Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 03, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | OLD SECOND BANCORP INC | |
Entity Central Index Key | 357,173 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 29,747,078 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and due from banks | $ 34,161 | $ 37,444 |
Interest bearing deposits with financial institutions | 31,147 | 18,389 |
Cash and cash equivalents | 65,308 | 55,833 |
Securities available-for-sale, at fair value | 543,644 | 541,439 |
Federal Home Loan Bank and Federal Reserve Bank stock | 9,093 | 10,168 |
Loans held-for-sale | 5,206 | 4,067 |
Loans | 1,849,162 | 1,617,622 |
Less: allowance for loan losses | 19,321 | 17,461 |
Net loans | 1,829,841 | 1,600,161 |
Premises and equipment, net | 42,532 | 37,628 |
Other real estate owned | 8,912 | 8,371 |
Mortgage servicing rights, net | 7,812 | 6,944 |
Goodwill and core deposit intangible | 22,074 | 8,922 |
Bank-owned life insurance (BOLI) | 61,159 | 61,764 |
Deferred tax assets, net | 27,812 | 25,356 |
Other assets | 26,355 | 22,776 |
Total assets | 2,649,748 | 2,383,429 |
Deposits: | ||
Noninterest bearing demand | 620,807 | 572,404 |
Interest bearing: | ||
Savings, NOW, and money market | 1,058,295 | 967,750 |
Time | 482,749 | 382,771 |
Total deposits | 2,161,851 | 1,922,925 |
Securities sold under repurchase agreements | 54,038 | 29,918 |
Other short-term borrowings | 76,625 | 115,000 |
Junior subordinated debentures | 57,662 | 57,639 |
Senior notes | 44,108 | 44,058 |
Notes payable and other borrowings | 23,496 | |
Other liabilities | 22,154 | 13,539 |
Total liabilities | 2,439,934 | 2,183,079 |
Stockholders' Equity | ||
Common stock | 34,717 | 34,626 |
Additional paid-in capital | 118,082 | 117,742 |
Retained earnings | 157,796 | 142,959 |
Accumulated other comprehensive loss | (4,487) | 1,479 |
Treasury stock | (96,294) | (96,456) |
Total stockholders' equity | 209,814 | 200,350 |
Total liabilities and stockholders' equity | $ 2,649,748 | $ 2,383,429 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Consolidated Balance Sheets | ||
Common stock, Par value (in dollars per share) | $ 1 | $ 1 |
Common Stock, Shares authorized | 60,000,000 | 60,000,000 |
Common stock, Shares issued | 34,716,589 | 34,625,734 |
Common stock, Shares outstanding | 29,747,078 | 29,627,086 |
Treasury stock, Shares | 4,969,511 | 4,998,648 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Interest and Dividend Income | ||||
Loans, including fees | $ 22,512 | $ 17,385 | $ 41,248 | $ 33,994 |
Loans held-for-sale | 35 | 37 | 55 | 61 |
Securities: | ||||
Taxable | 2,392 | 2,607 | 4,562 | 5,570 |
Tax exempt | 2,114 | 1,648 | 4,175 | 2,560 |
Dividends from FHLBC and FRBC stock | 111 | 92 | 217 | 177 |
Interest bearing deposits with financial institutions | 97 | 31 | 146 | 54 |
Total interest and dividend income | 27,261 | 21,800 | 50,403 | 42,416 |
Interest Expense | ||||
Savings, NOW, and money market deposits | 501 | 233 | 845 | 456 |
Time deposits | 1,444 | 1,025 | 2,619 | 2,004 |
Securities sold under repurchase agreements | 104 | 4 | 183 | 6 |
Other short-term borrowings | 276 | 146 | 605 | 252 |
Junior subordinated debentures | 927 | 1,059 | 1,854 | 2,143 |
Senior notes | 672 | 672 | 1,344 | 1,345 |
Notes payable and other borrowings | 95 | 95 | ||
Total interest expense | 4,019 | 3,139 | 7,545 | 6,206 |
Net interest and dividend income | 23,242 | 18,661 | 42,858 | 36,210 |
Release for loan and lease losses | 1,450 | 750 | 728 | 750 |
Net interest and dividend income after (release) provisions for loan losses | 21,792 | 17,911 | 42,130 | 35,460 |
Noninterest Income | ||||
Trust income | 1,645 | 1,638 | 3,140 | 3,096 |
Service charges on deposits | 1,769 | 1,615 | 3,361 | 3,233 |
Secondary mortgage fees | 195 | 223 | 357 | 399 |
Mortgage servicing rights mark to market loss | (105) | (429) | 200 | (562) |
Mortgage servicing income | 627 | 444 | 1,079 | 879 |
Net gain on sales of mortgage loans | 1,240 | 1,473 | 2,157 | 2,620 |
Securities gains (losses), net | 312 | (131) | 347 | (267) |
Increase in cash surrender value of BOLI | 351 | 350 | 599 | 709 |
Death benefit realized on bank-owned life insurance | 1,026 | |||
Debit card interchange income | 1,132 | 1,081 | 2,144 | 2,056 |
Losses on disposal and transfer of fixed assets, net | 12 | 10 | ||
Other income | 1,366 | 1,041 | 2,627 | 2,172 |
Total noninterest income | 8,532 | 7,317 | 17,037 | 14,345 |
Noninterest Expense | ||||
Salaries and employee benefits | 12,355 | 10,545 | 22,562 | 21,118 |
Occupancy, furniture and equipment | 1,652 | 1,462 | 3,210 | 3,028 |
Computer and data processing | 2,741 | 1,112 | 4,085 | 2,202 |
FDIC insurance | 165 | 165 | 321 | 313 |
General bank insurance | 299 | 264 | 550 | 534 |
Amortization of core deposit intangible | 97 | 25 | 118 | 50 |
Advertising expense | 492 | 452 | 833 | 838 |
Debit card interchange expense | 301 | 399 | 582 | 748 |
Legal fees | 286 | 184 | 445 | 288 |
Other real estate expense, net | 429 | 539 | 602 | 1,248 |
Other expense | 3,469 | 2,839 | 6,332 | 5,673 |
Total noninterest expense | 22,286 | 17,986 | 39,640 | 36,040 |
Income before income taxes | 8,038 | 7,242 | 19,527 | 13,765 |
Provision for income taxes | 1,777 | 2,096 | 3,777 | 4,192 |
Net income available to common stockholders | $ 6,261 | $ 5,146 | $ 15,750 | $ 9,573 |
Basic earnings per share (in dollars per share) | $ 0.21 | $ 0.17 | $ 0.53 | $ 0.32 |
Diluted earnings per share (in dollars per share) | $ 0.21 | $ 0.17 | $ 0.52 | $ 0.32 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Consolidated Statements of Comprehensive Income | ||||
Net income | $ 6,261 | $ 5,146 | $ 15,750 | $ 9,573 |
Unrealized holding (losses) gains on available-for-sale securities arising during the period | (1,391) | 6,596 | (10,199) | 10,827 |
Related tax benefit (expense) | 392 | (2,650) | 2,876 | (4,325) |
Holding (losses) gains after tax on available-for-sale securities | (999) | 3,946 | (7,323) | 6,502 |
Less: Reclassification adjustment for the net gains (losses) realized during the period | ||||
Net realized gains (losses) | 312 | (131) | 347 | (267) |
Income tax (expense) benefit on net realized gains (losses) | (88) | 52 | (98) | 106 |
Net realized gains (losses) after tax | (224) | 79 | (249) | 161 |
Other comprehensive (loss) income on available-for-sale securities | (1,223) | 4,025 | (7,572) | 6,663 |
Changes in fair value of derivatives used for cashflow hedges | 515 | (613) | 1,794 | (464) |
Related tax benefit | (145) | 245 | (507) | 184 |
Other comprehensive income on cashflow hedges | 370 | (368) | 1,287 | (280) |
Total other comprehensive (loss) income | (853) | 3,657 | (6,285) | 6,383 |
Total comprehensive income | $ 5,408 | $ 8,803 | $ 9,465 | $ 15,956 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities | |||
Net income | $ 5,146 | $ 15,750 | $ 9,573 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Depreciation and amortization of leasehold improvement | 1,142 | 1,193 | |
Change in fair value of mortgage servicing rights | 429 | (200) | 562 |
Release for loan and lease losses | 750 | 728 | 750 |
Provision for deferred tax expense | 3,468 | 4,052 | |
Originations of loans held-for-sale | (72,820) | (75,079) | |
Proceeds from sales of loans held-for-sale | 73,187 | 76,649 | |
Net gain on sales of mortgage loans | (1,473) | (2,157) | (2,620) |
Net premium amortization/discount (accretion) of purchase accounting adjustments on loans | (776) | (680) | |
Change in current income taxes receivable | 197 | (89) | |
Increase in cash surrender value of BOLI | (350) | (599) | (709) |
Change in accrued interest receivable and other assets | (1,075) | 1,665 | |
Change in accrued interest payable and other liabilities | 8,195 | 16,894 | |
Net premium amortization/discount (accretion) on securities | 1,388 | 773 | |
Securities (gains) losses, net | 131 | (347) | 267 |
Amortization of core deposit | 25 | 118 | 50 |
Amortization of junior subordinated debentures issuance costs | 23 | 24 | |
Amortization of senior notes issuance costs | 50 | 52 | |
Stock based compensation | 1,098 | 625 | |
Net gains on sale of other real estate owned | (104) | (104) | (178) |
Provision for other real estate owned valuation losses | 392 | 366 | 710 |
Net losses on disposal and transfer of fixed assets | (11) | ||
Loss on transfer of premises to other real estate owned | 1 | ||
Net cash provided by operating activities | 27,632 | 34,474 | |
Cash flows from investing activities | |||
Proceeds from maturities and calls including pay down of securities available-for-sale | 20,136 | 78,564 | |
Proceeds from sales of securities available-for-sale | 36,468 | 92,746 | 100,856 |
Purchases of securities available-for-sale | (54,550) | (205,755) | |
Net disbursements/proceeds from sales (purchases) of FHLBC stock | 2,624 | (675) | |
Net change in loans | (4,418) | (64,755) | |
Proceeds from clains on BOLI, net of premiums paid | 1,204 | ||
Improvements in other real estate owned | (59) | ||
Proceeds from sales of other real estate owned, net of participation purchase | 2,068 | 3,280 | |
Proceeds from disposition of premises and equipment | 13 | ||
Net purchases of premises and equipment | (710) | (375) | |
Cash paid for acquisition, net of cash and cash equivalent retained | (35,711) | ||
Net cash provided by (used in) investing activities | 23,330 | (88,847) | |
Cash flows from financing activities | |||
Net change in deposits | (9,587) | 43,360 | |
Net change in securities sold under repurchase agreements | 18,497 | 10,646 | |
Net change in other short-term borrowings | (49,298) | 5,000 | |
Payment of senior note issuance costs | (42) | ||
Dividends paid common stock | (594) | (592) | |
Purchase of treasury stock | (505) | (236) | |
Net cash (used in) provided by financing activities | (41,487) | 58,136 | |
Net change in cash and cash equivalents | 9,475 | 3,763 | |
Cash and cash equivalents at beginning of period | 55,833 | 47,334 | |
Cash and cash equivalents at end of period | 51,097 | 65,308 | $ 51,097 |
Supplemental cash flow information | |||
Income taxes paid | 230 | 100 | |
Interest paid for deposits | 2,448 | 3,295 | |
Interest paid for borrowings | 3,787 | 3,960 | |
Non-cash transfer of loans to other real estate owned | 3,525 | $ 2,380 | |
Non-cash transfer of premises to other real estate owned | $ 95 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total |
Balance at Dec. 31, 2016 | $ 34,534 | $ 116,653 | $ 129,005 | $ (8,762) | $ (96,220) | $ 175,210 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 9,573 | 9,573 | ||||
Other comprehensive income, net of tax | 6,383 | 6,383 | ||||
Dividends declared and paid | (592) | (592) | ||||
Vesting of restricted stock | 92 | (92) | ||||
Stock based compensation | 625 | 625 | ||||
Purchase of treasury stock | (236) | (236) | ||||
Balance at Jun. 30, 2017 | 34,626 | 117,186 | 137,986 | (2,379) | (96,456) | 190,963 |
Balance at Dec. 31, 2017 | 34,626 | 117,742 | 142,959 | 1,479 | (96,456) | 200,350 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 15,750 | 15,750 | ||||
Other comprehensive income, net of tax | (6,285) | (6,285) | ||||
Dividends declared and paid | (594) | (594) | ||||
Vesting of restricted stock | 91 | (758) | 667 | |||
Cumulative effect of change in accounting principle | (319) | 319 | ||||
Stock based compensation | 1,098 | 1,098 | ||||
Purchase of treasury stock | (505) | (505) | ||||
Balance at Jun. 30, 2018 | $ 34,717 | $ 118,082 | $ 157,796 | $ (4,487) | $ (96,294) | $ 209,814 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 1 – Summary of Significant Accounting Policies The accounting policies followed in the preparation of the interim consolidated financial statements are consistent with those used in the preparation of the annual financial information. The interim consolidated financial statements reflect all normal and recurring adjustments that are necessary, in the opinion of management, for a fair statement of results for the interim period presented. Results for the period ended June 30, 2018, are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. These interim consolidated financial statements are unaudited and should be read in conjunction with the audited financial statements and notes included in Old Second Bancorp, Inc.’s (the “Company”) annual report on Form 10-K for the year ended December 31, 2017. Unless otherwise indicated, amounts in the tables contained in the notes to the consolidated financial statements are in thousands. Certain items in prior periods have been reclassified to conform to the current presentation. The Company’s consolidated financial statements are prepared in accordance with United States generally accepted accounting principles (“GAAP”) and follow general practices within the banking industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the consolidated financial statements. Future changes in information may affect these estimates, assumptions, and judgments, which, in turn, may affect amounts reported in the consolidated financial statements. Significant accounting policies are presented in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. These policies, along with the disclosures presented in the other financial statement notes and in this discussion, provide information on how significant assets and liabilities are valued in the consolidated financial statements and how those values are determined. In addition to the significant accounting policies presented in our Form 10-K, as noted above, as a result of our acquisition of Greater Chicago Financial Corp. (“(GCFC”), and its wholly-owned subsidiary, ABC Bank, that closed in the second quarter of 2018, the Company has implemented accounting policies regarding purchased loans. Loans purchased as a result of a business combination are recorded at estimated fair value on the acquisition date, with no carryover of the related allowance for loan and lease losses recorded by the acquiree at the time of purchase. These loans are segregated into two classifications upon purchase: 1) purchased non-credit impaired (“non-PCI”) loans, accounted for in accordance with FASB ASC Subtopic 310-20 “ Nonrefundable Fees and Costs ” (“ASC 310-20”), which have a discount attributable in part to credit quality. Premiums and discounts created when ASC 310-20 loans are recorded at their fair values at acquisition are amortized over the remaining terms of the loans as an adjustment to the related loan’s yield; and 2) purchased credit impaired (“PCI”) loans, accounted for under FASB ASC Subtopic 310-30, “ Loans and Debt Securities Acquired with Deteriorated Credit Quality ” (“ASC 310-30”) as they display signs of credit deterioration. Interest income, through accretion of the difference between the carrying value of the loans and the expected cash flows, is recognized on the acquired loans accounted for under ASC 310-30. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 "Revenue from Contracts with Customers (Topic 606)." The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. In August 2015, the FASB issued ASU 2015-14 “ Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date, ” which deferred the effective date of ASU 2014-09 for an additional year. ASU 2015-14 was effective for annual reporting periods beginning after December 15, 2017. The amendments could be applied retrospectively to each prior reporting period or retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application. Early application was not permitted. In March 2016, the FASB issued ASU 2016-08 “ Revenue from Contracts with Customers (TOPIC 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) ” and in April 2016, the FASB issued ASU 2016-10 “ Revenue from Contracts with Customers (TOPIC 606): Identifying Performance Obligations and Licensing.” ASU 2016-08 requires the entity to determine if it is acting as a principal with control over the goods or services it is contractually obligated to provide, or an agent with no control over specified goods or services provided by another party to a customer. ASU 2016-10 was issued to further clarify ASU 2014-09 implementation regarding identifying performance obligation materiality, identification of key contract components, and scope. The Company performed an analysis of the impact of adoption of this ASU, reviewing revenue recorded from service charges on deposit accounts, asset management fees, gains (losses) on other real estate owned, and debit card interchange fees. Certain revenue received, such as service charges on deposit accounts and interchange fees, is recorded immediately or as the service is performed. Asset management fees recorded by the Company take the form of wealth management income and brokerage income, and both types of fees are recorded after services are rendered, with no contractual requirement of refund to a customer based on non-achievement of fund performance objectives. Finally, the methodology used to record revenue from gains (losses) due to the sale of other real estate owned is not anticipated to change, as the Company currently records income or expense only upon consummation of the sale, and any revenue recorded stemming from seller financed transactions is reviewed for deferral, as appropriate. The Company adopted ASU 2014-09 and related issuances on January 1, 2018, with no cumulative effect adjustment to opening retained earnings required upon implementation of this standard. In January 2016, the FASB issued ASU No. 2016-01 “ Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities .” The objective of the issuance is to provide users of financial statements with more decision–useful information, by making targeted improvements to GAAP. These targeted improvements included revisions to the methodology of accounting for equity investments, eliminating certain disclosures on fair value assumptions for financial instruments measured at amortized cost, and requiring public business entities to use the exit price notion, as defined in ASC 820, for the measurement of the fair value of financial instruments. This standard was effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted this standard as of January 1, 2018. Adoption of this standard resulted in the Company’s use of an exit price rather than an entrance price to determine the fair value of loans and deposits not already measured at fair value on a non-recurring basis in the consolidated balance sheet disclosures; see Note 14–Fair Value of Financial Instruments for further information regarding the valuation processes. In February 2016, the FASB issued ASU No. 2016-02 “ Leases (Topic 842) .” This ASU was issued to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. One key revision from prior guidance was to include operating leases within assets and liabilities recorded; another revision was included which created a new model to follow for sale-leaseback transactions. The impact of this pronouncement will affect lessees primarily, as virtually all of their assets will be recognized on the balance sheet, by recording a right of use asset and lease liability. This pronouncement is effective for fiscal years beginning after December 15, 2018. The Company is in the process of identifying all lease arrangements, methodology of tracking, and practical expedients that may be applied, such as the cumulative effect adjustment in equity upon adoption as of January 1, 2019, compared to a retroactive adoption. We will continue to assess the impact of ASU 2016-02 on our accounting and disclosures. In June 2016, the FASB issued ASU No. 2016-13 “ Measurement of Credit Losses on Financial Instruments (Topic 326). ” ASU 2016-13 was issued to provide financial statement users with more useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date to enhance the decision making process. The new methodology to be used should reflect expected credit losses based on relevant vintage historical information, supported by reasonable forecasts of projected loss given defaults, which will affect the collectability of the reported amounts. This new methodology will also require available-for-sale debt securities to have a credit loss recorded through an allowance rather than write-downs. ASU 2016-13 is effective for financial statements issued for fiscal years beginning after December 15, 2019. The Company is assessing the impact of ASU 2016-13 on its accounting and disclosures, and is in the process of accumulating historical data by loan pools and collateral classifications, and completing model option evaluations to support future risk assessments. In March 2017, the FASB issued ASU No. 2017-08 “ Receivables-Nonrefundable Fees and Other Costs – Premium Amortization on Purchased Callable Debt Securities (Subtopic 310-20) .” This ASU was issued to shorten the amortization period for the premium to the earliest call date on debt securities. This premium is required to be recorded as a reduction to net interest margin during the shorter yield to call period, as compared to prior practice of amortizing the premium as a reduction to net interest margin over the contractual life of the instrument. This ASU does not change the current method of amortizing any discount over the contractual life of the debt security, and this pronouncement is effective for fiscal years beginning after December 15, 2018, with earlier adoption permitted. The Company adopted ASU 2017-08 as a change in accounting principle in the third quarter of 2017 on a modified retrospective basis, which required the Company to reflect its adoption effective January 1, 2017. The effect of amortizing the premium over a shorter period will continue to decrease future quarterly net interest income over the call period until the premium is fully amortized. As a result of management’s analysis, the impact of the change in accounting principle as a result of ASU 2017-08 to adjust beginning of year retained earnings was considered insignificant and, accordingly, the impact was adjusted through 2017 earnings. Net interest income, net income and diluted earnings per share (“EPS”) were previously reported as $22.1 million, $5.5 million, and $0.18 for the quarter ended June 30, 2017, and $42.9 million, $10.0 million, and $0.33 for the six months ended June 30, 2017. The effect of the adoption of ASU 2017-08 resulted in the currently reported totals of net interest income, net income and diluted EPS of $21.8 million, $5.1 million, and $0.17 for the quarter ended June 30, 2017, and $42.4 million, $9.6 million, and $0.32 for the six months ended June 30, 2017. In August 2017, the FASB issued ASU No. 2017-12, “ Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities”. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. The Company adopted ASU 2017-12 on January 1, 2018, on a modified retrospective basis. FASB ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. In accordance with the FASB’s fair value measurement guidance in ASU 2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. As the Company does not currently have any derivative financial instruments subject to master netting agreements, there was no impact to the balance sheet. In February 2018, the FASB issued ASU No. 2018-02, “ Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income .” This ASU was issued in response to the enactment of tax bill H.R.1 “Tax Cuts and Jobs Act”, which resulted in “stranding” the tax effects of items within accumulated other comprehensive income related to the adjustment of deferred taxes due to the reduction of the federal corporate income tax rate. The amendments proposed allow the reclassification of these stranded tax effects to retained earnings, and were effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, and should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate tax rate is recognized. The Company adopted ASU 2018-02 as of January 1, 2018, and a reclassification of $319,000, net, was recorded, which increased accumulated other comprehensive income and reduced retained earnings with the adoption of the accounting standard. Subsequent Events On July 17, 2018, the Company’s Board of Directors declared a cash dividend of $0.01 per share payable on August 6, 2018, to stockholders of record as of July 27, 2018; dividends of $297,000 were paid to stockholders on August 6, 2018. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2018 | |
Acquisitions | |
Acquisitions | Note 2 – Acquisitions On April 20, 2018, the Company acquired Greater Chicago Financial Corp. (“GCFC”), and its wholly owned subsidiary, ABC Bank, which operates four branches in the Chicago metro area. In addition to the acquisition price of $41.1 million, the Company retired the convertible and nonconvertible debentures held by GCFC upon acquisition, which totaled $6.6 million, including interest due. The purchase and the debentures’ retirement were funded with the Company’s cash on hand, and all GCFC common stock was retired and cancelled simultaneous with the close of the transaction. The Company acquired $227.6 million of loans, net of purchase accounting adjustments, and $248.5 million of deposits, net of purchase accounting adjustments for time deposits. Purchase accounting adjustments recorded in the second quarter of 2018 include a loan valuation mark of $11.2 million, a core deposit intangible of $3.1 million, a fixed asset valuation adjustment of $1.5 million, and goodwill of $9.9 million. In addition, a deferred tax asset of $3.5 million was recorded as of the date of acquisition based on analysis of the fair value of assets acquired, less liabilities assumed. None of the $9.9 million recorded as goodwill is expected to be deductible for tax purposes. Acquisition related costs incurred by the Company for the six months ended June 30, 2018, totaled $3.4 million, pretax, and included $1.2 million of salaries and employee benefits related expenses, and $1.8 million of data processing, computer and ATM related conversion costs. The assets and liabilities associated with the acquisition of GCFC were recorded in the Consolidated Balance Sheets at estimated fair value as of the acquisition date. In many cases the determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change, as noted below. The following allocation is based on the information that was available to make preliminary estimates of the fair value and may change as additional information becomes available and additional analyses are completed. While the Company believes that information provided a reasonable basis for estimating the fair values, it expects that it could obtain additional information and evidence during the measurement period that may result in changes to the estimated fair value amounts. This measurement period ends on the earlier of one year after the acquisition date or the date we receive the information about the facts and circumstances that existed at the acquisition date. Subsequent adjustments are, and if necessary, will be prospectively reflected in future filings, and may impact loans, other assets, notes payable and other borrowings, deferred tax assets, net, and goodwill. The below table summarizes the assets acquired, less the liabilities assumed, related to the GCFC/ABC Bank acquisition. All amounts are listed at their estimated fair values as of date of acquisition, and have been accounted for under the acquisition method of accounting. GCFC/ABC Bank Acquisition Summary As of Date of Acquisition April 20, 2018 Assets Cash and due from banks $ 6,669 Interest bearing deposits with financial institutions 500 Securities available-for-sale, at fair value 72,091 Federal funds sold 4,300 FHLBC stock 1,549 Loans 227,594 Premises and equipment 5,339 Other real estate owned 432 Goodwill and core deposit intangible 12,957 Deferred tax assets, net 3,456 Other assets 2,083 Total assets $ 336,970 Liabilities Noninterest bearing demand $ 58,005 Savings, NOW and money market 91,494 Time 98,999 Total deposits 248,498 Securities sold under repurchase agreements 5,624 Other short-term borrowings 10,875 Notes payable and other borrowings 23,544 Other liabilities 1,249 Total liabilities 289,790 Cash consideration paid 47,180 Total Liabilities Assumed and Cash Consideration Paid for Acquisition $ 336,970 Loans acquired in the GCFC acquisition were initially recorded at fair value with no separate allowance for loan losses. The Company reviewed the loans at acquisition to determine which should be considered PCI loans, defining impaired loans as those that were either not accruing interest or exhibited credit risk factors consistent with nonperforming loans at the acquisition date, or non-PCI loans, as addressed in the Company’s significant accounting policies. The following table represents the acquired loans as of date of acquisition and as of June 30, 2018: April 20, 2018 June 30, 2018 ABC Bank Acquired Loans PCI Non-PCI PCI Non-PCI Fair Value $ 11,360 $ 216,306 $ 11,214 $ 208,929 Contractually required principal and interest payment 19,447 219,488 18,989 211,341 Best estimate of contractual cash flows not expected to be collected 6,537 2,511 6,402 2,119 Best estimate of contractual cash flows expected to be collected 12,910 216,977 12,587 209,222 |
