NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Unaudited
|
|
(1)
|
Basis of Presentation and Informational Disclosures
|
Northwest Bancshares, Inc. (the “Company”) or (“NWBI”), a Maryland corporation headquartered in Warren, Pennsylvania, is a savings and loan holding company regulated by the Board of Governors of the Federal Reserve System. The primary activity of the Company is the ownership of all of the issued and outstanding common stock of Northwest Bank, a Pennsylvania-chartered savings bank (“Northwest”). Northwest is regulated by the FDIC and the Pennsylvania Department of Banking. Northwest operates
176
community-banking offices throughout Pennsylvania, western New York, eastern Ohio and Maryland.
The accompanying unaudited consolidated financial statements include the accounts of the Company and its subsidiary, Northwest, and Northwest’s subsidiaries Northwest Settlement Agency, LLC, Northwest Consumer Discount Company, Northwest Financial Services, Inc., Northwest Advisors, Inc., Northwest Capital Group, Inc., Allegheny Services, Inc., Great Northwest Corporation, Boetger & Associates, Inc. and The Bert Company. The unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information or footnotes required for complete annual financial statements. In the opinion of management, all adjustments necessary for the fair presentation of the Company’s financial position and results of operations have been included. The consolidated statements have been prepared using the accounting policies described in the financial statements included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2016
updated, as required, for any new pronouncements or changes.
The results of operations for the quarter and three months ended
March 31, 2017
are not necessarily indicative of the results that may be expected for the year ending
December 31, 2017
, or any other period.
Stock-Based Compensation
Stock-based compensation expense of
$918,000
and
$1.2 million
for the quarters ended
March 31, 2017
and
2016
, respectively, was recognized in compensation expense relating to our stock benefit plans. At
March 31, 2017
there was compensation expense of
$3.8 million
to be recognized for awarded but unvested stock options and
$14.1 million
for unvested common shares.
Income Taxes- Uncertain Tax Positions
Accounting standards prescribe a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. A tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. At
March 31, 2017
we had
no
liability for unrecognized tax benefits.
We recognize interest accrued related to: (1) unrecognized tax benefits in other expenses and (2) refund claims in other operating income. We recognize penalties (if any) in other expenses. We are subject to audit by the Internal Revenue Service and any state in which we conduct business for the tax periods ended
December 31, 2016
,
2015
, and
2014
.
Impact of New Accounting Standards
In May 2014 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-9,
“Revenue from Contracts with Customers (Topic 606)”.
This guidance supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The core principle of this guidance requires an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and provides five steps to be analyzed to accomplish the core principle. This guidance is effective retrospectively for annual reporting periods beginning after December 15, 2017, including interim periods within those years and early adoption is not permitted. We are currently evaluating the impact this standard will have on our results of operations and financial position.
In January 2016 the FASB issued ASU 2016-01,
“Financial Instruments-Overall (Subtopic 825-10)”
. This guidance requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. Additionally, this guidance
requires entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating the impact this standard will have on our results of operations and financial position.
In February 2016 the FASB issued ASU 2016-2,
“Leases”
. This guidance requires a lessee to recognize in the statement of financial condition a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the term of the lease. Optional periods should only be recognized if the lessee is reasonably certain to exercise the option. For leases with a term of twelve months or less, the lessee is permitted not to recognize lease assets and lease liabilities and should recognize lease expense for such leases generally on a straight-line basis over the term of the lease. This guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those years and early adoption is permitted. We are currently evaluating the impact this standard will have on our results of operations and financial position.
In March 2016 the FASB issued ASU 2016-08,
“Principal Versus Agent Considerations”
. This guidance clarifies the implementation guidance on principal versus agent considerations of ASU 2014-09
"Revenue from Contracts with Customers (Topic 606)"
. When another party is involved in providing goods or services to a customer, an entity is required to determine whether the nature of its promise is to provide the specified good or service itself (that is, the entity is a principal) or to arrange for that good or service to be provided by the other party (that is, the entity is an agent). When (or as) an entity that is a principal satisfies a performance obligation, the entity recognizes revenue in the gross amount of consideration to which it expects to be entitled in exchange for the specified good or service transferred to the customer. When (or as) an entity that is an agent satisfies a performance obligation, the entity recognizes revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified good or service to be provided by the other party. This guidance is effective retrospectively for annual reporting periods beginning after December 15, 2017, including interim periods within those years and early adoption is not permitted. We are currently evaluating the impact this standard will have on our results of operations and financial position.
In June 2016, the FASB issued ASU 2016-13,
Financial Instruments-Credit Losses (Topic 326)-Measurement of Credit Losses on Financial Instruments
, which eliminates the probable initial recognition threshold for credit losses requiring, instead, that all financial assets (or group of financial assets) measured at amortized cost be presented at the net amount expected to be collected inclusive of the entity’s current estimate of all lifetime expected credit losses. This guidance also applies to certain off-balance-sheet credit exposures such as unfunded commitments and non-derivative financial guarantees. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) in order to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The income statement under this guidance will reflect the initial recognition of current expected credit losses for newly recognized assets, as well as any increases or decreases of expected credit losses that have occurred during the period. This guidance retains many currently-existing disclosures related to the credit quality of an entity’s assets and the related allowance for credit losses amended to reflect the change to an expected credit loss methodology, as well as enhanced disclosures to provide information to users at a more disaggregated level. Upon adoption, ASU 2016-13 provides for a modified retrospective transition by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is effective, except for debt securities for which an other-than-temporary impairment has previously been recognized. For these debt securities, a prospective transition is provided in order to maintain the same amortized cost prior to and subsequent to the effective date of the ASU. This guidance is effective for annual reporting periods beginning after December 15, 2019, and interim periods within those annual periods with early adoption permitted for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. We are currently evaluating the impact this standard will have on our results of operations and financial position.
In January 2017 the FASB issued ASU 2017-04,
"Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment"
. This guidance eliminates the requirement to determine the fair value of individual assets and liabilities of a reporting unit to measure goodwill impairment. Under this guidance goodwill impairment testing will be performed by comparing the fair value of the reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. This guidance is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and should be applied on a prospective basis. We are currently evaluating the impact this standard will have on our results of operations and financial position.
In March 2017, the FASB issued ASU No. 2017-07,
“Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Costs and Net Periodic Postretirement Benefit Costs.
This guidance provides financial statement users with clearer and disaggregated information related to the components of net periodic benefit cost and improve transparency of the presentation of net periodic benefit cost in the financial statements. This guidance is effective for annual and
interim periods beginning after December 15, 2017. Early adoption is permitted and this guidance should be applied retrospectively. We are currently evaluating the impact this standard will have on our results of operations and financial position.
In March 2017 the FASB issued ASU 2017-08,
"Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities"
. This guidance shortens the amortization period for certain callable debt securities held at a premium to the earliest call date from the maturity date. This guidance is effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted in any interim period. We are currently evaluating the impact this standard will have on our results of operations and financial position.
We operate in
two
reportable business segments: Community Banking and Consumer Finance. The Community Banking segment provides services traditionally offered by full-service community banks, including business and personal deposit accounts and business and personal loans, as well as insurance, brokerage and investment management and trust services. The Consumer Finance segment, which is comprised of Northwest Consumer Discount Company ("NCDC"), a subsidiary of Northwest, operates
44
offices in Pennsylvania and offers personal installment loans for a variety of consumer and real estate products. This activity is funded primarily through an intercompany borrowing relationship with Allegheny Services, Inc., a subsidiary of Northwest. As previously announced, all NCDC offices will be closed effective July 19, 2017, this closure will eliminate our consumer finance segment. Net income is the primary measure used by management to measure segment performance. The following tables provide financial information for these reportable segments. The “All Other” column represents the parent company and elimination entries necessary to reconcile to the consolidated amounts presented in the financial statements.
At or for the quarter ended (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Community
|
|
Consumer
|
|
|
|
|
March 31, 2017
|
|
Banking
|
|
Finance
|
|
All other (1)
|
|
Consolidated
|
External interest income
|
|
$
|
83,183
|
|
|
4,024
|
|
|
60
|
|
|
87,267
|
|
Intersegment interest income/ expense
|
|
656
|
|
|
—
|
|
|
(656
|
)
|
|
—
|
|
Interest expense
|
|
5,558
|
|
|
656
|
|
|
476
|
|
|
6,690
|
|
Provision for loan losses
|
|
2,130
|
|
|
2,507
|
|
|
—
|
|
|
4,637
|
|
Noninterest income
|
|
21,256
|
|
|
226
|
|
|
22
|
|
|
21,504
|
|
Noninterest expense
|
|
68,430
|
|
|
2,862
|
|
|
354
|
|
|
71,646
|
|
Income tax expense (benefit)
|
|
9,294
|
|
|
(737
|
)
|
|
(505
|
)
|
|
8,052
|
|
Net income/ (loss)
|
|
$
|
19,683
|
|
|
(1,038
|
)
|
|
(899
|
)
|
|
17,746
|
|
Total assets
|
|
$
|
9,614,093
|
|
|
103,841
|
|
|
13,589
|
|
|
9,731,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Community
|
|
Consumer
|
|
|
|
|
March 31, 2016
|
|
Banking
|
|
Finance
|
|
All other (1)
|
|
Consolidated
|
External interest income
|
|
$
|
80,838
|
|
|
4,243
|
|
|
217
|
|
|
85,298
|
|
Intersegment interest income/ expense
|
|
642
|
|
|
—
|
|
|
(642
|
)
|
|
—
|
|
Interest expense
|
|
12,681
|
|
|
642
|
|
|
423
|
|
|
13,746
|
|
Provision for loan losses
|
|
1,213
|
|
|
447
|
|
|
—
|
|
|
1,660
|
|
Noninterest income
|
|
19,006
|
|
|
380
|
|
|
62
|
|
|
19,448
|
|
Noninterest expense
|
|
59,972
|
|
|
2,929
|
|
|
374
|
|
|
63,275
|
|
Income tax expense (benefit)
|
|
8,242
|
|
|
251
|
|
|
(412
|
)
|
|
8,081
|
|
Net income/ (loss)
|
|
$
|
18,378
|
|
|
354
|
|
|
(748
|
)
|
|
17,984
|
|
Total assets
|
|
$
|
8,795,000
|
|
|
106,784
|
|
|
14,504
|
|
|
8,916,288
|
|
|
|
(1)
|
Eliminations consist of intercompany loans, interest income and interest expense.
