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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 10-Q

 

 

Quarterly Report Under Section 13 or 15(d)

of the Securities Exchange Act of 1934

For Quarter ended March 31, 2015

Commission File Number 1-35746

 

 

Bryn Mawr Bank Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Pennsylvania   23-2434506

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

identification No.)

801 Lancaster Avenue, Bryn Mawr, Pennsylvania   19010
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code (610) 525-1700

Not Applicable

Former name, former address and fiscal year, if changed since last report.

 

 

Indicate by checkmark whether the registrant (1) has filed all reports to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨    Accelerated filer   x
Non-accelerated filer   ¨    Smaller reporting company   ¨

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s class of common stock, as of the latest practicable date.

 

Class

 

Outstanding at May 4, 2015

Common Stock, par value $1   17,800,223

 

 

 


Table of Contents

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES

FORM 10-Q

QUARTER ENDED March 31, 2015

Index

 

PART I -

FINANCIAL INFORMATION

ITEM 1.

Financial Statements (unaudited)
Consolidated Financial Statements   Page 3   
Notes to Consolidated Financial Statements   Page 8   

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations   Page 38   

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk   Page 54   

ITEM 4.

Controls and Procedures   Page 54   

PART II -

OTHER INFORMATION   Page 54   

ITEM 1.

Legal Proceedings   Page 54   

ITEM 1A.

Risk Factors   Page 54   

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds   Page 55   

ITEM 3.

Defaults Upon Senior Securities   Page 55   

ITEM 4.

Mine Safety Disclosures   Page 55   

ITEM 5.

Other Information   Page 55   

ITEM 6.

Exhibits   Page 56   


Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets—Unaudited

 

     (unaudited)        
     March 31,     December 31,  
(dollars in thousands)    2015     2014  

Assets

    

Cash and due from banks

   $ 17,269      $ 16,717   

Interest bearing deposits with banks

     244,248        202,552   
  

 

 

   

 

 

 

Cash and cash equivalents

  261,517      219,269   

Investment securities available for sale, at fair value (amortized cost of $330,721 and $227,553 as of March 31, 2015 and December 31, 2014 respectively)

  334,746      229,577   

Investment securities, trading

  4,035      3,896   

Loans held for sale

  6,656      3,882   

Portfolio loans and leases

  2,088,531      1,652,257   

Less: Allowance for loan and lease losses

  (14,296   (14,586
  

 

 

   

 

 

 

Net portfolio loans and leases

  2,074,235      1,637,671   

Premises and equipment, net

  42,888      33,748   

Accrued interest receivable

  7,465      5,560   

Deferred income taxes

  12,057      7,209   

Mortgage servicing rights

  4,815      4,765   

Bank owned life insurance

  32,772      20,535   

Federal Home Loan Bank stock

  11,541      11,523   

Goodwill

  101,619      35,781   

Intangible assets

  26,522      22,521   

Other investments

  9,238      5,226   

Other assets

  13,073      5,343   
  

 

 

   

 

 

 

Total assets

$ 2,943,179    $ 2,246,506   
  

 

 

   

 

 

 

Liabilities

Deposits:

Non-interest-bearing

$ 582,495    $ 446,903   

Interest-bearing

  1,658,869      1,241,125   
  

 

 

   

 

 

 

Total deposits

  2,241,364      1,688,028   
  

 

 

   

 

 

 

Short-term borrowings

  38,372      23,824   

FHLB advances and other borrowings

  250,088      260,146   

Accrued interest payable

  1,201      1,040   

Other liabilities

  34,251      27,994   
  

 

 

   

 

 

 

Total liabilities

  2,565,276      2,001,032   
  

 

 

   

 

 

 

Shareholders’ equity

Common stock, par value $1; authorized 100,000,000 shares; issued 20,750,427 and 16,742,135 shares as of March 31, 2015 and December 31, 2014, respectively, and outstanding of 17,777,628 and 13,769,336 as of March 31, 2015 and December 31, 2014, respectively

  20,750      16,742   

Paid-in capital in excess of par value

  223,389      100,486   

Less: Common stock in treasury at cost - 2,972,799 and 2,972,799 shares as of March 31, 2015 and December 31, 2014, respectively

  (31,646   (31,642

Accumulated other comprehensive loss, net of tax benefit

  (10,287   (11,704

Retained earnings

  175,697      171,592   
  

 

 

   

 

 

 

Total shareholders’ equity

  377,903      245,474   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

$ 2,943,179    $ 2,246,506   
  

 

 

   

 

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

Page 3


Table of Contents

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income—Unaudited

 

     Three Months Ended March 31,  
     2015      2014  
(dollars in thousands, except per share data)              

Interest income:

     

Interest and fees on loans and leases

   $ 25,164       $ 19,042   

Interest on cash and cash equivalents

     115         37   

Interest on investment securities:

     

Taxable

     1,320         951   

Non-taxable

     135         103   

Dividends

     20         28   
  

 

 

    

 

 

 

Total interest income

  26,754      20,161   
  

 

 

    

 

 

 

Interest expense on:

Deposits

  1,028      689   

Short-term borrowings

  21      3   

FHLB advances and other borrowings

  910      746   
  

 

 

    

 

 

 

Total interest expense

  1,959      1,438   

Net interest income

  24,795      18,723   

Provision for loan and lease losses

  569      750   
  

 

 

    

 

 

 

Net interest income after provision for loan and lease losses

  24,226      17,973   

Non-interest income:

Fees for wealth management services

  9,105      8,913   

Service charges on deposits

  712      601   

Loan servicing and other fees

  591      446   

Net gain on sale of residential mortgage loans

  808      324   

Net gain (loss) on sale of investment securities available for sale

  810      (4

Net gain on sale of other real estate owned

  15      —     

Dividends on bank stocks

  615      80   

Insurance commissions

  1,021      105   

Other operating income

  1,088      674   
  

 

 

    

 

 

 

Total non-interest income

  14,765      11,139   

Non-interest expenses:

Salaries and wages

  10,870      8,440   

Employee benefits

  2,729      1,979   

Occupancy and bank premises

  2,466      1,933   

Furniture, fixtures, and equipment

  1,512      983   

Advertising

  557      339   

Amortization of intangible assets

  982      637   

Due diligence and merger-related expenses

  2,501      264   

Professional fees

  673      593   

Pennsylvania bank shares tax

  433      368   

Information technology

  702      649   

Other operating expenses

  4,004      2,714   
  

 

 

    

 

 

 

Total non-interest expenses

  27,429      18,899   

Income before income taxes

  11,562      10,213   

Income tax expense

  4,068      3,524   
  

 

 

    

 

 

 

Net income

$ 7,494    $ 6,689   
  

 

 

    

 

 

 

Basic earnings per common share

$ 0.43    $ 0.50   

Diluted earnings per common share

$ 0.42    $ 0.49   

Dividends declared per share

$ 0.19    $ 0.18   

Weighted-average basic shares outstanding

  17,545,802      13,485,213   

Dilutive shares

  357,456      304,828   
  

 

 

    

 

 

 

Adjusted weighted-average diluted shares

  17,903,258      13,790,041   
  

 

 

    

 

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

Page 4


Table of Contents

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income—Unaudited

 

(dollars in thousands)    Three Months Ended March 31,  
     2015     2014  

Net income

   $ 7,494      $ 6,689   

Other comprehensive income (loss):

    

Net change in unrealized gains on investment securities available for sale:

    

Net unrealized gains arising during the period, net of tax expense of $983 and $615, respectively

     1,828        1,142   

Less: reclassification adjustment for net (gains) losses on sales realized in net income, net of tax expense (benefit) of $283 and $(1), respectively

     (527     3   
  

 

 

   

 

 

 

Unrealized investment gains, net of tax expense of $700 and $616, respectively

  1,301      1,145   

Net change in fair value of derivative used for cash flow hedge:

Change in fair value of hedging instruments, net of tax benefit of $(126) and $(123), respectively

  (234   (227

Net change in unfunded pension liability:

Change in unfunded pension liability related to unrealized loss, prior service cost and transition obligation, net of tax expense $188 and $25, respectively

  350      46   
  

 

 

   

 

 

 

Total other comprehensive income

  1,417      964   

Total comprehensive income

$ 8,911    $ 7,653   
  

 

 

   

 

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

Page 5


Table of Contents

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows—Unaudited

 

(dollars in thousands)    Three Months Ended March 31,  
     2015     2014  

Operating activities:

    

Net Income

   $ 7,494      $ 6,689   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Provision for loan and lease losses

     569        750   

Depreciation of fixed assets and net amortization of investment premiums and discounts

     1,925        1,364   

Net (gain) loss on sale of investment securities available for sale

     (810     4   

Net gain on sale of residential mortgages

     (808     (324

Stock based compensation cost

     376        307   

Amortization and net impairment of mortgage servicing rights

     187        107   

Net accretion of fair value adjustments

     (1,461     (770

Amortization of intangible assets

     982        637   

Impairment of other real estate owned (“OREO”)

     90        —     

Net gain on sale of OREO

     (15     —     

Net increase in cash surrender value of bank owned life insurance

     (183     (81

Other, net

     3,038        (5,214

Loans originated for resale

     (29,479     (9,228

Proceeds from loans sold

     27,783        9,471   

Provision for deferred income taxes

     677        655   

Change in income taxes payable/receivable

     (875     (482

Change in accrued interest receivable

     189        41   

Change in accrued interest payable

     (134     39   
  

 

 

   

 

 

 

Net cash provided by operating activities

  9,545      3,965   
  

 

 

   

 

 

 

Investing activities:

Purchases of investment securities

  (22,088   (7,289

Proceeds from maturity of investment securities and paydowns of mortgage-related securities

  12,468      9,126   

Proceeds from sale of investment securities available for sale

  62,788      1,025   

Net proceeds from redemptions of FHLB stock

  4,963      (257

Proceeds from calls of investment securities

  25,525      11,500   

Net change in other investments

  (3,962   45   

Net portfolio loan and lease originations

  (10,194   (18,569

Purchases of premises and equipment

  (1,273   (1,465

Acquisitions, net of cash acquired

  16,609      —     

Proceeds from sale of OREO

  279      5   
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

  85,115      (5,879
  

 

 

   

 

 

 

Financing activities:

Change in deposits

  71,907      (11,745

Change in short-term borrowings

  (94,026   (152

Dividends paid

  (3,335   (2,432

Change in FHLB advances and other borrowings

  (29,749   9,026   

Excess tax benefit from stock-based compensation

  277      73   

Proceeds from sale of treasury stock from deferred compensation plans

  —        67   

Purchase of treasury stock

  (6   (169

Proceeds from issuance of common stock

  16      16   

Proceeds from exercise of stock options

  2,504      103   
  

 

 

   

 

 

 

Net cash used in financing activities

  (52,412   (5,213
  

 

 

   

 

 

 

Change in cash and cash equivalents

  42,248      (7,127

Cash and cash equivalents at beginning of period

  219,269      81,071   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

$ 261,517    $ 73,944   
  

 

 

   

 

 

 