Securities
Securities | 6 Months Ended |
Jun. 30, 2018 | |
Securities | |
Securities | Note 3 – Securities Investment Portfolio Management Our investment portfolio serves the liquidity needs and income objectives of the Company. While the portfolio serves as an important component of the overall liquidity management at the Bank, portions of the portfolio also serve as income producing assets. The size and composition of the portfolio reflects liquidity needs, loan demand and interest income objectives. Portfolio size and composition will be adjusted from time to time. While a significant portion of the portfolio consists of readily marketable securities to address liquidity, other parts of the portfolio may reflect funds invested pending future loan demand or to maximize interest income without undue interest rate risk. Investments are comprised of debt securities and non-marketable equity investments. Securities available-for-sale are carried at fair value. Unrealized gains and losses, net of tax, on securities available-for-sale are reported as a separate component of equity. This balance sheet component changes as interest rates and market conditions change. Unrealized gains and losses are not included in the calculation of regulatory capital. FHLBC and FRBC stock are considered nonmarketable equity investments. FHLBC stock was recorded at $4.3 million at June 30, 2018, and $5.4 million at December 31, 2017. FRBC stock was recorded at $4.8 million at both June 30, 2018, and December 31, 2017. The following table summarizes the amortized cost and fair value of the securities portfolio at June 30, 2018, and December 31, 2017, and the corresponding amounts of gross unrealized gains and losses: Gross Gross Amortized Unrealized Unrealized Fair June 30, 2018 Cost Gains Losses Value Securities available-for-sale U.S. Treasuries $ 4,004 $ - $ (128) $ 3,876 U.S. government agencies 12,369 - (153) 12,216 U.S. government agencies mortgage-backed 14,011 - (604) 13,407 States and political subdivisions 279,007 1,640 (4,535) 276,112 Corporate bonds 685 21 (6) 700 Collateralized mortgage obligations 63,778 60 (2,406) 61,432 Asset-backed securities 110,053 1,011 (1,801) 109,263 Collateralized loan obligations 66,489 223 (74) 66,638 Total securities available-for-sale $ 550,396 $ 2,955 $ (9,707) $ 543,644 Gross Gross Amortized Unrealized Unrealized Fair December 31, 2017 Cost Gains Losses Value Securities available-for-sale U.S. Treasury $ 4,002 $ - $ (55) $ 3,947 U.S. government agencies 13,062 8 (9) 13,061 U.S. government agencies mortgage-backed 12,372 7 (165) 12,214 States and political subdivisions 272,240 7,116 (1,264) 278,092 Corporate bonds 823 21 (11) 833 Collateralized mortgage obligations 66,892 202 (1,155) 65,939 Asset-backed securities 113,983 862 (1,913) 112,932 Collateralized loan obligations 54,271 251 (101) 54,421 Total securities available-for-sale $ 537,645 $ 8,467 $ (4,673) $ 541,439 The fair value, amortized cost and weighted average yield of debt securities at June 30, 2018, by contractual maturity, were as follows in the table below. Securities not due at a single maturity date are shown separately. Weighted Amortized Average Fair Securities available-for-sale Cost Yield Value Due in one year or less $ 10,550 2.10 % $ 10,540 Due after one year through five years 4,689 2.20 4,576 Due after five years through ten years 5,343 3.27 5,413 Due after ten years 275,483 2.98 272,375 296,065 2.94 292,904 Mortgage-backed and collateralized mortgage obligations 77,789 3.11 74,839 Asset-backed securities 110,053 3.23 109,263 Collateralized loan obligations 66,489 4.34 66,638 Total securities available-for-sale $ 550,396 3.19 % $ 543,644 At June 30, 2018, the Company’s investments included $92.5 million of asset-backed securities that are backed by student loans originated under the Federal Family Education Loan program (“FFEL”). Under the FFEL, private lenders made federally guaranteed student loans to parents and students. While the program was modified several times before elimination in 2010, FFEL securities are generally guaranteed by the U.S Department of Education (“DOE”) at not less than 97% of the outstanding principal amount of the loans. The guarantee will reduce to 85% if the DOE receives reimbursement requests in excess of 5% of insured loans; reimbursement will drop to 75% if reimbursement requests exceed 9% of insured loans. In addition to the DOE guarantee, total added credit enhancement in the form of overcollateralization and/or subordination amounted to $10.9 million, or 11.44%, of outstanding principal. The Company has invested in securities issued from three originators that individually amount to over 10% of the Company’s stockholders equity. Information regarding these three issuers and the value of the securities issued follows: June 30, 2018 Amortized Fair Issuer Cost Value GCO Education Loan Funding Corp $ 27,685 $ 26,754 Towd Point Mortgage Trust 28,966 28,080 Student Loan Marketing Association 25,780 26,176 Securities with unrealized losses at June 30, 2018, and December 31, 2017, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows (in thousands except for number of securities): Less than 12 months 12 months or more June 30, 2018 in an unrealized loss position in an unrealized loss position Total Number of Unrealized Fair Number of Unrealized Fair Number of Unrealized Fair Securities available-for-sale Securities Losses Value Securities Losses Value Securities Losses Value U.S. Treasuries 1 $ 128 $ 3,876 - $ - $ - 1 $ 128 $ 3,876 U.S. government agencies 4 153 12,216 - - - 4 153 12,216 U.S. government agencies mortgage-backed 7 356 8,968 5 248 4,439 12 604 13,407 States and political subdivisions 43 3,264 141,455 2 1,271 3,849 45 4,535 145,304 Corporate bonds - - - 1 6 198 1 6 198 Collateralized mortgage obligations 3 399 20,353 9 2,007 37,782 12 2,406 58,135 Asset-backed securities 3 65 8,451 6 1,736 56,539 9 1,801 64,990 Collateralized loan obligations 3 60 17,364 1 14 7,986 4 74 25,350 Total securities available-for-sale 64 $ 4,425 $ 212,683 24 $ 5,282 $ 110,793 88 $ 9,707 $ 323,476 Less than 12 months 12 months or more December 31, 2017 in an unrealized loss position in an unrealized loss position Total Number of Unrealized Fair Number of Unrealized Fair Number of Unrealized Fair Securities available-for-sale Securities Losses Value Securities Losses Value Securities Losses Value U.S. Treasuries 1 $ 55 $ 3,947 - $ - $ - 1 $ 55 $ 3,947 U.S. government agencies 2 9 6,550 - - - 2 9 6,550 U.S. government agencies mortgage-backed 4 24 5,501 5 141 4,843 9 165 10,344 States and political subdivisions 13 1,237 45,985 1 27 1,512 14 1,264 47,497 Corporate bonds - - - 1 11 332 1 11 332 Collateralized mortgage obligations 3 31 11,534 8 1,124 40,219 11 1,155 51,753 Asset-backed securities - - - 7 1,913 61,745 7 1,913 61,745 Collateralized loan obligations 3 101 29,313 - - - 3 101 29,313 Total securities available-for-sale 26 $ 1,457 $ 102,830 22 $ 3,216 $ 108,651 48 $ 4,673 $ 211,481 Recognition of other-than-temporary impairment was not necessary as of the three and six months ended June 30, 2018. The changes in fair value related primarily to interest rate fluctuations. Our review of other-than-temporary impairment determined that there was no credit quality deterioration. The following table presents net realized gains (losses) on securities available-for-sale for the three and six months ended June 30, 2018 and 2017. Three Months Ended Six Months Ended June 30, June 30, Securities available-for-sale 2018 2017 2018 2017 Proceeds from sales of securities $ 90,224 $ 36,468 $ 92,746 $ 100,856 Gross realized gains on securities 312 71 347 437 Gross realized losses on securities - (202) - (704) Securities realized gains (losses), net $ 312 $ (131) $ 347 $ (267) Income tax (expense) benefit on net realized gains (losses) (88) 52 (98) 106 The majority of the net realized losses in the prior year were incurred as the portfolio was repositioned during 2017 to invest in higher yielding tax exempt municipal securities. Securities valued at $311.4 million as of June 30, 2018, an increase from $301.0 million at year-end 2017, were pledged to secure deposits and borrowings, and for other purposes. |
Loans
Loans | 6 Months Ended |
Jun. 30, 2018 | |
Loans | |
Loans | Note 4 – Loans Major classifications of loans were as follows: June 30, 2018 December 31, 2017 Commercial $ 299,536 $ 272,851 Leases 66,687 68,325 Real estate - commercial 808,264 750,991 Real estate - construction 115,486 85,162 Real estate - residential 404,908 313,397 Home equity lines of credit "HELOC" 127,986 112,833 Other 1 13,969 13,384 Total loans, excluding deferred loan costs and PCI loans 1,836,836 1,616,942 Net deferred loan costs 1,112 680 Total loans, excluding PCI loans 1,837,948 1,617,622 PCI loans, net of purchase accounting adjustments 11,214 - Total loans $ 1,849,162 $ 1,617,622 1 The “Other” class includes consumer and overdrafts. It is the policy of the Company to review each prospective credit prior to making a loan in order to determine if an adequate level of security or collateral has been obtained. The type of collateral, when required, will vary from liquid assets to real estate. The Company’s access to collateral, in the event of borrower default, is assured through adherence to lending laws, the Company’s lending standards and credit monitoring procedures. With selected exceptions, the Bank makes loans solely within its market area. There are no significant concentrations of loans where the customers’ ability to honor loan terms is dependent upon a single economic sector, although the real estate related categories listed above represent 78.8% and 78.0% of the portfolio at June 30, 2018, and December 31, 2017, respectively. The PCI loans, net of purchase accounting adjustments, reflect purchase credit impaired loans as of June 30, 2018, related to the Company’s second quarter acquisition of ABC Bank. Aged analysis of past due loans by class of loans was as follows: Recorded Investment 90 days or 90 Days or Greater Past 30-59 Days 60-89 Days Greater Past Total Past Due and June 30, 2018 Past Due Past Due Due Due Current Nonaccrual Total Loans Accruing Commercial $ 210 $ - $ - $ 210 $ 299,326 $ - $ 299,536 $ - Leases - - - - 66,687 - 66,687 - Real estate - commercial Owner occupied general purpose 903 - 450 1,353 172,922 823 175,098 477 Owner occupied special purpose 1,981 - - 1,981 194,604 426 197,011 - Non-owner occupied general purpose 3,282 - 174 3,456 279,599 39 283,094 178 Non-owner occupied special purpose - - - - 87,704 3,099 90,803 - Retail properties - - - - 47,582 - 47,582 - Farm - - - - 14,676 - 14,676 - Real estate - construction Homebuilder - - - - 7,649 - 7,649 - Land - - - - 9,168 - 9,168 - Commercial speculative - - - - 39,730 - 39,730 - All other 59 - 442 501 58,245 193 58,939 475 Real estate - residential Investor 466 108 38 612 72,896 371 73,879 40 Multifamily 232 - - 232 191,883 - 192,115 - Owner occupied 710 208 - 918 134,265 3,731 138,914 - HELOC 599 172 49 820 126,443 723 127,986 50 Other 1 39 - - 39 15,026 16 15,081 - Total, excluding PCI loans $ 8,481 $ 488 $ 1,153 $ 10,122 $ 1,818,405 $ 9,421 $ 1,837,948 $ 1,220 PCI loans, net of purchase accounting adjustments 387 - - 387 7,850 2,977 11,214 Total $ 8,868 $ 488 $ 1,153 $ 10,509 $ 1,826,255 $ 12,398 $ 1,849,162 $ 1,220 Recorded Investment 90 days or 90 Days or Greater Past 30-59 Days 60-89 Days Greater Past Total Past Due and December 31, 2017 Past Due Past Due Due Due Current Nonaccrual Total Loans Accruing Commercial $ 995 $ 275 $ - $ 1,270 $ 271,581 $ - $ 272,851 $ - Leases - - - - 68,147 178 68,325 - Real estate - commercial Owner occupied general purpose 1,136 - - 1,136 144,267 455 145,858 - Owner occupied special purpose 226 - - 226 170,546 342 171,114 - Non-owner occupied general purpose - 593 - 593 273,203 1,163 274,959 - Non-owner occupied special purpose - - 248 248 92,923 - 93,171 254 Retail properties - - - - 49,538 1,081 50,619 - Farm - - - - 15,270 - 15,270 - Real estate - construction Homebuilder 129 - - 129 2,221 - 2,350 - Land 1,124 - - 1,124 1,319 - 2,443 - Commercial speculative - - - - 32,028 - 32,028 - All other - - - - 48,140 201 48,341 - Real estate - residential Investor - - - - 55,248 372 55,620 - Multifamily - - - - 125,049 4,723 129,772 - Owner occupied 74 - - 74 123,257 4,674 128,005 - HELOC 491 278 - 769 110,872 1,192 112,833 - Other 1 37 - - 37 14,019 7 14,063 - Total $ 4,212 $ 1,146 $ 248 $ 5,606 $ 1,597,628 $ 14,388 $ 1,617,622 $ 254 1 The “Other” class includes consumer, overdrafts and net deferred costs. Credit Quality Indicators The Company categorizes loans into credit risk categories based on current financial information, overall debt service coverage, comparison against industry averages, historical payment experience, and current economic trends. This analysis includes loans with outstanding balances or commitments greater than $50,000 and excludes homogeneous loans such as home equity lines of credit and residential mortgages. Loans with a classified risk rating are reviewed quarterly regardless of size or loan type. The Company uses the following definitions for classified risk ratings: Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan at some future date. Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Credits that are not covered by the definitions above are pass credits, which are not considered to be adversely rated. Credit Quality Indicators by class of loans were as follows: June 30, 2018 Special Pass Mention Substandard 2 Doubtful Total Commercial $ 298,512 $ 631 $ 393 $ - $ 299,536 Leases 66,148 - 539 - 66,687 Real estate - commercial Owner occupied general purpose 166,962 4,915 3,221 - 175,098 Owner occupied special purpose 195,009 254 1,748 - 197,011 Non-owner occupied general purpose 275,728 4,899 2,467 - 283,094 Non-owner occupied special purpose 87,704 - 3,099 - 90,803 Retail Properties 45,755 - 1,827 - 47,582 Farm 13,428 - 1,248 - 14,676 Real estate - construction Homebuilder 7,649 - - - 7,649 Land 9,168 - - - 9,168 Commercial speculative 39,730 - - - 39,730 All other 56,443 2,130 366 - 58,939 Real estate - residential Investor 72,759 91 1,029 - 73,879 Multifamily 188,813 - 3,302 - 192,115 Owner occupied 133,485 1 5,428 - 138,914 HELOC 126,353 - 1,633 - 127,986 Other 1 15,063 - 18 - 15,081 Total, excluding PCI loans $ 1,798,709 $ 12,921 $ 26,318 $ - $ 1,837,948 PCI loans, net of purchase accounting adjustments - - 11,214 - 11,214 Total $ 1,798,709 $ 12,921 $ 37,532 $ - $ 1,849,162 December 31, 2017 Special Pass Mention Substandard 2 Doubtful Total Commercial $ 270,889 $ 1,962 $ - $ - $ 272,851 Leases 67,500 - 825 - 68,325 Real estate - commercial Owner occupied general purpose 142,843 1,927 1,088 - 145,858 Owner occupied special purpose 169,621 1,152 341 - 171,114 Non-owner occupied general purpose 271,731 2,065 1,163 - 274,959 Non-owner occupied special purpose 89,582 - 3,589 - 93,171 Retail Properties 48,321 1,217 1,081 - 50,619 Farm 11,755 1,029 2,486 - 15,270 Real estate - construction Homebuilder 2,350 - - - 2,350 Land 2,443 - - - 2,443 Commercial speculative 32,028 - - - 32,028 All other 46,913 1,052 376 - 48,341 Real estate - residential Investor 55,172 - 448 - 55,620 Multifamily 125,049 - 4,723 - 129,772 Owner occupied 122,178 561 5,266 - 128,005 HELOC 110,934 - 1,899 - 112,833 Other 1 14,043 - 20 - 14,063 Total $ 1,583,352 $ 10,965 $ 23,305 $ - $ 1,617,622 1 The “Other” class includes consumer, overdrafts and net deferred costs. 2 The substandard credit quality indicator includes both potential problem loans that are currently performing and nonperforming loans. The Company had $942,000 and $1.3 million in residential real estate loans in the process of foreclosure as of June 30, 2018, and December 31, 2017, respectively. The following tables set forth the recorded investments, unpaid principal balance and related allowance, excluding purchased credit-impaired loans, by class of loans for the June 30, 2018, periods: Six Months Ended As of June 30, 2018 June 30, 2018 Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized With no related allowance recorded Commercial $ - $ - $ - $ - $ - Leases - - - 89 - Commercial real estate Owner occupied general purpose 911 985 - 683 3 Owner occupied special purpose 426 546 - 384 - Non-owner occupied general purpose 39 81 - 601 - Non-owner occupied special purpose - - - - - Retail properties - - - 541 - Farm - - - - - Construction Homebuilder - - - - - Land - - - - - Commercial speculative - - - - - All other 193 226 - 197 - Residential Investor 371 468 - 371 - Multifamily - - - 2,362 - Owner occupied 4,244 5,769 - 4,726 18 HELOC 741 860 - 933 1 Other 1 16 16 - 11 - Total impaired loans with no recorded allowance 6,941 8,951 - 10,898 22 With an allowance recorded Commercial - - - - - Leases - - - - - Commercial real estate Owner occupied general purpose - - - - - Owner occupied special purpose - - - - - Non-owner occupied general purpose - - - - - Non-owner occupied special purpose 3,099 3,575 419 1,550 - Retail properties - - - - - Farm - - - - - Construction Homebuilder - - - - - Land - - - - - Commercial speculative - - - - - All other - - - - - Residential Investor 815 815 10 822 22 Multifamily - - - - - Owner occupied 3,646 3,646 45 3,544 73 HELOC 1,321 1,321 24 1,153 24 Other 1 3 3 - 2 - Total impaired loans with a recorded allowance 8,884 9,360 498 7,071 119 Total impaired loans $ 15,825 $ 18,311 $ 498 $ 17,969 $ 141 1 The “Other” class includes consumer, overdrafts and net deferred costs. Impaired loans by class of loans as of December 31, 2017, and for the six months ended June 30, 2017, were as follows: Six Months Ended As of December 31, 2017 June 30, 2017 Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized With no related allowance recorded Commercial $ - $ - $ - $ 128 $ - Leases 178 213 - 293 - Commercial real estate Owner occupied general purpose 455 495 - 1,170 - Owner occupied special purpose 342 498 - 376 - Non-owner occupied general purpose 1,163 1,538 - 1,443 1 Non-owner occupied special purpose - - - 507 - Retail properties 1,081 1,177 - 1,161 - Farm - - - - - Construction Homebuilder - - - - - Land - - - - - Commercial speculative - - - 72 - All other 201 229 - 180 - Residential Investor 372 676 - 1,708 20 Multifamily 4,723 4,965 - 2,412 - Owner occupied 5,208 6,680 - 9,016 65 HELOC 1,125 1,313 - 2,227 15 Other 1 7 8 - 105 - Total impaired loans with no recorded allowance 14,855 17,792 - 20,798 101 With an allowance recorded Commercial - - - - - Leases - - - 120 - Commercial real estate Owner occupied general purpose - - - - - Owner occupied special purpose - - - - - Non-owner occupied general purpose - - - 123 - Non-owner occupied special purpose - - - - - Retail properties - - - - - Farm - - - - - Construction Homebuilder - - - - - Land - - - - - Commercial speculative - - - - - All other - - - - - Residential Investor 829 829 10 - - Multifamily - - - - - Owner occupied 3,443 3,443 43 402 - HELOC 985 985 91 - - Other 1 - - - - - Total impaired loans with a recorded allowance 5,257 5,257 144 645 - Total impaired loans $ 20,112 $ 23,049 $ 144 $ 21,443 $ 101 1 The “Other” class includes consumer, overdrafts and net deferred costs. Troubled debt restructurings (“TDRs”) are loans for which the contractual terms have been modified and both of these conditions exist: (1) there is a concession to the borrower and (2) the borrower is experiencing financial difficulties. Loans are restructured on a case-by-case basis during the loan collection process with modifications generally initiated at the request of the borrower. These modifications may include reduction in interest rates, extension of term, deferrals of principal, and other modifications. The Bank participates in the U.S. Department of the Treasury’s (the “Treasury”) Home Affordable Modification Program (“HAMP”) which gives qualifying homeowners an opportunity to refinance into more affordable monthly payments. The specific allocation of the allowance for loan and lease losses for TDRs is determined by calculating the present value of the TDR cash flows by discounting the original payment less an assumption for probability of default at the original note’s issue rate, and adding this amount to the present value of collateral less selling costs. If the resulting amount is less than the recorded book value, the Bank either establishes a valuation allowance (i.e., specific reserve) as a component of the allowance for loan and lease losses or charges off the impaired balance if it determines that such amount is a confirmed loss. This method is used consistently for all segments of the portfolio. The allowance for loan and lease losses also includes an allowance based on a loss migration analysis for each loan category on loans and leases that are not individually evaluated for specific impairment. All loans charged-off, including TDRs charged-off, are factored into this calculation by portfolio segment. TDRs that were modified during the period are as follows: TDR Modifications TDR Modifications Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 # of Pre-modification Post-modification # of Pre-modification Post-modification contracts recorded investment recorded investment contracts recorded investment recorded investment Troubled debt restructurings Real estate - commercial Owner occupied special purpose Other 1 1 $ 110 $ 56 1 $ 110 $ 56 Real estate - residential Owner occupied HAMP 2 1 49 39 1 49 39 Other 1 HELOC Rate 3 1 24 24 Other 1 3 305 287 7 523 503 Total 5 $ 464 $ 382 10 $ 706 $ 622 TDR Modifications TDR Modifications Three Months Ended June 30, 2017 Six Months Ended June 30, 2017 # of Pre-modification Post-modification # of Pre-modification Post-modification contracts recorded investment recorded investment contracts recorded investment recorded investment Troubled debt restructurings HELOC Other 1 2 $ 155 $ 147 6 $ 399 $ 388 Total 2 $ 155 $ 147 6 $ 399 $ 388 1 Other: Change of terms from bankruptcy court. 2 HAMP: Home Affordable Modification Program. 3 Rate: Refers to interest rate reduction. TDRs are classified as being in default on a case-by-case basis when they fail to be in compliance with the modified terms. There was no TDR default activity for the June 30, 2018, and June 30, 2017, for loans that were restructured within the 12 month period prior to default. The following table details the accretable discount on all of the Company’s purchased loans, both non-PCI loans and PCI loans as of June 30, 2018. Accretable Discount - Non-PCI Loans Accretable Discount - PCI Loans Non-Accretable Discount - PCI Loans Total Beginning balance, April 1, 2018 $ 694 $ - $ - $ 694 Purchases 3,182 1,551 6,536 11,269 Accretion (881) (176) - (1,057) Transfer 1 - (2) (133) (135) Ending balance, June 30, 2018 $ 2,995 $ 1,373 $ 6,403 $ 10,771 1 Transfer was due to loans moved to OREO. |
Allowance for Loan Losses
Allowance for Loan Losses | 6 Months Ended |
Jun. 30, 2018 | |
Allowance for Loan Losses | |
Allowance for Loan Losses | Note 5 – Allowance for Loan and Lease Losses Changes in the allowance for loan and lease losses by segment of loans based on method of impairment for the three and six months ended June 30, 2018, were as follows: Real Estate Real Estate Real Estate Allowance for loan and lease losses: Commercial Leases Commercial Construction Residential HELOC Other 1 Total Three months ended June 30, 2018 Beginning balance $ 2,604 $ 617 $ 9,565 $ 1,143 $ 1,854 $ 1,535 $ 870 $ 18,188 Charge-offs 15 8 504 - 5 65 102 699 Recoveries 92 - 21 - 105 91 73 382 (Release) Provision (5) 25 1,455 255 (136) (171) 27 1,450 Ending balance $ 2,676 $ 634 $ 10,537 $ 1,398 $ 1,818 $ 1,390 $ 868 $ 19,321 Six months ended June 30, 2018 Beginning balance $ 2,453 $ 692 $ 9,522 $ 923 $ 1,846 $ 1,446 $ 579 $ 17,461 Charge-offs 31 13 408 (16) (55) 92 201 674 Recoveries 109 - 388 3 1,016 138 152 1,806 Provision (Release) 145 (45) 1,035 456 (1,099) (102) 338 728 Ending balance $ 2,676 $ 634 $ 10,537 $ 1,398 $ 1,818 $ 1,390 $ 868 $ 19,321 Ending balance: Individually evaluated for impairment $ - $ - $ 419 $ - $ 55 $ 24 $ - $ 498 Ending balance: Collectively evaluated for impairment 2,676 634 10,118 1,398 1,763 1,366 868 18,823 Ending balance: Acquired and accounted for ASC 310-30 - - - - - - - - Total ending allowance balance $ 2,676 $ 634 $ 10,537 $ 1,398 $ 1,818 $ 1,390 $ 868 $ 19,321 Loans: Ending balance: Individually evaluated for Impairment $ - $ - $ 4,475 $ 193 $ 11,138 $ - $ 19 $ 15,825 Ending balance: Collectively evaluated for impairment 299,536 66,687 803,789 115,293 393,770 127,986 15,062 1,822,123 Ending balance: Acquired and accounted for ASC 310-30 2 - 4,146 1,556 5,509 - 1 11,214 Total ending loans balance $ 299,538 $ 66,687 $ 812,410 $ 117,042 $ 410,417 $ 127,986 $ 15,082 $ 1,849,162 1 The “Other” class includes consumer, overdrafts and net deferred costs. Changes in the allowance for loan and lease losses by segment of loans based on method of impairment for the three and six months ended June 30, 2017, were as follows: Allowance for loan and lease losses: Commercial Leases Commercial Construction Residential HELOC Other 1 Total Three months ended June 30, 2017 Beginning balance $ 1,672 $ 603 $ 7,831 $ 978 $ 2,438 $ 1,340 $ 879 $ 15,741 Charge-offs 6 - 4 - 946 30 80 1,066 Recoveries 5 - 46 60 110 139 51 411 Provision (Release) 479 188 234 (181) 270 64 (304) 750 Ending balance $ 2,150 $ 791 $ 8,107 $ 857 $ 1,872 $ 1,513 $ 546 $ 15,836 Six months ended June 30, 2017 Beginning balance $ 1,629 $ 633 $ 9,547 $ 389 $ 2,178 $ 1,331 $ 451 $ 16,158 Charge-offs 7 117 278 4 977 194 180 1,757 Recoveries 7 - 81 78 153 238 128 685 Provision (Release) 521 275 (1,243) 394 518 138 147 750 Ending balance $ 2,150 $ 791 $ 8,107 $ 857 $ 1,872 $ 1,513 $ 546 $ 15,836 Ending balance: Individually evaluated for impairment $ - $ 98 $ - $ - $ - $ - $ - $ 98 Ending balance: Collectively evaluated for impairment 2,150 693 8,107 857 1,872 1,513 546 15,738 Total ending allowance balance $ 2,150 $ 791 $ 8,107 $ 857 $ 1,872 $ 1,513 $ 546 $ 15,836 Loans: Ending balance: Individually evaluated for impairment $ 216 $ 460 $ 3,113 $ 220 $ 14,609 $ 1,971 $ 9 $ 20,598 Ending balance: Collectively evaluated for impairment 256,544 69,678 702,990 93,441 267,509 114,081 14,806 1,519,049 Total ending loan balance $ 256,760 $ 70,138 $ 706,103 $ 93,661 $ 282,118 $ 116,052 $ 14,815 $ 1,539,647 |
Other Real Estate Owned
Other Real Estate Owned | 6 Months Ended |
Jun. 30, 2018 | |
Other Real Estate Owned | |
Other Real Estate Owned | Note 6 – Other Real Estate Owned Details related to the activity in the other real estate owned (“OREO”) portfolio, net of valuation reserve, for the periods presented are itemized in the following table: Three Months Ended Six Months Ended June 30, June 30, Other real estate owned 2018 2017 2018 2017 Balance at beginning of period $ 7,063 $ 13,481 $ 8,371 $ 11,916 Property additions 2,812 204 2,812 3,620 Property improvements - - 59 - Less: Proceeds from property disposals, net of participation purchase and of gains/losses 709 1,569 1,964 3,102 Period valuation adjustments 254 392 366 710 Balance at end of period $ 8,912 $ 11,724 $ 8,912 $ 11,724 Activity in the valuation allowance was as follows: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Balance at beginning of period $ 8,099 $ 9,659 $ 8,208 $ 9,982 Provision for unrealized losses 254 392 366 710 Reductions taken on sales (5) (1,747) (226) (2,388) Other adjustments - - - - Balance at end of period $ 8,348 $ 8,304 $ 8,348 $ 8,304 Expenses related to OREO, net of lease revenue includes: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Gain on sales, net $ (24) $ (104) $ (104) $ (178) Provision for unrealized losses 254 392 366 710 Operating expenses 213 293 369 816 Less: Lease revenue 14 42 29 100 Net OREO expense $ 429 $ 539 $ 602 $ 1,248 |
Deposits
Deposits | 6 Months Ended |
Jun. 30, 2018 | |
Deposits | |
Deposits | Note 7 – Deposits Major classifications of deposits were as follows: June 30, 2018 December 31, 2017 Noninterest bearing demand $ 620,807 $ 572,404 Savings 301,832 262,220 NOW accounts 435,514 429,448 Money market accounts 320,949 276,082 Certificates of deposit of less than $100,000 249,049 216,493 Certificates of deposit of $100,000 through $250,000 175,174 122,489 Certificates of deposit of more than $250,000 58,526 43,789 Total deposits $ 2,161,851 $ 1,922,925 |
Borrowings
Borrowings | 6 Months Ended |
Jun. 30, 2018 | |
Borrowings | |