|
|
|
(3)
|
Investment securities and impairment of investment securities
|
The following table shows the portfolio of investment securities available-for-sale at
March 31, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
cost
|
|
Gross
unrealized
holding
gains
|
|
Gross
unrealized
holding
losses
|
|
Fair
value
|
Debt issued by the U.S. government and agencies:
|
|
|
|
|
|
|
|
|
|
|
|
Due in one year or less
|
$
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
|
|
|
|
|
|
|
Debt issued by government sponsored enterprises:
|
|
|
|
|
|
|
|
|
|
|
|
Due in one year or less
|
75,667
|
|
|
25
|
|
|
(76
|
)
|
|
75,616
|
|
Due after one year through five years
|
219,698
|
|
|
140
|
|
|
(2,256
|
)
|
|
217,582
|
|
Due after five years through ten years
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Equity securities
|
3,351
|
|
|
1,482
|
|
|
(6
|
)
|
|
4,827
|
|
|
|
|
|
|
|
|
|
Municipal securities:
|
|
|
|
|
|
|
|
|
|
|
|
Due in one year or less
|
2,048
|
|
|
11
|
|
|
—
|
|
|
2,059
|
|
Due after one year through five years
|
9,415
|
|
|
115
|
|
|
(3
|
)
|
|
9,527
|
|
Due after five years through ten years
|
10,694
|
|
|
161
|
|
|
—
|
|
|
10,855
|
|
Due after ten years
|
36,167
|
|
|
914
|
|
|
(6
|
)
|
|
37,075
|
|
|
|
|
|
|
|
|
|
Corporate debt issues:
|
|
|
|
|
|
|
|
|
|
|
|
Due after ten years
|
14,377
|
|
|
3,527
|
|
|
(285
|
)
|
|
17,619
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate pass-through
|
166,950
|
|
|
1,656
|
|
|
(2,783
|
)
|
|
165,823
|
|
Variable rate pass-through
|
40,329
|
|
|
1,851
|
|
|
(6
|
)
|
|
42,174
|
|
Fixed rate non-agency CMOs
|
81
|
|
|
1
|
|
|
—
|
|
|
82
|
|
Fixed rate agency CMOs
|
225,035
|
|
|
274
|
|
|
(3,229
|
)
|
|
222,080
|
|
Variable rate agency CMOs
|
70,629
|
|
|
292
|
|
|
(198
|
)
|
|
70,723
|
|
Total residential mortgage-backed securities
|
503,024
|
|
|
4,074
|
|
|
(6,216
|
)
|
|
500,882
|
|
Total marketable securities available-for-sale
|
$
|
874,446
|
|
|
10,449
|
|
|
(8,848
|
)
|
|
876,047
|
|
The following table shows the portfolio of investment securities available-for-sale at
December 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
cost
|
|
Gross
unrealized
holding
gains
|
|
Gross
unrealized
holding
losses
|
|
Fair
value
|
Debt issued by the U.S. government and agencies:
|
|
|
|
|
|
|
|
|
|
|
|
Due in one year or less
|
$
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
|
|
|
|
|
|
|
Debt issued by government sponsored enterprises:
|
|
|
|
|
|
|
|
|
|
|
|
Due in one year or less
|
74,980
|
|
|
5
|
|
|
(33
|
)
|
|
74,952
|
|
Due after one year through five years
|
220,937
|
|
|
203
|
|
|
(2,504
|
)
|
|
218,636
|
|
Due after five years through ten years
|
585
|
|
|
—
|
|
|
(3
|
)
|
|
582
|
|
|
|
|
|
|
|
|
|
Equity securities
|
3,351
|
|
|
1,095
|
|
|
(6
|
)
|
|
4,440
|
|
|
|
|
|
|
|
|
|
Municipal securities:
|
|
|
|
|
|
|
|
|
|
|
|
Due in one year or less
|
2,449
|
|
|
7
|
|
|
—
|
|
|
2,456
|
|
Due after one year through five years
|
9,448
|
|
|
105
|
|
|
(21
|
)
|
|
9,532
|
|
Due after five years through ten years
|
11,794
|
|
|
137
|
|
|
(1
|
)
|
|
11,930
|
|
Due after ten years
|
38,141
|
|
|
1,027
|
|
|
(16
|
)
|
|
39,152
|
|
|
|
|
|
|
|
|
|
Corporate debt issues:
|
|
|
|
|
|
|
|
|
|
|
|
Due after ten years
|
14,367
|
|
|
2,935
|
|
|
(322
|
)
|
|
16,980
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate pass-through
|
175,398
|
|
|
1,849
|
|
|
(2,680
|
)
|
|
174,567
|
|
Variable rate pass-through
|
43,587
|
|
|
2,007
|
|
|
(6
|
)
|
|
45,588
|
|
Fixed rate non-agency CMOs
|
100
|
|
|
1
|
|
|
—
|
|
|
101
|
|
Fixed rate agency CMOs
|
165,535
|
|
|
185
|
|
|
(3,455
|
)
|
|
162,265
|
|
Variable rate agency CMOs
|
64,874
|
|
|
306
|
|
|
(167
|
)
|
|
65,013
|
|
Total residential mortgage-backed securities
|
449,494
|
|
|
4,348
|
|
|
(6,308
|
)
|
|
447,534
|
|
Total marketable securities available-for-sale
|
$
|
825,552
|
|
|
9,862
|
|
|
(9,214
|
)
|
|
826,200
|
|
The following table shows the portfolio of investment securities held-to-maturity at
March 31, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
cost
|
|
Gross
unrealized
holding
gains
|
|
Gross
unrealized
holding
losses
|
|
Fair
value
|
Municipal securities:
|
|
|
|
|
|
|
|
|
|
|
|
Due after ten years
|
4,809
|
|
|
30
|
|
|
—
|
|
|
4,839
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate pass-through
|
4,476
|
|
|
218
|
|
|
—
|
|
|
4,694
|
|
Variable rate pass-through
|
2,685
|
|
|
49
|
|
|
—
|
|
|
2,734
|
|
Fixed rate agency CMOs
|
29,115
|
|
|
93
|
|
|
(7
|
)
|
|
29,201
|
|
Variable rate agency CMOs
|
803
|
|
|
14
|
|
|
—
|
|
|
817
|
|
Total residential mortgage-backed securities
|
37,079
|
|
|
374
|
|
|
(7
|
)
|
|
37,446
|
|
Total marketable securities held-to-maturity
|
$
|
41,888
|
|
|
404
|
|
|
(7
|
)
|
|
42,285
|
|
The following table shows the portfolio of investment securities held-to-maturity at
December 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
cost
|
|
Gross
unrealized
holding
gains
|
|
Gross
unrealized
holding
losses
|
|
Fair
value
|
Municipal securities:
|
|
|
|
|
|
|
|
|
|
|
|
Due after ten years
|
$
|
4,808
|
|
|
65
|
|
|
—
|
|
|
4,873
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate pass-through
|
4,807
|
|
|
217
|
|
|
—
|
|
|
5,024
|
|
Variable rate pass-through
|
2,848
|
|
|
58
|
|
|
—
|
|
|
2,906
|
|
Fixed rate agency CMOs
|
6,674
|
|
|
94
|
|
|
—
|
|
|
6,768
|
|
Variable rate agency CMOs
|
841
|
|
|
14
|
|
|
—
|
|
|
855
|
|
Total residential mortgage-backed securities
|
15,170
|
|
|
383
|
|
|
—
|
|
|
15,553
|
|
Total marketable securities held-to-maturity
|
$
|
19,978
|
|
|
448
|
|
|
—
|
|
|
20,426
|
|
The following table shows the fair value of and gross unrealized losses on investment securities, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at
March 31, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
|
Fair value
|
|
Unrealized
loss
|
|
Fair value
|
|
Unrealized
loss
|
|
Fair value
|
|
Unrealized
loss
|
U.S. government sponsored enterprises
|
$
|
268,156
|
|
|
(2,259
|
)
|
|
8,163
|
|
|
(72
|
)
|
|
276,319
|
|
|
(2,331
|
)
|
Municipal securities
|
2,604
|
|
|
(9
|
)
|
|
66
|
|
|
(1
|
)
|
|
2,670
|
|
|
(10
|
)
|
Corporate issues
|
—
|
|
|
—
|
|
|
2,146
|
|
|
(285
|
)
|
|
2,146
|
|
|
(285
|
)
|
Equity securities
|
—
|
|
|
—
|
|
|
545
|
|
|
(6
|
)
|
|
545
|
|
|
(6
|
)
|
Residential mortgage-backed securities - agency
|
251,847
|
|
|
(3,903
|
)
|
|
89,806
|
|
|
(2,320
|
)
|
|
341,653
|
|
|
(6,223
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily impaired securities
|
$
|
522,607
|
|
|
(6,171
|
)
|
|
100,726
|
|
|
(2,684
|
)
|
|
623,333
|
|
|
(8,855
|
)
|
The following table shows the fair value of and gross unrealized losses on investment securities, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at
December 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
|
Fair value
|
|
Unrealized
loss
|
|
Fair value
|
|
Unrealized
loss
|
|
Fair value
|
|
Unrealized
loss
|
U.S. government sponsored enterprises
|
$
|
238,003
|
|
|
(2,448
|
)
|
|
9,205
|
|
|
(92
|
)
|
|
247,208
|
|
|
(2,540
|
)
|
Municipal securities
|
5,621
|
|
|
(37
|
)
|
|
66
|
|
|
(1
|
)
|
|
5,687
|
|
|
(38
|
)
|
Corporate debt issues
|
—
|
|
|
—
|
|
|
2,107
|
|
|
(322
|
)
|
|
2,107
|
|
|
(322
|
)
|
Equity securities
|
—
|
|
|
—
|
|
|
544
|
|
|
(6
|
)
|
|
544
|
|
|
(6
|
)
|
Residential mortgage-backed securities - agency
|
213,662
|
|
|
(3,837
|
)
|
|
87,723
|
|
|
(2,471
|
)
|
|
301,385
|
|
|
(6,308
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily impaired securities
|
$
|
457,286
|
|
|
(6,322
|
)
|
|
99,645
|
|
|
(2,892
|
)
|
|
556,931
|
|
|
(9,214
|
)
|
We review our investment portfolio for indications of impairment. This review includes analyzing the length of time and the extent to which amortized costs have exceeded fair values, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer, and the intent and ability to hold the investments for a period of time sufficient to allow for a recovery in value. Certain investments are evaluated using our best estimate of future cash flows. If the estimate of cash flows indicates that an adverse change has occurred, other-than-temporary impairment is recognized for the amount of the unrealized loss that was deemed credit related.
Credit related impairment on all debt securities is recognized in earnings while noncredit related impairment on available-for-sale debt securities, not expected to be sold, is recognized in other comprehensive income.
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
Beginning balance at January 1, (1)
|
$
|
7,942
|
|
|
8,436
|
|
Credit losses on debt securities for which other-than-temporary impairment was not previously recognized
|
—
|
|
|
—
|
|
Reduction for losses realized during the quarter
|
—
|
|
|
(12
|
)
|
Reduction for securities sold/ called realized during the quarter
|
—
|
|
|
—
|
|
Additional credit losses on debt securities for which other-than-temporary impairment was previously recognized
|
—
|
|
|
—
|
|
Ending balance at March 31,
|
$
|
7,942
|
|
|
8,424
|
|
(1) The beginning balance represents credit losses included in other-than-temporary impairment charges recognized on debt securities in prior periods
The following table shows a summary of our loans receivable at
March 31, 2017
and
December 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
|
Originated
|
|
Acquired
|
|
Total
|
|
Originated
|
|
Acquired
|
|
Total
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans (1)
|
$
|
2,574,465
|
|
|
129,258
|
|
|
2,703,723
|
|
|
2,582,218
|
|
|
133,511
|
|
|
2,715,729
|
|
Home equity loans
|
1,014,775
|
|
|
290,619
|
|
|
1,305,394
|
|
|
1,026,315
|
|
|
302,457
|
|
|
1,328,772
|
|
Consumer loans
|
488,513
|
|
|
142,451
|
|
|
630,964
|
|
|
467,637
|
|
|
163,622
|
|
|
631,259
|
|
Total Personal Banking
|
4,077,753
|
|
|
562,328
|
|
|
4,640,081
|
|
|
4,076,170
|
|
|
599,590
|
|
|
4,675,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
2,165,848
|
|
|
363,549
|
|
|
2,529,397
|
|
|
2,140,678
|
|
|
372,991
|
|
|
2,513,669
|
|
Commercial loans
|
489,265
|
|
|
76,091
|
|
|
565,356
|
|
|
481,543
|
|
|
75,676
|
|
|
557,219
|
|
Total Commercial Banking
|
2,655,113
|
|
|
439,640
|
|
|
3,094,753
|
|
|
2,622,221
|
|
|
448,667
|
|
|
3,070,888
|
|
Total loans receivable, gross
|
6,732,866
|
|
|
1,001,968
|
|
|
7,734,834
|
|
|
6,698,391
|
|
|
1,048,257
|
|
|
7,746,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred loan costs
|
19,513
|
|
|
2,532
|
|
|
22,045
|
|
|
20,081
|
|
|
2,294
|
|
|
22,375
|
|
Allowance for loan losses
|
(54,090
|
)
|
|
(7,014
|
)
|
|
(61,104
|
)
|
|
(55,293
|
)
|
|
(5,646
|
)
|
|
(60,939
|
)
|
Undisbursed loan proceeds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
(7,558
|
)
|
|
—
|
|
|
(7,558
|
)
|
|
(11,638
|
)
|
|
—
|
|
|
(11,638
|
)
|
Commercial real estate loans
|
(148,265
|
)
|
|
(2,658
|
)
|
|
(150,923
|
)
|
|
(168,595
|
)
|
|
(2,985
|
)
|
|
(171,580
|
)
|
Commercial loans
|
(33,856
|
)
|
|
(1,454
|
)
|
|
(35,310
|
)
|
|
(26,168
|
)
|
|
(2,290
|
)
|
|
(28,458
|
)
|
Total loans receivable, net
|
$
|
6,508,610
|
|
|
993,374
|
|
|
7,501,984
|
|
|
6,456,778
|
|
|
1,039,630
|
|
|
7,496,408
|
|
(1) Includes
$1.6 million
and
$9.6 million
of loans held for sale at
March 31, 2017
and December 31, 2016, respectively.
