 2020 Debt securities available-for sale Direct placement municipal securities $ 3,265 Discounted cash flows Credit spread assumption 1.12% - 2.52% 1.47 % December 31, 2019 Debt securities available-for sale Direct placement municipal securities $ 2,292 Discounted cash flows Credit spread assumption 0.12% - 2.85% Financial Instruments on Non-recurring Basis: The Company may be required, from time to time, to measure certain other financial assets at fair value on a non-recurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower of cost or market accounting or impairment charges of individual assets. The Credit Policy Committee (CPC), a management committee, is responsible for overseeing the valuation processes and procedures for Level 3 measurements of impaired loans, other real estate and repossessions. The CPC reviews these assets on a quarterly basis to determine the accuracy of the observable inputs, generally third party appraisals, auction values, values derived from trade publications and data submitted by the borrower, and the appropriateness of the unobservable inputs, generally discounts due to current market conditions and collection issues. The CPC establishes discounts based on asset type and valuation source; deviations from the standard are documented. The discounts are reviewed periodically, annually at a minimum, to determine they remain appropriate. Consideration is given to current trends in market values for the asset categories and gains and losses on sales of similar assets. The Loan and Funds Management Committee of the Board of Directors is responsible for overseeing the CPC. Discounts vary depending on the nature of the assets and the source of value. Aircraft are generally valued using quarterly trade publications adjusted for engine time, condition, maintenance programs, discounted by 10%. Likewise, autos are valued using current auction values, discounted by 10%; medium and heavy duty trucks are valued using trade publications and auction values, discounted by 15%. Construction equipment is generally valued using trade publications and auction values, discounted by 20%. Real estate is valued based on appraisals or evaluations, discounted by 20% with higher discounts for property in poor condition or property with characteristics which may make it more difficult to market. Commercial loans subject to borrowing base certificates are generally discounted by 20% for receivables and 40% - 75% for inventory with higher discounts when monthly borrowing base certificates are not required or received. Impaired loans and related write-downs are based on the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are reviewed quarterly and estimated using customized discounting criteria, appraisals and dealer and trade magazine quotes which are used in a market valuation approach. In accordance with fair value measurements, only impaired loans for which a reserve for loan loss has been established based on the fair value of collateral require classification in the fair value hierarchy. As a result, only a portion of the Company’s impaired loans are classified in the fair value hierarchy. The Company has established MSRs valuation policies and procedures based on industry standards and to ensure valuation methodologies are consistent and verifiable. MSRs and related adjustments to fair value result from application of lower of cost or fair value accounting. For purposes of impairment, MSRs are stratified based on the predominant risk characteristics of the underlying servicing, principally by loan type. The fair value of each tranche of the servicing portfolio is estimated by calculating the present value of estimated future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates, servicing costs, and other economic factors. Prepayment rates and discount rates are derived through a third party pricing agent. Changes in the most significant inputs, including prepayment rates and discount rates, are compared to the changes in the fair value measurements and appropriate resolution is made. A fair value analysis is also obtained from an independent third party agent and compared to the internal valuation for reasonableness. MSRs do not trade in an active, open market with readily observable prices and though sales of MSRs do occur, precise terms and conditions typically are not readily available and the characteristics of the Company’s servicing portfolio may differ from those of any servicing portfolios that do trade. Other real estate is based on the fair value of the underlying collateral less expected selling costs. Collateral values are estimated primarily using appraisals and reflect a market value approach. Fair values are reviewed quarterly, and new appraisals are obtained annually. Repossessions are similarly valued. For assets measured at fair value on a nonrecurring basis the following represents impairment charges (recoveries) recognized on these assets during the quarter ended September 30, 2020: impaired loans - $3.80 million; mortgage servicing rights - $0.26 million; repossessions - $0.65 million; and other real estate - $0.00 million. The following table shows the carrying value of assets measured at fair value on a non-recurring basis. (Dollars in thousands) Level 1 Level 2 Level 3 Total September 30, 2020 Impaired loans - collateral based $ — $ — $ 19,802 $ 19,802 Accrued income and other assets (mortgage servicing rights) — — 3,729 3,729 Accrued income and other assets (repossessions) — — 4,639 4,639 Accrued income and other assets (other real estate) — — 303 303 Total $ — $ — $ 28,473 $ 28,473 December 31, 2019 Impaired loans - collateral based $ — $ — $ 8,492 $ 8,492 Accrued income and other assets (mortgage servicing rights) — — 4,200 4,200 Accrued income and other assets (repossessions) — — 8,623 8,623 Accrued income and other assets (other real estate) — — 522 522 Total $ — $ — $ 21,837 $ 21,837 The following table below shows the valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a non-recurring basis. (Dollars in thousands) Carrying Value Fair Value Valuation Methodology Unobservable Inputs Range of Inputs Weighted Average September 30, 2020 Impaired loans $ 19,802 $ 19,802 Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions 0% - 90% 28 % Mortgage servicing rights 3,729 4,000 Discounted cash flows Constant prepayment rate (CPR) 15.3% - 24.7% 21.7 % Discount rate 8.4% - 11.2% 8.6 % Repossessions 4,639 4,898 Appraisals, trade publications and auction values Discount for lack of marketability 3% - 16% 5 % Other real estate 303 324 Appraisals Discount for lack of marketability 0% - 6% 6 % December 31, 2019 Impaired loans $ 8,492 $ 8,492 Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions 0% - 90% Mortgage servicing rights 4,200 5,986 Discounted cash flows Constant prepayment rate (CPR) 10.2% - 28.1% Discount rate 9.3% - 12.1% Repossessions 8,623 9,211 Appraisals, trade publications and auction values Discount for lack of marketability 3% - 25% Other real estate 522 564 Appraisals Discount for lack of marketability 0% - 11% GAAP requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring or non-recurring basis. The following table shows the fair values of the Company’s financial instruments. (Dollars in thousands) Carrying or Contract Value Fair Value Level 1 Level 2 Level 3 September 30, 2020 Assets: Cash and due from banks $ 62,575 $ 62,575 $ 62,575 $ — $ — Federal funds sold and interest bearing deposits with other banks 91,641 91,641 91,641 — — Investment securities, available-for-sale 1,083,427 1,083,427 76,298 1,003,864 3,265 Other investments 27,674 27,674 27,674 — — Mortgages held for sale 20,990 20,990 — 20,990 — Loans and leases, net of reserve for loan and lease losses 5,490,219 5,568,395 — — 5,568,395 Mortgage servicing rights 3,729 4,000 — — 4,000 Accrued interest receivable 21,565 21,565 — 21,565 — Interest rate swaps 53,027 53,027 — 53,027 — Liabilities: Deposits $ 5,896,855 $ 5,909,192 $ 4,598,859 $ 1,310,333 $ — Short-term borrowings 165,574 165,574 159,822 5,752 — Long-term debt and mandatorily redeemable securities 81,659 82,894 — 82,894 — Subordinated notes 58,764 57,617 — 57,617 — Accrued interest payable 7,647 7,647 — 7,647 — Interest rate swaps 53,988 53,988 — 53,988 — Off-balance-sheet instruments * — 289 — 289 — December 31, 2019 Assets: Cash and due from banks $ 67,215 $ 67,215 $ 67,215 $ — $ — Federal funds sold and interest bearing deposits with other banks 16,150 16,150 16,150 — — Investment securities, available-for-sale 1,040,583 1,040,583 80,393 957,898 2,292 Other investments 28,414 28,414 28,414 — — Mortgages held for sale 20,277 20,277 — 20,277 — Loans and leases, net of reserve for loan and lease losses 4,974,273 4,992,684 — — 4,992,684 Mortgage servicing rights 4,200 5,986 — — 5,986 Accrued interest receivable 19,125 19,125 — 19,125 — Interest rate swaps 21,975 21,975 — 21,975 — Liabilities: Deposits $ 5,357,326 $ 5,362,633 $ 3,708,828 $ 1,653,805 $ — Short-term borrowings 145,893 145,893 120,891 25,002 — Long-term debt and mandatorily redeemable securities 71,639 71,084 — 71,084 — Subordinated notes 58,764 61,469 — 61,469 — Accrued interest payable 13,918 13,918 — 13,918 — Interest rate swaps 22,352 22,352 — 22,352 — Off-balance-sheet instruments * — 281 — 281 — * Represents estimated cash outflows required to currently settle the obligations at current market rates. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. These estimates are subjective in nature and require considerable judgment to interpret market data. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange, nor are they intended to represent the fair value of the Company as a whole. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The fair value estimates presented herein are based on pertinent information available to management as of the respective balance sheet date. Although the Company is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amounts presented herein. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation – The accompanying unaudited consolidated financial statements reflect all adjustments (all of which are normal and recurring in nature) which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position, the results of operations, changes in comprehensive income (loss), changes in shareholders’ equity, and cash flows for the periods presented. These unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission (SEC) and, therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been omitted. The Notes to the Consolidated Financial Statements appearing in 1st Source Corporation’s Annual Report on Form 10-K (2019 Annual Report), which include descriptions of significant accounting policies, should be read in conjunction with these interim financial statements. The Consolidated Statement of Financial Condition at December 31, 2019 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements – Financial statements prepared in accordance with GAAP require the Company 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 income and expense during the reporting period. Actual results could differ from those estimates. |
Loans and Leases | Loans and Leases – Loans are stated at the principal amount outstanding, net of unamortized deferred loan origination fees and costs and net of unearned income. Interest income is accrued as earned based on unpaid principal balances. Origination fees and direct loan and lease origination costs are deferred, and the net amount amortized to interest income over the estimated life of the related loan or lease. Loan commitment fees are deferred and amortized into other income over the commitment period. Direct financing leases are carried at the aggregate of lease payments plus estimated residual value of the leased property, net of unamortized deferred lease origination fees and costs and unearned income. Interest income on direct financing leases is recognized over the term of the lease to achieve a constant periodic rate of return on the outstanding investment. Effective January 1, 2019, as part of the new leasing standard, only those costs incurred as a direct result of closing a lease transaction can be capitalized. All existing deferrals will continue to be amortized over the estimated life of the lease while all new incremental direct costs will be expensed immediately. The accrual of interest on loans and leases is discontinued when a loan or lease becomes contractually delinquent for 90 days, or when an individual analysis of a borrower’s credit worthiness indicates a credit should be placed on nonperforming status, except for residential mortgage loans and consumer loans that are well secured and in the process of collection. Residential mortgage loans are placed on nonaccrual at the time the loan is placed in foreclosure. When interest accruals are discontinued, interest credited to income in the current year is reversed and interest accrued in the prior year is charged to the reserve for loan and lease losses. However, in some cases, the Company may elect to continue the accrual of interest when the net realizable value of collateral is sufficient to cover the principal and accrued interest. When a loan or lease is classified as nonaccrual and the future collectability of the recorded loan or lease balance is doubtful, collections on interest and principal are applied as a reduction to principal outstanding. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured, which is typically evidenced by a sustained repayment performance of at least six months. A loan or lease is considered impaired, based on current information and events, if it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan or lease agreement. Interest on impaired loans and leases, which are not classified as nonaccrual, is recognized on the accrual basis. The Company evaluates loans and leases exceeding $100,000 for impairment and establishes a specific reserve as a component of the reserve for loan and lease losses when it is probable all amounts due will not be collected pursuant to the contractual terms of the loan or lease and the recorded investment in the loan or lease exceeds its fair value. Loans and leases that have been modified and economic concessions have been granted to borrowers who have experienced financial difficulties are considered a troubled debt restructuring (TDR) and, by definition, are deemed an impaired loan. These concessions typically result from the Company’s loss mitigation activities and may include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructuring and typically are returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period of at least six months. When the Company modifies loans and leases in a TDR, it evaluates any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan or lease agreement, or uses the current fair value of the collateral, less selling costs for collateral dependent loans. If the Company determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through a reserve for loan and lease losses estimate or a charge-off to the reserve for loan and lease losses. In periods subsequent to modification, the Company evaluates all TDRs, including those that have payment defaults, for possible impairment and recognizes impairment through the reserve for loan and lease losses. On March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which provides entities with optional temporary relief from certain accounting and financial reporting requirements under U.S. GAAP. Section 4013 of the CARES Act allows financial institutions to suspend application of certain TDR accounting guidance for loan and lease modifications related to the COVID-19 pandemic made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the end of the COVID-19 national emergency, provided certain criteria are met. This relief can be applied to loan and lease modifications for borrowers that were not more than 30 days past due as of December 31, 2019 and to loan and lease modifications that defer or delay the payment of principal or interest, or change the interest rate on the loan. The Company chose to apply this relief to eligible loan and lease modifications. |
Investment Securities (Tables)
Investment Securities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of investment securities available-for-sale | The following table shows investment securities available-for-sale. (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value September 30, 2020 U.S. Treasury and Federal agencies securities $ 557,262 $ 10,954 $ (208) $ 568,008 U.S. States and political subdivisions securities 66,323 2,423 (13) 68,733 Mortgage-backed securities — Federal agencies 392,427 11,154 (91) 403,490 Corporate debt securities 40,822 1,674 — 42,496 Foreign government and other securities 700 — — 700 Total debt securities available-for-sale $ 1,057,534 $ 26,205 $ (312) $ 1,083,427 December 31, 2019 U.S. Treasury and Federal agencies securities $ 524,896 $ 2,538 $ (470) $ 526,964 U.S. States and political subdivisions securities 83,566 1,048 (109) 84,505 Mortgage-backed securities — Federal agencies 372,458 3,948 (1,017) 375,389 Corporate debt securities 52,151 890 (16) 53,025 Foreign government and other securities 700 — — 700 Total debt securities available-for-sale $ 1,033,771 $ 8,424 $ (1,612) $ 1,040,583 |
Schedule of contractual maturities of investments in debt securities available-for-sale | The following table shows the contractual maturities of investments in debt securities available-for-sale at September 30, 2020. Expected maturities will differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. (Dollars in thousands) Amortized Cost Fair Value Due in one year or less $ 126,626 $ 127,388 Due after one year through five years 454,199 468,075 Due after five years through ten years 83,702 83,903 Due after ten years 580 571 Mortgage-backed securities 392,427 403,490 Total debt securities available-for-sale $ 1,057,534 $ 1,083,427 |
Schedule of gross unrealized losses and fair value by investment category and age | The following table summarizes gross unrealized losses and fair value by investment category and age. At September 30, 2020, the Company’s available-for-sale securities portfolio consisted of 600 securities, 35 of which were in an unrealized loss position. Less than 12 Months 12 months or Longer Total (Dollars in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses September 30, 2020 U.S. Treasury and Federal agencies securities $ 47,792 $ (208) $ — $ — $ 47,792 $ (208) U.S. States and political subdivisions securities 857 (13) — — 857 (13) Mortgage-backed securities - Federal agencies 45,256 (85) 3,245 (6) 48,501 (91) Corporate debt securities — — — — — — Foreign government and other securities 200 — — — 200 — Total debt securities available-for-sale $ 94,105 $ (306) $ 3,245 $ (6) $ 97,350 $ (312) December 31, 2019 U.S. Treasury and Federal agencies securities $ 87,352 $ (171) $ 69,053 $ (299) $ 156,405 $ (470) U.S. States and political subdivisions securities 9,283 (107) 1,042 (2) 10,325 (109) Mortgage-backed securities - Federal agencies 81,951 (383) 51,165 (634) 133,116 (1,017) Corporate debt securities — — 8,091 (16) 8,091 (16) Foreign government and other securities — — — — — — Total debt securities available-for-sale $ 178,586 $ (661) $ 129,351 $ (951) $ 307,937 $ (1,612) |
Schedule of gross realized gains and losses from securities available-for-sale portfolio | The following table shows the gross realized gains and losses from the available-for-sale debt securities portfolio. Realized gains and losses of all securities are computed using the specific identification cost basis. Three Months Ended Nine Months Ended (Dollars in thousands) 2020 2019 2020 2019 Gross realized gains $ — $ — $ 285 $ — Gross realized losses — — (6) — OTTI losses — — — — Net realized gains (losses) $ — $ — $ 279 $ — |
Loan and Lease Financings (Tabl
Loan and Lease Financings (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Schedule of credit quality grades of the recorded investment in loans and leases, segregated by class | The following table shows the credit quality grades of the recorded investment in loans and leases, segregated by class. Credit Quality Grades (Dollars in thousands) 1-6 7-12 Total September 30, 2020 Commercial and agricultural $ 1,617,272 $ 64,247 $ 1,681,519 Auto and light truck 470,744 56,838 527,582 Medium and heavy duty truck 269,070 2,178 271,248 Aircraft 782,656 23,506 806,162 Construction equipment 671,254 52,342 723,596 Commercial real estate 932,782 28,768 961,550 Total $ 4,743,778 $ 227,879 $ 4,971,657 December 31, 2019 Commercial and agricultural $ 1,080,933 $ 51,858 $ 1,132,791 Auto and light truck 569,234 19,573 588,807 Medium and heavy duty truck 293,736 1,088 294,824 Aircraft 764,564 19,476 784,040 Construction equipment 668,076 37,375 705,451 Commercial real estate 888,154 20,023 908,177 Total $ 4,264,697 $ 149,393 $ 4,414,090 *Paycheck Protection Program (PPP) loans are included in the Commercial and agricultural category in the Grades 1-6 column above. |
Schedule of recorded investment in residential real estate and home equity and consumer loans by performing or nonperforming status | The following table shows the recorded investment in residential real estate and home equity and consumer loans by performing or nonperforming status. Nonperforming loans are those loans which are on nonaccrual status or are 90 days or more past due. (Dollars in thousands) Performing Nonperforming Total September 30, 2020 Residential real estate and home equity $ 518,127 $ 1,754 $ 519,881 Consumer 135,074 424 135,498 Total $ 653,201 $ 2,178 $ 655,379 December 31, 2019 Residential real estate and home equity $ 529,557 $ 2,446 $ 532,003 Consumer 138,951 483 139,434 Total $ 668,508 $ 2,929 $ 671,437 |
Schedule of recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | The following table shows the recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status. (Dollars in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due and Accruing Total Nonaccrual Total September 30, 2020 Commercial and agricultural $ 1,679,388 $ 49 $ 574 $ — $ 1,680,011 $ 1,508 $ 1,681,519 Auto and light truck 488,688 682 302 — 489,672 37,910 527,582 Medium and heavy duty truck 270,211 93 — — 270,304 944 271,248 Aircraft 793,451 6,837 3,921 — 804,209 1,953 806,162 Construction equipment 697,020 1,633 321 — 698,974 24,622 723,596 Commercial real estate 959,816 173 — — 959,989 1,561 961,550 Residential real estate and home equity 517,233 875 19 80 518,207 1,674 519,881 Consumer 134,222 779 73 1 135,075 423 135,498 Total $ 5,540,029 $ 11,121 $ 5,210 $ 81 $ 5,556,441 $ 70,595 $ 5,627,036 December 31, 2019 Commercial and agricultural $ 1,131,704 $ 118 $ — $ — $ 1,131,822 $ 969 $ 1,132,791 Auto and light truck 586,212 1,268 77 — 587,557 1,250 588,807 Medium and heavy duty truck 293,736 14 — — 293,750 1,074 294,824 Aircraft 772,846 7,026 3,293 — 783,165 875 784,040 Construction equipment 702,671 819 609 — 704,099 1,352 705,451 Commercial real estate 906,468 58 — — 906,526 1,651 908,177 Residential real estate and home equity 528,844 561 152 257 529,814 2,189 532,003 Consumer 138,132 632 187 54 139,005 429 139,434 Total $ 5,060,613 $ 10,496 $ 4,318 $ 311 $ 5,075,738 $ 9,789 $ 5,085,527 |
Schedule of impaired loans and leases, segregated by class, and the corresponding reserve for impaired loan and lease losses | The following table shows impaired loans and leases, segregated by class, and the corresponding reserve for impaired loan and lease losses. (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Reserve September 30, 2020 With no related reserve recorded: Commercial and agricultural $ 768 $ 768 $ — Auto and light truck 20,094 20,094 — Medium and heavy duty truck 830 830 — Aircraft 1,953 1,953 — Construction equipment 5,312 5,312 — Commercial real estate 1,354 1,354 — Residential real estate and home equity — — — Consumer — — — Total with no related reserve recorded 30,311 30,311 — With a reserve recorded: Commercial and agricultural 6,647 6,647 1,554 Auto and light truck 16,980 16,980 7,517 Medium and heavy duty truck 114 114 34 Aircraft — — — Construction equipment 12,910 12,910 7,966 Commercial real estate — — — Residential real estate and home equity 331 333 111 Consumer — — — Total with a reserve recorded 36,982 36,984 17,182 Total impaired loans $ 67,293 $ 67,295 $ 17,182 December 31, 2019 With no related reserve recorded: Commercial and agricultural $ 218 $ 218 $ — Auto and light truck 853 853 — Medium and heavy duty truck 1,074 1,074 — Aircraft 875 875 — Construction equipment 615 615 — Commercial real estate 1,487 1,487 — Residential real estate and home equity — — — Consumer — — — Total with no related reserve recorded 5,122 5,122 — With a reserve recorded: Commercial and agricultural 10,366 10,366 3,003 Auto and light truck 278 278 30 Medium and heavy duty truck — — — Aircraft — — — Construction equipment 736 736 75 Commercial real estate — — — Residential real estate and home equity 337 339 117 Consumer — — — Total with a reserve recorded 11,717 11,719 3,225 Total impaired loans $ 16,839 $ 16,841 $ 3,225 |
Schedule of average recorded investment and interest income recognized on impaired loans and leases, segregated by class | The following table shows average recorded investment and interest income recognized on impaired loans and leases, segregated by class. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (Dollars in thousands) Average Interest Average Interest Average Interest Average Interest Commercial and agricultural $ 8,989 $ 1 $ 5,177 $ 68 $ 7,393 $ 139 $ 4,026 $ 81 Auto and light truck 32,369 — 1,793 — 14,632 — 3,196 — Medium and heavy duty truck 985 — — — 1,011 — 205 — Aircraft 1,957 — 593 — 2,015 — 2,542 — Construction equipment 15,543 — 1,838 — 12,541 4 1,728 — Commercial real estate 1,306 — 1,595 — 1,235 — 1,763 — Residential real estate and home equity 332 4 340 4 334 11 341 14 Consumer — — — — — — — — Total $ 61,481 $ 5 $ 11,336 $ 72 $ 39,161 $ 154 $ 13,801 $ 95 |
Schedule of recorded investment in loans and leases classified as troubled debt restructuring | The following table shows the recorded investment of loans and leases classified as troubled debt restructurings as of September 30, 2020 and December 31, 2019. (Dollars in thousands) September 30, December 31, Performing TDRs $ 331 $ 10,238 Nonperforming TDRs 14,503 486 Total TDRs $ 14,834 $ 10,724 |
Reserve for Loan and Lease Lo_2
Reserve for Loan and Lease Losses (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract] | |