Borrowings | Note 8 – Borrowings The following table is a summary of borrowings as of June 30, 2018, and December 31, 2017. Junior subordinated debentures are discussed in detail in Note 9: June 30, 2018 December 31, 2017 Securities sold under repurchase agreements $ 54,038 $ 29,918 Other short-term borrowings 1 76,625 115,000 Junior subordinated debentures 57,662 57,639 Senior notes 44,108 44,058 Notes payable and other borrowings 23,496 - Total borrowings $ 255,929 $ 246,615 1 Includes short-term FHLBC advances and the outstanding portion of an operating line of credit. The Company enters into deposit sweep transactions where the transaction amounts are secured by pledged securities. These transactions consistently mature overnight from the transaction date and are governed by sweep repurchase agreements. All sweep repurchase agreements are treated as financings secured by U.S. government agencies and collateralized mortgage-backed securities and had a carrying amount of $54.0 million at June 30, 2018, and $29.9 million at December 31, 2017. The fair value of the pledged collateral was $73.9 million at June 30, 2018, and $40.0 million at December 31, 2017. At June 30, 2018, there was one customer with secured balances exceeding 10% of stockholders’ equity. The Company’s borrowings at the FHLBC require the Bank to be a member and invest in the stock of the FHLBC. Total borrowings are generally limited to the lower of 35% of total assets or 60% of the book value of certain mortgage loans. As of June 30, 2018, the Bank had $72.6 million in short-term advances outstanding under the FHLBC compared to $115.0 million outstanding as of December 31, 2017; $70.0 million of the June 30, 2018, balance was issued at 2.01%, and $2.6 million was issued at 1.40%. The additional $4.0 million in other short-term borrowings as of June 30, 2018, was the outstanding portion of a $20.0 million line of credit the Company has with a correspondent bank for short-term funding needs, paying 3.73% as of the current quarter end; advances under the line can be outstanding up to 360 days from date of issuance. The Bank also assumed $23.5 million of long-term FHLBC advances with the ABC Bank acquisition, with maturities scheduled over the next 7.75 years and paying interest at rates in the range of 1.40% to 2.83 % as of June 30, 2018. FHLBC stock held was valued at $4.3 million, and any potential FHLBC advances were collateralized by securities with a fair value of $76.7 million and loans with a principal balance of $296.3 million, which carried a FHLBC calculated combined collateral value of $295.5 million. The Company had excess collateral of $150.1 million available to secure borrowings at June 30, 2018. The Company also has $44.1 million of senior notes outstanding, net of deferred issuance costs, as of June 30, 2018 and December 31, 2017. The senior notes mature in ten years, and terms include interest payable semiannually at 5.75% for five years. Beginning December 2021, the senior debt will pay interest at a floating rate, with interest payable quarterly at three month LIBOR plus 385 basis points. The notes are redeemable, in whole or in part, at the option of the Company, beginning with the interest payment date on December 31, 2021, and on any floating rate interest payment date thereafter, at a redemption price equal to 100% of the principal amount of the notes plus accrued and unpaid interest. As of June 30, 2018 and December 31, 2017, unamortized debt issuance costs related to the senior notes were $892,000 and $942,000, respectively, and are included as a reduction of the balance of the senior notes on the Consolidated Balance Sheet. These deferred issuance costs will be amortized to interest expense over the ten year term of the notes and are included in the Consolidated Statements of Income. |
Junior Subordinated Debentures
Junior Subordinated Debentures | 6 Months Ended |
Jun. 30, 2018 | |
Junior Subordinated Debentures. | |
Junior Subordinated Debentures | Note 9 – Junior Subordinated Debentures The Company completed the sale of $27.5 million of cumulative trust preferred securities by its unconsolidated subsidiary, Old Second Capital Trust I, in June 2003. An additional $4.1 million of cumulative trust preferred securities were sold in July 2003. The trust preferred securities may remain outstanding for a 30-year term but, subject to regulatory approval, can be called in whole or in part by the Company after June 30, 2008. When not in deferral, distributions on the securities are payable quarterly at an annual rate of 7.80%. The Company issued a new $32.6 million subordinated debenture to Old Second Capital Trust I in return for the aggregate net proceeds of this trust preferred offering. The interest rate and payment frequency on the debenture are equivalent to the cash distribution basis on the trust preferred securities. The Company issued an additional $25.0 million of cumulative trust preferred securities through a private placement completed by an additional, unconsolidated subsidiary, Old Second Capital Trust II, in April 2007. These trust preferred securities also mature in 30 years, but subject to the aforementioned regulatory approval, can be called in whole or in part on a quarterly basis commencing June 15, 2017. The quarterly cash distributions on the securities were fixed at 6.77% through June 15, 2017, and float at 150 basis points over three-month LIBOR thereafter. The Trust II issuance converted from fixed to floating rate at three month LIBOR plus 150 basis points on June 15, 2017. Upon conversion to a floating rate, a cash flow hedge was initiated which resulted in the total interest rate paid on the debt of 4.34% as of June 30, 2018, compared to the rate paid prior to June 15, 2017 of 6.77%. The Company issued a new $25.8 million subordinated debenture to Old Second Capital Trust II in return for the aggregate net proceeds of this trust preferred offering. The interest rate and payment frequency on the debenture are equivalent to the cash distribution basis on the trust preferred securities. Both of the debentures issued by the Company are disclosed on the Consolidated Balance Sheet as junior subordinated debentures and the related interest expense for each issuance is included in the Consolidated Statements of Income. As of June 30, 2018, and December 31, 2017, unamortized debt issuance costs related to the junior subordinated debentures were $716,000 and $739,000 respectively, and are included as a reduction to the balance of the junior subordinated debentures on the Consolidated Balance Sheet. |
Equity Compensation Plans
Equity Compensation Plans | 6 Months Ended |
Jun. 30, 2018 | |
Equity Compensation Plans | |
Equity Compensation Plans | Note 10 – Equity Compensation Plans Stock-based awards are outstanding under the Company’s 2008 Equity Incentive Plan (the “2008 Plan”) and the Company’s 2014 Equity Incentive Plan, as amended (the “2014 Plan,” and together with the 2008 Plan, the “Plans”). The 2014 Plan was approved at the 2014 annual meeting of stockholders; a maximum of 375,000 shares were authorized to be issued under this plan. Following approval of the 2014 Plan, no further awards will be granted under the 2008 Plan or any other Company equity compensation plan. At the May 2016 annual stockholders meeting, an amendment to the 2014 Plan authorized an additional 600,000 shares to be issued, which resulted in a total of 975,000 shares authorized for issuance under this plan. The 2014 Plan authorizes the granting of qualified stock options, non-qualified stock options, restricted stock, restricted stock units, and stock appreciation rights. Awards may be granted to selected directors and officers or employees under the 2014 Plan at the discretion of the Compensation Committee of the Company’s Board of Directors. As of June 30, 2018, 169,791 shares remained available for issuance under the 2014 Plan. There were no stock options granted or exercised in the six months ended June 30, 2018 and 2017. All stock options are granted for a term of ten years. There is no unrecognized compensation cost related to unvested stock options as all stock options of the Company’s common stock have fully vested. A summary of stock option activity in the Plans for the six months ended June 30, 2018, is as follows: Weighted- Weighted Average Average Remaining Exercise Contractual Aggregate Shares Price Term (years) Intrinsic Value Beginning outstanding 9,000 $ 7.49 - - Canceled - - - - Expired - - - - Ending outstanding 9,000 $ 7.49 0.6 $ 64 Exercisable at end of period 9,000 $ 7.49 0.6 $ 64 Generally, restricted stock and restricted stock units granted under the Plans vest three years from the grant date, but the Compensation Committee of the Company’s Board of Directors has discretionary authority to change some terms including the amount of time until the vest date. Awards under the 2008 Plan will become fully vested upon a merger or change in control of the Company. Under the 2014 Plan, upon a change in control of the Company, if (i) the 2014 Plan is not an obligation of the successor entity following the change in control, or (ii) the 2014 Plan is an obligation of the successor entity following the change in control and the participant incurs an involuntary termination, then the stock options, stock appreciation rights, stock awards and cash incentive awards under the 2014 Plan will become fully exercisable and vested. Performance-based awards generally will vest based upon the level of achievement of the applicable performance measures through the change in control. The Company granted restricted stock under its equity compensation plans beginning in 2005 and it began granting restricted stock units in February 2009. Restricted stock awards under the Plans generally entitle holders to voting and dividend rights upon grant and are subject to forfeiture until certain restrictions have lapsed including employment for a specific period. Restricted stock units under the Plans are also subject to forfeiture until certain restrictions have lapsed including employment for a specific period, but do not entitle holders to voting rights until the restricted period ends and shares are transferred in connection with the units. There were 254,281 restricted awards issued under the 2014 Plan during the six months ended June 30, 2018, which included 140,000 shares granted under a new performance restricted stock unit agreement for select officers and all directors. The performance period covers January 1, 2018 through December 31, 2020, and vesting will be based upon the achievement of certain key Company performance metrics, such as total shareholder return, earnings, and corporate efficiencies. There were 170,000 restricted awards issued during the six months ended June 30, 2017. Compensation expense is recognized over the vesting period of the restricted award based on the market value of the award on the issue date. Total compensation cost that has been recorded for the 2014 Plan was $1.1 million and $645,000 in the first six months of 2018 and 2017, respectively. A summary of changes in the Company’s unvested restricted awards for the six months ended June 30, 2018, is as follows: June 30, 2018 Weighted Restricted Average Stock Shares Grant Date and Units Fair Value Unvested at January 1 465,000 $ 7.79 Granted 254,281 13.98 Vested (155,500) 5.14 Forfeited - - Unvested at June 30 563,781 $ 11.31 Total unrecognized compensation cost of restricted awards was $4.1 million as of June 30, 2018, which is expected to be recognized over a weighted-average period of 2.22 years. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share | |
Earnings Per Share | Note 11 – Earnings Per Share The earnings per share – both basic and diluted – are included below as of June 30 (in thousands except for share and per share data): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Basic earnings per share: Weighted-average common shares outstanding 29,747,078 29,587,095 29,703,508 29,573,881 Net income $ 6,261 $ 5,146 $ 15,750 $ 9,573 Basic earnings per share $ 0.21 $ 0.17 $ 0.53 $ 0.32 Diluted earnings per share: Weighted-average common shares outstanding 29,747,078 29,587,095 29,703,508 29,573,881 Dilutive effect of unvested restricted awards 1 539,166 426,264 506,234 400,232 Dilutive effect of stock options and warrants 51,038 2,546 43,698 2,431 Diluted average common shares outstanding 30,337,282 30,015,905 30,253,440 29,976,544 Net Income $ 6,261 $ 5,146 $ 15,750 $ 9,573 Diluted earnings per share $ 0.21 $ 0.17 $ 0.52 $ 0.32 Number of antidilutive options and warrants excluded from the diluted earnings per share calculation - 900,839 - 900,839 1 Includes the common stock equivalents for restricted share rights that are dilutive. The above earnings per share calculation also includes a warrant for 815,339 shares of common stock, at an exercise price of $13.43 per share, that was outstanding as of June 30, 2018, as it is considered dilutive. The same warrant was not included as of June 30, 2017, because the warrant was anti-dilutive. The ten-year warrant was issued in 2009, and was sold at auction by the U.S. Treasury in June 2013 to a third party investor. |
Regulatory & Capital Matters
Regulatory & Capital Matters | 6 Months Ended |
Jun. 30, 2018 | |
Regulatory & Capital Matters | |
Regulatory & Capital Matters | Note 12 – Regulatory & Capital Matters The Bank is subject to the risk-based capital regulatory guidelines, which include the methodology for calculating the risk-weighted Bank assets, developed by the Office of the Comptroller of the Currency (the “OCC”) and the other bank regulatory agencies. In connection with the current economic environment, the Bank’s current level of nonperforming assets and the risk-based capital guidelines, the Bank’s Board of Directors has determined that the Bank should maintain a Tier 1 leverage capital ratio at or above eight percent (8%) and a total risk-based capital ratio at or above twelve percent (12%). At June 30, 2018, the Bank exceeded those thresholds. At June 30, 2018, the Bank’s Tier 1 capital leverage ratio was 10.75%, an increase of 4 basis points from December 31, 2017, and is well above the 8.00% objective. The Bank’s total capital ratio was 13.51%, an increase of 27 basis points from December 31, 2017, and also well above the objective of 12.00%. Bank holding companies are required to maintain minimum levels of capital in accordance with capital guidelines implemented by the Board of Governors of the Federal Reserve System. The general bank and holding company capital adequacy guidelines are shown in the accompanying table, as are the capital ratios of the Company and the Bank, as of June 30, 2018, and December 31, 2017. In July 2013, the U.S. federal banking authorities issued final rules (the “Basel III Rules”) establishing more stringent regulatory capital requirements for U.S. banking institutions, which went into effect on January 1, 2015. A detailed discussion of the Basel III Rules is included in Part I, Item 1 of the Company’s Form 10-K for the year ended December 31, 2017, under the heading “Supervision and Regulation.” At June 30, 2018, and December 31, 2017, the Company, on a consolidated basis, exceeded the minimum thresholds to be considered “well capitalized” under current regulatory defined capital ratios. Capital levels and industry defined regulatory minimum required levels are as follows: Minimum Capital To Be Well Capitalized Under Adequacy with Capital Prompt Corrective Actual Conservation Buffer if applicable 1 Action Provisions 2 Amount Ratio Amount Ratio Amount Ratio June 30, 2018 Common equity tier 1 capital to risk weighted assets Consolidated $ 185,044 8.49 % $ 138,946 6.375 % N/A N/A Old Second Bank 273,950 12.62 138,386 6.375 $ 141,099 6.50 % Total capital to risk weighted assets Consolidated 258,854 11.87 215,348 9.875 N/A N/A Old Second Bank 293,266 13.51 214,360 9.875 217,073 10.00 Tier 1 capital to risk weighted assets Consolidated 239,538 10.99 171,643 7.875 N/A N/A Old Second Bank 273,950 12.62 170,947 7.875 173,661 8.00 Tier 1 capital to average assets Consolidated 239,538 9.37 102,257 4.00 N/A N/A Old Second Bank 273,950 10.75 101,935 4.00 127,419 5.00 December 31, 2017 Common equity tier 1 capital to risk weighted assets Consolidated $ 179,853 9.25 % $ 111,801 5.750 % N/A N/A Old Second Bank 249,417 12.88 111,347 5.750 $ 125,870 6.50 % Total capital to risk weighted assets Consolidated 251,383 12.93 179,837 9.250 N/A N/A Old Second Bank 266,873 13.78 179,142 9.250 193,667 10.00 Tier 1 capital to risk weighted assets Consolidated 233,927 12.03 140,978 7.250 N/A N/A Old Second Bank 249,417 12.88 140,394 7.250 154,917 8.00 Tier 1 capital to average assets Consolidated 233,927 10.08 92,828 4.00 N/A N/A Old Second Bank 249,417 10.79 92,462 4.00 115,578 5.00 1 As of June 30, 2018, amounts are shown inclusive of a capital conservation buffer of 1.875%; as compared to December 31, 2017, of 1.25%. 2 The Bank exceeded the general minimum regulatory requirements to be considered “well capitalized.” Dividend Restrictions In addition to the above requirements, banking regulations and capital guidelines generally limit the amount of dividends that may be paid by a bank without prior regulatory approval. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s profits, combined with the retained profit of the previous two years, subject to the capital requirements described above. Pursuant to the Basel III rules that came into effect January 1, 2015, the Bank must keep a buffer of 0.625% for 2016, 1.25% for 2017, 1.875% for 2018, and 2.5% for 2019 and thereafter of minimum capital requirements in order to avoid additional limitations on capital distributions and certain other payments. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | Note 13 – Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy established by the Company also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Three levels of inputs that may be used to measure fair value are: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date. Level 2: Significant observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a company’s own view about the assumptions that market participants would use in pricing an asset or liability. The majority of securities available-for-sale are valued by external pricing services or dealer market participants and are classified in Level 2 of the fair value hierarchy. Both market and income valuation approaches are utilized. Quarterly, the Company evaluates the methodologies used by the external pricing services or dealer market participants to develop the fair values to determine whether the results of the valuations are representative of an exit price in the Company’s principal markets and an appropriate representation of fair value. The Company uses the following methods and significant assumptions to estimate fair value: · Government-sponsored agency debt securities are primarily priced using available market information through processes such as benchmark spreads, market valuations of like securities, like securities groupings and matrix pricing. · Other government-sponsored agency securities, MBS and some of the actively traded real estate mortgage investment conduits and collateralized mortgage obligations are priced using available market information including benchmark yields, prepayment speeds, spreads, volatility of similar securities and trade date. · State and political subdivisions are largely grouped by characteristics (e.g., geographical data and source of revenue in trade dissemination systems). Because some securities are not traded daily and due to other grouping limitations, active market quotes are often obtained using benchmarking for like securities. · Auction rate securities are priced using market spreads, cash flows, prepayment speeds, and loss analytics. Therefore, the valuations of auction rate asset-backed securities are considered Level 2 valuations. · Asset-backed collateralized loan obligations were priced using data from a pricing matrix supported by our bond accounting service provider and are therefore considered Level 2 valuations. · Annually every security holding is priced by a pricing service independent of the regular and recurring pricing services used. The independent service provides a measurement to indicate if the price assigned by the regular service is within or outside of a reasonable range. Management reviews this report and applies judgment in adjusting calculations at year end related to securities pricing. · Residential mortgage loans available for sale in the secondary market are carried at fair market value. The fair value of loans held-for-sale is determined using quoted secondary market prices. · Lending related commitments to fund certain residential mortgage loans, e.g., residential mortgage loans with locked interest rates to be sold in the secondary market and forward commitments for the future delivery of mortgage loans to third party investors, as well as forward commitments for future delivery of MBS are considered derivatives. Fair values are estimated based on observable changes in mortgage interest rates including prices for MBS from the date of the commitment and do not typically involve significant judgments by management. · The fair value of mortgage servicing rights is based on a valuation model that calculates the present value of estimated net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income to derive the resultant value. The Company is able to compare the valuation model inputs, such as the discount rate, prepayment speeds, weighted average delinquency and foreclosure/bankruptcy rates to widely available published industry data for reasonableness. · Interest rate swap positions, both assets and liabilities, are based on valuation pricing models using an income approach reflecting readily observable market parameters such as interest rate yield curves. · The fair value of impaired loans with specific allocations of the allowance for loan and lease losses is essentially based on recent real estate appraisals or the fair value of the collateralized asset. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are made in the appraisal process by the appraisers to reflect differences between the available comparable sales and income data. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. · Nonrecurring adjustments to certain commercial and residential real estate properties classified as OREO are measured at the lower of carrying amount or fair value, less costs to sell. Fair values are based on third party appraisals of the property, resulting in a Level 3 classification. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized. Assets and Liabilities Measured at Fair Value on a Recurring Basis : The tables below present the balance of assets and liabilities at June 30, 2018, and December 31, 2017, respectively, measured by the Company at fair value on a recurring basis: June 30, 2018 Level 1 Level 2 Level 3 Total Assets: Securities available-for-sale U.S. Treasury $ 3,876 $ - $ - $ 3,876 U.S. government agencies - 12,216 - 12,216 U.S. government agencies mortgage-backed - 13,407 - 13,407 States and political subdivisions - 257,663 18,449 276,112 Corporate bonds - 700 - 700 Collateralized mortgage obligations - 59,661 1,771 61,432 Asset-backed securities - 109,263 - 109,263 Collateralized loan obligations - 66,638 - 66,638 Loans held-for-sale - 5,206 - 5,206 Mortgage servicing rights - - 7,812 7,812 Interest rate swap agreements - 2,287 - 2,287 Mortgage banking derivatives - 261 - 261 Total $ 3,876 $ 527,302 $ 28,032 $ 559,210 Liabilities: Interest rate swap agreements $ - $ 2,287 $ - $ 2,287 Total $ - $ 2,287 $ - $ 2,287 December 31, 2017 Level 1 Level 2 Level 3 Total Assets: Securities available-for-sale U.S. Treasury $ 3,947 $ - $ - $ 3,947 U.S. government agencies - 13,061 - 13,061 U.S. government agencies mortgage-backed - 12,214 - 12,214 States and political subdivisions - 263,831 14,261 278,092 Corporate bonds - 833 - 833 Collateralized mortgage obligations - 63,671 2,268 65,939 Asset-backed securities - 112,932 - 112,932 Collateralized loan obligations - 54,421 - 54,421 Loans held-for-sale - 4,067 - 4,067 Mortgage servicing rights - - 6,944 6,944 Interest rate swap agreements - 727 - 727 Mortgage banking derivatives - 238 - 238 Total $ 3,947 $ 525,995 $ 23,473 $ 553,415 Liabilities: Interest rate swap agreements $ - $ 2,014 $ - $ 2,014 Total $ - $ 2,014 $ - $ 2,014 The changes in Level 3 assets and liabilities measured at fair value on a recurring basis are as follows: Six Months Ended June 30, 2018 Securities available-for-sale Collateralized States and Mortgage Mortgage Political Servicing Obligation Subdivisions Rights Beginning balance January 1, 2018 $ 2,268 $ 14,261 $ 6,944 Transfers into Level 3 - - - Transfers out of Level 3 - - - Total gains or losses Included in earnings (or changes in net assets) 26 - 520 Included in other comprehensive income 31 (551) - Purchases, issuances, sales, and settlements Purchases - 19,934 - Issuances - - 668 Settlements (554) (15,195) (320) Sales - - - Ending balance June 30, 2018 $ 1,771 $ 18,449 $ 7,812 Six Months Ended June 30, 2017 Securities available-for-sale Collateralized States and Mortgage Mortgage Political Servicing Obligation Subdivisions Rights Beginning balance January 1, 2017 $ 3,119 $ 22,226 $ 6,489 Transfers into Level 3 - - - Transfers out of Level 3 - - - Total gains or losses Included in earnings (or changes in net assets) 23 - (280) Included in other comprehensive income (1) (289) - Purchases, issuances, sales, and settlements Purchases - 10,456 - Issuances - - 601 Settlements (463) (12,045) (282) Sales - - - Ending balance June 30, 2017 $ 2,678 $ 20,348 $ 6,528 The following table and commentary presents quantitative and qualitative information about Level 3 fair value measurements as of June 30, 2018: Weighted Measured at fair value Unobservable Average on a recurring basis: Fair Value Valuation Methodology Inputs Range of Input of Inputs Mortgage servicing rights $ 7,812 Discounted Cash Flow Discount Rate 10.0 - 417.6% 10.2 % Prepayment Speed 7.0 - 68.4% 8.2 % The following table and commentary presents quantitative and qualitative information about Level 3 fair value measurements as of December 31, 2017: Weighted Measured at fair value Unobservable Average on a recurring basis: Fair Value Valuation Methodology Inputs Range of Input of Inputs Mortgage servicing rights $ 6,944 Discounted Cash Flow Discount Rate 10.0 - 34.3% 10.2 % Prepayment Speed 7.0 - 68.4% 9.6 % In addition to the above, Level 3 fair value measurement included $18.4 million for state and political subdivisions representing various local municipality securities and $1.8 million of collateralized mortgage obligations at June 30, 2018. Both of these were classified as securities available-for-sale, and were valued using a discount based on market spreads of similar assets, but the liquidity premium was an unobservable input. The state and political subdivisions securities balance in Level 3 fair value at June 30, 2017, was $20.3 million and collateralized mortgage obligation balance in Level 3 was $2.3 million at December 31, 2017. Both of these were classified as securities available-for-sale, and were valued using a discount based on market spreads of similar assets, but the liquidity premium was an unobservable input. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis: The Company may be required, from time to time, to measure certain other assets at fair value on a nonrecurring basis in accordance with GAAP. These assets consist of impaired loans and OREO. For assets measured at fair value on a nonrecurring basis at June 30, 2018, and December 31, 2017, respectively, the following tables provide the level of valuation assumptions used to determine each valuation and the carrying value of the related assets: June 30, 2018 Level 1 Level 2 Level 3 Total Impaired loans 1 $ - $ - $ 8,386 $ 8,386 Other real estate owned, net 2 - - 8,912 8,912 Total $ - $ - $ 17,298 $ 17,298 1 Represents carrying value and related write-downs of loans for which adjustments are substantially based on the appraised value of collateral for collateral-dependent loans; had a carrying amount of $8.9 million and a valuation allowance of $498,000 resulting in an increase of specific allocations within the allowance for loan and lease losses of $90,000 for the six months ended June 30, 2018. 2 OREO is measured at the lower of carrying or fair value less costs to sell, and had a net carrying amount of $8.9 million, which is made up of the outstanding balance of $18.2 million, net of a valuation allowance of $8.3 million and participations of $937,000 at June 30, 2018. December 31, 2017 Level 1 Level 2 Level 3 Total Impaired loans 1 $ - $ - $ 5,113 $ 5,113 Other real estate owned, net 2 - - 8,371 8,371 Total $ - $ - $ 13,484 $ 13,484 1 Represents carrying value and related write-downs of loans for which adjustments are substantially based on the appraised value of collateral for collateral-dependent loans; had a carrying amount of $5.3 million and a valuation allowance of $144,000, resulting in an increase of specific allocations within the allowance for loan and lease losses of $856,000 for the year December 31, 2017. 2 OREO is measured at the lower of carrying or fair value less costs to sell, and had a net carrying amount of $8.4 million, which is made up of the outstanding balance of $17.5 million, net of a valuation allowance of $8.2 million and participations of $937,000, at December 31, 2017. The Company has estimated the fair values of these assets based primarily on Level 3 inputs. OREO and impaired loans are generally valued using the fair value of collateral provided by third party appraisals. These valuations include assumptions related to cash flow projections, discount rates, and recent comparable sales. The numerical ranges of unobservable inputs for these valuation assumptions are not meaningful. |
