Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 31, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | ORRSTOWN FINANCIAL SERVICES INC | |
Entity Central Index Key | 826,154 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | ORRF | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 9,432,862 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and due from banks | $ 21,892 | $ 21,734 |
Interest-bearing deposits with banks | 19,125 | 8,073 |
Cash and cash equivalents | 41,017 | 29,807 |
Restricted investments in bank stocks | 9,337 | 9,997 |
Securities available for sale | 489,356 | 415,308 |
Loans held for sale | 4,765 | 6,089 |
Loans | 1,084,941 | 1,010,012 |
Less: Allowance for loan losses | (13,812) | (12,796) |
Net loans | 1,071,129 | 997,216 |
Premises and equipment, net | 35,922 | 34,809 |
Cash surrender value of life insurance | 34,799 | 33,570 |
Accrued interest receivable | 5,393 | 5,048 |
Other assets | 29,037 | 27,005 |
Total assets | 1,720,755 | 1,558,849 |
Deposits: | ||
Noninterest-bearing | 187,721 | 162,343 |
Interest-bearing | 1,241,449 | 1,057,172 |
Total deposits | 1,429,170 | 1,219,515 |
Short-term borrowings | 45,353 | 93,576 |
Long-term debt | 83,543 | 83,815 |
Accrued interest and other liabilities | 17,132 | 17,178 |
Total liabilities | 1,575,198 | 1,414,084 |
Shareholders’ Equity | ||
Preferred stock, $1.25 par value per share; 500,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock, no par value—$0.05205 stated value per share 50,000,000 shares authorized; 8,393,158 and 8,347,856 shares issued; 8,385,627 and 8,347,039 shares outstanding | 437 | 435 |
Additional paid - in capital | 126,260 | 125,458 |
Retained earnings | 24,529 | 16,042 |
Accumulated other comprehensive income (loss) | (5,472) | 2,845 |
Treasury stock—common, 7,531 and 817 shares, at cost | (197) | (15) |
Total shareholders’ equity | 145,557 | 144,765 |
Total liabilities and shareholders’ equity | $ 1,720,755 | $ 1,558,849 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (usd per share) | $ 1.25 | $ 1.25 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, stated value (usd per share) | $ 0.05205 | $ 0.05205 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 8,393,158 | 8,347,856 |
Common stock, shares outstanding | 8,385,627 | 8,347,039 |
Treasury stock - common - shares | 7,531 | 817 |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Interest and dividend income | ||||
Interest and fees on loans | $ 12,281 | $ 10,337 | $ 35,068 | $ 29,392 |
Interest and dividends on investment securities | ||||
Taxable | 2,922 | 1,925 | 7,754 | 5,518 |
Tax-exempt | 955 | 758 | 2,834 | 2,344 |
Short-term investments | 68 | 78 | 169 | 142 |
Total interest and dividend income | 16,226 | 13,098 | 45,825 | 37,396 |
Interest expense | ||||
Interest on deposits | 2,780 | 1,619 | 6,765 | 4,429 |
Interest on short-term borrowings | 332 | 182 | 1,097 | 543 |
Interest on long-term debt | 410 | 216 | 1,222 | 388 |
Total interest expense | 3,522 | 2,017 | 9,084 | 5,360 |
Net interest income | 12,704 | 11,081 | 36,741 | 32,036 |
Provision for loan losses | 200 | 100 | 600 | 200 |
Net interest income after provision for loan losses | 12,504 | 10,981 | 36,141 | 31,836 |
Noninterest income | ||||
Service charges on deposit accounts | 1,524 | 1,437 | 4,405 | 4,224 |
Other service charges, commissions and fees | 492 | 205 | 1,430 | 697 |
Trust and investment management income | 1,668 | 1,551 | 5,037 | 4,620 |
Brokerage income | 455 | 424 | 1,514 | 1,409 |
Mortgage banking activities | 735 | 797 | 2,049 | 2,113 |
Income from life insurance | 533 | 275 | 1,101 | 814 |
Other income | 56 | 34 | 272 | 147 |
Investment securities gains | 29 | 533 | 891 | 1,190 |
Total noninterest income | 5,492 | 5,256 | 16,699 | 15,214 |
Noninterest expenses | ||||
Salaries and employee benefits | 7,610 | 7,544 | 23,487 | 22,366 |
Occupancy | 775 | 639 | 2,252 | 2,101 |
Furniture and equipment | 990 | 937 | 2,977 | 2,499 |
Data processing | 661 | 527 | 1,875 | 1,702 |
Telephone and communication | 181 | 221 | 542 | 536 |
Automated teller and interchange fees | 187 | 196 | 548 | 568 |
Advertising and bank promotions | 279 | 325 | 898 | 1,103 |
FDIC insurance | 169 | 139 | 507 | 454 |
Legal fees | 215 | 565 | 364 | 826 |
Other professional services | 361 | 380 | 1,140 | 1,112 |
Directors' compensation | 207 | 254 | 663 | 745 |
Collection and problem loan | 59 | 56 | 137 | 134 |
Real estate owned | 18 | 41 | 96 | 49 |
Taxes other than income | 259 | 211 | 761 | 659 |
Merger related | 319 | 0 | 473 | 0 |
Other operating expenses | 1,046 | 1,052 | 2,957 | 2,796 |
Total noninterest expenses | 13,336 | 13,087 | 39,677 | 37,650 |
Income before income tax expense | 4,660 | 3,150 | 13,163 | 9,400 |
Income tax expense | 644 | 376 | 1,510 | 1,316 |
Net income | $ 4,016 | $ 2,774 | $ 11,653 | $ 8,084 |
Per share information: | ||||
Basic earnings per share (in usd per share) | $ 0.50 | $ 0.34 | $ 1.44 | $ 1 |
Diluted earnings per share (in usd per share) | 0.49 | 0.34 | 1.41 | 0.98 |
Dividends per share (in usd per share) | $ 0.13 | $ 0.1 | $ 0.38 | $ 0.3 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 4,016 | $ 2,774 | $ 11,653 | $ 8,084 |
Other comprehensive income (loss), net of tax: | ||||
Unrealized gains (losses) on securities available for sale arising during the period | (3,488) | (1,400) | (9,637) | 5,350 |
Reclassification adjustment for gains realized in net income | (29) | (533) | (891) | (1,190) |
Net unrealized gains (losses) | (3,517) | (1,933) | (10,528) | 4,160 |
Tax effect | 738 | 656 | 2,211 | (1,415) |
Total other comprehensive income (loss), net of tax and reclassification adjustments | (2,779) | (1,277) | (8,317) | 2,745 |
Total comprehensive income | $ 1,237 | $ 1,497 | $ 3,336 | $ 10,829 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock |
Beginning balance at Dec. 31, 2016 | $ 134,859 | $ 437 | $ 124,935 | $ 11,669 | $ (1,165) | $ (1,017) |
Increase (Decrease) in Shareholders' Equity | ||||||
Net income | 8,084 | 0 | 0 | 8,084 | 0 | 0 |
Total other comprehensive income (loss), net of taxes | 2,745 | 0 | 0 | 0 | 2,745 | 0 |
Cash dividends ($0.38 and $0.30 per share in 2018 and 2017) | (2,489) | 0 | 0 | (2,489) | 0 | 0 |
Share-based compensation plans: | ||||||
Issuance of stock, including compensation expense | 1,185 | (2) | 185 | 0 | 0 | 1,002 |
Ending balance at Sep. 30, 2017 | 144,384 | 435 | 125,120 | 17,264 | 1,580 | (15) |
Beginning balance at Dec. 31, 2017 | 144,765 | 435 | 125,458 | 16,042 | 2,845 | (15) |
Increase (Decrease) in Shareholders' Equity | ||||||
Net income | 11,653 | 0 | 0 | 11,653 | 0 | 0 |
Total other comprehensive income (loss), net of taxes | (8,317) | 0 | 0 | 0 | (8,317) | 0 |
Cash dividends ($0.38 and $0.30 per share in 2018 and 2017) | (3,166) | 0 | 0 | (3,166) | 0 | 0 |
Share-based compensation plans: | ||||||
Issuance of stock, including compensation expense | 622 | 2 | 802 | 0 | 0 | (182) |
Ending balance at Sep. 30, 2018 | $ 145,557 | $ 437 | $ 126,260 | $ 24,529 | $ (5,472) | $ (197) |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends per share (in usd per share) | $ 0.38 | $ 0.30 |
Stock-based compensation plans, issuance of stock (in shares) | 45,302 | 5,418 |
Issuance of stock, common stock forfeited (in shares) | 0 | 0 |
Compensation expense, issuance of stock | $ 1,112 | $ 1,048 |
Issuance of treasury stock (in shares) | 0 | 56,885 |
Treasury Stock, Shares, Acquired | 6,714 | 0 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities | ||
Net income | $ 11,653 | $ 8,084 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of premiums on securities available for sale | 1,356 | 3,388 |
Depreciation and amortization | 2,572 | 2,382 |
Provision for loan losses | 600 | 200 |
Share-based compensation | 1,112 | 1,048 |
Gain on sales of loans originated for sale | (1,687) | (1,751) |
Mortgage loans originated for sale | (71,008) | (75,484) |
Proceeds from sales of loans originated for sale | 73,679 | 71,409 |
Gain on sale of portfolio loans | (291) | (32) |
Net gain on disposal of OREO | (111) | (11) |
Writedown of OREO | 24 | 4 |
Net (gain) loss on disposal of premises and equipment | 16 | (18) |
Deferred income taxes | 756 | 229 |
Investment securities gains | (891) | (1,190) |
Income from life insurance | (1,101) | (814) |
(Increase) decrease in accrued interest receivable | (345) | 420 |
Increase in accrued interest payable and other liabilities | (46) | 1,835 |
Other, net | (1,158) | (360) |
Net cash provided by operating activities | 15,130 | 9,339 |
Cash flows from investing activities | ||
Proceeds from sales of available for sale securities | 113,180 | 162,319 |
Maturities, repayments and calls of available for sale securities | 12,793 | 22,060 |
Purchases of available for sale securities | (211,014) | (203,719) |
Net (purchases) redemptions of restricted investments in bank stocks | 660 | (1,499) |
Net increase in loans | (78,497) | (101,203) |
Proceeds from sales of portfolio loans | 3,589 | 2,195 |
Purchases of bank premises and equipment | (3,078) | (2,372) |
Improvements to OREO | 0 | (9) |
Proceeds from disposal of OREO | 1,260 | 237 |
Proceeds from disposal of bank premises and equipment | 7 | 83 |
Purchases of bank owned life insurance | (900) | (600) |
Death benefit proceeds from life insurance contracts | 576 | 0 |
Net cash used in investing activities | (161,424) | (122,508) |
Cash flows from financing activities | ||
Net increase in deposits | 209,655 | 64,275 |
Net decrease in borrowings with original maturities less than 90 days | (8,223) | (36,293) |
Proceeds from other short-term borrowings | 0 | 70,000 |
Payments on other short-term borrowings | (40,000) | (30,000) |
Proceeds from long-term debt | 0 | 60,000 |
Payments on long-term debt | (272) | (20,260) |
Dividends paid | (3,166) | (2,489) |
Treasury shares repurchased for employee taxes associated with restricted stock vesting | (651) | 0 |
Proceeds from issuance of stock for option exercises and employee stock purchase plan | 161 | 137 |
Net cash provided by financing activities | 157,504 | 105,370 |
Net increase (decrease) in cash and cash equivalents | 11,210 | (7,799) |
Cash and cash equivalents at beginning of period | 29,807 | 30,273 |
Cash and cash equivalents at end of period | 41,017 | 22,474 |
Supplemental disclosures of cash flow information: | ||
Interest | 8,991 | 5,335 |
Income taxes | 60 | 1,108 |
Supplemental schedule of noncash investing activities: | ||
OREO acquired in settlement of loans | $ 538 | $ 1,007 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES See the Glossary of Defined Terms at the beginning of this Report for terms used throughout the consolidated financial statements and related notes of this Form 10-Q. Nature of Operations – Orrstown Financial Services, Inc. and subsidiaries is a financial holding company that operates Orrstown Bank, a commercial bank with banking and financial advisory offices in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York Counties, Pennsylvania, and in Washington County, Maryland and Wheatland Advisors, Inc., a registered investment advisor non-bank subsidiary, headquartered in Lancaster, Pennsylvania. The Company operates in the community banking segment and engages in lending activities, including commercial, residential, commercial mortgages, construction, municipal, and various forms of consumer lending, and deposit services, including checking, savings, time, and money market deposits. The Company also provides fiduciary services, investment advisory, insurance and brokerage services. The Company and the Bank are subject to regulation by certain federal and state agencies and undergo periodic examinations by such regulatory authorities. Basis of Presentation – The accompanying condensed consolidated financial statements include the accounts of Orrstown Financial Services, Inc. and its wholly owned subsidiaries, the Bank and Wheatland. The Company has prepared these unaudited condensed consolidated financial statements in accordance with GAAP for interim financial information, SEC rules that permit reduced disclosure for interim periods, and Article 10 of Regulation S-X. In the opinion of management, all adjustments (all of which are of a normal recurring nature) that are necessary for a fair statement are reflected in the unaudited condensed consolidated financial statements. The December 31, 2017 consolidated balance sheet information contained in this Quarterly Report on Form 10-Q was derived from the 2017 audited consolidated financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 . Operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 . All significant intercompany transactions and accounts have been eliminated. Certain reclassifications have been made to prior year amounts to conform with current year classifications. The Company's management has evaluated all activity of the Company and concluded that subsequent events are properly reflected in the Company's consolidated financial statements and notes as required by GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change include the determination of the ALL and income taxes. Concentration of Credit Risk – The Company grants commercial, residential, construction, municipal, and various forms of consumer lending to customers primarily in its market area of Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry, and York Counties, Pennsylvania, and in Washington County, Maryland. Therefore the Company's exposure to credit risk is significantly affected by changes in the economy in those areas. Although the Company maintains a diversified loan portfolio, a significant portion of its customers’ ability to honor their contracts is dependent upon economic sectors for commercial real estate, including office space, retail strip centers, sales finance, sub-dividers and developers, and multi-family, hospitality, and residential building operators. Management evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if collateral is deemed necessary by the Company upon the extension of credit, is based on management’s credit evaluation of the customer. Collateral held varies, but generally includes real estate and equipment. The types of securities the Company invests in are included in Note 3, Securities Available for Sale, and the types of lending the Company engages in are included in Note 4, Loans and Allowance for Loan Losses. Cash and Cash Equivalents – Cash and cash equivalents include cash, balances due from banks, federal funds sold and interest-bearing deposits due on demand, all of which have original maturities of 90 days or less. Net cash flows are reported for customer loan and deposit transactions, loans held for sale, redemption (purchases) of restricted investments in bank stocks, and short-term borrowings. Restricted Investments in Bank Stocks – Restricted investments in bank stocks consist of Federal Reserve Bank of Philadelphia stock, FHLB of Pittsburgh stock and Atlantic Community Bankers Bank stock. Federal law requires a member institution of the district Federal Reserve Bank and FHLB to hold stock according to predetermined formulas. Atlantic Community Bankers Bank requires its correspondent banking institutions to hold stock as a condition of membership. The restricted investment in bank stocks is carried at cost. Quarterly, management evaluates the bank stocks for impairment based on assessment of the ultimate recoverability of cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of cost is influenced by criteria such as operating performance, liquidity, funding and capital positions, stock repurchase history, dividend history and impact of legislative and regulatory changes. Securities – The Company typically classifies debt securities as available for sale on the date of purchase. At September 30, 2018 and December 31, 2017 , the Company had no held to maturity or trading securities. AFS securities are reported at fair value. Interest income and dividends are recognized in interest income on an accrual basis. Purchase premiums and discounts on debt securities are amortized to interest income using the interest method over the terms of the securities and approximate the level yield method. Changes in unrealized gains and losses, net of related deferred taxes, for AFS securities are recorded in AOCI. Realized gains and losses on securities are recorded on the trade date using the specific identification method and are included in noninterest income. AFS securities include investments that management intends to use as part of its asset/liability management strategy. Securities may be sold in response to changes in interest rates, changes in prepayment rates and other factors. The Company does not have the intent to sell any of its AFS securities that are in an unrealized loss position and it is more likely than not that the Company will not be required to sell these securities before recovery of their amortized cost. Management evaluates securities for OTTI on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components: OTTI related to other factors, which is recognized in OCI, and the remaining OTTI, which is recognized in earnings. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The Company’s securities are exposed to various risks, such as interest rate risk, market risk, and credit risk. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible that changes in risks in the near term would materially affect investment assets reported in the consolidated financial statements. Loans Held for Sale – Loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value. Gains and losses on loan sales (sales proceeds minus carrying value) are recorded in noninterest income. Loans – The Company grants commercial loans; residential, commercial and construction mortgage loans; and various forms of consumer loans to its customers located principally in south central Pennsylvania and northern Maryland. The ability of the Company’s debtors to honor their contracts is dependent largely upon the real estate and general economic conditions in this area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the ALL, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and amortized as a yield adjustment over the respective term of the loan. For purchased loans that are not deemed impaired at the acquisition date, premiums and discounts are amortized or accreted as adjustments to interest income using the effective yield method. For all classes of loans, the accrual of interest income on loans, including impaired loans, ceases when principal or interest is past due 90 days or more or immediately if, in the opinion of management, full collection is unlikely. Interest will continue to accrue on loans past due 90 days or more if the collateral is adequate to cover principal and interest, and the loan is in the process of collection. Interest accrued, but not collected, at the date of placement on nonaccrual status, is reversed and charged against current interest income, unless fully collateralized. Subsequent payments received are either applied to the outstanding principal balance or recorded as interest income, depending upon management’s assessment of the ultimate collectability of principal. Loans are returned to accrual status, for all loan classes, when all the principal and interest amounts contractually due are brought current, the loan has performed in accordance with the contractual terms of the note for a reasonable period of time, generally six months , and the ultimate collectability of the total contractual principal and interest is reasonably assured. Past due status is based on contractual terms of the loan. Loans, the terms of which are modified, are classified as TDRs if a concession was granted in connection with the modification, for legal or economic reasons, related to the debtor’s financial difficulties. Concessions granted under a TDR typically involve a temporary deferral of scheduled loan payments, an extension of a loan’s stated maturity date, a temporary reduction in interest rates, or granting of an interest rate below market rates given the risk of the transaction. If a modification occurs while the loan is on accruing status, it will continue to accrue interest under the modified terms. Nonaccrual TDRs may be restored to accrual status if scheduled principal and interest payments, under the modified terms, are current for six months after modification, and the borrower continues to demonstrate its ability to meet the modified terms. TDRs are evaluated individually for impairment on a quarterly basis including monitoring of performance according to their modified terms. Allowance for Loan Losses – The ALL is evaluated on at least a quarterly basis, as losses are estimated to be probable and incurred, and, if deemed necessary, is increased through a provision for loan losses charged to earnings. Loan losses are charged against the ALL when management determines that all or a portion of the loan is uncollectible. Recoveries on previously charged-off loans are credited to the ALL when received. The ALL is allocated to loan portfolio classes on a quarterly basis, but the entire balance is available to cover losses from any of the portfolio classes when those losses are confirmed. Management uses internal policies and bank regulatory guidance in periodically evaluating loans for collectability and incorporates historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. See Note 4, Loans and Allowance for Loan Losses, for additional information. Loan Commitments and Related Financial Instruments – Financial instruments include off-balance sheet credit commitments issued to meet customer financing needs, such as commitments to make loans and commercial letters of credit. These financial instruments are recorded when they are funded. The face amount represents the exposure to loss, before considering customer collateral or ability to repay. The Company maintains a reserve for probable losses on off-balance sheet commitments which is included in Other Liabilities. Loans Serviced – The Bank administers secondary market mortgage programs available through the FHLB and the Federal National Mortgage Association and offers residential mortgage products and services to customers. The Bank originates single-family residential mortgage loans for immediate sale in the secondary market and retains the servicing of those loans. At September 30, 2018 and December 31, 2017 , the balance of loans serviced for others totaled $337,379,000 and $334,802,000 . Transfers of Financial Assets – Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Cash Surrender Value of Life Insurance – The Company has purchased life insurance policies on certain employees. Life insurance is recorded at the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Premises and Equipment – Buildings, improvements, equipment, furniture and fixtures are carried at cost less accumulated depreciation and amortization. Land is carried at cost. Depreciation and amortization has been provided generally on the straight-line method and is computed over the estimated useful lives of the various assets as follows: buildings and improvements, including leasehold improvements – 10 to 40 years; and furniture and equipment – 3 to 15 years. Leasehold improvements are amortized over the shorter of the lease term or the indicated life. Repairs and maintenance are charged to operations as incurred, while major additions and improvements are capitalized. Gain or loss on retirement or disposal of individual assets is recorded as income or expense in the period of retirement or disposal. Goodwill and Other Intangible Assets – Goodwill is calculated as the purchase premium, if any, after adjusting for the fair value of net assets acquired in purchase transactions. Goodwill is not amortized but is reviewed for potential impairment on at least an annual basis, with testing between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit. Other intangible assets represent purchased assets that can be distinguished from goodwill because of contractual or other legal rights. The Company’s other intangible assets have finite lives and are amortized on either the sum of the years digits or straight line bases over their estimated lives, generally 10 years for deposit premiums and 10 to 15 years for customer lists. Mortgage Servicing Rights – The estimated fair value of MSRs related to loans sold and serviced by the Company is recorded as an asset upon the sale of such loans. MSRs are amortized as a reduction to servicing income over the estimated lives of the underlying loans. MSRs are evaluated periodically for impairment by comparing the carrying amount to estimated fair value. Fair value is determined periodically through a discounted cash flows valuation performed by a third party. Significant inputs to the valuation include expected servicing income, net of expense, the discount rate and the expected life of the underlying loans. To the extent the amortized cost of the MSRs exceeds their estimated fair values, a valuation allowance is established for such impairment through a charge against servicing income on the consolidated statements of income. If the Company determines, based on subsequent valuations, that the impairment no longer exists or is reduced, the valuation allowance is reduced through a credit to earnings. MSRs totaled $2,931,000 and $2,897,000 at September 30, 2018 and December 31, 2017 , and are included in Other Assets. Foreclosed Real Estate – Real estate acquired through foreclosure or other means is initially recorded at the fair value of the related real estate collateral at the transfer date less estimated selling costs, and subsequently at the lower of its carrying value or fair value less estimated costs to sell. Fair value is usually determined based on an independent third party appraisal of the property or occasionally on a recent sales offer. Costs to maintain foreclosed real estate are expensed as incurred. Costs that significantly improve the value of the properties are capitalized. Foreclosed real estate totaled $286,000 and $961,000 at September 30, 2018 and December 31, 2017 and is included in Other Assets. Investments in Real Estate Partnerships – The Company has a 99% limited partner interest in several real estate partnerships in central Pennsylvania. These investments are affordable housing projects, which entitle the Company to tax deductions and credits that expire through 2025. The Company accounts for its investments in affordable housing projects under the proportional amortization method when the criteria are met, which is limited to one investment entered into in 2015. Other investments are accounted for under the equity method of accounting. The investment in these real estate partnerships, included in Other Assets, totaled $4,006,000 and $4,416,000 at September 30, 2018 and December 31, 2017 , of which $1,616,000 and $1,776,000 are accounted for under the proportional amortization method. Equity method losses totaled $81,000 for the three months ended September 30, 2018 and 2017 , and $250,000 and $196,000 for the nine months ended September 30, 2018 and 2017 , and are included in other noninterest income. Proportional amortization method losses totaled $53,000 and $52,000 for the three months ended September 30, 2018 and 2017 , and $160,000 and $157,000 for the nine months ended September 30, 2018 and 2017 and are included in income tax expense. The Company recognized federal tax credits from these projects totaling $144,000 and $253,000 during the three months ended September 30, 2018 and 2017 , and $433,000 , and $758,000 during the nine months ended September 30, 2018 and 2017 , which are included in income tax expense. Advertising – The Company expenses advertising as incurred. Advertising expense totaled $83,000 and $138,000 for the three months ended September 30, 2018 and 2017 , and $209,000 and $455,000 for the nine months ended September 30, 2018 and 2017 . Repurchase Agreements – The Company enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities which are included in short-term borrowings. Under these agreements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets. As a result, these Repurchase Agreements are accounted for as collateralized financing arrangements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability in the Company’s consolidated balance sheets, while the securities underlying the Repurchase Agreements remaining are reflected in AFS securities. The repurchase obligation and underlying securities are not offset or netted. The Company does not enter into reverse Repurchase Agreements, so there is no offsetting to be performed with Repurchase Agreements. The right of setoff for a Repurchase Agreement resembles a secured borrowing, whereby the collateral would be used to settle the fair value of the Repurchase Agreement should the Company be in default (e.g., fail to make an interest payment to the counterparty). For the Repurchase Agreements, the collateral is held by the Company in a segregated custodial account under a third party agreement. Repurchase agreements are secured by GSE MBSs and mature overnight. Share Compensation Plans – The Company has share compensation plans that cover employees and non-employee directors. Compensation expense relating to share-based payment transactions is measured based on the grant date fair value of the share award, including a Black-Scholes model for stock options. Compensation expense for all share awards is calculated and recognized over the employees’ or non-employee directors' service period, generally defined as the vesting period. Income Taxes – Income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of enacted tax law to taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more likely than not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company recognizes interest and penalties, if any, on income taxes as a component of income tax expense. Loss Contingencies – Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Treasury Stock – Common stock shares repurchased are recorded as treasury stock at cost. Earnings Per Share – Basic earnings per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Restricted stock awards are included in weighted average common shares outstanding as they are earned. Diluted earnings per share includes additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by the Company relate solely to outstanding stock options and restricted stock awards and are determined using the treasury stock method. Treasury shares are not deemed outstanding for earnings per share calculations. Comprehensive Income – Comprehensive income consists of net income and OCI. OCI is limited to unrealized gains (losses) on securities available for sale for all years presented. Unrealized gains (losses) on securities available for sale, net of tax, was the sole component of AOCI at September 30, 2018 and December 31, 2017 . Fair Value – Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 10, Fair Value. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates. Segment Reporting – The Company operates in one significant segment – Community Banking. The Company’s non-community banking activities, principally related to Wheatland, are insignificant to the consolidated financial statements. Recent Accounting Pronouncements - ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 implements a common revenue standard that clarifies the principles for recognizing revenue. The core principle of ASU 2014-09 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 or services. On January 1, 2018, the Company adopted ASU 2014-09 and all subsequent amendments (collectively “ASC 606”). The majority of the Company's revenue comes from interest income, including loans and securities, that are outside the scope of ASC 606. The Company's services that fall within the scope of ASC 606 are presented within noninterest income on the consolidated statements of income and are recognized as revenue as the Company satisfies its obligation to the customer. Services within the scope of ASC 606 include service charges on deposit accounts, income from fiduciary investment management and brokerage activities and interchange fees from service charges on ATM and debit card transactions. ASC 606 did not result in a change to the accounting for any in-scope revenue streams; as such, no cumulative effect adjustment was recorded. ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (viii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. Our adoption of ASU 2016-01 on January 1, 2018, did not have a material effect on our consolidated financial condition or results of operations. In accordance with (iv) above, the Company measured fair value of its loan portfolio at September 30, 2018 using an exit price methodology as indicated in Note 10, Fair Value. ASU 2016-02, Leases (Topic 842). ASU 2016-02 will, among other things, require lessees to recognize a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 will be effective for the Company on January 1, 2019. In July 2018, the FASB issued amendments in ASU 2018-11, which provide a transition election to not restate comparative periods for the effects of applying the new standard. The Company expects to elect this transition election, which permits entities to change the date of initial application to the beginning of the year of adoption and to recognize the effects of applying the new standard as a cumulative-effect adjustment to the opening balance of retained earnings. The Company anticipates that the impact on its consolidated balance sheet will result in an increase in assets and liabilities for its right of use assets and related lease liabilities for those leases that are outstanding at the date of adoption, however, it does not anticipate it will have a material impact on its results of operations. Management is evaluating other effects of this standard on our consolidated financial position and regulatory capital. ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on available for sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be effective on January 1, 2020. The Company is currently evaluating the potential impact of ASU 2016-13 on our consolidated financial statements. In that regard, the Company has formed a cross-functional working group, under the direction of the Chief Financial Officer and the Chief Risk Officer. The working group is comprised of individuals from various functional areas including credit, risk management, finance and information technology. We are currently developing an implementation plan to include, but not limited to, an assessment of processes, portfolio segmentation, model development, system requirements and the identification of data and resource needs. We have selected a third-party vendor solution to assist us in the application of ASU 2016-13. While the Company is currently unable to reasonably estimate the impact of adopting ASU 2016-13, we expect t |
MERGERS AND ACQUISITIONS
MERGERS AND ACQUISITIONS | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
MERGERS AND ACQUISITIONS | MERGERS AND ACQUISITIONS Mercersburg Financial Corporation On October 1, 2018, the Company completed its acquisition of Mercersburg Financial Corporation ("Mercersburg"), the holding company for First Community Bank of Mercersburg. The transaction was valued at approximately $30,000,000 with the Company issuing 1,052,635 shares of common stock and paying cash totaling approximately $4,900,000 . At September 30, 2018 , First Community Bank of Mercersburg reported total assets of $184,161,000 , total loans of $147,386,000 and total deposits of $160,947,000 on a Call Report filed with federal banking regulators on October 30, 2018. The acquisition expanded the Company's operations in Franklin County, Pennsylvania. The initial purchase accounting for this acquisition is not yet completed and the Company is not yet able to disclose the preliminary fair value of the Mercersburg assets acquired and liabilities assumed. Hamilton Bancorp, Inc. On October 23, 2018, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Hamilton Bancorp, Inc., a Maryland corporation ("Hamilton") and the holding company for Hamilton Bank, based in Towson, Maryland. At September 30, 2018 , Hamilton had $502,187,000 in assets, $374,649,000 in loans, $388,471,000 in deposits and 3,416,414 shares outstanding. The Merger Agreement provides that, subject to the terms and conditions thereof, Hamilton will merge with and into the Company, with the Company as the surviving corporation, and that Hamilton Bank will merge with and into Orrstown Bank, with Orrstown Bank as the surviving bank. The merger is expected to close in the second quarter of 2019, subject to receipt of regulatory approvals, the approval of Hamilton's shareholders, and the satisfaction of other customary closing conditions. The acquisition will introduce the Company's operations into the Greater Baltimore area of Maryland. Pursuant to the Merger Agreement, for each share of Hamilton common stock outstanding as of the effective date, the Company will issue $4.10 in cash, without interest, and 0.54 shares of of the Company's common stock, no par value per share. The cash consideration is subject to reduction based on potential losses, write-downs, or reserves related to certain identified loans. |
SECURITIES AVAILABLE FOR SALE
SECURITIES AVAILABLE FOR SALE | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
SECURITIES AVAILABLE FOR SALE | SECURITIES AVAILABLE FOR SALE The following table summarizes amortized cost and fair value of AFS securities at September 30, 2018 and December 31, 2017 , and the corresponding amounts of gross unrealized gains and losses recognized in AOCI. At September 30, 2018 and December 31, 2017 , all investment securities were classified as AFS. (Dollars in thousands) Amortized Cost Gross Unrealized Gross Unrealized Fair Value September 30, 2018 States and political subdivisions $ 161,146 $ 1,251 $ 2,977 $ 159,420 GSE residential CMOs 113,335 39 4,720 108,654 Private label residential CMOs 313 0 1 312 Private label commercial CMOs 61,560 18 368 61,210 Asset-backed and other 159,928 503 671 159,760 Totals $ 496,282 $ 1,811 $ 8,737 $ 489,356 December 31, 2017 States and political subdivisions $ 153,803 $ 6,133 $ 478 $ 159,458 GSE residential MBSs 48,600 930 0 49,530 GSE residential CMOs 113,658 296 2,835 111,119 Private label residential CMOs 999 4 0 1,003 Private label commercial CMOs 7,809 0 156 7,653 Asset-backed and other 86,837 133 425 86,545 Totals $ 411,706 $ 7,496 $ 3,894 $ 415,308 The following table summarizes AFS securities with unrealized losses at September 30, 2018 and December 31, 2017 , aggregated by major security type and length of time in a continuous unrealized loss position. Less Than 12 Months 12 Months or More Total (Dollars in thousands) # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses September 30, 2018 States and political subdivisions 46 $ 67,649 $ 1,591 5 $ 22,667 $ 1,386 51 $ 90,316 $ 2,977 GSE residential CMOs 4 59,708 1,125 7 46,729 3,595 11 106,437 4,720 Private label residential CMOs 1 312 1 0 0 0 1 312 1 Private label commercial CMOs 5 33,258 70 2 6,597 298 7 39,855 368 Asset-backed and other 4 61,660 274 3 11,426 397 7 73,086 671 Totals 60 $ 222,587 $ 3,061 17 $ 87,419 $ 5,676 77 $ 310,006 $ 8,737 December 31, 2017 States and political subdivisions 7 $ 24,577 $ 473 1 $ 5,585 $ 5 8 $ 30,162 $ 478 GSE residential CMOs 4 25,155 914 5 37,459 1,921 9 62,614 2,835 Private label commercial CMOs 2 7,653 156 0 0 0 2 7,653 156 Asset-backed and other 6 60,006 425 0 0 0 6 60,006 425 Totals 19 $ 117,391 $ 1,968 6 $ 43,044 $ 1,926 25 $ 160,435 $ 3,894 States and Political Subdivisions. The unrealized losses presented in the table above have been caused by a widening of spreads and/or a rise in interest rates from the time these securities were purchased. Management considers the investment rating, the state of the issuer of the security and other credit support in determining whether the security is OTTI. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at September 30, 2018 or at December 31, 2017 . GSE Residential CMOs. The unrealized losses presented in the table above have been caused by a widening of spreads and/or a rise in interest rates from the time these securities were purchased. The contractual terms of these securities do not permit the issuer to settle the securities at a price less than its par value basis. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at September 30, 2018 or at December 31, 2017 . Private Label Residential CMOs. The unrealized losses presented in the table above have been caused by a widening of spreads and/or a rise in interest rates from the time the securities were purchased. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at September 30, 2018 or at December 31, 2017 . Private Label Commercial CMOs and Asset-backed and Other. The unrealized losses presented in the table above have been caused by widening of spreads and/or a rise in interest rates from the time the securities were purchased. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at September 30, 2018 or at December 31, 2017 . The following table summarizes amortized cost and fair value of AFS securities at September 30, 2018 by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately. Available for Sale (Dollars in thousands) Amortized Cost Fair Value Due after one year through five years $ 5,066 $ 5,053 Due after five years through ten years 38,129 37,619 Due after ten years 117,951 116,748 CMOs 175,208 170,176 Asset-backed and other 159,928 159,760 $ 496,282 $ 489,356 The following table summarizes proceeds from sales of AFS securities and gross gains and gross losses for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands) 2018 2017 2018 2017 Proceeds from sale of AFS securities $ 25,070 $ 103,666 $ 113,180 $ 162,319 Gross gains 185 670 1,237 1,477 Gross losses 156 137 346 287 AFS securities with a fair value of $297,469,000 and $319,907,000 at September 30, 2018 and December 31, 2017 were pledged to secure public funds and for other purposes as required or permitted by law. |
LOANS AND ALLOWANCE FOR LOAN LO
LOANS AND ALLOWANCE FOR LOAN LOSSES | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
LOANS AND ALLOWANCE FOR LOAN LOSSES | LOANS AND ALLOWANCE FOR LOAN LOSSES The Company’s loan portfolio is grouped into classes to allow management to monitor the performance by the borrower and to monitor the yield on the portfolio. Consistent with ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Loan Losses, the segments are further broken down into classes to allow for differing risk characteristics within a segment. The risks associated with lending activities differ among the various loan classes and are subject to the impact of changes in interest rates, market conditions of collateral securing the loans, and general economic conditions. All of these factors may adversely impact both the borrower’s ability to repay its loans and associated collateral. The Company has various types of commercial real estate loans, which have differing levels of credit risk. Owner occupied commercial real estate loans are generally dependent upon the successful operation of the borrower’s business, with the cash flows generated from the business being the primary source of repayment of the loan. If the business suffers a downturn in sales or profitability, the borrower’s ability to repay the loan could be in jeopardy. Non-owner occupied and multi-family commercial real estate loans and non-owner occupied residential loans present a different credit risk to the Company than owner occupied commercial real estate loans, as the repayment of the loan is dependent upon the borrower’s ability to generate a sufficient level of occupancy to produce rental income that exceeds debt service requirements and operating expenses. Lower occupancy or lease rates may result in a reduction in cash flows, which hinders the ability of the borrower to meet debt service requirements, and may result in lower collateral values. The Company generally recognizes that greater risk is inherent in these credit relationships as compared to owner occupied loans mentioned above. Acquisition and development loans consist of 1-4 family residential construction and commercial and land development loans. The risk of loss on these loans is largely dependent on the Company’s ability to assess the property’s value at the completion of the project, which should exceed the property’s construction costs. During the construction phase, a number of factors could potentially negatively impact the collateral value, including cost overruns, delays in completing the project, competition, and real estate market conditions which may change based on the supply of similar properties in the area. In the event the collateral value at the completion of the project is not sufficient to cover the outstanding loan balance, the Company must rely upon other repayment sources, including, if any, the guarantors of the project or other collateral securing the loan. Commercial and industrial loans include advances to local and regional businesses for general commercial purposes and include permanent and short-term working capital, machinery and equipment financing, and may be either in the form of lines of credit or term loans. Although commercial and industrial loans may be unsecured to our highest-rated borrowers, the majority of these loans are secured by the borrower’s accounts receivable, inventory and machinery and equipment. In a significant number of these loans, the collateral also includes the business real estate or the business owner’s personal real estate or assets. Commercial and industrial loans present credit exposure to the Company, as they are more susceptible to risk of loss during a downturn in the economy as borrowers may have greater difficulty in meeting their debt service requirements and the value of the collateral may decline. The Company attempts to mitigate this risk through its underwriting standards, including evaluating the creditworthiness of the borrower and, to the extent available, credit ratings on the business. Additionally, monitoring of the loans through annual renewals and meetings with the borrowers are typical. However, these procedures cannot eliminate the risk of loss associated with commercial and industrial lending. Municipal loans consist of extensions of credit to municipalities and school districts within the Company’s market area. These loans generally present a lower risk than commercial and industrial loans, as they are generally secured by the municipality’s full taxing authority, by revenue obligations, or by its ability to raise assessments on its customers for a specific utility. The Company originates loans to its retail customers, including fixed-rate and adjustable first lien mortgage loans with the underlying 1-4 family owner occupied residential property securing the loan. The Company’s risk exposure is minimized in these types of loans through the evaluation of the creditworthiness of the borrower, including credit scores and debt-to-income ratios, and underwriting standards which limit the loan-to-value ratio to generally no more than 80% upon loan origination, unless the borrower obtains private mortgage insurance. Home equity loans, including term loans and lines of credit, present a slightly higher risk to the Company than 1-4 family first liens, as these loans can be first or second liens on 1-4 family owner occupied residential property, but can have loan-to-value ratios of no greater than 90% of the value of the real estate taken as collateral. The creditworthiness of the borrower is considered, including credit scores and debt-to-income ratios. Installment and other loans’ credit risk are mitigated through prudent underwriting standards, including evaluation of the creditworthiness of the borrower through credit scores and debt-to-income ratios and, if secured, the collateral value of the assets. These loans can be unsecured or secured by assets the value of which may depreciate quickly or may fluctuate, and may present a greater risk to the Company than 1-4 family residential loans. The following table presents the loan portfolio by segment and class, excluding residential LHFS, at September 30, 2018 and December 31, 2017 . (Dollars in thousands) September 30, 2018 December 31, 2017 Commercial real estate: Owner occupied $ 119,056 $ 116,811 Non-owner occupied 249,529 244,491 Multi-family 75,314 53,634 Non-owner occupied residential 84,598 77,980 Acquisition and development: 1-4 family residential construction 10,217 11,730 Commercial and land development 33,735 19,251 Commercial and industrial 127,011 115,663 Municipal 39,429 42,065 Residential mortgage: First lien 167,178 162,509 Home equity - term 10,513 11,784 Home equity - lines of credit 135,578 132,192 Installment and other loans 32,783 21,902 $ 1,084,941 $ 1,010,012 In order to monitor ongoing risk associated with its loan portfolio and specific loans within the segments, management uses an internal grading system. The first several rating categories, representing the lowest risk to the Bank, are combined and given a “Pass” rating. Management generally follows regulatory definitions in assigning criticized ratings to loans, including "Special Mention," "Substandard," "Doubtful" or "Loss." The Special Mention category includes loans that have potential weaknesses that may, if not monitored or corrected, weaken the asset or inadequately protect the Bank's position at some future date. These assets pose elevated risk, but their weakness does not yet justify a more severe, or classified rating. Substandard loans are classified as they have a well-defined weakness, or weaknesses that jeopardize liquidation of the debt. These loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Substandard loans include loans that management has determined not to be impaired, as well as loans considered to be impaired. A Doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as Loss is deferred. Loss loans are considered uncollectible, as the borrowers are often in bankruptcy, have suspended debt repayments, or have ceased business operations. Once a loan is classified as Loss, there is little prospect of collecting the loan’s principal or interest and it is charged-off. The Company has a loan review policy and program which is designed to identify and monitor risk in the lending function. The ERM Committee, comprised of executive officers and loan department personnel, is charged with the oversight of overall credit quality and risk exposure of the Company's loan portfolio. This includes the monitoring of the lending activities of all Company personnel with respect to underwriting and processing new loans and the timely follow-up and corrective action for loans showing signs of deterioration in quality. A loan review program provides the Company with an independent review of the loan portfolio on an ongoing basis. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as extended delinquencies, bankruptcy, repossession or death of the borrower occurs, which heightens awareness as to a possible credit event. Internal loan reviews are completed annually on all commercial relationships with a committed loan balance in excess of $500,000 , which includes confirmation of risk rating by an independent credit officer. In addition, all commercial relationships greater than $250,000 rated Substandard, Doubtful or Loss are reviewed quarterly and corresponding risk ratings are reaffirmed by the Company's Problem Loan Committee, with subsequent reporting to the ERM Committee. The following table summarizes the Company’s loan portfolio ratings based on its internal risk rating system at September 30, 2018 and December 31, 2017 . (Dollars in thousands) Pass Special Mention Non-Impaired Substandard Impaired - Substandard Doubtful Total September 30, 2018 Commercial real estate: Owner occupied $ 114,871 $ 1,962 $ 275 $ 1,948 $ 0 $ 119,056 Non-owner occupied 239,429 5,700 4,400 0 0 249,529 Multi-family 68,981 5,468 726 139 0 75,314 Non-owner occupied residential 82,381 744 1,144 329 0 84,598 Acquisition and development: 1-4 family residential construction 10,016 0 0 201 0 10,217 Commercial and land development 33,120 25 590 0 0 33,735 Commercial and industrial 124,819 1,883 0 309 0 127,011 Municipal 39,429 0 0 0 0 39,429 Residential mortgage: First lien 164,247 0 0 2,931 0 167,178 Home equity - term 10,495 0 0 18 0 10,513 Home equity - lines of credit 134,716 77 59 726 0 135,578 Installment and other loans 32,783 0 0 0 0 32,783 $ 1,055,287 $ 15,859 $ 7,194 $ 6,601 $ 0 $ 1,084,941 December 31, 2017 Commercial real estate: Owner occupied $ 113,240 $ 413 $ 1,921 $ 1,237 $ 0 $ 116,811 Non-owner occupied 235,919 0 4,507 4,065 0 244,491 Multi-family 48,603 4,113 753 165 0 53,634 Non-owner occupied residential 76,373 142 1,084 381 0 77,980 Acquisition and development: 1-4 family residential construction 11,238 0 0 492 0 11,730 Commercial and land development 18,635 5 611 0 0 19,251 Commercial and industrial 113,162 2,151 0 350 0 115,663 Municipal 42,065 0 0 0 0 42,065 Residential mortgage: First lien 158,673 0 0 3,836 0 162,509 Home equity - term 11,762 0 0 22 0 11,784 Home equity - lines of credit 131,585 80 60 467 0 132,192 Installment and other loans 21,891 0 0 11 0 21,902 $ 983,146 $ 6,904 $ 8,936 $ 11,026 $ 0 $ 1,010,012 For commercial real estate, acquisition and development and commercial and industrial loans, a loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Generally, loans that are more than 90 days past due are deemed impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed to determine if the loan should be placed on nonaccrual status. Nonaccrual loans in the commercial and commercial real estate portfolios and any TDRs are, by definition, deemed to be impaired. Impairment is measured on a loan-by-loan basis for commercial, construction and restructured loans by either the present value of the expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. A loan is collateral dependent if the repayment of the loan is expected to be provided solely by the underlying collateral. For loans that are deemed to be impaired for extended periods of time, periodic updates on fair values are obtained, which may include updated appraisals. Updated fair values are incorporated into the impairment analysis in the next reporting period. Loan charge-offs, which may include partial charge-offs, are taken on an impaired loan that is collateral dependent if the loan’s carrying balance exceeds its collateral’s appraised value, the loan has been identified as uncollectible, and it is deemed to be a confirmed loss. Typically, impaired loans with a charge-off or partial charge-off will continue to be considered impaired, unless the note is split into two , and management expects the performing note to continue to perform and is adequately secured. The second, or non-performing note, would be charged-off. Generally, an impaired loan with a partial charge-off may continue to have an impairment reserve on it after the partial charge-off, if factors warrant. At September 30, 2018 and December 31, 2017 , nearly all of the Company’s impaired loans’ extent of impairment were measured based on the estimated fair value of the collateral securing the loan, except for TDRs. By definition, TDRs are considered impaired. All restructured loans’ impairment were determined based on discounted cash flows for those loans classified as TDRs and still accruing interest. For real estate loans, collateral generally consists of commercial real estate, but in the case of commercial and industrial loans, it could also consist of accounts receivable, inventory, equipment or other business assets. Commercial and industrial loans may also have real estate collateral. Updated appraisals are generally required every 18 months for classified commercial loans in excess of $250,000 . The “as is" value provided in the appraisal is often used as the fair value of the collateral in determining impairment, unless circumstances, such as subsequent improvements, approvals, or other circumstances dictate that another value provided by the appraiser is more appropriate. Generally, impaired commercial loans secured by real estate, other than performing TDRs, are measured at fair value using certified real estate appraisals that had been completed within the last 18 months . Appraised values are discounted for estimated costs to sell the property and other selling considerations to arrive at the property’s fair value. In those situations in which it is determined an updated appraisal is not required for loans individually evaluated for impairment, fair values are based on one or a combination of approaches. In those situations in which a combination of approaches is considered, the factor that carries the most consideration will be the one management believes is warranted. The approaches are: • Original appraisal – if the original appraisal provides a strong loan-to-value ratio (generally 70% or lower) and, after consideration of market conditions and knowledge of the property and area, it is determined by the Credit Administration staff that there has not been a significant deterioration in the collateral value, the original certified appraised value may be used. Discounts as deemed appropriate for selling costs are factored into the appraised value in arriving at fair value. • Discounted cash flows – in limited cases, discounted cash flows may be used on projects in which the collateral is liquidated to reduce the borrowings outstanding, and is used to validate collateral values derived from other approaches. Collateral on certain impaired loans is not limited to real estate, and may consist of accounts receivable, inventory, equipment or other business assets. Estimated fair values are determined based on borrowers’ financial statements, inventory ledgers, accounts receivable agings or appraisals from individuals with knowledge in the business. Stated balances are generally discounted for the age of the financial information or the quality of the assets. In determining fair value, liquidation discounts are applied to this collateral based on existing loan evaluation policies. The Company distinguishes Substandard loans on both an impaired and nonimpaired basis, as it places less emphasis on a loan’s classification, and increased reliance on whether the loan was performing in accordance with the contractual terms. A Substandard classification does not automatically meet the definition of impaired. Loss potential, while existing in the aggregate amount of Substandard loans, does not have to exist in individual extensions of credit classified Substandard. As a result, the Company’s methodology includes an evaluation of certain accruing commercial real estate, acquisition and development and commercial and industrial loans rated Substandard to be collectively, as opposed to individually, evaluated for impairment. Although the Company believes these loans meet the definition of Substandard, they are generally performing and management has concluded that it is likely we will be able to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Larger groups of smaller balance homogeneous loans are collectively evaluated for impairment. Generally, the Company does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower. The following table summarizes impaired loans by segment and class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required at September 30, 2018 and December 31, 2017 . The recorded investment in loans excludes accrued interest receivable due to insignificance. Related allowances established generally pertain to those loans in which loan forbearance agreements were in the process of being negotiated or updated appraisals were pending, and any partial charge-off will be recorded when final information is received. Impaired Loans with a Specific Allowance Impaired Loans with No Specific Allowance (Dollars in thousands) Recorded Investment (Book Balance) Unpaid Principal Balance (Legal Balance) Related Allowance Recorded Investment (Book Balance) Unpaid Principal Balance (Legal Balance) September 30, 2018 Commercial real estate: Owner occupied $ 0 $ 0 $ 0 $ 1,948 $ 2,602 Multi-family 0 0 0 139 340 Non-owner occupied residential 0 0 0 329 642 Acquisition and development: 1-4 family residential construction 0 0 0 201 201 Commercial and industrial 0 0 0 309 474 Residential mortgage: First lien 853 853 39 2,078 3,497 Home equity - term 0 0 0 18 24 Home equity - lines of credit 0 0 0 726 994 $ 853 $ 853 $ 39 $ 5,748 $ 8,774 December 31, 2017 Commercial real estate: Owner occupied $ 0 $ 0 $ 0 $ 1,237 $ 2,479 Non-owner occupied 0 0 0 4,065 4,856 Multi-family 0 0 0 165 352 Non-owner occupied residential 0 0 0 381 669 Acquisition and development: 1-4 family residential construction 0 0 0 492 492 Commercial and industrial 0 0 0 350 495 Residential mortgage: First lien 872 872 42 2,964 3,706 Home equity - term 0 0 0 22 27 Home equity - lines of credit 0 0 0 467 628 Installment and other loans 9 9 9 2 33 $ 881 $ 881 $ 51 $ 10,145 $ 13,737 The following table summarize the average recorded investment in impaired loans and related recognized interest income for the three and nine months ended September 30, 2018 and 2017 . 