Acquired loans were initially measured at fair value and subsequently accounted for under either Accounting Standards Codification (“ASC”) Topic 310-30 or ASC Topic 310-20. The following table provides information related to the outstanding principal balance and related carrying value of acquired loans for the dates indicated (in thousands):
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
December 31,
2016
|
Acquired loans evaluated individually for future credit losses:
|
|
|
|
|
Outstanding principal balance
|
$
|
14,969
|
|
|
16,108
|
|
Carrying value
|
11,866
|
|
|
12,665
|
|
|
|
|
|
|
Acquired loans evaluated collectively for future credit losses:
|
|
|
|
|
Outstanding principal balance
|
996,045
|
|
|
1,040,378
|
|
Carrying value
|
988,522
|
|
|
1,032,611
|
|
|
|
|
|
|
Total acquired loans:
|
|
|
|
|
Outstanding principal balance
|
1,011,014
|
|
|
1,056,486
|
|
Carrying value
|
1,000,388
|
|
|
1,045,276
|
|
The following table provides information related to the changes in the accretable discount, which includes income recognized from contractual cash flows for the dates indicated (in thousands):
|
|
|
|
|
|
Total
|
Balance at December 31, 2015
|
$
|
2,019
|
|
Accretion
|
(1,170
|
)
|
Net reclassification from nonaccretable yield
|
1,338
|
|
Balance at December 31, 2016
|
2,187
|
|
Accretion
|
(306
|
)
|
Net reclassification from nonaccretable yield
|
130
|
|
Balance at March 31, 2017
|
$
|
2,011
|
|
The following table provides information related to acquired impaired loans by portfolio segment and by class of financing receivable at and for the
three months ended
March 31, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
value
|
|
Outstanding
principal
balance
|
|
Related
impairment
reserve
|
|
Average
recorded
investment
in impaired
loans
|
|
Interest
income
recognized
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
1,276
|
|
|
2,003
|
|
|
144
|
|
|
1,297
|
|
|
43
|
|
Home equity loans
|
1,205
|
|
|
2,350
|
|
|
4
|
|
|
1,284
|
|
|
45
|
|
Consumer loans
|
116
|
|
|
266
|
|
|
3
|
|
|
126
|
|
|
12
|
|
Total Personal Banking
|
2,597
|
|
|
4,619
|
|
|
151
|
|
|
2,707
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
9,165
|
|
|
10,234
|
|
|
179
|
|
|
9,380
|
|
|
195
|
|
Commercial loans
|
104
|
|
|
116
|
|
|
—
|
|
|
178
|
|
|
11
|
|
Total Commercial Banking
|
9,269
|
|
|
10,350
|
|
|
179
|
|
|
9,558
|
|
|
206
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
11,866
|
|
|
14,969
|
|
|
330
|
|
|
12,265
|
|
|
306
|
|
The following table provides information related to acquired impaired loans by portfolio segment and by class of financing receivable at and for the year ended
December 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
value
|
|
Outstanding
principal
balance
|
|
Related
impairment
reserve
|
|
Average
recorded
investment
in impaired
loans
|
|
Interest
income
recognized
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
1,319
|
|
|
2,062
|
|
|
204
|
|
|
1,650
|
|
|
202
|
|
Home equity loans
|
1,363
|
|
|
2,669
|
|
|
8
|
|
|
1,724
|
|
|
185
|
|
Consumer loans
|
136
|
|
|
303
|
|
|
3
|
|
|
201
|
|
|
51
|
|
Total Personal Banking
|
2,818
|
|
|
5,034
|
|
|
215
|
|
|
3,575
|
|
|
438
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
9,596
|
|
|
10,809
|
|
|
52
|
|
|
10,942
|
|
|
721
|
|
Commercial loans
|
251
|
|
|
265
|
|
|
—
|
|
|
249
|
|
|
11
|
|
Total Commercial Banking
|
9,847
|
|
|
11,074
|
|
|
52
|
|
|
11,191
|
|
|
732
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
12,665
|
|
|
16,108
|
|
|
267
|
|
|
14,766
|
|
|
1,170
|
|
The following table provides information related to the allowance for loan losses by portfolio segment and by class of financing receivable for the quarter ended
March 31, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
March 31,
2017
|
|
Current
period
provision
|
|
Charge-offs
|
|
Recoveries
|
|
Balance
December 31, 2016
|
Originated loans:
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
4,638
|
|
|
(33
|
)
|
|
(153
|
)
|
|
168
|
|
|
4,656
|
|
Home equity loans
|
2,989
|
|
|
(406
|
)
|
|
(176
|
)
|
|
85
|
|
|
3,486
|
|
Consumer loans
|
10,429
|
|
|
5,349
|
|
|
(3,252
|
)
|
|
358
|
|
|
7,974
|
|
Total Personal Banking
|
18,056
|
|
|
4,910
|
|
|
(3,581
|
)
|
|
611
|
|
|
16,116
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
20,635
|
|
|
(2,948
|
)
|
|
(263
|
)
|
|
179
|
|
|
23,667
|
|
Commercial loans
|
15,399
|
|
|
409
|
|
|
(946
|
)
|
|
426
|
|
|
15,510
|
|
Total Commercial Banking
|
36,034
|
|
|
(2,539
|
)
|
|
(1,209
|
)
|
|
605
|
|
|
39,177
|
|
Total originated loans
|
54,090
|
|
|
2,371
|
|
|
(4,790
|
)
|
|
1,216
|
|
|
55,293
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans:
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
78
|
|
|
115
|
|
|
(137
|
)
|
|
29
|
|
|
71
|
|
Home equity loans
|
932
|
|
|
180
|
|
|
(473
|
)
|
|
178
|
|
|
1,047
|
|
Consumer loans
|
831
|
|
|
403
|
|
|
(408
|
)
|
|
183
|
|
|
653
|
|
Total Personal Banking
|
1,841
|
|
|
698
|
|
|
(1,018
|
)
|
|
390
|
|
|
1,771
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
3,713
|
|
|
666
|
|
|
(211
|
)
|
|
250
|
|
|
3,008
|
|
Commercial loans
|
1,460
|
|
|
902
|
|
|
(321
|
)
|
|
12
|
|
|
867
|
|
Total Commercial Banking
|
5,173
|
|
|
1,568
|
|
|
(532
|
)
|
|
262
|
|
|
3,875
|
|
Total acquired loans
|
7,014
|
|
|
2,266
|
|
|
(1,550
|
)
|
|
652
|
|
|
5,646
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
61,104
|
|
|
4,637
|
|
|
(6,340
|
)
|
|
1,868
|
|
|
60,939
|
|
The following table provides information related to the allowance for loan losses by portfolio segment and by class of financing receivable for the quarter ended
March 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
March 31,
2016
|
|
Current period provision
|
|
Charge-offs
|
|
Recoveries
|
|
Balance
December 31, 2015
|
Originated loans:
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
4,257
|
|
|
3
|
|
|
(489
|
)
|
|
51
|
|
|
4,692
|
|
Home equity loans
|
3,409
|
|
|
(273
|
)
|
|
(298
|
)
|
|
39
|
|
|
3,941
|
|
Consumer loans
|
7,294
|
|
|
1,639
|
|
|
(2,226
|
)
|
|
393
|
|
|
7,488
|
|
Total Personal Banking
|
14,960
|
|
|
1,369
|
|
|
(3,013
|
)
|
|
483
|
|
|
16,121
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
29,867
|
|
|
(4,205
|
)
|
|
(184
|
)
|
|
1,908
|
|
|
32,348
|
|
Commercial loans
|
14,923
|
|
|
2,440
|
|
|
(112
|
)
|
|
94
|
|
|
12,501
|
|
Total Commercial Banking
|
44,790
|
|
|
(1,765
|
)
|
|
(296
|
)
|
|
2,002
|
|
|
44,849
|
|
Total originated loans
|
59,750
|
|
|
(396
|
)
|
|
(3,309
|
)
|
|
2,485
|
|
|
60,970
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans:
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
8
|
|
|
37
|
|
|
(75
|
)
|
|
28
|
|
|
18
|
|
Home equity loans
|
298
|
|
|
738
|
|
|
(686
|
)
|
|
145
|
|
|
101
|
|
Consumer loans
|
199
|
|
|
214
|
|
|
(177
|
)
|
|
52
|
|
|
110
|
|
Total Personal Banking
|
505
|
|
|
989
|
|
|
(938
|
)
|
|
225
|
|
|
229
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
1,735
|
|
|
813
|
|
|
(713
|
)
|
|
196
|
|
|
1,439
|
|
Commercial loans
|
288
|
|
|
254
|
|
|
5
|
|
|
5
|
|
|
34
|
|
Total Commercial Banking
|
2,023
|
|
|
1,067
|
|
|
(708
|
)
|
|
201
|
|
|
1,473
|
|
Total acquired loans
|
2,528
|
|
|
2,056
|
|
|
(1,646
|
)
|
|
426
|
|
|
1,702
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
62,278
|
|
|
1,660
|
|
|
(4,955
|
)
|
|
2,911
|
|
|
62,672
|
|
At
March 31, 2017
, we expect to fully collect the carrying value of our purchased credit impaired loans and have determined that we can reasonably estimate their future cash flows including those loans that are 90 days or more delinquent. As a result, we do not consider our purchased credit impaired loans that are 90 days or more delinquent to be nonaccrual or impaired and continue to recognize interest income on these loans, including the loans’ accretable discount.
The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at
March 31, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
receivable
|
|
Allowance for
loan losses
|
|
Nonaccrual
loans (1)
|
|
Loans past
due 90 days
or more and
still accruing
(2)
|
|
TDRs
|
|
Allowance
related to
TDRs
|
|
Additional
commitments
to customers
with loans
classified as
TDRs
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
2,706,069
|
|
|
4,716
|
|
|
15,480
|
|
|
—
|
|
|
7,717
|
|
|
826
|
|
|
—
|
|
Home equity loans
|
1,305,394
|
|
|
3,921
|
|
|
8,174
|
|
|
—
|
|
|
1,783
|
|
|
417
|
|
|
—
|
|
Consumer loans
|
643,105
|
|
|
11,260
|
|
|
4,452
|
|
|
265
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total Personal Banking
|
4,654,568
|
|
|
19,897
|
|
|
28,106
|
|
|
265
|
|
|
9,500
|
|
|
1,243
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
2,378,474
|
|
|
24,348
|
|
|
36,754
|
|
|
—
|
|
|
26,622
|
|
|
2,052
|
|
|
345
|
|
Commercial loans
|
530,046
|
|
|
16,859
|
|
|
8,430
|
|
|
—
|
|
|
7,456
|
|
|
963
|
|
|
77
|
|
Total Commercial Banking
|
2,908,520
|
|
|
41,207
|
|
|
45,184
|
|
|
—
|
|
|
34,078
|
|
|
3,015
|
|
|
422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
7,563,088
|
|
|
61,104
|
|
|
73,290
|
|
|
265
|
|
|
43,578
|
|
|
4,258
|
|
|
422
|
|
|
|
(1)
|
Includes
$18.3 million
of nonaccrual TDRs.
|
|
|
(2)
|
Represents loans 90 days past maturity and still accruing.
|
The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at
December 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
receivable
|
|
Allowance for
loan losses
|
|
Nonaccrual
loans (1)
|
|
Loans past
due 90 days
or more and
still accruing
(2)
|
|
TDRs
|
|
Allowance
related to
TDRs
|
|
Additional
commitments
to customers
with loans
classified as
TDRs
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
2,714,764
|
|
|
4,727
|
|
|
18,264
|
|
|
—
|
|
|
7,299
|
|
|
708
|
|
|
—
|
|
Home equity loans
|
1,328,772
|
|
|
4,533
|
|
|
7,865
|
|
|
—
|
|
|
1,813
|
|
|
450
|
|
|
4
|
|
Consumer loans
|
642,961
|
|
|
8,627
|
|
|
5,109
|
|
|
85
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total Personal Banking
|
4,686,497
|
|
|
17,887
|
|
|
31,238
|
|
|
85
|
|
|
9,112
|
|
|
1,158
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
2,342,089
|
|
|
26,675
|
|
|
38,724
|
|
|
564
|
|
|
24,483
|
|
|
2,072
|
|
|
417
|
|
Commercial loans
|
528,761
|
|
|
16,377
|
|
|
9,574
|
|
|
—
|
|
|
9,331
|
|
|
1,360
|
|
|
17
|
|
Total Commercial Banking
|
2,870,850
|
|
|
43,052
|
|
|
48,298
|
|
|
564
|
|
|
33,814
|
|
|
3,432
|
|
|
434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
7,557,347
|
|
|
60,939
|
|
|
79,536
|
|
|
649
|
|
|
42,926
|
|
|
4,590
|
|
|
438
|
|
|
|
(1)
|
Includes
$16.3 million
of nonaccrual TDRs.
|
|
|
(2)
|
Represents loans 90 days past maturity and still accruing.