Fair Values of Financial Instru
Fair Values of Financial Instruments | 6 Months Ended |
Jun. 30, 2018 | |
Fair Values of Financial Instruments | |
Fair Values of Financial Instruments | Note 14 – Fair Values of Financial Instruments The estimated fair values approximate carrying amount for all items except those described in the following table. Securities available-for-sale fair values are based upon market prices or dealer quotes, and if no such information is available, on the rate and term of the security. The carrying value of FHLBC stock approximates fair value as the stock is nonmarketable and can only be sold to the FHLBC or another member institution at par. FHLBC stock is carried at cost and considered a Level 2 fair value. For June 30, 2018, the fair values of loans and leases are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors. This is not comparable with the fair value disclosures for December 31, 2017, which were estimated using an entrance price basis. For December 31, 2017, fair values of variable rate loans and leases with no significant change in credit risk were based on carrying values. The fair values of other loans and leases were estimated using discounted cash flow analyses which used interest rates being offered for loans and leases with similar terms to borrowers of similar credit quality. The fair value of time deposits is estimated using discounted future cash flows at current rates offered for deposits of similar remaining maturities. The fair values of borrowings were estimated based on interest rates available to the Company for debt with similar terms and remaining maturities. The fair value of off balance sheet volume is not considered material. The carrying amount and estimated fair values of financial instruments were as follows: June 30, 2018 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial assets: Cash and due from banks $ 34,161 $ 34,161 $ 34,161 $ - $ - Interest bearing deposits with financial institutions 31,147 31,147 31,147 - - Securities available-for-sale 543,644 543,644 3,876 519,548 20,220 FHLBC and FRBC Stock 9,093 9,093 - 9,093 - Loans held-for-sale 5,206 5,206 - 5,206 - Loans, net 1,829,841 1,816,393 - - 1,816,393 Accrued interest receivable 10,244 10,244 - 10,244 - Financial liabilities: Noninterest bearing deposits $ 620,807 $ 620,807 $ 620,807 $ - $ - Interest bearing deposits 1,541,044 1,534,109 - 1,534,109 - Securities sold under repurchase agreements 54,038 54,038 - 54,038 - Other short-term borrowings 76,625 76,625 - 76,625 - Junior subordinated debentures 57,662 59,471 33,267 26,204 - Senior notes 44,108 46,743 - 46,743 - Note payable and other borrowings 23,496 23,496 - 23,496 - Borrowing interest payable 192 192 - 192 - Deposit interest payable 800 800 - 800 - December 31, 2017 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial assets: Cash and due from banks $ 37,444 $ 37,444 $ 37,444 $ - $ - Interest bearing deposits with financial institutions 18,389 18,389 18,389 - - Securities available-for-sale 541,439 541,439 3,947 520,963 16,529 FHLBC and FRBC Stock 10,168 10,168 - 10,168 - Loans held-for-sale 4,067 4,067 - 4,067 - Loans, net 1,600,161 1,586,722 - - 1,586,722 Accrued interest receivable 8,595 8,595 - 8,595 - Financial liabilities: Noninterest bearing deposits $ 572,404 $ 572,404 $ 572,404 $ - $ - Interest bearing deposits 1,350,521 1,346,339 - 1,346,339 - Securities sold under repurchase agreements 29,918 29,918 - 29,918 - Other short-term borrowings 115,000 115,000 - 115,000 - Junior subordinated debentures 57,639 59,471 33,267 26,204 - Subordinated debenture 44,058 46,743 - 46,743 - Interest rate swap agreements 1,287 1,287 - 1,287 - Borrowing interest payable 140 140 - 140 - Deposit interest payable 631 631 - 631 - |
Financial Instruments with Off-
Financial Instruments with Off-Balance Sheet Risk and Derivative Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Derivatives, Hedging Activities and Financial Instruments with Off-Balance Sheet Risk | |
Financial Instruments with Off-Balance Sheet Risk and Derivative Transactions | Note 15 – Derivatives, Hedging Activities and Financial Instruments with Off-Balance Sheet Risk Risk Management Objective of Using Derivatives The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s loan portfolio. Cash Flow Hedges of Interest Rate Risk The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During 2018, such derivatives were used to hedge the variable cash flows associated with existing variable-rate borrowings. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are received on the Company’s variable-rate borrowings. During the next twelve months, the Company estimates that an additional $59,000 will be reclassified as a reduction to interest expense. Non-designated Hedges Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings. Disclosure of Fair Values of Derivative Instruments on the Balance Sheet The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet as of June 30, 2018 and December 31, 2017. Fair Value of Derivative Instruments Asset Derivatives Liability Derivatives June 30, 2018 December 31, 2017 June 30, 2018 December 31, 2017 Number of Transactions Notional Amount $ Balance Sheet Location Fair Value $ Balance Sheet Location Fair Value $ Balance Sheet Location Fair Value $ Balance Sheet Location Fair Value $ Derivatives designated as hedging instruments Interest Rate Products 1 25,774 Other Assets 507 Other Assets - Other Liabilities - Other Liabilities 1,287 Total derivatives designated as hedging instruments 507 - - 1,287 Derivatives not designated as hedging instruments Interest Rate Products 2 51,548 Other Assets 507 Other Assets - Other Liabilities 507 Other Liabilities 1,287 Other Contracts 3 15,857 Other Assets - Other Assets - Other Liabilities 5 Other Liabilities 13 Total derivatives not designated as hedging instruments 507 - 512 1,301 Disclosure of the Effect of Fair Value and Cash Flow Hedge Accounting The fair value and cash flow hedge accounting related to derivatives covered under ASC Subtopic 815-20 impacted Accumulated Other Comprehensive Income (“AOCI”) and the Income Statement. The gain recognized in AOCI on derivatives totaled $473,000 as of June 30, 2018, and a loss in AOCI of $632,000 as of June 30, 2017. The amount of the gain (loss) reclassified from AOCI to interest income on the income statement totaled ($42,000) and ($18,000) for the three months ended June 30, 2018, and June 30, 2017, respectively. The amount of the gain (loss) reclassified from AOCI to interest income or interest expense on the income statement totaled ($116,000) and ($18,000) for the six months ended June 30, 2018, and June 30, 2017, respectively. Credit-risk-related Contingent Features For derivative transactions involving counterparties who are lending customers of the Company, the derivative credit exposure is managed through the normal credit review and monitoring process, which may include collateralization, financial covenants and/or financial guarantees of affiliated parties. Agreements with such customers require that losses associated with derivative transactions receive payment priority from any funds recovered should a customer default and ultimate disposition of collateral or guarantees occur. Credit exposure to broker/dealer counterparties is managed through agreements with each derivative counterparty that require collateralization of fair value gains owed by such counterparties. Some small degree of credit exposure exists due to timing differences between when a gain may occur and the subsequent point in time that collateral is delivered to secure that gain. This is monitored by the Company and procedures are in place to minimize this exposure. Such agreements also require the Company to collateralize counterparties in circumstances wherein the fair value of the derivatives result in loss to the Company. Other provisions of such agreements include the definition of certain events that may lead to the declaration of default and/or the early termination of the derivative transaction(s): · if the Company either defaults or is capable of being declared in default on any of its indebtedness (exclusive of deposit obligations), then the Company could also be declared in default on its derivative obligations. · if a merger occurs that materially changes the Company's creditworthiness in an adverse manner. · If certain specified adverse regulatory actions occur, such as the issuance of a Cease and Desist Order, or citations for actions considered Unsafe and Unsound or that may lead to the termination of deposit insurance coverage by the Federal Deposit Insurance Corporation. As of June 30, 2018, there were no derivatives in a net liability position. As of June 30, 2018, the Company has not posted any collateral related to derivatives agreements. The Bank also issues letters of credit, which are conditional commitments that guarantee the performance of a customer to a third party. The credit risk involved and collateral obtained in issuing letters of credit are essentially the same as that involved in extending loan commitments to our customers. In addition to customer related commitments, the Company is responsible for letters of credit commitments that relate to properties held in OREO. The following table represents the Company’s contractual commitments due to letters of credit as of June 30, 2018, and December 31, 2017. The following table is a summary of letter of credit commitments (in thousands): June 30, 2018 December 31, 2017 Fixed Variable Total Fixed Variable Total Letters of credit: Borrower: Financial standby $ 2,017 $ 5,320 $ 7,337 $ 177 $ 3,770 $ 3,947 Commercial standby - 395 395 - 354 354 Performance standby 914 6,676 7,590 241 7,594 7,835 2,931 12,391 15,322 418 11,718 12,136 Non-borrower: Performance standby - 67 67 - 142 142 Total letters of credit $ 2,931 $ 12,458 $ 15,389 $ 418 $ 11,860 $ 12,278 |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Summary of Significant Accounting Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 "Revenue from Contracts with Customers (Topic 606)." The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. In August 2015, the FASB issued ASU 2015-14 “ Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date, ” which deferred the effective date of ASU 2014-09 for an additional year. ASU 2015-14 was effective for annual reporting periods beginning after December 15, 2017. The amendments could be applied retrospectively to each prior reporting period or retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application. Early application was not permitted. In March 2016, the FASB issued ASU 2016-08 “ Revenue from Contracts with Customers (TOPIC 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) ” and in April 2016, the FASB issued ASU 2016-10 “ Revenue from Contracts with Customers (TOPIC 606): Identifying Performance Obligations and Licensing.” ASU 2016-08 requires the entity to determine if it is acting as a principal with control over the goods or services it is contractually obligated to provide, or an agent with no control over specified goods or services provided by another party to a customer. ASU 2016-10 was issued to further clarify ASU 2014-09 implementation regarding identifying performance obligation materiality, identification of key contract components, and scope. The Company performed an analysis of the impact of adoption of this ASU, reviewing revenue recorded from service charges on deposit accounts, asset management fees, gains (losses) on other real estate owned, and debit card interchange fees. Certain revenue received, such as service charges on deposit accounts and interchange fees, is recorded immediately or as the service is performed. Asset management fees recorded by the Company take the form of wealth management income and brokerage income, and both types of fees are recorded after services are rendered, with no contractual requirement of refund to a customer based on non-achievement of fund performance objectives. Finally, the methodology used to record revenue from gains (losses) due to the sale of other real estate owned is not anticipated to change, as the Company currently records income or expense only upon consummation of the sale, and any revenue recorded stemming from seller financed transactions is reviewed for deferral, as appropriate. The Company adopted ASU 2014-09 and related issuances on January 1, 2018, with no cumulative effect adjustment to opening retained earnings required upon implementation of this standard. In January 2016, the FASB issued ASU No. 2016-01 “ Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities .” The objective of the issuance is to provide users of financial statements with more decision–useful information, by making targeted improvements to GAAP. These targeted improvements included revisions to the methodology of accounting for equity investments, eliminating certain disclosures on fair value assumptions for financial instruments measured at amortized cost, and requiring public business entities to use the exit price notion, as defined in ASC 820, for the measurement of the fair value of financial instruments. This standard was effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted this standard as of January 1, 2018. Adoption of this standard resulted in the Company’s use of an exit price rather than an entrance price to determine the fair value of loans and deposits not already measured at fair value on a non-recurring basis in the consolidated balance sheet disclosures; see Note 14–Fair Value of Financial Instruments for further information regarding the valuation processes. In February 2016, the FASB issued ASU No. 2016-02 “ Leases (Topic 842) .” This ASU was issued to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. One key revision from prior guidance was to include operating leases within assets and liabilities recorded; another revision was included which created a new model to follow for sale-leaseback transactions. The impact of this pronouncement will affect lessees primarily, as virtually all of their assets will be recognized on the balance sheet, by recording a right of use asset and lease liability. This pronouncement is effective for fiscal years beginning after December 15, 2018. The Company is in the process of identifying all lease arrangements, methodology of tracking, and practical expedients that may be applied, such as the cumulative effect adjustment in equity upon adoption as of January 1, 2019, compared to a retroactive adoption. We will continue to assess the impact of ASU 2016-02 on our accounting and disclosures. In June 2016, the FASB issued ASU No. 2016-13 “ Measurement of Credit Losses on Financial Instruments (Topic 326). ” ASU 2016-13 was issued to provide financial statement users with more useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date to enhance the decision making process. The new methodology to be used should reflect expected credit losses based on relevant vintage historical information, supported by reasonable forecasts of projected loss given defaults, which will affect the collectability of the reported amounts. This new methodology will also require available-for-sale debt securities to have a credit loss recorded through an allowance rather than write-downs. ASU 2016-13 is effective for financial statements issued for fiscal years beginning after December 15, 2019. The Company is assessing the impact of ASU 2016-13 on its accounting and disclosures, and is in the process of accumulating historical data by loan pools and collateral classifications, and completing model option evaluations to support future risk assessments. In March 2017, the FASB issued ASU No. 2017-08 “ Receivables-Nonrefundable Fees and Other Costs – Premium Amortization on Purchased Callable Debt Securities (Subtopic 310-20) .” This ASU was issued to shorten the amortization period for the premium to the earliest call date on debt securities. This premium is required to be recorded as a reduction to net interest margin during the shorter yield to call period, as compared to prior practice of amortizing the premium as a reduction to net interest margin over the contractual life of the instrument. This ASU does not change the current method of amortizing any discount over the contractual life of the debt security, and this pronouncement is effective for fiscal years beginning after December 15, 2018, with earlier adoption permitted. The Company adopted ASU 2017-08 as a change in accounting principle in the third quarter of 2017 on a modified retrospective basis, which required the Company to reflect its adoption effective January 1, 2017. The effect of amortizing the premium over a shorter period will continue to decrease future quarterly net interest income over the call period until the premium is fully amortized. As a result of management’s analysis, the impact of the change in accounting principle as a result of ASU 2017-08 to adjust beginning of year retained earnings was considered insignificant and, accordingly, the impact was adjusted through 2017 earnings. Net interest income, net income and diluted earnings per share (“EPS”) were previously reported as $22.1 million, $5.5 million, and $0.18 for the quarter ended June 30, 2017, and $42.9 million, $10.0 million, and $0.33 for the six months ended June 30, 2017. The effect of the adoption of ASU 2017-08 resulted in the currently reported totals of net interest income, net income and diluted EPS of $21.8 million, $5.1 million, and $0.17 for the quarter ended June 30, 2017, and $42.4 million, $9.6 million, and $0.32 for the six months ended June 30, 2017. In August 2017, the FASB issued ASU No. 2017-12, “ Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities”. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. The Company adopted ASU 2017-12 on January 1, 2018, on a modified retrospective basis. FASB ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. In accordance with the FASB’s fair value measurement guidance in ASU 2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. As the Company does not currently have any derivative financial instruments subject to master netting agreements, there was no impact to the balance sheet. In February 2018, the FASB issued ASU No. 2018-02, “ Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income .” This ASU was issued in response to the enactment of tax bill H.R.1 “Tax Cuts and Jobs Act”, which resulted in “stranding” the tax effects of items within accumulated other comprehensive income related to the adjustment of deferred taxes due to the reduction of the federal corporate income tax rate. The amendments proposed allow the reclassification of these stranded tax effects to retained earnings, and were effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, and should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate tax rate is recognized. The Company adopted ASU 2018-02 as of January 1, 2018, and a reclassification of $319,000, net, was recorded, which increased accumulated other comprehensive income and reduced retained earnings with the adoption of the accounting standard. |
Subsequent Events | Subsequent Events On July 17, 2018, the Company’s Board of Directors declared a cash dividend of $0.01 per share payable on August 6, 2018, to stockholders of record as of July 27, 2018; dividends of $297,000 were paid to stockholders on August 6, 2018. |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Acquisitions | |
Summary of acquisition | GCFC/ABC Bank Acquisition Summary As of Date of Acquisition April 20, 2018 Assets Cash and due from banks $ 6,669 Interest bearing deposits with financial institutions 500 Securities available-for-sale, at fair value 72,091 Federal funds sold 4,300 FHLBC stock 1,549 Loans 227,594 Premises and equipment 5,339 Other real estate owned 432 Goodwill and core deposit intangible 12,957 Deferred tax assets, net 3,456 Other assets 2,083 Total assets $ 336,970 Liabilities Noninterest bearing demand $ 58,005 Savings, NOW and money market 91,494 Time 98,999 Total deposits 248,498 Securities sold under repurchase agreements 5,624 Other short-term borrowings 10,875 Notes payable and other borrowings 23,544 Other liabilities 1,249 Total liabilities 289,790 Cash consideration paid 47,180 Total Liabilities Assumed and Cash Consideration Paid for Acquisition $ 336,970 |
Schedule of Acquired Loans as of Acquisition Date | April 20, 2018 June 30, 2018 ABC Bank Acquired Loans PCI Non-PCI PCI Non-PCI Fair Value $ 11,360 $ 216,306 $ 11,214 $ 208,929 Contractually required principal and interest payment 19,447 219,488 18,989 211,341 Best estimate of contractual cash flows not expected to be collected 6,537 2,511 6,402 2,119 Best estimate of contractual cash flows expected to be collected 12,910 216,977 12,587 209,222 |
Securities (Tables)
Securities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Securities | |
Schedule of amortized cost and fair value of the securities portfolio and corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss | Gross Gross Amortized Unrealized Unrealized Fair June 30, 2018 Cost Gains Losses Value Securities available-for-sale U.S. Treasuries $ 4,004 $ - $ (128) $ 3,876 U.S. government agencies 12,369 - (153) 12,216 U.S. government agencies mortgage-backed 14,011 - (604) 13,407 States and political subdivisions 279,007 1,640 (4,535) 276,112 Corporate bonds 685 21 (6) 700 Collateralized mortgage obligations 63,778 60 (2,406) 61,432 Asset-backed securities 110,053 1,011 (1,801) 109,263 Collateralized loan obligations 66,489 223 (74) 66,638 Total securities available-for-sale $ 550,396 $ 2,955 $ (9,707) $ 543,644 Gross Gross Amortized Unrealized Unrealized Fair December 31, 2017 Cost Gains Losses Value Securities available-for-sale U.S. Treasury $ 4,002 $ - $ (55) $ 3,947 U.S. government agencies 13,062 8 (9) 13,061 U.S. government agencies mortgage-backed 12,372 7 (165) 12,214 States and political subdivisions 272,240 7,116 (1,264) 278,092 Corporate bonds 823 21 (11) 833 Collateralized mortgage obligations 66,892 202 (1,155) 65,939 Asset-backed securities 113,983 862 (1,913) 112,932 Collateralized loan obligations 54,271 251 (101) 54,421 Total securities available-for-sale $ 537,645 $ 8,467 $ (4,673) $ 541,439 |
Schedule of fair value, amortized cost and weighted average yield of debt securities by contractual maturity along with securities not due at a single maturity date, primarily mortgage-backed securities (MBS), asset-backed securities, and collateralized loan obligations | Weighted Amortized Average Fair Securities available-for-sale Cost Yield Value Due in one year or less $ 10,550 2.10 % $ 10,540 Due after one year through five years 4,689 2.20 4,576 Due after five years through ten years 5,343 3.27 5,413 Due after ten years 275,483 2.98 272,375 296,065 2.94 292,904 Mortgage-backed and collateralized mortgage obligations 77,789 3.11 74,839 Asset-backed securities 110,053 3.23 109,263 Collateralized loan obligations 66,489 4.34 66,638 Total securities available-for-sale $ 550,396 3.19 % $ 543,644 |
Schedule of amortized cost and fair value of securities that exceed 10% of stockholders equity | The Company has invested in securities issued from three originators that individually amount to over 10% of the Company’s stockholders equity. Information regarding these three issuers and the value of the securities issued follows: June 30, 2018 Amortized Fair Issuer Cost Value GCO Education Loan Funding Corp $ 27,685 $ 26,754 Towd Point Mortgage Trust 28,966 28,080 Student Loan Marketing Association 25,780 26,176 |
Schedule of securities with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position | Less than 12 months 12 months or more June 30, 2018 in an unrealized loss position in an unrealized loss position Total Number of Unrealized Fair Number of Unrealized Fair Number of Unrealized Fair Securities available-for-sale Securities Losses Value Securities Losses Value Securities Losses Value U.S. Treasuries 1 $ 128 $ 3,876 - $ - $ - 1 $ 128 $ 3,876 U.S. government agencies 4 153 12,216 - - - 4 153 12,216 U.S. government agencies mortgage-backed 7 356 8,968 5 248 4,439 12 604 13,407 States and political subdivisions 43 3,264 141,455 2 1,271 3,849 45 4,535 145,304 Corporate bonds - - - 1 6 198 1 6 198 Collateralized mortgage obligations 3 399 20,353 9 2,007 37,782 12 2,406 58,135 Asset-backed securities 3 65 8,451 6 1,736 56,539 9 1,801 64,990 Collateralized loan obligations 3 60 17,364 1 14 7,986 4 74 25,350 Total securities available-for-sale 64 $ 4,425 $ 212,683 24 $ 5,282 $ 110,793 88 $ 9,707 $ 323,476 Less than 12 months 12 months or more December 31, 2017 in an unrealized loss position in an unrealized loss position Total Number of Unrealized Fair Number of Unrealized Fair Number of Unrealized Fair Securities available-for-sale Securities Losses Value Securities Losses Value Securities Losses Value U.S. Treasuries 1 $ 55 $ 3,947 - $ - $ - 1 $ 55 $ 3,947 U.S. government agencies 2 9 6,550 - - - 2 9 6,550 U.S. government agencies mortgage-backed 4 24 5,501 5 141 4,843 9 165 10,344 States and political subdivisions 13 1,237 45,985 1 27 1,512 14 1,264 47,497 Corporate bonds - - - 1 11 332 1 11 332 Collateralized mortgage obligations 3 31 11,534 8 1,124 40,219 11 1,155 51,753 Asset-backed securities - - - 7 1,913 61,745 7 1,913 61,745 Collateralized loan obligations 3 101 29,313 - - - 3 101 29,313 Total securities available-for-sale 26 $ 1,457 $ 102,830 22 $ 3,216 $ 108,651 48 $ 4,673 $ 211,481 |
Schedule of proceeds from sale and gross realized gains and losses on sale of securities | Three Months Ended Six Months Ended June 30, June 30, Securities available-for-sale 2018 2017 2018 2017 Proceeds from sales of securities $ 90,224 $ 36,468 $ 92,746 $ 100,856 Gross realized gains on securities 312 71 347 437 Gross realized losses on securities - (202) - (704) Securities realized gains (losses), net $ 312 $ (131) $ 347 $ (267) Income tax (expense) benefit on net realized gains (losses) (88) 52 (98) 106 |
Loans (Tables)
Loans (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Loans | |
Schedule of major classifications of loans | June 30, 2018 December 31, 2017 Commercial $ 299,536 $ 272,851 Leases 66,687 68,325 Real estate - commercial 808,264 750,991 Real estate - construction 115,486 85,162 Real estate - residential 404,908 313,397 Home equity lines of credit "HELOC" 127,986 112,833 Other 1 13,969 13,384 Total loans, excluding deferred loan costs and PCI loans 1,836,836 1,616,942 Net deferred loan costs 1,112 680 Total loans, excluding PCI loans 1,837,948 1,617,622 PCI loans, net of purchase accounting adjustments 11,214 - Total loans $ 1,849,162 $ 1,617,622 |
Schedule of aged analysis of past due loans by class of loans | Recorded Investment 90 days or 90 Days or Greater Past 30-59 Days 60-89 Days Greater Past Total Past Due and June 30, 2018 Past Due Past Due Due Due Current Nonaccrual Total Loans Accruing Commercial $ 210 $ - $ - $ 210 $ 299,326 $ - $ 299,536 $ - Leases - - - - 66,687 - 66,687 - Real estate - commercial Owner occupied general purpose 903 - 450 1,353 172,922 823 175,098 477 Owner occupied special purpose 1,981 - - 1,981 194,604 426 197,011 - Non-owner occupied general purpose 3,282 - 174 3,456 279,599 39 283,094 178 Non-owner occupied special purpose - - - - 87,704 3,099 90,803 - Retail properties - - - - 47,582 - 47,582 - Farm - - - - 14,676 - 14,676 - Real estate - construction Homebuilder - - - - 7,649 - 7,649 - Land - - - - 9,168 - 9,168 - Commercial speculative - - - - 39,730 - 39,730 - All other 59 - 442 501 58,245 193 58,939 475 Real estate - residential Investor 466 108 38 612 72,896 371 73,879 40 Multifamily 232 - - 232 191,883 - 192,115 - Owner occupied 710 208 - 918 134,265 3,731 138,914 - HELOC 599 172 49 820 126,443 723 127,986 50 Other 1 39 - - 39 15,026 16 15,081 - Total, excluding PCI loans $ 8,481 $ 488 $ 1,153 $ 10,122 $ 1,818,405 $ 9,421 $ 1,837,948 $ 1,220 PCI loans, net of purchase accounting adjustments 387 - - 387 7,850 2,977 11,214 Total $ 8,868 $ 488 $ 1,153 $ 10,509 $ 1,826,255 $ 12,398 $ 1,849,162 $ 1,220 Recorded Investment 90 days or 90 Days or Greater Past 30-59 Days 60-89 Days Greater Past Total Past Due and December 31, 2017 Past Due Past Due Due Due Current Nonaccrual Total Loans Accruing Commercial $ 995 $ 275 $ - $ 1,270 $ 271,581 $ - $ 272,851 $ - Leases - - - - 68,147 178 68,325 - Real estate - commercial Owner occupied general purpose 1,136 - - 1,136 144,267 455 145,858 - Owner occupied special purpose 226 - - 226 170,546 342 171,114 - Non-owner occupied general purpose - 593 - 593 273,203 1,163 274,959 - Non-owner occupied special purpose - - 248 248 92,923 - 93,171 254 Retail properties - - - - 49,538 1,081 50,619 - Farm - - - - 15,270 - 15,270 - Real estate - construction Homebuilder 129 - - 129 2,221 - 2,350 - Land 1,124 - - 1,124 1,319 - 2,443 - Commercial speculative - - - - 32,028 - 32,028 - All other - - - - 48,140 201 48,341 - Real estate - residential Investor - - - - 55,248 372 55,620 - Multifamily - - - - 125,049 4,723 129,772 - Owner occupied 74 - - 74 123,257 4,674 128,005 - HELOC 491 278 - 769 110,872 1,192 112,833 - Other 1 37 - - 37 14,019 7 14,063 - Total $ 4,212 $ 1,146 $ 248 $ 5,606 $ 1,597,628 $ 14,388 $ 1,617,622 $ 254 1 The “Other” class includes consumer, overdrafts and net deferred costs. |