Schedule of changes in reserve for loan and lease losses, segregated by class | The following table shows the changes in the reserve for loan and lease losses, segregated by class, for the three months ended September 30, 2020 and 2019. (Dollars in thousands) Commercial and Auto and Medium and Aircraft Construction Commercial Residential Consumer Total September 30, 2020 Balance, beginning of period $ 29,007 $ 17,371 $ 4,649 $ 31,101 $ 23,872 $ 19,936 $ 3,821 $ 1,526 $ 131,283 Charge-offs 182 4,382 — — 21 36 61 210 4,892 Recoveries 231 263 — 191 347 15 1 75 1,123 Net charge-offs (recoveries) (49) 4,119 — (191) (326) 21 60 135 3,769 Provision (recovery of provision) (3,986) 11,997 (192) 953 (1,395) 1,834 (29) 121 9,303 Balance, end of period $ 25,070 $ 25,249 $ 4,457 $ 32,245 $ 22,803 $ 21,749 $ 3,732 $ 1,512 $ 136,817 September 30, 2019 Balance, beginning of period $ 19,052 $ 16,341 $ 4,671 $ 31,918 $ 12,284 $ 15,757 $ 3,518 $ 1,370 $ 104,911 Charge-offs 83 61 — 65 19 — 4 705 937 Recoveries 438 57 — 614 17 6 40 78 1,250 Net charge-offs (recoveries) (355) 4 — (549) 2 (6) (36) 627 (313) Provision (recovery of provision) 2,823 (610) (87) (429) 370 970 12 668 3,717 Balance, end of period $ 22,230 $ 15,727 $ 4,584 $ 32,038 $ 12,652 $ 16,733 $ 3,566 $ 1,411 $ 108,941 The following table shows the changes in the reserve for loan and lease losses, segregated by class, for the nine months ended September 30, 2020 and 2019. (Dollars in thousands) Commercial and Auto and Medium and Aircraft Construction Commercial Residential Consumer Total September 30, 2020 Balance, beginning of period $ 23,671 $ 14,400 $ 4,612 $ 31,058 $ 14,120 $ 18,350 $ 3,609 $ 1,434 $ 111,254 Charge-offs 753 4,416 — 840 1,582 37 74 640 8,342 Recoveries 533 403 — 694 937 43 31 233 2,874 Net charge-offs (recoveries) 220 4,013 — 146 645 (6) 43 407 5,468 Provision (recovery of provision) 1,619 14,862 (155) 1,333 9,328 3,393 166 485 31,031 Balance, end of period $ 25,070 $ 25,249 $ 4,457 $ 32,245 $ 22,803 $ 21,749 $ 3,732 $ 1,512 $ 136,817 September 30, 2019 Balance, beginning of period $ 17,063 $ 14,689 $ 4,303 $ 33,047 $ 10,922 $ 15,705 $ 3,425 $ 1,315 $ 100,469 Charge-offs 171 527 1,132 3,066 215 — 25 1,268 6,404 Recoveries 500 86 — 916 136 66 46 244 1,994 Net charge-offs (recoveries) (329) 441 1,132 2,150 79 (66) (21) 1,024 4,410 Provision (recovery of provision) 4,838 1,479 1,413 1,141 1,809 962 120 1,120 12,882 Balance, end of period $ 22,230 $ 15,727 $ 4,584 $ 32,038 $ 12,652 $ 16,733 $ 3,566 $ 1,411 $ 108,941 The following table shows the reserve for loan and lease losses and recorded investment in loans and leases, segregated by class, separated between individually and collectively evaluated for impairment as of September 30, 2020 and December 31, 2019. (Dollars in thousands) Commercial and Auto and Medium and Aircraft Construction Commercial Residential Consumer Total September 30, 2020 Reserve for loan and lease losses Ending balance, individually evaluated for impairment $ 1,554 $ 7,517 $ 34 $ — $ 7,966 $ — $ 111 $ — $ 17,182 Ending balance, collectively evaluated for impairment 23,516 17,732 4,423 32,245 14,837 21,749 3,621 1,512 119,635 Total reserve for loan and lease losses $ 25,070 $ 25,249 $ 4,457 $ 32,245 $ 22,803 $ 21,749 $ 3,732 $ 1,512 $ 136,817 Recorded investment in loans Ending balance, individually evaluated for impairment $ 7,415 $ 37,074 $ 944 $ 1,953 $ 18,222 $ 1,354 $ 331 $ — $ 67,293 Ending balance, collectively evaluated for impairment 1,674,104 490,508 270,304 804,209 705,374 960,196 519,550 135,498 5,559,743 Total recorded investment in loans $ 1,681,519 $ 527,582 $ 271,248 $ 806,162 $ 723,596 $ 961,550 $ 519,881 $ 135,498 $ 5,627,036 December 31, 2019 Reserve for loan and lease losses Ending balance, individually evaluated for impairment $ 3,003 $ 30 $ — $ — $ 75 $ — $ 117 $ — $ 3,225 Ending balance, collectively evaluated for impairment 20,668 14,370 4,612 31,058 14,045 18,350 3,492 1,434 108,029 Total reserve for loan and lease losses $ 23,671 $ 14,400 $ 4,612 $ 31,058 $ 14,120 $ 18,350 $ 3,609 $ 1,434 $ 111,254 Recorded investment in loans Ending balance, individually evaluated for impairment $ 10,584 $ 1,131 $ 1,074 $ 875 $ 1,351 $ 1,487 $ 337 $ — $ 16,839 Ending balance, collectively evaluated for impairment 1,122,207 587,676 293,750 783,165 704,100 906,690 531,666 139,434 5,068,688 Total recorded investment in loans $ 1,132,791 $ 588,807 $ 294,824 $ 784,040 $ 705,451 $ 908,177 $ 532,003 $ 139,434 $ 5,085,527 |
Lease Investments (Tables)
Lease Investments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of the components of income from direct finance and operating lease equipment | The following table shows interest income recognized from direct finance lease payments and operating lease equipment rental income and related depreciation expense. Three Months Ended Nine Months Ended (Dollars in thousands) 2020 2019 2020 2019 Direct finance leases: Interest income on lease receivable $ 1,880 $ 2,280 $ 6,310 $ 8,699 Operating leases: Income related to lease payments $ 5,593 $ 7,578 $ 18,213 $ 23,369 Depreciation expense 4,694 6,198 15,263 19,122 |
Mortgage Servicing Rights (Tabl
Mortgage Servicing Rights (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Transfers and Servicing of Financial Assets [Abstract] | |
Schedule of changes in carrying value of mortgage servicing rights and associated valuation allowance | The following table shows changes in the carrying value of MSRs and the associated valuation allowance. Three Months Ended Nine Months Ended (Dollars in thousands) 2020 2019 2020 2019 Mortgage servicing rights: Balance at beginning of period $ 4,294 $ 4,141 $ 4,200 $ 4,283 Additions 897 318 2,094 703 Amortization (654) (352) (1,757) (879) Sales — — — — Carrying value before valuation allowance at end of period 4,537 4,107 4,537 4,107 Valuation allowance: Balance at beginning of period (546) — — — Impairment charges (262) — (808) — Balance at end of period $ (808) $ — $ (808) $ — Net carrying value of mortgage servicing rights at end of period $ 3,729 $ 4,107 $ 3,729 $ 4,107 Fair value of mortgage servicing rights at end of period $ 4,000 $ 5,722 $ 4,000 $ 5,722 |
Commitments and Financial Ins_2
Commitments and Financial Instruments with Off-Balance-Sheet Risk (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of financial instruments whose contract amounts represent credit risk | The following table shows financial instruments whose contract amounts represent credit risk. (Dollars in thousands) September 30, 2020 December 31, 2019 Amounts of commitments: Loan commitments to extend credit $ 1,121,554 $ 1,095,054 Standby letters of credit $ 25,231 $ 27,549 Commercial and similar letters of credit $ 3,526 $ 2,332 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of amounts of non-hedging derivative financial instruments | The following table shows the amounts of non-hedging derivative financial instruments. Asset derivatives Liability derivatives (Dollars in thousands) Notional or contractual amount Statement of Financial Condition classification Fair value Statement of Financial Condition classification Fair value September 30, 2020 Interest rate swap contracts $ 1,139,493 Other assets $ 53,027 Other liabilities $ 53,988 Loan commitments 51,834 Mortgages held for sale 2,477 N/A — Forward contracts - mortgage loan 57,187 N/A — Mortgages held for sale 75 Total $ 1,248,514 $ 55,504 $ 54,063 December 31, 2019 Interest rate swap contracts $ 1,074,809 Other assets $ 21,975 Other liabilities $ 22,352 Loan commitments 9,950 Mortgages held for sale 185 N/A — Forward contracts - mortgage loan 23,632 N/A — Mortgages held for sale 38 Total $ 1,108,391 $ 22,160 $ 22,390 |
Schedule of amounts included in the consolidated statements of income for non-hedging derivative financial instruments | The following table shows the amounts included in the Consolidated Statements of Income for non-hedging derivative financial instruments. Gain (loss) Three Months Ended Nine Months Ended (Dollars in thousands) Statement of Income classification 2020 2019 2020 2019 Interest rate swap contracts Other expense $ 50 $ (129) $ (583) $ (378) Interest rate swap contracts Other income 23 272 560 1,056 Loan commitments Mortgage banking 1,406 (6) 2,292 86 Forward contracts - mortgage loan Mortgage banking 26 157 (37) 118 Total $ 1,505 $ 294 $ 2,232 $ 882 |
Schedule of offsetting of financial assets and derivative assets | The following table shows the offsetting of financial assets and derivative assets. Gross Amounts Not Offset in the Statement of Financial Condition (Dollars in thousands) Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Assets Presented in the Statement of Financial Condition Financial Instruments Cash Collateral Received Net Amount September 30, 2020 Interest rate swaps $ 57,457 $ 4,430 $ 53,027 $ — $ — $ 53,027 December 31, 2019 Interest rate swaps $ 22,279 $ 304 $ 21,975 $ — $ — $ 21,975 |
Schedule of offsetting of financial liabilities and derivative liabilities | The following table shows the offsetting of financial liabilities and derivative liabilities. Gross Amounts Not Offset in the Statement of Financial Condition (Dollars in thousands) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Liabilities Presented in the Statement of Financial Condition Financial Instruments Cash Collateral Pledged Net Amount September 30, 2020 Interest rate swaps $ 58,418 $ 4,430 $ 53,988 $ 53,891 $ — $ 97 Repurchase agreements 158,834 — 158,834 158,834 — — Total $ 217,252 $ 4,430 $ 212,822 $ 212,725 $ — $ 97 December 31, 2019 Interest rate swaps $ 22,656 $ 304 $ 22,352 $ 23,482 $ — $ (1,130) Repurchase agreements 120,459 — 120,459 120,459 — — Total $ 143,115 $ 304 $ 142,811 $ 143,941 $ — $ (1,130) |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Variable Interest Entities [Abstract] | |
Schedule of unconsolidated variable interest entities | The following table provides a summary of investments in affordable housing, community development and renewable energy VIEs that the Company has not consolidated. (Dollars in thousands) September 30, 2020 December 31, 2019 Investment carrying amount $ 47,719 $ 19,843 Unfunded capital and other commitments 41,409 17,420 Maximum exposure to loss 43,329 37,904 |
Summary of subordinated notes | The following table shows subordinated notes at September 30, 2020. (Dollars in thousands) Amount of Subordinated Notes Interest Rate Maturity Date June 2007 issuance (1) $ 41,238 7.22 % 6/15/2037 August 2007 issuance (2) 17,526 1.73 % 9/15/2037 Total $ 58,764 (1) Fixed rate through life of debt. (2) 3-Month LIBOR +1.48% through remaining life of debt. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share | The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share. Three Months Ended Nine Months Ended (Dollars in thousands - except per share amounts) 2020 2019 2020 2019 Distributed earnings allocated to common stock $ 7,166 $ 6,895 $ 21,714 $ 20,791 Undistributed earnings allocated to common stock 12,755 17,402 32,941 48,827 Net earnings allocated to common stock 19,921 24,297 54,655 69,618 Net earnings allocated to participating securities 137 141 318 401 Net income allocated to common stock and participating securities $ 20,058 $ 24,438 $ 54,973 $ 70,019 Weighted average shares outstanding for basic earnings per common share 25,552,374 25,520,035 25,538,910 25,630,771 Dilutive effect of stock compensation — — — — Weighted average shares outstanding for diluted earnings per common share 25,552,374 25,520,035 25,538,910 25,630,771 Basic earnings per common share $ 0.78 $ 0.95 $ 2.14 $ 2.72 Diluted earnings per common share $ 0.78 $ 0.95 $ 2.14 $ 2.72 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of reclassifications out of accumulated other comprehensive income | The following table presents reclassifications out of accumulated other comprehensive income (loss) related to unrealized gains and losses on available-for-sale securities. Three Months Ended September 30, Nine Months Ended September 30, Affected Line Item in the Statements of Income (Dollars in thousands) 2020 2019 2020 2019 Realized gains included in net income $ — $ — $ 279 $ — Gains on investment securities available-for-sale — — 279 — Income before income taxes Tax effect — — (65) — Income tax expense Net of tax $ — $ — $ 214 $ — Net income |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair value measurements | |
Schedule of differences between the fair value carrying amount of mortgages held for sale measured at fair value and the aggregate unpaid principal amount | The following table shows the differences between the fair value carrying amount of mortgages held for sale measured at fair value and the aggregate unpaid principal amount the Company is contractually entitled to receive at maturity. (Dollars in thousands) Fair value carrying Aggregate Excess of fair value carrying amount over (under) unpaid principal September 30, 2020 Mortgages held for sale reported at fair value $ 20,990 $ 17,618 $ 3,372 (1) December 31, 2019 Mortgages held for sale reported at fair value $ 20,277 $ 19,890 $ 387 (1) (1) The excess of fair value carrying amount over (under) unpaid principal is included in mortgage banking income and includes changes in fair value at and subsequent to funding and gains and losses on the related loan commitment prior to funding. |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following table shows the balance of assets and liabilities measured at fair value on a recurring basis. (Dollars in thousands) Level 1 Level 2 Level 3 Total September 30, 2020 Assets: Investment securities available-for-sale: U.S. Treasury and Federal agencies securities $ 76,298 $ 491,710 $ — $ 568,008 U.S. States and political subdivisions securities — 65,468 3,265 68,733 Mortgage-backed securities — Federal agencies — 403,490 — 403,490 Corporate debt securities — 42,496 — 42,496 Foreign government and other securities — 700 — 700 Total debt securities available-for-sale 76,298 1,003,864 3,265 1,083,427 Mortgages held for sale — 20,990 — 20,990 Accrued income and other assets (interest rate swap agreements) — 53,027 — 53,027 Total $ 76,298 $ 1,077,881 $ 3,265 $ 1,157,444 Liabilities: Accrued expenses and other liabilities (interest rate swap agreements) $ — $ 53,988 $ — $ 53,988 Total $ — $ 53,988 $ — $ 53,988 December 31, 2019 Assets: Investment securities available-for-sale: U.S. Treasury and Federal agencies securities $ 80,393 $ 446,571 $ — $ 526,964 U.S. States and political subdivisions securities — 82,213 2,292 84,505 Mortgage-backed securities — Federal agencies — 375,389 — 375,389 Corporate debt securities — 53,025 — 53,025 Foreign government and other securities — 700 — 700 Total debt securities available-for-sale 80,393 957,898 2,292 1,040,583 Mortgages held for sale — 20,277 — 20,277 Accrued income and other assets (interest rate swap agreements) — 21,975 — 21,975 Total $ 80,393 $ 1,000,150 $ 2,292 $ 1,082,835 Liabilities: Accrued expenses and other liabilities (interest rate swap agreements) $ — $ 22,352 $ — $ 22,352 Total $ — $ 22,352 $ — $ 22,352 |