|
The following table provides information related to the composition of originated impaired loans by portfolio segment and by class of financing receivable at and for the
three months ended
March 31, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual
loans 90 or
more days
delinquent
|
|
Nonaccrual
loans less
than 90
days
delinquent
|
|
Loans less
than 90
days
delinquent
reviewed for
impairment
|
|
TDRs less
than 90
days
delinquent
not included
elsewhere
|
|
Total
impaired
loans
|
|
Average
recorded
investment
in impaired
loans
|
|
Interest
income
recognized
on impaired
loans
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
11,911
|
|
|
3,569
|
|
|
—
|
|
|
6,711
|
|
|
22,191
|
|
|
23,590
|
|
|
231
|
|
Home equity loans
|
6,194
|
|
|
1,980
|
|
|
—
|
|
|
1,416
|
|
|
9,590
|
|
|
9,578
|
|
|
111
|
|
Consumer loans
|
3,359
|
|
|
1,093
|
|
|
—
|
|
|
|
|
|
4,452
|
|
|
5,012
|
|
|
52
|
|
Total Personal Banking
|
21,464
|
|
|
6,642
|
|
|
—
|
|
|
8,127
|
|
|
36,233
|
|
|
38,180
|
|
|
394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
20,897
|
|
|
15,857
|
|
|
3,469
|
|
|
11,003
|
|
|
51,226
|
|
|
54,273
|
|
|
468
|
|
Commercial loans
|
2,744
|
|
|
5,686
|
|
|
1,024
|
|
|
2,982
|
|
|
12,436
|
|
|
13,383
|
|
|
235
|
|
Total Commercial Banking
|
23,641
|
|
|
21,543
|
|
|
4,493
|
|
|
13,985
|
|
|
63,662
|
|
|
67,656
|
|
|
703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
45,105
|
|
|
28,185
|
|
|
4,493
|
|
|
22,112
|
|
|
99,895
|
|
|
105,836
|
|
|
1,097
|
|
The following table provides information related to the composition of originated impaired loans by portfolio segment and by class of financing receivable at and for the year ended
December 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual
loans 90 or
more days
delinquent
|
|
Nonaccrual
loans less
than 90
days
delinquent
|
|
Loans less
than 90
days
delinquent
reviewed for
impairment
|
|
TDRs less
than 90
days
delinquent
not included
elsewhere
|
|
Total
impaired
loans
|
|
Average
recorded
investment
in impaired
loans
|
|
Interest
income
recognized
on impaired
loans
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
13,169
|
|
|
5,095
|
|
|
—
|
|
|
5,929
|
|
|
24,193
|
|
|
24,483
|
|
|
1,079
|
|
Home equity loans
|
5,552
|
|
|
2,313
|
|
|
—
|
|
|
1,439
|
|
|
9,304
|
|
|
9,234
|
|
|
496
|
|
Consumer loans
|
3,823
|
|
|
1,286
|
|
|
—
|
|
|
—
|
|
|
5,109
|
|
|
3,703
|
|
|
166
|
|
Total Personal Banking
|
22,544
|
|
|
8,694
|
|
|
—
|
|
|
7,368
|
|
|
38,606
|
|
|
37,420
|
|
|
1,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
19,264
|
|
|
19,460
|
|
|
3,622
|
|
|
11,582
|
|
|
53,928
|
|
|
64,350
|
|
|
2,864
|
|
Commercial loans
|
3,373
|
|
|
6,201
|
|
|
2,837
|
|
|
3,116
|
|
|
15,527
|
|
|
16,905
|
|
|
991
|
|
Total Commercial Banking
|
22,637
|
|
|
25,661
|
|
|
6,459
|
|
|
14,698
|
|
|
69,455
|
|
|
81,255
|
|
|
3,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
45,181
|
|
|
34,355
|
|
|
6,459
|
|
|
22,066
|
|
|
108,061
|
|
|
118,675
|
|
|
5,596
|
|
The following table provides information related to the evaluation of impaired loans by portfolio segment and by class of financing receivable at
March 31, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
collectively
evaluated for
impairment
|
|
Loans
individually
evaluated for
impairment
|
|
Loans
individually
evaluated for
impairment
for which
there is a
related
impairment
reserve
|
|
Related
impairment
reserve
|
|
Loans
individually
evaluated for
impairment
for which
there is no
related
reserve
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
2,697,686
|
|
|
8,383
|
|
|
8,383
|
|
|
826
|
|
|
—
|
|
Home equity loans
|
1,303,611
|
|
|
1,783
|
|
|
1,783
|
|
|
417
|
|
|
—
|
|
Consumer loans
|
642,978
|
|
|
127
|
|
|
127
|
|
|
29
|
|
|
—
|
|
Total Personal Banking
|
4,644,275
|
|
|
10,293
|
|
|
10,293
|
|
|
1,272
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
2,344,366
|
|
|
34,108
|
|
|
27,739
|
|
|
3,339
|
|
|
6,369
|
|
Commercial loans
|
519,504
|
|
|
10,542
|
|
|
10,009
|
|
|
1,496
|
|
|
533
|
|
Total Commercial Banking
|
2,863,870
|
|
|
44,650
|
|
|
37,748
|
|
|
4,835
|
|
|
6,902
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
7,508,145
|
|
|
54,943
|
|
|
48,041
|
|
|
6,107
|
|
|
6,902
|
|
The following table provides information related to the evaluation of impaired loans by portfolio segment and by class of financing receivable at
December 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
collectively
evaluated for
impairment
|
|
Loans
individually
evaluated for
impairment
|
|
Loans
individually
evaluated for
impairment
for which
there is a
related
impairment
reserve
|
|
Related
impairment
reserve
|
|
Loans
individually
evaluated for
impairment
for which
there is no
related
reserve
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
2,706,484
|
|
|
8,280
|
|
|
8,280
|
|
|
709
|
|
|
—
|
|
Home equity loans
|
1,326,958
|
|
|
1,814
|
|
|
1,814
|
|
|
450
|
|
|
—
|
|
Consumer loans
|
642,835
|
|
|
126
|
|
|
126
|
|
|
29
|
|
|
—
|
|
Total Personal Banking
|
4,676,277
|
|
|
10,220
|
|
|
10,220
|
|
|
1,188
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
2,309,186
|
|
|
32,903
|
|
|
27,594
|
|
|
3,545
|
|
|
5,309
|
|
Commercial loans
|
518,449
|
|
|
10,312
|
|
|
10,242
|
|
|
1,390
|
|
|
70
|
|
Total Commercial Banking
|
2,827,635
|
|
|
43,215
|
|
|
37,836
|
|
|
4,935
|
|
|
5,379
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
7,503,912
|
|
|
53,435
|
|
|
48,056
|
|
|
6,123
|
|
|
5,379
|
|
Our loan portfolios include loans that have been modified in a troubled debt restructuring ("TDR"), where concessions have been granted to borrowers who have experienced financial difficulties. These concessions typically result from our loss mitigation activities and could include: extending the note’s maturity date, permitting interest only payments, reducing the interest rate to a rate lower than current market rates for new debt with similar risk, reducing the principal payment, principal forbearance or other actions. These concessions are applicable to all loan segments and classes. Certain TDRs are classified as nonperforming at the time of restructuring and may be returned to performing status after considering the borrower’s sustained repayment performance for a period of at least six months.
When we modify loans in a TDR, we evaluate any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, the loan’s observable market price or the current fair value of the collateral, less selling costs, for collateral dependent loans. If we determine that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance. In periods subsequent to modification, we evaluate all TDRs, including those that have payment defaults, for possible impairment, using ASC 310-10. As a result, loans modified in a TDR may have the financial effect of increasing the specific allowance associated with the loan.
Loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a TDR subsequently default, we evaluate the loan for possible further impairment. The allowance may be increased, adjustments may be made in the allocation of the allowance, partial charge-offs may be taken to further write-down the carrying value of the loan, or the loan may be charged-off completely.
The following table provides a roll forward of troubled debt restructurings for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended March 31,
|
|
2017
|
|
2016
|
|
Number of
contracts
|
|
Amount
|
|
Number of
contracts
|
|
Amount
|
Beginning TDR balance:
|
225
|
|
|
$
|
42,926
|
|
|
227
|
|
|
$
|
51,115
|
|
New TDRs
|
6
|
|
|
3,790
|
|
|
9
|
|
|
3,349
|
|
Re-modified TDRs
|
—
|
|
|
—
|
|
|
1
|
|
|
200
|
|
Net paydowns
|
|
|
|
(1,222
|
)
|
|
|
|
|
(1,483
|
)
|
Charge-offs:
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Home equity loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Commercial real estate loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Commercial loans
|
1
|
|
|
(101
|
)
|
|
1
|
|
|
(43
|
)
|
Paid-off loans:
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Home equity loans
|
1
|
|
|
—
|
|
|
2
|
|
|
(231
|
)
|
Commercial real estate loans
|
2
|
|
|
(65
|
)
|
|
4
|
|
|
(4,521
|
)
|
Commercial loans
|
3
|
|
|
(1,750
|
)
|
|
2
|
|
|
(138
|
)
|
Ending TDR balance:
|
224
|
|
|
$
|
43,578
|
|
|
227
|
|
|
$
|
48,248
|
|
|
|
|
|
|
|
|
|
Accruing TDRs
|
|
|
|
$
|
25,305
|
|
|
|
|
|
$
|
30,549
|
|
Non-accrual TDRs
|
|
|
|
18,273
|
|
|
|
|
|
17,699
|
|
The following table provides information related to troubled debt restructurings (including re-modified TDRs) by portfolio segment and by class of financing receivable during the periods indicated (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended
March 31, 2017
|
|
|
Number
of
contracts
|
|
Recorded
investment
at the time of
modification
|
|
Current
recorded
investment
|
|
Current
allowance
|
|
Troubled debt restructurings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
2
|
|
|
$
|
448
|
|
|
447
|
|
|
48
|
|
|
Home equity loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Consumer loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total Personal Banking
|
2
|
|
|
448
|
|
|
447
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
3
|
|
|
3,138
|
|
|
3,119
|
|
|
225
|
|
|
Commercial loans
|
1
|
|
|
204
|
|
|
199
|
|
|
14
|
|
|
Total Commercial Banking
|
4
|
|
|
3,342
|
|
|
3,318
|
|
|
239
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
6
|
|
|
$
|
3,790
|
|
|
3,765
|
|
|
287
|
|
|
During the quarter ended March 31, 2017, no TDRs modified within the previous twelve months have subsequently defaulted.
The following table provides information related to troubled debt restructurings (including re-modified TDRs) by portfolio segment and by class of financing receivable during the periods indicated (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended
March 31, 2016
|
|
|
Number
of
contracts
|
|
Recorded
investment
at the time of
modification
|
|
Current
recorded
investment
|
|
Current
allowance
|
|
Troubled debt restructurings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
3
|
|
|
$
|
507
|
|
|
505
|
|
|
46
|
|
|
Home equity loans
|
1
|
|
|
56
|
|
|
55
|
|
|
13
|
|
|
Consumer loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total Personal Banking
|
4
|
|
|
563
|
|
|
560
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
2
|
|
|
1,284
|
|
|
1,284
|
|
|
269
|
|
|
Commercial loans
|
4
|
|
|
1,702
|
|
|
1,689
|
|
|
538
|
|
|
Total Commercial Banking
|
6
|
|
|
2,986
|
|
|
2,973
|
|
|
807
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
10
|
|
|
$
|
3,549
|
|
|
3,533
|
|
|
866
|
|
|
During the quarter ended March 31, 2016, no TDRs modified within the previous twelve months have subsequently defaulted.
The following table provides information as of
March 31, 2017
for troubled debt restructuring (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the quarter ended
March 31, 2017
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of modification
|
|
|
|
Number of
contracts
|
|
Rate
|
|
Payment
|
|
Maturity
date
|
|
Other
|
|
Total
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
2
|
|
|
$
|
112
|
|
|
—
|
|
|
—
|
|
|
335
|
|
|
447
|
|
Home equity loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Consumer loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total Personal Banking
|
2
|
|
|
112
|
|
|
—
|
|
|
—
|
|
|
335
|
|
|
447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
3
|
|
|
—
|
|
|
2,755
|
|
|
364
|
|
|
—
|
|
|
3,119
|
|
Commercial loans
|
1
|
|
|
—
|
|
|
—
|
|
|
199
|
|
|
—
|
|
|
199
|
|
Total Commercial Banking
|
4
|
|
|
—
|
|
|
2,755
|
|
|
563
|
|
|
—
|
|
|
3,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
6
|
|
|
$
|
112
|
|
|
2,755
|
|
|
563
|
|
|
335
|
|
|
3,765
|
|
The following table provides information as of
March 31, 2016
for troubled debt restructuring (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the quarter ended
March 31, 2016
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of modification
|
|
|
|
Number of
contracts
|
|
Rate
|
|
Payment
|
|
Maturity
date
|
|
Other
|
|
Total
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
3
|
|
|
$
|
364
|
|
|
—
|
|
|
93
|
|
|
48
|
|
|
505
|
|
Home equity loans
|
1
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55
|
|
Consumer loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total Personal Banking
|
4
|
|
|
419
|
|
|
—
|
|
|
93
|
|
|
48
|
|
|
560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,284
|
|
|
1,284
|
|
Commercial loans
|
4
|
|
|
—
|
|
|
863
|
|
|
—
|
|
|
826
|
|
|
1,689
|
|
Total Commercial Banking
|
6
|
|
|
—
|
|
|
863
|
|
|
—
|
|
|
2,110
|
|
|
2,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
10
|
|
|
$
|
419
|
|
|
863
|
|
|
93
|
|
|
2,158
|
|
|
3,533
|
|
During the quarter ended
March 31, 2017
, no TDRs were re-modified.