2018 2017 (Dollars in thousands) Average Impaired Balance Interest Income Recognized Average Impaired Balance Interest Income Recognized Three Months Ended September 30, Commercial real estate: Owner-occupied $ 1,569 $ 1 $ 882 $ 0 Multi-family 144 0 178 0 Non-owner occupied residential 336 0 409 0 Acquisition and development: 1-4 family residential construction 201 0 123 0 Commercial and industrial 316 0 378 0 Residential mortgage: First lien 2,900 15 3,812 23 Home equity – term 18 0 34 0 Home equity - lines of credit 692 0 469 0 Installment and other loans 1 0 15 0 $ 6,177 $ 16 $ 6,300 $ 23 Nine Months Ended September 30, Commercial real estate: Owner occupied $ 1,372 $ 2 $ 984 $ 5 Non-owner occupied 2,395 0 184 0 Multi-family 152 0 186 0 Non-owner occupied residential 355 0 427 0 Acquisition and development: 1-4 family residential construction 235 0 41 0 Commercial and industrial 330 0 431 0 Residential mortgage: First lien 3,312 44 4,118 44 Home equity - term 20 0 69 0 Home equity - lines of credit 621 1 498 1 Installment and other loans 6 0 9 0 $ 8,798 $ 47 $ 6,947 $ 50 The following table presents impaired loans that are TDRs, with the recorded investment at September 30, 2018 and December 31, 2017 . September 30, 2018 December 31, 2017 (Dollars in thousands) Number of Contracts Recorded Investment Number of Contracts Recorded Investment Accruing: Commercial real estate: Owner occupied 1 $ 39 1 $ 52 Residential mortgage: First lien 11 1,079 11 1,102 Home equity - lines of credit 1 25 1 29 13 1,143 13 1,183 Nonaccruing: Commercial real estate: Owner occupied 1 40 1 57 Residential mortgage: First lien 8 673 8 715 Installment and other loans 0 0 1 3 9 713 10 775 22 $ 1,856 23 $ 1,958 There were no loans modified in the three months ended September 30, 2018 or 2017. The following table presents the number of loans modified, and their pre-modification and post-modification investment balances for the nine months ended September 30, 2018 and 2017. 2018 2017 (Dollars in thousands) Number of Contracts Pre- Modification Recorded Investment Post Modification Recorded Investment Number of Contracts Pre- Modification Recorded Investment Post Modification Recorded Investment Nine Months Ended September 30, Commercial real estate: Owner occupied 0 $ 0 $ 0 2 $ 119 $ 119 There were no restructured loans for the three or nine months ended September 30, 2018 and 2017 and that were modified as TDRs within the previous 12 months which were in payment default. The loans presented in the table above were considered TDRs as a result of the Company agreeing to below market interest rates given the risk of the transaction; allowing the loan to remain on interest only status; or a reduction in interest rates, in order to give the borrowers an opportunity to improve their cash flows. For TDRs in default of their modified terms, impairment is generally determined on a collateral dependent approach, except for accruing residential mortgage TDRs, which are generally on the discounted cash flow approach. Certain loans modified during a period may no longer be outstanding at the end of the period if the loan was paid off. No additional commitments have been made to borrowers whose loans are considered TDRs. Management further monitors the performance and credit quality of the loan portfolio by analyzing the length of time a portfolio is past due, by aggregating loans based on its delinquencies. The following table presents the classes of loan portfolio summarized by aging categories of performing loans and nonaccrual loans at September 30, 2018 and December 31, 2017 . Days Past Due (Dollars in thousands) Current 30-59 60-89 90+ (still accruing) Total Past Due Non- Accrual Total Loans September 30, 2018 Commercial real estate: Owner occupied $ 117,147 $ 0 $ 0 $ 0 $ 0 $ 1,909 $ 119,056 Non-owner occupied 249,529 0 0 0 0 0 249,529 Multi-family 75,175 0 0 0 0 139 75,314 Non-owner occupied residential 84,099 170 0 0 170 329 84,598 Acquisition and development: 1-4 family residential construction 10,016 0 0 0 0 201 10,217 Commercial and land development 33,690 45 0 0 45 0 33,735 Commercial and industrial 126,602 100 0 0 100 309 127,011 Municipal 39,429 0 0 0 0 0 39,429 Residential mortgage: First lien 164,763 403 160 0 563 1,852 167,178 Home equity - term 10,483 12 0 0 12 18 10,513 Home equity - lines of credit 134,166 451 260 0 711 701 135,578 Installment and other loans 32,703 74 6 0 80 0 32,783 $ 1,077,802 $ 1,255 $ 426 $ 0 $ 1,681 $ 5,458 $ 1,084,941 December 31, 2017 Commercial real estate: Owner occupied $ 115,605 $ 4 $ 17 $ 0 $ 21 $ 1,185 $ 116,811 Non-owner occupied 240,426 0 0 0 0 4,065 244,491 Multi-family 53,469 0 0 0 0 165 53,634 Non-owner occupied residential 77,454 145 0 0 145 381 77,980 Acquisition and development: 1-4 family residential construction 11,238 0 0 0 0 492 11,730 Commercial and land development 19,226 25 0 0 25 0 19,251 Commercial and industrial 115,312 1 0 0 1 350 115,663 Municipal 42,065 0 0 0 0 0 42,065 Residential mortgage: First lien 155,387 3,333 1,055 0 4,388 2,734 162,509 Home equity - term 11,753 9 0 0 9 22 11,784 Home equity - lines of credit 131,208 474 72 0 546 438 132,192 Installment and other loans 21,749 141 1 0 142 11 21,902 $ 994,892 $ 4,132 $ 1,145 $ 0 $ 5,277 $ 9,843 $ 1,010,012 The Company maintains its ALL at a level management believes adequate for probable incurred credit losses. The ALL is established and maintained through a provision for loan losses charged to earnings. Quarterly, management assesses the adequacy of the ALL utilizing a defined methodology which considers specific credit evaluation of impaired loans as discussed above, past loan loss historical experience, and qualitative factors. Management believes its approach properly addresses relevant accounting guidance for loans individually identified as impaired and for loans collectively evaluated for impairment, and other bank regulatory guidance. In connection with its quarterly evaluation of the adequacy of the ALL, management reviews its methodology to determine if it properly addresses the current risk in the loan portfolio. For each loan class, general allowances based on quantitative factors, principally historical loss trends, are provided for loans that are collectively evaluated for impairment. An adjustment to historical loss factors may be incorporated for delinquency and other potential risk not elsewhere defined within the ALL methodology. In addition to this quantitative analysis, adjustments to the ALL requirements are allocated on loans collectively evaluated for impairment based on additional qualitative factors, including: Nature and Volume of Loans – including loan growth in the current and subsequent quarters based on the Company’s targeted growth and strategic plan, coupled with the types of loans booked based on risk management and credit culture; the number of exceptions to loan policy; and supervisory loan to value exceptions. Concentrations of Credit and Changes within Credit Concentrations – including the composition of the Company’s overall portfolio makeup and management's evaluation related to concentration risk management and the inherent risk associated with the concentrations identified. Underwriting Standards and Recovery Practices – including changes to underwriting standards and perceived impact on anticipated losses; trends in the number of exceptions to loan policy; supervisory loan to value exceptions; and administration of loan recovery practices. Delinquency Trends – including delinquency percentages noted in the portfolio relative to economic conditions; severity of the delinquencies; and whether the ratios are trending upwards or downwards. Classified Loans Trends – including internal loan ratings of the portfolio; severity of the ratings; whether the loan segment’s ratings show a more favorable or less favorable trend; and underlying market conditions and impact on the collateral values securing the loans. Experience, Ability and Depth of Management/Lending staff – including the years’ experience of senior and middle management and the lending staff; turnover of the staff; and instances of repeat criticisms of ratings. Quality of Loan Review – including the years of experience of the loan review staff; in-house versus outsourced provider of review; turnover of staff and the perceived quality of their work in relation to other external information. National and Local Economic Conditions – including trends in the consumer price index, unemployment rates, the housing price index, housing statistics compared to the prior year, bankruptcy rates, regulatory and legal environment risks and competition. The following table presents the activity in the ALL for the three and nine months ended September 30, 2018 and 2017 . Commercial Consumer (Dollars in thousands) Commercial Real Estate Acquisition and Development Commercial and Industrial Municipal Total Residential Mortgage Installment and Other Total Unallocated Total Three Months Ended September 30, 2018 Balance, beginning of period $ 6,680 $ 720 $ 1,598 $ 80 $ 9,078 $ 3,544 $ 230 $ 3,774 $ 585 $ 13,437 Provision for loan losses 194 19 (38 ) (1 ) 174 (45 ) 146 101 (75 ) 200 Charge-offs (17 ) 0 0 0 (17 ) (62 ) (80 ) (142 ) 0 (159 ) Recoveries 200 0 1 0 201 102 31 133 0 334 Balance, end of period $ 7,057 $ 739 $ 1,561 $ 79 $ 9,436 $ 3,539 $ 327 $ 3,866 $ 510 $ 13,812 September 30, 2017 Balance, beginning of period $ 6,777 $ 579 $ 1,291 $ 117 $ 8,764 $ 3,386 $ 131 $ 3,517 $ 470 $ 12,751 Provision for loan losses (102 ) (90 ) 191 (12 ) (13 ) (12 ) 74 62 51 100 Charge-offs 0 0 (30 ) 0 (30 ) (54 ) (51 ) (105 ) 0 (135 ) Recoveries 0 1 1 0 2 41 12 53 0 55 Balance, end of period $ 6,675 $ 490 $ 1,453 $ 105 $ 8,723 $ 3,361 $ 166 $ 3,527 $ 521 $ 12,771 Nine Months Ended September 30, 2018 Balance, beginning of period $ 6,763 $ 417 $ 1,446 $ 84 $ 8,710 $ 3,400 $ 211 $ 3,611 $ 475 $ 12,796 Provision for loan losses (217 ) 319 114 (5 ) 211 157 197 354 35 600 Charge-offs (17 ) 0 0 0 (17 ) (148 ) (198 ) (346 ) 0 (363 ) Recoveries 528 3 1 0 532 130 117 247 0 779 Balance, end of period $ 7,057 $ 739 $ 1,561 $ 79 $ 9,436 $ 3,539 $ 327 $ 3,866 $ 510 $ 13,812 September 30, 2017 Balance, beginning of period $ 7,530 $ 580 $ 1,074 $ 54 $ 9,238 $ 2,979 $ 144 $ 3,123 $ 414 $ 12,775 Provision for loan losses (840 ) (93 ) 458 51 (424 ) 429 88 517 107 200 Charge-offs (45 ) 0 (85 ) 0 (130 ) (105 ) (107 ) (212 ) 0 (342 ) Recoveries 30 3 6 0 39 58 41 99 0 138 Balance, end of period $ 6,675 $ 490 $ 1,453 $ 105 $ 8,723 $ 3,361 $ 166 $ 3,527 $ 521 $ 12,771 The following table summarizes the ending loan balance individually evaluated for impairment based upon loan segment, as well as the related ALL loss allocation for each at September 30, 2018 and December 31, 2017 : Commercial Consumer (Dollars in thousands) Commercial Real Estate Acquisition and Development Commercial and Industrial Municipal Total Residential Mortgage Installment and Other Total Unallocated Total September 30, 2018 Loans allocated by: Individually evaluated for impairment $ 2,416 $ 201 $ 309 $ 0 $ 2,926 $ 3,675 $ 0 $ 3,675 $ 0 $ 6,601 Collectively evaluated for impairment 526,081 43,751 126,702 39,429 735,963 309,594 32,783 342,377 0 1,078,340 $ 528,497 $ 43,952 $ 127,011 $ 39,429 $ 738,889 $ 313,269 $ 32,783 $ 346,052 $ 0 $ 1,084,941 ALL allocated by: Individually evaluated for impairment $ 0 $ 0 $ 0 $ 0 $ 0 $ 39 $ 0 $ 39 $ 0 $ 39 Collectively evaluated for impairment 7,057 739 1,561 79 9,436 3,500 327 3,827 510 13,773 $ 7,057 $ 739 $ 1,561 $ 79 $ 9,436 $ 3,539 $ 327 $ 3,866 $ 510 $ 13,812 December 31, 2017 Loans allocated by: Individually evaluated for impairment $ 5,848 $ 492 $ 350 $ 0 $ 6,690 $ 4,325 $ 11 $ 4,336 $ 0 $ 11,026 Collectively evaluated for impairment 487,068 30,489 115,313 42,065 674,935 302,160 21,891 324,051 0 998,986 $ 492,916 $ 30,981 $ 115,663 $ 42,065 $ 681,625 $ 306,485 $ 21,902 $ 328,387 $ 0 $ 1,010,012 ALL allocated by: Individually evaluated for impairment $ 0 $ 0 $ 0 $ 0 $ 0 $ 42 $ 9 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company files income tax returns in the U.S. federal jurisdiction, the Commonwealth of Pennsylvania and the State of Maryland. The Company is no longer subject to tax examination by tax authorities for years before 2015 . The following table summarizes income tax expense for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands) 2018 2017 2018 2017 Current expense $ 406 $ 892 $ 754 $ 1,087 Deferred expense 238 (516 ) 756 229 Income tax expense $ 644 $ 376 $ 1,510 $ 1,316 Income tax expense includes $6,000 and $181,000 related to net securities gains for the three months ended September 30, 2018 and 2017 , and $187,000 and $405,000 related to net security gains for the nine months ended September 30, 2018 and 2017 . The base federal statutory rate used in determining the estimated annual effective tax rate for periods ending in 2018 was 21% and for periods ending in 2017 was 34% . The 21% base federal statutory rate became effective for the Company on January 1, 2018, as a result of federal tax reform legislation enacted in December 2017. SEC Staff Accounting Bulletin No. 118, issued in December 2017, provided for a measurement period that should not extend beyond one year from the tax reform legislation's enactment date for companies to complete the accounting under ASC 740, Income Taxes. In measuring the impact of the tax reform legislation on our net deferred tax asset in 2017, we estimated the income in 2017 for our limited partnership investments in affordable housing real estate partnerships and interest income on nonperforming loans. Adjustment between our estimates and the actual amounts determined during the measurement period did not have a material impact to our consolidated financial statements. The following table summarizes deferred tax assets and liabilities at September 30, 2018 and December 31, 2017 . (Dollars in thousands) September 30, December 31, Deferred tax assets: Allowance for loan losses $ 3,135 $ 2,919 Deferred compensation 354 355 Retirement and salary continuation plans 1,386 1,301 Share-based compensation 667 597 Off-balance sheet reserves 193 207 Nonaccrual loan interest 344 258 Net unrealized losses on securities available for sale 1,454 0 Goodwill 25 39 Bonus accrual 354 25 Low-income housing credit carryforward 847 2,313 Other 321 390 Total deferred tax assets 9,080 8,404 Deferred tax liabilities: Depreciation 414 488 Net unrealized gains on securities available for sale 0 757 Mortgage servicing rights 574 536 Purchase accounting adjustments 238 251 Other 149 122 Total deferred tax liabilities 1,375 2,154 Net deferred tax asset, included in Other Assets $ 7,705 $ 6,250 The provision for income taxes differs from that computed by applying statutory rates to income before income taxes primarily due to the effects of tax-exempt income, non-deductible expenses and tax credits. At September 30, 2018 , the Company had low-income housing credit carryforwards that expire through 2037 . |
SHARE-BASED COMPENSATION PLANS
SHARE-BASED COMPENSATION PLANS | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION PLANS | SHARE-BASED COMPENSATION PLANS The Company maintains share-based compensation plans under the shareholder-approved 2011 Plan. The purpose of the share-based compensation plans is to provide officers, employees, and non-employee members of the Board of Directors of the Company with additional incentive to further the success of the Company. At the 2018 Annual Meeting of Shareholders on May 1, 2018, the Company's shareholders approved an increase in the number of shares available for issuance to 881,920 shares and extended the term of the 2011 Plan to May 31, 2028, subject to any future extensions. At September 30, 2018 , 881,920 shares of the common stock of the Company were reserved to be issued and 525,814 shares were available to be issued. The 2011 Plan incentive awards may consist of grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, deferred stock units and performance shares. All employees of the Company and its present or future subsidiaries, and members of the Board of Directors of the Company or any subsidiary of the Company, are eligible to participate in the 2011 Plan. The 2011 Plan allows for the Compensation Committee of the Board of Directors to determine the type of incentive to be awarded, its term, manner of exercise, vesting of awards and restrictions on shares. Generally, awards are nonqualified under the IRC, unless the awards are deemed to be incentive awards to employees at the Compensation Committee’s discretion. The following table presents a summary of nonvested restricted shares activity for the nine months ended September 30, 2018 . Shares Weighted Average Grant Date Fair Value Nonvested shares, beginning of year 268,411 $ 18.18 Granted 87,317 25.64 Forfeited (30,854 ) 16.88 Vested (40,424 ) 18.67 Nonvested shares, at period end 284,450 $ 20.34 The following table presents restricted shares compensation expense, with tax benefit information, and fair value of shares vested, for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands) 2018 2017 2018 2017 Restricted share award expense $ 179 $ 371 $ 1,099 $ 1,031 Restricted share award tax benefit 38 126 231 351 Fair value of shares vested 0 25 1,056 288 The unrecognized compensation expense related to the share awards totaled $2,644,000 at September 30, 2018 and $2,035,000 at December 31, 2017 . The unrecognized compensation expense at September 30, 2018 is expected to be recognized over a weighted-average period of 1.8 years . The following table presents a summary of outstanding stock options activity for the nine months ended September 30, 2018 . Shares Weighted Average Exercise Price Outstanding, beginning of year 59,583 $ 25.89 Forfeited (2,235 ) 28.02 Expired (15,214 ) 30.11 Exercised (1,150 ) 21.14 Options outstanding and exercisable, at period end 40,984 $ 24.34 The exercise price of each option equals the market price of the Company’s stock on the grant date. An option’s maximum term is ten years . All options are fully vested upon issuance. The following table presents information pertaining to options outstanding and exercisable at September 30, 2018 . Range of Exercise Prices Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price $21.14 - $24.99 31,519 1.65 $ 21.51 $25.00 - $34.99 2,792 1.50 25.76 $35.00 - $37.59 6,673 0.81 37.10 $21.14 - $37.59 40,984 1.50 $ 24.34 Outstanding and exercisable options had an intrinsic value of $74,000 at September 30, 2018 and $127,000 at December 31, 2017 . The Company maintains an employee stock purchase plan to provide employees of the Company an opportunity to purchase Company common stock. Eligible employees may purchase shares in an amount that does not exceed 10% of their annual salary, at the lower of 95% of the fair market value of the shares on the semi-annual offering date or related purchase date. The Company reserved 350,000 shares of its common stock to be issued under the employee stock purchase plan. At September 30, 2018 , 173,465 shares were available to be issued. The following table presents information for the employee stock purchase plan for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands except share information) 2018 2017 2018 2017 Shares purchased 2,951 3,518 5,907 6,632 Weighted average price of shares purchased $ 22.61 $ 21.33 $ 23.04 $ 20.57 Compensation expense recognized 10 11 14 17 Tax benefits 2 4 3 6 The Company issues new shares or treasury shares, depending on market conditions, in its share-based compensation plans. |
SHAREHOLDERS_ EQUITY AND REGULA
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL | SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under the Basel Committee on Banking Supervision's capital guidelines for U.S. Banks ("Basel III rules"), an entity must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The required capital conservation buffer was 1.25% for 2017, is 1.875% for 2018 and will be 2.50% for 2019 under phase-in rules. The Company and the Bank have elected not to include net unrealized gain or loss on available for sale securities in computing regulatory capital. Effective with the third quarter of 2018, the FRB raised the consolidated asset limit on small bank holding companies from $1,000,000,000 to $3,000,000,000 and a company with assets under the revised limits is not subject to the FRB consolidated capital rules. A company with consolidated assets under the revised limit may continue to file reports that include capital amounts and ratios. The Company has elected to continue to file those reports. Management believes, at September 30, 2018 and December 31, 2017 , that the Company and the Bank met all capital adequacy requirements to which they are subject. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At September 30, 2018 , the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's category. The following table presents capital amounts and ratios at September 30, 2018 and December 31, 2017 . Actual For Capital Adequacy Purposes (includes applicable capital conservation buffer) To Be Well Capitalized Under Prompt Corrective Action Provisions (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio September 30, 2018 Total Capital to risk weighted assets Consolidated $ 163,976 13.4 % $ 120,679 9.875 % n/a n/a Bank 161,352 13.2 % 120,544 9.875 % $ 122,070 10.0 % Tier 1 Capital to risk weighted assets Consolidated 149,288 12.2 % 96,238 7.875 % n/a n/a Bank 146,664 12.0 % 96,130 7.875 % 97,656 8.0 % Common Tier 1 (CET1) to risk weighted assets Consolidated 149,288 12.2 % 77,907 6.375 % n/a n/a Bank 146,664 12.0 % 77,820 6.375 % 79,345 6.5 % Tier 1 Capital to average assets Consolidated 149,288 8.9 % 67,406 4.0 % n/a n/a Bank 146,664 8.7 % 67,595 4.0 % 84,493 5.0 % December 31, 2017 Total Capital to risk weighted assets Consolidated $ 152,386 13.3 % $ 106,040 9.250 % n/a n/a Bank 148,997 13.0 % 105,747 9.250 % $ 114,321 10.0 % Tier 1 Capital to risk weighted assets Consolidated 138,774 12.1 % 83,112 7.250 % n/a n/a Bank 135,385 11.8 % 82,883 7.250 % 91,457 8.0 % Common Tier 1 (CET1) to risk weighted assets Consolidated 138,774 12.1 % 65,917 5.750 % n/a n/a Bank 135,385 11.8 % 65,734 5.750 % 74,308 6.5 % Tier 1 Capital to average assets Consolidated 138,774 8.9 % 62,042 4.0 % n/a n/a Bank 135,385 8.7 % 62,066 4.0 % 77,582 5.0 % In September 2015, the Board of Directors of the Company authorized a share repurchase program under which the Company may repurchase up to 5% of the Company's outstanding shares of common stock, or approximately 416,000 shares, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act of 1934, as amended. When and if appropriate, repurchases may be made in open market or privately negotiated transactions, depending on market conditions, regulatory requirements and other corporate considerations, as determined by management. Share repurchases may not occur and may be discontinued at any time. At September 30, 2018 , 82,725 shares had been repurchased under the program at a total cost of $1,438,000 , or $17.38 per share. On October 17, 2018 , the Board declared a cash dividend of $0.13 per common share, which was paid on November 5, 2018 to shareholders of record at October 29, 2018 . |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The following table presents earnings per share for the three and nine months ended September 30, 2018 and 2017 . Three Months Ended September 30, Nine Months Ended September 30, (In thousands, except per share information) 2018 2017 2018 2017 Net income $ 4,016 $ 2,774 $ 11,653 $ 8,084 Weighted average shares outstanding - basic 8,099 8,075 8,092 8,068 Dilutive effect of share-based compensation 172 164 182 147 Weighted average shares outstanding - diluted 8,271 8,239 8,274 8,215 Per share information: Basic earnings per share $ 0.50 $ 0.34 $ 1.44 $ 1.00 Diluted earnings per share 0.49 0.34 1.41 0.98 Average outstanding stock options of 21,000 and 30,000 for the three months ended September 30, 2018 and 2017 , and of 23,000 and 42,000 for the nine months ended September 30, 2018 and 2017 , were not included in the computation of earnings per share because the effect was antidilutive, due to the exercise price exceeding the average market price. The dilutive effect of share-based compensation in each period above relates principally to restricted stock awards. |
FINANCIAL INSTRUMENTS WITH OFF-
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK | FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit and financial guarantees written is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The following table presents these contract, or notional, amounts. Contract or Notional Amount (Dollars in thousands) September 30, 2018 December 31, 2017 Commitments to fund: Home equity lines of credit $ 155,916 $ 139,281 1-4 family residential construction loans 12,876 11,420 Commercial real estate, construction and land development loans 27,419 44,592 Commercial, industrial and other loans 149,420 145,394 Standby letters of credit 17,061 12,273 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer. Collateral varies but may include accounts receivable, inventory, equipment, residential real estate, and income-producing commercial properties. Standby letters of credit and financial guarantees written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company holds collateral supporting those commitments when deemed necessary by management. The liability, at September 30, 2018 and December 31, 2017 , for guarantees under standby letters of credit issued was not material. The Company currently maintains a reserve, based on historical loss experience of the related loan class, for off-balance sheet credit exposures that currently are not funded, in other liabilities. This reserve totaled $876,000 and $816,000 at September 30, 2018 and December 31, 2017 . The following table presents the net amount expensed (recovered) for the off-balance sheet credit exposures reserve for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands) 2018 2017 2018 2017 Off-balance sheet credit exposures expense (recovery) $ (89 ) $ 76 $ 60 $ 121 The Company sells loans to the FHLB of Chicago as part of its MPF Program. Under the terms of the MPF Program, there is limited recourse back to the Company for loans that do not perform in accordance with the terms of the loan agreement. Each loan that is sold under the program is “credit enhanced” such that the individual loan’s rating is raised to a minimum “BBB,” as determined by the FHLB of Chicago. Outstanding loans sold under the MPF Program totaled $29,585,000 and $31,977,000 at September 30, 2018 and December 31, 2017 , with limited recourse back to the Company on these loans of $1,085,000 and $1,135,000 , respectively. Many of the loans sold under the MPF Program have primary mortgage insurance, which reduces the Company’s overall exposure. The net amount expensed or recovered for the Company's estimate of losses under its recourse exposure for loans foreclosed, or in the process of foreclosure, is recorded in other expenses. The following table presents the net amount expensed (recovered) for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands) 2018 2017 2018 2017 MPF program recourse loss expense (recovery) $ 20 $ 45 $ (135 ) $ 19 |
FAIR VALUE