Schedule of changes in investment securities available-for-sale Level 3 assets measured at fair value on a recurring basis | The following table shows changes in Level 3 assets measured at fair value on a recurring basis for the quarter ended September 30, 2020 and 2019. (Dollars in thousands) U.S. States and Beginning balance July 1, 2020 $ 3,179 Total gains or losses (realized/unrealized): Included in earnings — Included in other comprehensive income 166 Purchases — Issuances — Sales — Settlements — Maturities (80) Transfers into Level 3 — Transfers out of Level 3 — Ending balance September 30, 2020 $ 3,265 Beginning balance July 1, 2019 $ 5,061 Total gains or losses (realized/unrealized): Included in earnings — Included in other comprehensive income (12) Purchases — Issuances — Sales — Settlements — Maturities (80) Transfers into Level 3 — Transfers out of Level 3 — Ending balance September 30, 2019 $ 4,969 |
Schedule of carrying value of assets measured at fair value on a non-recurring basis | The following table shows the carrying value of assets measured at fair value on a non-recurring basis. (Dollars in thousands) Level 1 Level 2 Level 3 Total September 30, 2020 Impaired loans - collateral based $ — $ — $ 19,802 $ 19,802 Accrued income and other assets (mortgage servicing rights) — — 3,729 3,729 Accrued income and other assets (repossessions) — — 4,639 4,639 Accrued income and other assets (other real estate) — — 303 303 Total $ — $ — $ 28,473 $ 28,473 December 31, 2019 Impaired loans - collateral based $ — $ — $ 8,492 $ 8,492 Accrued income and other assets (mortgage servicing rights) — — 4,200 4,200 Accrued income and other assets (repossessions) — — 8,623 8,623 Accrued income and other assets (other real estate) — — 522 522 Total $ — $ — $ 21,837 $ 21,837 |
Schedule of fair values of financial instruments | The following table shows the fair values of the Company’s financial instruments. (Dollars in thousands) Carrying or Contract Value Fair Value Level 1 Level 2 Level 3 September 30, 2020 Assets: Cash and due from banks $ 62,575 $ 62,575 $ 62,575 $ — $ — Federal funds sold and interest bearing deposits with other banks 91,641 91,641 91,641 — — Investment securities, available-for-sale 1,083,427 1,083,427 76,298 1,003,864 3,265 Other investments 27,674 27,674 27,674 — — Mortgages held for sale 20,990 20,990 — 20,990 — Loans and leases, net of reserve for loan and lease losses 5,490,219 5,568,395 — — 5,568,395 Mortgage servicing rights 3,729 4,000 — — 4,000 Accrued interest receivable 21,565 21,565 — 21,565 — Interest rate swaps 53,027 53,027 — 53,027 — Liabilities: Deposits $ 5,896,855 $ 5,909,192 $ 4,598,859 $ 1,310,333 $ — Short-term borrowings 165,574 165,574 159,822 5,752 — Long-term debt and mandatorily redeemable securities 81,659 82,894 — 82,894 — Subordinated notes 58,764 57,617 — 57,617 — Accrued interest payable 7,647 7,647 — 7,647 — Interest rate swaps 53,988 53,988 — 53,988 — Off-balance-sheet instruments * — 289 — 289 — December 31, 2019 Assets: Cash and due from banks $ 67,215 $ 67,215 $ 67,215 $ — $ — Federal funds sold and interest bearing deposits with other banks 16,150 16,150 16,150 — — Investment securities, available-for-sale 1,040,583 1,040,583 80,393 957,898 2,292 Other investments 28,414 28,414 28,414 — — Mortgages held for sale 20,277 20,277 — 20,277 — Loans and leases, net of reserve for loan and lease losses 4,974,273 4,992,684 — — 4,992,684 Mortgage servicing rights 4,200 5,986 — — 5,986 Accrued interest receivable 19,125 19,125 — 19,125 — Interest rate swaps 21,975 21,975 — 21,975 — Liabilities: Deposits $ 5,357,326 $ 5,362,633 $ 3,708,828 $ 1,653,805 $ — Short-term borrowings 145,893 145,893 120,891 25,002 — Long-term debt and mandatorily redeemable securities 71,639 71,084 — 71,084 — Subordinated notes 58,764 61,469 — 61,469 — Accrued interest payable 13,918 13,918 — 13,918 — Interest rate swaps 22,352 22,352 — 22,352 — Off-balance-sheet instruments * — 281 — 281 — * Represents estimated cash outflows required to currently settle the obligations at current market rates. |
Recurring | |
Fair value measurements | |
Schedule of valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis | The following table shows the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a recurring basis. (Dollars in thousands) Fair Value Valuation Methodology Unobservable Inputs Range of Inputs Weighted Average September 30, 2020 Debt securities available-for sale Direct placement municipal securities $ 3,265 Discounted cash flows Credit spread assumption 1.12% - 2.52% 1.47 % December 31, 2019 Debt securities available-for sale Direct placement municipal securities $ 2,292 Discounted cash flows Credit spread assumption 0.12% - 2.85% |
Non-recurring | |
Fair value measurements | |
Schedule of valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis | The following table below shows the valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a non-recurring basis. (Dollars in thousands) Carrying Value Fair Value Valuation Methodology Unobservable Inputs Range of Inputs Weighted Average September 30, 2020 Impaired loans $ 19,802 $ 19,802 Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions 0% - 90% 28 % Mortgage servicing rights 3,729 4,000 Discounted cash flows Constant prepayment rate (CPR) 15.3% - 24.7% 21.7 % Discount rate 8.4% - 11.2% 8.6 % Repossessions 4,639 4,898 Appraisals, trade publications and auction values Discount for lack of marketability 3% - 16% 5 % Other real estate 303 324 Appraisals Discount for lack of marketability 0% - 6% 6 % December 31, 2019 Impaired loans $ 8,492 $ 8,492 Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions 0% - 90% Mortgage servicing rights 4,200 5,986 Discounted cash flows Constant prepayment rate (CPR) 10.2% - 28.1% Discount rate 9.3% - 12.1% Repossessions 8,623 9,211 Appraisals, trade publications and auction values Discount for lack of marketability 3% - 25% Other real estate 522 564 Appraisals Discount for lack of marketability 0% - 11% |
Accounting Policies (Details)
Accounting Policies (Details) - Minimum | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Summary of Significant Accounting Policies [Line Items] | |
Period of sustained performance required to change from non-performing to performing status | 6 months |
Amount necessary for impairment evaluation | $ 100,000 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jan. 01, 2020 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Increase to Unfunded Loan Commitment Liability | $ 780 | |
Minimum | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Estimated Increase to Allowance for Credit Losses | $ 0 | |
Maximum | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Estimated Increase to Allowance for Credit Losses | $ 2,000 | |
Accounting Standards Update 2016-13 [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Increase to Allowance for Credit Losses | $ 2,580 |
Investment Securities (Details)
Investment Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Contractual maturities of investments in debt securities available-for-sale, Amortized Cost | ||
Due in one year or less | $ 126,626 | |
Due after one year through five years | 454,199 | |
Due after five years through ten years | 83,702 | |
Due after ten years | 580 | |
Mortgage-backed securities | 392,427 | |
Total debt securities available-for-sale | 1,057,534 | $ 1,033,771 |
Contractual maturities of investments in debt securities available-for-sale, Fair Value | ||
Due in one year or less | 127,388 | |
Due after one year through five years | 468,075 | |
Due after five years through ten years | 83,903 | |
Due after ten years | 571 | |
Mortgage-backed securities | 403,490 | |
Total debt securities available-for-sale | 1,083,427 | 1,040,583 |
U.S. Treasury and Federal agencies securities | ||
Contractual maturities of investments in debt securities available-for-sale, Amortized Cost | ||
Total debt securities available-for-sale | 557,262 | 524,896 |
Contractual maturities of investments in debt securities available-for-sale, Fair Value | ||
Total debt securities available-for-sale | 568,008 | 526,964 |
U.S. States and political subdivisions securities | ||
Contractual maturities of investments in debt securities available-for-sale, Amortized Cost | ||
Total debt securities available-for-sale | 66,323 | 83,566 |
Contractual maturities of investments in debt securities available-for-sale, Fair Value | ||
Total debt securities available-for-sale | 68,733 | 84,505 |
Mortgage-backed securities - Federal agencies | ||
Contractual maturities of investments in debt securities available-for-sale, Amortized Cost | ||
Total debt securities available-for-sale | 392,427 | 372,458 |
Contractual maturities of investments in debt securities available-for-sale, Fair Value | ||
Total debt securities available-for-sale | 403,490 | 375,389 |
Corporate debt securities | ||
Contractual maturities of investments in debt securities available-for-sale, Amortized Cost | ||
Total debt securities available-for-sale | 40,822 | 52,151 |
Contractual maturities of investments in debt securities available-for-sale, Fair Value | ||
Total debt securities available-for-sale | 42,496 | 53,025 |
Foreign government and other securities | ||
Contractual maturities of investments in debt securities available-for-sale, Amortized Cost | ||
Total debt securities available-for-sale | 700 | 700 |
Contractual maturities of investments in debt securities available-for-sale, Fair Value | ||
Total debt securities available-for-sale | $ 700 | $ 700 |
Investment Securities (Details
Investment Securities (Details 2) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Schedule Of Available For Sale Debt Securities [Line Items] | |||||
Total debt securities available-for-sale | $ 1,057,534 | $ 1,057,534 | $ 1,033,771 | ||
Gross Unrealized Gains | 26,205 | 26,205 | 8,424 | ||
Gross Unrealized Losses | (312) | (312) | (1,612) | ||
Investment securities available-for-sale | 1,083,427 | 1,083,427 | 1,040,583 | ||
Fair Value | |||||
Less than 12 Months | 94,105 | 94,105 | 178,586 | ||
12 months or Longer | 3,245 | 3,245 | 129,351 | ||
Total fair value | 97,350 | 97,350 | 307,937 | ||
Unrealized Losses | |||||
Less than 12 Months | (306) | (306) | (661) | ||
12 months or Longer | (6) | (6) | (951) | ||
Total unrealized losses | (312) | (312) | (1,612) | ||
Gross realized gains and losses | |||||
Gross realized gains | 0 | $ 0 | 285 | $ 0 | |
Gross realized losses | 0 | 0 | (6) | 0 | |
OTTI losses | 0 | 0 | 0 | 0 | |
Net realized gains (losses) | 0 | $ 0 | 279 | $ 0 | |
Investment securities pledged as collateral | $ 371,450 | $ 371,450 | 281,380 | ||
Number of available-for-sale debt securities | 600 | 600 | |||
Number of available-for-sale debt securities in an unrealized loss position | 35 | 35 | |||
U.S. Treasury and Federal agencies securities | |||||
Schedule Of Available For Sale Debt Securities [Line Items] | |||||
Total debt securities available-for-sale | $ 557,262 | $ 557,262 | 524,896 | ||
Gross Unrealized Gains | 10,954 | 10,954 | 2,538 | ||
Gross Unrealized Losses | (208) | (208) | (470) | ||
Investment securities available-for-sale | 568,008 | 568,008 | 526,964 | ||
Fair Value | |||||
Less than 12 Months | 47,792 | 47,792 | 87,352 | ||
12 months or Longer | 0 | 0 | 69,053 | ||
Total fair value | 47,792 | 47,792 | 156,405 | ||
Unrealized Losses | |||||
Less than 12 Months | (208) | (208) | (171) | ||
12 months or Longer | 0 | 0 | (299) | ||
Total unrealized losses | (208) | (208) | (470) | ||
U.S. States and political subdivisions securities | |||||
Schedule Of Available For Sale Debt Securities [Line Items] | |||||
Total debt securities available-for-sale | 66,323 | 66,323 | 83,566 | ||
Gross Unrealized Gains | 2,423 | 2,423 | 1,048 | ||
Gross Unrealized Losses | (13) | (13) | (109) | ||
Investment securities available-for-sale | 68,733 | 68,733 | 84,505 | ||
Fair Value | |||||
Less than 12 Months | 857 | 857 | 9,283 | ||
12 months or Longer | 0 | 0 | 1,042 | ||
Total fair value | 857 | 857 | 10,325 | ||
Unrealized Losses | |||||
Less than 12 Months | (13) | (13) | (107) | ||
12 months or Longer | 0 | 0 | (2) | ||
Total unrealized losses | (13) | (13) | (109) | ||
Mortgage-backed securities - Federal agencies | |||||
Schedule Of Available For Sale Debt Securities [Line Items] | |||||
Total debt securities available-for-sale | 392,427 | 392,427 | 372,458 | ||
Gross Unrealized Gains | 11,154 | 11,154 | 3,948 | ||
Gross Unrealized Losses | (91) | (91) | (1,017) | ||
Investment securities available-for-sale | 403,490 | 403,490 | 375,389 | ||
Fair Value | |||||
Less than 12 Months | 45,256 | 45,256 | 81,951 | ||
12 months or Longer | 3,245 | 3,245 | 51,165 | ||
Total fair value | 48,501 | 48,501 | 133,116 | ||
Unrealized Losses | |||||
Less than 12 Months | (85) | (85) | (383) | ||
12 months or Longer | (6) | (6) | (634) | ||
Total unrealized losses | (91) | (91) | (1,017) | ||
Corporate debt securities | |||||
Schedule Of Available For Sale Debt Securities [Line Items] | |||||
Total debt securities available-for-sale | 40,822 | 40,822 | 52,151 | ||
Gross Unrealized Gains | 1,674 | 1,674 | 890 | ||
Gross Unrealized Losses | 0 | 0 | (16) | ||
Investment securities available-for-sale | 42,496 | 42,496 | 53,025 | ||
Fair Value | |||||
Less than 12 Months | 0 | 0 | 0 | ||
12 months or Longer | 0 | 0 | 8,091 | ||
Total fair value | 0 | 0 | 8,091 | ||
Unrealized Losses | |||||
Less than 12 Months | 0 | 0 | 0 | ||
12 months or Longer | 0 | 0 | (16) | ||
Total unrealized losses | 0 | 0 | (16) | ||
Foreign government and other securities | |||||
Schedule Of Available For Sale Debt Securities [Line Items] | |||||
Total debt securities available-for-sale | 700 | 700 | 700 | ||
Gross Unrealized Gains | 0 | 0 | 0 | ||
Gross Unrealized Losses | 0 | 0 | 0 | ||
Investment securities available-for-sale | 700 | 700 | 700 | ||