The following table provides information related to re-modified troubled debt restructurings by portfolio segment and by class of financing receivable for the quarter ended
March 31, 2016
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Type of re-modification
|
|
|
|
re-modified
TDRs
|
|
Rate
|
|
Payment
|
|
Maturity
date
|
|
Other
|
|
Total
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Home equity loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Consumer loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total Personal Banking
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200
|
|
|
200
|
|
Commercial loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total Commercial Banking
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
1
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
200
|
|
|
200
|
|
The following table provides information related to loan payment delinquencies at
March 31, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 Days
delinquent
|
|
60-89 Days
delinquent
|
|
90 Days or
greater
delinquent
|
|
Total
delinquency
|
|
Current
|
|
Total loans
receivable
|
|
90 Days or
greater
delinquent
and accruing
(1)
|
Originated loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
20,795
|
|
|
1,535
|
|
|
11,716
|
|
|
34,046
|
|
|
2,542,765
|
|
|
2,576,811
|
|
|
—
|
|
Home equity loans
|
3,931
|
|
|
1,006
|
|
|
4,716
|
|
|
9,653
|
|
|
1,005,122
|
|
|
1,014,775
|
|
|
—
|
|
Consumer loans
|
6,382
|
|
|
2,022
|
|
|
2,979
|
|
|
11,383
|
|
|
486,739
|
|
|
498,122
|
|
|
—
|
|
Total Personal Banking
|
31,108
|
|
|
4,563
|
|
|
19,411
|
|
|
55,082
|
|
|
4,034,626
|
|
|
4,089,708
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
4,914
|
|
|
1,627
|
|
|
18,678
|
|
|
25,219
|
|
|
1,992,364
|
|
|
2,017,583
|
|
|
—
|
|
Commercial loans
|
1,151
|
|
|
35
|
|
|
2,680
|
|
|
3,866
|
|
|
451,543
|
|
|
455,409
|
|
|
—
|
|
Total Commercial Banking
|
6,065
|
|
|
1,662
|
|
|
21,358
|
|
|
29,085
|
|
|
2,443,907
|
|
|
2,472,992
|
|
|
—
|
|
Total originated loans
|
37,173
|
|
|
6,225
|
|
|
40,769
|
|
|
84,167
|
|
|
6,478,533
|
|
|
6,562,700
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
1,459
|
|
|
59
|
|
|
610
|
|
|
2,128
|
|
|
127,130
|
|
|
129,258
|
|
|
414
|
|
Home equity loans
|
655
|
|
|
139
|
|
|
1,542
|
|
|
2,336
|
|
|
288,283
|
|
|
290,619
|
|
|
64
|
|
Consumer loans
|
775
|
|
|
219
|
|
|
393
|
|
|
1,387
|
|
|
143,596
|
|
|
144,983
|
|
|
13
|
|
Total Personal Banking
|
2,889
|
|
|
417
|
|
|
2,545
|
|
|
5,851
|
|
|
559,009
|
|
|
564,860
|
|
|
491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
4,450
|
|
|
1,407
|
|
|
4,331
|
|
|
10,188
|
|
|
350,703
|
|
|
360,891
|
|
|
2,112
|
|
Commercial loans
|
1,153
|
|
|
464
|
|
|
64
|
|
|
1,681
|
|
|
72,956
|
|
|
74,637
|
|
|
—
|
|
Total Commercial Banking
|
5,603
|
|
|
1,871
|
|
|
4,395
|
|
|
11,869
|
|
|
423,659
|
|
|
435,528
|
|
|
2,112
|
|
Total acquired loans
|
8,492
|
|
|
2,288
|
|
|
6,940
|
|
|
17,720
|
|
|
982,668
|
|
|
1,000,388
|
|
|
2,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
$
|
45,665
|
|
|
8,513
|
|
|
47,709
|
|
|
101,887
|
|
|
7,461,201
|
|
|
7,563,088
|
|
|
2,603
|
|
|
|
(1)
|
Represents acquired loans that were originally recorded at fair value upon acquisition. These loans are considered to be accruing because we can reasonably estimate future cash flows on and expect to fully collect the carrying value of these loans. Therefore, we are accreting the difference between the carrying value and their expected cash flows into interest income.
|
The following table provides information related to loan payment delinquencies at
December 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 Days
delinquent
|
|
60-89 Days
delinquent
|
|
90 Days or
greater
delinquent
|
|
Total
delinquency
|
|
Current
|
|
Total loans
receivable
|
|
90 Days or
greater
delinquent
and accruing
(1)
|
Originated loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
26,212
|
|
|
5,806
|
|
|
12,792
|
|
|
44,810
|
|
|
2,536,443
|
|
|
2,581,253
|
|
|
—
|
|
Home equity loans
|
5,785
|
|
|
1,305
|
|
|
4,783
|
|
|
11,873
|
|
|
1,014,442
|
|
|
1,026,315
|
|
|
—
|
|
Consumer loans
|
8,598
|
|
|
3,204
|
|
|
3,518
|
|
|
15,320
|
|
|
461,725
|
|
|
477,045
|
|
|
—
|
|
Total Personal Banking
|
40,595
|
|
|
10,315
|
|
|
21,093
|
|
|
72,003
|
|
|
4,012,610
|
|
|
4,084,613
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
7,674
|
|
|
3,674
|
|
|
16,508
|
|
|
27,856
|
|
|
1,944,227
|
|
|
1,972,083
|
|
|
—
|
|
Commercial loans
|
1,067
|
|
|
1,957
|
|
|
3,107
|
|
|
6,131
|
|
|
449,244
|
|
|
455,375
|
|
|
—
|
|
Total Commercial Banking
|
8,741
|
|
|
5,631
|
|
|
19,615
|
|
|
33,987
|
|
|
2,393,471
|
|
|
2,427,458
|
|
|
—
|
|
Total originated loan
|
49,336
|
|
|
15,946
|
|
|
40,708
|
|
|
105,990
|
|
|
6,406,081
|
|
|
6,512,071
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
1,174
|
|
|
421
|
|
|
829
|
|
|
2,424
|
|
|
131,087
|
|
|
133,511
|
|
|
452
|
|
Home equity loans
|
1,020
|
|
|
258
|
|
|
973
|
|
|
2,251
|
|
|
300,206
|
|
|
302,457
|
|
|
204
|
|
Consumer loans
|
1,270
|
|
|
405
|
|
|
320
|
|
|
1,995
|
|
|
163,921
|
|
|
165,916
|
|
|
15
|
|
Total Personal Banking
|
3,464
|
|
|
1,084
|
|
|
2,122
|
|
|
6,670
|
|
|
595,214
|
|
|
601,884
|
|
|
671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
2,703
|
|
|
821
|
|
|
4,762
|
|
|
8,286
|
|
|
361,720
|
|
|
370,006
|
|
|
2,006
|
|
Commercial loans
|
111
|
|
|
124
|
|
|
413
|
|
|
648
|
|
|
72,738
|
|
|
73,386
|
|
|
147
|
|
Total Commercial Banking
|
2,814
|
|
|
945
|
|
|
5,175
|
|
|
8,934
|
|
|
434,458
|
|
|
443,392
|
|
|
2,153
|
|
Total acquired loan
|
6,278
|
|
|
2,029
|
|
|
7,297
|
|
|
15,604
|
|
|
1,029,672
|
|
|
1,045,276
|
|
|
2,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
55,614
|
|
|
17,975
|
|
|
48,005
|
|
|
121,594
|
|
|
7,435,753
|
|
|
7,557,347
|
|
|
2,824
|
|
(1) Represents acquired loans that were originally recorded at fair value upon acquisition. These loans are considered to be accruing because we can reasonably estimate future cash flows on and expect to fully collect the carrying value of these loans. Therefore, we are accreting the difference between the carrying value and their expected cash flows into interest income.
Credit quality indicators
:
We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. We analyze loans individually by classifying the loans by credit risk. Credit relationships greater than or equal to
$1.0 million
classified as special mention or substandard are reviewed quarterly for deterioration or improvement to determine if the loan is appropriately classified. We use the following definitions for risk ratings other than pass:
Special mention
— Loans designated as special mention have specific, well-defined risk issues, which create a high level of uncertainty regarding the long-term viability of the business. Loans in this class are considered to have high-risk characteristics. A special mention loan exhibits material negative financial trends due to company-specific or systemic conditions. If these potential weaknesses are not mitigated, they threaten the borrower’s capacity to meet its debt obligations. Special mention loans still demonstrate sufficient financial flexibility to react to and positively address the root cause of the adverse financial trends without significant deviations from their current business strategy. Their potential weaknesses deserve our close attention and warrant enhanced monitoring.
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. Loans so classified have a well-defined weakness or weaknesses that
jeopardize the liquidation of the debt. They are characterized by the distinct possibility that we 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. In addition, those weaknesses make collection or liquidation in full highly questionable and improbable. A loan classified as doubtful exhibits discernible loss potential, but a complete loss seems very unlikely. The possibility of a loss on a doubtful loan is high, but because of certain important and reasonably specific pending factors that may strengthen the loan, its classification as an estimated loss is deferred until a more exact status can be determined.
Loss
—
Loans classified as loss are considered uncollectible and of such value that the continuance as a loan is not warranted. A loss classification does not mean that the loan has no recovery or salvage value; instead, it means that it is not practical or desirable to defer writing off all or a portion of a basically worthless loan even though partial recovery may be possible in the future.