FAIR VALUE | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | FAIR VALUE Fair value is the exchange price that would be received for an asset or paid to transfer a liability (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. Certain financial instruments and all non-financial instruments are excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are: Level 1 – quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access at the measurement date. Level 2 – significant other observable inputs other than Level 1 prices such as prices for similar assets and liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 – at least one significant unobservable input that reflects a company's own assumptions about the assumptions that market participants would use in pricing an asset or liability. In instances in which multiple levels of inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The Company used the following methods and significant assumptions to estimate fair value for instruments measured on a recurring basis: Securities Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, securities are classified within Level 2 and fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flow. Level 2 securities include U.S. agency securities, mortgage-backed securities, obligations of states and political subdivisions and certain corporate, asset backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. All of the Company’s securities are classified as available for sale. The Company had no fair value liabilities measured on a recurring basis at September 30, 2018 and December 31, 2017 . The following table summarizes assets measured at fair value on a recurring basis at September 30, 2018 and December 31, 2017 . (Dollars in Thousands) Level 1 Level 2 Level 3 Total Fair Value Measurements September 30, 2018 AFS Securities: States and political subdivisions $ 0 $ 159,420 $ 0 $ 159,420 GSE residential CMOs 0 108,654 0 108,654 Private label residential CMOs 0 312 0 312 Private label commercial CMOs 0 61,210 0 61,210 Asset-backed and other 0 159,760 0 159,760 Totals $ 0 $ 489,356 $ 0 $ 489,356 December 31, 2017 AFS Securities: States and political subdivisions $ 0 $ 159,458 $ 0 $ 159,458 GSE residential MBSs 0 49,530 0 49,530 GSE residential CMOs 0 111,119 0 111,119 Private label residential CMOs 0 1,003 0 1,003 Private label commercial CMOs 0 7,653 0 7,653 Asset-backed and other 0 86,545 0 86,545 Totals $ 0 $ 415,308 $ 0 $ 415,308 Certain financial assets are measured at fair value on a nonrecurring basis. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets. The Company used the following methods and significant assumptions to estimate fair value for these financial assets. Impaired Loans Loans are designated as impaired when, in the judgment of management and based on current information and events, it is probable that all amounts due, according to the contractual terms of the loan agreement, will not be collected. The measurement of loss associated with impaired loans for all loan classes can be based on either the observable market price of the loan, the fair value of the collateral, or discounted cash flows based on a market rate of interest for performing TDRs. For collateral-dependent loans, fair value is measured based on the value of the collateral securing the loan, less estimated costs to sell. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The value of the real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company using observable market data (Level 2). However, if the collateral is a house or building in the process of construction, or if management adjusts the appraisal value, then the fair value is considered Level 3. The value of business equipment is based upon an outside appraisal, if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivable collateral are based on financial statement balances or aging reports (Level 3). Impaired loans with an allocation to the ALL are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for loan losses on the consolidated statements of income. Specific allocations to the ALL or partial charge-offs totaled $929,000 and $2,266,000 at September 30, 2018 and December 31, 2017 . The following table presents changes in the fair value for impaired loans still held at September 30, considered in the determination of the provision for loan losses, for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands) 2018 2017 2018 2017 Changes in fair value of impaired loans still held $ 63 $ 43 $ 147 $ 41 Foreclosed Real Estate OREO property acquired through foreclosure is initially recorded at the fair value of the property at the transfer date less estimated selling cost. Subsequently, OREO is carried at the lower of its carrying value or the fair value less estimated selling cost. Fair value is usually determined based upon an independent third-party appraisal of the property or occasionally upon a recent sales offer. Specific charges to value OREO at the lower of cost or fair value on properties held at September 30, 2018 and December 31, 2017 totaled $11,000 and $0 . The following table summarizes changes in the fair value of OREO for properties still held at September 30, charged to real estate expenses, for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands) 2018 2017 2018 2017 Changes in fair value of OREO still held $ 11 $ 0 $ 11 $ 0 The following table summarizes assets measured at fair value on a nonrecurring basis at September 30, 2018 and December 31, 2017 . (Dollars in thousands) Level 1 Level 2 Level 3 Total Fair Value Measurements September 30, 2018 Impaired Loans Commercial real estate: Owner occupied $ 0 $ 0 $ 1,136 $ 1,136 Multi-family 0 0 139 139 Non-owner occupied residential 0 0 297 297 Commercial and industrial 0 0 40 40 Residential mortgage: First lien 0 0 1,239 1,239 Home equity - lines of credit 0 0 415 415 Total impaired loans $ 0 $ 0 $ 3,266 $ 3,266 December 31, 2017 Impaired Loans Commercial real estate: Owner occupied $ 0 $ 0 $ 430 $ 430 Non-owner occupied 0 0 4,066 4,066 Multi-family 0 0 165 165 Non-owner occupied residential 0 0 344 344 Commercial and industrial 0 0 53 53 Residential mortgage: First lien 0 0 1,951 1,951 Home equity - lines of credit 0 0 161 161 Installment and other loans 0 0 3 3 Total impaired loans $ 0 $ 0 $ 7,173 $ 7,173 The following table presents additional qualitative information about assets measured on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value. (Dollars in thousands) Fair Value Estimate Valuation Techniques Unobservable Input Range September 30, 2018 Impaired loans $ 3,266 Appraisal of Management adjustments on appraisals for property type and recent activity 5% - 75% discount - Management adjustments for liquidation expenses 6% - 20% discount December 31, 2017 Impaired loans $ 7,173 Appraisal of Management adjustments on appraisals for property type and recent activity 7% - 75% discount - Management adjustments for liquidation expenses 0% - 20% discount Fair values of financial instruments The following table presents carrying amounts and estimated fair values of the Company’s financial instruments at September 30, 2018 and December 31, 2017 : (Dollars in thousands) Carrying Amount Fair Value Level 1 Level 2 Level 3 September 30, 2018 Financial Assets Cash and due from banks $ 21,892 $ 21,892 $ 21,892 $ 0 $ 0 Interest-bearing deposits with banks 19,125 19,125 19,125 0 0 Restricted investments in bank stocks 9,337 n/a n/a n/a n/a Securities available for sale 489,356 489,356 0 489,356 0 Loans held for sale 4,765 4,883 0 4,883 0 Loans, net of allowance for loan losses 1,071,129 1,059,620 0 0 1,059,620 Accrued interest receivable 5,393 5,393 0 2,480 2,913 Financial Liabilities Deposits 1,429,170 1,426,373 0 1,426,373 0 Short-term borrowings 45,353 45,353 0 45,353 0 Long-term debt 83,543 82,790 0 82,790 0 Accrued interest payable 588 588 0 588 0 Off-balance sheet instruments 0 0 0 0 0 December 31, 2017 Financial Assets Cash and due from banks $ 21,734 $ 21,734 $ 21,734 $ 0 $ 0 Interest-bearing deposits with banks 8,073 8,073 8,073 0 0 Restricted investments in bank stocks 9,997 n/a n/a n/a n/a Securities available for sale 415,308 415,308 0 415,308 0 Loans held for sale 6,089 6,272 0 6,272 0 Loans, net of allowance for loan losses 997,216 994,617 0 0 994,617 Accrued interest receivable 5,048 5,048 0 2,580 2,468 Financial Liabilities Deposits 1,219,515 1,213,288 0 1,213,288 0 Short-term borrowings 93,576 93,576 0 93,576 0 Long-term debt 83,815 83,949 0 83,949 0 Accrued interest payable 495 495 0 495 0 Off-balance sheet instruments 0 0 0 0 0 The methods utilized to estimate the fair value of financial instruments at December 31, 2017 did not necessarily represent an exit price. In accordance with our adoption of ASU 2016-01 in 2018, the methods utilized to measure the fair value of financial instruments at September 30, 2018 represent an approximation of exit price; however, an actual exit price may differ. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | REVENUE FROM CONTRACTS WITH CUSTOMERS All of the Company's revenue from contracts with customers within the scope of ASC 606 is recognized within noninterest income on the consolidated statements of income. Consistent with ASC 606, noninterest income covered by this guidance is recognized as services are transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Service Charges on Deposit Accounts - The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer's account balance. Interchange Income - The Company earns interchange fees from debit/credit cardholder transactions conducted through the MasterCard payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. Interchange income is presented net of cardholder rewards. Wealth Management and Investment Advisory Income (Gross) - The Company earns wealth management and investment brokerage fees from its contracts with trust and wealth management customers to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Company provides the contracted services and are generally assessed based on a tiered scale of the market value of assets under management. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e., the trade date. Other related services provided included financial planning services and the fees the Company earns, which are based on a fixed fee schedule, are recognized when the services are rendered. Services are generally billed in arrears and a receivable is recorded until fees are paid. Investment Brokerage Income (Net) - The Company earns fees from investment management and brokerage services provided to its customers through a third-party service provider. The Company receives commissions from the third-party service provider and recognizes income on a weekly basis based upon customer activity. Because the Company acts as an agent in arranging the relationship between the customer and the third-party service provider and does not control the services rendered to the customers, investment brokerage income is presented net of related costs. Gains/Losses on Sales of OREO - The Company records a gain or loss on the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. If the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present. At September 30, 2018 and December 31, 2017 , the Company had receivables from customers totaling $678,000 and $682,000 . The following table presents our noninterest income disaggregated by revenue source for the three and nine months ended September 30, 2018 and 2017 . Three Months Ended Nine Months Ended (Dollars in thousands) September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 Noninterest income Service charges on deposits $ 926 $ 876 $ 2,599 $ 2,531 Trust and investment management income 1,668 1,551 5,037 4,620 Brokerage income 455 424 1,514 1,409 Merchant and bankcard fees (interchange income) 681 647 2,047 1,950 Revenue from contracts with customers 3,730 3,498 11,197 10,510 Other service charges 409 119 1,189 440 Mortgage banking activities 735 797 2,049 2,113 Income from life insurance 533 275 1,101 814 Other income 56 34 272 147 Investment securities gains 29 533 891 1,190 Total noninterest income $ 5,492 $ 5,256 $ 16,699 $ 15,214 |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES The nature of the Company’s business generates a certain amount of litigation involving matters arising out of the ordinary course of business. Except as described below, in the opinion of management, there are no legal proceedings that might have a material effect on the results of operations, liquidity, or the financial position of the Company at this time. On May 25, 2012, SEPTA filed a putative class action complaint in the U.S. District Court for the Middle District of Pennsylvania against the Company, the Bank and certain current and former directors and executive officers (collectively, the “Defendants”). The complaint alleges, among other things, that (i) in connection with the Company’s Registration Statement on Form S-3 dated February 23, 2010 and its Prospectus Supplement dated March 23, 2010, and (ii) during the purported class period of March 24, 2010 through October 27, 2011, the Company issued materially false and misleading statements regarding the Company’s lending practices and financial results, including misleading statements concerning the stringent nature of the Bank’s credit practices and underwriting standards, the quality of its loan portfolio, and the intended use of the proceeds from the Company’s March 2010 public offering of common stock. The complaint asserts claims under Sections 11, 12(a) and 15 of the Securities Act of 1933, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and seeks class certification, unspecified money damages, interest, costs, fees and equitable or injunctive relief. Under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), motions for appointment of Lead Plaintiff in this case were due by July 24, 2012. SEPTA was the sole movant and the Court appointed SEPTA Lead Plaintiff on August 20, 2012. Pursuant to the PSLRA and the Court’s September 27, 2012 Order, SEPTA was given until October 26, 2012 to file an amended complaint and the Defendants until December 7, 2012 to file a motion to dismiss the amended complaint. SEPTA’s opposition to the Defendant’s motion to dismiss was originally due January 11, 2013. Under the PSLRA, discovery and all other proceedings in the case were stayed pending the Court’s ruling on the motion to dismiss. The September 27, 2012 Order specified that if the motion to dismiss were denied, the Court would schedule a conference to address discovery and the filing of a motion for class certification. On October 26, 2012, SEPTA filed an unopposed motion for enlargement of time to file its amended complaint in order to permit the parties and new defendants to be named in the amended complaint time to discuss plaintiff’s claims and defendants’ defenses. On October 26, 2012, the Court granted SEPTA’s motion, mooting its September 27, 2012 scheduling Order, and requiring SEPTA to file its amended complaint on or before January 16, 2013 or otherwise advise the Court of circumstances that require a further enlargement of time. On January 14, 2013, the Court granted SEPTA’s second unopposed motion for enlargement of time to file an amended complaint on or before March 22, 2013. On March 4, 2013, SEPTA filed an amended complaint. The amended complaint expands the list of defendants in the action to include the Company’s independent registered public accounting firm and the underwriters of the Company’s March 2010 public offering of common stock. In addition, among other things, the amended complaint extends the purported 1934 Exchange Act class period from March 15, 2010 through April 5, 2012. Pursuant to the Court’s March 28, 2013 Second Scheduling Order, on May 28, 2013, all defendants filed their motions to dismiss the amended complaint, and on July 22, 2013, SEPTA filed its “omnibus” opposition to all of the defendants’ motions to dismiss. On August 23, 2013, all defendants filed reply briefs in further support of their motions to dismiss. On December 5, 2013, the Court ordered oral argument on the Orrstown Defendants’ motion to dismiss the amended complaint to be heard on February 7, 2014. Oral argument on the pending motions to dismiss SEPTA’s amended complaint was held on April 29, 2014. The Second Scheduling Order stayed all discovery in the case pending the outcome of the motions to dismiss, and informed the parties that, if required, a telephonic conference to address discovery and the filing of SEPTA’s motion for class certification would be scheduled after the Court’s ruling on the motions to dismiss. On April 10, 2015, pursuant to Court order, all parties filed supplemental briefs addressing the impact of the U.S. Supreme Court’s March 24, 2015 decision in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund on defendants’ motions to dismiss the amended complaint. On June 22, 2015, in a 96-page Memorandum, the Court dismissed without prejudice SEPTA’s amended complaint against all defendants, finding that SEPTA failed to state a claim under either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. The Court ordered that, within 30 days, SEPTA either seek leave to amend its amended complaint, accompanied by the proposed amendment, or file a notice of its intention to stand on the amended complaint. On July 22, 2015, SEPTA filed a motion for leave to amend under Local Rule 15.1, and attached a copy of its proposed second amended complaint to its motion. Many of the allegations of the proposed second amended complaint are essentially the same or similar to the allegations of the dismissed amended complaint. The proposed second amended complaint also alleges that the Orrstown Defendants did not publicly disclose certain alleged failures of internal controls over loan underwriting, risk management, and financial reporting during the period 2009 to 2012, in violation of the federal securities laws. On February 8, 2016, the Court granted SEPTA’s motion for leave to amend and SEPTA filed its second amended complaint that same day. On February 25, 2016, the Court issued a scheduling Order directing: all defendants to file any motions to dismiss by March 18, 2016; SEPTA to file an omnibus opposition to defendants’ motions to dismiss by April 8, 2016; and all defendants to file reply briefs in support of their motions to dismiss by April 22, 2016. Defendants timely filed their motions to dismiss the second amended complaint and the parties filed their briefs in accordance with the Court-ordered schedule, above. The February 25, 2016 Order stays all discovery and other deadlines in the case (including the filing of SEPTA’s motion for class certification) pending the outcome of the motions to dismiss. The allegations of SEPTA’s proposed second amended complaint disclosed the existence of a confidential, non-public, fact-finding inquiry regarding the Company being conducted by the SEC. As disclosed in the Company’s Form 8-K filed on September 27, 2016, on that date the Company entered into a settlement agreement with the SEC resolving the investigation of accounting and related matters at the Company for the periods ended June 30, 2010, to December 31, 2011. As part of the settlement of the SEC’s administrative proceedings and pursuant to the cease-and-desist order, without admitting or denying the SEC’s findings, the Company, its Chief Executive Officer, its former Chief Financial Officer, its former Executive Vice President and Chief Credit Officer, and its Chief Accounting Officer, agreed to pay civil money penalties to the SEC. The Company agreed to pay a civil money penalty of $1,000,000 . The Company had previously established a reserve for that amount which was expensed in the second fiscal quarter of 2016. In the settlement agreement with the SEC, the Company also agreed to cease and desist from committing or causing any violations and any future violations of Securities Act Sections 17(a)(2) and 17(a)(3) and Exchange Act Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B), and Rules 12b-20, 13a-1 and 13a-13 promulgated thereunder. On September 27, 2016, the Orrstown Defendants filed with the Court a Notice of Subsequent Event in Further Support of their Motion to Dismiss the Second Amended Complaint, regarding the settlement with the SEC. The Notice attached a copy of the SEC’s cease-and-desist order and briefly described what the Company believed were the most salient terms of the neither-admit-nor-deny settlement. On September 29, 2016, SEPTA filed a Response to the Notice, in which SEPTA argued that the settlement with the SEC did not support dismissal of the second amended complaint. On December 7, 2016, the Court issued an Order and Memorandum granting in part and denying in part defendants’ motions to dismiss SEPTA’s second amended complaint. The Court granted the motions to dismiss the Securities Act claims against all defendants, and granted the motions to dismiss the Exchange Act Section 10(b) and Rule 10b-5 claims against all defendants except Orrstown Financial Services, Inc., Orrstown Bank, Thomas R. Quinn, Jr., Bradley S. Everly, and Jeffrey W. Embly. The Court also denied the motions to dismiss the Exchange Act Section 20(a) claims against Quinn, Everly, and Embly. On January 31, 2017, the Court entered a Case Management Order establishing the schedule for the litigation and, on August 15, 2017, it entered a revised Order that, among other things, set the following deadlines: all fact discovery closes on March 1, 2018, and SEPTA’s motion for class certification is due the same day; expert merits discovery closes May 30, 2018; summary judgment motions are due by June 26, 2018; the mandatory pretrial and settlement conference is set for December 11, 2018; and trial is scheduled to begin on January 7, 2019. Document discovery has begun in the case and is ongoing. To date, one deposition, of a non-party, has been concluded. On December 15, 2017, the Orrstown Defendants and SEPTA exchanged expert reports in opposition to and in support of class certification, respectively. On January 15, 2018, the parties exchanged expert rebuttal reports. SEPTA’s motion for class certification was due March 1, 2018, with the Orrstown Defendants’ opposition due April 2, 2018, and SEPTA’s reply due April 23, 2018. On February 9, 2018, SEPTA filed a Status Report and Request for a Telephonic Status Conference asking the Court to convene a conference to discuss the status of discovery in the case and possible revisions to the case schedule. On February 12, 2018, the Orrstown Defendants filed their status report to provide the Court with a summary of document discovery in the case to date. On February 27, 2018, SEPTA filed an unopposed motion for a continuance of the existing case deadlines pending a status conference with the Court or the issuance of a revised case schedule. On February 28, 2018, the Court issued an Order continuing all case management deadlines until further order of the Court. On March 27, 2018, the Court held a telephonic status conference with the parties to discuss outstanding discovery issues and case deadlines. On May 2, 2018, the parties filed a joint status report. On May 10, 2018, the Court held a follow-up telephonic status conference at which the parties reported on the progress of discovery to date. On August 9, 2018, SEPTA filed a motion to compel the production of Confidential Supervisory Information (CSI) of non-parties the Board of Governors of the Federal Reserve System (FRB) and the Pennsylvania Department of Banking and Securities, in the possession of Orrstown and third parties. On August 23, 2018, the Orrstown Defendants filed a response to the motion to compel. On August 30, 2018, the FRB filed an unopposed motion to intervene in the Action for the purpose of opposing SEPTA’s motion to compel, and on September 27, 2018, the FRB filed its brief in opposition to SEPTA’s motion. On October 11, 2018, SEPTA filed its reply brief in support of its motion to compel. The motion is pending before the Court. Party and non-party document discovery in the case continues. To date, one additional non-party deposition has been requested. The Company believes that the allegations of SEPTA’s second amended complaint are without merit and intends to vigorously defend itself against those claims. It is not possible at this time to estimate reasonably possible losses, or even a range of reasonably possible losses, in connection with the litigation. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations – Orrstown Financial Services, Inc. and subsidiaries is a financial holding company that operates Orrstown Bank, a commercial bank with banking and financial advisory offices in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York Counties, Pennsylvania, and in Washington County, Maryland and Wheatland Advisors, Inc., a registered investment advisor non-bank subsidiary, headquartered in Lancaster, Pennsylvania. The Company operates in the community banking segment and engages in lending activities, including commercial, residential, commercial mortgages, construction, municipal, and various forms of consumer lending, and deposit services, including checking, savings, time, and money market deposits. The Company also provides fiduciary services, investment advisory, insurance and brokerage services. The Company and the Bank are subject to regulation by certain federal and state agencies and undergo periodic examinations by such regulatory authorities. |
Basis of Presentation | Basis of Presentation – The accompanying condensed consolidated financial statements include the accounts of Orrstown Financial Services, Inc. and its wholly owned subsidiaries, the Bank and Wheatland. The Company has prepared these unaudited condensed consolidated financial statements in accordance with GAAP for interim financial information, SEC rules that permit reduced disclosure for interim periods, and Article 10 of Regulation S-X. In the opinion of management, all adjustments (all of which are of a normal recurring nature) that are necessary for a fair statement are reflected in the unaudited condensed consolidated financial statements. The December 31, 2017 consolidated balance sheet information contained in this Quarterly Report on Form 10-Q was derived from the 2017 audited consolidated financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 . Operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 . All significant intercompany transactions and accounts have been eliminated. Certain reclassifications have been made to prior year amounts to conform with current year classifications. The Company's management has evaluated all activity of the Company and concluded that subsequent events are properly reflected in the Company's consolidated financial statements and notes as required by GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change include the determination of the ALL and income taxes. |
Concentration of Credit Risk | Concentration of Credit Risk – The Company grants commercial, residential, construction, municipal, and various forms of consumer lending to customers primarily in its market area of Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry, and York Counties, Pennsylvania, and in Washington County, Maryland. Therefore the Company's exposure to credit risk is significantly affected by changes in the economy in those areas. Although the Company maintains a diversified loan portfolio, a significant portion of its customers’ ability to honor their contracts is dependent upon economic sectors for commercial real estate, including office space, retail strip centers, sales finance, sub-dividers and developers, and multi-family, hospitality, and residential building operators. Management evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if collateral is deemed necessary by the Company upon the extension of credit, is based on management’s credit evaluation of the customer. Collateral held varies, but generally includes real estate and equipment. |
Cash and Cash Equivalents | Cash and Cash Equivalents – Cash and cash equivalents include cash, balances due from banks, federal funds sold and interest-bearing deposits due on demand, all of which have original maturities of 90 days or less. Net cash flows are reported for customer loan and deposit transactions, loans held for sale, redemption (purchases) of restricted investments in bank stocks, and short-term borrowings. |
Restricted Investments in Bank Stocks | Restricted Investments in Bank Stocks – Restricted investments in bank stocks consist of Federal Reserve Bank of Philadelphia stock, FHLB of Pittsburgh stock and Atlantic Community Bankers Bank stock. Federal law requires a member institution of the district Federal Reserve Bank and FHLB to hold stock according to predetermined formulas. Atlantic Community Bankers Bank requires its correspondent banking institutions to hold stock as a condition of membership. The restricted investment in bank stocks is carried at cost. Quarterly, management evaluates the bank stocks for impairment based on assessment of the ultimate recoverability of cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of cost is influenced by criteria such as operating performance, liquidity, funding and capital positions, stock repurchase history, dividend history and impact of legislative and regulatory changes. |
Securities | Securities – The Company typically classifies debt securities as available for sale on the date of purchase. At September 30, 2018 and December 31, 2017 , the Company had no held to maturity or trading securities. AFS securities are reported at fair value. Interest income and dividends are recognized in interest income on an accrual basis. Purchase premiums and discounts on debt securities are amortized to interest income using the interest method over the terms of the securities and approximate the level yield method. Changes in unrealized gains and losses, net of related deferred taxes, for AFS securities are recorded in AOCI. Realized gains and losses on securities are recorded on the trade date using the specific identification method and are included in noninterest income. AFS securities include investments that management intends to use as part of its asset/liability management strategy. Securities may be sold in response to changes in interest rates, changes in prepayment rates and other factors. The Company does not have the intent to sell any of its AFS securities that are in an unrealized loss position and it is more likely than not that the Company will not be required to sell these securities before recovery of their amortized cost. Management evaluates securities for OTTI on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components: OTTI related to other factors, which is recognized in OCI, and the remaining OTTI, which is recognized in earnings. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The Company’s securities are exposed to various risks, such as interest rate risk, market risk, and credit risk. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible that changes in risks in the near term would materially affect investment assets reported in the consolidated financial statements. |
Loans Held for Sale | Loans Held for Sale – Loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value. Gains and losses on loan sales (sales proceeds minus carrying value) are recorded in noninterest income. |