Schedule of credit quality indicators by class of loans | June 30, 2018 Special Pass Mention Substandard 2 Doubtful Total Commercial $ 298,512 $ 631 $ 393 $ - $ 299,536 Leases 66,148 - 539 - 66,687 Real estate - commercial Owner occupied general purpose 166,962 4,915 3,221 - 175,098 Owner occupied special purpose 195,009 254 1,748 - 197,011 Non-owner occupied general purpose 275,728 4,899 2,467 - 283,094 Non-owner occupied special purpose 87,704 - 3,099 - 90,803 Retail Properties 45,755 - 1,827 - 47,582 Farm 13,428 - 1,248 - 14,676 Real estate - construction Homebuilder 7,649 - - - 7,649 Land 9,168 - - - 9,168 Commercial speculative 39,730 - - - 39,730 All other 56,443 2,130 366 - 58,939 Real estate - residential Investor 72,759 91 1,029 - 73,879 Multifamily 188,813 - 3,302 - 192,115 Owner occupied 133,485 1 5,428 - 138,914 HELOC 126,353 - 1,633 - 127,986 Other 1 15,063 - 18 - 15,081 Total, excluding PCI loans $ 1,798,709 $ 12,921 $ 26,318 $ - $ 1,837,948 PCI loans, net of purchase accounting adjustments - - 11,214 - 11,214 Total $ 1,798,709 $ 12,921 $ 37,532 $ - $ 1,849,162 December 31, 2017 Special Pass Mention Substandard 2 Doubtful Total Commercial $ 270,889 $ 1,962 $ - $ - $ 272,851 Leases 67,500 - 825 - 68,325 Real estate - commercial Owner occupied general purpose 142,843 1,927 1,088 - 145,858 Owner occupied special purpose 169,621 1,152 341 - 171,114 Non-owner occupied general purpose 271,731 2,065 1,163 - 274,959 Non-owner occupied special purpose 89,582 - 3,589 - 93,171 Retail Properties 48,321 1,217 1,081 - 50,619 Farm 11,755 1,029 2,486 - 15,270 Real estate - construction Homebuilder 2,350 - - - 2,350 Land 2,443 - - - 2,443 Commercial speculative 32,028 - - - 32,028 All other 46,913 1,052 376 - 48,341 Real estate - residential Investor 55,172 - 448 - 55,620 Multifamily 125,049 - 4,723 - 129,772 Owner occupied 122,178 561 5,266 - 128,005 HELOC 110,934 - 1,899 - 112,833 Other 1 14,043 - 20 - 14,063 Total $ 1,583,352 $ 10,965 $ 23,305 $ - $ 1,617,622 1 The “Other” class includes consumer, overdrafts and net deferred costs. 2 The substandard credit quality indicator includes both potential problem loans that are currently performing and nonperforming loans. |
Schedule of impaired loans by class of loan | Six Months Ended As of June 30, 2018 June 30, 2018 Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized With no related allowance recorded Commercial $ - $ - $ - $ - $ - Leases - - - 89 - Commercial real estate Owner occupied general purpose 911 985 - 683 3 Owner occupied special purpose 426 546 - 384 - Non-owner occupied general purpose 39 81 - 601 - Non-owner occupied special purpose - - - - - Retail properties - - - 541 - Farm - - - - - Construction Homebuilder - - - - - Land - - - - - Commercial speculative - - - - - All other 193 226 - 197 - Residential Investor 371 468 - 371 - Multifamily - - - 2,362 - Owner occupied 4,244 5,769 - 4,726 18 HELOC 741 860 - 933 1 Other 1 16 16 - 11 - Total impaired loans with no recorded allowance 6,941 8,951 - 10,898 22 With an allowance recorded Commercial - - - - - Leases - - - - - Commercial real estate Owner occupied general purpose - - - - - Owner occupied special purpose - - - - - Non-owner occupied general purpose - - - - - Non-owner occupied special purpose 3,099 3,575 419 1,550 - Retail properties - - - - - Farm - - - - - Construction Homebuilder - - - - - Land - - - - - Commercial speculative - - - - - All other - - - - - Residential Investor 815 815 10 822 22 Multifamily - - - - - Owner occupied 3,646 3,646 45 3,544 73 HELOC 1,321 1,321 24 1,153 24 Other 1 3 3 - 2 - Total impaired loans with a recorded allowance 8,884 9,360 498 7,071 119 Total impaired loans $ 15,825 $ 18,311 $ 498 $ 17,969 $ 141 1 The “Other” class includes consumer, overdrafts and net deferred costs. Impaired loans by class of loans as of December 31, 2017, and for the six months ended June 30, 2017, were as follows: Six Months Ended As of December 31, 2017 June 30, 2017 Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized With no related allowance recorded Commercial $ - $ - $ - $ 128 $ - Leases 178 213 - 293 - Commercial real estate Owner occupied general purpose 455 495 - 1,170 - Owner occupied special purpose 342 498 - 376 - Non-owner occupied general purpose 1,163 1,538 - 1,443 1 Non-owner occupied special purpose - - - 507 - Retail properties 1,081 1,177 - 1,161 - Farm - - - - - Construction Homebuilder - - - - - Land - - - - - Commercial speculative - - - 72 - All other 201 229 - 180 - Residential Investor 372 676 - 1,708 20 Multifamily 4,723 4,965 - 2,412 - Owner occupied 5,208 6,680 - 9,016 65 HELOC 1,125 1,313 - 2,227 15 Other 1 7 8 - 105 - Total impaired loans with no recorded allowance 14,855 17,792 - 20,798 101 With an allowance recorded Commercial - - - - - Leases - - - 120 - Commercial real estate Owner occupied general purpose - - - - - Owner occupied special purpose - - - - - Non-owner occupied general purpose - - - 123 - Non-owner occupied special purpose - - - - - Retail properties - - - - - Farm - - - - - Construction Homebuilder - - - - - Land - - - - - Commercial speculative - - - - - All other - - - - - Residential Investor 829 829 10 - - Multifamily - - - - - Owner occupied 3,443 3,443 43 402 - HELOC 985 985 91 - - Other 1 - - - - - Total impaired loans with a recorded allowance 5,257 5,257 144 645 - Total impaired loans $ 20,112 $ 23,049 $ 144 $ 21,443 $ 101 |
Schedule of TDRs modified during the period by type of modification | TDRs that were modified during the period are as follows: TDR Modifications TDR Modifications Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 # of Pre-modification Post-modification # of Pre-modification Post-modification contracts recorded investment recorded investment contracts recorded investment recorded investment Troubled debt restructurings Real estate - commercial Owner occupied special purpose Other 1 1 $ 110 $ 56 1 $ 110 $ 56 Real estate - residential Owner occupied HAMP 2 1 49 39 1 49 39 Other 1 HELOC Rate 3 1 24 24 Other 1 3 305 287 7 523 503 Total 5 $ 464 $ 382 10 $ 706 $ 622 TDR Modifications TDR Modifications Three Months Ended June 30, 2017 Six Months Ended June 30, 2017 # of Pre-modification Post-modification # of Pre-modification Post-modification contracts recorded investment recorded investment contracts recorded investment recorded investment Troubled debt restructurings HELOC Other 1 2 $ 155 $ 147 6 $ 399 $ 388 Total 2 $ 155 $ 147 6 $ 399 $ 388 1 Other: Change of terms from bankruptcy court. 2 HAMP: Home Affordable Modification Program. 3 Rate: Refers to interest rate reduction |
Schedule of accretable discount on purchased loans | The following table details the accretable discount on all of the Company’s purchased loans, both non-PCI loans and PCI loans as of June 30, 2018. Accretable Discount - Non-PCI Loans Accretable Discount - PCI Loans Non-Accretable Discount - PCI Loans Total Beginning balance, April 1, 2018 $ 694 $ - $ - $ 694 Purchases 3,182 1,551 6,536 11,269 Accretion (881) (176) - (1,057) Transfer 1 - (2) (133) (135) Ending balance, June 30, 2018 $ 2,995 $ 1,373 $ 6,403 $ 10,771 1 Transfer was due to loans moved to OREO. |
Allowance for Loan Losses (Tabl
Allowance for Loan Losses (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Allowance for Loan Losses | |
Schedule of changes in the allowance for loan losses by segment of loans based on method of impairment | Changes in the allowance for loan and lease losses by segment of loans based on method of impairment for the three and six months ended June 30, 2018, were as follows: Real Estate Real Estate Real Estate Allowance for loan and lease losses: Commercial Leases Commercial Construction Residential HELOC Other 1 Total Three months ended June 30, 2018 Beginning balance $ 2,604 $ 617 $ 9,565 $ 1,143 $ 1,854 $ 1,535 $ 870 $ 18,188 Charge-offs 15 8 504 - 5 65 102 699 Recoveries 92 - 21 - 105 91 73 382 (Release) Provision (5) 25 1,455 255 (136) (171) 27 1,450 Ending balance $ 2,676 $ 634 $ 10,537 $ 1,398 $ 1,818 $ 1,390 $ 868 $ 19,321 Six months ended June 30, 2018 Beginning balance $ 2,453 $ 692 $ 9,522 $ 923 $ 1,846 $ 1,446 $ 579 $ 17,461 Charge-offs 31 13 408 (16) (55) 92 201 674 Recoveries 109 - 388 3 1,016 138 152 1,806 Provision (Release) 145 (45) 1,035 456 (1,099) (102) 338 728 Ending balance $ 2,676 $ 634 $ 10,537 $ 1,398 $ 1,818 $ 1,390 $ 868 $ 19,321 Ending balance: Individually evaluated for impairment $ - $ - $ 419 $ - $ 55 $ 24 $ - $ 498 Ending balance: Collectively evaluated for impairment 2,676 634 10,118 1,398 1,763 1,366 868 18,823 Ending balance: Acquired and accounted for ASC 310-30 - - - - - - - - Total ending allowance balance $ 2,676 $ 634 $ 10,537 $ 1,398 $ 1,818 $ 1,390 $ 868 $ 19,321 Loans: Ending balance: Individually evaluated for Impairment $ - $ - $ 4,475 $ 193 $ 11,138 $ - $ 19 $ 15,825 Ending balance: Collectively evaluated for impairment 299,536 66,687 803,789 115,293 393,770 127,986 15,062 1,822,123 Ending balance: Acquired and accounted for ASC 310-30 2 - 4,146 1,556 5,509 - 1 11,214 Total ending loans balance $ 299,538 $ 66,687 $ 812,410 $ 117,042 $ 410,417 $ 127,986 $ 15,082 $ 1,849,162 1 The “Other” class includes consumer, overdrafts and net deferred costs. Changes in the allowance for loan and lease losses by segment of loans based on method of impairment for the three and six months ended June 30, 2017, were as follows: Allowance for loan and lease losses: Commercial Leases Commercial Construction Residential HELOC Other 1 Total Three months ended June 30, 2017 Beginning balance $ 1,672 $ 603 $ 7,831 $ 978 $ 2,438 $ 1,340 $ 879 $ 15,741 Charge-offs 6 - 4 - 946 30 80 1,066 Recoveries 5 - 46 60 110 139 51 411 Provision (Release) 479 188 234 (181) 270 64 (304) 750 Ending balance $ 2,150 $ 791 $ 8,107 $ 857 $ 1,872 $ 1,513 $ 546 $ 15,836 Six months ended June 30, 2017 Beginning balance $ 1,629 $ 633 $ 9,547 $ 389 $ 2,178 $ 1,331 $ 451 $ 16,158 Charge-offs 7 117 278 4 977 194 180 1,757 Recoveries 7 - 81 78 153 238 128 685 Provision (Release) 521 275 (1,243) 394 518 138 147 750 Ending balance $ 2,150 $ 791 $ 8,107 $ 857 $ 1,872 $ 1,513 $ 546 $ 15,836 Ending balance: Individually evaluated for impairment $ - $ 98 $ - $ - $ - $ - $ - $ 98 Ending balance: Collectively evaluated for impairment 2,150 693 8,107 857 1,872 1,513 546 15,738 Total ending allowance balance $ 2,150 $ 791 $ 8,107 $ 857 $ 1,872 $ 1,513 $ 546 $ 15,836 Loans: Ending balance: Individually evaluated for impairment $ 216 $ 460 $ 3,113 $ 220 $ 14,609 $ 1,971 $ 9 $ 20,598 Ending balance: Collectively evaluated for impairment 256,544 69,678 702,990 93,441 267,509 114,081 14,806 1,519,049 Total ending loan balance $ 256,760 $ 70,138 $ 706,103 $ 93,661 $ 282,118 $ 116,052 $ 14,815 $ 1,539,647 |
Other Real Estate Owned (Tables
Other Real Estate Owned (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Other Real Estate Owned | |
Schedule of activity in the other real estate owned (OREO) portfolio, net of valuation reserve | Three Months Ended Six Months Ended June 30, June 30, Other real estate owned 2018 2017 2018 2017 Balance at beginning of period $ 7,063 $ 13,481 $ 8,371 $ 11,916 Property additions 2,812 204 2,812 3,620 Property improvements - - 59 - Less: Proceeds from property disposals, net of participation purchase and of gains/losses 709 1,569 1,964 3,102 Period valuation adjustments 254 392 366 710 Balance at end of period $ 8,912 $ 11,724 $ 8,912 $ 11,724 |
Schedule of activity in valuation allowance | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Balance at beginning of period $ 8,099 $ 9,659 $ 8,208 $ 9,982 Provision for unrealized losses 254 392 366 710 Reductions taken on sales (5) (1,747) (226) (2,388) Other adjustments - - - - Balance at end of period $ 8,348 $ 8,304 $ 8,348 $ 8,304 |
Schedule of expenses related to foreclosed assets, net of lease revenue | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Gain on sales, net $ (24) $ (104) $ (104) $ (178) Provision for unrealized losses 254 392 366 710 Operating expenses 213 293 369 816 Less: Lease revenue 14 42 29 100 Net OREO expense $ 429 $ 539 $ 602 $ 1,248 |
Deposits (Tables)
Deposits (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Deposits | |
Schedule of major classifications of deposits | June 30, 2018 December 31, 2017 Noninterest bearing demand $ 620,807 $ 572,404 Savings 301,832 262,220 NOW accounts 435,514 429,448 Money market accounts 320,949 276,082 Certificates of deposit of less than $100,000 249,049 216,493 Certificates of deposit of $100,000 through $250,000 175,174 122,489 Certificates of deposit of more than $250,000 58,526 43,789 Total deposits $ 2,161,851 $ 1,922,925 |
Borrowings (Tables)
Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Borrowings | |
Summary of borrowings and junior subordinated debentures | June 30, 2018 December 31, 2017 Securities sold under repurchase agreements $ 54,038 $ 29,918 Other short-term borrowings 1 76,625 115,000 Junior subordinated debentures 57,662 57,639 Senior notes 44,108 44,058 Notes payable and other borrowings 23,496 - Total borrowings $ 255,929 $ 246,615 |
Equity Compensation Plans (Tabl
Equity Compensation Plans (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity Compensation Plans | |
Summary of stock option activity in Incentive Plan | A summary of stock option activity in the Plans for the six months ended June 30, 2018, is as follows: Weighted- Weighted Average Average Remaining Exercise Contractual Aggregate Shares Price Term (years) Intrinsic Value Beginning outstanding 9,000 $ 7.49 - - Canceled - - - - Expired - - - - Ending outstanding 9,000 $ 7.49 0.6 $ 64 Exercisable at end of period 9,000 $ 7.49 0.6 $ 64 |
Summary of changes in nonvested shares of restricted share rights | June 30, 2018 Weighted Restricted Average Stock Shares Grant Date and Units Fair Value Unvested at January 1 465,000 $ 7.79 Granted 254,281 13.98 Vested (155,500) 5.14 Forfeited - - Unvested at June 30 563,781 $ 11.31 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share | |
Schedule of Earnings Per Share | Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Basic earnings per share: Weighted-average common shares outstanding 29,747,078 29,587,095 29,703,508 29,573,881 Net income $ 6,261 $ 5,146 $ 15,750 $ 9,573 Basic earnings per share $ 0.21 $ 0.17 $ 0.53 $ 0.32 Diluted earnings per share: Weighted-average common shares outstanding 29,747,078 29,587,095 29,703,508 29,573,881 Dilutive effect of unvested restricted awards 1 539,166 426,264 506,234 400,232 Dilutive effect of stock options and warrants 51,038 2,546 43,698 2,431 Diluted average common shares outstanding 30,337,282 30,015,905 30,253,440 29,976,544 Net Income $ 6,261 $ 5,146 $ 15,750 $ 9,573 Diluted earnings per share $ 0.21 $ 0.17 $ 0.52 $ 0.32 Number of antidilutive options and warrants excluded from the diluted earnings per share calculation - 900,839 - 900,839 1 Includes the common stock equivalents for restricted share rights that are dilutive. |
Regulatory & Capital Matters (T
Regulatory & Capital Matters (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Regulatory & Capital Matters | |
Schedule of capital levels and industry defined regulatory minimum required levels | Capital levels and industry defined regulatory minimum required levels are as follows: Minimum Capital To Be Well Capitalized Under Adequacy with Capital Prompt Corrective Actual Conservation Buffer if applicable 1 Action Provisions 2 Amount Ratio Amount Ratio Amount Ratio June 30, 2018 Common equity tier 1 capital to risk weighted assets Consolidated $ 185,044 8.49 % $ 138,946 6.375 % N/A N/A Old Second Bank 273,950 12.62 138,386 6.375 $ 141,099 6.50 % Total capital to risk weighted assets Consolidated 258,854 11.87 215,348 9.875 N/A N/A Old Second Bank 293,266 13.51 214,360 9.875 217,073 10.00 Tier 1 capital to risk weighted assets Consolidated 239,538 10.99 171,643 7.875 N/A N/A Old Second Bank 273,950 12.62 170,947 7.875 173,661 8.00 Tier 1 capital to average assets Consolidated 239,538 9.37 102,257 4.00 N/A N/A Old Second Bank 273,950 10.75 101,935 4.00 127,419 5.00 December 31, 2017 Common equity tier 1 capital to risk weighted assets Consolidated $ 179,853 9.25 % $ 111,801 5.750 % N/A N/A Old Second Bank 249,417 12.88 111,347 5.750 $ 125,870 6.50 % Total capital to risk weighted assets Consolidated 251,383 12.93 179,837 9.250 N/A N/A Old Second Bank 266,873 13.78 179,142 9.250 193,667 10.00 Tier 1 capital to risk weighted assets Consolidated 233,927 12.03 140,978 7.250 N/A N/A Old Second Bank 249,417 12.88 140,394 7.250 154,917 8.00 Tier 1 capital to average assets Consolidated 233,927 10.08 92,828 4.00 N/A N/A Old Second Bank 249,417 10.79 92,462 4.00 115,578 5.00 1 As of June 30, 2018, amounts are shown inclusive of a capital conservation buffer of 1.875%; as compared to December 31, 2017, of 1.25%. 2 The Bank exceeded the general minimum regulatory requirements to be considered “well capitalized.” |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Measurements | |
Schedule of balance of assets and liabilities which are measured at fair value on a recurring basis | June 30, 2018 Level 1 Level 2 Level 3 Total Assets: Securities available-for-sale U.S. Treasury $ 3,876 $ - $ - $ 3,876 U.S. government agencies - 12,216 - 12,216 U.S. government agencies mortgage-backed - 13,407 - 13,407 States and political subdivisions - 257,663 18,449 276,112 Corporate bonds - 700 - 700 Collateralized mortgage obligations - 59,661 1,771 61,432 Asset-backed securities - 109,263 - 109,263 Collateralized loan obligations - 66,638 - 66,638 Loans held-for-sale - 5,206 - 5,206 Mortgage servicing rights - - 7,812 7,812 Interest rate swap agreements - 2,287 - 2,287 Mortgage banking derivatives - 261 - 261 Total $ 3,876 $ 527,302 $ 28,032 $ 559,210 Liabilities: Interest rate swap agreements $ - $ 2,287 $ - $ 2,287 Total $ - $ 2,287 $ - $ 2,287 December 31, 2017 Level 1 Level 2 Level 3 Total Assets: Securities available-for-sale U.S. Treasury $ 3,947 $ - $ - $ 3,947 U.S. government agencies - 13,061 - 13,061 U.S. government agencies mortgage-backed - 12,214 - 12,214 States and political subdivisions - 263,831 14,261 278,092 Corporate bonds - 833 - 833 Collateralized mortgage obligations - 63,671 2,268 65,939 Asset-backed securities - 112,932 - 112,932 Collateralized loan obligations - 54,421 - 54,421 Loans held-for-sale - 4,067 - 4,067 Mortgage servicing rights - - 6,944 6,944 Interest rate swap agreements - 727 - 727 Mortgage banking derivatives - 238 - 238 Total $ 3,947 $ 525,995 $ 23,473 $ 553,415 Liabilities: Interest rate swap agreements $ - $ 2,014 $ - $ 2,014 Total $ - $ 2,014 $ - $ 2,014 |
Schedule of changes in Level 3 assets and liabilities measured at fair value on a recurring basis | Six Months Ended June 30, 2018 Securities available-for-sale Collateralized States and Mortgage Mortgage Political Servicing Obligation Subdivisions Rights Beginning balance January 1, 2018 $ 2,268 $ 14,261 $ 6,944 Transfers into Level 3 - - - Transfers out of Level 3 - - - Total gains or losses Included in earnings (or changes in net assets) 26 - 520 Included in other comprehensive income 31 (551) - Purchases, issuances, sales, and settlements Purchases - 19,934 - Issuances - - 668 Settlements (554) (15,195) (320) Sales - - - Ending balance June 30, 2018 $ 1,771 $ 18,449 $ 7,812 Six Months Ended June 30, 2017 Securities available-for-sale Collateralized States and Mortgage Mortgage Political Servicing Obligation Subdivisions Rights Beginning balance January 1, 2017 $ 3,119 $ 22,226 $ 6,489 Transfers into Level 3 - - - Transfers out of Level 3 - - - Total gains or losses Included in earnings (or changes in net assets) 23 - (280) Included in other comprehensive income (1) (289) - Purchases, issuances, sales, and settlements Purchases - 10,456 - Issuances - - 601 Settlements (463) (12,045) (282) Sales - - - Ending balance June 30, 2017 $ 2,678 $ 20,348 $ 6,528 |
Schedule of quantitative information about level 3 fair value measurements | The following table and commentary presents quantitative and qualitative information about Level 3 fair value measurements as of June 30, 2018: Weighted Measured at fair value Unobservable Average on a recurring basis: Fair Value Valuation Methodology Inputs Range of Input of Inputs Mortgage servicing rights $ 7,812 Discounted Cash Flow Discount Rate 10.0 - 417.6% 10.2 % Prepayment Speed 7.0 - 68.4% 8.2 % The following table and commentary presents quantitative and qualitative information about Level 3 fair value measurements as of December 31, 2017: Weighted Measured at fair value Unobservable Average on a recurring basis: Fair Value Valuation Methodology Inputs Range of Input of Inputs Mortgage servicing rights $ 6,944 Discounted Cash Flow Discount Rate 10.0 - 34.3% 10.2 % Prepayment Speed 7.0 - 68.4% 9.6 % |
Schedule of assets measured at fair value on a nonrecurring basis | June 30, 2018 Level 1 Level 2 Level 3 Total Impaired loans 1 $ - $ - $ 8,386 $ 8,386 Other real estate owned, net 2 - - 8,912 8,912 Total $ - $ - $ 17,298 $ 17,298 1 Represents carrying value and related write-downs of loans for which adjustments are substantially based on the appraised value of collateral for collateral-dependent loans; had a carrying amount of $8.9 million and a valuation allowance of $498,000 resulting in an increase of specific allocations within the allowance for loan and lease losses of $90,000 for the six months ended June 30, 2018. 2 OREO is measured at the lower of carrying or fair value less costs to sell, and had a net carrying amount of $8.9 million, which is made up of the outstanding balance of $18.2 million, net of a valuation allowance of $8.3 million and participations of $937,000 at June 30, 2018. December 31, 2017 Level 1 Level 2 Level 3 Total Impaired loans 1 $ - $ - $ 5,113 $ 5,113 Other real estate owned, net 2 - - 8,371 8,371 Total $ - $ - $ 13,484 $ 13,484 1 Represents carrying value and related write-downs of loans for which adjustments are substantially based on the appraised value of collateral for collateral-dependent loans; had a carrying amount of $5.3 million and a valuation allowance of $144,000, resulting in an increase of specific allocations within the allowance for loan and lease losses of $856,000 for the year December 31, 2017. 2 OREO is measured at the lower of carrying or fair value less costs to sell, and had a net carrying amount of $8.4 million, which is made up of the outstanding balance of $17.5 million, net of a valuation allowance of $8.2 million and participations of $937,000, at December 31, 2017. |
Fair Values of Financial Inst35
Fair Values of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Values of Financial Instruments | |
Schedule of carrying amount and estimated fair values of financial instruments | June 30, 2018 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial assets: Cash and due from banks $ 34,161 $ 34,161 $ 34,161 $ - $ - Interest bearing deposits with financial institutions 31,147 31,147 31,147 - - Securities available-for-sale 543,644 543,644 3,876 519,548 20,220 FHLBC and FRBC Stock 9,093 9,093 - 9,093 - Loans held-for-sale 5,206 5,206 - 5,206 - Loans, net 1,829,841 1,816,393 - - 1,816,393 Accrued interest receivable 10,244 10,244 - 10,244 - Financial liabilities: Noninterest bearing deposits $ 620,807 $ 620,807 $ 620,807 $ - $ - Interest bearing deposits 1,541,044 1,534,109 - 1,534,109 - Securities sold under repurchase agreements 54,038 54,038 - 54,038 - Other short-term borrowings 76,625 76,625 - 76,625 - Junior subordinated debentures 57,662 59,471 33,267 26,204 - Senior notes 44,108 46,743 - 46,743 - Note payable and other borrowings 23,496 23,496 - 23,496 - Borrowing interest payable 192 192 - 192 - Deposit interest payable 800 800 - 800 - December 31, 2017 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial assets: Cash and due from banks $ 37,444 $ 37,444 $ 37,444 $ - $ - Interest bearing deposits with financial institutions 18,389 18,389 18,389 - - Securities available-for-sale 541,439 541,439 3,947 520,963 16,529 FHLBC and FRBC Stock 10,168 10,168 - 10,168 - Loans held-for-sale 4,067 4,067 - 4,067 - Loans, net 1,600,161 1,586,722 - - 1,586,722 Accrued interest receivable 8,595 8,595 - 8,595 - Financial liabilities: Noninterest bearing deposits $ 572,404 $ 572,404 $ 572,404 $ - $ - Interest bearing deposits 1,350,521 1,346,339 - 1,346,339 - Securities sold under repurchase agreements 29,918 29,918 - 29,918 - Other short-term borrowings 115,000 115,000 - 115,000 - Junior subordinated debentures 57,639 59,471 33,267 26,204 - Subordinated debenture 44,058 46,743 - 46,743 - Interest rate swap agreements 1,287 1,287 - 1,287 - Borrowing interest payable 140 140 - 140 - Deposit interest payable 631 631 - 631 - |
Financial Instruments with Of36
Financial Instruments with Off-Balance Sheet Risk and Derivative Transactions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Derivatives, Hedging Activities and Financial Instruments with Off-Balance Sheet Risk | |
Schedule of fair value of derivative financial instruments as well as their classification on the Balance Sheet | Asset Derivatives Liability Derivatives June 30, 2018 December 31, 2017 June 30, 2018 December 31, 2017 Number of Transactions Notional Amount $ Balance Sheet Location Fair Value $ Balance Sheet Location Fair Value $ Balance Sheet Location Fair Value $ Balance Sheet Location Fair Value $ Derivatives designated as hedging instruments Interest Rate Products 1 25,774 Other Assets 507 Other Assets - Other Liabilities - Other Liabilities 1,287 Total derivatives designated as hedging instruments 507 - - 1,287 Derivatives not designated as hedging instruments Interest Rate Products 2 51,548 Other Assets 507 Other Assets - Other Liabilities 507 Other Liabilities 1,287 Other Contracts 3 15,857 Other Assets - Other Assets - Other Liabilities 5 Other Liabilities 13 Total derivatives not designated as hedging instruments 507 - 512 1,301 |
Schedule of financial instrument commitments | June 30, 2018 December 31, 2017 Fixed Variable Total Fixed Variable Total Letters of credit: Borrower: Financial standby $ 2,017 $ 5,320 $ 7,337 $ 177 $ 3,770 $ 3,947 Commercial standby - 395 395 - 354 354 Performance standby 914 6,676 7,590 241 7,594 7,835 2,931 12,391 15,322 418 11,718 12,136 Non-borrower: Performance standby - 67 67 - 142 142 Total letters of credit $ 2,931 $ 12,458 $ 15,389 $ 418 $ 11,860 $ 12,278 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies - Accounting Pronouncements (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 01, 2018 | |
Net interest income | $ 27,261,000 | $ 21,800,000 | $ 50,403,000 | $ 42,416,000 | |
Net income | $ 6,261,000 | $ 5,146,000 | $ 15,750,000 | $ 9,573,000 | |
Diluted earnings per share (in dollars per share) | $ 0.21 | $ 0.17 | $ 0.52 | $ 0.32 | |
Accounting Standards Update 2017-08 | Previously reported | |||||
Net interest income | $ 22,100,000 | $ 42,900,000 | |||
Net income | $ 5,500,000 | $ 10,000,000 | |||
Diluted earnings per share (in dollars per share) | $ 0.18 | $ 0.33 | |||
Accounting Standards Update 2018-02 | Accumulated Other Comprehensive Income (Loss) | |||||
Cumulative effect of new accounting principle | $ 319,000 | ||||
Accounting Standards Update 2018-02 | Retained Earnings | |||||
Cumulative effect of new accounting principle | $ (319,000) |
Summary of Significant Accoun38
Summary of Significant Accounting Policies - Dividend (Details) - USD ($) | Aug. 06, 2018 | Jul. 17, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Allowance for Loan Losses | ||||||||
Loans and Leases Receivable, Allowance | $ 19,321,000 | $ 18,188,000 | $ 17,461,000 | $ 15,836,000 | $ 15,741,000 | $ 16,158,000 | ||
Subsequent Event | ||||||||
Allowance for Loan Losses | ||||||||
Dividends Payable, Amount Per Share | $ 0.01 | |||||||
Payments of Dividends | $ 297,000 | |||||||
All other | ||||||||
Allowance for Loan Losses | ||||||||
Loans and Leases Receivable, Allowance | $ 868,000 | $ 870,000 | $ 579,000 | $ 546,000 | $ 879,000 | $ 451,000 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Apr. 20, 2018 | Jun. 30, 2018 |
Business Acquisition [Line Items] | |||
Acquisition price | $ 41,100 | ||
Subordinated debentures retired | 6,600 | ||
Valuation adjustment, fixed assets | $ 1,500 | ||
GCFC/ABC Bank | |||
Business Acquisition [Line Items] | |||
Net cash paid | 47,180 | ||
Goodwill | 9,900 | $ 9,900 | |