The following table sets forth information about credit quality indicators updated during the quarter ended
March 31, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
Special
mention
|
|
Substandard
|
|
Doubtful
|
|
Loss
|
|
Total loans
receivable
|
Originated loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
2,561,508
|
|
|
—
|
|
|
15,303
|
|
|
—
|
|
|
—
|
|
|
2,576,811
|
|
Home equity loans
|
1,008,295
|
|
|
—
|
|
|
6,480
|
|
|
—
|
|
|
—
|
|
|
1,014,775
|
|
Consumer loans
|
495,477
|
|
|
—
|
|
|
2,645
|
|
|
—
|
|
|
—
|
|
|
498,122
|
|
Total Personal Banking
|
4,065,280
|
|
|
—
|
|
|
24,428
|
|
|
—
|
|
|
—
|
|
|
4,089,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
1,870,514
|
|
|
38,750
|
|
|
108,319
|
|
|
—
|
|
|
—
|
|
|
2,017,583
|
|
Commercial loans
|
408,666
|
|
|
9,261
|
|
|
37,482
|
|
|
—
|
|
|
—
|
|
|
455,409
|
|
Total Commercial Banking
|
2,279,180
|
|
|
48,011
|
|
|
145,801
|
|
|
—
|
|
|
—
|
|
|
2,472,992
|
|
Total originated loans
|
6,344,460
|
|
|
48,011
|
|
|
170,229
|
|
|
—
|
|
|
—
|
|
|
6,562,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
127,695
|
|
|
—
|
|
|
1,563
|
|
|
—
|
|
|
—
|
|
|
129,258
|
|
Home equity loans
|
287,887
|
|
|
—
|
|
|
2,732
|
|
|
—
|
|
|
—
|
|
|
290,619
|
|
Consumer loans
|
144,097
|
|
|
—
|
|
|
886
|
|
|
—
|
|
|
—
|
|
|
144,983
|
|
Total Personal Banking
|
559,679
|
|
|
—
|
|
|
5,181
|
|
|
—
|
|
|
—
|
|
|
564,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
317,031
|
|
|
9,439
|
|
|
34,421
|
|
|
—
|
|
|
—
|
|
|
360,891
|
|
Commercial loans
|
65,996
|
|
|
2,965
|
|
|
5,676
|
|
|
—
|
|
|
—
|
|
|
74,637
|
|
Total Commercial Banking
|
383,027
|
|
|
12,404
|
|
|
40,097
|
|
|
—
|
|
|
—
|
|
|
435,528
|
|
Total acquired loans
|
942,706
|
|
|
12,404
|
|
|
45,278
|
|
|
—
|
|
|
—
|
|
|
1,000,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
$
|
7,287,166
|
|
|
60,415
|
|
|
215,507
|
|
|
—
|
|
|
—
|
|
|
7,563,088
|
|
The following table sets forth information about credit quality indicators, which were updated during the year ended
December 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
Special
mention
|
|
Substandard
|
|
Doubtful
|
|
Loss
|
|
Total loans
receivable
|
Originated loans:
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
2,564,988
|
|
|
—
|
|
|
16,265
|
|
|
—
|
|
|
—
|
|
|
2,581,253
|
|
Home equity loans
|
1,018,898
|
|
|
—
|
|
|
7,417
|
|
|
—
|
|
|
—
|
|
|
1,026,315
|
|
Consumer loans
|
473,950
|
|
|
—
|
|
|
3,095
|
|
|
—
|
|
|
—
|
|
|
477,045
|
|
Total Personal Banking
|
4,057,836
|
|
|
—
|
|
|
26,777
|
|
|
—
|
|
|
—
|
|
|
4,084,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
1,821,548
|
|
|
36,321
|
|
|
114,214
|
|
|
—
|
|
|
—
|
|
|
1,972,083
|
|
Commercial loans
|
401,866
|
|
|
15,203
|
|
|
38,306
|
|
|
—
|
|
|
—
|
|
|
455,375
|
|
Total Commercial Banking
|
2,223,414
|
|
|
51,524
|
|
|
152,520
|
|
|
—
|
|
|
—
|
|
|
2,427,458
|
|
Total originated loans
|
6,281,250
|
|
|
51,524
|
|
|
179,297
|
|
|
—
|
|
|
—
|
|
|
6,512,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans:
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
131,717
|
|
|
—
|
|
|
1,794
|
|
|
—
|
|
|
—
|
|
|
133,511
|
|
Home equity loans
|
300,100
|
|
|
—
|
|
|
2,357
|
|
|
—
|
|
|
—
|
|
|
302,457
|
|
Consumer loans
|
165,094
|
|
|
—
|
|
|
822
|
|
|
—
|
|
|
—
|
|
|
165,916
|
|
Total Personal Banking
|
596,911
|
|
|
—
|
|
|
4,973
|
|
|
—
|
|
|
—
|
|
|
601,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
331,780
|
|
|
7,403
|
|
|
30,823
|
|
|
—
|
|
|
—
|
|
|
370,006
|
|
Commercial loans
|
68,127
|
|
|
1,989
|
|
|
3,270
|
|
|
—
|
|
|
—
|
|
|
73,386
|
|
Total Commercial Banking
|
399,907
|
|
|
9,392
|
|
|
34,093
|
|
|
—
|
|
|
—
|
|
|
443,392
|
|
Total acquired loans
|
996,818
|
|
|
9,392
|
|
|
39,066
|
|
|
—
|
|
|
—
|
|
|
1,045,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
7,278,068
|
|
|
60,916
|
|
|
218,363
|
|
|
—
|
|
|
—
|
|
|
7,557,347
|
|
|
|
(5)
|
Goodwill and Other Intangible Assets
|
The following table provides information for intangible assets subject to amortization at the dates indicated (in thousands):
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
December 31,
2016
|
Amortizable intangible assets:
|
|
|
|
|
|
Core deposit intangibles — gross
|
$
|
63,685
|
|
|
37,953
|
|
Acquisitions
|
—
|
|
|
25,732
|
|
Less: accumulated amortization
|
(35,845
|
)
|
|
(34,378
|
)
|
Core deposit intangibles — net
|
27,840
|
|
|
29,307
|
|
Customer and Contract intangible assets — gross
|
10,474
|
|
|
8,496
|
|
Acquisitions
|
—
|
|
|
1,978
|
|
Less: accumulated amortization
|
(7,630
|
)
|
|
(7,348
|
)
|
Customer and Contract intangible assets — net
|
$
|
2,844
|
|
|
3,126
|
|
The following table shows the actual aggregate amortization expense for the quarters ended
March 31, 2017
and
2016
, as well as the estimated aggregate amortization expense, based upon current levels of intangible assets, for the current fiscal year and each of the five succeeding fiscal years (in thousands):
|
|
|
|
|
For the quarter ended March 31, 2017
|
$
|
1,749
|
|
For the quarter ended March 31, 2016
|
675
|
|
For the year ending December 31, 2017
|
6,764
|
|
For the year ending December 31, 2018
|
5,848
|
|
For the year ending December 31, 2019
|
4,933
|
|
For the year ending December 31, 2020
|
4,017
|
|
For the year ending December 31, 2021
|
3,188
|
|
For the year ending December 31, 2022
|
2,456
|
|
The following table provides information for the changes in the carrying amount of goodwill (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Community
Banking
|
|
Consumer
Finance
|
|
Total
|
Balance at December 31, 2015
|
$
|
260,123
|
|
|
1,613
|
|
|
261,736
|
|
Goodwill acquired-FNFG
|
45,167
|
|
|
—
|
|
|
45,167
|
|
Goodwill acquired-Best Insurance Agency
|
404
|
|
|
—
|
|
|
404
|
|
Goodwill acquired- Winan Insurance
|
113
|
|
|
—
|
|
|
113
|
|
Balance at December 31, 2016
|
305,807
|
|
|
1,613
|
|
|
307,420
|
|
Goodwill acquired
|
—
|
|
|
—
|
|
|
—
|
|
Impairment losses
|
—
|
|
|
—
|
|
|
—
|
|
Balance at March 31, 2017
|
$
|
305,807
|
|
|
1,613
|
|
|
307,420
|
|
We performed our annual goodwill impairment test as of June 30, 2016 and concluded that goodwill was not impaired. At
March 31, 2017
, there were no changes in our operations or other factors that would cause us to update that test. See Note 1 of the Notes to Consolidated Financial Statements in Item 8 of Part II of our 2016 Annual Report on Form 10-K for a description of our testing procedures.
We issue standby letters of credit in the normal course of business. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party. We are required to perform under a standby letter of credit when drawn upon by the guaranteed third party in the case of nonperformance by our customer. The credit risk associated with standby letters of credit is essentially the same as that involved in extending loans to customers and is subject to normal loan underwriting procedures. Collateral may be obtained based on management’s credit assessment of the customer. At
March 31, 2017
, the maximum potential amount of future payments we could be required to make under these non-recourse standby letters of credit was
$24.7 million
, of which
$16.0 million
is fully collateralized. At
March 31, 2017
, we had a liability, which represents deferred income, of
$159,000
related to the standby letters of credit.
Basic earnings per common share (EPS) is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period, without considering any dilutive items. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. All stock options outstanding during the quarter ended
March 31, 2017
were included in the computation of diluted earnings per share because the options’ exercise price was less than the average market price of the common shares of
$17.54
. Stock options to purchase
521,786
shares of common stock with a weighted average exercise price of
$13.15
per share were outstanding during the quarter ended
March 31, 2016
but were not included in the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of the common shares of
$12.71
.
The computation of basic and diluted earnings per share follows (in thousands, except share data and per share amounts):
|
|
|
|
|
|
|
|
|
|
Quarter ended
March 31,
|
|
|
2017
|
|
2016
|
|
Reported net income
|
$
|
17,746
|
|
|
17,984
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
100,653,277
|
|
|
98,889,744
|
|
|
Dilutive potential shares due to effect of stock options
|
1,827,272
|
|
|
490,265
|
|
|
Total weighted average common shares and dilutive potential shares
|
102,480,549
|
|
|
99,380,009
|
|
|
|
|
|
|
|
Basic earnings per share:
|
$
|
0.18
|
|
|
0.18
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
$
|
0.17
|
|
|
0.18
|
|
|
|
|
(8)
|
Pension and Other Post-retirement Benefits
|
The following table sets forth the net periodic costs for the defined benefit pension plans and post retirement healthcare plans for the periods indicated (in thousands):
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended March 31,
|
|
Pension benefits
|
|
Other post-retirement benefits
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Service cost
|
$
|
1,537
|
|
|
1,374
|
|
|
—
|
|
|
—
|
|
Interest cost
|
1,737
|
|
|
1,696
|
|
|
18
|
|
|
17
|
|
Expected return on plan assets
|
(2,628
|
)
|
|
(2,474
|
)
|
|
—
|
|
|
—
|
|
Amortization of prior service cost
|
(581
|
)
|
|
(581
|
)
|
|
—
|
|
|
—
|
|
Amortization of the net loss
|
928
|
|
|
927
|
|
|
27
|
|
|
23
|
|
Net periodic cost
|
$
|
993
|
|
|
942
|
|
|
45
|
|
|
40
|
|
We anticipate making a contribution to our defined benefit pension plan of
$4.0 million
to
$5.0 million
during the year ending
December 31, 2017
.
|
|
(9)
|
Disclosures About Fair Value of Financial Instruments
|
Fair value information about financial instruments, whether or not recognized in the consolidated statement of financial condition, is required to be disclosed. These requirements exclude certain financial instruments and all nonfinancial instruments. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.
Financial assets and liabilities recognized or disclosed at fair value on a recurring basis and certain financial assets and liabilities on a non-recurring basis are accounted for using a three-level hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. This hierarchy gives the highest priority to quoted prices with readily available independent data in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable market inputs (Level 3). When various inputs for measurement fall within different levels of the fair value hierarchy, the lowest level input that has a significant impact on fair value measurement is used.
Financial assets and liabilities are categorized based upon the following characteristics or inputs to the valuation techniques:
|
|
•
|
Level 1 — Financial assets and liabilities for which inputs are observable and are obtained from reliable quoted prices for identical assets or liabilities in actively traded markets. This is the most reliable fair value measurement and includes, for example, active exchange-traded equity securities.
|
|
|
•
|
Level 2 — Financial assets and liabilities for which values are based on quoted prices in markets that are not active or for which values are based on similar assets or liabilities that are actively traded. Level 2 also includes pricing models in which the inputs are corroborated by market data, for example, matrix pricing.
|
|
|
•
|
Level 3 — Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Level 3 inputs include the following:
|
|
|
•
|
Quotes from brokers or other external sources that are not considered binding;
|
|
|
•
|
Quotes from brokers or other external sources where it cannot be determined that market participants would in fact transact for the asset or liability at the quoted price;
|
|
|
•
|
Quotes and other information from brokers or other external sources where the inputs are not deemed observable.
|
We are responsible for the valuation process and as part of this process may use data from outside sources in establishing fair value. We perform due diligence to understand the inputs used or how the data was calculated or derived. We also corroborate the reasonableness of external inputs in the valuation process.
The carrying amounts reported in the consolidated statement of financial condition approximate fair value for the following financial instruments: cash on hand, interest-earning deposits in other institutions, federal funds sold and other short-term investments, accrued interest receivable, accrued interest payable, and marketable securities available-for-sale.
Marketable Securities
Where available, market values are based on quoted market prices, dealer quotes, and prices obtained from independent pricing services.
Debt securities - available for sale
- Generally, debt securities are valued using pricing for similar securities, recently executed transactions and other pricing models utilizing observable inputs. The valuation for most debt securities is classified as Level 2. Securities within Level 2 include corporate bonds, municipal bonds, mortgage-backed securities and US government obligations. Certain corporate debt securities do not have an active market and as such the broker pricing received uses alternative methods. The fair value of these corporate debt securities is determined by using a discounted cash flow model using market assumptions, which generally include cash flow, collateral and other market assumptions. As such, these securities are included herein as Level 3 assets.
Equity securities - available for sale
- Level 1 securities include publicly traded securities valued using quoted market prices. We consider the financial condition of the issuer to determine if the securities have indicators of impairment.
Debt securities - held to maturity
-
The fair value of debt securities held to maturity is determined in the same manner as debt securities available for sale.
Loans Held for Sale
The estimated fair value of loans held for sale is based on market bids obtained from potential buyers.
Loans Held for Investment
Loans with comparable characteristics including collateral and re-pricing structures are segregated for valuation purposes. Characteristics include remaining term, coupon interest, and estimated prepayment speeds. Delinquent loans are separately evaluated given the impact delinquency has on the projected future cash flow of the loan and the approximate discount or market rate. Each loan pool is separately valued utilizing a discounted cash flow analysis. Projected monthly cash flows are discounted to present value using a market rate for comparable loans, which is not considered an exit price.
Federal Home Loan Bank (“FHLB”) Stock
Due to the restrictions placed on the transferability of FHLB stock it is not practical to determine the fair value.
Deposit Liabilities
The estimated fair value of deposits with no stated maturity, which includes demand deposits, money market, and other savings accounts, is the amount payable on demand. Although market premiums paid for depository institutions reflect an additional value for these low-cost deposits, adjusting fair value for any value expected to be derived from retaining those deposits for a future period of time or from the benefit that results from the ability to fund interest-earning assets with these deposit liabilities is prohibited. The fair value estimates of deposit liabilities do not include the benefit that results from the low-cost funding provided by these deposits compared to the cost of borrowing funds in the market. Fair values for time deposits are estimated using a discounted cash flow calculation that applies contractual cost currently being offered in the existing portfolio to current market rates being offered locally for deposits of similar remaining maturities. The valuation adjustment for the portfolio consists of the present value of the difference of these two cash flows, discounted at the assumed market rate of the corresponding maturity.
Borrowed Funds
Fixed rate advances are valued by comparing their contractual cost to the prevailing market cost. The carrying amount of collateralized borrowings approximates the fair value.