Supplemental cash flow information:

Cash paid during the year for:

Income taxes

$ 3,399    $ 3,278   

Interest

$ 1,798    $ 1,399   

Change in other comprehensive loss

$ 1,417    $ 964   

Change in deferred tax due to change in comprehensive income

$ 762    $ 518   

Transfer of loans to other real estate owned

$ 282    $ 190   

Acquisition of noncash assets and liabilities:

Assets acquired

$ 724,724    $ —     

Liabilities assumed

$ 617,599    $ —     

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

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Table of Contents

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes In Shareholders’ Equity—Unaudited

 

(dollars in thousands, except per share information)    For the Three Months Ended March 31, 2015  
     Shares of
Common
Stock Issued
    Common
Stock
     Paid-in
Capital
    Treasury
Stock
    Accumulated
Other
Comprehensive
Loss
    Retained
Earnings
    Total
Shareholders’
Equity
 

Balance December 31, 2014

     16,742,135      $ 16,742       $ 100,486      $ (31,642   $ (11,704   $ 171,592      $ 245,474   

Net income

     —          —           —          —          —          7,494        7,494   

Dividends declared, $0.19 per share

     —          —           —          —          —          (3,389     (3,389

Other comprehensive income, net of tax expense of $762

     —          —           —          —          1,417        —          1,417   

Stock based compensation

     —          —           376        —          —          —          376   

Tax benefit from stock-based compensation

     —          —           277        —          —          —          277   

Retirement of treasury stock

     (198     —           (2     2        —          —          —     

Net purchase of treasury stock by deferred compensation plans

     —          —           —          (6     —          —          (6

Shares issued in acquisitions

     3,878,304        3,878         117,513        —          —          —          121,391   

Options assumed in acquisitions

     —          —           2,343        —          —          —          2,343   

Common stock issued:

                  —     

Dividend Reinvestment and Stock Purchase Plan

     546        1         15        —          —          —          16   

Share-based awards and options exercises

     129,640        129         2,381        —          —          —          2,510   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance March 31, 2015

  20,750,427    $ 20,750    $ 223,389    $ (31,646 $ (10,287 $ 175,697    $ 377,903   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

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Table of Contents

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Note 1—Basis of Presentation

The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In the opinion of Bryn Mawr Bank Corporation’s (the “Corporation”) management, all adjustments necessary for a fair presentation of the consolidated financial position and the results of operations for the interim periods presented have been included. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Corporation’s Annual Report on Form 10-K for the twelve months ended December 31, 2014 (the “2014 Annual Report”).

The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year.

Note 2—Earnings per Common Share

Basic earnings per common share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding during the period. Diluted earnings per common share takes into account the potential dilution computed pursuant to the treasury stock method that could occur if stock options were exercised and converted into common stock, as well as the effect of restricted and performance shares becoming unrestricted common stock. The effects of stock options are excluded from the computation of diluted earnings per share in periods in which the effect would be anti-dilutive. All weighted average shares, actual shares and per share information in the financial statements have been adjusted retroactively for the effect of stock dividends and splits.

 

     Three Months Ended  
     March 31,  

(dollars in thousands except per share data)

   2015      2014  

Numerator:

     

Net income available to common shareholders

   $ 7,494       $ 6,689   
  

 

 

    

 

 

 

Denominator for basic earnings per share – weighted average shares outstanding

  17,545,802      13,485,213   

Effect of dilutive common shares

  357,456      304,828   
  

 

 

    

 

 

 

Denominator for diluted earnings per share – adjusted weighted average shares outstanding

  17,903,258      13,790,041   
  

 

 

    

 

 

 

Basic earnings per share

$ 0.43    $ 0.50   

Diluted earnings per share

$ 0.42    $ 0.49   

Antidilutive shares excluded from computation of average dilutive earnings per share

  —        —     

Note 3—Business Combinations

Continental Bank Holdings, Inc.

On January 1, 2015, the previously announced merger (the “Merger”) of Continental Bank Holdings, Inc. (“CBH”) with and into the Corporation, and the merger of Continental Bank with and into the The Bryn Mawr Trust Company, the wholly-owned subsidiary of the Corporation (the “Bank”), as contemplated by the Agreement and Plan of Merger, by and between CBH and the Corporation, dated as of May 5, 2014 (as amended by the Amendment to Agreement and Plan of Merger, dated as of October 23, 2014, the “Agreement”), were completed. In accordance with the Agreement, the aggregate share consideration paid to CBH shareholders consisted of 3,878,383 shares (which included fractional shares paid in cash) of the Corporation’s common stock. Shareholders of CBH received 0.45 shares of Corporation common stock for each share of CBH common stock they owned as of the effective date of the Merger. Holders of options to purchase shares of CBH common stock received options to purchase shares of Corporation common stock, converted at the same rate of 0.45. In addition, $1,323,000 was paid to certain warrant holders to cash-out certain warrants. In accordance with the acquisition method of accounting, assets acquired and liabilities assumed were preliminarily adjusted to their fair values as of the date of the Merger. The excess of consideration paid above the fair value of net assets acquired was recorded as goodwill. This goodwill is not amortizable nor is it deductible for income tax purposes.

 

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In connection with the Merger, the consideration paid and the estimated fair value of identifiable assets acquired and liabilities assumed as of the date of the Merger are summarized in the following table:

 

(dollars in thousands)       

Consideration paid:

  

Common shares issued (3,878,304)

   $ 121,391   

Cash in lieu of fractional shares

     2   

Cash-out of certain warrants

     1,323   

Fair value of options assumed

     2,343   
  

 

 

 

Value of consideration

  125,059   

Assets acquired:

Cash and due from banks

  17,934   

Investment securities available for sale

  181,838   

Loans

  426,601   

Premises and equipment

  9,037   

Deferred income taxes

  6,288   

Bank-owned life insurance

  12,054   

Core deposit intangible

  4,191   

Favorable lease asset

  792   

Other assets

  18,085   
  

 

 

 

Total assets

  676,820   

Liabilities assumed:

Deposits

  481,674   

FHLB and other long-term borrowings

  19,726   

Short-term borrowings

  108,609   

Unfavorable lease liability

  2,884   

Other liabilities

  4,706   
  

 

 

 

Total liabilities

  617,599   

Net assets acquired

  59,221   
  

 

 

 

Goodwill resulting from acquisition of CBH

$ 65,838   
  

 

 

 

The fair values of the assets acquired and liabilities assumed are preliminary estimates.

Pro Forma Income Statements

The following pro forma income statements for the three months ended March 31, 2014 and 2015 present the pro forma results of operations of the combined institution (CBH and the Corporation) had the merger occurred on January 1, 2014 and January 1, 2015, respectively. The pro forma income statement adjustments are limited to the effects of fair value mark amortization and accretion and intangible asset amortization. No cost savings or additional merger expenses have been included in the pro forma results of operations for the three months ended March 31, 2014.

 

    

Three Months Ended

March 31,

 
(dollars in thousands except per share data)    2015      2014  

Net interest income

   $ 24,795       $ 24,664   

Provision for loan and lease losses

     569         1,119   
  

 

 

    

 

 

 

Net interest income after provision for loan and lease losses

  24,226      23,545   

Non-interest income

  14,765      11,729   

Non-interest expense

  27,429      23,543   
  

 

 

    

 

 

 

Income before income taxes

  11,562      11,731   

Income tax expense

  4,068      3,967   
  

 

 

    

 

 

 

Net income

$ 7,494    $ 7,764   
  

 

 

    

 

 

 

Per share data*:

Weighted average basic shares outstanding

  17,545,802      17,363,517   

Dilutive shares

  357,456      383,411   
  

 

 

    

 

 

 

Adjusted weighted-average diluted shares

  17,903,258      17,746,928   
  

 

 

    

 

 

 

Basic earnings per common share

$ 0.43    $ 0.45   

Diluted earnings per common share

$ 0.42    $ 0.44   

 

* Assumes that the common shares outstanding as of December 31, 2014 for CBH were outstanding for the full three months ended March 31, 2014 and therefore equal the weighted average common shares outstanding for the three months ended March 31, 2014. The merger conversion of 8,618,629 CBH common shares equals 3,878,304 Corporation common shares (8,618,629 times 0.45 minus 79 fractional shares paid in cash).

 

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Powers Craft Parker and Beard, Inc. (“PCPB”)

The acquisition of PCPB, an insurance brokerage headquartered in Rosemont, Pennsylvania, was completed on October 1, 2014. The consideration paid by the Corporation was $7.0 million, of which $5.4 million was paid at closing and three contingent cash payments, not to exceed $542 thousand each, will be payable on each of September 30, 2015, September 30, 2016 and September 30, 2017, subject to the attainment of certain revenue targets during the related periods. The acquisition will enable the Corporation to offer a comprehensive line of insurance solutions to both individual and business clients.

In connection with the PCPB acquisition, the consideration paid and the fair value of identifiable assets acquired and liabilities assumed as of the date of acquisition are summarized in the following table:

 

(dollars in thousands)       

Consideration paid:

  

Cash paid at closing

   $ 5,399   

Contingent payment liability

     1,625   
  

 

 

 

Value of consideration

  7,024   

Assets acquired:

Cash operating accounts

  1,274   

Other investments

  302   

Premises and equipment

  100   

Intangible assets – customer relationships

  3,280   

Intangible assets – non-competition agreements

  1,580   

Intangible assets – trade name

  955   

Other assets

  850   
  

 

 

 

Total assets

  8,341   

Liabilities assumed:

Deferred tax liability

  2,437   

Other liabilities

  1,818   
  

 

 

 

Total liabilities

  4,255   

Net assets acquired

  4,086   
  

 

 

 

Goodwill resulting from acquisition of PCPB

$ 2,938   
  

 

 

 

As of December 31, 2014, the Corporation had finalized its fair value estimates related to the acquisition of PCPB.