Loans | Loans – The Company grants commercial loans; residential, commercial and construction mortgage loans; and various forms of consumer loans to its customers located principally in south central Pennsylvania and northern Maryland. The ability of the Company’s debtors to honor their contracts is dependent largely upon the real estate and general economic conditions in this area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the ALL, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and amortized as a yield adjustment over the respective term of the loan. For purchased loans that are not deemed impaired at the acquisition date, premiums and discounts are amortized or accreted as adjustments to interest income using the effective yield method. For all classes of loans, the accrual of interest income on loans, including impaired loans, ceases when principal or interest is past due 90 days or more or immediately if, in the opinion of management, full collection is unlikely. Interest will continue to accrue on loans past due 90 days or more if the collateral is adequate to cover principal and interest, and the loan is in the process of collection. Interest accrued, but not collected, at the date of placement on nonaccrual status, is reversed and charged against current interest income, unless fully collateralized. Subsequent payments received are either applied to the outstanding principal balance or recorded as interest income, depending upon management’s assessment of the ultimate collectability of principal. Loans are returned to accrual status, for all loan classes, when all the principal and interest amounts contractually due are brought current, the loan has performed in accordance with the contractual terms of the note for a reasonable period of time, generally six months , and the ultimate collectability of the total contractual principal and interest is reasonably assured. Past due status is based on contractual terms of the loan. Loans, the terms of which are modified, are classified as TDRs if a concession was granted in connection with the modification, for legal or economic reasons, related to the debtor’s financial difficulties. Concessions granted under a TDR typically involve a temporary deferral of scheduled loan payments, an extension of a loan’s stated maturity date, a temporary reduction in interest rates, or granting of an interest rate below market rates given the risk of the transaction. If a modification occurs while the loan is on accruing status, it will continue to accrue interest under the modified terms. Nonaccrual TDRs may be restored to accrual status if scheduled principal and interest payments, under the modified terms, are current for six months after modification, and the borrower continues to demonstrate its ability to meet the modified terms. TDRs are evaluated individually for impairment on a quarterly basis including monitoring of performance according to their modified terms. |
Allowance for Loan Losses | Allowance for Loan Losses – The ALL is evaluated on at least a quarterly basis, as losses are estimated to be probable and incurred, and, if deemed necessary, is increased through a provision for loan losses charged to earnings. Loan losses are charged against the ALL when management determines that all or a portion of the loan is uncollectible. Recoveries on previously charged-off loans are credited to the ALL when received. The ALL is allocated to loan portfolio classes on a quarterly basis, but the entire balance is available to cover losses from any of the portfolio classes when those losses are confirmed. Management uses internal policies and bank regulatory guidance in periodically evaluating loans for collectability and incorporates historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. See Note 4, Loans and Allowance for Loan Losses, for additional information. |
Loan Commitments and Related Financial Instruments | Loan Commitments and Related Financial Instruments – Financial instruments include off-balance sheet credit commitments issued to meet customer financing needs, such as commitments to make loans and commercial letters of credit. These financial instruments are recorded when they are funded. The face amount represents the exposure to loss, before considering customer collateral or ability to repay. The Company maintains a reserve for probable losses on off-balance sheet commitments which is included in Other Liabilities. |
Loans Serviced | Loans Serviced – The Bank administers secondary market mortgage programs available through the FHLB and the Federal National Mortgage Association and offers residential mortgage products and services to customers. The Bank originates single-family residential mortgage loans for immediate sale in the secondary market and retains the servicing of those loans. |
Transfers of Financial Assets | Transfers of Financial Assets – Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. |
Cash Surrender Value of Life Insurance | Cash Surrender Value of Life Insurance – The Company has purchased life insurance policies on certain employees. Life insurance is recorded at the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. |
Premises and Equipment | Premises and Equipment – Buildings, improvements, equipment, furniture and fixtures are carried at cost less accumulated depreciation and amortization. Land is carried at cost. Depreciation and amortization has been provided generally on the straight-line method and is computed over the estimated useful lives of the various assets as follows: buildings and improvements, including leasehold improvements – 10 to 40 years; and furniture and equipment – 3 to 15 years. Leasehold improvements are amortized over the shorter of the lease term or the indicated life. Repairs and maintenance are charged to operations as incurred, while major additions and improvements are capitalized. Gain or loss on retirement or disposal of individual assets is recorded as income or expense in the period of retirement or disposal. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets – Goodwill is calculated as the purchase premium, if any, after adjusting for the fair value of net assets acquired in purchase transactions. Goodwill is not amortized but is reviewed for potential impairment on at least an annual basis, with testing between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit. Other intangible assets represent purchased assets that can be distinguished from goodwill because of contractual or other legal rights. The Company’s other intangible assets have finite lives and are amortized on either the sum of the years digits or straight line bases over their estimated lives, generally 10 years for deposit premiums and 10 to 15 years for customer lists. |
Mortgage Servicing Rights | Mortgage Servicing Rights – The estimated fair value of MSRs related to loans sold and serviced by the Company is recorded as an asset upon the sale of such loans. MSRs are amortized as a reduction to servicing income over the estimated lives of the underlying loans. MSRs are evaluated periodically for impairment by comparing the carrying amount to estimated fair value. Fair value is determined periodically through a discounted cash flows valuation performed by a third party. Significant inputs to the valuation include expected servicing income, net of expense, the discount rate and the expected life of the underlying loans. To the extent the amortized cost of the MSRs exceeds their estimated fair values, a valuation allowance is established for such impairment through a charge against servicing income on the consolidated statements of income. If the Company determines, based on subsequent valuations, that the impairment no longer exists or is reduced, the valuation allowance is reduced through a credit to earnings. |
Foreclosed Real Estate | Foreclosed Real Estate – Real estate acquired through foreclosure or other means is initially recorded at the fair value of the related real estate collateral at the transfer date less estimated selling costs, and subsequently at the lower of its carrying value or fair value less estimated costs to sell. Fair value is usually determined based on an independent third party appraisal of the property or occasionally on a recent sales offer. Costs to maintain foreclosed real estate are expensed as incurred. Costs that significantly improve the value of the properties are capitalized. |
Investments In Real Estate Partnerships | Investments in Real Estate Partnerships – The Company has a 99% limited partner interest in several real estate partnerships in central Pennsylvania. These investments are affordable housing projects, which entitle the Company to tax deductions and credits that expire through 2025. The Company accounts for its investments in affordable housing projects under the proportional amortization method when the criteria are met, which is limited to one investment entered into in 2015. Other investments are accounted for under the equity method of accounting. |
Advertising | Advertising – The Company expenses advertising as incurred. |
Repurchase Agreements | Repurchase Agreements – The Company enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities which are included in short-term borrowings. Under these agreements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets. As a result, these Repurchase Agreements are accounted for as collateralized financing arrangements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability in the Company’s consolidated balance sheets, while the securities underlying the Repurchase Agreements remaining are reflected in AFS securities. The repurchase obligation and underlying securities are not offset or netted. The Company does not enter into reverse Repurchase Agreements, so there is no offsetting to be performed with Repurchase Agreements. The right of setoff for a Repurchase Agreement resembles a secured borrowing, whereby the collateral would be used to settle the fair value of the Repurchase Agreement should the Company be in default (e.g., fail to make an interest payment to the counterparty). For the Repurchase Agreements, the collateral is held by the Company in a segregated custodial account under a third party agreement. Repurchase agreements are secured by GSE MBSs and mature overnight. |
Share Compensation Plans | Share Compensation Plans – The Company has share compensation plans that cover employees and non-employee directors. Compensation expense relating to share-based payment transactions is measured based on the grant date fair value of the share award, including a Black-Scholes model for stock options. Compensation expense for all share awards is calculated and recognized over the employees’ or non-employee directors' service period, generally defined as the vesting period. |
Income Taxes | Income Taxes – Income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of enacted tax law to taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more likely than not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company recognizes interest and penalties, if any, on income taxes as a component of income tax expense. |
Loss Contingencies | Loss Contingencies – Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. |
Treasury Stock | Treasury Stock – Common stock shares repurchased are recorded as treasury stock at cost. |
Earnings Per Share | Earnings Per Share – Basic earnings per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Restricted stock awards are included in weighted average common shares outstanding as they are earned. Diluted earnings per share includes additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by the Company relate solely to outstanding stock options and restricted stock awards and are determined using the treasury stock method. Treasury shares are not deemed outstanding for earnings per share calculations. |
Comprehensive Income | Comprehensive Income – Comprehensive income consists of net income and OCI. OCI is limited to unrealized gains (losses) on securities available for sale for all years presented. Unrealized gains (losses) on securities available for sale, net of tax, was the sole component of AOCI at September 30, 2018 and December 31, 2017 . |
Fair Value | Fair Value – Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 10, Fair Value. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates. |
Segment Reporting | Segment Reporting – The Company operates in one significant segment – Community Banking. The Company’s non-community banking activities, principally related to Wheatland, are insignificant to the consolidated financial statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements - ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 implements a common revenue standard that clarifies the principles for recognizing revenue. The core principle of ASU 2014-09 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 or services. On January 1, 2018, the Company adopted ASU 2014-09 and all subsequent amendments (collectively “ASC 606”). The majority of the Company's revenue comes from interest income, including loans and securities, that are outside the scope of ASC 606. The Company's services that fall within the scope of ASC 606 are presented within noninterest income on the consolidated statements of income and are recognized as revenue as the Company satisfies its obligation to the customer. Services within the scope of ASC 606 include service charges on deposit accounts, income from fiduciary investment management and brokerage activities and interchange fees from service charges on ATM and debit card transactions. ASC 606 did not result in a change to the accounting for any in-scope revenue streams; as such, no cumulative effect adjustment was recorded. ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (viii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. Our adoption of ASU 2016-01 on January 1, 2018, did not have a material effect on our consolidated financial condition or results of operations. In accordance with (iv) above, the Company measured fair value of its loan portfolio at September 30, 2018 using an exit price methodology as indicated in Note 10, Fair Value. ASU 2016-02, Leases (Topic 842). ASU 2016-02 will, among other things, require lessees to recognize a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 will be effective for the Company on January 1, 2019. In July 2018, the FASB issued amendments in ASU 2018-11, which provide a transition election to not restate comparative periods for the effects of applying the new standard. The Company expects to elect this transition election, which permits entities to change the date of initial application to the beginning of the year of adoption and to recognize the effects of applying the new standard as a cumulative-effect adjustment to the opening balance of retained earnings. The Company anticipates that the impact on its consolidated balance sheet will result in an increase in assets and liabilities for its right of use assets and related lease liabilities for those leases that are outstanding at the date of adoption, however, it does not anticipate it will have a material impact on its results of operations. Management is evaluating other effects of this standard on our consolidated financial position and regulatory capital. ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on available for sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be effective on January 1, 2020. The Company is currently evaluating the potential impact of ASU 2016-13 on our consolidated financial statements. In that regard, the Company has formed a cross-functional working group, under the direction of the Chief Financial Officer and the Chief Risk Officer. The working group is comprised of individuals from various functional areas including credit, risk management, finance and information technology. We are currently developing an implementation plan to include, but not limited to, an assessment of processes, portfolio segmentation, model development, system requirements and the identification of data and resource needs. We have selected a third-party vendor solution to assist us in the application of ASU 2016-13. While the Company is currently unable to reasonably estimate the impact of adopting ASU 2016-13, we expect that the impact of adoption will be significantly influenced by the composition, characteristics and quality of the Company's loan and securities portfolios, as well as the prevailing economic conditions and forecasts, at the adoption date. ASU 2016-15, Statement of Cash Flows (Topic 230) - Restricted Cash . ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. On January 1, 2018, the Company adopted ASU 2016-18 with no material impact on our consolidated financial condition or results of operations. ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . ASU 2017-04 simplifies how all entities assess goodwill for impairment by eliminating Step 2 from the goodwill impairment test. As amended, the goodwill impairment test will consist of one step comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. ASU 2017-04 will be effective for the Company on January 1, 2020, with earlier adoption permitted, and is not expected to have a material impact on the Company's consolidated financial statements. ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20). ASU 2017-08 shortens the amortization period of certain callable debt securities held at a premium to the earliest call date unless applicable guidance related to certain pools of securities is applied to consider estimated prepayments. Under prior guidance, entities were generally required to amortize premiums on individual, non-pooled callable debt securities as a yield adjustment over the contractual life of the security. ASU 2017-08 does not change the accounting for callable debt securities held at a discount. ASU 2017-08 will be effective for the Company on January 1, 2019, with early adoption permitted. Management does not anticipate ASU 2017-08 will have a material impact on the Company's consolidated financial statements. ASU 2017-09, Compensation - Stock Compensation (Topic 718). ASU 2017-09 clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under ASU 2017-09, an entity will not apply modification accounting to a share-based payment award if all of the following are the same immediately before and after the change: (i) the award's fair value, (ii) the award's vesting conditions and (iii) the award's classification as an equity or liability instrument. On January 1, 2018, the Company adopted ASU 2017-09 with no material impact on our consolidated financial condition or results of operations. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification , amending certain disclosure requirements. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement and should present a reconciliation of the beginning balance to the ending balance for each period for which a statement of comprehensive income is presented. The disclosure requirements amendment will be effective for the Company with its first interim reporting filing in 2019. The Company expects these changes will result in additional disclosures for the consolidated statement of changes in stockholders' equity and is evaluating any additional impact of these changes on its consolidated financial statements. |
Revenue Recognition | All of the Company's revenue from contracts with customers within the scope of ASC 606 is recognized within noninterest income on the consolidated statements of income. Consistent with ASC 606, noninterest income covered by this guidance is recognized as services are transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Service Charges on Deposit Accounts - The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer's account balance. Interchange Income - The Company earns interchange fees from debit/credit cardholder transactions conducted through the MasterCard payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. Interchange income is presented net of cardholder rewards. Wealth Management and Investment Advisory Income (Gross) - The Company earns wealth management and investment brokerage fees from its contracts with trust and wealth management customers to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Company provides the contracted services and are generally assessed based on a tiered scale of the market value of assets under management. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e., the trade date. Other related services provided included financial planning services and the fees the Company earns, which are based on a fixed fee schedule, are recognized when the services are rendered. Services are generally billed in arrears and a receivable is recorded until fees are paid. Investment Brokerage Income (Net) - The Company earns fees from investment management and brokerage services provided to its customers through a third-party service provider. The Company receives commissions from the third-party service provider and recognizes income on a weekly basis based upon customer activity. Because the Company acts as an agent in arranging the relationship between the customer and the third-party service provider and does not control the services rendered to the customers, investment brokerage income is presented net of related costs. Gains/Losses on Sales of OREO - The Company records a gain or loss on the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. If the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present. |
SECURITIES AVAILABLE FOR SALE (
SECURITIES AVAILABLE FOR SALE (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Amortized Cost and Fair Values of AFS Securities | The following table summarizes amortized cost and fair value of AFS securities at September 30, 2018 and December 31, 2017 , and the corresponding amounts of gross unrealized gains and losses recognized in AOCI. At September 30, 2018 and December 31, 2017 , all investment securities were classified as AFS. (Dollars in thousands) Amortized Cost Gross Unrealized Gross Unrealized Fair Value September 30, 2018 States and political subdivisions $ 161,146 $ 1,251 $ 2,977 $ 159,420 GSE residential CMOs 113,335 39 4,720 108,654 Private label residential CMOs 313 0 1 312 Private label commercial CMOs 61,560 18 368 61,210 Asset-backed and other 159,928 503 671 159,760 Totals $ 496,282 $ 1,811 $ 8,737 $ 489,356 December 31, 2017 States and political subdivisions $ 153,803 $ 6,133 $ 478 $ 159,458 GSE residential MBSs 48,600 930 0 49,530 GSE residential CMOs 113,658 296 2,835 111,119 Private label residential CMOs 999 4 0 1,003 Private label commercial CMOs 7,809 0 156 7,653 Asset-backed and other 86,837 133 425 86,545 Totals $ 411,706 $ 7,496 $ 3,894 $ 415,308 |
Summary of AFS Securities with Unrealized Losses | The following table summarizes AFS securities with unrealized losses at September 30, 2018 and December 31, 2017 , aggregated by major security type and length of time in a continuous unrealized loss position. Less Than 12 Months 12 Months or More Total (Dollars in thousands) # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses September 30, 2018 States and political subdivisions 46 $ 67,649 $ 1,591 5 $ 22,667 $ 1,386 51 $ 90,316 $ 2,977 GSE residential CMOs 4 59,708 1,125 7 46,729 3,595 11 106,437 4,720 Private label residential CMOs 1 312 1 0 0 0 1 312 1 Private label commercial CMOs 5 33,258 70 2 6,597 298 7 39,855 368 Asset-backed and other 4 61,660 274 3 11,426 397 7 73,086 671 Totals 60 $ 222,587 $ 3,061 17 $ 87,419 $ 5,676 77 $ 310,006 $ 8,737 December 31, 2017 States and political subdivisions 7 $ 24,577 $ 473 1 $ 5,585 $ 5 8 $ 30,162 $ 478 GSE residential CMOs 4 25,155 914 5 37,459 1,921 9 62,614 2,835 Private label commercial CMOs 2 7,653 156 0 0 0 2 7,653 156 Asset-backed and other 6 60,006 425 0 0 0 6 60,006 425 Totals 19 $ 117,391 $ 1,968 6 $ 43,044 $ 1,926 25 $ 160,435 $ 3,894 |
Schedule of Amortized Cost and Fair Values of AFS Securities by Contractual Maturity | The following table summarizes amortized cost and fair value of AFS securities at September 30, 2018 by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately. Available for Sale (Dollars in thousands) Amortized Cost Fair Value Due after one year through five years $ 5,066 $ 5,053 Due after five years through ten years 38,129 37,619 Due after ten years 117,951 116,748 CMOs 175,208 170,176 Asset-backed and other 159,928 159,760 $ 496,282 $ 489,356 |
Proceeds From Sale of AFS Securities and Gross Gains and Gross Losses | The following table summarizes proceeds from sales of AFS securities and gross gains and gross losses for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands) 2018 2017 2018 2017 Proceeds from sale of AFS securities $ 25,070 $ 103,666 $ 113,180 $ 162,319 Gross gains 185 670 1,237 1,477 Gross losses 156 137 346 287 |
LOANS AND ALLOWANCE FOR LOAN _2
LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Summary of Loan Portfolio, Excluding Residential Loans Held for Sale, Broken Out by Classes | The following table presents the loan portfolio by segment and class, excluding residential LHFS, at September 30, 2018 and December 31, 2017 . (Dollars in thousands) September 30, 2018 December 31, 2017 Commercial real estate: Owner occupied $ 119,056 $ 116,811 Non-owner occupied 249,529 244,491 Multi-family 75,314 53,634 Non-owner occupied residential 84,598 77,980 Acquisition and development: 1-4 family residential construction 10,217 11,730 Commercial and land development 33,735 19,251 Commercial and industrial 127,011 115,663 Municipal 39,429 42,065 Residential mortgage: First lien 167,178 162,509 Home equity - term 10,513 11,784 Home equity - lines of credit 135,578 132,192 Installment and other loans 32,783 21,902 $ 1,084,941 $ 1,010,012 |
Bank's Ratings Based on its Internal Risk Rating System | The following table summarizes the Company’s loan portfolio ratings based on its internal risk rating system at September 30, 2018 and December 31, 2017 . (Dollars in thousands) Pass Special Mention Non-Impaired Substandard Impaired - Substandard Doubtful Total September 30, 2018 Commercial real estate: Owner occupied $ 114,871 $ 1,962 $ 275 $ 1,948 $ 0 $ 119,056 Non-owner occupied 239,429 5,700 4,400 0 0 249,529 Multi-family 68,981 5,468 726 139 0 75,314 Non-owner occupied residential 82,381 744 1,144 329 0 84,598 Acquisition and development: 1-4 family residential construction 10,016 0 0 201 0 10,217 Commercial and land development 33,120 25 590 0 0 33,735 Commercial and industrial 124,819 1,883 0 309 0 127,011 Municipal 39,429 0 0 0 0 39,429 Residential mortgage: First lien 164,247 0 0 2,931 0 167,178 Home equity - term 10,495 0 0 18 0 10,513 Home equity - lines of credit 134,716 77 59 726 0 135,578 Installment and other loans 32,783 0 0 0 0 32,783 $ 1,055,287 $ 15,859 $ 7,194 $ 6,601 $ 0 $ 1,084,941 December 31, 2017 Commercial real estate: Owner occupied $ 113,240 $ 413 $ 1,921 $ 1,237 $ 0 $ 116,811 Non-owner occupied 235,919 0 4,507 4,065 0 244,491 Multi-family 48,603 4,113 753 165 0 53,634 Non-owner occupied residential 76,373 142 1,084 381 0 77,980 Acquisition and development: 1-4 family residential construction 11,238 0 0 492 0 11,730 Commercial and land development 18,635 5 611 0 0 19,251 Commercial and industrial 113,162 2,151 0 350 0 115,663 Municipal 42,065 0 0 0 0 42,065 Residential mortgage: First lien 158,673 0 0 3,836 0 162,509 Home equity - term 11,762 0 0 22 0 11,784 Home equity - lines of credit 131,585 80 60 467 0 132,192 Installment and other loans 21,891 0 0 11 0 21,902 $ 983,146 $ 6,904 $ 8,936 $ 11,026 $ 0 $ 1,010,012 |
Impaired Loans by Class | The following table summarizes impaired loans by segment and class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required at September 30, 2018 and December 31, 2017 . The recorded investment in loans excludes accrued interest receivable due to insignificance. Related allowances established generally pertain to those loans in which loan forbearance agreements were in the process of being negotiated or updated appraisals were pending, and any partial charge-off will be recorded when final information is received. Impaired Loans with a Specific Allowance Impaired Loans with No Specific Allowance (Dollars in thousands) Recorded Investment (Book Balance) Unpaid Principal Balance (Legal Balance) Related Allowance Recorded Investment (Book Balance) Unpaid Principal Balance (Legal Balance) September 30, 2018 Commercial real estate: Owner occupied $ 0 $ 0 $ 0 $ 1,948 $ 2,602 Multi-family 0 0 0 139 340 Non-owner occupied residential 0 0 0 329 642 Acquisition and development: 1-4 family residential construction 0 0 0 201 201 Commercial and industrial 0 0 0 309 474 Residential mortgage: First lien 853 853 39 2,078 3,497 Home equity - term 0 0 0 18 24 Home equity - lines of credit 0 0 0 726 994 $ 853 $ 853 $ 39 $ 5,748 $ 8,774 December 31, 2017 Commercial real estate: Owner occupied $ 0 $ 0 $ 0 $ 1,237 $ 2,479 Non-owner occupied 0 0 0 4,065 4,856 Multi-family 0 0 0 165 352 Non-owner occupied residential 0 0 0 381 669 Acquisition and development: 1-4 family residential construction 0 0 0 492 492 Commercial and industrial 0 0 0 350 495 Residential mortgage: First lien 872 872 42 2,964 3,706 Home equity - term 0 0 0 22 27 Home equity - lines of credit 0 0 0 467 628 Installment and other loans 9 9 9 2 33 $ 881 $ 881 $ 51 $ 10,145 $ 13,737 |