Junior Subordinated Debentures
The fair value of junior subordinated debentures is calculated using the discounted cash flows at the prevailing rate of interest.
Cash flow hedges — Interest rate swap agreements (“swaps”)
The fair value of the swaps is the amount we would expect to pay to terminate the agreements and is based upon the present value of the expected future cash flows using the LIBOR swap curve, the basis for the underlying interest rate.
Off-Balance Sheet Financial Instruments
These financial instruments generally are not sold or traded, and estimated fair values are not readily available. However, the fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements. Commitments to extend credit are generally short-term in nature and, if drawn upon, are issued under current market terms. At
March 31, 2017
and
December 31, 2016
, there was
no
significant unrealized appreciation or depreciation on these financial instruments.
The following table sets forth the carrying amount and estimated fair value of our financial instruments included in the consolidated statement of financial condition at
March 31, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
amount
|
|
Estimated
fair value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
431,948
|
|
|
$
|
431,948
|
|
|
$
|
431,948
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Securities available-for-sale
|
876,047
|
|
|
876,047
|
|
|
4,827
|
|
|
861,343
|
|
|
9,877
|
|
Securities held-to-maturity
|
41,888
|
|
|
42,285
|
|
|
—
|
|
|
42,285
|
|
|
—
|
|
Loans receivable, net
|
7,501,984
|
|
|
7,916,346
|
|
|
1,595
|
|
|
—
|
|
|
7,914,751
|
|
Assets held-for-sale
|
146,167
|
|
|
146,167
|
|
|
146,167
|
|
|
—
|
|
|
—
|
|
Accrued interest receivable
|
20,945
|
|
|
20,945
|
|
|
20,945
|
|
|
—
|
|
|
—
|
|
FHLB Stock
|
7,362
|
|
|
7,362
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total financial assets
|
$
|
9,026,341
|
|
|
9,441,100
|
|
|
605,482
|
|
|
903,628
|
|
|
7,924,628
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings and checking deposits
|
$
|
6,490,660
|
|
|
$
|
6,490,660
|
|
|
$
|
6,490,660
|
|
|
—
|
|
|
—
|
|
Time deposits
|
1,495,095
|
|
|
1,585,009
|
|
|
—
|
|
|
—
|
|
|
1,585,009
|
|
Liabilities held-for-sale
|
220,619
|
|
|
220,619
|
|
|
220,619
|
|
|
—
|
|
|
—
|
|
Borrowed funds
|
137,191
|
|
|
137,191
|
|
|
137,191
|
|
|
—
|
|
|
—
|
|
Junior subordinated debentures
|
111,213
|
|
|
112,946
|
|
|
—
|
|
|
—
|
|
|
112,946
|
|
Cash flow hedges - swaps
|
2,270
|
|
|
2,270
|
|
|
—
|
|
|
2,270
|
|
|
—
|
|
Accrued interest payable
|
586
|
|
|
586
|
|
|
586
|
|
|
—
|
|
|
—
|
|
Total financial liabilities
|
$
|
8,457,634
|
|
|
8,549,281
|
|
|
6,849,056
|
|
|
2,270
|
|
|
1,697,955
|
|
The following table sets forth the carrying amount and estimated fair value of our financial instruments included in the consolidated statement of financial condition at
December 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
amount
|
|
Estimated
fair value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
389,867
|
|
|
389,867
|
|
|
389,867
|
|
|
—
|
|
|
—
|
|
Securities available-for-sale
|
826,200
|
|
|
826,200
|
|
|
4,440
|
|
|
812,394
|
|
|
9,366
|
|
Securities held-to-maturity
|
19,978
|
|
|
20,426
|
|
|
—
|
|
|
20,426
|
|
|
—
|
|
Loans receivable, net
|
7,496,408
|
|
|
7,878,815
|
|
|
9,625
|
|
|
—
|
|
|
7,869,190
|
|
Assets held-for-sale
|
146,660
|
|
|
146,660
|
|
|
146,660
|
|
|
—
|
|
|
—
|
|
Accrued interest receivable
|
21,699
|
|
|
21,699
|
|
|
21,699
|
|
|
—
|
|
|
—
|
|
FHLB Stock
|
7,390
|
|
|
7,390
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total financial assets
|
$
|
8,908,202
|
|
|
9,291,057
|
|
|
572,291
|
|
|
832,820
|
|
|
7,878,556
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings and checking accounts
|
$
|
6,341,735
|
|
|
6,341,735
|
|
|
6,341,735
|
|
|
—
|
|
|
—
|
|
Time deposits
|
1,540,586
|
|
|
1,626,434
|
|
|
—
|
|
|
—
|
|
|
1,626,434
|
|
Liabilities held-for-sale
|
215,649
|
|
|
215,649
|
|
|
215,649
|
|
|
—
|
|
|
—
|
|
Borrowed funds
|
142,899
|
|
|
142,899
|
|
|
142,899
|
|
|
—
|
|
|
—
|
|
Junior subordinated debentures
|
111,213
|
|
|
113,313
|
|
|
—
|
|
|
—
|
|
|
113,313
|
|
Cash flow hedges - swaps
|
2,736
|
|
|
2,736
|
|
|
—
|
|
|
2,736
|
|
|
—
|
|
Accrued interest payable
|
643
|
|
|
643
|
|
|
643
|
|
|
—
|
|
|
—
|
|
Total financial liabilities
|
$
|
8,355,461
|
|
|
8,443,409
|
|
|
6,700,926
|
|
|
2,736
|
|
|
1,739,747
|
|
Fair value estimates are made at a point-in-time, based on relevant market data and information about the instrument. The methods and assumptions detailed above were used in estimating the fair value of financial instruments at both
March 31, 2017
and
December 31, 2016
. There were
no
transfers of financial instruments between Level 1 and Level 2 during the quarter ended
March 31, 2017
.
The following table represents assets and liabilities measured at fair value on a recurring basis at
March 31, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
assets at
fair value
|
Equity securities
|
$
|
4,827
|
|
|
—
|
|
|
—
|
|
|
4,827
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agencies
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
Government sponsored enterprises
|
—
|
|
|
293,198
|
|
|
—
|
|
|
293,198
|
|
States and political subdivisions
|
—
|
|
|
59,516
|
|
|
—
|
|
|
59,516
|
|
Corporate
|
—
|
|
|
7,742
|
|
|
9,877
|
|
|
17,619
|
|
Total debt securities
|
—
|
|
|
360,461
|
|
|
9,877
|
|
|
370,338
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
GNMA
|
—
|
|
|
29,519
|
|
|
—
|
|
|
29,519
|
|
FNMA
|
—
|
|
|
100,014
|
|
|
—
|
|
|
100,014
|
|
FHLMC
|
—
|
|
|
77,891
|
|
|
—
|
|
|
77,891
|
|
Non-agency
|
—
|
|
|
573
|
|
|
—
|
|
|
573
|
|
Collateralized mortgage obligations:
|
|
|
|
|
|
|
|
|
|
|
|
GNMA
|
—
|
|
|
5,821
|
|
|
—
|
|
|
5,821
|
|
FNMA
|
—
|
|
|
150,228
|
|
|
—
|
|
|
150,228
|
|
FHLMC
|
—
|
|
|
130,577
|
|
|
—
|
|
|
130,577
|
|
SBA
|
—
|
|
|
6,178
|
|
|
—
|
|
|
6,178
|
|
Non-agency
|
—
|
|
|
81
|
|
|
—
|
|
|
81
|
|
Total mortgage-backed securities
|
—
|
|
|
500,882
|
|
|
—
|
|
|
500,882
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
—
|
|
|
(2,270
|
)
|
|
—
|
|
|
(2,270
|
)
|
|
|
|
|
|
|
|
|
Total assets and liabilities
|
$
|
4,827
|
|
|
859,073
|
|
|
9,877
|
|
|
873,777
|
|
The following table represents assets and liabilities measured at fair value on a recurring basis at
December 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
assets at
fair value
|
Equity securities
|
$
|
4,440
|
|
|
—
|
|
|
—
|
|
|
4,440
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agencies
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
Government sponsored enterprises
|
—
|
|
|
294,170
|
|
|
—
|
|
|
294,170
|
|
States and political subdivisions
|
—
|
|
|
63,070
|
|
|
—
|
|
|
63,070
|
|
Corporate
|
—
|
|
|
7,614
|
|
|
9,366
|
|
|
16,980
|
|
Total debt securities
|
—
|
|
|
364,860
|
|
|
9,366
|
|
|
374,226
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
GNMA
|
—
|
|
|
30,883
|
|
|
—
|
|
|
30,883
|
|
FNMA
|
—
|
|
|
106,578
|
|
|
—
|
|
|
106,578
|
|
FHLMC
|
—
|
|
|
82,115
|
|
|
—
|
|
|
82,115
|
|
Non-agency
|
—
|
|
|
579
|
|
|
—
|
|
|
579
|
|
Collateralized mortgage obligations:
|
|
|
|
|
|
|
|
|
|
|
|
GNMA
|
—
|
|
|
6,287
|
|
|
—
|
|
|
6,287
|
|
FNMA
|
—
|
|
|
95,186
|
|
|
—
|
|
|
95,186
|
|
FHLMC
|
—
|
|
|
119,197
|
|
|
—
|
|
|
119,197
|
|
SBA
|
—
|
|
|
6,608
|
|
|
—
|
|
|
6,608
|
|
Non-agency
|
—
|
|
|
101
|
|
|
—
|
|
|
101
|
|
Total mortgage-backed securities
|
—
|
|
|
447,534
|
|
|
—
|
|
|
447,534
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
—
|
|
|
(2,736
|
)
|
|
—
|
|
|
(2,736
|
)
|
|
|
|
|
|
|
|
|
Total assets and liabilities
|
$
|
4,440
|
|
|
809,658
|
|
|
9,366
|
|
|
823,464
|
|
The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
March 31,
2017
|
|
March 31,
2016
|
|
Beginning balance
|
$
|
9,366
|
|
|
8,955
|
|
|
|
|
|
|
|
Total net realized investment gains/ (losses) and net change in unrealized appreciation/ (depreciation):
|
|
|
|
|
|
|
Included in net income as OTTI
|
—
|
|
|
—
|
|
|
Included in other comprehensive income
|
511
|
|
|
(365
|
)
|
|
|
|
|
|
|
Purchases
|
—
|
|
|
—
|
|
|
Sales
|
—
|
|
|
—
|
|
|
Transfers in to Level 3
|
—
|
|
|
—
|
|
|
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
|
|
|
|
|
Ending balance
|
$
|
9,877
|
|
|
8,590
|
|
|
Certain assets and liabilities are measured at fair value on a nonrecurring basis after initial recognition such as loans measured for impairment and real estate owned. The following table represents the fair value measurement for nonrecurring assets at
March 31, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
assets at
fair value
|
Loans measured for impairment
|
$
|
—
|
|
|
—
|
|
|
41,934
|
|
|
41,934
|
|
Real estate owned
|
—
|
|
|
—
|
|
|
6,242
|
|
|
6,242
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
—
|
|
|
—
|
|
|
48,176
|
|
|
48,176
|
|
Certain assets and liabilities are measured at fair value on a nonrecurring basis after initial recognition such as loans measured for impairment, mortgage servicing rights, and real estate owned. The following table represents the fair value measurement for nonrecurring assets at
December 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
assets at
fair value
|
Loans measured for impairment
|
$
|
—
|
|
|
—
|
|
|
41,933
|
|
|
41,933
|
|
Mortgage loan servicing
|
$
|
—
|
|
|
—
|
|
|
246
|
|
|
246
|
|
Real estate owned
|
—
|
|
|
—
|
|
|
4,889
|
|
|
4,889
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
—
|
|
|
—
|
|
|
47,068
|
|
|
47,068
|
|
Impaired loans
— A loan is considered to be impaired as described in Note 1 of the Notes to Consolidated Financial Statements in Item 8 of Part II of our 2016 Annual Report on Form 10-K. We classify loans individually evaluated for impairment that require a specific reserve as nonrecurring Level 3.
Mortgage servicing rights
- Mortgage servicing rights represent the value of servicing residential mortgage loans, when the mortgage loans have been sold into the secondary market and the associated servicing has been retained. The value is determined through a discounted cash flow analysis, which uses interest rates, prepayment speeds and delinquency rate assumptions as inputs. All of these assumptions require a significant degree of management judgment. Servicing rights and the related mortgage loans are segregated into categories or homogeneous pools based upon common characteristics. Adjustments are only made when the estimated discounted future cash flows are less than the carrying value, as determined by individual pool. As such, mortgage servicing rights are classified as nonrecurring Level 3.