Note 4—Investment Securities

The amortized cost and fair value of investment securities available for sale are as follows:

As of March 31, 2015

 

(dollars in thousands)    Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
     Fair Value  

U.S. Treasury securities

   $ 102       $ —         $ —         $ 102   

Obligations of U.S. government agency securities

     89,078         659         (68      89,669   

Obligations of state & political subdivisions

     32,128         161         (28      32,261   

Mortgage-backed securities

     159,472         2,901         (2      162,371   

Collateralized mortgage obligations

     32,412         389         (42      32,759   

Other investments

     17,529         164         (109      17,584   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 330,721    $ 4,274    $ (249 $ 334,746   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

As of December 31, 2014

 

(dollars in thousands)    Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
     Fair Value  

U.S. Treasury securities

   $ 102       $ —         $ (2    $ 100   

Obligations of the U.S. government and agencies

     66,881         171         (290      66,762   

Obligations of state and political subdivisions

     28,955         137         (47      29,045   

Mortgage-backed securities

     79,498         1,914         (30      81,382   

Collateralized mortgage obligations

     34,618         299         (120      34,797   

Other investments

     17,499         173         (181      17,491   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 227,553    $ 2,694    $ (670 $ 229,577   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following tables detail the amount of investment securities available for sale that were in an unrealized loss position as of the dates indicated:

As of March 31, 2015

 

    

Less than 12

Months

   

12 Months

or Longer

    Total  
(dollars in thousands)    Fair
Value
     Unrealized
Losses
    Fair
Value
     Unrealized
Losses
    Fair
Value
     Unrealized
Losses
 

Obligations of the U.S. government and agencies

   $ 10,315       $ (51   $ 6,006       $ (17   $ 16,321       $ (68

Obligations of state and political subdivisions

     7,711         (18     2,751         (10     10,462         (28

Mortgage-backed securities

     1,188         (2     —           —          1,188         (2

Collateralized mortgage obligations

     3,459         (26     2,970         (16     6,429         (42

Other investments

     13,161         (109     —           —          13,161         (109
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total

$ 35,834    $ (206 $ 11,727    $ (43 $ 47,561    $ (249
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

As of December 31, 2014

 

    

Less than 12

Months

   

12 Months

or Longer

    Total  
(dollars in thousands)    Fair
Value
     Unrealized
Losses
    Fair
Value
     Unrealized
Losses
    Fair
Value
     Unrealized
Losses
 

U.S. Treasury securities

   $ —         $ —        $ 100       $ (2 )   $ 100       $ (2

Obligations of the U.S. government and agencies

     16,822         (28     22,691         (262     39,513         (290

Obligations of state and political subdivisions

     4,777         (19     4,060         (28     8,837         (47

Mortgage-backed securities

     2,289         (14     3,814         (16     6,103         (30

Collateralized mortgage obligations

     3,274         (22     9,507         (98     12,781         (120

Other investments

     13,717         (181     —           —          13,717         (181
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total

$ 40,879    $ (264 $ 40,172    $ (406 $ 81,051    $ (670
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

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Management evaluates the Corporation’s investment securities available for sale that are in an unrealized loss position in order to determine if the decline in fair value is other than temporary. The available for sale investment portfolio includes debt securities issued by U.S. government agencies, U.S. government-sponsored agencies, state and local municipalities and other issuers. All fixed income investment securities in the Corporation’s available for sale investment portfolio are rated as investment grade. Factors considered in the evaluation include the current economic climate, the length of time and the extent to which the fair value has been below cost, interest rates and the bond rating of each security. The unrealized losses presented in the tables above are temporary in nature and are primarily related to market interest rates rather than the underlying credit quality of the issuers. The Corporation does not believe that these unrealized losses are other-than-temporary. The Corporation does not have the intent to sell these securities prior to their maturity or the recovery of their cost bases and believes that it is more likely than not that it will not have to sell these securities prior to their maturity or the recovery of their cost bases.

As of March 31, 2015 and December 31, 2014, securities having fair values of $160.9 million and $91.9 million, respectively, were specifically pledged as collateral for public funds, trust deposits, the Federal Reserve Bank of Philadelphia discount window program, Federal Home Loan Bank of Pittsburgh (“FHLB”) borrowings and other purposes. The FHLB has a blanket lien on non-pledged, mortgage-related loans and securities as part of the Corporation’s borrowing agreement with the FHLB.

The amortized cost and fair value of investment securities available for sale as of March 31, 2015 and December 31, 2014, by contractual maturity, are shown below:

 

     March 31, 2015      December 31, 2014  
(dollars in thousands)   

Amortized

Cost

    

Fair

Value

    

Amortized

Cost

    

Fair

Value

 

Investment securities1:

           

Due in one year or less

   $ 16,620       $ 16,635       $ 15,254       $ 15,277   

Due after one year through five years

     57,316         57,520         59,433         59,463   

Due after five years through ten years

     25,653         25,761         23,151         23,067   

Due after ten years

     23,619         24,015         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal

  123,208      123,931      97,838      97,807   

Mortgage-related securities2

  191,884      195,130      114,116      116,179   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 315,092    $ 319,061    $ 211,954    $ 213,986   

 

1 Included in the investment portfolio, but not in the table above, are mutual funds with a fair value, as of March 31, 2015 and December 31, 2014, of $15.7 million and $15.6 million, respectively, which have no stated maturity.
2 Expected maturities of mortgage-related securities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

As of March 31, 2015 and December 31, 2014, the Corporation’s investment securities held in trading accounts were comprised of a deferred compensation trust which is invested in marketable securities whose diversification is at the discretion of the deferred compensation plan participants.

 

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Note 5—Loans and Leases

The loan and lease portfolio consists of loans and leases originated by the Corporation, as well as loans acquired in mergers and acquisitions. These mergers and acquisitions include the January 2015 acquisition of CBH, the November 2012 transaction with First Bank of Delaware and the July 2010 acquisition of First Keystone Financial, Inc. Many of the tables in this footnote are presented for all loans as well as supplemental tables for originated and acquired loans.

A. The table below details all portfolio loans and leases as of the dates indicated:

 

     March 31,
2015
     December 31,
2014
 

Loans held for sale

   $ 6,656       $ 3,882   
  

 

 

    

 

 

 

Real estate loans:

Commercial mortgage

$ 892,675    $ 689,528   

Home equity lines and loans

  209,037      182,082   

Residential mortgage

  379,363      313,442   

Construction

  81,408      66,267   
  

 

 

    

 

 

 

Total real estate loans

  1,562,483      1,251,319   

Commercial and industrial

  457,432      335,645   

Consumer

  20,204      18,480   

Leases

  48,412      46,813   
  

 

 

    

 

 

 

Total portfolio loans and leases

  2,088,531      1,652,257   
  

 

 

    

 

 

 

Total loans and leases

$ 2,095,187    $ 1,656,139   
  

 

 

    

 

 

 

Loans with fixed rates

$ 1,086,804    $ 927,009   

Loans with adjustable or floating rates

  1,008,383      729,130   
  

 

 

    

 

 

 

Total loans and leases

$ 2,095,187    $ 1,656,139   
  

 

 

    

 

 

 

Net deferred loan origination costs included in the above loan table

$ 302    $ 324   
  

 

 

    

 

 

 

The table below details the Corporation’s originated portfolio loans and leases as of the dates indicated:

 

     March 31,
2015
     December 31,
2014
 

Loans held for sale

   $ 6,656       $ 3,882   
  

 

 

    

 

 

 

Real estate loans:

Commercial mortgage

$ 663,658    $ 637,100   

Home equity lines and loans

  163,878      164,554   

Residential mortgage

  275,653      276,596   

Construction

  67,615      66,206   
  

 

 

    

 

 

 

Total real estate loans

  1,170,804      1,144,456   

Commercial and industrial

  332,593      325,264   

Consumer

  19,568      18,471   

Leases

  48,412      46,813   
  

 

 

    

 

 

 

Total portfolio loans and leases

  1,571,377      1,535,004   
  

 

 

    

 

 

 

Total loans and leases

$ 1,578,033    $ 1,538,886   
  

 

 

    

 

 

 

Loans with fixed rates

$ 867,480    $ 856,203   

Loans with adjustable or floating rates

  710,553      682,683   
  

 

 

    

 

 

 

Total originated loans and leases

$ 1,578,033    $ 1,538,886   
  

 

 

    

 

 

 

 

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Table of Contents

The table below details the Corporation’s acquired portfolio loans as of the dates indicated:

 

     March 31,
2015
     December 31,
2014
 

Real estate loans:

     

Commercial mortgage

   $ 229,017       $ 52,428   

Home equity lines and loans

     45,159         17,528   

Residential mortgage

     103,710         36,846   

Construction

     13,793         61   
  

 

 

    

 

 

 

Total real estate loans

  391,679      106,863   

Commercial and industrial

  124,839      10,381   

Consumer

  636      9   
  

 

 

    

 

 

 

Total portfolio loans and leases

  517,154      117,253   
  

 

 

    

 

 

 

Total loans and leases

$ 517,154    $ 117,253   
  

 

 

    

 

 

 

Loans with fixed rates

$ 219,324    $ 70,806   

Loans with adjustable or floating rates

  297,830      46,447   
  

 

 

    

 

 

 

Total acquired loans and leases

$ 517,154    $ 117,253   
  

 

 

    

 

 

 

B. Components of the net investment in leases are detailed as follows:

 

(dollars in thousands)    March 31,
2015
     December 31,
2014
 

Minimum lease payments receivable

   $ 54,833       $ 53,131   

Unearned lease income

     (8,673      (8,546

Initial direct costs and deferred fees

     2,252         2,228   
  

 

 

    

 

 

 

Total

$ 48,412    $ 46,813   
  

 

 

    

 

 

 

C. Non-Performing Loans and Leases(1)

The following table details all non-performing loans and leases as of the dates indicated:

 

(dollars in thousands)    March 31,
2015
     December 31,
2014
 

Non-accrual loans and leases:

     

Commercial mortgage

   $ 600       $ 668   

Home equity lines and loans

     924         1,061   

Residential mortgage

     5,129         5,693   

Construction

     201         263   

Commercial and industrial

     2,218         2,390   

Consumer

     9         —     

Leases

     49         21   
  

 

 

    

 

 

 

Total

$ 9,130    $ 10,096   
  

 

 

    

 

 

 

 

(1)  Purchased credit-impaired loans, which have been recorded at their fair values at acquisition, and which are performing, are excluded from this table, with the exception of $692 thousand and $572 thousand of purchased credit-impaired loans as of March 31, 2015 and December 31, 2014, respectively, which became non-performing subsequent to acquisition.

 

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Table of Contents

The following table details non-performing originated portfolio loans and leases as of the dates indicated:

 

(dollars in thousands)    March 31,
2015
     December 31,
2014
 

Non-accrual originated loans and leases:

     

Commercial mortgage

   $ —         $ —     

Home equity lines and loans

     786         904   

Residential mortgage

     4,215         4,662   

Construction

     201         263   

Commercial and industrial

     1,009         1,583   

Consumer

     9         —     

Leases

     49         21   
  

 

 

    

 

 

 

Total

$ 6,269    $ 7,433   
  

 

 

    

 

 

 

The following table details non-performing acquired portfolio loans(1) as of the dates indicated:

 

(dollars in thousands)    March 31,
2015
     December 31,
2014
 

Non-accrual acquired loans and leases:

     

Commercial mortgage

   $ 600       $ 668   

Home equity lines and loans

     138         157   

Residential mortgage

     914         1,031   

Construction

     —           —     

Commercial and industrial

     1,209         807   

Consumer

     —           —     
  

 

 

    

 

 

 

Total

$ 2,861    $ 2,663   
  

 

 

    

 

 

 

 

(1)  Purchased credit-impaired loans, which have been recorded at their fair values at acquisition, and which are performing, are excluded from this table, with the exception of $692 thousand and $572 thousand of purchased credit-impaired loans as of March 31, 2015 and December 31, 2014, respectively, which became non-performing subsequent to acquisition.