Fair Value | |||||
Less than 12 Months | 200 | 200 | 0 | ||
12 months or Longer | 0 | 0 | 0 | ||
Total fair value | 200 | 200 | 0 | ||
Unrealized Losses | |||||
Less than 12 Months | 0 | 0 | 0 | ||
12 months or Longer | 0 | 0 | 0 | ||
Total unrealized losses | $ 0 | $ 0 | $ 0 |
Loan and Lease Financings (Deta
Loan and Lease Financings (Details) | 9 Months Ended | |
Sep. 30, 2020USD ($)item | Dec. 31, 2019USD ($) | |
Receivables [Abstract] | ||
Number of methods to assess credit risk | item | 2 | |
Loan and Lease Financings | ||
Recorded investment in loans and leases | $ 5,627,036,000 | $ 5,085,527,000 |
Loan and lease financings excluding residential real estate and consumer loans | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 4,971,657,000 | 4,414,090,000 |
Commercial and agricultural | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 1,681,519,000 | 1,132,791,000 |
Auto and light truck | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 527,582,000 | 588,807,000 |
Medium and heavy duty truck | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 271,248,000 | 294,824,000 |
Aircraft | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 806,162,000 | 784,040,000 |
Construction equipment | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 723,596,000 | 705,451,000 |
Commercial real estate | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 961,550,000 | 908,177,000 |
Credit Quality Grades 1-6 | Loan and lease financings excluding residential real estate and consumer loans | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 4,743,778,000 | 4,264,697,000 |
Credit Quality Grades 1-6 | Commercial and agricultural | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 1,617,272,000 | 1,080,933,000 |
Credit Quality Grades 1-6 | Auto and light truck | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 470,744,000 | 569,234,000 |
Credit Quality Grades 1-6 | Medium and heavy duty truck | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 269,070,000 | 293,736,000 |
Credit Quality Grades 1-6 | Aircraft | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 782,656,000 | 764,564,000 |
Credit Quality Grades 1-6 | Construction equipment | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 671,254,000 | 668,076,000 |
Credit Quality Grades 1-6 | Commercial real estate | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 932,782,000 | 888,154,000 |
Credit Quality Grades 7-12 | ||
Loan and Lease Financings | ||
Relationships reviewed quarterly as part of management's evaluation of the appropriateness of the reserve for loan and lease losses | 100,000 | |
Credit Quality Grades 7-12 | Loan and lease financings excluding residential real estate and consumer loans | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 227,879,000 | 149,393,000 |
Credit Quality Grades 7-12 | Commercial and agricultural | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 64,247,000 | 51,858,000 |
Credit Quality Grades 7-12 | Auto and light truck | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 56,838,000 | 19,573,000 |
Credit Quality Grades 7-12 | Medium and heavy duty truck | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 2,178,000 | 1,088,000 |
Credit Quality Grades 7-12 | Aircraft | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 23,506,000 | 19,476,000 |
Credit Quality Grades 7-12 | Construction equipment | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 52,342,000 | 37,375,000 |
Credit Quality Grades 7-12 | Commercial real estate | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | $ 28,768,000 | $ 20,023,000 |
Loan and Lease Financings (De_2
Loan and Lease Financings (Details 2) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Loan and Lease Financings | ||
Recorded investment in loans and leases | $ 5,627,036 | $ 5,085,527 |
Residential real estate and home equity and consumer loans | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 655,379 | 671,437 |
Residential real estate and home equity | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 519,881 | 532,003 |
Consumer | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 135,498 | 139,434 |
Performing | Residential real estate and home equity and consumer loans | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 653,201 | 668,508 |
Performing | Residential real estate and home equity | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 518,127 | 529,557 |
Performing | Consumer | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | $ 135,074 | 138,951 |
Nonperforming | ||
Loan and Lease Financings | ||
Classification of nonperforming loans, threshold period past due | 90 days | |
Nonperforming | Residential real estate and home equity and consumer loans | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | $ 2,178 | 2,929 |
Nonperforming | Residential real estate and home equity | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | 1,754 | 2,446 |
Nonperforming | Consumer | ||
Loan and Lease Financings | ||
Recorded investment in loans and leases | $ 424 | $ 483 |
Loan and Lease Financings (De_3
Loan and Lease Financings (Details 3) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | $ 5,540,029 | $ 5,060,613 |
90 Days or More Past Due and Accruing | 81 | 311 |
Total Accruing Loans | 5,556,441 | 5,075,738 |
Nonaccrual | 70,595 | 9,789 |
Total loans and leases | 5,627,036 | 5,085,527 |
30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 11,121 | 10,496 |
60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 5,210 | 4,318 |
Commercial and agricultural | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 1,679,388 | 1,131,704 |
Total Accruing Loans | 1,680,011 | 1,131,822 |
Nonaccrual | 1,508 | 969 |
Total loans and leases | 1,681,519 | 1,132,791 |
Commercial and agricultural | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 49 | 118 |
Commercial and agricultural | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 574 | 0 |
Auto and light truck | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 488,688 | 586,212 |
Total Accruing Loans | 489,672 | 587,557 |
Nonaccrual | 37,910 | 1,250 |
Total loans and leases | 527,582 | 588,807 |
Auto and light truck | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 682 | 1,268 |
Auto and light truck | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 302 | 77 |
Medium and heavy duty truck | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 270,211 | 293,736 |
Total Accruing Loans | 270,304 | 293,750 |
Nonaccrual | 944 | 1,074 |
Total loans and leases | 271,248 | 294,824 |
Medium and heavy duty truck | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 93 | 14 |
Medium and heavy duty truck | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 0 | 0 |
Aircraft | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 793,451 | 772,846 |
Total Accruing Loans | 804,209 | 783,165 |
Nonaccrual | 1,953 | 875 |
Total loans and leases | 806,162 | 784,040 |
Aircraft | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 6,837 | 7,026 |
Aircraft | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 3,921 | 3,293 |
Construction equipment | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 697,020 | 702,671 |
Total Accruing Loans | 698,974 | 704,099 |
Nonaccrual | 24,622 | 1,352 |
Total loans and leases | 723,596 | 705,451 |
Construction equipment | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 1,633 | 819 |
Construction equipment | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 321 | 609 |
Commercial real estate | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 959,816 | 906,468 |
Total Accruing Loans | 959,989 | 906,526 |
Nonaccrual | 1,561 | 1,651 |
Total loans and leases | 961,550 | 908,177 |
Commercial real estate | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 173 | 58 |
Commercial real estate | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 0 | 0 |
Residential real estate and home equity | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 517,233 | 528,844 |
90 Days or More Past Due and Accruing | 80 | 257 |
Total Accruing Loans | 518,207 | 529,814 |
Nonaccrual | 1,674 | 2,189 |
Total loans and leases | 519,881 | 532,003 |
Residential real estate and home equity | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 875 | 561 |
Residential real estate and home equity | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 19 | 152 |
Consumer | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Current | 134,222 | 138,132 |
90 Days or More Past Due and Accruing | 1 | 54 |
Total Accruing Loans | 135,075 | 139,005 |
Nonaccrual | 423 | 429 |
Total loans and leases | 135,498 | 139,434 |
Consumer | 30 to 59 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | 779 | 632 |
Consumer | 60 to 89 Days Past Due | ||
Recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status | ||
Past Due | $ 73 | $ 187 |
Loan and Lease Financings (De_4
Loan and Lease Financings (Details 4) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | $ 30,311 | $ 30,311 | $ 5,122 | ||
Unpaid Principal Balance, With no related allowance recorded | 30,311 | 30,311 | 5,122 | ||
Recorded Investment, With an allowance recorded | 36,982 | 36,982 | 11,717 | ||
Unpaid Principal Balance, With an allowance recorded | 36,984 | 36,984 | 11,719 | ||
Total Recorded Investment | 67,293 | 67,293 | 16,839 | ||
Total Unpaid Principal Balance | 67,295 | 67,295 | 16,841 | ||
Total Related Allowance | 17,182 | 17,182 | 3,225 | ||
Average Recorded Investment | 61,481 | $ 11,336 | 39,161 | $ 13,801 | |
Interest Income | 5 | 72 | 154 | 95 | |
Commercial and agricultural | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 768 | 768 | 218 | ||
Unpaid Principal Balance, With no related allowance recorded | 768 | 768 | 218 | ||
Recorded Investment, With an allowance recorded | 6,647 | 6,647 | 10,366 | ||
Unpaid Principal Balance, With an allowance recorded | 6,647 | 6,647 | 10,366 | ||
Total Related Allowance | 1,554 | 1,554 | 3,003 | ||
Average Recorded Investment | 8,989 | 5,177 | 7,393 | 4,026 | |
Interest Income | 1 | 68 | 139 | 81 | |
Auto and light truck | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 20,094 | 20,094 | 853 | ||
Unpaid Principal Balance, With no related allowance recorded | 20,094 | 20,094 | 853 | ||
Recorded Investment, With an allowance recorded | 16,980 | 16,980 | 278 | ||
Unpaid Principal Balance, With an allowance recorded | 16,980 | 16,980 | 278 | ||
Total Related Allowance | 7,517 | 7,517 | 30 | ||
Average Recorded Investment | 32,369 | 1,793 | 14,632 | 3,196 | |
Interest Income | 0 | 0 | 0 | 0 | |
Medium and heavy duty truck | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 830 | 830 | 1,074 | ||
Unpaid Principal Balance, With no related allowance recorded | 830 | 830 | 1,074 | ||
Recorded Investment, With an allowance recorded | 114 | 114 | 0 | ||
Unpaid Principal Balance, With an allowance recorded | 114 | 114 | 0 | ||
Total Related Allowance | 34 | 34 | 0 | ||
Average Recorded Investment | 985 | 0 | 1,011 | 205 | |
Interest Income | 0 | 0 | 0 | 0 | |
Aircraft | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 1,953 | 1,953 | 875 | ||
Unpaid Principal Balance, With no related allowance recorded | 1,953 | 1,953 | 875 | ||
Recorded Investment, With an allowance recorded | 0 | 0 | 0 | ||
Unpaid Principal Balance, With an allowance recorded | 0 | 0 | 0 | ||
Total Related Allowance | 0 | 0 | 0 | ||
Average Recorded Investment | 1,957 | 593 | 2,015 | 2,542 | |
Interest Income | 0 | 0 | 0 | 0 | |
Construction equipment | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 5,312 | 5,312 | 615 | ||
Unpaid Principal Balance, With no related allowance recorded | 5,312 | 5,312 | 615 | ||
Recorded Investment, With an allowance recorded | 12,910 | 12,910 | 736 | ||
Unpaid Principal Balance, With an allowance recorded | 12,910 | 12,910 | 736 | ||
Total Related Allowance | 7,966 | 7,966 | 75 | ||
Average Recorded Investment | 15,543 | 1,838 | 12,541 | 1,728 | |
Interest Income | 0 | 0 | 4 | 0 | |
Commercial real estate | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 1,354 | 1,354 | 1,487 | ||
Unpaid Principal Balance, With no related allowance recorded | 1,354 | 1,354 | 1,487 | ||
Recorded Investment, With an allowance recorded | 0 | 0 | 0 | ||
Unpaid Principal Balance, With an allowance recorded | 0 | 0 | 0 | ||
Total Related Allowance | 0 | 0 | 0 | ||
Average Recorded Investment | 1,306 | 1,595 | 1,235 | 1,763 | |
Interest Income | 0 | 0 | 0 | 0 | |
Residential real estate and home equity | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 0 | 0 | 0 | ||
Unpaid Principal Balance, With no related allowance recorded | 0 | 0 | 0 | ||
Recorded Investment, With an allowance recorded | 331 | 331 | 337 | ||
Unpaid Principal Balance, With an allowance recorded | 333 | 333 | 339 | ||
Total Related Allowance | 111 | 111 | 117 | ||
Average Recorded Investment | 332 | 340 | 334 | 341 | |
Interest Income | 4 | 4 | 11 | 14 | |
Consumer | |||||
Impaired loans and leases | |||||
Recorded Investment, With no related allowance recorded | 0 | 0 | 0 | ||
Unpaid Principal Balance, With no related allowance recorded | 0 | 0 | 0 | ||
Recorded Investment, With an allowance recorded | 0 | 0 | 0 | ||
Unpaid Principal Balance, With an allowance recorded | 0 | 0 | 0 | ||
Total Related Allowance | 0 | 0 | $ 0 | ||
Average Recorded Investment | 0 | 0 | 0 | 0 | |
Interest Income | $ 0 | $ 0 | $ 0 | $ 0 |
Loan and Lease Financings (De_5
Loan and Lease Financings (Details 5) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($)item | Sep. 30, 2019item | Sep. 30, 2020USD ($)item | Sep. 30, 2019item | Dec. 31, 2019USD ($) | |
Loans and leases classified as TDR | |||||
Number of Modifications | 0 | 1 | 2 | 2 | |
Number of Defaults | 0 | 0 | 0 | 1 | |
Loans and leases classified as troubled debt restructuring | $ | $ 14,834 | $ 14,834 | $ 10,724 | ||
Troubled debt restructured loans and leases which had payment defaults within twelve months following modification | |||||