Real Estate Owned
— Real estate owned is comprised of property acquired through foreclosure or voluntarily conveyed by delinquent borrowers. These assets are recorded on the date acquired at the lower of the related loan balance or fair value, less estimated disposition costs, with the fair value being determined by appraisal. Subsequently, foreclosed assets are valued at the lower of the amount recorded at acquisition date or fair value, less estimated disposition costs. We classify all real estate owned as nonrecurring Level 3.
The table presents additional quantitative information about assets measured at fair value on a recurring and nonrecurring basis and for which we have utilized Level 3 inputs to determine fair value at
March 31, 2017
(dollar amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Fair value
|
|
Valuation
techniques
|
|
Significant
unobservable inputs
|
|
Range (weighted
average)
|
Debt securities
|
$
|
9,877
|
|
|
Discounted cash
|
|
Discount margin
|
|
0.4% to 2.1% (0.7%)
|
|
|
|
flow
|
|
Default rates
|
|
1.0%
|
|
|
|
|
|
Prepayment speeds
|
|
1.0 annually
|
|
|
|
|
|
|
|
|
Loans measured for impairment
|
41,934
|
|
|
Appraisal value (1)
|
|
Estimated cost to sell
|
|
10.0%
|
|
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
3.8% to 20.0% (11.0%)
|
|
|
|
|
|
|
|
|
Real estate owned
|
6,242
|
|
|
Appraisal value (1)
|
|
Estimated cost to sell
|
|
10.0%
|
|
|
(1)
|
Fair value is generally determined through independent appraisals of the underlying collateral, which may include level 3 inputs that are not identifiable, or by using the discounted cash flow method if the loan is not collateral dependent.
|
The significant unobservable inputs used in the fair value measurement of our debt securities are discount margins, default rates and prepayment speeds. Significant increases in any of those rates would result in a significantly lower fair value measurement.
|
|
(10)
|
Guaranteed Preferred Beneficial Interests in the Company’s Junior Subordinated Deferrable Interest Debentures (Trust Preferred Securities) and Derivatives
|
We have
two
legacy statutory business trusts: Northwest Bancorp Capital Trust III, a Delaware statutory business trust and Northwest Bancorp Statutory Trust IV, a Connecticut statutory business trust (“Trusts”). These trusts exist solely to issue preferred securities to third parties for cash, issue common securities to the Company in exchange for capitalization of the Trusts, invest the proceeds from the sale of the trust securities in an equivalent amount of debentures of the Company, and engage in other activities that are incidental to those previously listed.
Northwest Bancorp Capital Trust III (Trust III) issued
50,000
cumulative trust preferred securities in a private transaction to a pooled investment vehicle on December 5, 2006 (liquidation value of
$1,000
per preferred security or
$50,000,000
) with a stated maturity of December 30, 2035. These securities carry a floating interest rate, which is reset quarterly, equal to
three-month LIBOR
plus
1.38%
. Northwest Bancorp Statutory Trust IV (Trust IV) issued
50,000
cumulative trust preferred securities in a private transaction to a pooled investment vehicle on December 15, 2006 (liquidation value of
$1,000
per preferred security or
$50,000,000
) with a stated maturity of December 15, 2035. These securities carry a floating interest rate, which is reset quarterly, equal to
three-month LIBOR
plus
1.38%
. The Trusts have invested the proceeds of the offerings in junior subordinated deferrable interest debentures issued by the Company. The structure of these debentures mirrors the structure of the trust-preferred securities. Trust III holds
$51,547,000
of the Company’s junior subordinated debentures and Trust IV holds
$51,547,000
of the Company’s junior subordinated debentures. These subordinated debentures are the sole assets of the Trusts. Cash distributions on the trust securities are made on a quarterly basis to the extent interest on the debentures is received by the Trusts. We have the right to defer payment of interest on the subordinated debentures at any time, or from time-to-time, for periods not exceeding
five
years. If interest payments on the subordinated debentures are deferred, the distributions on the trust preferred securities are also deferred. Interest on the subordinated debentures and distributions on the trust securities is cumulative. To date, there have been
no
interest deferrals. Our obligation constitutes a full, irrevocable, and unconditional guarantee on a subordinated basis of the obligations of the trust under the preferred securities.
As a result of the LNB acquisition we acquired
two
statutory business trusts: LNB Trust I and LNB Trust II; both are Delaware statutory business trusts. The outstanding stock issued by LNB Trust I was redeemed on December 15, 2015. At
March 31, 2017
, LNB Trust II had
7,875
cumulative trust preferred securities outstanding (liquidation value of
$1,000
per preferred security or
$7,875,000
) with a stated maturity of June 15, 2037. These securities carry a fixed interest rate of
6.64%
through June 15, 2017, then becomes a floating interest rate, which is reset quarterly, equal to
three-month LIBOR
plus
1.48%
. LNB Trust II invested the proceeds of the offerings in junior subordinated deferrable interest debentures acquired by the Company. The structure of these debentures mirrors the structure of the trust-preferred securities. LNB Trust II holds
$8,119,000
of junior subordinated debentures. The subordinated debentures are the sole assets of the Trusts. Cash distributions on the trust securities are made on a quarterly basis to the extent interest on the debentures is received by the Trusts.
Derivatives Designated as Hedging Instruments
We are currently a counterparty to
two
interest rate swap agreements (swaps), designating the swaps as cash flow hedges. The swaps are intended to protect against the variability of cash flows associated with Trust III and Trust IV. The first swap modifies the re-pricing characteristics of Trust III, wherein for a
ten
year period expiring in September 2018, the Company receives interest of
three-month LIBOR
from a counterparty and pays a fixed rate of
4.61%
to the same counterparty calculated on a notional amount of $
25.0 million
. The other swap modifies the re-pricing characteristics of Trust IV, wherein for a
ten
year period expiring in December 2018, the Company receives interest of
three-month LIBOR
from a counterparty and pays a fixed rate of
4.09%
to the same counterparty calculated on a notional amount of
$25.0 million
. The swap agreements were entered into with a counterparty that met our credit standards and the agreements contain collateral provisions protecting the at-risk party. We believe that the credit risk inherent in the contracts is not significant. At
March 31, 2017
, $
2.6 million
of cash was pledged as collateral to the counterparty.
At
March 31, 2017
, the fair value of the swap agreements was
$(2.3) million
and was the amount we would have expected to pay if the contracts were terminated. There was
no
material hedge ineffectiveness for these swaps.
Derivatives Not Designated as Hedging Instruments
We are currently a counterparty to foreign exchange contracts, which include spot and forward contracts, which are commitments to buy or sell foreign currency at an agreed-upon price on an agreed-upon settlement date. We use these instruments on a limited basis to eliminate exposure to fluctuations in currency exchange rates on certain commercial loans that are denominated in foreign currencies. As a result of fluctuations in foreign currencies, the U.S. dollar-equivalent value of the foreign currency denominated loans increase or decrease. Gains or losses on the foreign exchange contracts substantially offset the translation gains and losses on the related foreign currency denominated loans.
The following table sets forth information related to derivatives at
March 31, 2017
and
December 31, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
December 31,
2016
|
Derivatives designed as hedging instruments:
|
|
|
|
Fair value adjustment (1)
|
$
|
2,270
|
|
|
2,736
|
|
Notional amount
|
50,000
|
|
|
50,000
|
|
|
|
|
|
Derivatives not designed as hedging instruments:
|
|
|
|
Foreign exchange adjustment (2)
|
34
|
|
|
—
|
|
Notional amount
|
2,741
|
|
|
—
|
|
(1) Included in other liabilities.
(2) Included in other asset
s.
We establish accruals for legal proceedings when information related to the loss contingencies represented by those matters indicates both that a loss is probable and that the amount of loss can be reasonably estimated. As of
March 31, 2017
we have not accrued for any legal proceedings based on our analysis of currently available information which is subject to significant judgment and a variety of assumptions and uncertainties. Any such accruals are adjusted thereafter as appropriate to reflect changes in circumstances. Due to the inherent subjectivity of assessments and unpredictability of outcomes of legal proceedings, any amounts accrued may not represent the ultimate loss to us from legal proceedings.
|
|
(12)
|
Changes in Accumulated Other Comprehensive Income/ (Loss)
|
The following table shows the changes in accumulated other comprehensive income by component for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended March 31, 2017
|
|
Unrealized
gains and
(losses) on
securities
available-
for-sale
|
|
Change in
fair value of
interest rate
swaps
|
|
Change in
defined
benefit
pension
plans
|
|
Total
|
Balance as of December 31, 2016
|
$
|
395
|
|
|
(1,778
|
)
|
|
(26,608
|
)
|
|
(27,991
|
)
|
|
|
|
|
|
|
|
|
Other comprehensive income before reclassification adjustments
|
658
|
|
|
303
|
|
|
—
|
|
|
961
|
|
Amounts reclassified from accumulated other comprehensive income (1), (2)
|
(11
|
)
|
|
—
|
|
|
220
|
|
|
209
|
|
|
|
|
|
|
|
|
|
Net other comprehensive income
|
647
|
|
|
303
|
|
|
220
|
|
|
1,170
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2017
|
$
|
1,042
|
|
|
(1,475
|
)
|
|
(26,388
|
)
|
|
(26,821
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended March 31, 2016
|
|
Unrealized
gains and
(losses) on
securities
available-
for-sale
|
|
Change in
fair value of
interest rate
swaps
|
|
Change in
defined
benefit
pension
plans
|
|
Total
|
Balance as of December 31, 2015
|
$
|
3,325
|
|
|
(2,779
|
)
|
|
(25,081
|
)
|
|
(24,535
|
)
|
|
|
|
|
|
|
|
|
Other comprehensive income before reclassification adjustments
|
3,464
|
|
|
(140
|
)
|
|
—
|
|
|
3,324
|
|
Amounts reclassified from accumulated other comprehensive income (3), (4)
|
28
|
|
|
—
|
|
|
225
|
|
|
253
|
|
|
|
|
|
|
|
|
|
Net other comprehensive income/ (loss)
|
3,492
|
|
|
(140
|
)
|
|
225
|
|
|
3,577
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2016
|
$
|
6,817
|
|
|
(2,919
|
)
|
|
(24,856
|
)
|
|
(20,958
|
)
|
|
|
(1)
|
Consists of realized gain on securities (gain on sales of investments, net) of
$19
, net of tax (income tax expense) of
$(8)
.
|
|
|
(2)
|
Consists of amortization of prior service cost (compensation and employee benefits) of
$581
and amortization of net loss (compensation and employee benefits) of
$(954)
, net of tax (income tax expense) of
$153
. See note 8.
|
|
|
(3)
|
Consists of realized loss on securities (gain on sales of investments, net) of
$(39)
, net of tax (income tax expense) of
$11
.
|
|
|
(4)
|
Consists of amortization of prior service cost (compensation and employee benefits) of
$581
and amortization of net loss (compensation and employee benefits) of
$(950)
, net of tax (income tax expense) of
$144
. See note 8.
|
(13)
Other items
The Company previously announced that it has entered into a purchase and assumption agreement to sell its
three
bank branches located in the greater Baltimore, Maryland area to Shore Bancshares, Inc.'s banking subsidiary, Shore United Bank. This divestiture includes approximately $
220.0 million
of deposits, $
145.0 million
of performing loans and $
50.0 million
of cash. The transaction includes a deposit premium of
8.0%
and based on the amounts at the time the agreement was signed Northwest anticipates recording a gain of approximately $
17.0 million
. The sale is expected to close on May 19, 2017.
The following table provides information related to assets and liabilities held-for-sale at March 31, 2017 and
December 31, 2016
:
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
December 31,
2016
|
Assets held-for-sale:
|
|
|
|
Residential mortgage loans
|
$
|
26,458
|
|
|
$
|
26,406
|
|
Home equity loans
|
16,353
|
|
|
15,725
|
|
Consumer loans
|
847
|
|
|
522
|
|
Commercial real estate loans
|
98,659
|
|
|
101,123
|
|
Commercial loans
|
2,850
|
|
|
2,884
|
|
Total loans
|
145,167
|
|
|
146,660
|
|
Accrued interest receivable
|
405
|
|
|
416
|
|
Premises and equipment, net
|
5,368
|
|
|
5,452
|
|
Total assets held-for-sale
|
$
|
150,940
|
|
|
$
|
152,528
|
|
|
|
|
|
Liabilities held-for-sale:
|
|
|
|
Noninterest-bearing demand deposits
|
$
|
38,413
|
|
|
$
|
34,657
|
|
Interest-bearing demand deposits
|
17,890
|
|
|
17,181
|
|
Money market deposit accounts
|
46,249
|
|
|
45,806
|
|
Savings deposits
|
56,195
|
|
|
55,205
|
|
Time deposits
|
61,872
|
|
|
62,800
|
|
Total deposits
|
220,619
|
|
|
215,649
|
|
Accrued interest payable
|
8
|
|
|
8
|
|
Total liabilities held-for-sale
|
$
|
220,627
|
|
|
$
|
215,657
|
|