D. Purchased Credit-Impaired Loans

The outstanding principal balance and related carrying amount of credit-impaired loans, for which the Corporation applies ASC 310-30, Accounting for Purchased Loans with Deteriorated Credit Quality, to account for the interest earned, as of the dates indicated, are as follows:

 

(dollars in thousands)    March 31,
2015
     December 31,
2014
 

Outstanding principal balance

   $ 25,461       $ 12,491   

Carrying amount(1)

   $ 16,894       $ 9,045   

 

(1)  Includes $1.3 million and $105 thousand purchased credit-impaired loans as of March 31, 2015 and December 31, 2014, respectively, for which the Corporation could not estimate the timing or amount of expected cash flows to be collected at acquisition, and for which no accretable yield is recognized. Additionally, the table above includes $692 thousand and $572 thousand of purchased credit-impaired loans as of March 31, 2015 and December 31, 2014, respectively, which became non-performing subsequent to acquisition, which are disclosed in Note 5C, above, and which also have no accretable yield.

The following table presents changes in the accretable discount on purchased credit-impaired loans, for which the Corporation applies ASC 310-30, for the three months ended March 31, 2015:

 

(dollars in thousands)    Accretable
Discount
 

Balance, December 31, 2014

   $ 5,357   

Accretion

     (521

Reclassifications from nonaccretable difference

     2   

Additions/adjustments

     3,050   

Disposals

     (277
  

 

 

 

Balance, March 31, 2015

$ 7,611   
  

 

 

 

 

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Table of Contents

E. Age Analysis of Past Due Loans and Leases

The following tables present an aging of all portfolio loans and leases as of the dates indicated:

 

     Accruing Loans and Leases                
(dollars in thousands)    30 – 59
Days
Past Due
     60 – 89
Days
Past Due
     Over 89
Days
Past Due
     Total Past
Due
     Current      Total
Accruing
Loans and
Leases
     Nonaccrual
Loans and
Leases
     Total
Loans
and
Leases
 

As of March 31, 2015

                       

Commercial mortgage

   $ 467       $ 299       $ —         $ 766       $ 891,309       $ 892,075       $ 600       $ 892,675   

Home equity lines and loans

     876         803         —           1,679         206,434         208,113         924         209,037   

Residential mortgage

     76         —           —           76         374,158         374,234         5,129         379,363   

Construction

     —           —           —           —           81,207         81,207         201         81,408   

Commercial and industrial

     331         349         —           680         454,534         455,214         2,218         457,432   

Consumer

     —           15         —           15         20,180         20,195         9         20,204   

Leases

     129         16         —           145         48,218         48,363         49         48,412   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
$ 1,879    $ 1,482    $ —      $ 3,361    $ 2,076,040    $ 2,079,401    $ 9,130    $ 2,088,531   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     Accruing Loans and Leases                
(dollars in thousands)    30 – 59
Days

Past Due
     60 – 89
Days

Past Due
     Over 89
Days
Past Due
     Total Past
Due
     Current      Total
Accruing
Loans and
Leases
     Nonaccrual
Loans and
Leases
     Total
Loans
and
Leases
 

As of December 31, 2014

                       

Commercial mortgage

   $ 71       $ 1,185       $ —         $ 1,256       $ 687,604       $ 688,860       $ 668       $ 689,528   

Home equity lines and loans

     26         —           —           26         180,995         181,021         1,061         182,082   

Residential mortgage

     381         123         —           504         307,245         307,749         5,693         313,442   

Construction

     —           —           —           —           66,004         66,004         263         66,267   

Commercial and industrial

     390         —           —           390         332,865         333,255         2,390         335,645   

Consumer

     19         3         —           22         18,458         18,480         —           18,480   

Leases

     18         17         —           35         46,757         46,792         21         46,813   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
$ 905    $ 1,328    $ —      $ 2,233    $ 1,639,928    $ 1,642,161    $ 10,096    $ 1,652,257   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The following tables present an aging of originated portfolio loans and leases as of the dates indicated:

 

     Accruing Loans and Leases                

(dollars in thousands)

   30 – 59
Days
Past Due
     60 – 89
Days
Past Due
     Over 89
Days
Past Due
     Total Past
Due
     Current      Total
Accruing
Loans and
Leases
     Nonaccrual
Loans and
Leases
     Total
Loans
and
Leases
 

As of March 31, 2015

                       

Commercial mortgage

   $ 467       $ 299       $ —         $ 766       $ 662,892       $ 663,658       $ —         $ 663,658   

Home equity lines and loans

     710         803         —           1,513         161,580         163,093         786         163,879   

Residential mortgage

     —           —           —           —           271,438         271,438         4,215         275,653   

Construction

     —           —           —           —           67,414         67,414         201         67,615   

Commercial and industrial

     45         —           —           45         331,539         331,584         1,009         332,593   

Consumer

     —           —           —           —           19,558         19,558         9         19,567   

Leases

     129         16         —           145         48,217         48,362         49         48,411   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
$ 1,351    $ 1,118    $ —      $ 2,469    $ 1,562,638    $ 1,565,107    $ 6,269    $ 1,571,376   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents
     Accruing Loans and Leases                
(dollars in thousands)    30 – 59
Days
Past Due
     60 – 89
Days

Past Due
     Over 89
Days

Past Due
     Total Past
Due
     Current      Total
Accruing
Loans and
Leases
     Nonaccrual
Loans and
Leases
     Total
Loans
and
Leases
 

As of December 31, 2014

                       

Commercial mortgage

   $ —         $ 1,185       $ —         $ 1,185       $ 635,914       $ 637,099       $ —         $ 637,099   

Home equity lines and loans

     19         —           —           19         163,631         163,650         904         164,554   

Residential mortgage

     218         123         —           341         271,593         271,934         4,662         276,596   

Construction

     —           —           —           —           65,943         65,943         263         66,206   

Commercial and industrial

     119         —           —           119         323,561         323,680         1,583         325,263   

Consumer

     19         3         —           22         18,450         18,472         —           18,472   

Leases

     18         17         —           35         46,757         46,792         21         46,813   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
$ 393    $ 1,328    $ —      $ 1,721    $ 1,525,849    $ 1,527,570    $ 7,433    $ 1,535,003   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The following tables present an aging of acquired portfolio loans and leases as of the dates indicated:

 

     Accruing Loans and Leases                
(dollars in thousands)    30 – 59
Days
Past Due
     60 – 89
Days
Past Due
     Over 89
Days

Past Due
     Total Past
Due
     Current      Total
Accruing
Loans and
Leases
     Nonaccrual
Loans and
Leases
     Total
Loans

and
Leases
 

As of March 31, 2015

                       

Commercial mortgage

   $ —         $ —         $ —         $ —         $ 228,417       $ 228,417       $ 600       $ 229,017   

Home equity lines and loans

     166         —           —           166         44,854         45,020         138         45,158   

Residential mortgage

     76         —           —           76         102,720         102,796         914         103,710   

Construction

     —           —           —           —           13,793         13,793         —           13,793   

Commercial and industrial

     286         349         —           635         122,995         123,630         1,209         124,839   

Consumer

     —           15         —           15         622         637         —           637   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
$ 528    $ 364    $ —      $ 892    $ 513,401    $ 514,293    $ 2,861    $ 517,154   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     Accruing Loans and Leases                
(dollars in thousands)    30 – 59
Days

Past Due
     60 – 89
Days

Past Due
     Over 89
Days

Past Due
     Total Past
Due
     Current      Total
Accruing
Loans and
Leases
     Nonaccrual
Loans and
Leases
     Total
Loans

and
Leases
 

As of December 31, 2014

                       

Commercial mortgage

   $ 71       $ —         $ —         $ 71       $ 51,690       $ 51,761       $ 668       $ 52,429   

Home equity lines and loans

     7         —           —           7         17,364         17,371         157         17,528   

Residential mortgage

     163         —           —           163         35,652         35,815         1,031         36,846   

Construction

     —           —           —           —           61         61         —           61   

Commercial and industrial

     271         —           —           271         9,304         9,575         807         10,382   

Consumer

     —           —           —           —           8         8         —           8   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
$ 512    $ —      $ —      $ 512    $ 114,079    $ 114,591    $ 2,663    $ 117,254   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

F. Allowance for Loan and Lease Losses (the “Allowance”)

The following tables detail the roll-forward of the Allowance for the three months ended March 31, 2015:

 

(dollars in thousands)   

Commercial

Mortgage

   

Home Equity
Lines and

Loans

   

Residential

Mortgage

    Construction      Commercial
and
Industrial
    Consumer     Leases     Unallocated      Total  

Balance, December 31, 2014

   $ 3,948      $ 1,917      $ 1,736      $ 1,367       $ 4,533      $ 238      $ 468      $ 379       $ 14,586   

Charge-offs

     —          (129     (468     —           (276     (35     (20     —           (928

Recoveries

     21        4        5        1         21        3        14        —           69   

Provision for loan and lease losses

     (193     259        593        5         (293     51        22        125         569   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Balance March 31, 2015

$ 3,776    $ 2,051    $ 1,866    $ 1,373    $ 3,985    $ 257    $ 484    $ 504    $ 14,296   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

The following table details the roll-forward of the Allowance for the three months ended March 31, 2014:

 

(dollars in thousands)    Commercial
Mortgage
   

Home Equity
Lines and

Loans

   

Residential

Mortgage

    Construction      Commercial
and
Industrial
    Consumer     Leases     Unallocated     Total  

Balance, December 31, 2013

   $ 3,797      $ 2,204      $ 2,446      $ 845       $ 5,011      $ 259      $ 604      $ 349      $ 15,515   

Charge-offs

     (20     (386     (17     —           (1     (32     (82     —          (538

Recoveries

     1        —          5        —           1        2        34        —          43   

Provision for loan and lease losses

     193        311        (116     22         345        57        59        (121     750   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, March 31, 2014

$ 3,971    $ 2,129    $ 2,318    $ 867    $ 5,356    $ 286    $ 615    $ 228    $ 15,770   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 17


Table of Contents

The following table details the allocation of the Allowance for all portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of March 31, 2015 and December 31, 2014:

 

(dollars in thousands)   Commercial
Mortgage
    Home Equity
Lines and

Loans
    Residential
Mortgage
    Construction     Commercial
and
Industrial
    Consumer     Leases     Unallocated     Total  

As of March 31, 2015

                 

Allowance on loans and leases:

                 

Individually evaluated for impairment

  $ —        $ 26      $ 65      $ —        $ 103      $ 15      $      $      $ 209   

Collectively evaluated for impairment

    3,776        2,025        1,801        1,373        3,882        242        484        504        14,087   

Purchased credit-impaired(1)

    —          —          —          —          —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

$ 3,776    $ 2,051    $ 1,866    $ 1,373    $ 3,985    $ 257    $ 484    $ 504    $ 14,296   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2014

Allowance on loans and leases:

Individually evaluated for impairment

$ —      $ 4    $ 184    $ —      $ 448    $ 32    $    $    $ 668   

Collectively evaluated for impairment

  3,948      1,913      1,552      1,366      4,085      206      468      379      13,917   

Purchased credit-impaired(1)

  —        —        —        1      —        —        —        —        1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

$ 3,948    $ 1,917    $ 1,736    $ 1,367    $ 4,533    $ 238    $ 468    $ 379    $ 14,586   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  Purchased credit-impaired loans are evaluated for impairment on an individual basis.