Default threshold | 90 days | ||||
Performing | |||||
Loans and leases classified as TDR | |||||
Number of Modifications | 1 | ||||
Loans and leases classified as troubled debt restructuring | $ | 331 | $ 331 | 10,238 | ||
Nonperforming | |||||
Loans and leases classified as TDR | |||||
Number of Modifications | 1 | ||||
Loans and leases classified as troubled debt restructuring | $ | $ 14,503 | $ 14,503 | $ 486 | ||
Interest Rate Below Market Reduction [Member] | |||||
Loans and leases classified as TDR | |||||
Number of Modifications | 0 | 0 | 0 | 0 |
Reserve for Loan and Lease Lo_3
Reserve for Loan and Lease Losses (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)item | Dec. 31, 2019USD ($) | |
Reserve for loan and lease losses | ||||||
Number of classes existing in loan and lease portfolio | item | 8 | |||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | $ 131,283 | $ 104,911 | $ 111,254 | $ 100,469 | ||
Charge-offs | 4,892 | 937 | 8,342 | 6,404 | ||
Recoveries | 1,123 | 1,250 | 2,874 | 1,994 | ||
Net charge-offs (recoveries) | 3,769 | (313) | 5,468 | 4,410 | ||
Provision (recovery of provision) | 9,303 | 3,717 | 31,031 | 12,882 | ||
Balance at the end of the period | 136,817 | 108,941 | 136,817 | 108,941 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | $ 17,182 | $ 3,225 | ||||
Ending balance, collectively evaluated for impairment | 119,635 | 108,029 | ||||
Total reserve for loan and lease losses | 136,817 | 108,941 | 136,817 | 100,469 | 136,817 | 111,254 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 67,293 | 16,839 | ||||
Ending balance, collectively evaluated for impairment | 5,559,743 | 5,068,688 | ||||
Total loans and leases | 5,627,036 | 5,085,527 | ||||
Commercial and agricultural | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 29,007 | 19,052 | 23,671 | 17,063 | ||
Charge-offs | 182 | 83 | 753 | 171 | ||
Recoveries | 231 | 438 | 533 | 500 | ||
Net charge-offs (recoveries) | (49) | (355) | 220 | (329) | ||
Provision (recovery of provision) | (3,986) | 2,823 | 1,619 | 4,838 | ||
Balance at the end of the period | 25,070 | 22,230 | 25,070 | 22,230 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 1,554 | 3,003 | ||||
Ending balance, collectively evaluated for impairment | 23,516 | 20,668 | ||||
Total reserve for loan and lease losses | 25,070 | 22,230 | 23,671 | 22,230 | 25,070 | 23,671 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 7,415 | 10,584 | ||||
Ending balance, collectively evaluated for impairment | 1,674,104 | 1,122,207 | ||||
Total loans and leases | 1,681,519 | 1,132,791 | ||||
Auto and light truck | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 17,371 | 16,341 | 14,400 | 14,689 | ||
Charge-offs | 4,382 | 61 | 4,416 | 527 | ||
Recoveries | 263 | 57 | 403 | 86 | ||
Net charge-offs (recoveries) | 4,119 | 4 | 4,013 | 441 | ||
Provision (recovery of provision) | 11,997 | (610) | 14,862 | 1,479 | ||
Balance at the end of the period | 25,249 | 15,727 | 25,249 | 15,727 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 7,517 | 30 | ||||
Ending balance, collectively evaluated for impairment | 17,732 | 14,370 | ||||
Total reserve for loan and lease losses | 25,249 | 15,727 | 14,400 | 15,727 | 25,249 | 14,400 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 37,074 | 1,131 | ||||
Ending balance, collectively evaluated for impairment | 490,508 | 587,676 | ||||
Total loans and leases | 527,582 | 588,807 | ||||
Medium and heavy duty truck | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 4,649 | 4,671 | 4,612 | 4,303 | ||
Charge-offs | 0 | 0 | 0 | 1,132 | ||
Recoveries | 0 | 0 | 0 | 0 | ||
Net charge-offs (recoveries) | 0 | 0 | 0 | 1,132 | ||
Provision (recovery of provision) | (192) | (87) | (155) | 1,413 | ||
Balance at the end of the period | 4,457 | 4,584 | 4,457 | 4,584 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 34 | 0 | ||||
Ending balance, collectively evaluated for impairment | 4,423 | 4,612 | ||||
Total reserve for loan and lease losses | 4,457 | 4,584 | 4,457 | 4,584 | 4,457 | 4,612 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 944 | 1,074 | ||||
Ending balance, collectively evaluated for impairment | 270,304 | 293,750 | ||||
Total loans and leases | 271,248 | 294,824 | ||||
Aircraft | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 31,101 | 31,918 | 31,058 | 33,047 | ||
Charge-offs | 0 | 65 | 840 | 3,066 | ||
Recoveries | 191 | 614 | 694 | 916 | ||
Net charge-offs (recoveries) | (191) | (549) | 146 | 2,150 | ||
Provision (recovery of provision) | 953 | (429) | 1,333 | 1,141 | ||
Balance at the end of the period | 32,245 | 32,038 | 32,245 | 32,038 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 0 | 0 | ||||
Ending balance, collectively evaluated for impairment | 32,245 | 31,058 | ||||
Total reserve for loan and lease losses | 32,245 | 32,038 | 31,058 | 33,047 | 32,245 | 31,058 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 1,953 | 875 | ||||
Ending balance, collectively evaluated for impairment | 804,209 | 783,165 | ||||
Total loans and leases | 806,162 | 784,040 | ||||
Construction equipment | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 23,872 | 12,284 | 14,120 | 10,922 | ||
Charge-offs | 21 | 19 | 1,582 | 215 | ||
Recoveries | 347 | 17 | 937 | 136 | ||
Net charge-offs (recoveries) | (326) | 2 | 645 | 79 | ||
Provision (recovery of provision) | (1,395) | 370 | 9,328 | 1,809 | ||
Balance at the end of the period | 22,803 | 12,652 | 22,803 | 12,652 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 7,966 | 75 | ||||
Ending balance, collectively evaluated for impairment | 14,837 | 14,045 | ||||
Total reserve for loan and lease losses | 22,803 | 12,652 | 14,120 | 12,652 | 22,803 | 14,120 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 18,222 | 1,351 | ||||
Ending balance, collectively evaluated for impairment | 705,374 | 704,100 | ||||
Total loans and leases | 723,596 | 705,451 | ||||
Commercial real estate | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 19,936 | 15,757 | 18,350 | 15,705 | ||
Charge-offs | 36 | 0 | 37 | 0 | ||
Recoveries | 15 | 6 | 43 | 66 | ||
Net charge-offs (recoveries) | 21 | (6) | (6) | (66) | ||
Provision (recovery of provision) | 1,834 | 970 | 3,393 | 962 | ||
Balance at the end of the period | 21,749 | 16,733 | 21,749 | 16,733 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 0 | 0 | ||||
Ending balance, collectively evaluated for impairment | 21,749 | 18,350 | ||||
Total reserve for loan and lease losses | 21,749 | 16,733 | 21,749 | 16,733 | 21,749 | 18,350 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 1,354 | 1,487 | ||||
Ending balance, collectively evaluated for impairment | 960,196 | 906,690 | ||||
Total loans and leases | 961,550 | 908,177 | ||||
Residential real estate and home equity | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 3,821 | 3,518 | 3,609 | 3,425 | ||
Charge-offs | 61 | 4 | 74 | 25 | ||
Recoveries | 1 | 40 | 31 | 46 | ||
Net charge-offs (recoveries) | 60 | (36) | 43 | (21) | ||
Provision (recovery of provision) | (29) | 12 | 166 | 120 | ||
Balance at the end of the period | 3,732 | 3,566 | 3,732 | 3,566 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 111 | 117 | ||||
Ending balance, collectively evaluated for impairment | 3,621 | 3,492 | ||||
Total reserve for loan and lease losses | 3,732 | 3,566 | 3,609 | 3,566 | 3,732 | 3,609 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 331 | 337 | ||||
Ending balance, collectively evaluated for impairment | 519,550 | 531,666 | ||||
Total loans and leases | 519,881 | 532,003 | ||||
Consumer | ||||||
Changes in reserve for loan and lease losses | ||||||
Balance at the beginning of the period | 1,526 | 1,370 | 1,434 | 1,315 | ||
Charge-offs | 210 | 705 | 640 | 1,268 | ||
Recoveries | 75 | 78 | 233 | 244 | ||
Net charge-offs (recoveries) | 135 | 627 | 407 | 1,024 | ||
Provision (recovery of provision) | 121 | 668 | 485 | 1,120 | ||
Balance at the end of the period | 1,512 | 1,411 | 1,512 | 1,411 | ||
Reserve for loan and lease losses | ||||||
Ending balance, individually evaluated for impairment | 0 | 0 | ||||
Ending balance, collectively evaluated for impairment | 1,512 | 1,434 | ||||
Total reserve for loan and lease losses | $ 1,512 | $ 1,411 | $ 1,434 | $ 1,411 | 1,512 | 1,434 |
Recorded investment in loans | ||||||
Ending balance, individually evaluated for impairment | 0 | 0 | ||||
Ending balance, collectively evaluated for impairment | 135,498 | 139,434 | ||||
Total loans and leases | $ 135,498 | $ 139,434 |
Lease Investments (Details)
Lease Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Schedule of the Components of Income from Direct Finance and Operating Lease Equipment [Line Items] | ||||
Interest income on lease receivable | $ 1,880 | $ 2,280 | $ 6,310 | $ 8,699 |
Income related to lease payments | 5,593 | 7,578 | 18,213 | 23,369 |
Income from reimbursements for personal property tax payments on operating leased equipment | 20 | 150 | 440 | 500 |
Expense for payments of personal property taxes on operating leased equipment | 20 | 150 | 440 | 500 |
Leased equipment | ||||
Schedule of the Components of Income from Direct Finance and Operating Lease Equipment [Line Items] | ||||
Depreciation - leased equipment | $ 4,694 | $ 6,198 | $ 15,263 | $ 19,122 |
Mortgage Servicing Rights (Deta
Mortgage Servicing Rights (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Residential mortgage loans | ||
Mortgage Servicing Rights | ||
Unpaid principal balance | $ 808,140 | $ 740,910 |
Mortgage Servicing Rights (De_2
Mortgage Servicing Rights (Details 2) - Residential mortgage loans - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Changes in mortgage servicing assets | ||||
Balance at the beginning of the period | $ 4,294 | $ 4,141 | $ 4,200 | $ 4,283 |
Additions | 897 | 318 | 2,094 | 703 |
Amortization | (654) | (352) | (1,757) | (879) |
Sales | 0 | 0 | 0 | 0 |
Carrying value before valuation allowance at end of period | 4,537 | 4,107 | 4,537 | 4,107 |
Changes in valuation allowance | ||||
Balance at the beginning of the period | (546) | 0 | 0 | 0 |
Impairment charges | (262) | 0 | (808) | 0 |
Balance at the end of the period | (808) | 0 | (808) | 0 |
Net carrying value of mortgage servicing rights at end of period | 3,729 | 4,107 | 3,729 | 4,107 |
Fair value of mortgage servicing rights at end of period | 4,000 | 5,722 | 4,000 | 5,722 |
Fair value of mortgage servicing rights exceeding the carrying value | 270 | 1,620 | 270 | 1,620 |
Mortgage loan contractual servicing fees, including late fees and ancillary income | $ 810 | $ 680 | $ 2,310 | $ 1,930 |
Commitments and Financial Ins_3
Commitments and Financial Instruments with Off-Balance-Sheet Risk (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Loan commitments to extend credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance-sheet instruments | $ 1,121,554 | $ 1,095,054 |
Standby letters of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance-sheet instruments | $ 25,231 | 27,549 |
Standby letters of credit | Minimum | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Letter of credit term | 2 months | |
Standby letters of credit | Maximum | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Letter of credit term | 1 year | |
Commercial and similar letters of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance-sheet instruments | $ 3,526 | $ 2,332 |
Commercial and similar letters of credit | Minimum | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Letter of credit term | 2 months | |
Commercial and similar letters of credit | Maximum | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Letter of credit term | 6 months |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Non-hedging derivative financial instruments | ||
Derivative Financial Instruments | ||
Notional or contractual amount | $ 1,248,514 | $ 1,108,391 |
Asset derivatives, Fair value | 55,504 | 22,160 |
Liability derivatives, Fair value | 54,063 | 22,390 |
Interest rate swap contracts | ||
Derivative Financial Instruments | ||
Asset derivatives, Fair value | 57,457 | 22,279 |
Interest rate swap contracts | Non-hedging derivative financial instruments | ||
Derivative Financial Instruments | ||
Notional or contractual amount | 1,139,493 | 1,074,809 |
Asset derivatives, Fair value | 53,027 | 21,975 |
Liability derivatives, Fair value | 53,988 | 22,352 |
Loan commitments | Non-hedging derivative financial instruments | ||
Derivative Financial Instruments | ||
Notional or contractual amount | 51,834 | 9,950 |
Asset derivatives, Fair value | 2,477 | 185 |
Liability derivatives, Fair value | 0 | 0 |
Forward contracts - mortgage loan | Non-hedging derivative financial instruments | ||
Derivative Financial Instruments | ||
Notional or contractual amount | 57,187 | 23,632 |
Asset derivatives, Fair value | 0 | 0 |
Liability derivatives, Fair value | $ 75 | $ 38 |
Derivative Financial Instrume_4
Derivative Financial Instruments (Details 2) - Non-hedging derivative financial instruments - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Derivative Financial Instruments | ||||
Gain (loss) | $ 1,505 | $ 294 | $ 2,232 | $ 882 |
Interest rate swap contracts | Other expense | ||||
Derivative Financial Instruments | ||||
Gain (loss) | 50 | (129) | (583) | (378) |
Interest rate swap contracts | Other income | ||||
Derivative Financial Instruments | ||||
Gain (loss) | 23 | 272 | 560 | 1,056 |
Loan commitments | Mortgage banking income | ||||
Derivative Financial Instruments | ||||
Gain (loss) | 1,406 | (6) | 2,292 | 86 |
Forward contracts - mortgage loan | Mortgage banking income | ||||
Derivative Financial Instruments | ||||
Gain (loss) | $ 26 | $ 157 | $ (37) | $ 118 |
Derivative Financial Instrume_5
Derivative Financial Instruments (Details 3) - Interest rate swaps - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Offsetting Assets | ||