Average Recorded Investment in Impaired Loans and Related Interest Income | The following table summarize the average recorded investment in impaired loans and related recognized interest income for the three and nine months ended September 30, 2018 and 2017 . 2018 2017 (Dollars in thousands) Average Impaired Balance Interest Income Recognized Average Impaired Balance Interest Income Recognized Three Months Ended September 30, Commercial real estate: Owner-occupied $ 1,569 $ 1 $ 882 $ 0 Multi-family 144 0 178 0 Non-owner occupied residential 336 0 409 0 Acquisition and development: 1-4 family residential construction 201 0 123 0 Commercial and industrial 316 0 378 0 Residential mortgage: First lien 2,900 15 3,812 23 Home equity – term 18 0 34 0 Home equity - lines of credit 692 0 469 0 Installment and other loans 1 0 15 0 $ 6,177 $ 16 $ 6,300 $ 23 Nine Months Ended September 30, Commercial real estate: Owner occupied $ 1,372 $ 2 $ 984 $ 5 Non-owner occupied 2,395 0 184 0 Multi-family 152 0 186 0 Non-owner occupied residential 355 0 427 0 Acquisition and development: 1-4 family residential construction 235 0 41 0 Commercial and industrial 330 0 431 0 Residential mortgage: First lien 3,312 44 4,118 44 Home equity - term 20 0 69 0 Home equity - lines of credit 621 1 498 1 Installment and other loans 6 0 9 0 $ 8,798 $ 47 $ 6,947 $ 50 |
Troubled Debt Restructurings | The following table presents impaired loans that are TDRs, with the recorded investment at September 30, 2018 and December 31, 2017 . September 30, 2018 December 31, 2017 (Dollars in thousands) Number of Contracts Recorded Investment Number of Contracts Recorded Investment Accruing: Commercial real estate: Owner occupied 1 $ 39 1 $ 52 Residential mortgage: First lien 11 1,079 11 1,102 Home equity - lines of credit 1 25 1 29 13 1,143 13 1,183 Nonaccruing: Commercial real estate: Owner occupied 1 40 1 57 Residential mortgage: First lien 8 673 8 715 Installment and other loans 0 0 1 3 9 713 10 775 22 $ 1,856 23 $ 1,958 |
Number of Loans Modified and Their Pre-Modification and Post-Modification Investment Balances | The following table presents the number of loans modified, and their pre-modification and post-modification investment balances for the nine months ended September 30, 2018 and 2017. 2018 2017 (Dollars in thousands) Number of Contracts Pre- Modification Recorded Investment Post Modification Recorded Investment Number of Contracts Pre- Modification Recorded Investment Post Modification Recorded Investment Nine Months Ended September 30, Commercial real estate: Owner occupied 0 $ 0 $ 0 2 $ 119 $ 119 |
Loan Portfolio Summarized by Aging Categories of Performing Loans and Nonaccrual Loans | The following table presents the classes of loan portfolio summarized by aging categories of performing loans and nonaccrual loans at September 30, 2018 and December 31, 2017 . Days Past Due (Dollars in thousands) Current 30-59 60-89 90+ (still accruing) Total Past Due Non- Accrual Total Loans September 30, 2018 Commercial real estate: Owner occupied $ 117,147 $ 0 $ 0 $ 0 $ 0 $ 1,909 $ 119,056 Non-owner occupied 249,529 0 0 0 0 0 249,529 Multi-family 75,175 0 0 0 0 139 75,314 Non-owner occupied residential 84,099 170 0 0 170 329 84,598 Acquisition and development: 1-4 family residential construction 10,016 0 0 0 0 201 10,217 Commercial and land development 33,690 45 0 0 45 0 33,735 Commercial and industrial 126,602 100 0 0 100 309 127,011 Municipal 39,429 0 0 0 0 0 39,429 Residential mortgage: First lien 164,763 403 160 0 563 1,852 167,178 Home equity - term 10,483 12 0 0 12 18 10,513 Home equity - lines of credit 134,166 451 260 0 711 701 135,578 Installment and other loans 32,703 74 6 0 80 0 32,783 $ 1,077,802 $ 1,255 $ 426 $ 0 $ 1,681 $ 5,458 $ 1,084,941 December 31, 2017 Commercial real estate: Owner occupied $ 115,605 $ 4 $ 17 $ 0 $ 21 $ 1,185 $ 116,811 Non-owner occupied 240,426 0 0 0 0 4,065 244,491 Multi-family 53,469 0 0 0 0 165 53,634 Non-owner occupied residential 77,454 145 0 0 145 381 77,980 Acquisition and development: 1-4 family residential construction 11,238 0 0 0 0 492 11,730 Commercial and land development 19,226 25 0 0 25 0 19,251 Commercial and industrial 115,312 1 0 0 1 350 115,663 Municipal 42,065 0 0 0 0 0 42,065 Residential mortgage: First lien 155,387 3,333 1,055 0 4,388 2,734 162,509 Home equity - term 11,753 9 0 0 9 22 11,784 Home equity - lines of credit 131,208 474 72 0 546 438 132,192 Installment and other loans 21,749 141 1 0 142 11 21,902 $ 994,892 $ 4,132 $ 1,145 $ 0 $ 5,277 $ 9,843 $ 1,010,012 |
Activity in Allowance for Loan Losses | The following table presents the activity in the ALL for the three and nine months ended September 30, 2018 and 2017 . Commercial Consumer (Dollars in thousands) Commercial Real Estate Acquisition and Development Commercial and Industrial Municipal Total Residential Mortgage Installment and Other Total Unallocated Total Three Months Ended September 30, 2018 Balance, beginning of period $ 6,680 $ 720 $ 1,598 $ 80 $ 9,078 $ 3,544 $ 230 $ 3,774 $ 585 $ 13,437 Provision for loan losses 194 19 (38 ) (1 ) 174 (45 ) 146 101 (75 ) 200 Charge-offs (17 ) 0 0 0 (17 ) (62 ) (80 ) (142 ) 0 (159 ) Recoveries 200 0 1 0 201 102 31 133 0 334 Balance, end of period $ 7,057 $ 739 $ 1,561 $ 79 $ 9,436 $ 3,539 $ 327 $ 3,866 $ 510 $ 13,812 September 30, 2017 Balance, beginning of period $ 6,777 $ 579 $ 1,291 $ 117 $ 8,764 $ 3,386 $ 131 $ 3,517 $ 470 $ 12,751 Provision for loan losses (102 ) (90 ) 191 (12 ) (13 ) (12 ) 74 62 51 100 Charge-offs 0 0 (30 ) 0 (30 ) (54 ) (51 ) (105 ) 0 (135 ) Recoveries 0 1 1 0 2 41 12 53 0 55 Balance, end of period $ 6,675 $ 490 $ 1,453 $ 105 $ 8,723 $ 3,361 $ 166 $ 3,527 $ 521 $ 12,771 Nine Months Ended September 30, 2018 Balance, beginning of period $ 6,763 $ 417 $ 1,446 $ 84 $ 8,710 $ 3,400 $ 211 $ 3,611 $ 475 $ 12,796 Provision for loan losses (217 ) 319 114 (5 ) 211 157 197 354 35 600 Charge-offs (17 ) 0 0 0 (17 ) (148 ) (198 ) (346 ) 0 (363 ) Recoveries 528 3 1 0 532 130 117 247 0 779 Balance, end of period $ 7,057 $ 739 $ 1,561 $ 79 $ 9,436 $ 3,539 $ 327 $ 3,866 $ 510 $ 13,812 September 30, 2017 Balance, beginning of period $ 7,530 $ 580 $ 1,074 $ 54 $ 9,238 $ 2,979 $ 144 $ 3,123 $ 414 $ 12,775 Provision for loan losses (840 ) (93 ) 458 51 (424 ) 429 88 517 107 200 Charge-offs (45 ) 0 (85 ) 0 (130 ) (105 ) (107 ) (212 ) 0 (342 ) Recoveries 30 3 6 0 39 58 41 99 0 138 Balance, end of period $ 6,675 $ 490 $ 1,453 $ 105 $ 8,723 $ 3,361 $ 166 $ 3,527 $ 521 $ 12,771 |
Summary of Ending Loan Balances Individually Evaluated for Impairment Based on Loan Segment | The following table summarizes the ending loan balance individually evaluated for impairment based upon loan segment, as well as the related ALL loss allocation for each at September 30, 2018 and December 31, 2017 : Commercial Consumer (Dollars in thousands) Commercial Real Estate Acquisition and Development Commercial and Industrial Municipal Total Residential Mortgage Installment and Other Total Unallocated Total September 30, 2018 Loans allocated by: Individually evaluated for impairment $ 2,416 $ 201 $ 309 $ 0 $ 2,926 $ 3,675 $ 0 $ 3,675 $ 0 $ 6,601 Collectively evaluated for impairment 526,081 43,751 126,702 39,429 735,963 309,594 32,783 342,377 0 1,078,340 $ 528,497 $ 43,952 $ 127,011 $ 39,429 $ 738,889 $ 313,269 $ 32,783 $ 346,052 $ 0 $ 1,084,941 ALL allocated by: Individually evaluated for impairment $ 0 $ 0 $ 0 $ 0 $ 0 $ 39 $ 0 $ 39 $ 0 $ 39 Collectively evaluated for impairment 7,057 739 1,561 79 9,436 3,500 327 3,827 510 13,773 $ 7,057 $ 739 $ 1,561 $ 79 $ 9,436 $ 3,539 $ 327 $ 3,866 $ 510 $ 13,812 December 31, 2017 Loans allocated by: Individually evaluated for impairment $ 5,848 $ 492 $ 350 $ 0 $ 6,690 $ 4,325 $ 11 $ 4,336 $ 0 $ 11,026 Collectively evaluated for impairment 487,068 30,489 115,313 42,065 674,935 302,160 21,891 324,051 0 998,986 $ 492,916 $ 30,981 $ 115,663 $ 42,065 $ 681,625 $ 306,485 $ 21,902 $ 328,387 $ 0 $ 1,010,012 ALL allocated by: Individually evaluated for impairment $ 0 $ 0 $ 0 $ 0 $ 0 $ 42 $ 9 $ 51 $ 0 $ 51 Collectively evaluated for impairment 6,763 417 1,446 84 8,710 3,358 202 3,560 475 12,745 $ 6,763 $ 417 $ 1,446 $ 84 $ 8,710 $ 3,400 $ 211 $ 3,611 $ 475 $ 12,796 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Summary of Income Tax Expense | The following table summarizes income tax expense for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands) 2018 2017 2018 2017 Current expense $ 406 $ 892 $ 754 $ 1,087 Deferred expense 238 (516 ) 756 229 Income tax expense $ 644 $ 376 $ 1,510 $ 1,316 |
Summary of Deferred Tax Assets and Liabilities | The following table summarizes deferred tax assets and liabilities at September 30, 2018 and December 31, 2017 . (Dollars in thousands) September 30, December 31, Deferred tax assets: Allowance for loan losses $ 3,135 $ 2,919 Deferred compensation 354 355 Retirement and salary continuation plans 1,386 1,301 Share-based compensation 667 597 Off-balance sheet reserves 193 207 Nonaccrual loan interest 344 258 Net unrealized losses on securities available for sale 1,454 0 Goodwill 25 39 Bonus accrual 354 25 Low-income housing credit carryforward 847 2,313 Other 321 390 Total deferred tax assets 9,080 8,404 Deferred tax liabilities: Depreciation 414 488 Net unrealized gains on securities available for sale 0 757 Mortgage servicing rights 574 536 Purchase accounting adjustments 238 251 Other 149 122 Total deferred tax liabilities 1,375 2,154 Net deferred tax asset, included in Other Assets $ 7,705 $ 6,250 |
SHARE-BASED COMPENSATION PLANS
SHARE-BASED COMPENSATION PLANS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Nonvested Restricted Shares Activity | The following table presents a summary of nonvested restricted shares activity for the nine months ended September 30, 2018 . Shares Weighted Average Grant Date Fair Value Nonvested shares, beginning of year 268,411 $ 18.18 Granted 87,317 25.64 Forfeited (30,854 ) 16.88 Vested (40,424 ) 18.67 Nonvested shares, at period end 284,450 $ 20.34 |
Schedule of Restricted Shares Compensation Expense | The following table presents restricted shares compensation expense, with tax benefit information, and fair value of shares vested, for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands) 2018 2017 2018 2017 Restricted share award expense $ 179 $ 371 $ 1,099 $ 1,031 Restricted share award tax benefit 38 126 231 351 Fair value of shares vested 0 25 1,056 288 |
Summary of Outstanding Stock Options Activity | The following table presents a summary of outstanding stock options activity for the nine months ended September 30, 2018 . Shares Weighted Average Exercise Price Outstanding, beginning of year 59,583 $ 25.89 Forfeited (2,235 ) 28.02 Expired (15,214 ) 30.11 Exercised (1,150 ) 21.14 Options outstanding and exercisable, at period end 40,984 $ 24.34 |
Information Pertaining to Options Outstanding and Exercisable | The following table presents information pertaining to options outstanding and exercisable at September 30, 2018 . Range of Exercise Prices Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price $21.14 - $24.99 31,519 1.65 $ 21.51 $25.00 - $34.99 2,792 1.50 25.76 $35.00 - $37.59 6,673 0.81 37.10 $21.14 - $37.59 40,984 1.50 $ 24.34 |
Schedule of Employee Stock Purchase Plan | The following table presents information for the employee stock purchase plan for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands except share information) 2018 2017 2018 2017 Shares purchased 2,951 3,518 5,907 6,632 Weighted average price of shares purchased $ 22.61 $ 21.33 $ 23.04 $ 20.57 Compensation expense recognized 10 11 14 17 Tax benefits 2 4 3 6 |
SHAREHOLDERS_ EQUITY AND REGU_2
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Capital Amounts and Ratios | The following table presents capital amounts and ratios at September 30, 2018 and December 31, 2017 . Actual For Capital Adequacy Purposes (includes applicable capital conservation buffer) To Be Well Capitalized Under Prompt Corrective Action Provisions (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio September 30, 2018 Total Capital to risk weighted assets Consolidated $ 163,976 13.4 % $ 120,679 9.875 % n/a n/a Bank 161,352 13.2 % 120,544 9.875 % $ 122,070 10.0 % Tier 1 Capital to risk weighted assets Consolidated 149,288 12.2 % 96,238 7.875 % n/a n/a Bank 146,664 12.0 % 96,130 7.875 % 97,656 8.0 % Common Tier 1 (CET1) to risk weighted assets Consolidated 149,288 12.2 % 77,907 6.375 % n/a n/a Bank 146,664 12.0 % 77,820 6.375 % 79,345 6.5 % Tier 1 Capital to average assets Consolidated 149,288 8.9 % 67,406 4.0 % n/a n/a Bank 146,664 8.7 % 67,595 4.0 % 84,493 5.0 % December 31, 2017 Total Capital to risk weighted assets Consolidated $ 152,386 13.3 % $ 106,040 9.250 % n/a n/a Bank 148,997 13.0 % 105,747 9.250 % $ 114,321 10.0 % Tier 1 Capital to risk weighted assets Consolidated 138,774 12.1 % 83,112 7.250 % n/a n/a Bank 135,385 11.8 % 82,883 7.250 % 91,457 8.0 % Common Tier 1 (CET1) to risk weighted assets Consolidated 138,774 12.1 % 65,917 5.750 % n/a n/a Bank 135,385 11.8 % 65,734 5.750 % 74,308 6.5 % Tier 1 Capital to average assets Consolidated 138,774 8.9 % 62,042 4.0 % n/a n/a Bank 135,385 8.7 % 62,066 4.0 % 77,582 5.0 % |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | The following table presents earnings per share for the three and nine months ended September 30, 2018 and 2017 . Three Months Ended September 30, Nine Months Ended September 30, (In thousands, except per share information) 2018 2017 2018 2017 Net income $ 4,016 $ 2,774 $ 11,653 $ 8,084 Weighted average shares outstanding - basic 8,099 8,075 8,092 8,068 Dilutive effect of share-based compensation 172 164 182 147 Weighted average shares outstanding - diluted 8,271 8,239 8,274 8,215 Per share information: Basic earnings per share $ 0.50 $ 0.34 $ 1.44 $ 1.00 Diluted earnings per share 0.49 0.34 1.41 0.98 |
FINANCIAL INSTRUMENTS WITH OF_2
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Commitments and Conditional Obligations, Contract or Notional Amounts | The following table presents these contract, or notional, amounts. Contract or Notional Amount (Dollars in thousands) September 30, 2018 December 31, 2017 Commitments to fund: Home equity lines of credit $ 155,916 $ 139,281 1-4 family residential construction loans 12,876 11,420 Commercial real estate, construction and land development loans 27,419 44,592 Commercial, industrial and other loans 149,420 145,394 Standby letters of credit 17,061 12,273 |
Schedule of Financial Instruments With Off- balance Sheet Risk | The following table presents the net amount expensed (recovered) for the off-balance sheet credit exposures reserve for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands) 2018 2017 2018 2017 Off-balance sheet credit exposures expense (recovery) $ (89 ) $ 76 $ 60 $ 121 |
Schedule of MPF Program Recourse Exposure | The following table presents the net amount expensed (recovered) for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands) 2018 2017 2018 2017 MPF program recourse loss expense (recovery) $ 20 $ 45 $ (135 ) $ 19 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets Measured at Fair Value on Recurring Basis | The following table summarizes assets measured at fair value on a recurring basis at September 30, 2018 and December 31, 2017 . (Dollars in Thousands) Level 1 Level 2 Level 3 Total Fair Value Measurements September 30, 2018 AFS Securities: States and political subdivisions $ 0 $ 159,420 $ 0 $ 159,420 GSE residential CMOs 0 108,654 0 108,654 Private label residential CMOs 0 312 0 312 Private label commercial CMOs 0 61,210 0 61,210 Asset-backed and other 0 159,760 0 159,760 Totals $ 0 $ 489,356 $ 0 $ 489,356 December 31, 2017 AFS Securities: States and political subdivisions $ 0 $ 159,458 $ 0 $ 159,458 GSE residential MBSs 0 49,530 0 49,530 GSE residential CMOs 0 111,119 0 111,119 Private label residential CMOs 0 1,003 0 1,003 Private label commercial CMOs 0 7,653 0 7,653 Asset-backed and other 0 86,545 0 86,545 Totals $ 0 $ 415,308 $ 0 $ 415,308 |
Schedule of Changes in Fair Value of Impaired Loans | The following table presents changes in the fair value for impaired loans still held at September 30, considered in the determination of the provision for loan losses, for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands) 2018 2017 2018 2017 Changes in fair value of impaired loans still held $ 63 $ 43 $ 147 $ 41 |
Schedule of Changes in Fair Value of OREO For Properties Held | The following table summarizes changes in the fair value of OREO for properties still held at September 30, charged to real estate expenses, for the three and nine months ended September 30, 2018 and 2017 . Three months ended September 30, Nine months ended September 30, (Dollars in thousands) 2018 2017 2018 2017 Changes in fair value of OREO still held $ 11 $ 0 $ 11 $ 0 |
Summary of Assets Measured at Fair Value on Nonrecurring Basis | The following table summarizes assets measured at fair value on a nonrecurring basis at September 30, 2018 and December 31, 2017 . (Dollars in thousands) Level 1 Level 2 Level 3 Total Fair Value Measurements September 30, 2018 Impaired Loans Commercial real estate: Owner occupied $ 0 $ 0 $ 1,136 $ 1,136 Multi-family 0 0 139 139 Non-owner occupied residential 0 0 297 297 Commercial and industrial 0 0 40 40 Residential mortgage: First lien 0 0 1,239 1,239 Home equity - lines of credit 0 0 415 415 Total impaired loans $ 0 $ 0 $ 3,266 $ 3,266 December 31, 2017 Impaired Loans Commercial real estate: Owner occupied $ 0 $ 0 $ 430 $ 430 Non-owner occupied 0 0 4,066 4,066 Multi-family 0 0 165 165 Non-owner occupied residential 0 0 344 344 Commercial and industrial 0 0 53 53 Residential mortgage: First lien 0 0 1,951 1,951 Home equity - lines of credit 0 0 161 161 Installment and other loans 0 0 3 3 Total impaired loans $ 0 $ 0 $ 7,173 $ 7,173 |
Summary of Additional Qualitative Information | The following table presents additional qualitative information about assets measured on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value. (Dollars in thousands) Fair Value Estimate Valuation Techniques Unobservable Input Range September 30, 2018 Impaired loans $ 3,266 Appraisal of Management adjustments on appraisals for property type and recent activity 5% - 75% discount - Management adjustments for liquidation expenses 6% - 20% discount December 31, 2017 Impaired loans $ 7,173 Appraisal of Management adjustments on appraisals for property type and recent activity 7% - 75% discount - Management adjustments for liquidation expenses 0% - 20% discount |
Financial Instruments at Estimated Fair Values | The following table presents carrying amounts and estimated fair values of the Company’s financial instruments at September 30, 2018 and December 31, 2017 : (Dollars in thousands) Carrying Amount Fair Value Level 1 Level 2 Level 3 September 30, 2018 Financial Assets Cash and due from banks $ 21,892 $ 21,892 $ 21,892 $ 0 $ 0 Interest-bearing deposits with banks 19,125 19,125 19,125 0 0 Restricted investments in bank stocks 9,337 n/a n/a n/a n/a Securities available for sale 489,356 489,356 0 489,356 0 Loans held for sale 4,765 4,883 0 4,883 0 Loans, net of allowance for loan losses 1,071,129 1,059,620 0 0 1,059,620 Accrued interest receivable 5,393 5,393 0 2,480 2,913 Financial Liabilities Deposits 1,429,170 1,426,373 0 1,426,373 0 Short-term borrowings 45,353 45,353 0 45,353 0 Long-term debt 83,543 82,790 0 82,790 0 Accrued interest payable 588 588 0 588 0 Off-balance sheet instruments 0 0 0 0 0 December 31, 2017 Financial Assets Cash and due from banks $ 21,734 $ 21,734 $ 21,734 $ 0 $ 0 Interest-bearing deposits with banks 8,073 8,073 8,073 0 0 Restricted investments in bank stocks 9,997 n/a n/a n/a n/a Securities available for sale 415,308 415,308 0 415,308 0 Loans held for sale 6,089 6,272 0 6,272 0 Loans, net of allowance for loan losses 997,216 994,617 0 0 994,617 Accrued interest receivable 5,048 5,048 0 2,580 2,468 Financial Liabilities Deposits 1,219,515 1,213,288 0 1,213,288 0 Short-term borrowings 93,576 93,576 0 93,576 0 Long-term debt 83,815 83,949 0 83,949 0 Accrued interest payable 495 495 0 495 0 Off-balance sheet instruments 0 0 0 0 0 |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Noninterest Income Disaggregated by Revenue Source | The following table presents our noninterest income disaggregated by revenue source for the three and nine months ended September 30, 2018 and 2017 . Three Months Ended Nine Months Ended (Dollars in thousands) September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 Noninterest income Service charges on deposits $ 926 $ 876 $ 2,599 $ 2,531 Trust and investment management income 1,668 1,551 5,037 4,620 Brokerage income 455 424 1,514 1,409 Merchant and bankcard fees (interchange income) 681 647 2,047 1,950 Revenue from contracts with customers 3,730 3,498 11,197 10,510 Other service charges 409 119 1,189 440 Mortgage banking activities 735 797 2,049 2,113 Income from life insurance 533 275 1,101 814 Other income 56 34 272 147 Investment securities gains 29 533 891 1,190 Total noninterest income $ 5,492 $ 5,256 $ 16,699 $ 15,214 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | Dec. 31, 2015investment | Dec. 31, 2017USD ($) | |
Accounting Policies [Abstract] | ||||||
Maturity of interest bearing deposits | 90 days | |||||
Evaluation period to return past due loans to accrual status | 6 months | |||||
Balance of loans serviced for others | $ 337,379 | $ 337,379 | $ 334,802 | |||
Finite-Lived Intangible Assets [Line Items] | ||||||
Mortgage servicing rights | 2,931 | 2,931 | 2,897 | |||
Foreclosed real estate | $ 286 | $ 286 | 961 | |||
Percentage of limited partner interest | 99.00% | 99.00% | ||||
Number of investments accounted for under the proportional amortization method | investment | 1 | |||||
Investment in real estate partnership | $ 4,006 | $ 4,006 | 4,416 | |||
Investment in real estate partnerships, proportional amortization method | 1,616 | 1,616 | $ 1,776 | |||
Loss investment in real estate partnership | 81 | $ 81 | 250 | $ 196 | ||
Losses on investments accounted for under the proportional amortization method | 53 | 52 | 160 | 157 | ||
Recognition of federal tax credits | 144 | 253 | 433 | 758 | ||
Advertising expense | $ 83 | $ 138 | $ 209 | $ 455 | ||
Number of significant operating segments | segment | 1 | |||||
Building and Improvements | Minimum | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Plant and equipment, useful life | 10 years | |||||
Building and Improvements | Maximum | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Plant and equipment, useful life | 40 years | |||||
Furniture and Equipment | Minimum | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Plant and equipment, useful life | 3 years | |||||
Furniture and Equipment | Maximum | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Plant and equipment, useful life | 15 years | |||||
Deposit Premium | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Finite lives of intangible assets | 10 years | |||||
Customer Lists | Minimum | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Finite lives of intangible assets | 10 years | |||||
Customer Lists | Maximum | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Finite lives of intangible assets | 15 years |
MERGERS AND ACQUISITIONS (Detai
MERGERS AND ACQUISITIONS (Details) $ / shares in Units, $ in Thousands | Oct. 23, 2018$ / shares | Oct. 01, 2018USD ($)shares | Sep. 30, 2018USD ($)shares | Dec. 31, 2017USD ($) |
Business Acquisition [Line Items] | ||||
Assets of acquiree | $ 1,720,755 | $ 1,558,849 | ||
Loans of acquiree | 1,071,129 | 997,216 | ||
Deposits of acquiree | 1,429,170 | $ 1,219,515 | ||
Mercersburg Financial Corporation | ||||
Business Acquisition [Line Items] | ||||
Assets of acquiree | 184,161 | |||
Loans of acquiree | 147,386 | |||
Deposits of acquiree | 160,947 | |||
Hamilton Bancorp, Inc. | ||||
Business Acquisition [Line Items] | ||||
Assets of acquiree | 502,187 | |||
Loans of acquiree | 374,649 | |||
Deposits of acquiree | $ 388,471 | |||
Shares outstanding (in shares) | shares | 3,416,414 | |||
Subsequent Event | Common Stock | Hamilton Bancorp, Inc. | ||||
Business Acquisition [Line Items] | ||||
Consideration transferred, cash paid per acquiree shares (in usd per share) | $ / shares | $ 4.10 | |||
Acquisition stock exchange ratio | 0.54 | |||
Subsequent Event | Mercersburg Financial Corporation | ||||
Business Acquisition [Line Items] | ||||
Acquisition, transaction value | $ 30,000 | |||
Acquisition, cash paid | $ 4,900 | |||
Subsequent Event | Mercersburg Financial Corporation | Common Stock | ||||
Business Acquisition [Line Items] | ||||
Business acquisition, shares issued (in shares) | shares | 1,052,635 |
SECURITIES AVAILABLE FOR SALE -
SECURITIES AVAILABLE FOR SALE - Amortized Cost and Fair Values of AFS Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 496,282 | $ 411,706 |
Gross Unrealized Gains | 1,811 | 7,496 |
Gross Unrealized Losses | 8,737 | 3,894 |
Fair Value | 489,356 | 415,308 |
States and political subdivisions | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 161,146 | 153,803 |
Gross Unrealized Gains | 1,251 | 6,133 |
Gross Unrealized Losses | 2,977 | 478 |
Fair Value | 159,420 | 159,458 |
GSE residential MBSs | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 48,600 | |
Gross Unrealized Gains | 930 | |
Gross Unrealized Losses | 0 | |
Fair Value | 49,530 | |
GSE residential CMOs | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 113,335 | 113,658 |
Gross Unrealized Gains | 39 | 296 |
Gross Unrealized Losses | 4,720 | 2,835 |
Fair Value | 108,654 | 111,119 |
Private label residential CMOs | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 313 | 999 |
Gross Unrealized Gains | 0 | 4 |
Gross Unrealized Losses | 1 | 0 |
Fair Value | 312 | 1,003 |
Private label commercial CMOs | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 61,560 | 7,809 |
Gross Unrealized Gains | 18 | 0 |
Gross Unrealized Losses | 368 | 156 |
Fair Value | 61,210 | 7,653 |
Asset-backed and other | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 159,928 | 86,837 |
Gross Unrealized Gains | 503 | 133 |
Gross Unrealized Losses | 671 | 425 |
Fair Value | $ 159,760 | $ 86,545 |
SECURITIES AVAILABLE FOR SALE_2
SECURITIES AVAILABLE FOR SALE - Summary of AFS Securities with Unrealized Losses (Details) $ in Thousands | Sep. 30, 2018USD ($)security | Dec. 31, 2017USD ($)security |
Number of Securities | ||
Less Than 12 Months | security | 60 | 19 |
12 Months or More | security | 17 | 6 |
Total | security | 77 | 25 |
Fair Value | ||
Less Than 12 Months | $ 222,587 | $ 117,391 |
12 Months or More | 87,419 | 43,044 |
Total | 310,006 | 160,435 |
Unrealized Losses | ||
Less Than 12 Months | 3,061 | 1,968 |
12 Months or More | 5,676 | 1,926 |
Total | $ 8,737 | $ 3,894 |
States and political subdivisions | ||
Number of Securities | ||
Less Than 12 Months | security | 46 | 7 |
12 Months or More | security | 5 | 1 |
Total | security | 51 | 8 |
Fair Value | ||
Less Than 12 Months | $ 67,649 | $ 24,577 |
12 Months or More | 22,667 | 5,585 |
Total | 90,316 | 30,162 |
Unrealized Losses | ||
Less Than 12 Months | 1,591 | 473 |
12 Months or More | 1,386 | 5 |
Total | $ 2,977 | $ 478 |
GSE residential CMOs | ||
Number of Securities | ||
Less Than 12 Months | security | 4 | 4 |
12 Months or More | security | 7 | 5 |
Total | security | 11 | 9 |
Fair Value | ||
Less Than 12 Months | $ 59,708 | $ 25,155 |
12 Months or More | 46,729 | 37,459 |
Total | 106,437 | 62,614 |
Unrealized Losses | ||
Less Than 12 Months | 1,125 | 914 |
12 Months or More | 3,595 | 1,921 |
Total | $ 4,720 | $ 2,835 |
Private label residential CMOs | ||
Number of Securities | ||
Less Than 12 Months | security | 1 | |
12 Months or More | security | 0 | |
Total | security | 1 | |
Fair Value | ||
Less Than 12 Months | $ 312 | |
12 Months or More | 0 | |
Total | 312 | |
Unrealized Losses | ||
Less Than 12 Months | 1 | |
12 Months or More | 0 | |
Total | $ 1 | |
Private label commercial CMOs | ||
Number of Securities | ||
Less Than 12 Months | security | 5 | 2 |
12 Months or More | security | 2 | 0 |
Total | security | 7 | 2 |
Fair Value | ||
Less Than 12 Months | $ 33,258 | $ 7,653 |
12 Months or More | 6,597 | 0 |
Total | 39,855 | 7,653 |
Unrealized Losses | ||
Less Than 12 Months | 70 | 156 |
12 Months or More | 298 | 0 |
Total | $ 368 | $ 156 |
Asset-backed and other | ||
Number of Securities | ||
Less Than 12 Months | security | 4 | 6 |
12 Months or More | security | 3 | 0 |
Total | security | 7 | 6 |
Fair Value | ||
Less Than 12 Months | $ 61,660 | $ 60,006 |
12 Months or More | 11,426 | 0 |
Total | 73,086 | 60,006 |
Unrealized Losses | ||
Less Than 12 Months | 274 | 425 |
12 Months or More | 397 | 0 |
Total | $ 671 | $ 425 |
SECURITIES AVAILABLE FOR SALE_3
SECURITIES AVAILABLE FOR SALE - Schedule of Amortized Cost and Fair Values of AFS Securities by Contractual Maturity (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Amortized Cost | |
Due after one year through five years | $ 5,066 |
Due after five years through ten years | 38,129 |
Due after ten years | 117,951 |
CMOs | 175,208 |
Asset-backed and other | 159,928 |
Total Amortized Cost | 496,282 |
Fair Value | |
Due after one year through five years | 5,053 |
Due after five years through ten years | 37,619 |
Due after ten years | 116,748 |
CMOs | 170,176 |
Asset-backed and other | 159,760 |
Total Fair Value | $ 489,356 |
SECURITIES AVAILABLE FOR SALE_4
SECURITIES AVAILABLE FOR SALE - Proceeds from Sales of AFS Securities and Gross Gains and Gross Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |||||
Proceeds from sale of AFS securities | $ 25,070 | $ 103,666 | $ 113,180 | $ 162,319 | |
Gross gains | 185 | 670 | 1,237 | 1,477 | |
Gross losses | 156 | $ 137 | 346 | $ 287 | |
Collateral Pledged | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
AFS securities pledged to secure public funds, fair value | $ 297,469 | $ 297,469 | $ 319,907 |
LOANS AND ALLOWANCE FOR LOAN _3
LOANS AND ALLOWANCE FOR LOAN LOSSES - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2018USD ($)note | |
Financing Receivable, Allowance for Credit Losses [Line Items] | |
Amount of loan on which review have been made annually | $ 500,000 |
Amount of loan on which reviews require approval | $ 250,000 |
Loans that are deemed impaired, number of days past due (more than) | 90 days |
Number of notes split | note | 2 |
Appraisals, required period interval | 18 months |
Minimum amount on which annual updated appraisals for classified loans is required | $ 250,000 |
Maximum | |
Financing Receivable, Allowance for Credit Losses [Line Items] | |
Percentage of loan-to-value ratio upon loan origination | 80.00% |
Percentage of loan-to-value ratios of the value of the real estate taken as collateral | 90.00% |