Core deposit intangible | 3,100 | 3,100 | |
Valuation adjustment, loan valuation mark | 11,200 | ||
Acquisition expenses | 3,400 | 3,400 | |
Total liabilities | 289,790 | ||
Loans payable | 23,500 | 23,500 | |
Assets acquired: | |||
Cash on due from banks | 6,669 | ||
Interest bearing deposits with financial institutions | 500 | ||
Securities available-for-sale, at fair value | 72,091 | ||
Federal funds sold | 4,300 | ||
FHLBC stock | 1,549 | ||
Loans | 227,594 | ||
Premises and equipment | 5,339 | ||
Other real estate owned | 432 | ||
Goodwill and core deposit intangible | 12,957 | ||
Deferred tax assets, net | 3,456 | ||
Other assets | 2,083 | ||
Total assets | 336,970 | ||
Liabilities assumed: | |||
Deposits- noninterest bearing demand | 58,005 | ||
Deposits- interest bearing - Savings, NOW, Moneymarket | 91,494 | ||
Deposits - Time | 98,999 | ||
Total deposits | 248,498 | ||
Securities sold under repurchase agreements | 5,624 | ||
Other short-term borrowings | 10,875 | ||
Notes payable and other borrowings | 23,544 | ||
Other liabilities | 1,249 | ||
Total liabilities | 289,790 | ||
Cash consideration paid | 47,180 | ||
Total Liabilities Assumed and Cash Consideration Paid for Acquisition | $ 336,970 | ||
GCFC/ABC Bank | Salaries and Employee Benefits | |||
Business Acquisition [Line Items] | |||
Acquisition expenses | 1,200 | 1,200 | |
GCFC/ABC Bank | Data Processing, Computer and ATM | |||
Business Acquisition [Line Items] | |||
Acquisition expenses | $ 1,800 | $ 1,800 |
Acquisition of Loans (Details)
Acquisition of Loans (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Apr. 20, 2018 |
Business Acquisition [Line Items] | ||
Fair Value | $ 11,214 | |
PCI | GCFC/ABC Bank | ||
Business Acquisition [Line Items] | ||
Fair Value | 11,214 | $ 11,360 |
Contractually required principal and interest payments | 18,989 | 19,447 |
Best estimate of contractual cash flows not expected to be collected | 6,402 | 6,537 |
Best estimate of contractual cash flows expected to be collected | 12,587 | 12,910 |
Non-PCI | GCFC/ABC Bank | ||
Business Acquisition [Line Items] | ||
Fair Value | 208,929 | 216,306 |
Contractually required principal and interest payments | 211,341 | 219,488 |
Best estimate of contractual cash flows not expected to be collected | 2,119 | 2,511 |
Best estimate of contractual cash flows expected to be collected | $ 209,222 | $ 216,977 |
Securities - Investment Portfol
Securities - Investment Portfolio (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2018 | Dec. 31, 2017 | |
Securities | ||||
Pretax realized losses on sale of available-for-sale securities | $ 202 | $ 704 | ||
FHLB and FRB Stock | ||||
FHLBC stock | $ 4,300 | $ 5,400 | ||
FRB stock | $ 4,800 | $ 4,800 |
Securities - Amortized Cost and
Securities - Amortized Cost and Fair Value (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($)item | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)item | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Securities Available-for-Sale | |||||
Amortized Cost | $ 550,396 | $ 550,396 | $ 550,396 | $ 550,396 | $ 537,645 |
Gross Unrealized Gains | 2,955 | 2,955 | 8,467 | ||
Gross Unrealized Losses | (9,707) | (9,707) | (4,673) | ||
Fair Value | 543,644 | 543,644 | 543,644 | 543,644 | 541,439 |
Other disclosures | |||||
Purchases | 54,550 | 205,755 | |||
Sales | $ 90,224 | $ 36,468 | $ 92,746 | $ 100,856 | |
Number of originators | item | 3 | 3 | |||
Securities pledged to secure deposits and for other purposes | $ 311,400 | $ 311,400 | 301,000 | ||
U.S. Treasury | |||||
Securities Available-for-Sale | |||||
Amortized Cost | 4,004 | 4,004 | 4,002 | ||
Gross Unrealized Losses | (128) | (128) | (55) | ||
Fair Value | 3,876 | 3,876 | 3,947 | ||
U.S. government agencies | |||||
Securities Available-for-Sale | |||||
Amortized Cost | 12,369 | 12,369 | 13,062 | ||
Gross Unrealized Gains | 8 | ||||
Gross Unrealized Losses | (153) | (153) | (9) | ||
Fair Value | 12,216 | 12,216 | 13,061 | ||
U.S. government agencies mortgage-backed | |||||
Securities Available-for-Sale | |||||
Amortized Cost | 12,372 | ||||
Gross Unrealized Gains | 7 | ||||
Gross Unrealized Losses | (165) | ||||
Fair Value | 12,214 | ||||
States and political subdivisions | |||||
Securities Available-for-Sale | |||||
Amortized Cost | 279,007 | 279,007 | 272,240 | ||
Gross Unrealized Gains | 1,640 | 1,640 | 7,116 | ||
Gross Unrealized Losses | (4,535) | (4,535) | (1,264) | ||
Fair Value | 276,112 | 276,112 | 278,092 | ||
Corporate bonds | |||||
Securities Available-for-Sale | |||||
Amortized Cost | 685 | 685 | 823 | ||
Gross Unrealized Gains | 21 | 21 | 21 | ||
Gross Unrealized Losses | (6) | (6) | (11) | ||
Fair Value | 700 | 700 | 833 | ||
Collateralized mortgage obligations | |||||
Securities Available-for-Sale | |||||
Amortized Cost | 63,778 | 63,778 | 66,892 | ||
Gross Unrealized Gains | 60 | 60 | 202 | ||
Gross Unrealized Losses | (2,406) | (2,406) | (1,155) | ||
Fair Value | 61,432 | 61,432 | 65,939 | ||
Asset-backed securities | |||||
Securities Available-for-Sale | |||||
Amortized Cost | 110,053 | 110,053 | 113,983 | ||
Gross Unrealized Gains | 1,011 | 1,011 | 862 | ||
Gross Unrealized Losses | (1,801) | (1,801) | (1,913) | ||
Fair Value | 109,263 | 109,263 | 112,932 | ||
FFEL | |||||
Other disclosures | |||||
Asset-backed securities | 92,500 | $ 92,500 | |||
Percentage of outstanding principal amount of loans guaranteed by US Department of Education | 97 | ||||
Total added credit enhancement in the form of overcollaterization and/or subordination of outstanding principal | 10,900 | $ 10,900 | |||
Percentage of total added credit enhancement in the form of overcollaterization and/or subordination of outstanding principal | 11.44 | ||||
FFEL | Reimbursement requests greater than 5 % | |||||
Other disclosures | |||||
Percentage of outstanding principal amount of loans guaranteed by US Department of Education | 85 | ||||
Percent of insured loan | 5 | ||||
FFEL | Reimbursement requests greater than 9 % | |||||
Other disclosures | |||||
Percentage of outstanding principal amount of loans guaranteed by US Department of Education | 75 | ||||
Percent of insured loan | 9 | ||||
Collateralized loan obligations | |||||
Securities Available-for-Sale | |||||
Amortized Cost | 66,489 | $ 66,489 | 54,271 | ||
Gross Unrealized Gains | 223 | 223 | 251 | ||
Gross Unrealized Losses | (74) | (74) | (101) | ||
Fair Value | 66,638 | 66,638 | $ 54,421 | ||
U.S. government agency mortgage-backed | |||||
Securities Available-for-Sale | |||||
Amortized Cost | 14,011 | 14,011 | |||
Gross Unrealized Losses | (604) | (604) | |||
Fair Value | 13,407 | 13,407 | |||
GCO Education Loan Funding Corp | |||||
Securities Available-for-Sale | |||||
Amortized Cost | 27,685 | 27,685 | |||
Fair Value | 26,754 | 26,754 | |||
Towd Point Mortgage Trust | |||||
Securities Available-for-Sale | |||||
Amortized Cost | 28,966 | 28,966 | |||
Fair Value | 28,080 | $ 28,080 | |||
Towd Point Mortgage Trust | Stockholders' Equity | |||||
Other disclosures | |||||
Credit risk as a percentage of benchmark | 10.00% | ||||
Student Marketing Association [Member] | |||||
Securities Available-for-Sale | |||||
Amortized Cost | 25,780 | $ 25,780 | |||
Fair Value | $ 26,176 | $ 26,176 | |||
Stockholders' Equity | GCO Education Loan Funding Corp | |||||
Other disclosures | |||||
Credit risk as a percentage of benchmark | 10.00% |
Securities - Contractural Matur
Securities - Contractural Maturities (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2018 | Dec. 31, 2017 | |
Securities Available-for-Sale, Amortized Cost | |||
Due in one year or less | $ 10,550 | ||
Due after one year through five years | 4,689 | ||
Due after five years through ten years | 5,343 | ||
Due after ten years | 275,483 | ||
Debt securities excluding securities not due at a single maturity date | 296,065 | ||
Total | $ 550,396 | $ 550,396 | $ 537,645 |
Securities Available-for-Sale, Weighted Average Yield | |||
Due in one year or less (as a percent) | 2.10% | ||
Due after one year through five years (as a percent) | 2.20% | ||
Due after five years through ten years (as a percent) | 3.27% | ||
Due after ten years (as a percent) | 2.98% | ||
Debt securities (as a percent) | 2.94% | ||
Total (as a percent) | 3.19% | ||
Securities Available-for-Sale, Fair Value | |||
Due in one year or less | $ 10,540 | ||
Due after one year through five years | 4,576 | ||
Due after five years through ten years | 5,413 | ||
Due after ten years | 272,375 | ||
Debt securities | 292,904 | ||
Fair Value | 543,644 | 543,644 | 541,439 |
Collateralized mortgage obligations | |||
Securities Available-for-Sale, Amortized Cost | |||
Total | 63,778 | 66,892 | |
Securities Available-for-Sale, Fair Value | |||
Fair Value | 61,432 | 65,939 | |
Asset-backed securities | |||
Securities Available-for-Sale, Amortized Cost | |||
Securities not due at a single maturity date | $ 110,053 | ||
Total | 110,053 | 113,983 | |
Securities Available-for-Sale, Weighted Average Yield | |||
Securities not due at a single maturity date, Weighted Average Yield (as a percent) | 3.23% | ||
Securities Available-for-Sale, Fair Value | |||
Securities not due at a single maturity date | $ 109,263 | ||
Fair Value | 109,263 | 112,932 | |
Collateralized loan obligations | |||
Securities Available-for-Sale, Amortized Cost | |||
Securities not due at a single maturity date | $ 66,489 | ||
Total | 66,489 | 54,271 | |
Securities Available-for-Sale, Weighted Average Yield | |||
Securities not due at a single maturity date, Weighted Average Yield (as a percent) | 4.34% | ||
Securities Available-for-Sale, Fair Value | |||
Securities not due at a single maturity date | $ 66,638 | ||
Fair Value | $ 66,638 | $ 54,421 | |
Mortgage-backed and collateralized mortgage obligations | |||
Securities Available-for-Sale, Amortized Cost | |||
Securities not due at a single maturity date | $ 77,789 | ||
Securities Available-for-Sale, Weighted Average Yield | |||
Securities not due at a single maturity date, Weighted Average Yield (as a percent) | 3.11% | ||
Securities Available-for-Sale, Fair Value | |||
Securities not due at a single maturity date | $ 74,839 |
Securities - Unrealized Loss Po
Securities - Unrealized Loss Positions (Details) $ in Thousands | Jun. 30, 2018USD ($)security | Dec. 31, 2017USD ($)security |
Securities Available-for-Sale, Number of Securities | ||
Less than 12 months in an unrealized loss position | security | 64 | 26 |
Greater than 12 months in an unrealized loss position | security | 24 | 22 |
Total | security | 88 | 48 |
Securities Available-for-Sale, Unrealized Losses | ||
Less than 12 months in an unrealized loss position | $ 4,425 | $ 1,457 |
Greater than 12 months in an unrealized loss position | 5,282 | 3,216 |
Total | 9,707 | 4,673 |
Securities Available-for-Sale, Fair Value | ||
Less than 12 months in an unrealized loss position | 212,683 | 102,830 |
Greater than 12 months in an unrealized loss position | 110,793 | 108,651 |
Total | $ 323,476 | $ 211,481 |
U.S. Treasury | ||
Securities Available-for-Sale, Number of Securities | ||
Less than 12 months in an unrealized loss position | security | 1 | 1 |
Total | security | 1 | 1 |
Securities Available-for-Sale, Unrealized Losses | ||
Less than 12 months in an unrealized loss position | $ 128 | $ 55 |
Total | 128 | 55 |
Securities Available-for-Sale, Fair Value | ||
Less than 12 months in an unrealized loss position | 3,876 | 3,947 |
Total | $ 3,876 | $ 3,947 |
U.S. government agencies | ||
Securities Available-for-Sale, Number of Securities | ||
Less than 12 months in an unrealized loss position | security | 4 | 2 |
Total | security | 4 | 2 |
Securities Available-for-Sale, Unrealized Losses | ||
Less than 12 months in an unrealized loss position | $ 153 | $ 9 |
Total | 153 | 9 |
Securities Available-for-Sale, Fair Value | ||
Less than 12 months in an unrealized loss position | 12,216 | 6,550 |
Total | $ 12,216 | $ 6,550 |
U.S. government agency mortgage-backed | ||
Securities Available-for-Sale, Number of Securities | ||
Less than 12 months in an unrealized loss position | security | 7 | 4 |
Greater than 12 months in an unrealized loss position | security | 5 | 5 |
Total | security | 12 | 9 |
Securities Available-for-Sale, Unrealized Losses | ||
Less than 12 months in an unrealized loss position | $ 356 | $ 24 |
Greater than 12 months in an unrealized loss position | 248 | 141 |
Total | 604 | 165 |
Securities Available-for-Sale, Fair Value | ||
Less than 12 months in an unrealized loss position | 8,968 | 5,501 |
Greater than 12 months in an unrealized loss position | 4,439 | 4,843 |
Total | $ 13,407 | $ 10,344 |
States and political subdivisions | ||
Securities Available-for-Sale, Number of Securities | ||
Less than 12 months in an unrealized loss position | security | 43 | 13 |
Greater than 12 months in an unrealized loss position | security | 2 | 1 |
Total | security | 45 | 14 |
Securities Available-for-Sale, Unrealized Losses | ||
Less than 12 months in an unrealized loss position | $ 3,264 | $ 1,237 |
Greater than 12 months in an unrealized loss position | 1,271 | 27 |
Total | 4,535 | 1,264 |
Securities Available-for-Sale, Fair Value | ||
Less than 12 months in an unrealized loss position | 141,455 | 45,985 |
Greater than 12 months in an unrealized loss position | 3,849 | 1,512 |
Total | $ 145,304 | $ 47,497 |
Corporate bonds | ||
Securities Available-for-Sale, Number of Securities | ||
Greater than 12 months in an unrealized loss position | security | 1 | 1 |
Total | security | 1 | 1 |
Securities Available-for-Sale, Unrealized Losses | ||
Greater than 12 months in an unrealized loss position | $ 6 | $ 11 |
Total | 6 | 11 |
Securities Available-for-Sale, Fair Value | ||
Greater than 12 months in an unrealized loss position | 198 | 332 |
Total | $ 198 | $ 332 |
Collateralized mortgage obligations | ||
Securities Available-for-Sale, Number of Securities | ||
Less than 12 months in an unrealized loss position | security | 3 | 3 |
Greater than 12 months in an unrealized loss position | security | 9 | 8 |
Total | security | 12 | 11 |
Securities Available-for-Sale, Unrealized Losses | ||
Less than 12 months in an unrealized loss position | $ 399 | $ 31 |
Greater than 12 months in an unrealized loss position | 2,007 | 1,124 |
Total | 2,406 | 1,155 |
Securities Available-for-Sale, Fair Value | ||
Less than 12 months in an unrealized loss position | 20,353 | 11,534 |
Greater than 12 months in an unrealized loss position | 37,782 | 40,219 |
Total | $ 58,135 | $ 51,753 |
Asset-backed securities | ||
Securities Available-for-Sale, Number of Securities | ||
Less than 12 months in an unrealized loss position | security | 3 | |
Greater than 12 months in an unrealized loss position | security | 6 | 7 |
Total | security | 9 | 7 |
Securities Available-for-Sale, Unrealized Losses | ||
Less than 12 months in an unrealized loss position | $ 65 | |
Greater than 12 months in an unrealized loss position | 1,736 | $ 1,913 |
Total | 1,801 | 1,913 |
Securities Available-for-Sale, Fair Value | ||
Less than 12 months in an unrealized loss position | 8,451 | |
Greater than 12 months in an unrealized loss position | 56,539 | 61,745 |
Total | $ 64,990 | $ 61,745 |
Collateralized loan obligations | ||
Securities Available-for-Sale, Number of Securities | ||
Less than 12 months in an unrealized loss position | security | 3 | 3 |
Greater than 12 months in an unrealized loss position | security | 1 | |
Total | security | 4 | 3 |
Securities Available-for-Sale, Unrealized Losses | ||
Less than 12 months in an unrealized loss position | $ 60 | $ 101 |
Greater than 12 months in an unrealized loss position | 14 | |
Total | 74 | 101 |
Securities Available-for-Sale, Fair Value | ||
Less than 12 months in an unrealized loss position | 17,364 | 29,313 |
Greater than 12 months in an unrealized loss position | 7,986 | |
Total | $ 25,350 | $ 29,313 |
Securities - Realized Gain (Los
Securities - Realized Gain (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Securities | |||||
Sales | $ 90,224 | $ 36,468 | $ 92,746 | $ 100,856 | |
Gross realized gains on securities | 312 | 71 | 347 | 437 | |
Gross realized losses on securities | (202) | (704) | |||
Securities (losses) gains, net | 312 | (131) | 347 | (267) | |
Income tax (expense) benefit on net realized gains (losses) | (88) | $ 52 | (98) | $ 106 | |
Available-for-sale Securities Pledged as Collateral | $ 311,400 | $ 311,400 | $ 301,000 |
Loans - Major Classifications (
Loans - Major Classifications (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Loans | |||
Total loans, gross | $ 1,836,836 | $ 1,616,942 | |
Net deferred loan fees | 1,112 | 680 | |
PCI loans, net of purchase accounting adjustments | 11,214 | ||
Total Loans | 1,849,162 | 1,617,622 | $ 1,539,647 |
Other | |||
Loans | |||
Total loans, gross | 13,969 | 13,384 | |
PCI | |||
Loans | |||
Total Loans | 11,214 | ||
Non-PCI | |||
Loans | |||
Total Loans | 1,837,948 | 1,617,622 | |
Commercial | |||
Loans | |||
Total loans, gross | 299,536 | 272,851 | |
PCI loans, net of purchase accounting adjustments | 2 | ||
Total Loans | 299,536 | 272,851 | 256,760 |
Real estate - commercial | |||
Loans | |||
Total loans, gross | 808,264 | 750,991 | |
PCI loans, net of purchase accounting adjustments | 4,146 | ||
Total Loans | 706,103 | ||
Real estate - commercial | Construction Loans | |||
Loans | |||
Total loans, gross | 115,486 | 85,162 | |
PCI loans, net of purchase accounting adjustments | 1,556 | ||
Total Loans | 93,661 | ||
Real estate - residential | |||
Loans | |||
Total loans, gross | 404,908 | 313,397 | |
PCI loans, net of purchase accounting adjustments | 5,509 | ||
Total Loans | 282,118 | ||
Real estate - residential | Home Equity Line of Credit | |||
Loans | |||
Total Loans | 127,986 | 112,833 | |
Consumer | |||
Loans | |||
Total Loans | 116,052 | ||
Consumer | Home Equity Line of Credit | |||
Loans | |||
Total loans, gross | 127,986 | 112,833 | |
Lease financing receivables | |||
Loans | |||
Total loans, gross | 66,687 | 68,325 | |
Total Loans | $ 66,687 | $ 68,325 | $ 70,138 |
Loans - Major Classifications -
Loans - Major Classifications - Loan Concentrations (Details) - Total real estate - Loan receivables - Customer concentration risk | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2018 | |
Loans | ||
Credit risk as a percentage of benchmark | 78.00% | |
Loans receivable as a percentage of total portfolio | 78.80% |
Loans - Aging Analysis (Details
Loans - Aging Analysis (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Aged analysis of past due loans | |||
Total Past Due | $ 10,509 | $ 5,606 | |
Current | 1,826,255 | 1,597,628 | |
Nonaccrual | 12,398 | 14,388 | |
Total Loans | 1,849,162 | 1,617,622 | $ 1,539,647 |
Recorded Investment 90 days or Greater Past Due and Accruing | 1,220 | 254 | |
30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 8,868 | 4,212 | |
60 to 89 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 488 | 1,146 | |
90 Days or Greater Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 1,153 | 248 | |
PCI | |||
Aged analysis of past due loans | |||
Total Past Due | 387 | ||
Current | 7,850 | ||
Nonaccrual | 2,977 | ||
Total Loans | 11,214 | ||
PCI | 30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 387 | ||
Non-PCI | |||
Aged analysis of past due loans | |||
Total Past Due | 10,122 | ||
Current | 1,818,405 | ||
Nonaccrual | 9,421 | ||
Total Loans | 1,837,948 | 1,617,622 | |
Recorded Investment 90 days or Greater Past Due and Accruing | 1,220 | ||
Non-PCI | 30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 8,481 | ||
Non-PCI | 60 to 89 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 488 | ||
Non-PCI | 90 Days or Greater Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 1,153 | ||
Multifamily | |||
Aged analysis of past due loans | |||
Total Past Due | 232 | ||
Current | 191,883 | 125,049 | |
Nonaccrual | 4,723 | ||
Total Loans | 192,115 | 129,772 | |
Multifamily | 30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 232 | ||
Commercial | |||
Aged analysis of past due loans | |||
Total Past Due | 210 | 1,270 | |
Current | 299,326 | 271,581 | |
Total Loans | 299,536 | 272,851 | 256,760 |
Commercial | 30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 210 | 995 | |
Commercial | 60 to 89 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 275 | ||
Lease financing receivables | |||
Aged analysis of past due loans | |||
Current | 66,687 | 68,147 | |
Nonaccrual | 178 | ||
Total Loans | 66,687 | 68,325 | 70,138 |
Real estate - commercial | |||
Aged analysis of past due loans | |||
Total Loans | 706,103 | ||
Real estate - commercial | Owner occupied general purpose | |||
Aged analysis of past due loans | |||
Total Past Due | 1,353 | 1,136 | |
Current | 172,922 | 144,267 | |
Nonaccrual | 823 | 455 | |
Total Loans | 175,098 | 145,858 | |
Recorded Investment 90 days or Greater Past Due and Accruing | 477 | ||
Real estate - commercial | Owner occupied general purpose | 30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 903 | 1,136 | |
Real estate - commercial | Owner occupied general purpose | 90 Days or Greater Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 450 | ||
Real estate - commercial | Owner occupied special purpose | |||
Aged analysis of past due loans | |||
Total Past Due | 1,981 | 226 | |
Current | 194,604 | 170,546 | |
Nonaccrual | 426 | 342 | |
Total Loans | 197,011 | 171,114 | |
Real estate - commercial | Owner occupied special purpose | 30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 1,981 | 226 | |
Real estate - commercial | Non-owner occupied general purpose | |||
Aged analysis of past due loans | |||
Total Past Due | 3,456 | 593 | |
Current | 279,599 | 273,203 | |
Nonaccrual | 39 | 1,163 | |
Total Loans | 283,094 | 274,959 | |
Recorded Investment 90 days or Greater Past Due and Accruing | 178 | ||
Real estate - commercial | Non-owner occupied general purpose | 30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 3,282 | ||
Real estate - commercial | Non-owner occupied general purpose | 60 to 89 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 593 | ||
Real estate - commercial | Non-owner occupied general purpose | 90 Days or Greater Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 174 | ||
Real estate - commercial | Non-owner occupied special purpose | |||
Aged analysis of past due loans | |||
Total Past Due | 248 | ||
Current | 87,704 | 92,923 | |
Nonaccrual | 3,099 | ||
Total Loans | 90,803 | 93,171 | |
Recorded Investment 90 days or Greater Past Due and Accruing | 254 | ||
Real estate - commercial | Non-owner occupied special purpose | 90 Days or Greater Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 248 | ||
Real estate - commercial | Retail properties | |||
Aged analysis of past due loans | |||
Current | 47,582 | 49,538 | |
Nonaccrual | 1,081 | ||
Total Loans | 47,582 | 50,619 | |
Real estate - commercial | Farm | |||
Aged analysis of past due loans | |||
Current | 14,676 | 15,270 | |
Total Loans | 14,676 | 15,270 | |
Real estate - commercial | Construction Loans | |||
Aged analysis of past due loans | |||
Total Loans | 93,661 | ||
Real estate - commercial | Construction Loans | Homebuilder | |||
Aged analysis of past due loans | |||
Total Past Due | 129 | ||
Current | 7,649 | 2,221 | |
Total Loans | 7,649 | 2,350 | |
Real estate - commercial | Construction Loans | Homebuilder | 30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 129 | ||
Real estate - commercial | Construction Loans | Land | |||
Aged analysis of past due loans | |||
Total Past Due | 1,124 | ||
Current | 9,168 | 1,319 | |
Total Loans | 9,168 | 2,443 | |
Real estate - commercial | Construction Loans | Land | 30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 1,124 | ||
Real estate - commercial | Construction Loans | Commercial speculative | |||
Aged analysis of past due loans | |||
Current | 39,730 | 32,028 | |
Total Loans | 39,730 | 32,028 | |
Real estate - commercial | Construction Loans | All other | |||
Aged analysis of past due loans | |||
Total Past Due | 501 | ||
Current | 58,245 | 48,140 | |
Nonaccrual | 193 | 201 | |
Total Loans | 58,939 | 48,341 | |
Recorded Investment 90 days or Greater Past Due and Accruing | 475 | ||
Real estate - commercial | Construction Loans | All other | 30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 59 | ||
Real estate - commercial | Construction Loans | All other | 90 Days or Greater Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 442 | ||
Real estate - residential | |||
Aged analysis of past due loans | |||
Total Loans | 282,118 | ||
Real estate - residential | Investor | |||
Aged analysis of past due loans | |||
Total Past Due | 612 | ||
Current | 72,896 | 55,248 | |
Nonaccrual | 371 | 372 | |
Total Loans | 73,879 | 55,620 | |
Recorded Investment 90 days or Greater Past Due and Accruing | 40 | ||
Real estate - residential | Investor | 30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 466 | ||
Real estate - residential | Investor | 60 to 89 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 108 | ||
Real estate - residential | Investor | 90 Days or Greater Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 38 | ||
Real estate - residential | Owner occupied | |||
Aged analysis of past due loans | |||
Total Past Due | 918 | 74 | |
Current | 134,265 | 123,257 | |
Nonaccrual | 3,731 | 4,674 | |
Total Loans | 138,914 | 128,005 | |
Real estate - residential | Owner occupied | 30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 710 | 74 | |
Real estate - residential | Owner occupied | 60 to 89 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 208 | ||
Real estate - residential | Home Equity Line of Credit | |||
Aged analysis of past due loans | |||
Total Past Due | 820 | 769 | |
Current | 126,443 | 110,872 | |
Nonaccrual | 723 | 1,192 | |
Total Loans | 127,986 | 112,833 | |
Recorded Investment 90 days or Greater Past Due and Accruing | 50 | ||
Real estate - residential | Home Equity Line of Credit | 30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 599 | 491 | |
Real estate - residential | Home Equity Line of Credit | 60 to 89 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 172 | 278 | |
Real estate - residential | Home Equity Line of Credit | 90 Days or Greater Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | 49 | ||
Consumer | |||
Aged analysis of past due loans | |||
Total Loans | 116,052 | ||
All other | |||
Aged analysis of past due loans | |||
Total Past Due | 39 | 37 | |
Current | 15,026 | 14,019 | |
Nonaccrual | 16 | 7 | |
Total Loans | 15,081 | 14,063 | $ 14,815 |
All other | 30 to 59 Days Past Due | |||
Aged analysis of past due loans | |||
Total Past Due | $ 39 | $ 37 |
Loans - Inclusion (Details)
Loans - Inclusion (Details) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Minimum | |
Loans by risk rating | |
Loan commitment for inclusion in credit quality analysis | $ 50,000 |
Loans - Credit Quality (Details
Loans - Credit Quality (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Loans by risk rating | |||
Total Loans | $ 1,849,162 | $ 1,617,622 | $ 1,539,647 |
Multifamily | |||
Loans by risk rating | |||
Total Loans | 192,115 | 129,772 | |
Commercial | |||
Loans by risk rating | |||
Total Loans | 299,536 | 272,851 | 256,760 |
Lease financing receivables | |||
Loans by risk rating | |||
Total Loans | 66,687 | 68,325 | 70,138 |
Real estate - commercial | |||
Loans by risk rating | |||
Total Loans | 706,103 | ||
Real estate - commercial | Owner occupied general purpose | |||
Loans by risk rating | |||
Total Loans | 175,098 | 145,858 | |
Real estate - commercial | Owner occupied special purpose | |||
Loans by risk rating | |||
Total Loans | 197,011 | 171,114 | |
Real estate - commercial | Non-owner occupied general purpose | |||
Loans by risk rating | |||
Total Loans | 283,094 | 274,959 | |
Real estate - commercial | Non-owner occupied special purpose | |||
Loans by risk rating | |||
Total Loans | 90,803 | 93,171 | |
Real estate - commercial | Retail properties | |||
Loans by risk rating | |||
Total Loans | 47,582 | 50,619 | |
Real estate - commercial | Farm | |||
Loans by risk rating | |||
Total Loans | 14,676 | 15,270 | |
Real estate - residential | |||
Loans by risk rating | |||
Total Loans | 282,118 | ||
Real estate - residential | Investor | |||
Loans by risk rating | |||
Total Loans | 73,879 | 55,620 | |
Real estate - residential | Owner occupied | |||
Loans by risk rating | |||
Total Loans | 138,914 | 128,005 | |
Consumer | |||
Loans by risk rating | |||
Total Loans | 116,052 | ||
All other | |||
Loans by risk rating | |||
Total Loans | 15,081 | 14,063 | 14,815 |
Pass | |||
Loans by risk rating | |||
Total Loans | 1,798,709 | 1,583,352 | |
Pass | Multifamily | |||
Loans by risk rating | |||
Total Loans | 188,813 | 125,049 | |
Pass | Commercial | |||
Loans by risk rating | |||
Total Loans | 298,512 | 270,889 | |
Pass | Lease financing receivables | |||
Loans by risk rating | |||
Total Loans | 66,148 | 67,500 | |
Pass | Real estate - commercial | Owner occupied general purpose | |||
Loans by risk rating | |||
Total Loans | 166,962 | 142,843 | |
Pass | Real estate - commercial | Owner occupied special purpose | |||