Asset derivatives, Fair value | $ 57,457 | $ 22,279 |
Gross Amounts Offset in the Statement of Financial Position | 4,430 | 304 |
Net Amounts of Assets Presented in the Statement of Financial Position | 53,027 | 21,975 |
Derivative Asset, Fair Value, Amount Offset Against Collateral [Abstract] | ||
Financial instruments | 0 | 0 |
Cash collateral received | 0 | 0 |
Net Amount | $ 53,027 | $ 21,975 |
Derivative Financial Instrume_6
Derivative Financial Instruments (Details 4) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Offsetting of financial liabilities and derivative liabilities | ||
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement | $ 217,252 | $ 143,115 |
Gross Amounts Offset in the Statement of Financial Position | 4,430 | 304 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 212,822 | 142,811 |
Gross amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 212,725 | 143,941 |
Cash Collateral Pledged | 0 | 0 |
Net Amount | 97 | (1,130) |
Interest rate swaps | ||
Offsetting of financial liabilities and derivative liabilities | ||
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement | 58,418 | 22,656 |
Gross Amounts Offset in the Statement of Financial Position | 4,430 | 304 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 53,988 | 22,352 |
Derivative, Collateral, Right to Reclaim Securities | 53,891 | 23,482 |
Gross amounts Not Offset in the Statement of Financial Position | ||
Cash Collateral Pledged | 0 | 0 |
Net Amount | 97 | (1,130) |
Repurchase agreements | ||
Offsetting of financial liabilities and derivative liabilities | ||
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement | 158,834 | 120,459 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 158,834 | 120,459 |
Gross amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | $ 158,834 | $ 120,459 |
Derivative Financial Instrume_7
Derivative Financial Instruments (Details 5) - U.S. Treasury and Federal agencies securities - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Overnight and Continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Repurchase agreements | $ 157,830 | $ 119,450 |
Up to 30 Days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings | ||
Repurchase agreements | $ 1,000 | $ 1,010 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Subordinated Borrowing [Line Items] | |||||
Federal tax credits recognized in tax expense | $ 430 | $ 350 | $ 1,290 | $ 1,050 | |
Investment tax credits | 0 | $ 3,530 | 7,840 | $ 9,080 | |
Maximum exposure to loss, unconsolidated VIEs | 43,329 | 43,329 | $ 37,904 | ||
Investment carrying amount | 7,290,949 | 7,290,949 | 6,622,776 | ||
Unfunded capital and other commitments | 6,375,934 | 6,375,934 | 5,774,140 | ||
Variable interest entity, not primary beneficiary | |||||
Subordinated Borrowing [Line Items] | |||||
Investment carrying amount | 47,719 | 47,719 | 19,843 | ||
Unfunded capital and other commitments | 41,409 | 41,409 | 17,420 | ||
Variable interest entity, primary beneficiary | |||||
Subordinated Borrowing [Line Items] | |||||
Investment carrying amount | 52,550 | 52,550 | 41,240 | ||
Unfunded capital and other commitments | $ 11,170 | $ 11,170 | $ 18,680 |
Variable Interest Entities (D_2
Variable Interest Entities (Details 2) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020USD ($)trust | Dec. 31, 2019USD ($) | |
Variable Interest Entities [Abstract] | ||
Number of trusts sponsored | trust | 1 | |
Percentage of ownership interest | 100.00% | |
Subordinated Borrowing [Line Items] | ||
Amount of subordinated notes | $ 58,764 | $ 58,764 |
June 2007 issuance | ||
Subordinated Borrowing [Line Items] | ||
Amount of subordinated notes | $ 41,238 | |
Interest rate (as a percent) | 7.22% | |
Maturity date of subordinated notes | Jun. 15, 2037 | |
August 2007 issuance | ||
Subordinated Borrowing [Line Items] | ||
Amount of subordinated notes | $ 17,526 | |
Interest rate (as a percent) | 1.73% | |
Maturity date of subordinated notes | Sep. 15, 2037 | |
London Interbank Offered Rate (LIBOR) | August 2007 issuance | ||
Subordinated Borrowing [Line Items] | ||
Basis spread on variable rate (as a percent) | 1.48% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |||||
Outstanding stock options (in shares) | 0 | 0 | 0 | ||
Distributed earnings allocated to common stock | $ 7,166 | $ 6,895 | $ 21,714 | $ 20,791 | |
Undistributed earnings allocated to common stock | 12,755 | 17,402 | 32,941 | 48,827 | |
Net earnings allocated to common stock | 19,921 | 24,297 | 54,655 | 69,618 | |
Net earnings allocated to participating securities | 137 | 141 | 318 | 401 | |
Net income available to common shareholders | $ 20,058 | $ 24,438 | $ 54,973 | $ 70,019 | |
Weighted average shares outstanding for basic earnings per common share | 25,552,374 | 25,520,035 | 25,538,910 | 25,630,771 | |
Dilutive effect of stock compensation (in shares) | 0 | 0 | 0 | 0 | |
Weighted average shares outstanding for diluted earnings per common share | 25,552,374 | 25,520,035 | 25,538,910 | 25,630,771 | |
Basic earnings per common share (in dollars per share) | $ 0.78 | $ 0.95 | $ 2.14 | $ 2.72 | |
Diluted earnings per common share (in dollars per share) | $ 0.78 | $ 0.95 | $ 2.14 | $ 2.72 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020USD ($)itemshares | Sep. 30, 2019USD ($)shares | Dec. 31, 2019shares | |
Stock-based compensation | |||
Number of stock-based employee compensation plans | item | 4 | ||
Number of executive stock award plans | item | 3 | ||
Outstanding stock options (in shares) | 0 | 0 | |
Total unrecognized compensation cost related to non-vested share-based compensation arrangements | $ | $ 8,210 | ||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 3 years 7 months 6 days | ||
Stock options | |||
Stock-based compensation | |||
Total fair value of options vested and expensed | $ | $ 0 | $ 0 | |
Outstanding stock options (in shares) | 0 | 0 | |
Stock options exercised (in shares) | 0 | 0 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Reclassifications out of accumulated other comprehensive income | ||||
Gains on investment securities available-for-sale | $ 0 | $ 0 | $ 279 | $ 0 |
Income before income taxes | 26,563 | 32,137 | 72,183 | 91,578 |
Income tax expense | (6,509) | (7,689) | (17,185) | (21,517) |
Unrealized gains and losses on available-for-sale securities | Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Reclassifications out of accumulated other comprehensive income | ||||
Gains on investment securities available-for-sale | 0 | 0 | 279 | 0 |
Income before income taxes | 0 | 0 | 279 | 0 |
Income tax expense | 0 | 0 | (65) | 0 |
Net income | $ 0 | $ 0 | $ 214 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||||
Unrecognized tax benefits that would affect the effective tax rate if recognized | $ 0 | $ 0 | $ 0 | ||
Interest and penalties net of tax recognized | 0 | $ 0 | 0 | $ 0 | |
Accrued interest and penalties | $ 0 | $ 0 | $ 0 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | |
Fair value measurements | |||
Fair value carrying amount | $ 20,990 | $ 20,277 | |
Mortgages held for sale reported at fair value | |||
Fair value measurements | |||
Fair value carrying amount | 20,990 | 20,277 | |
Aggregate unpaid principal | 17,618 | 19,890 | |
Excess of fair value carrying amount over (under) unpaid principal | [1] | $ 3,372 | $ 387 |
[1] | The excess of fair value carrying amount over (under) unpaid principal is included in mortgage banking income and includes changes in fair value at and subsequent to funding and gains and losses on the related loan commitment prior to funding. |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details 2) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair value measurements | ||
Investment securities available-for-sale | $ 1,083,427 | $ 1,040,583 |
Assets: | ||
Mortgages held for sale | 20,990 | 20,277 |
U.S. Treasury and Federal agencies securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 568,008 | 526,964 |
U.S. States and political subdivisions securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 68,733 | 84,505 |
Mortgage-backed securities - Federal agencies | ||
Fair value measurements | ||
Investment securities available-for-sale | 403,490 | 375,389 |
Corporate debt securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 42,496 | 53,025 |
Foreign government and other securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 700 | 700 |
Total | ||
Fair value measurements | ||
Investment securities available-for-sale | 1,083,427 | 1,040,583 |
Assets: | ||
Mortgages held for sale | 20,990 | 20,277 |
Level 1 | ||
Fair value measurements | ||
Investment securities available-for-sale | 76,298 | 80,393 |
Assets: | ||
Mortgages held for sale | 0 | 0 |
Level 2 | ||
Fair value measurements | ||
Investment securities available-for-sale | 1,003,864 | 957,898 |
Assets: | ||
Mortgages held for sale | 20,990 | 20,277 |
Level 3 | ||
Fair value measurements | ||
Investment securities available-for-sale | 3,265 | 2,292 |
Assets: | ||
Mortgages held for sale | 0 | 0 |
Recurring basis | Total | ||
Fair value measurements | ||
Investment securities available-for-sale | 1,083,427 | 1,040,583 |
Assets: | ||
Mortgages held for sale | 20,990 | 20,277 |
Total | 1,157,444 | 1,082,835 |
Liabilities: | ||
Total | 53,988 | 22,352 |
Recurring basis | Total | Interest rate swap contracts | ||
Assets: | ||
Accrued income and other assets | 53,027 | 21,975 |
Liabilities: | ||
Accrued expenses and other liabilities | 53,988 | 22,352 |
Recurring basis | Total | U.S. Treasury and Federal agencies securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 568,008 | 526,964 |
Recurring basis | Total | U.S. States and political subdivisions securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 68,733 | 84,505 |
Recurring basis | Total | Mortgage-backed securities - Federal agencies | ||
Fair value measurements | ||
Investment securities available-for-sale | 403,490 | 375,389 |
Recurring basis | Total | Corporate debt securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 42,496 | 53,025 |
Recurring basis | Total | Foreign government and other securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 700 | 700 |
Recurring basis | Level 1 | ||
Fair value measurements | ||
Investment securities available-for-sale | 76,298 | 80,393 |
Assets: | ||
Mortgages held for sale | 0 | 0 |
Total | 76,298 | 80,393 |
Liabilities: | ||
Total | 0 | 0 |
Recurring basis | Level 1 | Interest rate swap contracts | ||
Assets: | ||
Accrued income and other assets | 0 | 0 |
Liabilities: | ||
Accrued expenses and other liabilities | 0 | 0 |
Recurring basis | Level 1 | U.S. Treasury and Federal agencies securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 76,298 | 80,393 |
Recurring basis | Level 1 | U.S. States and political subdivisions securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 0 | 0 |
Recurring basis | Level 1 | Mortgage-backed securities - Federal agencies | ||
Fair value measurements | ||
Investment securities available-for-sale | 0 | 0 |
Recurring basis | Level 1 | Corporate debt securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 0 | 0 |
Recurring basis | Level 1 | Foreign government and other securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 0 | 0 |
Recurring basis | Level 2 | ||
Fair value measurements | ||
Investment securities available-for-sale | 1,003,864 | 957,898 |
Assets: | ||
Mortgages held for sale | 20,990 | 20,277 |
Total | 1,077,881 | 1,000,150 |
Liabilities: | ||
Total | 53,988 | 22,352 |
Recurring basis | Level 2 | Interest rate swap contracts | ||
Assets: | ||
Accrued income and other assets | 53,027 | 21,975 |
Liabilities: | ||
Accrued expenses and other liabilities | 53,988 | 22,352 |
Recurring basis | Level 2 | U.S. Treasury and Federal agencies securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 491,710 | 446,571 |
Recurring basis | Level 2 | U.S. States and political subdivisions securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 65,468 | 82,213 |
Recurring basis | Level 2 | Mortgage-backed securities - Federal agencies | ||
Fair value measurements | ||
Investment securities available-for-sale | 403,490 | 375,389 |
Recurring basis | Level 2 | Corporate debt securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 42,496 | 53,025 |
Recurring basis | Level 2 | Foreign government and other securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 700 | 700 |
Recurring basis | Level 3 | ||
Fair value measurements | ||
Investment securities available-for-sale | 3,265 | 2,292 |
Assets: | ||
Mortgages held for sale | 0 | 0 |
Total | 3,265 | 2,292 |
Liabilities: | ||
Total | 0 | 0 |
Recurring basis | Level 3 | Interest rate swap contracts | ||
Assets: | ||
Accrued income and other assets | 0 | 0 |
Liabilities: | ||
Accrued expenses and other liabilities | 0 | 0 |
Recurring basis | Level 3 | U.S. Treasury and Federal agencies securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 0 | 0 |
Recurring basis | Level 3 | U.S. States and political subdivisions securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 3,265 | 2,292 |
Recurring basis | Level 3 | Mortgage-backed securities - Federal agencies | ||
Fair value measurements | ||
Investment securities available-for-sale | 0 | 0 |
Recurring basis | Level 3 | Corporate debt securities | ||
Fair value measurements | ||
Investment securities available-for-sale | 0 | 0 |
Recurring basis | Level 3 | Foreign government and other securities | ||
Fair value measurements | ||
Investment securities available-for-sale | $ 0 | $ 0 |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details 3) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Changes in the fair value of Level 3 assets measured on a recurring basis | ||
Total gains or losses (unrealized): included in earnings | $ 0 | $ 0 |
U.S. States and political subdivisions securities | ||
Changes in the fair value of Level 3 assets measured on a recurring basis | ||