The following table details the carrying value for all portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of March 31, 2015 and December 31, 2014:

 

(dollars in thousands)   Commercial
Mortgage
    Home Equity
Lines and
Loans
    Residential
Mortgage
    Construction     Commercial
and
Industrial
    Consumer     Leases     Total  

As of March 31, 2015

               

Carrying value of loans and leases:

               

Individually evaluated for impairment

  $ 94      $ 1,038      $ 8,055      $ 201      $ 3,085      $ 40      $ —        $ 12,513   

Collectively evaluated for impairment

    879,037        207,817        371,285        79,094        453,315        20,164        48,412        2,059,124   

Purchased credit-impaired(1)

    13,544        182        23        2,113        1,032        —          —          16,894   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

$ 892,675    $ 209,037    $ 379,363    $ 81,408    $ 457,432    $ 20,204    $ 48,412    $ 2,088,531   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2014

Carrying value of loans and leases:

Individually evaluated for impairment

$ 97    $ 1,155    $ 8,642    $ 264    $ 3,460    $ 31    $ —      $ 13,649   

Collectively evaluated for impairment

  680,820      180,912      304,773      65,942      331,854      18,449      46,813      1,629,563   

Purchased credit-impaired(1)

  8,611      15      27      61      331      —        —        9,045   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

$ 689,528    $ 182,082    $ 313,442    $ 66,267    $ 335,645    $ 18,480    $ 46,813    $ 1,652,257   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  Purchased credit-impaired loans are evaluated for impairment on an individual basis.

The following table details the allocation of the Allowance for originated portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of March 31, 2015 and December 31, 2014:

 

(dollars in thousands)   Commercial
Mortgage
    Home Equity
Lines and

Loans
    Residential
Mortgage
    Construction     Commercial
and
Industrial
    Consumer     Leases     Unallocated     Total  

As of March 31, 2015

                 

Allowance on loans and leases:

                 

Individually evaluated for impairment

  $ —        $ 26      $ 43      $ —        $ 103      $ 15      $ —        $ —        $ 187   

Collectively evaluated for impairment

    3,776        1,956        1,769        1,373        3,882        242        484        504        13,986   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 3,776      $ 1,982      $ 1,812      $ 1,373      $ 3,985      $ 257      $ 484      $ 504      $ 14,173   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2014

                 

Allowance on loans and leases:

                 

Individually evaluated for impairment

  $ —        $ 4      $ 162      $ —         $ 448      $ 32      $ —        $ —        $ 646   

Collectively evaluated for impairment

    3,948        1,851        1,551        1,366        4,085        206        468        379        13,854   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 3,948      $ 1,855      $ 1,713      $ 1,366      $ 4,533      $ 238      $ 468      $ 379      $ 14,500   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 18


Table of Contents

The following table details the carrying value for originated portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of March 31, 2015 and December 31, 2014:

 

(dollars in thousands)    Commercial
Mortgage
     Home Equity
Lines and

Loans
     Residential
Mortgage
     Construction      Commercial
and
Industrial
     Consumer      Leases      Total  

As of March 31, 2015

                       

Carrying value of loans and leases:

                       

Individually evaluated for impairment

   $ —         $ 900       $ 6,743       $ 201       $ 2,044       $ 40       $ —         $ 9,928   

Collectively evaluated for impairment

     663,658         162,978         268,908         67,414         330,549         19,528         48,412         1,561,447   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 663,658    $ 163,878    $ 275,651    $ 67,615    $ 332,593    $ 19,568    $ 48,412    $ 1,571,375   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

As of December 31, 2014

Carrying value of loans and leases:

Individually evaluated for impairment

$ —      $ 998    $ 7,211    $ 264    $ 2,632    $ 31    $ —      $ 11,136   

Collectively evaluated for impairment

  637,099      163,557      269,385      65,942      322,632      18,440      46,813      1,523,868   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 637,099    $ 164,555    $ 276,596    $ 66,206    $ 325,264    $ 18,471    $ 46,813    $ 1,535,004   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The following table details the allocation of the Allowance for acquired portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of March 31, 2015 and December 31, 2014:

 

(dollars in thousands)    Commercial
Mortgage
     Home Equity
Lines and
Loans
     Residential
Mortgage
     Construction      Commercial
and
Industrial
     Consumer      Leases      Unallocated      Total  

As of March 31, 2015

                          

Allowance on loans and leases:

                          

Individually evaluated for impairment

   $ —         $ —         $ 22       $ —         $ —         $ —         $ —         $ —         $ 22   

Collectively evaluated for impairment

     —           69         32         —           —           —           —           —           101   

Purchased credit-impaired(1)

     —           —           —           —           —           —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ —         $ 69       $ 54       $ —         $ —         $ —         $ —         $ —         $ 123   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

As of December 31, 2014

                          

Allowance on loans and leases:

                          

Individually evaluated for impairment

   $ —         $ —         $ 22       $ —         $ —         $ —         $ —         $ —         $ 22   

Collectively evaluated for impairment

     —           62         1         —           —           —           —           —           63   

Purchased credit-impaired(1)

     —           —           —           1         —           —           —           —           1   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $   —       $ 62       $ 23       $ 1       $ —         $ —         $ —         $ —         $ 86   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)  Purchased credit-impaired loans are evaluated for impairment on an individual basis.

The following table details the carrying value for acquired portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of March 31, 2015 and December 31, 2014:

 

(dollars in thousands)   Commercial
Mortgage
    Home Equity
Lines and

Loans
    Residential
Mortgage
    Construction     Commercial
and
Industrial
    Consumer     Leases     Total  

As of March 31, 2015

               

Carrying value of loans and leases:

               

Individually evaluated for impairment

  $ 94      $ 138      $ 1,312      $ —        $ 1,041      $ —        $ —        $ 2,585   

Collectively evaluated for impairment

    215,379        44,839        102,377        11,680        122,766        636        —          497,677   

Purchased credit-impaired(1)

    13,544        182        23        2,113        1,032        —          —          16,894   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

$ 229,017    $ 45,159    $ 103,712    $ 13,793    $ 124,839    $ 636    $ —      $ 517,156   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2014

Carrying value of loans and leases:

Individually evaluated for impairment

$ 97    $ 157    $ 1,431    $ —      $ 828    $ —      $ —      $ 2,513   

Collectively evaluated for impairment

  43,721      17,355      35,388      —        9,222      9      —        105,695   

Purchased credit-impaired(1)

  8,611      15      27      61      331      —        —        9,045   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

$ 52,429    $ 17,527    $ 36,846    $ 61    $ 10,381    $ 9    $ —      $ 117,253   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  Purchased credit-impaired loans are evaluated for impairment on an individual basis.

 

Page 19


Table of Contents

As part of the process of determining the Allowance for the different segments of the loan and lease portfolio, Management considers certain credit quality indicators. For the commercial mortgage, construction and commercial and industrial loan segments, periodic reviews of the individual loans are performed by both in-house staff as well as external loan reviewers. The results of these reviews is reflected in the risk grade assigned to each loan. These internally assigned grades are as follows:

 

    Pass – Loans considered satisfactory with no indications of deterioration.

 

    Special mention—Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

 

    Substandard—Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

 

    Doubtful—Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

In addition, for the remaining segments of the loan and lease portfolio, which include residential mortgage, home equity lines and loans, consumer, and leases, the credit quality indicator used to determine this component of the Allowance is based on performance status.

The following tables detail the carrying value of all portfolio loans and leases by portfolio segment based on the credit quality indicators used to determine the Allowance as of March 31, 2015 and December 31, 2014:

Credit Risk Profile by Internally Assigned Grade

 

(dollars in thousands)    Commercial Mortgage      Construction      Commercial and Industrial      Total  
     March 31,
2015
     December 31,
2014
     March 31,
2015
     December 31,
2014
     March 31,
2015
     December 31,
2014
     March 31,
2015
     December 31,
2014
 

Pass

   $ 874,635       $ 683,549       $ 76,392       $ 66,004       $ 445,073       $ 329,299       $ 1,396,100       $ 1,078,852   

Special Mention

     5,315         4,364         —           —           6,200         1,149         11,515         5,513   

Substandard

     12,725         1,615         2,971         263         5,973         5,197         21,669         7,075   

Doubtful

     —           —           2,045         —           186         —           2,231         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 892,675    $ 689,528    $ 81,408    $ 66,267    $ 457,432    $ 335,645    $ 1,431,515    $ 1,091,440   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Credit Risk Profile by Payment Activity

 

(dollars in thousands)   Residential Mortgage     Home Equity Lines and
Loans
    Consumer     Leases     Total  
    March 31,
2015
    December 31,
2014
    March 31,
2015
    December 31,
2014
    March 31,
2015
    December 31,
2014
    March 31,
2015
    December 31,
2014
    March 31,
2015
    December 31,
2014
 

Performing

  $ 374,234      $ 307,749      $ 208,114      $ 181,021      $ 20,195      $ 18,480      $ 48,363      $ 46,792      $ 650,906      $ 554,043   

Non-performing

    5,129        5,693        923        1,061        9        —          49        21        6,110        6,774   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

$ 379,363    $ 313,442    $ 209,037    $ 182,082    $ 20,204    $ 18,480    $ 48,412    $ 46,813    $ 657,016    $ 560,817   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The following tables detail the carrying value of originated portfolio loans and leases by portfolio segment based on the credit quality indicators used to determine the Allowance as of March 31, 2015 and December 31, 2014:

Credit Risk Profile by Internally Assigned Grade

 

(dollars in thousands)    Commercial Mortgage      Construction      Commercial and Industrial      Total  
     March 31,
2015
     December 31,
2014
     March 31,
2015
     December 31,
2014
     March 31,
2015
     December 31,
2014
     March 31,
2015
     December 31,
2014
 

Pass

   $ 658,321       $ 631,910       $ 66,628       $ 65,943       $ 327,622       $ 319,723       $ 1,052,571       $ 1,017,576   

Special Mention

     4,365         4,364         —           —           1,149         1,149         5,514         5,513   

Substandard

     972         825         987         263         3,822         4,391         5,781         5,479   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 663,658    $ 637,099    $ 67,615    $ 66,206    $ 332,593    $ 325,263    $ 1,063,866    $ 1,028,568   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

Credit Risk Profile by Payment Activity

 

(dollars in thousands)   Residential Mortgage     Home Equity Lines and
Loans
    Consumer     Leases     Total  
    March 31,
2015
    December 31,
2014
    March 31,
2015
    December 31,
2014
    March 31,
2015
    December 31,
2014
    March 31,
2015
    December 31,
2014
    March 31,
2015
    December 31,
2014
 

Performing

  $ 271,437      $ 271,933      $ 163,093      $ 163,651      $ 19,559      $ 18,471      $ 48,363      $ 46,792      $ 502,452      $ 500,847   