Percentage of strong loan-to-value | 70.00% |
LOANS AND ALLOWANCE FOR LOAN _4
LOANS AND ALLOWANCE FOR LOAN LOSSES - Summary of Loan Portfolio, Excluding Residential Loans Held for Sale, Broken Out by Classes (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans | $ 1,084,941 | $ 1,010,012 |
Commercial real estate | Owner occupied | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans | 119,056 | 116,811 |
Commercial real estate | Non-owner occupied | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans | 249,529 | 244,491 |
Commercial real estate | Multi-family | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans | 75,314 | 53,634 |
Commercial real estate | Non-owner occupied residential | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans | 84,598 | 77,980 |
Acquisition and development | 1-4 family residential construction | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans | 10,217 | 11,730 |
Acquisition and development | Commercial and land development | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans | 33,735 | 19,251 |
Commercial and industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans | 127,011 | 115,663 |
Municipal | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans | 39,429 | 42,065 |
Residential mortgage | First lien | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans | 167,178 | 162,509 |
Residential mortgage | Home equity - term | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans | 10,513 | 11,784 |
Residential mortgage | Home equity - lines of credit | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans | 135,578 | 132,192 |
Installment and other loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans | $ 32,783 | $ 21,902 |
LOANS AND ALLOWANCE FOR LOAN _5
LOANS AND ALLOWANCE FOR LOAN LOSSES - Company's Loan Portfolio Ratings Based on its Internal Risk Rating System (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | $ 1,084,941 | $ 1,010,012 |
Commercial real estate | Owner-occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 119,056 | 116,811 |
Commercial real estate | Non-owner occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 249,529 | 244,491 |
Commercial real estate | Multi-family | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 75,314 | 53,634 |
Commercial real estate | Non-owner occupied residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 84,598 | 77,980 |
Acquisition and development | 1-4 family residential construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 10,217 | 11,730 |
Acquisition and development | Commercial and land development | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 33,735 | 19,251 |
Commercial and industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 127,011 | 115,663 |
Municipal | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 39,429 | 42,065 |
Residential mortgage | First lien | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 167,178 | 162,509 |
Residential mortgage | Home equity - term | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 10,513 | 11,784 |
Residential mortgage | Home equity - lines of credit | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 135,578 | 132,192 |
Installment and other loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 32,783 | 21,902 |
Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 1,055,287 | 983,146 |
Pass | Commercial real estate | Owner-occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 114,871 | 113,240 |
Pass | Commercial real estate | Non-owner occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 239,429 | 235,919 |
Pass | Commercial real estate | Multi-family | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 68,981 | 48,603 |
Pass | Commercial real estate | Non-owner occupied residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 82,381 | 76,373 |
Pass | Acquisition and development | 1-4 family residential construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 10,016 | 11,238 |
Pass | Acquisition and development | Commercial and land development | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 33,120 | 18,635 |
Pass | Commercial and industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 124,819 | 113,162 |
Pass | Municipal | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 39,429 | 42,065 |
Pass | Residential mortgage | First lien | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 164,247 | 158,673 |
Pass | Residential mortgage | Home equity - term | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 10,495 | 11,762 |
Pass | Residential mortgage | Home equity - lines of credit | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 134,716 | 131,585 |
Pass | Installment and other loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 32,783 | 21,891 |
Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 15,859 | 6,904 |
Special Mention | Commercial real estate | Owner-occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 1,962 | 413 |
Special Mention | Commercial real estate | Non-owner occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 5,700 | 0 |
Special Mention | Commercial real estate | Multi-family | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 5,468 | 4,113 |
Special Mention | Commercial real estate | Non-owner occupied residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 744 | 142 |
Special Mention | Acquisition and development | 1-4 family residential construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Special Mention | Acquisition and development | Commercial and land development | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 25 | 5 |
Special Mention | Commercial and industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 1,883 | 2,151 |
Special Mention | Municipal | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Special Mention | Residential mortgage | First lien | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Special Mention | Residential mortgage | Home equity - term | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Special Mention | Residential mortgage | Home equity - lines of credit | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 77 | 80 |
Special Mention | Installment and other loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Non-Impaired Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 7,194 | 8,936 |
Non-Impaired Substandard | Commercial real estate | Owner-occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 275 | 1,921 |
Non-Impaired Substandard | Commercial real estate | Non-owner occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 4,400 | 4,507 |
Non-Impaired Substandard | Commercial real estate | Multi-family | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 726 | 753 |
Non-Impaired Substandard | Commercial real estate | Non-owner occupied residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 1,144 | 1,084 |
Non-Impaired Substandard | Acquisition and development | 1-4 family residential construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Non-Impaired Substandard | Acquisition and development | Commercial and land development | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 590 | 611 |
Non-Impaired Substandard | Commercial and industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Non-Impaired Substandard | Municipal | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Non-Impaired Substandard | Residential mortgage | First lien | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Non-Impaired Substandard | Residential mortgage | Home equity - term | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Non-Impaired Substandard | Residential mortgage | Home equity - lines of credit | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 59 | 60 |
Non-Impaired Substandard | Installment and other loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Impaired - Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 6,601 | 11,026 |
Impaired - Substandard | Commercial real estate | Owner-occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 1,948 | 1,237 |
Impaired - Substandard | Commercial real estate | Non-owner occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 4,065 |
Impaired - Substandard | Commercial real estate | Multi-family | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 139 | 165 |
Impaired - Substandard | Commercial real estate | Non-owner occupied residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 329 | 381 |
Impaired - Substandard | Acquisition and development | 1-4 family residential construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 201 | 492 |
Impaired - Substandard | Acquisition and development | Commercial and land development | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Impaired - Substandard | Commercial and industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 309 | 350 |
Impaired - Substandard | Municipal | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Impaired - Substandard | Residential mortgage | First lien | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 2,931 | 3,836 |
Impaired - Substandard | Residential mortgage | Home equity - term | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 18 | 22 |
Impaired - Substandard | Residential mortgage | Home equity - lines of credit | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 726 | 467 |
Impaired - Substandard | Installment and other loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 11 |
Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Doubtful | Commercial real estate | Owner-occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Doubtful | Commercial real estate | Non-owner occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Doubtful | Commercial real estate | Multi-family | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Doubtful | Commercial real estate | Non-owner occupied residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Doubtful | Acquisition and development | 1-4 family residential construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Doubtful | Acquisition and development | Commercial and land development | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Doubtful | Commercial and industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Doubtful | Municipal | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Doubtful | Residential mortgage | First lien | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Doubtful | Residential mortgage | Home equity - term | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Doubtful | Residential mortgage | Home equity - lines of credit | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 0 | 0 |
Doubtful | Installment and other loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | $ 0 | $ 0 |
LOANS AND ALLOWANCE FOR LOAN _6
LOANS AND ALLOWANCE FOR LOAN LOSSES - Impaired Loans by Class (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | $ 853 | $ 881 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 853 | 881 |
Impaired Loans with a Specific Allowance, Related Allowance | 39 | 51 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 5,748 | 10,145 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 8,774 | 13,737 |
Commercial real estate | Owner-occupied | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | 0 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 1,948 | 1,237 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 2,602 | 2,479 |
Commercial real estate | Non-owner occupied | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 4,065 | |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 4,856 | |
Commercial real estate | Multi-family | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | 0 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 139 | 165 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 340 | 352 |
Commercial real estate | Non-owner occupied residential | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | 0 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 329 | 381 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 642 | 669 |
Acquisition and development | 1-4 family residential construction | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | 0 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 201 | 492 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 201 | 492 |
Commercial and industrial | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | 0 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 309 | 350 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 474 | 495 |
Residential mortgage | First lien | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 853 | 872 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 853 | 872 |
Impaired Loans with a Specific Allowance, Related Allowance | 39 | 42 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 2,078 | 2,964 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 3,497 | 3,706 |
Residential mortgage | Home equity - term | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | 0 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 18 | 22 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 24 | 27 |
Residential mortgage | Home equity - lines of credit | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | 0 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 726 | 467 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | $ 994 | 628 |
Installment and other loans | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 9 | |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 9 | |
Impaired Loans with a Specific Allowance, Related Allowance | 9 | |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 2 | |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | $ 33 |
LOANS AND ALLOWANCE FOR LOAN _7
LOANS AND ALLOWANCE FOR LOAN LOSSES - Average Recorded Investment in Impaired Loans and Related Interest Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Financing Receivable, Impaired [Line Items] | ||||
Average Impaired Balance | $ 6,177 | $ 6,300 | $ 8,798 | $ 6,947 |
Interest Income Recognized | 16 | 23 | 47 | 50 |
Commercial real estate | Owner-occupied | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average Impaired Balance | 1,569 | 882 | 1,372 | 984 |
Interest Income Recognized | 1 | 0 | 2 | 5 |
Commercial real estate | Non-owner occupied | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average Impaired Balance | 2,395 | 184 | ||
Interest Income Recognized | 0 | 0 | ||
Commercial real estate | Multi-family | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average Impaired Balance | 144 | 178 | 152 | 186 |
Interest Income Recognized | 0 | 0 | 0 | 0 |
Commercial real estate | Non-owner occupied residential | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average Impaired Balance | 336 | 409 | 355 | 427 |
Interest Income Recognized | 0 | 0 | 0 | 0 |
Acquisition and development | 1-4 family residential construction | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average Impaired Balance | 201 | 123 | 235 | 41 |
Interest Income Recognized | 0 | 0 | 0 | 0 |
Commercial and industrial | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average Impaired Balance | 316 | 378 | 330 | 431 |
Interest Income Recognized | 0 | 0 | 0 | 0 |
Residential mortgage | First lien | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average Impaired Balance | 2,900 | 3,812 | 3,312 | 4,118 |
Interest Income Recognized | 15 | 23 | 44 | 44 |
Residential mortgage | Home equity - term | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average Impaired Balance | 18 | 34 | 20 | 69 |
Interest Income Recognized | 0 | 0 | 0 | 0 |
Residential mortgage | Home equity - lines of credit | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average Impaired Balance | 692 | 469 | 621 | 498 |
Interest Income Recognized | 0 | 0 | 1 | 1 |
Installment and other loans | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average Impaired Balance | 1 | 15 | 6 | 9 |
Interest Income Recognized | $ 0 | $ 0 | $ 0 | $ 0 |
LOANS AND ALLOWANCE FOR LOAN _8
LOANS AND ALLOWANCE FOR LOAN LOSSES - Troubled Debt Restructurings (Details) $ in Thousands | Sep. 30, 2018USD ($)contract | Dec. 31, 2017USD ($)contract |
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 22 | 23 |
Recorded Investment | $ | $ 1,856 | $ 1,958 |
Accruing | ||
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 13 | 13 |
Recorded Investment | $ | $ 1,143 | $ 1,183 |
Accruing | Commercial real estate | Owner-occupied | ||
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 1 | 1 |
Recorded Investment | $ | $ 39 | $ 52 |
Accruing | Residential mortgage | First lien | ||
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 11 | 11 |
Recorded Investment | $ | $ 1,079 | $ 1,102 |
Accruing | Residential mortgage | Home equity - lines of credit | ||
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 1 | 1 |
Recorded Investment | $ | $ 25 | $ 29 |
Nonaccruing | ||
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 9 | 10 |
Recorded Investment | $ | $ 713 | $ 775 |
Nonaccruing | Commercial real estate | Owner-occupied | ||
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 1 | 1 |
Recorded Investment | $ | $ 40 | $ 57 |
Nonaccruing | Residential mortgage | First lien | ||
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 8 | 8 |
Recorded Investment | $ | $ 673 | $ 715 |
Nonaccruing | Installment and other loans | ||
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 0 | 1 |
Recorded Investment | $ | $ 0 | $ 3 |
LOANS AND ALLOWANCE FOR LOAN _9
LOANS AND ALLOWANCE FOR LOAN LOSSES - Number of Loans Modified and Their Pre-Modification and Post-Modification Investment Balances (Details) - Commercial real estate - Owner-occupied $ in Thousands | 9 Months Ended | |
Sep. 30, 2018USD ($)contract | Sep. 30, 2017USD ($)contract | |
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 0 | 2 |
Pre- Modification Recorded Investment | $ 0 | $ 119 |
Post Modification Recorded Investment | $ 0 | $ 119 |
LOANS AND ALLOWANCE FOR LOAN_10
LOANS AND ALLOWANCE FOR LOAN LOSSES - Loan Portfolio Summarized by Aging Categories of Performing Loans and Nonaccrual Loans (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | $ 1,077,802 | $ 994,892 |
Past Due | 1,681 | 5,277 |
90+ (still accruing) Days Past Due | 0 | 0 |
Non- Accrual | 5,458 | 9,843 |
Total Loans | 1,084,941 | 1,010,012 |
30 to 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 1,255 | 4,132 |
60 to 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 426 | 1,145 |
Commercial real estate | Owner-occupied | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 117,147 | 115,605 |
Past Due | 0 | 21 |
90+ (still accruing) Days Past Due | 0 | 0 |
Non- Accrual | 1,909 | 1,185 |
Total Loans | 119,056 | 116,811 |
Commercial real estate | Owner-occupied | 30 to 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 0 | 4 |
Commercial real estate | Owner-occupied | 60 to 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 0 | 17 |
Commercial real estate | Non-owner occupied | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 249,529 | 240,426 |
Past Due | 0 | 0 |
90+ (still accruing) Days Past Due | 0 | 0 |
Non- Accrual | 0 | 4,065 |
Total Loans | 249,529 | 244,491 |
Commercial real estate | Non-owner occupied | 30 to 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 0 | 0 |
Commercial real estate | Non-owner occupied | 60 to 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 0 | 0 |
Commercial real estate | Multi-family | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 75,175 | 53,469 |
Past Due | 0 | 0 |
90+ (still accruing) Days Past Due | 0 | 0 |
Non- Accrual | 139 | 165 |
Total Loans | 75,314 | 53,634 |
Commercial real estate | Multi-family | 30 to 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 0 | 0 |
Commercial real estate | Multi-family | 60 to 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 0 | 0 |
Commercial real estate | Non-owner occupied residential | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 84,099 | 77,454 |
Past Due | 170 | 145 |
90+ (still accruing) Days Past Due | 0 | 0 |
Non- Accrual | 329 | 381 |
Total Loans | 84,598 | 77,980 |
Commercial real estate | Non-owner occupied residential | 30 to 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 170 | 145 |
Commercial real estate | Non-owner occupied residential | 60 to 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 0 | 0 |
Acquisition and development | 1-4 family residential construction | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 10,016 | 11,238 |
Past Due | 0 | 0 |
90+ (still accruing) Days Past Due | 0 | 0 |
Non- Accrual | 201 | 492 |
Total Loans | 10,217 | 11,730 |
Acquisition and development | 1-4 family residential construction | 30 to 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 0 | 0 |
Acquisition and development | 1-4 family residential construction | 60 to 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 0 | 0 |
Acquisition and development | Commercial and land development | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 33,690 | 19,226 |
Past Due | 45 | 25 |
90+ (still accruing) Days Past Due | 0 | 0 |
Non- Accrual | 0 | 0 |
Total Loans | 33,735 | 19,251 |
Acquisition and development | Commercial and land development | 30 to 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 45 | 25 |
Acquisition and development | Commercial and land development | 60 to 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 0 | 0 |
Commercial and industrial | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 126,602 | 115,312 |
Past Due | 100 | 1 |
90+ (still accruing) Days Past Due | 0 | 0 |
Non- Accrual | 309 | 350 |
Total Loans | 127,011 | 115,663 |
Commercial and industrial | 30 to 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 100 | 1 |
Commercial and industrial | 60 to 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 0 | 0 |
Municipal | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 39,429 | 42,065 |
Past Due | 0 | 0 |
90+ (still accruing) Days Past Due | 0 | 0 |
Non- Accrual | 0 | 0 |
Total Loans | 39,429 | 42,065 |
Municipal | 30 to 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 0 | 0 |
Municipal | 60 to 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 0 | 0 |
Residential mortgage | First lien | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 164,763 | 155,387 |
Past Due | 563 | 4,388 |
90+ (still accruing) Days Past Due | 0 | 0 |
Non- Accrual | 1,852 | 2,734 |
Total Loans | 167,178 | 162,509 |
Residential mortgage | First lien | 30 to 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 403 | 3,333 |
Residential mortgage | First lien | 60 to 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 160 | 1,055 |
Residential mortgage | Home equity - term | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 10,483 | 11,753 |
Past Due | 12 | 9 |
90+ (still accruing) Days Past Due | 0 | 0 |
Non- Accrual | 18 | 22 |
Total Loans | 10,513 | 11,784 |
Residential mortgage | Home equity - term | 30 to 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 12 | 9 |
Residential mortgage | Home equity - term | 60 to 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 0 | 0 |
Residential mortgage | Home equity - lines of credit | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 134,166 | 131,208 |
Past Due | 711 | 546 |
90+ (still accruing) Days Past Due | 0 | 0 |
Non- Accrual | 701 | 438 |
Total Loans | 135,578 | 132,192 |
Residential mortgage | Home equity - lines of credit | 30 to 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 451 | 474 |
Residential mortgage | Home equity - lines of credit | 60 to 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 260 | 72 |
Installment and other loans | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 32,703 | 21,749 |
Past Due | 80 | 142 |
90+ (still accruing) Days Past Due | 0 | 0 |
Non- Accrual | 0 | 11 |
Total Loans | 32,783 | 21,902 |
Installment and other loans | 30 to 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | 74 | 141 |
Installment and other loans | 60 to 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Past Due | $ 6 | $ 1 |
LOANS AND ALLOWANCE FOR LOAN_11
LOANS AND ALLOWANCE FOR LOAN LOSSES - Activity in Allowance for Loan Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Activity in allowance for loan losses | ||||
Balance, beginning of period | $ 13,437 | $ 12,751 | $ 12,796 | $ 12,775 |
Provision for loan losses | 200 | 100 | 600 | 200 |
Charge-offs | (159) | (135) | (363) | (342) |
Recoveries | 334 | 55 | 779 | 138 |
Balance, end of period | 13,812 | 12,771 | 13,812 | 12,771 |
Unallocated | ||||
Activity in allowance for loan losses | ||||
Balance, beginning of period | 585 | 470 | 475 | 414 |
Provision for loan losses | (75) | 51 | 35 | 107 |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 | 0 |
Balance, end of period | 510 | 521 | 510 | 521 |
Commercial | ||||
Activity in allowance for loan losses | ||||
Balance, beginning of period | 9,078 | 8,764 | 8,710 | 9,238 |
Provision for loan losses | 174 | (13) | 211 | (424) |
Charge-offs | (17) | (30) | (17) | (130) |
Recoveries | 201 | 2 | 532 | 39 |
Balance, end of period | 9,436 | 8,723 | 9,436 | 8,723 |
Commercial | Commercial Real Estate | ||||
Activity in allowance for loan losses | ||||
Balance, beginning of period | 6,680 | 6,777 | 6,763 | 7,530 |
Provision for loan losses | 194 | (102) | (217) | (840) |
Charge-offs | (17) | 0 | (17) | (45) |
Recoveries | 200 | 0 | 528 | 30 |
Balance, end of period | 7,057 | 6,675 | 7,057 | 6,675 |
Commercial | Acquisition and Development | ||||
Activity in allowance for loan losses | ||||
Balance, beginning of period | 720 | 579 | 417 | 580 |
Provision for loan losses | 19 | (90) | 319 | (93) |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 0 | 1 | 3 | 3 |
Balance, end of period | 739 | 490 | 739 | 490 |
Commercial | Commercial and Industrial | ||||
Activity in allowance for loan losses | ||||
Balance, beginning of period | 1,598 | 1,291 | 1,446 | 1,074 |
Provision for loan losses | (38) | 191 | 114 | 458 |
Charge-offs | 0 | (30) | 0 | (85) |
Recoveries | 1 | 1 | 1 | 6 |
Balance, end of period | 1,561 | 1,453 | 1,561 | 1,453 |
Commercial | Municipal | ||||
Activity in allowance for loan losses | ||||
Balance, beginning of period | 80 | 117 | 84 | 54 |
Provision for loan losses | (1) | (12) | (5) | 51 |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 | 0 |
Balance, end of period | 79 | 105 | 79 | 105 |
Consumer | ||||
Activity in allowance for loan losses | ||||
Balance, beginning of period | 3,774 | 3,517 | 3,611 | 3,123 |
Provision for loan losses | 101 | 62 | 354 | 517 |
Charge-offs | (142) | (105) | (346) | (212) |
Recoveries | 133 | 53 | 247 | 99 |
Balance, end of period | 3,866 | 3,527 | 3,866 | 3,527 |
Consumer | Residential Mortgage | ||||
Activity in allowance for loan losses | ||||
Balance, beginning of period | 3,544 | 3,386 | 3,400 | 2,979 |
Provision for loan losses | (45) | (12) | 157 | 429 |
Charge-offs | (62) | (54) | (148) | (105) |
Recoveries | 102 | 41 | 130 | 58 |
Balance, end of period | 3,539 | 3,361 | 3,539 | 3,361 |
Consumer | Installment and Other | ||||
Activity in allowance for loan losses | ||||
Balance, beginning of period | 230 | 131 | 211 | 144 |
Provision for loan losses | 146 | 74 | 197 | 88 |
Charge-offs | (80) | (51) | (198) | (107) |
Recoveries | 31 | 12 | 117 | 41 |
Balance, end of period | $ 327 | $ 166 | $ 327 | $ 166 |
LOANS AND ALLOWANCE FOR LOAN_12
LOANS AND ALLOWANCE FOR LOAN LOSSES - Summary of Ending Loan Balances Evaluated for Impairment and Related Allowance for Loan Losses Allocation (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Loans, Individually evaluated for impairment | $ 6,601 | $ 11,026 | ||||
Loans, Collectively evaluated for impairment | 1,078,340 | 998,986 | ||||
Total Loans | 1,084,941 | 1,010,012 | ||||
Allowance for loan losses, Individually evaluated for impairment | 39 | 51 | ||||
Allowance for loan losses, Collectively evaluated for impairment | 13,773 | 12,745 | ||||
Allowance for loan losses, Total | 13,812 | $ 13,437 | 12,796 | $ 12,771 | $ 12,751 | $ 12,775 |
Commercial and Industrial | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Total Loans | 127,011 | 115,663 | ||||
Municipal | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Total Loans | 39,429 | 42,065 | ||||
Installment and Other | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Total Loans | 32,783 | 21,902 | ||||
Commercial | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Loans, Individually evaluated for impairment | 2,926 | 6,690 | ||||
Loans, Collectively evaluated for impairment | 735,963 | 674,935 | ||||
Total Loans | 738,889 | 681,625 | ||||
Allowance for loan losses, Individually evaluated for impairment | 0 | 0 | ||||
Allowance for loan losses, Collectively evaluated for impairment | 9,436 | 8,710 | ||||
Allowance for loan losses, Total | 9,436 | 8,710 | ||||
Commercial | Commercial Real Estate | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Loans, Individually evaluated for impairment | 2,416 | 5,848 | ||||
Loans, Collectively evaluated for impairment | 526,081 | 487,068 | ||||
Total Loans | 528,497 | 492,916 | ||||
Allowance for loan losses, Individually evaluated for impairment | 0 | 0 | ||||
Allowance for loan losses, Collectively evaluated for impairment | 7,057 | 6,763 | ||||
Allowance for loan losses, Total | 7,057 | 6,763 | ||||
Commercial | Acquisition and Development | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Loans, Individually evaluated for impairment | 201 | 492 | ||||
Loans, Collectively evaluated for impairment | 43,751 | 30,489 | ||||
Total Loans | 43,952 | 30,981 | ||||
Allowance for loan losses, Individually evaluated for impairment | 0 | 0 | ||||
Allowance for loan losses, Collectively evaluated for impairment | 739 | 417 | ||||
Allowance for loan losses, Total | 739 | 417 | ||||
Commercial | Commercial and Industrial | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Loans, Individually evaluated for impairment | 309 | 350 | ||||
Loans, Collectively evaluated for impairment | 126,702 | 115,313 | ||||
Total Loans | 127,011 | 115,663 | ||||