Loans by risk rating | |||
Total Loans | 195,009 | 169,621 | |
Pass | Real estate - commercial | Non-owner occupied general purpose | |||
Loans by risk rating | |||
Total Loans | 275,728 | 271,731 | |
Pass | Real estate - commercial | Non-owner occupied special purpose | |||
Loans by risk rating | |||
Total Loans | 87,704 | 89,582 | |
Pass | Real estate - commercial | Retail properties | |||
Loans by risk rating | |||
Total Loans | 45,755 | 48,321 | |
Pass | Real estate - commercial | Farm | |||
Loans by risk rating | |||
Total Loans | 13,428 | 11,755 | |
Pass | Real estate - residential | Investor | |||
Loans by risk rating | |||
Total Loans | 72,759 | 55,172 | |
Pass | Real estate - residential | Owner occupied | |||
Loans by risk rating | |||
Total Loans | 133,485 | 122,178 | |
Pass | All other | |||
Loans by risk rating | |||
Total Loans | 15,063 | 14,043 | |
Special Mention | |||
Loans by risk rating | |||
Total Loans | 12,921 | 10,965 | |
Special Mention | Commercial | |||
Loans by risk rating | |||
Total Loans | 631 | 1,962 | |
Special Mention | Real estate - commercial | Owner occupied general purpose | |||
Loans by risk rating | |||
Total Loans | 4,915 | 1,927 | |
Special Mention | Real estate - commercial | Owner occupied special purpose | |||
Loans by risk rating | |||
Total Loans | 254 | 1,152 | |
Special Mention | Real estate - commercial | Non-owner occupied general purpose | |||
Loans by risk rating | |||
Total Loans | 4,899 | 2,065 | |
Special Mention | Real estate - commercial | Retail properties | |||
Loans by risk rating | |||
Total Loans | 1,217 | ||
Special Mention | Real estate - commercial | Farm | |||
Loans by risk rating | |||
Total Loans | 1,029 | ||
Special Mention | Real estate - residential | Investor | |||
Loans by risk rating | |||
Total Loans | 91 | ||
Special Mention | Real estate - residential | Owner occupied | |||
Loans by risk rating | |||
Total Loans | 1 | 561 | |
Substandard | |||
Loans by risk rating | |||
Total Loans | 37,532 | 23,305 | |
Substandard | Multifamily | |||
Loans by risk rating | |||
Total Loans | 3,302 | 4,723 | |
Substandard | Commercial | |||
Loans by risk rating | |||
Total Loans | 393 | ||
Substandard | Lease financing receivables | |||
Loans by risk rating | |||
Total Loans | 539 | 825 | |
Substandard | Real estate - commercial | Owner occupied general purpose | |||
Loans by risk rating | |||
Total Loans | 3,221 | 1,088 | |
Substandard | Real estate - commercial | Owner occupied special purpose | |||
Loans by risk rating | |||
Total Loans | 1,748 | 341 | |
Substandard | Real estate - commercial | Non-owner occupied general purpose | |||
Loans by risk rating | |||
Total Loans | 2,467 | 1,163 | |
Substandard | Real estate - commercial | Non-owner occupied special purpose | |||
Loans by risk rating | |||
Total Loans | 3,099 | 3,589 | |
Substandard | Real estate - commercial | Retail properties | |||
Loans by risk rating | |||
Total Loans | 1,827 | 1,081 | |
Substandard | Real estate - commercial | Farm | |||
Loans by risk rating | |||
Total Loans | 1,248 | 2,486 | |
Substandard | Real estate - residential | Investor | |||
Loans by risk rating | |||
Total Loans | 1,029 | 448 | |
Substandard | Real estate - residential | Owner occupied | |||
Loans by risk rating | |||
Total Loans | 5,428 | 5,266 | |
Substandard | All other | |||
Loans by risk rating | |||
Total Loans | 18 | 20 | |
PCI | |||
Loans by risk rating | |||
Total Loans | 11,214 | ||
PCI | Substandard | |||
Loans by risk rating | |||
Total Loans | 11,214 | ||
Non-PCI | |||
Loans by risk rating | |||
Total Loans | 1,837,948 | 1,617,622 | |
Non-PCI | Pass | |||
Loans by risk rating | |||
Total Loans | 1,798,709 | ||
Non-PCI | Special Mention | |||
Loans by risk rating | |||
Total Loans | 12,921 | ||
Non-PCI | Substandard | |||
Loans by risk rating | |||
Total Loans | 26,318 | ||
Construction Loans | Real estate - commercial | |||
Loans by risk rating | |||
Total Loans | $ 93,661 | ||
Construction Loans | Real estate - commercial | Homebuilder | |||
Loans by risk rating | |||
Total Loans | 7,649 | 2,350 | |
Construction Loans | Real estate - commercial | Land | |||
Loans by risk rating | |||
Total Loans | 9,168 | 2,443 | |
Construction Loans | Real estate - commercial | Commercial speculative | |||
Loans by risk rating | |||
Total Loans | 39,730 | 32,028 | |
Construction Loans | Real estate - commercial | All other | |||
Loans by risk rating | |||
Total Loans | 58,939 | 48,341 | |
Construction Loans | Pass | Real estate - commercial | Homebuilder | |||
Loans by risk rating | |||
Total Loans | 7,649 | 2,350 | |
Construction Loans | Pass | Real estate - commercial | Land | |||
Loans by risk rating | |||
Total Loans | 9,168 | 2,443 | |
Construction Loans | Pass | Real estate - commercial | Commercial speculative | |||
Loans by risk rating | |||
Total Loans | 39,730 | 32,028 | |
Construction Loans | Pass | Real estate - commercial | All other | |||
Loans by risk rating | |||
Total Loans | 56,443 | 46,913 | |
Construction Loans | Special Mention | Real estate - commercial | All other | |||
Loans by risk rating | |||
Total Loans | 2,130 | 1,052 | |
Construction Loans | Substandard | Real estate - commercial | All other | |||
Loans by risk rating | |||
Total Loans | 366 | 376 | |
Home Equity Line of Credit | Real estate - residential | |||
Loans by risk rating | |||
Total Loans | 127,986 | 112,833 | |
Home Equity Line of Credit | Pass | Real estate - residential | |||
Loans by risk rating | |||
Total Loans | 126,353 | 110,934 | |
Home Equity Line of Credit | Substandard | Real estate - residential | |||
Loans by risk rating | |||
Total Loans | $ 1,633 | $ 1,899 |
Loans - Repossessed Assets (Det
Loans - Repossessed Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Repossessed and foreclosed assets | ||||||
Other real estate owned | $ 8,912 | $ 7,063 | $ 8,371 | $ 11,724 | $ 13,481 | $ 11,916 |
Real estate - residential | ||||||
Repossessed and foreclosed assets | ||||||
Mortgage loans in process of foreclosure | $ 942,000,000 | $ 1,300 |
Loans - Impaired Loans - Record
Loans - Impaired Loans - Recorded Investment, Unpaid Principal Balance and Related Allowance (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Recorded Investment | ||
With no related allowance recorded | $ 6,941 | $ 14,855 |
With an allowance recorded | 8,884 | 5,257 |
Total impaired loans | 15,825 | 20,112 |
Unpaid Principal Balance | ||
With no related allowance recorded | 8,951 | 17,792 |
With an allowance recorded | 9,360 | 5,257 |
Total impaired loans | 18,311 | 23,049 |
Related Allowance | ||
With an allowance recorded | 498 | 144 |
Lease financing receivables | ||
Recorded Investment | ||
With no related allowance recorded | 178 | |
Unpaid Principal Balance | ||
With no related allowance recorded | 213 | |
Real estate - commercial | Owner occupied general purpose | ||
Recorded Investment | ||
With no related allowance recorded | 911 | 455 |
Unpaid Principal Balance | ||
With no related allowance recorded | 985 | 495 |
Real estate - commercial | Owner occupied special purpose | ||
Recorded Investment | ||
With no related allowance recorded | 426 | 342 |
Unpaid Principal Balance | ||
With no related allowance recorded | 546 | 498 |
Real estate - commercial | Non-owner occupied general purpose | ||
Recorded Investment | ||
With no related allowance recorded | 39 | 1,163 |
Unpaid Principal Balance | ||
With no related allowance recorded | 81 | 1,538 |
Real estate - commercial | Non-owner occupied special purpose | ||
Recorded Investment | ||
With an allowance recorded | 3,099 | |
Unpaid Principal Balance | ||
With an allowance recorded | 3,575 | |
Related Allowance | ||
With an allowance recorded | 419 | |
Real estate - commercial | Retail properties | ||
Recorded Investment | ||
With no related allowance recorded | 1,081 | |
Unpaid Principal Balance | ||
With no related allowance recorded | 1,177 | |
Real estate - residential | Investor | ||
Recorded Investment | ||
With no related allowance recorded | 371 | 372 |
With an allowance recorded | 815 | 829 |
Unpaid Principal Balance | ||
With no related allowance recorded | 468 | 676 |
With an allowance recorded | 815 | 829 |
Related Allowance | ||
With an allowance recorded | 10 | 10 |
Real estate - residential | Multifamily | ||
Recorded Investment | ||
With no related allowance recorded | 4,723 | |
Unpaid Principal Balance | ||
With no related allowance recorded | 4,965 | |
Real estate - residential | Owner occupied | ||
Recorded Investment | ||
With no related allowance recorded | 4,244 | 5,208 |
With an allowance recorded | 3,646 | 3,443 |
Unpaid Principal Balance | ||
With no related allowance recorded | 5,769 | 6,680 |
With an allowance recorded | 3,646 | 3,443 |
Related Allowance | ||
With an allowance recorded | 45 | 43 |
Real estate - residential | Revolving and junior liens | ||
Recorded Investment | ||
With no related allowance recorded | 741 | 1,125 |
With an allowance recorded | 1,321 | 985 |
Unpaid Principal Balance | ||
With no related allowance recorded | 860 | 1,313 |
With an allowance recorded | 1,321 | 985 |
Related Allowance | ||
With an allowance recorded | 24 | 91 |
Consumer | ||
Recorded Investment | ||
With no related allowance recorded | 16 | 7 |
With an allowance recorded | 3 | |
Unpaid Principal Balance | ||
With no related allowance recorded | 16 | 8 |
With an allowance recorded | 3 | |
Construction Loans | Real estate - commercial | All other | ||
Recorded Investment | ||
With no related allowance recorded | 193 | 201 |
Unpaid Principal Balance | ||
With no related allowance recorded | $ 226 | $ 229 |
Loans - Impaired Loans - Averag
Loans - Impaired Loans - Average Recorded Investment and Interest Income Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2018 | |
Average Recorded Investment | ||
With no related allowance recorded | $ 20,798 | $ 10,898 |
With an allowance recorded | 645 | 7,071 |
Total impaired loans | 21,443 | 17,969 |
Interest Income Recognized | ||
With no related allowance recorded | 101 | 22 |
With an allowance recorded | 119 | |
Total impaired loans | 101 | 141 |
Commercial | ||
Average Recorded Investment | ||
With no related allowance recorded | 128 | |
Lease financing receivables | ||
Average Recorded Investment | ||
With no related allowance recorded | 293 | 89 |
Real estate - commercial | Owner occupied general purpose | ||
Average Recorded Investment | ||
With no related allowance recorded | 1,170 | 683 |
Interest Income Recognized | ||
With no related allowance recorded | 3 | |
Real estate - commercial | Owner occupied special purpose | ||
Average Recorded Investment | ||
With no related allowance recorded | 376 | 384 |
Real estate - commercial | Non-owner occupied general purpose | ||
Average Recorded Investment | ||
With no related allowance recorded | 1,443 | 601 |
With an allowance recorded | 123 | |
Interest Income Recognized | ||
With no related allowance recorded | 1 | |
Real estate - commercial | Non-owner occupied special purpose | ||
Average Recorded Investment | ||
With no related allowance recorded | 507 | |
With an allowance recorded | 1,550 | |
Real estate - commercial | Retail properties | ||
Average Recorded Investment | ||
With no related allowance recorded | 1,161 | 541 |
Real estate - residential | Investor | ||
Average Recorded Investment | ||
With no related allowance recorded | 1,708 | 371 |
With an allowance recorded | 822 | |
Interest Income Recognized | ||
With no related allowance recorded | 20 | |
With an allowance recorded | 22 | |
Real estate - residential | Multifamily | ||
Average Recorded Investment | ||
With no related allowance recorded | 2,412 | 2,362 |
Real estate - residential | Owner occupied | ||
Average Recorded Investment | ||
With no related allowance recorded | 9,016 | 4,726 |
With an allowance recorded | 402 | 3,544 |
Interest Income Recognized | ||
With no related allowance recorded | 65 | 18 |
With an allowance recorded | 73 | |
Real estate - residential | Revolving and junior liens | ||
Average Recorded Investment | ||
With no related allowance recorded | 2,227 | 933 |
With an allowance recorded | 1,153 | |
Interest Income Recognized | ||
With no related allowance recorded | 15 | 1 |
With an allowance recorded | 24 | |
Consumer | ||
Average Recorded Investment | ||
With no related allowance recorded | 105 | 11 |
With an allowance recorded | 2 | |
Construction Loans | Real estate - commercial | Commercial speculative | ||
Average Recorded Investment | ||
With no related allowance recorded | 72 | |
Construction Loans | Real estate - commercial | All other | ||
Average Recorded Investment | ||
With no related allowance recorded | $ 180 | $ 197 |
Loans - TDR (Details)
Loans - TDR (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($)contract | Jun. 30, 2017USD ($)contract | Jun. 30, 2018USD ($)contract | Jun. 30, 2017USD ($)contract | Dec. 31, 2017USD ($) | |
Troubled debt restructurings - modified during the period | |||||
# of contracts | contract | 5 | 10 | |||
Pre-modification recorded investment | $ 464,000 | $ 155,000 | $ 706,000 | $ 399,000 | |
Post-modification recorded investment | 382,000 | $ 147,000 | 622,000 | $ 388,000 | |
TDR's defaulted | |||||
# of contracts | contract | 2 | 6 | |||
Pre-modification outstanding recorded investment during the period | 0 | $ 0 | |||
Other information | |||||
Total Past Due | $ 10,509,000 | $ 10,509,000 | $ 5,606,000 | ||
Real estate - commercial | |||||
Troubled debt restructurings - modified during the period | |||||
# of contracts | contract | 1 | 1 | |||
Pre-modification recorded investment | $ 110,000 | $ 110,000 | |||
Post-modification recorded investment | 56,000 | 56,000 | |||
Real estate - commercial | Owner occupied special purpose | |||||
Other information | |||||
Total Past Due | 1,981,000 | 1,981,000 | 226,000 | ||
Real estate - commercial | Owner occupied general purpose | |||||
Other information | |||||
Total Past Due | 1,353,000 | 1,353,000 | 1,136,000 | ||
Real estate - commercial | Non-owner occupied general purpose | |||||
Other information | |||||
Total Past Due | $ 3,456,000 | $ 3,456,000 | 593,000 | ||
Real estate - residential | HAMP | |||||
Troubled debt restructurings - modified during the period | |||||
# of contracts | contract | 1 | 1 | |||
Pre-modification recorded investment | $ 49,000 | $ 49,000 | |||
Post-modification recorded investment | 39,000 | $ 39,000 | |||
Real estate - residential | Interest Rate Concession Below Normal Market [Member] | |||||
Troubled debt restructurings - modified during the period | |||||
# of contracts | contract | 1 | ||||
Pre-modification recorded investment | $ 24,000 | ||||
Post-modification recorded investment | 24,000 | ||||
Real estate - residential | Investor | |||||
Other information | |||||
Total Past Due | 612,000 | 612,000 | |||
Real estate - residential | Owner occupied | |||||
Other information | |||||
Total Past Due | $ 918,000 | $ 918,000 | 74,000 | ||
Real estate - residential | Revolving and junior liens | Other | |||||
Troubled debt restructurings - modified during the period | |||||
# of contracts | contract | 3 | 7 | |||
Pre-modification recorded investment | $ 305,000 | $ 155,000 | $ 523,000 | 399,000 | |
Post-modification recorded investment | 287,000 | $ 147,000 | 503,000 | $ 388,000 | |
TDR's defaulted | |||||
# of contracts | contract | 2 | 6 | |||
Commercial | |||||
Other information | |||||
Total Past Due | 210,000 | 210,000 | 1,270,000 | ||
90 Days or Greater Past Due | |||||
Other information | |||||
Total Past Due | 1,153,000 | 1,153,000 | $ 248,000 | ||
90 Days or Greater Past Due | Real estate - commercial | Owner occupied general purpose | |||||
Other information | |||||
Total Past Due | 450,000 | 450,000 | |||
90 Days or Greater Past Due | Real estate - commercial | Non-owner occupied general purpose | |||||
Other information | |||||
Total Past Due | 174,000 | 174,000 | |||
90 Days or Greater Past Due | Real estate - residential | Investor | |||||
Other information | |||||
Total Past Due | $ 38,000 | $ 38,000 |
Loans - Accretable Discount on
Loans - Accretable Discount on Purchased Loans (Details) $ in Thousands | 3 Months Ended |
Jun. 30, 2018USD ($) | |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | |
Beginning balance | $ 694 |
Purchases | 11,269 |
Accretion | (1,057) |
Transfers | (135) |
Ending balance | 10,771 |
PCI | |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | |
Purchases | 1,551 |
Purchases | 6,536 |
Accretion | (176) |
Transfers | (2) |
Transfers | (133) |
Ending balance | 1,373 |
Ending balance | 6,403 |
Non-PCI | |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | |
Beginning balance | 694 |
Purchases | 3,182 |
Accretion | (881) |
Ending balance | $ 2,995 |
Allowance for Loan Losses (Deta
Allowance for Loan Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Allowance for loan losses: | |||||
Beginning Balance | $ 18,188 | $ 15,741 | $ 17,461 | $ 16,158 | |
Charge-offs | 699 | 1,066 | 674 | 1,757 | |
Recoveries | 382 | 411 | 1,806 | 685 | |
Provision (release) | 1,450 | 750 | 728 | 750 | |
Ending Balance | 19,321 | 15,836 | 19,321 | 15,836 | |
Ending balance: Individually evaluated for impairment | 498 | 98 | 498 | 98 | |
Ending balance: Collectively evaluated for impairment | 18,823 | 15,738 | 18,823 | 15,738 | |
Loans: | |||||
Ending balance | 1,849,162 | 1,539,647 | 1,849,162 | 1,539,647 | $ 1,617,622 |
Ending balance | 1,849,162 | 1,849,162 | |||
Ending balance: Individually evaluated for impairment | 15,825 | 20,598 | 15,825 | 20,598 | |
Ending balance: Collectively evaluated for impairment | 1,822,123 | 1,519,049 | 1,822,123 | 1,519,049 | |
Ending balance: Acquired and accounted for ASC 310-30 | 11,214 | 11,214 | |||
Commercial | |||||
Allowance for loan losses: | |||||
Beginning Balance | 2,604 | 1,672 | 2,453 | 1,629 | |
Charge-offs | 15 | 6 | 31 | 7 | |
Recoveries | 92 | 5 | 109 | 7 | |
Provision (release) | (5) | 479 | 145 | 521 | |
Ending Balance | 2,676 | 2,150 | 2,676 | 2,150 | |
Ending balance: Collectively evaluated for impairment | 2,676 | 2,150 | 2,676 | 2,150 | |
Loans: | |||||
Ending balance | 299,536 | 256,760 | 299,536 | 256,760 | 272,851 |
Ending balance | 299,538 | 299,538 | |||
Ending balance: Individually evaluated for impairment | 216 | 216 | |||
Ending balance: Collectively evaluated for impairment | 299,536 | 256,544 | 299,536 | 256,544 | |
Ending balance: Acquired and accounted for ASC 310-30 | 2 | 2 | |||
Lease financing receivables | |||||
Allowance for loan losses: | |||||
Beginning Balance | 617 | 603 | 692 | 633 | |
Charge-offs | 8 | 13 | 117 | ||
Provision (release) | 25 | 188 | (45) | 275 | |
Ending Balance | 634 | 791 | 634 | 791 | |
Ending balance: Individually evaluated for impairment | 98 | 98 | |||
Ending balance: Collectively evaluated for impairment | 634 | 693 | 634 | 693 | |
Loans: | |||||
Ending balance | 66,687 | 70,138 | 66,687 | 70,138 | 68,325 |
Ending balance | 66,687 | 66,687 | |||
Ending balance: Individually evaluated for impairment | 460 | 460 | |||
Ending balance: Collectively evaluated for impairment | 66,687 | 69,678 | 66,687 | 69,678 | |
Real estate - commercial | |||||
Allowance for loan losses: | |||||
Beginning Balance | 9,565 | 7,831 | 9,522 | 9,547 | |
Charge-offs | 504 | 4 | 408 | 278 | |
Recoveries | 21 | 46 | 388 | 81 | |
Provision (release) | 1,455 | 234 | 1,035 | (1,243) | |
Ending Balance | 10,537 | 8,107 | 10,537 | 8,107 | |
Ending balance: Individually evaluated for impairment | 419 | 419 | |||
Ending balance: Collectively evaluated for impairment | 10,118 | 8,107 | 10,118 | 8,107 | |
Loans: | |||||
Ending balance | 706,103 | 706,103 | |||
Ending balance | 812,410 | 812,410 | |||
Ending balance: Individually evaluated for impairment | 4,475 | 3,113 | 4,475 | 3,113 | |
Ending balance: Collectively evaluated for impairment | 803,789 | 702,990 | 803,789 | 702,990 | |
Ending balance: Acquired and accounted for ASC 310-30 | 4,146 | 4,146 | |||
Real estate - residential | |||||
Allowance for loan losses: | |||||
Beginning Balance | 1,854 | 2,438 | 1,846 | 2,178 | |
Charge-offs | 5 | 946 | (55) | 977 | |
Recoveries | 105 | 110 | 1,016 | 153 | |
Provision (release) | (136) | 270 | (1,099) | 518 | |
Ending Balance | 1,818 | 1,872 | 1,818 | 1,872 | |
Ending balance: Individually evaluated for impairment | 55 | 55 | |||
Ending balance: Collectively evaluated for impairment | 1,763 | 1,872 | 1,763 | 1,872 | |
Loans: | |||||
Ending balance | 282,118 | 282,118 | |||
Ending balance | 410,417 | 410,417 | |||
Ending balance: Individually evaluated for impairment | 11,138 | 14,609 | 11,138 | 14,609 | |
Ending balance: Collectively evaluated for impairment | 393,770 | 267,509 | 393,770 | 267,509 | |
Ending balance: Acquired and accounted for ASC 310-30 | 5,509 | 5,509 | |||
Consumer | |||||
Allowance for loan losses: | |||||
Beginning Balance | 1,535 | 1,340 | 1,446 | 1,331 | |
Charge-offs | 65 | 30 | 92 | 194 | |
Recoveries | 91 | 139 | 138 | 238 | |
Provision (release) | (171) | 64 | (102) | 138 | |
Ending Balance | 1,390 | 1,513 | 1,390 | 1,513 | |
Ending balance: Individually evaluated for impairment | 24 | 24 | |||
Ending balance: Collectively evaluated for impairment | 1,366 | 1,513 | 1,366 | 1,513 | |
Loans: | |||||
Ending balance | 116,052 | 116,052 | |||
Ending balance | 127,986 | 127,986 | |||
Ending balance: Individually evaluated for impairment | 1,971 | 1,971 | |||
Ending balance: Collectively evaluated for impairment | 127,986 | 114,081 | 127,986 | 114,081 | |
All other | |||||
Allowance for loan losses: | |||||
Beginning Balance | 870 | 879 | 579 | 451 | |
Charge-offs | 102 | 80 | 201 | 180 | |
Recoveries | 73 | 51 | 152 | 128 | |
Provision (release) | 27 | (304) | 338 | 147 | |
Ending Balance | 868 | 546 | 868 | 546 | |
Ending balance: Collectively evaluated for impairment | 868 | 546 | 868 | 546 | |
Loans: | |||||
Ending balance | 15,081 | 14,815 | 15,081 | 14,815 | $ 14,063 |
Ending balance | 15,082 | 15,082 | |||
Ending balance: Individually evaluated for impairment | 19 | 9 | 19 | 9 | |
Ending balance: Collectively evaluated for impairment | 15,062 | 14,806 | 15,062 | 14,806 | |
Ending balance: Acquired and accounted for ASC 310-30 | 1 | 1 | |||
Construction Loans | Real estate - commercial | |||||
Allowance for loan losses: | |||||
Beginning Balance | 1,143 | 978 | 923 | 389 | |
Charge-offs | (16) | 4 | |||
Recoveries | 60 | 3 | 78 | ||
Provision (release) | 255 | (181) | 456 | 394 | |
Ending Balance | 1,398 | 857 | 1,398 | 857 | |
Ending balance: Collectively evaluated for impairment | 1,398 | 857 | 1,398 | 857 | |
Loans: | |||||
Ending balance | 93,661 | 93,661 | |||
Ending balance | 117,042 | 117,042 | |||
Ending balance: Individually evaluated for impairment | 193 | 220 | 193 | 220 | |
Ending balance: Collectively evaluated for impairment | 115,293 | $ 93,441 | 115,293 | $ 93,441 | |
Ending balance: Acquired and accounted for ASC 310-30 | $ 1,556 | $ 1,556 |
Other Real Estate Owned (Detail
Other Real Estate Owned (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Activity in the other real estate owned (OREO) portfolio, net of valuation reserve | ||||
Balance at beginning of period | $ 7,063 | $ 13,481 | $ 8,371 | $ 11,916 |
Property additions | 2,812 | 204 | 2,812 | 3,620 |
Property improvements | 59 | |||
Less: Property disposals, net of gains/losses | 709 | 1,569 | 1,964 | 3,102 |
Less: Period valuation adjustments | 254 | 392 | 366 | 710 |
Balance at end of period | 8,912 | 11,724 | 8,912 | 11,724 |
Activity in the valuation allowance | ||||
Balance at beginning of period | 8,099 | 9,659 | 8,208 | 9,982 |
Provision for unrealized losses | 254 | 392 | 366 | 710 |
Reductions taken on sales | (5) | (1,747) | (226) | (2,388) |
Balance at end of period | 8,348 | 8,304 | 8,348 | 8,304 |
Expenses related to foreclosed assets, net of lease revenue | ||||
Gain on sales, net | (24) | (104) | (104) | (178) |
Provision for unrealized losses | 254 | 392 | 366 | 710 |
Operating expenses | 213 | 293 | 369 | 816 |
Less: Lease revenue | 14 | 42 | 29 | 100 |
Expenses related to OREO, net of lease revenue | $ 429 | $ 539 | $ 602 | $ 1,248 |
Deposits - Components and Matur
Deposits - Components and Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Deposits | ||
Noninterest bearing demand | $ 620,807 | $ 572,404 |
Savings | 301,832 | 262,220 |
NOW accounts | 435,514 | 429,448 |
Money market accounts | 320,949 | 276,082 |
Certificates of deposit of less than $100,000 | 249,049 | 216,493 |
Certificates of deposit of $100,000 up to $250,000 | 175,174 | 122,489 |
Certificates of deposit of $250,000 or more | 58,526 | 43,789 |
Total deposits | $ 2,161,851 | $ 1,922,925 |
Borrowings - Summary (Details)
Borrowings - Summary (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Borrowings | ||
Senior Notes | $ 44,108 | $ 44,058 |
Total borrowings | 255,929 | 246,615 |
Securities sold under repurchase agreements | ||
Borrowings | ||
Total borrowings | 54,038 | 29,918 |
FHLBC advances | ||
Borrowings | ||
Total borrowings | 76,625 | 115,000 |
Junior subordinated debentures | ||
Borrowings | ||
Total borrowings | 57,662 | 57,639 |
Senior Notes. | ||
Borrowings | ||
Senior Notes | 44,108 | $ 44,058 |
Notes payable and other borrowings | ||
Borrowings | ||
Total borrowings | $ 23,496 |
Borrowings - Additional informa
Borrowings - Additional information (Details) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2016 | Jun. 30, 2018USD ($)item | Apr. 20, 2018USD ($) | Dec. 31, 2017USD ($) | |
Borrowings | ||||
Interest rate (as a percent) | 5.75% | |||
Bank owned FHLBC stock | $ 4,300,000 | $ 5,400,000 | ||
Subordinated Debt. | $ 6,600,000 | |||
Senior notes | 44,108,000 | 44,058,000 | ||
Debt Instrument, Term | 10 years | |||
Interest rate term | 5 years | |||
Total borrowings | $ 255,929,000 | 246,615,000 | ||
GCFC/ABC Bank | ||||
Borrowings | ||||
Debt Instrument, Term | 7 years 9 months | |||
Debt assumed | $ 23,500,000 | |||
GCFC/ABC Bank | Minimum | ||||
Borrowings | ||||
Interest rate (as a percent) | 1.40% | |||
GCFC/ABC Bank | Maximum | ||||
Borrowings | ||||
Interest rate (as a percent) | 2.83% | |||
Three month LIBOR | ||||
Borrowings | ||||
Basis points added to reference rate (as a percent) | 385.00% | |||
Securities sold under repurchase agreements | ||||
Borrowings | ||||
Carrying amount of securities secured | $ 54,000,000 | 29,900,000 | ||
Fair value of the pledged collateral | $ 73,900,000 | 40,000,000 | ||
Number of customers having secured balances exceeding specified percentage of stockholders equity | item | 1 | |||
Total borrowings | $ 54,038,000 | 29,918,000 | ||
Securities sold under repurchase agreements | Minimum | ||||
Borrowings | ||||
Threshold percentage of stockholders' equity | 10.00% | |||
FHLBC advances | ||||
Borrowings | ||||
Borrowings at FHLBC as percentage of total assets | 35.00% | |||
Borrowings at FHLBC as percentage of book value of certain mortgage loans | 60.00% | |||
FHLBC advance amount | $ 72,600,000 | 115,000,000 | ||
Bank owned FHLBC stock | 4,300,000 | |||
Fair value of securities collateralized | 76,700,000 | |||
Principal balance of loans collateralized | 296,300,000 | |||
Combined collateral value | 295,500,000 | |||
Amount available for additional borrowings | 150,100,000 | |||
Total borrowings | $ 76,625,000 | 115,000,000 | ||
FHLB advances at 2.01 % | ||||
Borrowings | ||||
Interest rate (as a percent) | 2.01% | |||
FHLBC advance amount | $ 70,000,000 | |||
FHLB advances at 1.40 % | ||||
Borrowings | ||||
Interest rate (as a percent) | 1.40% | |||
FHLBC advance amount | $ 2,600,000 | |||
Notes payable and other borrowings | ||||
Borrowings | ||||
Total borrowings | $ 23,496,000 | |||
Correspondent Bank | ||||
Borrowings | ||||
Interest rate (as a percent) | 3.73% | |||
Maximum borrowing capacity | $ 20,000,000 | |||
Debt Instrument, Term | 360 days | |||
Short-term debt | $ 4,000,000 | |||
Junior subordinated debentures | ||||
Borrowings | ||||
Total borrowings | 57,662,000 | 57,639,000 | ||
Senior Notes. | ||||
Borrowings | ||||
Senior notes | 44,108,000 | 44,058,000 | ||
Debt issuance costs | $ 892,000 | $ 942,000 | ||
Amortization period for deferred financing costs | 10 years |
Junior Subordinated Debentures
Junior Subordinated Debentures - Issuance (Details) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | |||||
Jun. 30, 2017 | Apr. 30, 2007 | Jul. 31, 2003 | Jun. 30, 2003 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | |
Junior subordinated debentures | |||||||
Junior subordinated debentures | $ 57,662 | $ 57,639 | |||||
Old Second Capital Trust I | |||||||
Junior subordinated debentures | |||||||
Proceeds from sale of cumulative trust preferred securities | $ 4,100 | $ 27,500 | |||||
Maturity Period | 30 years | ||||||
Cash distribution rate of trust preferred securities (as a percent) | 7.80% | ||||||
Old Second Capital Trust II | |||||||
Junior subordinated debentures | |||||||
Proceeds from sale of cumulative trust preferred securities | $ 25,000 | ||||||
Maturity Period | 30 years | ||||||
Old Second Capital Trust II | Debt Instrument, Redemption, Period One [Member] | |||||||
Junior subordinated debentures | |||||||