Non-performing

    4,215        4,663        786        904        9        —          49        21        5,059        5,588   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 275,652      $ 276,596      $ 163,879      $ 164,555      $ 19,568      $ 18,471      $ 48,412      $ 46,813      $ 507,511      $ 506,435   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The following tables detail the carrying value of acquired portfolio loans and leases by portfolio segment based on the credit quality indicators used to determine the Allowance as of March 31, 2015 and December 31, 2014:

Credit Risk Profile by Internally Assigned Grade

 

(dollars in thousands)    Commercial Mortgage      Construction      Commercial and Industrial      Total  
     March 31,
2015
     December 31,
2014
     March 31,
2015
     December 31,
2014
     March 31,
2015
     December 31,
2014
     March 31,
2015
     December 31,
2014
 

Pass

   $ 216,314       $ 51,639       $ 9,764       $ 61       $ 117,451       $ 9,576       $ 343,529       $ 61,276   

Special Mention

     950         —           —           —           5,051         —           6,001         —     

Substandard

     11,753         790         1,984         —           2,151         806         15,888         1,596   

Doubtful

     —           —           2,044         —           186         —           2,230         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 229,017    $ 52,429    $ 13,792    $ 61    $ 124,839    $ 10,382    $ 367,648    $ 62,872   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Credit Risk Profile by Payment Activity

 

(dollars in thousands)    Residential Mortgage      Home Equity Lines and
Loans
     Consumer      Total  
     March 31,
2015
     December 31,
2014
     March 31,
2015
     December 31,
2014
     March 31,
2015
     December 31,
2014
     March 31,
2015
     December 31,
2014
 

Performing

   $ 102,797       $ 35,816       $ 45,021       $ 17,370       $ 636       $ 9       $ 148,454       $ 53,195   

Non-performing

     914         1,030         137         157         —           —           1,051         1,187   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 103,711    $ 36,846    $ 45,158    $ 17,527    $ 636    $ 9    $ 149,505    $ 54,382   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

G. Troubled Debt Restructurings (“TDRs”):

The restructuring of a loan is considered a “troubled debt restructuring” if both of the following conditions are met: (i) the borrower is experiencing financial difficulties, and (ii) the creditor has granted a concession. The most common concessions granted include one or more modifications to the terms of the debt, such as (a) a reduction in the interest rate for the remaining life of the debt, (b) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk, (c) a temporary period of interest-only payments, (d) a reduction in the contractual payment amount for either a short period or remaining term of the loan, and (e) for leases, a reduced lease payment. A less common concession granted is the forgiveness of a portion of the principal.

The determination of whether a borrower is experiencing financial difficulties takes into account not only the current financial condition of the borrower, but also the potential financial condition of the borrower, were a concession not granted. Similarly, the determination of whether a concession has been granted is very subjective in nature. For example, simply extending the term of a loan at its original interest rate or even at a higher interest rate could be interpreted as a concession unless the borrower could readily obtain similar credit terms from a different lender.

 

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Table of Contents

The following table presents the balance of TDRs as of the indicated dates:

 

(dollars in thousands)    March 31,
2015
     December 31,
2014
 

TDRs included in nonperforming loans and leases

   $ 4,217       $ 4,315   

TDRs in compliance with modified terms

     4,145         4,157   
  

 

 

    

 

 

 

Total TDRs

$ 8,362    $ 8,472   
  

 

 

    

 

 

 

The following tables present information regarding loan and lease modifications categorized as TDRs for the three months ended March 31, 2015:

 

     For the Three Months Ended March 31, 2015  
(dollars in thousands)    Number of Contracts      Pre-Modification
Outstanding Recorded
Investment
     Post-Modification
Outstanding Recorded
Investment
 

Residential mortgage

     2       $ 383       $ 383   

Home equity lines and loans

     1         22         22   

Leases

     1         12         12   
  

 

 

    

 

 

    

 

 

 

Total

  4    $ 417    $ 417   
  

 

 

    

 

 

    

 

 

 

 

     Number of Contracts for the Three Months Ended March 31, 2015  
     Interest
Rate
Change
     Loan Term
Extension
     Interest Rate
Change and
Term
Extension
     Interest
Rate
Change
and/or
Interest-
Only
Period
     Contractual
Payment
Reduction
(Leases
only)
     Forgiveness
of Interest
 

Residential mortgage

     —           —           2         —           —           —     

Home equity lines and loans

     —           —           —           1         —           —     

Leases

     —           —           —           —           1         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

  —        —        2      1      1      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

During the three months ended March 31, 2015, there were no defaults of loans or leases that had been previously modified to troubled debt restructurings.

H. Impaired Loans

The following tables detail the recorded investment and principal balance of impaired loans by portfolio segment, their related Allowance and interest income recognized as of the dates or for the periods indicated:

 

(dollars in thousands)    Recorded
Investment(2)
     Principal
Balance
     Related
Allowance
     Average
Principal
Balance
     Interest
Income
Recognized
     Cash-Basis
Interest
Income
Recognized
 

As of or for the three months ended March 31, 2015

                 

Impaired loans with related Allowance:

                 

Home equity lines and loans

   $ 75       $ 75       $ 26       $ 75       $ —         $ —     

Residential mortgage

     587         596         65         597         6         —     

Commercial and industrial

     975         972         103         983         13         —     

Consumer

     40         40         15         41         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 1,677    $ 1,683    $ 209    $ 1,696    $ 19    $ —     

Impaired loans without related Allowance(1) (3):

Commercial mortgage

$ 94    $ 94    $ —      $ 100    $ —      $ —     

Home equity lines and loans

  963      1,059      —        1,174      1      —     

Residential mortgage

  7,468      8,360      —        8,728      33      —     

Construction

  201      1,163      —        1,162      —        —     

Commercial and industrial

  2,110      2,830      —        2,909      1      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 10,836    $ 13,506    $ —      $ 14,073    $ 35    $ —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Grand total

$ 12,513    $ 15,189    $ 209    $ 15,769    $ 54    $ —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)  The table above does not include the recorded investment of $70 thousand of impaired leases without a related Allowance.
(2)  Recorded investment equals principal balance less partial charge-offs and interest payments on non-performing loans that have been applied to principal.
(3)  This table excludes all purchased credit-impaired loans, which are discussed in Note 5D, above.

 

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Table of Contents
(dollars in thousands)    Recorded
Investment(2)
     Principal
Balance
     Related
Allowance
     Average
Principal
Balance
     Interest
Income
Recognized
     Cash-Basis
Interest
Income
Recognized
 

As of or for the three months ended March 31, 2014

                 

Impaired loans with related Allowance:

                 

Home equity lines and loans

   $ 230       $ 233       $ 106       $ 252       $ 2       $ —     

Residential mortgage

     4,662         4,661         621         4,715         31         —     

Commercial and industrial

     3,987         4,272         761         4,351         4         —     

Consumer

     46         46         46         47         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 8,925    $ 9,212    $ 1,534    $ 9,365    $ 37    $ —     

Impaired loans without related Allowance(1) (3):

Commercial mortgage

$ 228    $ 230    $ —      $ 275    $ —      $ —     

Home equity lines and loans

  864      874      —        947      1      —     

Residential mortgage

  4,758      5,073      —        5,336      35      —     

Construction

  1,130      2,092      —        2,053      4      —     

Commercial and industrial

  711      716      —        725      1      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 7,691    $ 8,985    $ —      $ 9,336    $ 41    $ —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Grand total

$ 16,616    $ 18,197    $ 1,534    $ 18,701    $ 78    $ —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)  The table above does not include the recorded investment of $50 thousand of impaired leases without a related Allowance.
(2) Recorded investment equals principal balance less partial charge-offs and interest payments on non-performing loans that have been applied to principal.
(3)  This table excludes all purchased credit-impaired loans, which are discussed in Note 5D, above.

 

(dollars in thousands)    Recorded
Investment(2)
     Principal
Balance
     Related
Allowance
 

As of December 31, 2014

        

Impaired loans with related allowance:

        

Home equity lines and loans

   $ 111       $ 198       $ 4   

Residential mortgage

     3,273         3,260         184   

Commercial and industrial

     2,069         2,527         448   

Consumer

     31         32         32   
  

 

 

    

 

 

    

 

 

 

Total

  5,484      6,017      668   

Impaired loans(1)(3) without related allowance:

Commercial mortgage

  97      97      —     

Home equity lines and loans

  1,044      1,137      —     

Residential mortgage

  5,369      5,794      —     

Construction

  264      1,225      —     

Commercial and industrial

  1,391      1,403      —     
  

 

 

    

 

 

    

 

 

 

Total

  8,165      9,656      —     
  

 

 

    

 

 

    

 

 

 

Grand total

$ 13,649    $ 15,673    $ 668   
  

 

 

    

 

 

    

 

 

 

 

(1) The table above does not include the recorded investment of $32 thousand of impaired leases without a related Allowance.
(2)  Recorded investment equals principal balance less partial charge-offs and interest payments on non-performing loans that have been applied to principal.
(3)  This table excludes all purchased credit-impaired loans, which are discussed in Note 5D, above.

 

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Table of Contents

Note 6—Deposits

The following table details the components of deposits:

 

(dollars in thousands)    March 31,
2015
     December 31,
2014
 

Interest-bearing checking accounts

   $ 349,582       $ 277,228   

Money market accounts

     717,441         566,354   

Savings accounts

     184,819         138,992   

Wholesale non-maturity deposits

     69,555         66,693   

Wholesale time deposits

     73,476         73,458   

Time deposits

     263,996         118,400   
  

 

 

    

 

 

 

Total interest-bearing deposits

  1,658,869      1,241,125   

Non-interest-bearing deposits

  582,495      446,903   
  

 

 

    

 

 

 

Total deposits

$ 2,241,364    $ 1,688,028   
  

 

 

    

 

 

 

Note 7—Borrowings

A. Short-term borrowings

The Corporation’s short-term borrowings (original maturity of one year or less), which consist of a revolving line of credit with a correspondent bank, funds obtained from overnight repurchase agreements with commercial customers, FHLB advances with original maturities of one year or less and overnight fed funds, are detailed below.

A summary of short-term borrowings is as follows:

 

(dollars in thousands)    March 31,
2015
     December 31,
2014
 

Overnight fed funds*

   $ —         $ —     

Short-term FHLB advances*

     —           —     

Repurchase agreements

     38,372         23,824   
  

 

 

    

 

 

 

Total short-term borrowings

$ 38,372    $ 23,824   
  

 

 

    

 

 

 

 

* Although period-end balance is zero, these borrowing types may contribute to the average balance in the table below.

The following table sets forth information concerning short-term borrowings:

 

(dollars in thousands)    Three Months Ended March 31,  
   2015     2014  

Balance at period-end

   $ 38,372      $ 10,739   

Maximum amount outstanding at any month-end

     38,534        12,521   

Average balance outstanding during the period

     55,344        13,090   

Weighted-average interest rate:

    

As of period-end

     0.10     0.10

Paid during the period

     0.16        0.09   

 

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Table of Contents

B. Long-term FHLB Advances and Other Borrowings

The Corporation’s long-term FHLB advances and other borrowings consist of advances from the FHLB with original maturities of greater than one year and an adjustable-rate commercial loan from a correspondent bank.