Balance at the beginning of the period | 3,179 | 5,061 |
Total gains or losses (realized/unrealized): included in earnings | 0 | 0 |
Total gains or losses (realized/unrealized): included in other comprehensive income | 166 | (12) |
Purchases | 0 | 0 |
Issuances | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Maturities | (80) | (80) |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Balance at the end of the period | $ 3,265 | $ 4,969 |
Fair Value Measurements (Deta_4
Fair Value Measurements (Details 4) $ in Thousands | Sep. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Valuation Methodology | ||
Investment securities, available-for-sale | $ 1,083,427 | $ 1,040,583 |
Level 3 | ||
Valuation Methodology | ||
Investment securities, available-for-sale | 3,265 | 2,292 |
Recurring | Level 3 | ||
Valuation Methodology | ||
Investment securities, available-for-sale | 3,265 | 2,292 |
Recurring | Level 3 | Discounted cash flows | Direct placement municipal securities | ||
Valuation Methodology | ||
Investment securities, available-for-sale | $ 3,265 | $ 2,292 |
Discount for lack of marketability | Non-recurring | Level 3 | Trade publications | Aircraft | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.10 | |
Discount for lack of marketability | Non-recurring | Level 3 | Auction values | Autos | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.10 | |
Discount for lack of marketability | Non-recurring | Level 3 | Trade publications and auction values | Medium and heavy duty trucks | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.15 | |
Discount for lack of marketability | Non-recurring | Level 3 | Trade publications and auction values | Construction equipment | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.20 | |
Discount for lack of marketability | Non-recurring | Level 3 | Appraisals | Real estate | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.20 | |
Credit spread assumption | Recurring | Level 3 | Discounted cash flows | Direct placement municipal securities | Minimum | ||
Unobservable Inputs | ||
Debt securities available-for-sale unobservable inputs (as a percent) | 0.0112 | 0.0012 |
Credit spread assumption | Recurring | Level 3 | Discounted cash flows | Direct placement municipal securities | Maximum | ||
Unobservable Inputs | ||
Debt securities available-for-sale unobservable inputs (as a percent) | 0.0252 | 0.0285 |
Credit spread assumption | Recurring | Level 3 | Discounted cash flows | Direct placement municipal securities | Weighted Average | ||
Unobservable Inputs | ||
Debt securities available-for-sale unobservable inputs (as a percent) | 0.0147 | |
Receivables | Discount for lack of marketability | Non-recurring | Level 3 | Commercial loans | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.20 | |
Inventory | Discount for lack of marketability | Non-recurring | Level 3 | Minimum | Commercial loans | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.40 | |
Inventory | Discount for lack of marketability | Non-recurring | Level 3 | Maximum | Commercial loans | ||
Unobservable Inputs | ||
Discount rate (as a percent) | 0.75 |
Fair Value Measurements (Deta_5
Fair Value Measurements (Details 5) - Non-recurring - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Impaired loans | ||
Fair value measurements | ||
Impairment charges (recoveries) | $ 3,800 | |
Mortgage servicing rights | ||
Fair value measurements | ||
Impairment charges (recoveries) | 260 | |
Repossessions | ||
Fair value measurements | ||
Impairment charges (recoveries) | 650 | |
Other real estate | ||
Fair value measurements | ||
Impairment charges (recoveries) | 0 | |
Total | ||
Fair value measurements | ||
Impaired loans - collateral based | 19,802 | $ 8,492 |
Assets measured at fair value | 28,473 | 21,837 |
Total | Mortgage servicing rights | ||
Fair value measurements | ||
Accrued income and other assets | 3,729 | 4,200 |
Total | Repossessions | ||
Fair value measurements | ||
Accrued income and other assets | 4,639 | 8,623 |
Total | Other real estate | ||
Fair value measurements | ||
Accrued income and other assets | 303 | 522 |
Level 3 | ||
Fair value measurements | ||
Impaired loans - collateral based | 19,802 | 8,492 |
Assets measured at fair value | 28,473 | 21,837 |
Level 3 | Mortgage servicing rights | ||
Fair value measurements | ||
Accrued income and other assets | 3,729 | 4,200 |
Level 3 | Repossessions | ||
Fair value measurements | ||
Accrued income and other assets | 4,639 | 8,623 |
Level 3 | Other real estate | ||
Fair value measurements | ||
Accrued income and other assets | $ 303 | $ 522 |
Fair Value Measurements (Deta_6
Fair Value Measurements (Details 6) - Non-recurring $ in Thousands | Sep. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Level 3 | ||
Valuation Methodology | ||
Assets measured at fair value | $ 28,473 | $ 21,837 |
Carrying Value | Level 3 | Collateral based measurements | Impaired loans | ||
Valuation Methodology | ||
Assets measured at fair value | 19,802 | 8,492 |
Carrying Value | Level 3 | Discounted cash flows | Mortgage servicing rights | ||
Valuation Methodology | ||
Assets measured at fair value | 3,729 | 4,200 |
Carrying Value | Level 3 | Appraisals trade publications and auction values | Repossessions | ||
Valuation Methodology | ||
Assets measured at fair value | 4,639 | 8,623 |
Carrying Value | Level 3 | Appraisals | Other real estate | ||
Valuation Methodology | ||
Assets measured at fair value | 303 | 522 |
Fair Value | ||
Valuation Methodology | ||
Assets measured at fair value | 28,473 | 21,837 |
Fair Value | Level 3 | Collateral based measurements | Impaired loans | ||
Valuation Methodology | ||
Assets measured at fair value | 19,802 | 8,492 |
Fair Value | Level 3 | Discounted cash flows | Mortgage servicing rights | ||
Valuation Methodology | ||
Assets measured at fair value | 4,000 | 5,986 |
Fair Value | Level 3 | Appraisals trade publications and auction values | Repossessions | ||
Valuation Methodology | ||
Assets measured at fair value | 4,898 | 9,211 |
Fair Value | Level 3 | Appraisals | Other real estate | ||
Valuation Methodology | ||
Assets measured at fair value | $ 324 | $ 564 |
Discount for lack of marketability and current conditions | Level 3 | Collateral based measurements | Impaired loans | Minimum | ||
Unobservable Inputs | ||
Impaired loans unobservable inputs (as a percent) | 0 | 0 |
Discount for lack of marketability and current conditions | Level 3 | Collateral based measurements | Impaired loans | Maximum | ||
Unobservable Inputs | ||
Impaired loans unobservable inputs (as a percent) | 0.90 | 0.90 |
Discount for lack of marketability and current conditions | Level 3 | Collateral based measurements | Impaired loans | Weighted Average | ||
Unobservable Inputs | ||
Impaired loans unobservable inputs (as a percent) | 0.28 | |
Constant prepayment rate (CPR) | Level 3 | Discounted cash flows | Mortgage servicing rights | Minimum | ||
Unobservable Inputs | ||
Mortgage servicing rights unobservable inputs (as a percent) | 0.153 | 0.102 |
Constant prepayment rate (CPR) | Level 3 | Discounted cash flows | Mortgage servicing rights | Maximum | ||
Unobservable Inputs | ||
Mortgage servicing rights unobservable inputs (as a percent) | 0.247 | 0.281 |
Constant prepayment rate (CPR) | Level 3 | Discounted cash flows | Mortgage servicing rights | Weighted Average | ||
Unobservable Inputs | ||
Mortgage servicing rights unobservable inputs (as a percent) | 0.217 | |
Discount rate | Level 3 | Discounted cash flows | Mortgage servicing rights | Minimum | ||
Unobservable Inputs | ||
Mortgage servicing rights unobservable inputs (as a percent) | 0.084 | 0.093 |
Discount rate | Level 3 | Discounted cash flows | Mortgage servicing rights | Maximum | ||
Unobservable Inputs | ||
Mortgage servicing rights unobservable inputs (as a percent) | 0.112 | 0.121 |
Discount rate | Level 3 | Discounted cash flows | Mortgage servicing rights | Weighted Average | ||
Unobservable Inputs | ||
Mortgage servicing rights unobservable inputs (as a percent) | 0.086 | |
Discount for lack of marketability | Level 3 | Appraisals trade publications and auction values | Repossessions | Minimum | ||
Unobservable Inputs | ||
Repossessions unobservable inputs (as a percent) | 0.03 | 0.03 |
Discount for lack of marketability | Level 3 | Appraisals trade publications and auction values | Repossessions | Maximum | ||
Unobservable Inputs | ||
Repossessions unobservable inputs (as a percent) | 0.16 | 0.25 |
Discount for lack of marketability | Level 3 | Appraisals trade publications and auction values | Repossessions | Weighted Average | ||
Unobservable Inputs | ||
Repossessions unobservable inputs (as a percent) | 0.05 | |
Discount for lack of marketability | Level 3 | Appraisals | Other real estate | Minimum | ||
Unobservable Inputs | ||
Other real estate unobservable inputs (as a percent) | 0 | 0 |
Discount for lack of marketability | Level 3 | Appraisals | Other real estate | Maximum | ||
Unobservable Inputs | ||
Other real estate unobservable inputs (as a percent) | 0.06 | 0.11 |
Discount for lack of marketability | Level 3 | Appraisals | Other real estate | Weighted Average | ||
Unobservable Inputs | ||
Other real estate unobservable inputs (as a percent) | 0.06 |
Fair Value Measurements (Deta_7
Fair Value Measurements (Details 7) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Cash and due from banks | $ 62,575 | $ 67,215 |
Federal funds sold and interest bearing deposits with other banks | 91,641 | 16,150 |
Investment securities available-for-sale | 1,083,427 | 1,040,583 |
Other investments | 27,674 | 28,414 |
Mortgages held for sale | 20,990 | 20,277 |
Loans and leases, net of reserve for loan and lease losses | 5,490,219 | 4,974,273 |
Liabilities: | ||
Long-term debt and mandatorily redeemable securities | 81,659 | 71,639 |
Subordinated notes | 58,764 | 58,764 |
Carrying or Contract Value | ||
Assets: | ||
Cash and due from banks | 62,575 | 67,215 |
Federal funds sold and interest bearing deposits with other banks | 91,641 | 16,150 |
Investment securities available-for-sale | 1,083,427 | 1,040,583 |
Other investments | 27,674 | 28,414 |
Mortgages held for sale | 20,990 | 20,277 |
Loans and leases, net of reserve for loan and lease losses | 5,490,219 | 4,974,273 |
Mortgage servicing rights | 3,729 | 4,200 |
Accrued interest receivable | 21,565 | 19,125 |
Interest rate swaps | 53,027 | 21,975 |
Liabilities: | ||
Deposits | 5,896,855 | 5,357,326 |
Short-term borrowings | 165,574 | 145,893 |
Long-term debt and mandatorily redeemable securities | 81,659 | 71,639 |
Subordinated notes | 58,764 | 58,764 |
Accrued interest payable | 7,647 | 13,918 |
Interest rate swaps | 53,988 | 22,352 |
Off-balance-sheet instruments | 0 | 0 |
Fair Value | ||
Assets: | ||
Cash and due from banks | 62,575 | 67,215 |
Federal funds sold and interest bearing deposits with other banks | 91,641 | 16,150 |
Investment securities available-for-sale | 1,083,427 | 1,040,583 |
Other investments | 27,674 | 28,414 |
Mortgages held for sale | 20,990 | 20,277 |
Loans and leases, net of reserve for loan and lease losses | 5,568,395 | 4,992,684 |
Mortgage servicing rights | 4,000 | 5,986 |
Accrued interest receivable | 21,565 | 19,125 |
Interest rate swaps | 53,027 | 21,975 |
Liabilities: | ||
Deposits | 5,909,192 | 5,362,633 |
Short-term borrowings | 165,574 | 145,893 |
Long-term debt and mandatorily redeemable securities | 82,894 | 71,084 |
Subordinated notes | 57,617 | 61,469 |
Accrued interest payable | 7,647 | 13,918 |
Interest rate swaps | 53,988 | 22,352 |
Off-balance-sheet instruments | 289 | 281 |
Level 1 | ||
Assets: | ||
Cash and due from banks | 62,575 | 67,215 |
Federal funds sold and interest bearing deposits with other banks | 91,641 | 16,150 |
Investment securities available-for-sale | 76,298 | 80,393 |
Other investments | 27,674 | 28,414 |
Mortgages held for sale | 0 | 0 |
Loans and leases, net of reserve for loan and lease losses | 0 | 0 |
Mortgage servicing rights | 0 | 0 |
Accrued interest receivable | 0 | 0 |
Interest rate swaps | 0 | 0 |
Liabilities: | ||
Deposits | 4,598,859 | 3,708,828 |
Short-term borrowings | 159,822 | 120,891 |
Long-term debt and mandatorily redeemable securities | 0 | 0 |
Subordinated notes | 0 | 0 |
Accrued interest payable | 0 | 0 |
Interest rate swaps | 0 | 0 |
Off-balance-sheet instruments | 0 | 0 |
Level 2 | ||
Assets: | ||
Cash and due from banks | 0 | 0 |
Federal funds sold and interest bearing deposits with other banks | 0 | 0 |
Investment securities available-for-sale | 1,003,864 | 957,898 |
Other investments | 0 | 0 |
Mortgages held for sale | 20,990 | 20,277 |
Loans and leases, net of reserve for loan and lease losses | 0 | 0 |
Mortgage servicing rights | 0 | 0 |
Accrued interest receivable | 21,565 | 19,125 |
Interest rate swaps | 53,027 | 21,975 |
Liabilities: | ||
Deposits | 1,310,333 | 1,653,805 |
Short-term borrowings | 5,752 | 25,002 |
Long-term debt and mandatorily redeemable securities | 82,894 | 71,084 |
Subordinated notes | 57,617 | 61,469 |
Accrued interest payable | 7,647 | 13,918 |
Interest rate swaps | 53,988 | 22,352 |
Off-balance-sheet instruments | 289 | 281 |
Level 3 | ||
Assets: | ||
Cash and due from banks | 0 | 0 |
Federal funds sold and interest bearing deposits with other banks | 0 | 0 |
Investment securities available-for-sale | 3,265 | 2,292 |
Other investments | 0 | 0 |
Mortgages held for sale | 0 | 0 |
Loans and leases, net of reserve for loan and lease losses | 5,568,395 | 4,992,684 |
Mortgage servicing rights | 4,000 | 5,986 |
Accrued interest receivable | 0 | 0 |
Interest rate swaps | 0 | 0 |
Liabilities: | ||
Deposits | 0 | 0 |
Short-term borrowings | 0 | 0 |
Long-term debt and mandatorily redeemable securities | 0 | 0 |
Subordinated notes | 0 | 0 |
Accrued interest payable | 0 | 0 |
Interest rate swaps | 0 | 0 |
Off-balance-sheet instruments | $ 0 | $ 0 |