Cash distribution rate of trust preferred securities (as a percent) | 4.34% | ||||||
Cash distribution fixed rate of trust preferred securities (as a percent) | 6.77% | ||||||
Old Second Capital Trust II | Debt Instrument, Redemption, Period Two [Member] | |||||||
Junior subordinated debentures | |||||||
Basis points added to cash distribution floating rate base (as a percent) | 1.50% | ||||||
Old Second Capital Trust II | Debt Instrument, Redemption, Period Two [Member] | Three month LIBOR | |||||||
Junior subordinated debentures | |||||||
Cash distribution, floating rate base | three-month LIBOR | ||||||
Junior subordinated debentures | |||||||
Junior subordinated debentures | |||||||
Junior Subordinated Debentures issuance cost | $ 716 | $ 739 | |||||
Junior subordinated debentures | Old Second Capital Trust I | |||||||
Junior subordinated debentures | |||||||
Junior subordinated debentures | $ 32,600 | ||||||
Junior subordinated debentures | Old Second Capital Trust II | |||||||
Junior subordinated debentures | |||||||
Junior subordinated debentures | $ 25,800 |
Equity Compensation Plans - Opt
Equity Compensation Plans - Options (Details) - USD ($) | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 01, 2016 | May 31, 2016 | May 20, 2014 | |
Equity Compensation Plans | |||||
Total compensation cost | $ 1.1 | $ 645,000 | |||
2014 Plan | |||||
Equity Compensation Plans | |||||
Number of shares authorized | 975,000 | 600,000 | 375,000 | ||
Stock options | |||||
Equity Compensation Plans | |||||
Granted (in shares) | 0 | 0 | |||
Term of stock options granted | 10 years | ||||
Total unrecognized compensation cost | $ 0 | ||||
Shares | |||||
Beginning outstanding (in shares) | 9,000 | ||||
Ending outstanding (in shares) | 9,000 | ||||
Ending outstanding (in dollars) | $ 64,000 | ||||
Exercisable at the end of the period (in dollars) | $ 64,000 | ||||
Exercisable at end of period (in shares) | 9,000 | ||||
Weighted Average Exercise Price | |||||
Beginning outstanding (in dollars per share) | $ 7.49 | ||||
Ending outstanding (in dollars per share) | 7.49 | ||||
Exercisable at end of period (in dollars per share) | $ 7.49 | ||||
Weighted Average Remaining Contractual Term (years) | |||||
Ending outstanding (in years) | 7 months 6 days | ||||
Exercisable at end of period | 7 months 6 days |
Equity Compensation Plans - Sum
Equity Compensation Plans - Summary of stock option activity (Details) - USD ($) $ in Thousands | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 01, 2016 | May 31, 2016 | May 20, 2014 | |
Equity Compensation Plans | |||||
Stock based compensation | $ 1,098 | $ 625 | |||
2014 Plan | |||||
Equity Compensation Plans | |||||
Number of shares authorized | 975,000 | 600,000 | 375,000 | ||
Number of shares issuable | 169,791 |
Equity Compensation Plans - Res
Equity Compensation Plans - Restricted Stock and RSUs (Details) - Restricted stock and restricted stock units - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Equity Compensation Plans | |||
Vesting period | 3 years | ||
Changes in unvested awards | |||
Nonvested at the beginning of the period (in shares) | 465,000 | ||
Granted (in shares) | 170,000 | 254,281 | 170,000 |
Vested (in shares) | (155,500) | ||
Nonvested at the end of the period (in shares) | 563,781 | ||
Weighted Average Grant Date Fair Value | |||
Nonvested at the beginning of the period (in dollars per share) | $ 7.79 | ||
Granted (in dollars per share) | 13.98 | ||
Vested (in dollars per share) | 5.14 | ||
Nonvested at the end of the period (in dollars per share) | $ 11.31 | ||
Additional information | |||
Total unrecognized compensation cost of restricted awards | $ 4.1 | ||
Expected weighted-average period for recognition of unrecognized compensation | 2 years 2 months 19 days |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | 18 Months Ended | |||||
Jun. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2009 | Jun. 30, 2018 | |
Basic earnings per share: | |||||||||
Weighted-average common shares outstanding | 29,747,078 | 29,587,095 | 29,703,508 | 29,573,881 | |||||
Net income | $ 6,261 | $ 5,146 | $ 15,750 | $ 9,573 | |||||
Net income available to common stockholders | $ 6,261 | $ 5,146 | $ 15,750 | $ 9,573 | |||||
Basic earnings per share (in dollars per share) | $ 0.21 | $ 0.17 | $ 0.53 | $ 0.32 | |||||
Diluted earnings per share: | |||||||||
Weighted-average common shares outstanding | 29,747,078 | 29,587,095 | 29,703,508 | 29,573,881 | |||||
Diluted average common shares outstanding | 30,337,282 | 30,015,905 | 30,253,440 | 29,976,544 | |||||
Net earnings available to common stockholders | $ 6,261 | $ 5,146 | $ 15,750 | $ 9,573 | |||||
Diluted earnings per share (in dollars per share) | $ 0.21 | $ 0.17 | $ 0.52 | $ 0.32 | |||||
Warrants, exercise price (in dollars per share) | 13.43 | $ 13.43 | $ 13.43 | ||||||
Warrant term | 10 years | ||||||||
Antidilutive options and warrants | |||||||||
Diluted earnings per share: | |||||||||
One 10 year warrant | 900,839 | 900,839 | |||||||
Warrants | |||||||||
Diluted earnings per share: | |||||||||
One 10 year warrant | 815,339 | 815,339 | |||||||
Warrants, exercise price (in dollars per share) | $ 13.43 | $ 13.43 | $ 13.43 | $ 13.43 | $ 13.43 | ||||
Warrant term | 10 years | 10 years | 10 years | 10 years | |||||
Restricted stock and restricted stock units | |||||||||
Diluted earnings per share: | |||||||||
Dilutive effect of share-based payment awards (in shares) | 539,166 | 426,264 | 506,234 | 400,232 | |||||
Stock options | |||||||||
Diluted earnings per share: | |||||||||
Dilutive effect of share-based payment awards (in shares) | 51,038 | 2,546 | 43,698 | 2,431 |
Regulatory & Capital Matters (D
Regulatory & Capital Matters (Details) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Regulatory & Capital Matters | ||
Tier 1 capital leverage ratio (as a percent) | 9.37% | 10.08% |
Risk-based capital ratio (as a percent) | 11.87% | 12.93% |
Old Second National Bank | ||
Regulatory & Capital Matters | ||
Tier 1 capital leverage ratio (as a percent) | 10.75% | 10.79% |
Risk-based capital ratio (as a percent) | 13.51% | 13.78% |
Tier One leverage ratio, basis point increase (as a percent) | 0.04% | |
Risk-based capital ratio, basis point decrease (as a percent) | 0.27% | |
Minimum | Old Second National Bank | ||
Regulatory & Capital Matters | ||
Tier 1 capital leverage ratio, board-designated threshold | 8.00% | |
Total Capital Ratio, board-designated threshold (as a percent) | 12.00% |
Regulatory & Capital Matters -
Regulatory & Capital Matters - Capital Levels and Industry Defined Regulatory Minimums (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Common equity tier 1 capital to risk weighted assets | ||
Actual | $ 185,044 | $ 179,853 |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable | $ 138,946 | $ 111,801 |
Common equity tier 1 capital to risk weighted assets, Ratio | ||
Actual (as a percent) | 8.49% | 9.25% |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable (as a percent) | 6.375% | 5.75% |
Total capital to risk weighted assets, Amount | ||
Actual at period end | $ 258,854 | $ 251,383 |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable | $ 215,348 | $ 179,837 |
Total capital to risk weighted assets, Ratio | ||
Risk-based capital ratio (as a percent) | 11.87% | 12.93% |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable (as a percent) | 9.875% | 9.25% |
Tier 1 capital to risk weighted assets, Amount | ||
Actual | $ 239,538 | $ 233,927 |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable | $ 171,643 | $ 140,978 |
Tier 1 capital to risk weighted assets, Ratio | ||
Actual (as a percent) | 10.99% | 12.03% |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable (as a percent) | 7.875% | 7.25% |
Tier 1 capital to average assets, Amount | ||
Actual | $ 239,538 | $ 233,927 |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable | $ 102,257 | $ 92,828 |
Tier 1 capital to average assets, Ratio | ||
Tier 1 capital leverage ratio (as a percent) | 9.37% | 10.08% |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable (as a percent) | 4.00% | 4.00% |
Old Second National Bank | ||
Common equity tier 1 capital to risk weighted assets | ||
Actual | $ 273,950 | $ 249,417 |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable | 138,386 | 111,347 |
Minimum Required to Be Well Capitalized | $ 141,099 | $ 125,870 |
Common equity tier 1 capital to risk weighted assets, Ratio | ||
Actual (as a percent) | 12.62% | 12.88% |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable (as a percent) | 6.375% | 5.75% |
Minimum Required to Be Well Capitalized (as a percent) | 6.50% | 6.50% |
Total capital to risk weighted assets, Amount | ||
Actual at period end | $ 293,266 | $ 266,873 |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable | 214,360 | 179,142 |
Minimum Required to Be Well Capitalized | $ 217,073 | $ 193,667 |
Total capital to risk weighted assets, Ratio | ||
Risk-based capital ratio (as a percent) | 13.51% | 13.78% |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable (as a percent) | 9.875% | 9.25% |
Minimum Required to Be Well Capitalized (as a percent) | 10.00% | 10.00% |
Tier 1 capital to risk weighted assets, Amount | ||
Actual | $ 273,950 | $ 249,417 |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable | 170,947 | 140,394 |
Minimum Required to Be Well Capitalized | $ 173,661 | $ 154,917 |
Tier 1 capital to risk weighted assets, Ratio | ||
Actual (as a percent) | 12.62% | 12.88% |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable (as a percent) | 7.875% | 7.25% |
Minimum Required to Be Well Capitalized (as a percent) | 8.00% | 8.00% |
Tier 1 capital to average assets, Amount | ||
Actual | $ 273,950 | $ 249,417 |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable | 101,935 | 92,462 |
Minimum Required to Be Well Capitalized | $ 127,419 | $ 115,578 |
Tier 1 capital to average assets, Ratio | ||
Tier 1 capital leverage ratio (as a percent) | 10.75% | 10.79% |
Minimum Required for Capital Adequacy Purposes with Capital Conservation Buffer if applicable (as a percent) | 4.00% | 4.00% |
Minimum Required to Be Well Capitalized (as a percent) | 5.00% | 5.00% |
Regulatory & Capital Matters 68
Regulatory & Capital Matters - Dividend Restrictions and Deferrals (Details) | 6 Months Ended |
Jun. 30, 2018 | |
Dividend Restrictions and Deferrals | |
Number of previous years retained profit considered for dividend payment | 2 years |
Minimum capital requirements, minimum percentage required, 2016 | 0.625% |
Minimum capital requirements, minimum percentage required, 2017 | 1.25% |
Minimum capital requirements, minimum percentage required, 2018 | 1.875% |
Minimum capital requirements, minimum percentage required, 2019 and thereafter | 2.50% |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Assets: | |||
Securities available-for-sale | $ 543,644 | $ 543,644 | $ 541,439 |
Mortgage servicing rights | 7,812 | 6,944 | |
U.S. Treasury | |||
Assets: | |||
Securities available-for-sale | 3,876 | 3,947 | |
U.S. government agencies | |||
Assets: | |||
Securities available-for-sale | 12,216 | 13,061 | |
U.S. government agency mortgage-backed | |||
Assets: | |||
Securities available-for-sale | 13,407 | ||
States and political subdivisions | |||
Assets and liabilities measured at fair value on a recurring basis | |||
Purchases | 19,934 | $ 10,456 | |
Assets: | |||
Securities available-for-sale | 276,112 | 278,092 | |
Corporate bonds | |||
Assets: | |||
Securities available-for-sale | 700 | 833 | |
Collateralized mortgage obligations | |||
Assets: | |||
Securities available-for-sale | 61,432 | 65,939 | |
Asset-backed securities | |||
Assets: | |||
Securities available-for-sale | 109,263 | 112,932 | |
Collateralized loan obligations | |||
Assets: | |||
Securities available-for-sale | 66,638 | 54,421 | |
Level 1 | |||
Assets: | |||
Securities available-for-sale | 3,876 | 3,947 | |
Level 2 | |||
Assets: | |||
Securities available-for-sale | 519,548 | 520,963 | |
Loans held-for-sale | 5,206 | 4,067 | |
Liabilities: | |||
Other liabilities | 1,287 | ||
Level 3 | |||
Assets: | |||
Securities available-for-sale | 20,220 | 16,529 | |
Recurring | |||
Assets: | |||
Securities available-for-sale | 13,061 | ||
Total financial assets | 559,210 | 553,415 | |
Liabilities: | |||
Total | 2,287 | 2,014 | |
Recurring | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Loans held-for-sale | 5,206 | 4,067 | |
Mortgage servicing rights | 7,812 | 6,944 | |
Recurring | Interest rate swap agreements net of swap credit valuation | |||
Liabilities: | |||
Other liabilities | 2,287 | 2,014 | |
Recurring | Interest rate swap agreements net of swap credit valuation | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Other assets | 2,287 | 727 | |
Recurring | Forward MBS contracts and forward loan contracts | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Other assets | 261 | 238 | |
Recurring | U.S. Treasury | |||
Assets: | |||
Securities available-for-sale | 3,947 | ||
Recurring | U.S. Treasury | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 3,876 | ||
Recurring | U.S. government agencies | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 12,216 | ||
Recurring | U.S. government agency mortgage-backed | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 13,407 | 12,214 | |
Recurring | States and political subdivisions | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 276,112 | 278,092 | |
Recurring | Corporate bonds | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 700 | 833 | |
Recurring | Collateralized mortgage obligations | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 61,432 | 65,939 | |
Recurring | Asset-backed securities | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 109,263 | 112,932 | |
Recurring | Collateralized loan obligations | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 66,638 | 54,421 | |
Recurring | Level 1 | |||
Assets: | |||
Total financial assets | 3,876 | 3,947 | |
Recurring | Level 1 | U.S. Treasury | |||
Assets: | |||
Securities available-for-sale | 3,947 | ||
Recurring | Level 1 | U.S. Treasury | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 3,876 | ||
Recurring | Level 2 | |||
Assets: | |||
Securities available-for-sale | 13,061 | ||
Total financial assets | 527,302 | 525,995 | |
Liabilities: | |||
Total | 2,287 | 2,014 | |
Recurring | Level 2 | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Loans held-for-sale | 5,206 | 4,067 | |
Recurring | Level 2 | Interest rate swap agreements net of swap credit valuation | |||
Liabilities: | |||
Other liabilities | 2,287 | 2,014 | |
Recurring | Level 2 | Interest rate swap agreements net of swap credit valuation | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Other assets | 2,287 | 727 | |
Recurring | Level 2 | Forward MBS contracts and forward loan contracts | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Other assets | 261 | 238 | |
Recurring | Level 2 | U.S. government agencies | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 12,216 | ||
Recurring | Level 2 | U.S. government agency mortgage-backed | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 13,407 | 12,214 | |
Recurring | Level 2 | States and political subdivisions | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 257,663 | 263,831 | |
Recurring | Level 2 | Corporate bonds | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 700 | 833 | |
Recurring | Level 2 | Collateralized mortgage obligations | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 59,661 | 63,671 | |
Recurring | Level 2 | Asset-backed securities | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 109,263 | 112,932 | |
Recurring | Level 2 | Collateralized loan obligations | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 66,638 | 54,421 | |
Recurring | Level 3 | |||
Assets: | |||
Total financial assets | 28,032 | 23,473 | |
Recurring | Level 3 | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Mortgage servicing rights | 7,812 | 6,944 | |
Recurring | Level 3 | States and political subdivisions | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | 18,449 | 14,261 | |
Recurring | Level 3 | Collateralized mortgage obligations | Finite-Lived Intangible Assets [Member] | |||
Assets: | |||
Securities available-for-sale | $ 1,771 | $ 2,268 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Level 3 (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Changes in Level 3 | ||
Beginning balance | $ 3,119 | |
Total gains or losses | ||
Included in other comprehensive income | (1) | |
Purchases, issuances, sales, and settlements | ||
Settlements | (463) | |
Ending balance | 2,678 | |
Changes in Level 3 (liabilities) | ||
Included in earnings (or changes in net assets) | 23 | |
Collateralized loan obligations | ||
Changes in Level 3 | ||
Beginning balance | $ 2,268 | |
Total gains or losses | ||
Included in other comprehensive income | 31 | |
Purchases, issuances, sales, and settlements | ||
Settlements | (554) | |
Ending balance | 1,771 | |
Changes in Level 3 (liabilities) | ||
Included in earnings (or changes in net assets) | 26 | |
States and political subdivisions | ||
Changes in Level 3 | ||
Beginning balance | 14,261 | 22,226 |
Total gains or losses | ||
Included in other comprehensive income | (551) | (289) |
Purchases, issuances, sales, and settlements | ||
Purchases | 19,934 | 10,456 |
Settlements | (15,195) | (12,045) |
Ending balance | 18,449 | 20,348 |
Mortgage servicing rights | ||
Changes in Level 3 | ||
Beginning balance | 6,944 | 6,489 |
Total gains or losses | ||
Included in earnings (or changes in net assets) | (280) | |
Purchases, issuances, sales, and settlements | ||
Issuances | 668 | 601 |
Settlements | (320) | (282) |
Ending balance | 7,812 | $ 6,528 |
Changes in Level 3 (liabilities) | ||
Included in earnings (or changes in net assets) | $ 520 |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative and Qualitative Information (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Quantitative information about Level 3 fair value measurements | ||
Mortgage servicing rights, fair value | $ 7,812 | $ 6,944 |
Minimum | ||
Quantitative information about Level 3 fair value measurements | ||
Discount rate (as a percent) | 10.00% | |
Maximum | ||
Quantitative information about Level 3 fair value measurements | ||
Discount rate (as a percent) | 34.30% | |
Weighted Average | ||
Quantitative information about Level 3 fair value measurements | ||
Discount rate (as a percent) | 10.20% | |
Recurring | Mortgage servicing rights | Discounted Cash Flow | Level 3 | ||
Quantitative information about Level 3 fair value measurements | ||
Mortgage servicing rights, fair value | $ 7,812 | |
Recurring | Mortgage servicing rights | Discounted Cash Flow | Level 3 | Minimum | ||
Quantitative information about Level 3 fair value measurements | ||
Discount rate (as a percent) | 10.00% | |
Prepayment speed (as a percent) | 7.00% | 7.00% |
Recurring | Mortgage servicing rights | Discounted Cash Flow | Level 3 | Maximum | ||
Quantitative information about Level 3 fair value measurements | ||
Discount rate (as a percent) | 417.60% | |
Prepayment speed (as a percent) | 68.40% | 68.40% |
Recurring | Mortgage servicing rights | Discounted Cash Flow | Level 3 | Weighted Average | ||
Quantitative information about Level 3 fair value measurements | ||
Discount rate (as a percent) | 10.20% | |
Prepayment speed (as a percent) | 8.20% | 9.60% |
Fair Value Measurements - Nonre
Fair Value Measurements - Nonrecurring (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2018 | Dec. 31, 2017 | Mar. 31, 2018 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | |
Assets and liabilities measured at fair value | ||||||
Valuation allowance | $ 498 | $ 144 | ||||
Carrying value of other real estate owned | 8,912 | 8,371 | $ 7,063 | $ 11,724 | $ 13,481 | $ 11,916 |
OREO Valuation allowance | 8,348 | 8,208 | $ 8,099 | $ 8,304 | $ 9,659 | $ 9,982 |
Impaired loans | ||||||
Assets and liabilities measured at fair value | ||||||
Valuation allowance | 5,300 | |||||
Nonrecurring | ||||||
Assets and liabilities measured at fair value | ||||||
Total | 17,298 | 13,484 | ||||
Nonrecurring | Impaired loans | ||||||
Assets and liabilities measured at fair value | ||||||
Total | 8,386 | 5,113 | ||||
Valuation allowance | 498 | 144,000,000 | ||||
Increase (decrease) of specific allocations within the provision for loan losses | 90 | 856,000,000 | ||||
Nonrecurring | Impaired loans | Carrying Amount | ||||||
Assets and liabilities measured at fair value | ||||||
Total | 8,900 | |||||
Nonrecurring | Other real estate owned | ||||||
Assets and liabilities measured at fair value | ||||||
Total | 8,912 | 8,371 | ||||
Carrying value of other real estate owned | 8,900 | 8,400 | ||||
Outstanding balance | 18,200 | 17,500 | ||||
OREO Valuation allowance | 8,300 | 8,200 | ||||
OREO participations | 937,000,000 | 937,000 | ||||
Nonrecurring | Level 3 | ||||||
Assets and liabilities measured at fair value | ||||||
Total | 17,298 | 13,484 | ||||
Nonrecurring | Level 3 | Impaired loans | ||||||
Assets and liabilities measured at fair value | ||||||
Total | 8,386 | 5,113 | ||||
Nonrecurring | Level 3 | Other real estate owned | ||||||
Assets and liabilities measured at fair value | ||||||
Total | $ 8,912 | $ 8,371 |
Fair Values of Financial Inst73
Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Financial assets: | |||
Cash and due from banks | $ 34,161 | $ 37,444 | |
Interest bearing deposits with financial institutions | 31,147 | 18,389 | |
Securities available-for-sale | 543,644 | 541,439 | $ 543,644 |
FHLBC and FRBC Stock | 9,093 | 10,168 | |
Bank-owned life insurance | 61,159 | 61,764 | |
Financial liabilities: | |||
Noninterest bearing deposits | 620,807 | 572,404 | |
Other short-term borrowings | 76,625 | 115,000 | |
Junior subordinated debentures | 57,662 | 57,639 | |
Carrying Amount | |||
Financial assets: | |||
Cash and due from banks | 34,161 | 37,444 | |
Interest bearing deposits with financial institutions | 31,147 | 18,389 | |
Securities available-for-sale | 543,644 | 541,439 | |
FHLBC and FRBC Stock | 9,093 | 10,168 | |
Loans held for sale | 5,206 | 4,067 | |
Loans, net | 1,829,841 | 1,600,161 | |
Accrued interest receivable | 10,244 | 8,595 | |
Financial liabilities: | |||
Noninterest bearing deposits | 620,807 | 572,404 | |
Interest bearing deposits | 1,541,044 | 1,350,521 | |
Securities sold under repurchase agreements | 54,038 | 29,918 | |
Other short-term borrowings | 76,625 | 115,000 | |
Junior subordinated debentures | 57,662 | 57,639 | |
Subordinated debenture | 44,108 | 44,058 | |
Note payable and other borrowings | 23,496 | ||
Interest rate swap | 1,287 | ||
Borrowing interest payable | 192 | 140 | |
Deposit interest payable | 800 | 631 | |
Total Fair Value | |||
Financial assets: | |||
Cash and due from banks | 34,161 | 37,444 | |
Interest bearing deposits with financial institutions | 31,147 | 18,389 | |
Securities available-for-sale | 543,644 | 541,439 | |
FHLBC and FRBC Stock | 9,093 | 10,168 | |
Loans held for sale | 5,206 | 4,067 | |
Loans, net | 1,816,393 | 1,586,722 | |
Accrued interest receivable | 10,244 | 8,595 | |
Financial liabilities: | |||
Noninterest bearing deposits | 620,807 | 572,404 | |
Interest bearing deposits | 1,534,109 | 1,346,339 | |
Securities sold under repurchase agreements | 54,038 | 29,918 | |
Other short-term borrowings | 76,625 | 115,000 | |
Junior subordinated debentures | 59,471 | 59,471 | |
Subordinated debenture | 46,743 | 46,743 | |
Note payable and other borrowings | 23,496 | ||
Interest rate swap | 1,287 | ||
Borrowing interest payable | 192 | 140 | |
Deposit interest payable | 800 | 631 | |
Level 1 | |||
Financial assets: | |||
Cash and due from banks | 34,161 | 37,444 | |
Interest bearing deposits with financial institutions | 31,147 | 18,389 | |
Securities available-for-sale | 3,876 | 3,947 | |
Financial liabilities: | |||
Noninterest bearing deposits | 620,807 | 572,404 | |
Junior subordinated debentures | 33,267 | 33,267 | |
Level 2 | |||
Financial assets: | |||
Securities available-for-sale | 519,548 | 520,963 | |
FHLBC and FRBC Stock | 9,093 | 10,168 | |
Loans held for sale | 5,206 | 4,067 | |
Accrued interest receivable | 10,244 | 8,595 | |
Financial liabilities: | |||
Interest bearing deposits | 1,534,109 | 1,346,339 | |
Securities sold under repurchase agreements | 54,038 | 29,918 | |
Other short-term borrowings | 76,625 | 115,000 | |
Junior subordinated debentures | 26,204 | 26,204 | |
Subordinated debenture | 46,743 | 46,743 | |
Note payable and other borrowings | 23,496 | ||
Interest rate swap | 1,287 | ||
Borrowing interest payable | 192 | 140 | |
Deposit interest payable | 800 | 631 | |
Level 3 | |||
Financial assets: | |||
Securities available-for-sale | 20,220 | 16,529 | |
Loans, net | $ 1,816,393 | $ 1,586,722 |
Derivatives, Hedging Activities
Derivatives, Hedging Activities and Financial Instruments with Off-Balance Sheet Risk - Fair Value of Derivatives (Details) | Jun. 30, 2018USD ($)item | Dec. 31, 2017USD ($) |
Financial Instruments with Off-Balance Sheet Risk and Derivative Transactions | ||
Amount to be reclassified as a reduction to interest expense during the next twelve months | $ 59,000 | |
Derivative assets designated as hedging instruments, classified in other assets | 507,000 | |
Derivated liabilities designated as hedging instruments, classified in other liabilities | $ 1,287,000 | |
Interest rate derivatives, derivative assets not designated as hedging instruments, classified in other assets | 507,000 | |
Interest rate derivatives, derivative not designated as hedging instruments, classified in other liabilities | 507,000 | 1,287,000 |
Other derivatives, derivative not designated as hedging instruments, classified in other liabilities | 5,000 | 13,000 |
Derivative assets designated as hedging instruments, fair value | 507,000 | |
Derivative liabilities designated as hedging instruments, fair value | 1,287,000 | |
Derivative assets not designated as hedging instruments, fair value | 507,000 | |
Total Derivative liabilities not designated as hedging instruments, fair value | $ 512,000 | $ 1,301,000 |
Interest Rate Products | Designated | ||
Financial Instruments with Off-Balance Sheet Risk and Derivative Transactions | ||
Derivative, number of transactions | item | 1 | |
Notional Amount | $ 25,774,000 | |
Interest Rate Products | Not designated | ||
Financial Instruments with Off-Balance Sheet Risk and Derivative Transactions | ||
Derivative, number of transactions | item | 2 | |
Notional Amount | $ 51,548,000 | |
Other Contracts | Not designated | ||
Financial Instruments with Off-Balance Sheet Risk and Derivative Transactions | ||
Derivative, number of transactions | item | 3 | |
Notional Amount | $ 15,857,000 |
Derivatives, Hedging Activiti75
Derivatives, Hedging Activities and Financial Instruments with Off-Balance Sheet Risk - Effect of Fair Value (Details) - USD ($) | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | May 31, 2018 | May 31, 2017 |
Derivatives, Hedging Activities and Financial Instruments with Off-Balance Sheet Risk | ||||||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income | $ 473,000 | $ 632,000 | ||||
Amount of Gain or (Loss) Recognized in Income on Derivative | $ (42,000) | $ (18,000) | $ (116,000) | $ (18,000) |
Derivatives, Hedging Activiti76
Derivatives, Hedging Activities and Financial Instruments with Off-Balance Sheet Risk - Commitments (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Company's contractual commitments due to letters of credit | ||
Total letters of credit | $ 15,389 | $ 12,278 |
Fixed | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | 2,931 | 418 |
Variable | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | 12,458 | 11,860 |
Borrower | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | 15,322 | 12,136 |
Borrower | Fixed | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | 2,931 | 418 |
Borrower | Variable | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | 12,391 | 11,718 |
Borrower | Financial standby | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | 7,337 | 3,947 |
Borrower | Financial standby | Fixed | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | 2,017 | 177 |
Borrower | Financial standby | Variable | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | 5,320 | 3,770 |
Borrower | Commercial standby | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | 395 | 354 |
Borrower | Commercial standby | Variable | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | 395 | 354 |
Borrower | Performance standby | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | 7,590 | 7,835 |
Borrower | Performance standby | Fixed | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | 914 | 241 |
Borrower | Performance standby | Variable | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | 6,676 | 7,594 |
Nonborrower | Performance standby | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | 67 | 142 |
Nonborrower | Performance standby | Variable | ||
Company's contractual commitments due to letters of credit | ||
Total letters of credit | $ 67 | $ 142 |