The following table presents the remaining periods until maturity of the long-term FHLB advances and other borrowings:

 

(dollars in thousands)    March 31,
2015
     December 31,
2014
 

Within one year

   $ 30,135       $ 25,535   

Over one year through five years

     212,453         227,111   

Over five years through ten years

     7,500         7,500   
  

 

 

    

 

 

 

Total

$ 250,088    $ 260,146   
  

 

 

    

 

 

 

The following table presents rate and maturity information on long-term FHLB advances and other borrowings:

 

(dollars in thousands)    Maturity Range(1)      Weighted
Average
Rate
    Coupon Rate     Balance  

Description

   From      To        From     To     March 31,
2015
     December 31,
2014
 

Fixed amortizing

     04/09/15         04/09/15         3.57     3.57     3.57   $ 135       $ 535   

Bullet maturity – fixed rate

     08/26/15         05/20/20         1.46     0.58     2.41     183,612         193,240   

Bullet maturity – variable rate

     06/25/15         11/28/17         0.40     0.25     0.54     45,000         45,000   

Convertible-fixed(2)

     01/03/18         08/20/18         2.94     2.58     3.50     21,341         21,371   
              

 

 

    

 

 

 

Total

$ 250,088    $ 260,146   
              

 

 

    

 

 

 

 

(1)  Maturity range refers to March 31, 2015 balances.
(2)  FHLB advances whereby the FHLB has the option, at predetermined times, to convert the fixed interest rate to an adjustable interest rate indexed to the London Interbank Offered Rate (“LIBOR”). The Corporation has the option to prepay these advances, without penalty, if the FHLB elects to convert the interest rate to an adjustable rate. As of March 31, 2015, substantially all FHLB advances with this convertible feature are subject to conversion in fiscal 2015. These advances are included in the maturity ranges in which they mature, rather than the period in which they are subject to conversion.

C. Other Borrowings Information

As of March 31, 2015 the Corporation had a maximum borrowing capacity with the FHLB of approximately $1.07 billion, of which the unused capacity was $795.0 million. In addition, there were unused capacities of $64.0 million in overnight federal funds line, $81.3 million of Federal Reserve Discount Window borrowings and $5.0 million in a revolving line of credit from a correspondent bank as of March 31, 2015. In connection with its FHLB borrowings, the Corporation is required to hold the capital stock of the FHLB. The amount of FHLB capital stock held was $11.5 million as of both March 31, 2015, and December 31, 2014. The carrying amount of the FHLB capital stock approximates its redemption value.

Note 8—Derivatives and Hedging Activities

In December, 2012, the Corporation entered into a forward-starting interest rate swap to hedge the cash flows of a $15 million floating-rate FHLB borrowing. The interest rate swap involves the exchange of the Corporation’s floating rate interest payments on the underlying principal amount. This swap was designated, and qualified, for cash-flow hedge accounting. The term of the swap begins November 30, 2015 and ends November 28, 2022. For derivative instruments that are designated and qualify as hedging instruments, the effective portion of gains or losses is reported as a component of other comprehensive income, and is subsequently reclassified into earnings as an adjustment to interest expense in the periods in which the hedged forecasted transaction affects earnings.

 

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Table of Contents

The following table details the Corporation’s derivative positions as of the balance sheet dates indicated:

As of March 31, 2015:

 

(dollars in thousands)    Trade Date      Effective
Date
     Maturity Date      Receive (Variable) Index    Current
Projected
Receive Rate
    Pay Fixed
Swap Rate
    Fair Value of
Asset
(Liability)
 

Notional

Amount

                  

$15,000

     12/13/2012         11/30/2015         11/28/2022       US 3-Month LIBOR      1.973     2.376   $ (399

As of December 31, 2014:

 

(dollars in thousands)    Trade Date      Effective
Date
     Maturity Date      Receive (Variable) Index    Current
Projected
Receive Rate
    Pay Fixed
Swap Rate
    Fair Value of
Asset
(Liability)
 

Notional

Amount

                  

$15,000

     12/13/2012         11/30/2015         11/28/2022       US 3-Month LIBOR      2.335     2.376   $ (39

For each of the three month periods ended March 31, 2015 and 2014, there were no reclassifications of the interest-rate swap’s fair value from other comprehensive income to earnings.

Note 9—Stock-Based Compensation

A. General Information

Prior to April 25, 2007, all shares authorized for grant as stock-based compensation were limited to grants of stock options. On April 25, 2007, the shareholders approved the Corporation’s “2007 Long-Term Incentive Plan” (the “2007 LTIP”) under which a total of 428,996 shares of the Corporation’s common stock were made available for award grants. On April 28, 2010, the shareholders approved the Corporation’s “2010 Long Term Incentive Plan” (the “2010 LTIP”) under which a total of 445,002 shares of the Corporation’s common stock were made available for award grants.

In addition to the shareholder-approved plans mentioned in the preceding paragraph, the Corporation periodically authorizes grants of stock-based compensation as inducement awards to new employees. This type of award does not require shareholder approval in accordance with Rule 5635(c)(4) of the Nasdaq listing rules.

The equity awards are authorized to be in the form of, among others, options to purchase the Corporation’s common stock, restricted stock awards or units (“RSAs” or “RSUs”) and performance stock awards or units (“PSAs” or “PSUs”).

RSAs and RSUs have a restriction based on the passage of time and may also have a restriction based on non-market-related performance criteria. The fair value of the RSAs and RSUs is based on the closing price on the day preceding the date of the grant.

The PSAs and PSUs also have a restriction based on the passage of time, but also have a restriction based on performance criteria related to the Corporation’s total shareholder return relative to the performance of the community bank index for the respective period. The amount of PSAs or PSUs earned will not exceed 100% of the PSAs or PSUs awarded. The fair value of the PSAs and PSUs is calculated using the Monte Carlo Simulation method.

B. Stock Options

Stock-based compensation cost is measured at the grant date, based on the fair value of the award and is recognized as an expense over the vesting period. The fair value of stock option grants is determined using the Black-Scholes pricing model. The assumptions necessary for the calculation of the fair value are expected life of options, annual volatility of stock price, risk-free interest rate and annual dividend yield.

 

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Table of Contents

The following table provides information about options outstanding for the three months ended March 31, 2015:

 

     Shares      Weighted
Average
Exercise Price
     Weighted
Average Grant
Date Fair
Value
 

Options outstanding, December 31, 2014

     447,966       $ 20.94       $ 4.75   

Options assumed in Merger

     181,256       $ 17.73       $ 12.94   

Forfeited

     —         $ —         $ —     

Expired

     —         $ —         $ —     

Exercised

     (129,442    $ 19.35       $ 6.57   
  

 

 

       

Options outstanding, March 31, 2015

  499,780    $ 20.19    $ 7.25   
  

 

 

       

As of March 31, 2015, there were no unvested stock options.

For the three months ended March 31, 2015, the Corporation recognized $3 thousand of expense related to stock options assumed in the CBH merger. As of March 31, 2015, there was no unrecognized expense related to stock options.

Proceeds, related tax benefits realized from options exercised and intrinsic value of options exercised during the three months ended March 31, 2015 and 2014 are detailed below:

 

(dollars in thousands)    Three Months Ended March 31,  
   2015      2014  

Proceeds from exercise of stock options

   $ 2,504       $ 103   

Related tax benefit recognized

     277         22   
  

 

 

    

 

 

 

Net proceeds of options exercised

$ 2,781    $ 125   
  

 

 

    

 

 

 

Intrinsic value of options exercised

$ 1,391    $ 67   
  

 

 

    

 

 

 

The following table provides information about options outstanding and exercisable at March 31, 2015:

 

(dollars in thousands, except exercise price)    Outstanding      Exercisable  

Number of shares

     499,780         499,780   

Weighted average exercise price

   $ 20.19       $ 20.19   

Aggregate intrinsic value

   $ 5,109,287       $ 5,109,287   

Weighted average contractual term in years

     2.9         2.9   

C. Restricted Stock Awards and Performance Stock Awards

The Corporation has granted RSAs, RSUs, PSAs and PSUs under the 2007 LTIP and 2010 LTIP.

RSAs and RSUs

The compensation expense for the RSAs and RSUs is measured based on the market price of the stock on the day prior to the grant date and is recognized on a straight line basis over the vesting period.

For the three months ended March 31, 2015, the Corporation recognized $100 thousand of expense related to the Corporation’s RSAs and RSUs. As of March 31, 2015, there was $551 thousand of unrecognized compensation cost related to RSAs and RSUs. This cost will be recognized over a weighted average period of 2.2 years.

 

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The following table details the unvested RSAs and RSUs for the three months ended March 31, 2015:

 

     Three Months Ended
March 31, 2015
 
     Number of
Shares
     Weighted
Average
Grant Date
Fair Value
 

Beginning balance

     46,281       $ 23.17   

Granted

     3,000         30.04   

Vested

     —           —     

Forfeited

     —           —     
  

 

 

    

Ending balance

  49,281    $ 23.59   
  

 

 

    

For the three months ended March 31, 2015, the Corporation recorded no tax benefit related to the vesting of RSAs and RSUs.

PSAs and PSUs

The compensation expense for PSAs and PSUs is measured based on the grant date fair value as calculated using the Monte Carlo Simulation method.

For the three months ended March 31, 2015, the Corporation recognized $273 thousand of expense related to the PSAs and PSUs. As of March 31, 2015, there was $2.1 million of unrecognized compensation cost related to PSAs. This cost will be recognized over a weighted average period of 2.2 years.

For the three months ended March 31, 2015, the Corporation recorded no tax benefit related to the vesting of PSAs and PSUs.

The following table details the unvested PSAs and PSUs for the three months ended March 31, 2015:

 

     Three Months Ended
March 31, 2015
 
     Number
of Shares
     Weighted
Average
Grant Date
Fair Value
 

Beginning balance

     217,318       $ 13.41   

Granted

     40,000         16.91   

Vested

     —           —     

Forfeited

     —           —     
  

 

 

    

Ending balance

  257,318    $ 13.95   
  

 

 

    

Note 10—Pension and Other Post-Retirement Benefit Plans

The Corporation has three defined benefit pension plans: the qualified defined-benefit plan (the “QDBP”) which covers all employees over age 20 1/2 who meet certain service requirements, and two non-qualified defined-benefit pension plans (“SERP I” and “SERP II”) which are restricted to certain senior officers of the Corporation.

SERP I provides each participant with the equivalent pension benefit provided by the QDBP on any compensation and bonus deferrals that exceed the IRS limit applicable to the QDBP.

On February 12, 2008, the Corporation amended the QDBP and SERP I to freeze further increases in the defined-benefit amounts to all participants, effective March 31, 2008.

On April 1, 2008, the Corporation added SERP II, a non-qualified defined-benefit plan which was restricted to certain senior officers of the Corporation. Effective January 1, 2013, the Corporation curtailed SERP II, as further increases to the defined-benefit amounts to over 20% of the participants have been frozen.