Allowance for loan losses, Individually evaluated for impairment | 0 | 0 | ||||
Allowance for loan losses, Collectively evaluated for impairment | 1,561 | 1,446 | ||||
Allowance for loan losses, Total | 1,561 | 1,446 | ||||
Commercial | Municipal | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Loans, Individually evaluated for impairment | 0 | 0 | ||||
Loans, Collectively evaluated for impairment | 39,429 | 42,065 | ||||
Total Loans | 39,429 | 42,065 | ||||
Allowance for loan losses, Individually evaluated for impairment | 0 | 0 | ||||
Allowance for loan losses, Collectively evaluated for impairment | 79 | 84 | ||||
Allowance for loan losses, Total | 79 | 84 | ||||
Consumer | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Loans, Individually evaluated for impairment | 3,675 | 4,336 | ||||
Loans, Collectively evaluated for impairment | 342,377 | 324,051 | ||||
Total Loans | 346,052 | 328,387 | ||||
Allowance for loan losses, Individually evaluated for impairment | 39 | 51 | ||||
Allowance for loan losses, Collectively evaluated for impairment | 3,827 | 3,560 | ||||
Allowance for loan losses, Total | 3,866 | 3,611 | ||||
Consumer | Residential Mortgage | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Loans, Individually evaluated for impairment | 3,675 | 4,325 | ||||
Loans, Collectively evaluated for impairment | 309,594 | 302,160 | ||||
Total Loans | 313,269 | 306,485 | ||||
Allowance for loan losses, Individually evaluated for impairment | 39 | 42 | ||||
Allowance for loan losses, Collectively evaluated for impairment | 3,500 | 3,358 | ||||
Allowance for loan losses, Total | 3,539 | 3,400 | ||||
Consumer | Installment and Other | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Loans, Individually evaluated for impairment | 0 | 11 | ||||
Loans, Collectively evaluated for impairment | 32,783 | 21,891 | ||||
Total Loans | 32,783 | 21,902 | ||||
Allowance for loan losses, Individually evaluated for impairment | 0 | 9 | ||||
Allowance for loan losses, Collectively evaluated for impairment | 327 | 202 | ||||
Allowance for loan losses, Total | 327 | 211 | ||||
Unallocated | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Loans, Individually evaluated for impairment | 0 | 0 | ||||
Loans, Collectively evaluated for impairment | 0 | 0 | ||||
Total Loans | 0 | 0 | ||||
Allowance for loan losses, Individually evaluated for impairment | 0 | 0 | ||||
Allowance for loan losses, Collectively evaluated for impairment | 510 | 475 | ||||
Allowance for loan losses, Total | $ 510 | $ 475 |
INCOME TAXES - Summary of Incom
INCOME TAXES - Summary of Income Tax Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Current expense | $ 406 | $ 892 | $ 754 | $ 1,087 |
Deferred expense | 238 | (516) | 756 | 229 |
Income tax expense | $ 644 | $ 376 | $ 1,510 | $ 1,316 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense related to net securities gains | $ 6 | $ 181 | $ 187 | $ 405 |
Federal statutory rate | 21.00% | 34.00% |
INCOME TAXES - Summary of Defer
INCOME TAXES - Summary of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Allowance for loan losses | $ 3,135 | $ 2,919 |
Deferred compensation | 354 | 355 |
Retirement and salary continuation plans | 1,386 | 1,301 |
Share-based compensation | 667 | 597 |
Off-balance sheet reserves | 193 | 207 |
Nonaccrual loan interest | 344 | 258 |
Net unrealized losses on securities available for sale | 1,454 | 0 |
Goodwill | 25 | 39 |
Bonus accrual | 354 | 25 |
Low-income housing credit carryforward | 847 | 2,313 |
Other | 321 | 390 |
Total deferred tax assets | 9,080 | 8,404 |
Deferred tax liabilities: | ||
Depreciation | 414 | 488 |
Net unrealized gains on securities available for sale | 0 | 757 |
Mortgage servicing rights | 574 | 536 |
Purchase accounting adjustments | 238 | 251 |
Other | 149 | 122 |
Total deferred tax liabilities | 1,375 | 2,154 |
Net deferred tax asset, included in Other Assets | $ 7,705 | $ 6,250 |
SHARE-BASED COMPENSATION PLAN_2
SHARE-BASED COMPENSATION PLANS - Additional Information (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | May 01, 2018 | Dec. 31, 2017 | |
Orrstown 2011 Incentive Stock Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares reserved to be issued (in shares) | 881,920 | 881,920 | |
Number of shares available to be issued under employee stock purchase plan (in shares) | 525,814 | ||
Orrstown 2011 Incentive Stock Plan | Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation expense | $ 2,644 | $ 2,035 | |
Unrecognized compensation expense, recognition period | 1 year 9 months 4 days | ||
Orrstown 2011 Incentive Stock Plan | Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Intrinsic value of options outstanding and exercisable | $ 74 | $ 127 | |
Orrstown 2011 Incentive Stock Plan | Employee Stock Option | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum term to exercise option | 10 years | ||
Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares reserved to be issued (in shares) | 350,000 | ||
Number of shares available to be issued under employee stock purchase plan (in shares) | 173,465 | ||
Maximum shares purchase, as percentage of salary | 10.00% | ||
Percentage of value of the shares on the semi-annual offering | 95.00% |
SHARE-BASED COMPENSATION PLAN_3
SHARE-BASED COMPENSATION PLANS - Summary of Nonvested Restricted Shares Activity (Details) - Orrstown 2011 Incentive Stock Plan - Restricted Stock | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Shares | |
Nonvested shares, beginning of year (in shares) | shares | 268,411 |
Granted (in shares) | shares | 87,317 |
Forfeited (in shares) | shares | (30,854) |
Vested (in usd per share) | shares | (40,424) |
Nonvested shares, at period end (in shares) | shares | 284,450 |
Weighted Average Grant Date Fair Value | |
Nonvested shares, beginning of year (in usd per share) | $ / shares | $ 18.18 |
Granted (in usd per share) | $ / shares | 25.64 |
Forfeited (in usd per share) | $ / shares | 16.88 |
Vested (in usd per share) | $ / shares | 18.67 |
Nonvested shares, at period end (in usd per share) | $ / shares | $ 20.34 |
SHARE-BASED COMPENSATION PLAN_4
SHARE-BASED COMPENSATION PLANS - Schedule of Restricted Shares Compensation Expense (Details) - Orrstown 2011 Incentive Stock Plan - Restricted Stock - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted share award expense | $ 179 | $ 371 | $ 1,099 | $ 1,031 |
Restricted share award tax benefit | 38 | 126 | 231 | 351 |
Fair value of shares vested | $ 0 | $ 25 | $ 1,056 | $ 288 |
SHARE-BASED COMPENSATION PLAN_5
SHARE-BASED COMPENSATION PLANS - Summary of Outstanding Stock Options Activity (Details) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Shares | |
Options exercisable at period end (in shares) | shares | 58,403 |
Weighted Average Exercise Price | |
Options exercisable at period end (in usd per share) | $ / shares | $ 25.89 |
Orrstown 2011 Incentive Stock Plan | Employee Stock Option | |
Shares | |
Outstanding at beginning of year (in shares) | shares | 59,583 |
Forfeited (in shares) | shares | (2,235) |
Expired (in shares) | shares | (15,214) |
Exercised (in shares) | shares | (1,150) |
Options outstanding at period end (in shares) | shares | 40,984 |
Weighted Average Exercise Price | |
Outstanding at beginning of year (in usd per share) | $ / shares | $ 25.89 |
Forfeited (in usd per share) | $ / shares | 28.02 |
Expired (in usd per share) | $ / shares | 30.11 |
Exercised (in usd per share) | $ / shares | 21.14 |
Options outstanding at period end (in usd per share) | $ / shares | $ 24.34 |
SHARE-BASED COMPENSATION PLAN_6
SHARE-BASED COMPENSATION PLANS - Information Pertaining to Options Outstanding and Exercisable (Details) - Orrstown 2011 Incentive Stock Plan - Employee Stock Option | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
$21.14 - $24.99 | |
Range of Exercise Prices | |
Range of Exercise Prices, Minimum (in usd per share) | $ 21.14 |
Range of Exercise Prices, Maximum (in usd per share) | $ 24.99 |
Number Outstanding (in shares) | shares | 31,519 |
Weighted Average Remaining Contractual Life (Years) | 1 year 7 months 24 days |
Weighted Average Exercise Price (in usd per share) | $ 21.51 |
$25.00 - $34.99 | |
Range of Exercise Prices | |
Range of Exercise Prices, Minimum (in usd per share) | 25 |
Range of Exercise Prices, Maximum (in usd per share) | $ 34.99 |
Number Outstanding (in shares) | shares | 2,792 |
Weighted Average Remaining Contractual Life (Years) | 1 year 6 months |
Weighted Average Exercise Price (in usd per share) | $ 25.76 |
$35.00 - $37.59 | |
Range of Exercise Prices | |
Range of Exercise Prices, Minimum (in usd per share) | 35 |
Range of Exercise Prices, Maximum (in usd per share) | $ 37.59 |
Number Outstanding (in shares) | shares | 6,673 |
Weighted Average Remaining Contractual Life (Years) | 9 months 22 days |
Weighted Average Exercise Price (in usd per share) | $ 37.10 |
$21.14 - $37.59 | |
Range of Exercise Prices | |
Range of Exercise Prices, Minimum (in usd per share) | 21.14 |
Range of Exercise Prices, Maximum (in usd per share) | $ 37.59 |
Number Outstanding (in shares) | shares | 40,984 |
Weighted Average Remaining Contractual Life (Years) | 1 year 6 months |
Weighted Average Exercise Price (in usd per share) | $ 24.34 |
SHARE-BASED COMPENSATION PLAN_7
SHARE-BASED COMPENSATION PLANS - Schedule of Employee Stock Purchase Plan (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | ||||
Shares purchased (in shares) | 0 | 56,885 | ||
Employee Stock Purchase Plan | ||||
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | ||||
Shares purchased (in shares) | 2,951 | 3,518 | 5,907 | 6,632 |
Weighted average price of shares purchased (in usd per share) | $ 22.61 | $ 21.33 | $ 23.04 | $ 20.57 |
Compensation expense recognized | $ 10 | $ 11 | $ 14 | $ 17 |
Tax benefits | $ 2 | $ 4 | $ 3 | $ 6 |
SHAREHOLDERS_ EQUITY AND REGU_3
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL - Capital Amounts and Ratios (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Consolidated | ||
Total Capital to risk weighted assets | ||
Actual, Amount | $ 163,976 | $ 152,386 |
Actual, Ratio | 13.40% | 13.30% |
Minimum Capital Requirement, Amount | $ 120,679 | $ 106,040 |
Minimum Capital Requirement, Ratio | 9.875% | 9.25% |
Tier 1 Capital to risk weighted assets | ||
Actual, Amount | $ 149,288 | $ 138,774 |
Actual, Ratio | 12.20% | 12.10% |
Minimum Capital Requirement, Amount | $ 96,238 | $ 83,112 |
Minimum Capital Requirement, Ratio | 7.875% | 7.25% |
Common Tier 1 (CET1) to risk weighted assets | ||
Actual, Amount | $ 149,288 | $ 138,774 |
Actual, Ratio | 12.20% | 12.10% |
Minimum Capital Requirement, Amount | $ 77,907 | $ 65,917 |
Minimum Capital Requirement, Ratio | 6.375% | 5.75% |
Tier 1 Capital to average assets | ||
Actual, Amount | $ 149,288 | $ 138,774 |
Actual, Ratio | 8.90% | 8.90% |
Minimum Capital Requirement, Amount | $ 67,406 | $ 62,042 |
Minimum Capital Requirement, Ratio | 4.00% | 4.00% |
Bank | ||
Total Capital to risk weighted assets | ||
Actual, Amount | $ 161,352 | $ 148,997 |
Actual, Ratio | 13.20% | 13.00% |
Minimum Capital Requirement, Amount | $ 120,544 | $ 105,747 |
Minimum Capital Requirement, Ratio | 9.875% | 9.25% |
Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Amount | $ 122,070 | $ 114,321 |
Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio | 10.00% | 10.00% |
Tier 1 Capital to risk weighted assets | ||
Actual, Amount | $ 146,664 | $ 135,385 |
Actual, Ratio | 12.00% | 11.80% |
Minimum Capital Requirement, Amount | $ 96,130 | $ 82,883 |
Minimum Capital Requirement, Ratio | 7.875% | 7.25% |
Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Amount | $ 97,656 | $ 91,457 |
Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio | 8.00% | 8.00% |
Common Tier 1 (CET1) to risk weighted assets | ||
Actual, Amount | $ 146,664 | $ 135,385 |
Actual, Ratio | 12.00% | 11.80% |
Minimum Capital Requirement, Amount | $ 77,820 | $ 65,734 |
Minimum Capital Requirement, Ratio | 6.375% | 5.75% |
Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Amount | $ 79,345 | $ 74,308 |
Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio | 6.50% | 6.50% |
Tier 1 Capital to average assets | ||
Actual, Amount | $ 146,664 | $ 135,385 |
Actual, Ratio | 8.70% | 8.70% |
Minimum Capital Requirement, Amount | $ 67,595 | $ 62,066 |
Minimum Capital Requirement, Ratio | 4.00% | 4.00% |
Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Amount | $ 84,493 | $ 77,582 |
Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio | 5.00% | 5.00% |
SHAREHOLDERS_ EQUITY AND REGU_4
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 17, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2015 |
Equity, Class of Treasury Stock [Line Items] | ||||||
Number of shares authorized to be repurchased (in shares) | 416,000 | |||||
Acquisition of treasury stock (in shares) | 82,725 | 82,725 | ||||
Acquisition of treasury stock | $ 1,438 | $ 1,438 | ||||
Acquisition of treasury stock (in usd per share) | $ 17.38 | |||||
Dividends declared per share (in usd per share) | $ 0.13 | $ 0.1 | $ 0.38 | $ 0.3 | ||
Subsequent Event | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Dividends declared per share (in usd per share) | $ 0.13 | |||||
Maximum | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock repurchase program authorized, maximum percentage of outstanding shares of common stock | 5.00% |
EARNINGS PER SHARE - Calculatio
EARNINGS PER SHARE - Calculation of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 4,016 | $ 2,774 | $ 11,653 | $ 8,084 |
Weighted average shares outstanding - basic (in shares) | 8,099 | 8,075 | 8,092 | 8,068 |
Dilutive effect of share-based compensation (in shares) | 172 | 164 | 182 | 147 |
Weighted average shares outstanding - diluted (in shares) | 8,271 | 8,239 | 8,274 | 8,215 |
Per share information: | ||||
Basic earnings per share (in usd per share) | $ 0.50 | $ 0.34 | $ 1.44 | $ 1 |
Diluted earnings per share (in usd per share) | $ 0.49 | $ 0.34 | $ 1.41 | $ 0.98 |
EARNINGS PER SHARE - Additional
EARNINGS PER SHARE - Additional Information (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Employee Stock Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Stock options excluded from diluted earnings per share (in shares) | 21 | 30 | 23 | 42 |
FINANCIAL INSTRUMENTS WITH OF_3
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK - Commitments and Conditional Obligations, Contract or Notional Amount (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Home equity lines of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | $ 155,916 | $ 139,281 |
1-4 family residential construction loans | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | 12,876 | 11,420 |
Commercial real estate, construction and land development loans | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | 27,419 | 44,592 |
Commercial, industrial and other loans | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | 149,420 | 145,394 |
Standby letters of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | $ 17,061 | $ 12,273 |
FINANCIAL INSTRUMENTS WITH OF_4
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value Disclosures [Abstract] | ||
Reserve for off-balance sheet credit exposures | $ 876 | $ 816 |
Mortgage Partnership Finance Program | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Sum of total loans sold under the MPF Program | 29,585 | 31,977 |
Limited recourse debt | $ 1,085 | $ 1,135 |
FINANCIAL INSTRUMENTS WITH OF_5
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK - Schedule of Financial Instruments With Off-balance Sheet Risk (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | ||||
Off-balance sheet credit exposures expense (recovery) | $ (89) | $ 76 | $ 60 | $ 121 |
FINANCIAL INSTRUMENTS WITH OF_6
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK - MFP Program Recourse Exposure (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Mortgage Partnership Finance Program | ||||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||||
MPF program recourse loss expense (recovery) | $ 20 | $ 45 | $ (135) | $ 19 |
FAIR VALUE - Additional Informa
FAIR VALUE - Additional Information (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Specific charges to value the real estate owned | $ 11,000 | $ 0 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value liabilities | 0 | 0 |
Allowance for loan losses | $ 929,000 | $ 2,266,000 |
FAIR VALUE - Summary of Assets
FAIR VALUE - Summary of Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | $ 489,356 | $ 415,308 |
States and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 159,420 | 159,458 |
GSE residential MBSs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 49,530 | |
GSE residential CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 108,654 | 111,119 |
Private label residential CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 312 | 1,003 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 489,356 | 415,308 |
Fair Value, Measurements, Recurring | States and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 159,420 | 159,458 |
Fair Value, Measurements, Recurring | GSE residential MBSs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 49,530 | |
Fair Value, Measurements, Recurring | GSE residential CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 108,654 | 111,119 |
Fair Value, Measurements, Recurring | Private label residential CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 312 | 1,003 |
Fair Value, Measurements, Recurring | Private label commercial CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 61,210 | 7,653 |
Fair Value, Measurements, Recurring | Asset-backed and other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 159,760 | 86,545 |
Fair Value, Measurements, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | States and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | GSE residential MBSs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 0 | |
Fair Value, Measurements, Recurring | Level 1 | GSE residential CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Private label residential CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Private label commercial CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Asset-backed and other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 489,356 | 415,308 |
Fair Value, Measurements, Recurring | Level 2 | States and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 159,420 | 159,458 |
Fair Value, Measurements, Recurring | Level 2 | GSE residential MBSs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 49,530 | |
Fair Value, Measurements, Recurring | Level 2 | GSE residential CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 108,654 | 111,119 |
Fair Value, Measurements, Recurring | Level 2 | Private label residential CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 312 | 1,003 |
Fair Value, Measurements, Recurring | Level 2 | Private label commercial CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 61,210 | 7,653 |
Fair Value, Measurements, Recurring | Level 2 | Asset-backed and other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 159,760 | 86,545 |
Fair Value, Measurements, Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | States and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | GSE residential MBSs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 0 | |
Fair Value, Measurements, Recurring | Level 3 | GSE residential CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Private label residential CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Private label commercial CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Asset-backed and other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, debt securities | $ 0 | $ 0 |
FAIR VALUE - Schedule of Change
FAIR VALUE - Schedule of Changes in Fair Value of Impaired Loans Still Held (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Impaired loans | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Changes in fair value of impaired loans still held | $ 63 | $ 43 | $ 147 | $ 41 |
FAIR VALUE - Schedule of Chan_2
FAIR VALUE - Schedule of Changes in Fair Value of OREO For Properties Held (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | ||||
Changes in fair value of OREO still held | $ 11 | $ 0 | $ 11 | $ 0 |
FAIR VALUE - Summary of Asset_2
FAIR VALUE - Summary of Assets Measured at Fair Value on Nonrecurring Basis (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | $ 3,266 | $ 7,173 |
Commercial real estate | Owner-occupied | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 1,136 | 430 |
Commercial real estate | Non-owner occupied | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 4,066 | |
Commercial real estate | Multi-family | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 139 | 165 |
Commercial real estate | Non-owner occupied residential | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 297 | 344 |
Commercial and industrial | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 40 | 53 |
Residential mortgage | First lien | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 1,239 | 1,951 |
Residential mortgage | Home equity - lines of credit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 415 | 161 |
Installment and other loans | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 3 | |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | 0 |
Level 1 | Commercial real estate | Owner-occupied | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | 0 |
Level 1 | Commercial real estate | Non-owner occupied | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | |
Level 1 | Commercial real estate | Multi-family | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | 0 |
Level 1 | Commercial real estate | Non-owner occupied residential | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | 0 |
Level 1 | Commercial and industrial | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | 0 |
Level 1 | Residential mortgage | First lien | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | 0 |
Level 1 | Residential mortgage | Home equity - lines of credit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | 0 |
Level 1 | Installment and other loans | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | 0 |
Level 2 | Commercial real estate | Owner-occupied | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | 0 |
Level 2 | Commercial real estate | Non-owner occupied | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | |
Level 2 | Commercial real estate | Multi-family | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | 0 |
Level 2 | Commercial real estate | Non-owner occupied residential | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | 0 |
Level 2 | Commercial and industrial | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | 0 |
Level 2 | Residential mortgage | First lien | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | 0 |
Level 2 | Residential mortgage | Home equity - lines of credit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | 0 |
Level 2 | Installment and other loans | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 0 | |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 3,266 | 7,173 |
Level 3 | Commercial real estate | Owner-occupied | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 1,136 | 430 |
Level 3 | Commercial real estate | Non-owner occupied | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 4,066 | |
Level 3 | Commercial real estate | Multi-family | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 139 | 165 |
Level 3 | Commercial real estate | Non-owner occupied residential | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 297 | 344 |
Level 3 | Commercial and industrial | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 40 | 53 |
Level 3 | Residential mortgage | First lien | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | 1,239 | 1,951 |
Level 3 | Residential mortgage | Home equity - lines of credit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | $ 415 | 161 |
Level 3 | Installment and other loans | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net | $ 3 |
FAIR VALUE - Summary of Additio
FAIR VALUE - Summary of Additional Qualitative Information (Details) - Fair Value, Measurements, Nonrecurring - Impaired loans $ in Thousands | Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Servicing asset, measurement Input (percent) | 0 | |
Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Servicing asset, measurement Input (percent) | 0.20 | |
Measurement Input, Discount Rate | Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Servicing asset, measurement Input (percent) | 0.06 | |
Measurement Input, Discount Rate | Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Servicing asset, measurement Input (percent) | 0.20 | |
Appraisal of collateral | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair Value Estimate | $ 3,266 | $ 7,173 |
Appraisal of collateral | Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Servicing asset, measurement Input (percent) | 0.07 | |
Appraisal of collateral | Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Servicing asset, measurement Input (percent) | 0.75 | |
Appraisal of collateral | Measurement Input, Discount Rate | Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Servicing asset, measurement Input (percent) | 0.05 | |
Appraisal of collateral | Measurement Input, Discount Rate | Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Servicing asset, measurement Input (percent) | 0.75 |
FAIR VALUE - Financial Instrume
FAIR VALUE - Financial Instruments at Estimated Fair Values (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Financial Assets | ||
Interest-bearing deposits with banks | $ 19,125 | $ 8,073 |
Restricted investments in bank stocks | 9,337 | 9,997 |
Securities available for sale | 489,356 | 415,308 |
Carrying Amount | ||
Financial Assets | ||
Cash and due from banks | 21,892 | 21,734 |
Interest-bearing deposits with banks | 19,125 | 8,073 |
Restricted investments in bank stocks | 9,337 | 9,997 |
Securities available for sale | 489,356 | 415,308 |
Loans held for sale | 4,765 | 6,089 |
Loans, net of allowance for loan losses | 1,071,129 | 997,216 |
Accrued interest receivable | 5,393 | 5,048 |
Financial Liabilities | ||
Deposits | 1,429,170 | 1,219,515 |
Short-term borrowings | 45,353 | 93,576 |
Long-term debt | 83,543 | 83,815 |
Accrued interest payable | 588 | 495 |
Off-balance sheet instruments | 0 | 0 |
Fair Value | ||
Financial Assets | ||
Cash and due from banks | 21,892 | 21,734 |
Interest-bearing deposits with banks | 19,125 | 8,073 |
Securities available for sale | 489,356 | 415,308 |
Loans held for sale | 4,883 | 6,272 |
Loans, net of allowance for loan losses | 1,059,620 | 994,617 |
Accrued interest receivable | 5,393 | 5,048 |
Financial Liabilities | ||
Deposits | 1,426,373 | 1,213,288 |
Short-term borrowings | 45,353 | 93,576 |
Long-term debt | 82,790 | 83,949 |
Accrued interest payable | 588 | 495 |
Off-balance sheet instruments | 0 | 0 |
Fair Value | Level 1 | ||
Financial Assets | ||
Cash and due from banks | 21,892 | 21,734 |
Interest-bearing deposits with banks | 19,125 | 8,073 |
Securities available for sale | 0 | 0 |
Loans held for sale | 0 | 0 |
Loans, net of allowance for loan losses | 0 | 0 |
Accrued interest receivable | 0 | 0 |
Financial Liabilities | ||
Deposits | 0 | 0 |
Short-term borrowings | 0 | 0 |
Long-term debt | 0 | 0 |
Accrued interest payable | 0 | 0 |
Off-balance sheet instruments | 0 | 0 |
Fair Value | Level 2 | ||
Financial Assets | ||
Cash and due from banks | 0 | 0 |
Interest-bearing deposits with banks | 0 | 0 |
Securities available for sale | 489,356 | 415,308 |
Loans held for sale | 4,883 | 6,272 |
Loans, net of allowance for loan losses | 0 | 0 |
Accrued interest receivable | 2,480 | 2,580 |
Financial Liabilities | ||
Deposits | 1,426,373 | 1,213,288 |
Short-term borrowings | 45,353 | 93,576 |
Long-term debt | 82,790 | 83,949 |
Accrued interest payable | 588 | 495 |
Off-balance sheet instruments | 0 | 0 |
Fair Value | Level 3 | ||
Financial Assets | ||
Cash and due from banks | 0 | 0 |
Interest-bearing deposits with banks | 0 | 0 |
Securities available for sale | 0 | 0 |
Loans held for sale | 0 | 0 |
Loans, net of allowance for loan losses | 1,059,620 | 994,617 |
Accrued interest receivable | 2,913 | 2,468 |
Financial Liabilities | ||
Deposits | 0 | 0 |
Short-term borrowings | 0 | 0 |
Long-term debt | 0 | 0 |
Accrued interest payable | 0 | 0 |
Off-balance sheet instruments | $ 0 | $ 0 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Revenue from Contract with Customer [Abstract] | |||||
Receivables from customers | $ 678 | $ 678 | $ 682 | ||
Disaggregation of Revenue [Line Items] | |||||
Other service charges | 409 | $ 119 | 1,189 | $ 440 | |
Mortgage banking activities | 735 | 797 | 2,049 | 2,113 | |
Income from life insurance | 533 | 275 | 1,101 | 814 | |
Other income | 56 | 34 | 272 | 147 | |
Investment securities gains | 29 | 533 | 891 | 1,190 | |
Total noninterest income | 5,492 | 5,256 | 16,699 | 15,214 | |
Service charges on deposits | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from contract with customer | 926 | 876 | 2,599 | 2,531 | |
Trust and investment management income | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from contract with customer | 1,668 | 1,551 | 5,037 | 4,620 | |
Brokerage income | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from contract with customer | 455 | 424 | 1,514 | 1,409 | |
Merchant and bankcard fees (interchange income) | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from contract with customer | 681 | 647 | 2,047 | 1,950 | |
Noninterest income | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from contract with customer | $ 3,730 | $ 3,498 | $ 11,197 | $ 10,510 |
CONTINGENCIES (Details)
CONTINGENCIES (Details) | Jun. 22, 2015 | Jun. 30, 2016USD ($) | Sep. 30, 2018claim |
Commitments and Contingencies Disclosure [Abstract] | |||
Number of legal proceedings (in claims) | claim | 0 | ||
Number of days to file an amendment or stand on current amended complaint | 30 days | ||
Regulatory settlement | $ | $ 1,000,000 |