The Corporation also has a postretirement benefit plan (“PRBP”) that covers certain retired employees and a group of current employees. The PRBP was closed to new participants in 1994. In 2007, the Corporation amended the PRBP to allow for settlement of obligations to certain current and retired employees. Certain retired participant obligations were settled in 2007 and current employee obligations were settled in 2008.

 

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The following tables provide details of the components of the net periodic benefits cost (benefit) for the three months ended March 31, 2015 and 2014:

 

     Three Months Ended March 31,  
     SERP I and SERP II      QDBP     PRBP  
(dollars in thousands)    2015      2014      2015     2014     2015      2014  

Service cost

   $ —         $ 18       $ —        $ —        $ —         $ —     

Interest cost

     46         46         397        410        5         7   

Expected return on plan assets

     —           —           (804     (837     —           —     

Amortization of transition obligation

     —           —           —          —          —           —     

Amortization of prior service costs

     —           3         —          —          —           —     

Amortization of net loss

     16         11         479        98        9         15   

Gain on curtailment

     —           —           —          —          —           —     
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Net periodic benefit cost

$ 62    $ 78    $ 72    $ (329 $ 14    $ 22   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

QDBP: No contributions to the QDBP were made for the three months ended March 31, 2015.

SERP I and SERP II: The Corporation contributed $37 thousand during the three months ended March 31, 2015, and is expected to contribute an additional $111 thousand to the SERP I and SERP II plans for the remaining nine months of 2015.

PRBP: In 2005, the Corporation capped the maximum annual payment under the PRBP at 120% of the 2005 benefit. This maximum was reached in 2008 and the cap is not expected to be increased above this level.

Note 11 - Segment Information

FASB Codification 280 – “Segment Reporting” identifies operating segments as components of an enterprise which are evaluated regularly by the Corporation’s Chief Operating Decision Maker, our Chief Executive Officer, in deciding how to allocate resources and assess performance. The Corporation has applied the aggregation criterion set forth in this codification to the results of its operations.

The Corporation’s Banking segment consists of commercial and retail banking. The Banking segment is evaluated as a single strategic unit which generates revenues from a variety of products and services. The Banking segment generates interest income from its lending (including leases) and investing activities and is dependent on the gathering of lower cost deposits from its branch network or borrowed funds from other sources for funding its loans, resulting in the generation of net interest income. The Banking segment also derives revenues from other sources including gains on the sale in available for sale investment securities, gains on the sale of residential mortgage loans, service charges on deposit accounts, cash sweep fees, overdraft fees, BOLI income and interchange revenue associated with its Visa Check Card offering.

The Wealth Management segment has responsibility for a number of activities within the Corporation, including trust administration, other related fiduciary services, custody, investment management and advisory services, employee benefits and IRA administration, estate settlement, tax services and brokerage. Bryn Mawr Trust of Delaware and Lau Associates are included in the Wealth Management segment of the Corporation since they have similar economic characteristics, products and services to those of the Wealth Management Division of the Corporation. In addition, with the October 1, 2014 acquisition of PCPB, which was merged with the Corporation’s existing insurance subsidiary, Insurance Counsellors of Bryn Mawr (“ICBM”), and now operates under the Powers Craft Parker and Beard, Inc. name, the Wealth Management Division has assumed responsibility for all insurance services of the Corporation. Prior to the PCPB acquisition, ICBM was reported through the Banking segment. Any adjustments to prior year figures are immaterial and are not reflected in the table below.

The following tables detail segment information for the three months ended March 31, 2015 and 2014:

 

     Three Months Ended March 31, 2015     Three Months Ended March 31, 2014  
(dollars in thousands)    Banking     Wealth Management     Consolidated     Banking     Wealth Management     Consolidated  

Net interest income

   $ 24,794      $ 1      $ 24,795      $ 18,722      $ 1      $ 18,723   

Less: loan loss provision

     569        —          569        750        —          750   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after loan loss provision

  24,225      1      24,226      17,972      1      17,973   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income:

Fees for wealth management services

  —        9,105      9,105      —        8,913      8,913   

Service charges on deposit accounts

  712      —        712      601      —        601   

Loan servicing and other fees

  591      —        591      446      —        446   

Net gain on sale of loans

  808      —        808      324      —        324   

Net gain on sale of available for sale securities

  810      —        810      (4   —        (4

Net gain on sale of other real estate owned

  15      —        15      —        —        —     

Insurance commissions

  —        1,021      1,021      105      —        105   

Other operating income

  1,662      41      1,703      710      44      754   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income

  4,598      10,167      14,765      2,182      8,957      11,139   

Other expenses:

Salaries & wages

  7,407      3,463      10,870      5,467      2,973      8,440   

Employee benefits

  1,986      743      2,729      1,212      767      1,979   

Occupancy & equipment

  2,050      416      2,466      1,574      359      1,933   

Amortization of intangible assets

  341      641      982      72      565      637   

Professional fees

  654      19      673      568      25      593   

Other operating expenses

  8,690      1,019      9,709      4,480      837      5,317   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other expenses

  21,128      6,301      27,429      13,373      5,526      18,899   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment profit

  7,695      3,867      11,562      6,781      3,432      10,213   

Intersegment (revenues) expenses*

  (105   105      —        (93   93      —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pre-tax segment profit after eliminations

$ 7,590    $ 3,972    $ 11,562    $ 6,688    $ 3,525    $ 10,213   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

% of segment pre-tax profit after eliminations

  65.6   34.4   100.0   65.5   34.5   100.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment assets (dollars in millions)

$ 2,894    $ 49    $ 2,943    $ 2,020    $ 40    $ 2,060   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

* Inter-segment revenues consist of rental payments, interest on deposits and management fees.

 

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Other segment information is as follows:

Wealth Management Segment Information

 

     (dollars in millions)  
     March 31, 2015      December 31, 2014  

Assets under management, administration, supervision and brokerage:

   $ 7,816.4       $ 7,699.9   

Note 12—Mortgage Servicing Rights

The following tables summarize the Corporation’s activity related to mortgage servicing rights (“MSRs”) for the three months ended March 31, 2015 and 2014:

 

     Three Months Ended March 31,  
(dollars in thousands)    2015      2014  

Balance, beginning of period

   $ 4,765       $ 4,750   

Additions

     237         91   

Amortization

     (114      (115

Recovery

     —           8   

Impairment

     (73      —     
  

 

 

    

 

 

 

Balance, end of period

$ 4,815    $ 4,734   
  

 

 

    

 

 

 

Fair value

$ 5,291    $ 5,646   
  

 

 

    

 

 

 

Residential mortgage loans serviced for others, end of period

$ 591,989    $ 598,338   
  

 

 

    

 

 

 

As of March 31, 2015 and December 31, 2014, key economic assumptions and the sensitivity of the current fair value of MSRs to immediate 10 and 20 percent adverse changes in those assumptions are as follows:

 

(dollars in thousands)    March 31, 2015     December 31, 2014  

Fair value amount of MSRs

   $ 5,291      $ 5,456   

Weighted average life (in years)

     6.1        6.3   

Prepayment speeds (constant prepayment rate)*

     10.9     10.5

Impact on fair value:

    

10% adverse change

   $ (202   $ (201

20% adverse change

   $ (391   $ (390

Discount rate

     10.5     10.50

Impact on fair value:

    

10% adverse change

   $ (203   $ (213

20% adverse change

   $ (392   $ (411

 

* Represents the weighted average prepayment rate for the life of the MSR asset.

These assumptions and sensitivities are hypothetical and should be used with caution. Changes in fair value based on a 10% variation in assumptions generally cannot be extrapolated because the relationship of the change in assumptions to the change in fair value may not be linear. Also, the effect of a variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another, which could magnify or counteract the sensitivities.

 

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Note 13—Goodwill and Other Intangibles

The Corporation’s goodwill and intangible assets related to the acquisitions of Lau Associates LLC (“Lau”) in July, 2008, First Keystone Financial, Inc. (“FKF”) in July, 2010, the Private Wealth Management Group of the Hershey Trust Company (“PWMG”) in May, 2011, and Davidson Trust Company (“DTC”) in May, 2012, First Bank of Delaware (“FBD”) in November, 2012, Powers Craft Parker and Beard (“PCPB”) in October, 2014 and CBH in January, 2015 are detailed below:

 

(dollars in thousands)    Balance
December 31,
2014
     Additions/
Adjustments
     Amortization     Balance
March 31,
2015
     Amortization
Period

Goodwill – Wealth segment

   $ 20,412       $ —         $ —        $ 20,412       Indefinite

Goodwill – Banking segment

     12,431         65,838         —          78,269       Indefinite

Goodwill – Insurance segment

     2,938         —           —          2,938       Indefinite
  

 

 

    

 

 

    

 

 

   

 

 

    

Total

$ 35,781    $ 65,838    $ —      $ 101,619   

Core deposit intangible

$ 1,066    $ 4,191    $ (294 $ 4,963    10 Years

Customer relationships

  15,562      —        (376   15,186    10 to 20 Years

Non-compete agreements

  3,728      —        (266   3,462    5 to 10 Years

Trade name

  2,165      —        —        2,165    Indefinite

Favorable lease

  —        792      (46   746    5.75 Years
  

 

 

    

 

 

    

 

 

   

 

 

    

Total

$ 22,521    $ 4,983    $ (982 $ 26,522   
  

 

 

    

 

 

    

 

 

   

 

 

    

Grand total

$ 58,302    $ 70,821    $ (982 $ 128,141   
  

 

 

    

 

 

    

 

 

   

 

 

    

The Corporation performed its annual review of goodwill and identifiable intangible assets as of December 31, 2014 in accordance with ASC 350, “Intangibles Goodwill and Other.” For the three months ended March 31, 2015, the Corporation determined there were no events that would necessitate impairment testing of goodwill and other intangible assets.

Note 14—Accumulated Other Comprehensive Loss

The following tables detail the components of accumulated other comprehensive (loss) income for the three month period ended March 31, 2015 and 2014:

 

(dollars in thousands)    Net Change in
Unrealized Gains
on Available-for-
Sale Investment
Securities
     Net Change in
Fair Value of
Derivative
Used for Cash
Flow Hedge
     Net Change in
Unfunded
Pension
Liability
     Accumulated
Other
Comprehensive
Loss
 

Balance, December 31, 2014

   $ 1,316         (25      (12,995      (11,704

Net change

     1,301         (234      350         1,417   
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance, March 31, 2015

$ 2,617      (259   (12,645   (10,287
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance, December 31, 2013

$ (857 $ 743    $ (5,451 $ (5,565

Net change

  1,145      (227   46      964   
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance, March 31, 2014

$ 288    $ 516    $ (5,405 $ (4,601
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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The following tables detail the amounts reclassified from each component of accumulated other comprehensive loss to each component’s applicable income statement line, for the three month periods ended March 31, 2015 and 2014:

 

Description of Accumulated Other

Comprehensive Loss Component

   Amount Reclassified from Accumulated
Other Comprehensive Loss