Massachusetts | 04-2870273 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large Accelerated Filer | x | Accelerated Filer | o |
Non-accelerated Filer | o | Smaller Reporting Company | o |
Table of Contents | |
PAGE | |
Consolidated Balance Sheets - September 30, 2014 and December 31, 2013 | |
Consolidated Statements of Income - Three and nine months ended September 30, 2014 and 2013 | |
Consolidated Statements of Comprehensive Income -Three and nine months ended September 30, 2014 and 2013 | |
Consolidated Statements of Stockholders’ Equity - Nine months ended September 30, 2014 and 2013 | |
Consolidated Statements of Cash Flows - Nine months ended September 30, 2014 and 2013 | |
Notes to Consolidated Financial Statements - September 30, 2014 | |
Table of Contents | |
Exhibit 31.1 – Certification 302 | |
Exhibit 31.2 – Certification 302 | |
Exhibit 32.1 – Certification 906 | |
Exhibit 32.2 – Certification 906 |
September 30, 2014 | December 31, 2013 | ||||||
Assets | |||||||
Cash and due from banks | $ | 98,810 | $ | 168,106 | |||
Interest-earning deposits with banks | 126,522 | 48,219 | |||||
Securities | |||||||
Securities available for sale | 361,455 | 356,862 | |||||
Securities held to maturity (fair value $373,465 and $346,455) | 372,418 | 350,652 | |||||
Total securities | 733,873 | 707,514 | |||||
Loans held for sale (at fair value) | 12,580 | 8,882 | |||||
Loans | |||||||
Commercial and industrial | 842,833 | 784,202 | |||||
Commercial real estate | 2,338,641 | 2,249,260 | |||||
Commercial construction | 276,593 | 223,859 | |||||
Small business | 81,435 | 77,240 | |||||
Residential real estate | 536,822 | 541,443 | |||||
Home equity - 1st position | 509,903 | 497,075 | |||||
Home equity - subordinate positions | 344,743 | 325,066 | |||||
Other consumer | 16,885 | 20,162 | |||||
Total loans | 4,947,855 | 4,718,307 | |||||
Less: allowance for loan losses | (55,005 | ) | (53,239 | ) | |||
Net loans | 4,892,850 | 4,665,068 | |||||
Federal Home Loan Bank stock | 33,233 | 39,926 | |||||
Bank premises and equipment, net | 64,186 | 64,950 | |||||
Goodwill | 170,421 | 170,421 | |||||
Identifiable intangible assets | 10,450 | 12,221 | |||||
Cash surrender value of life insurance policies | 108,895 | 100,406 | |||||
Other real estate owned and other foreclosed assets | 9,632 | 7,633 | |||||
Other assets | 122,976 | 105,888 | |||||
Total assets | $ | 6,384,428 | $ | 6,099,234 | |||
Liabilities and Stockholders' Equity | |||||||
Deposits | |||||||
Demand deposits | $ | 1,493,116 | $ | 1,369,432 | |||
Savings and interest checking accounts | 2,070,617 | 1,940,153 | |||||
Money market | 1,066,237 | 933,205 | |||||
Time certificates of deposit of $100,000 and over | 268,965 | 297,984 | |||||
Other time certificates of deposits | 403,499 | 445,644 | |||||
Total deposits | 5,302,434 | 4,986,418 | |||||
Borrowings | |||||||
Federal Home Loan Bank borrowings | 60,127 | 140,294 | |||||
Customer repurchase agreements and other short-term borrowings | 153,192 | 154,288 | |||||
Wholesale repurchase agreements | 50,000 | 50,000 |
Junior subordinated debentures | 73,741 | 73,906 | |||||
Subordinated debentures | 30,000 | 30,000 | |||||
Total borrowings | 367,060 | 448,488 | |||||
Other liabilities | 87,752 | 72,788 | |||||
Total liabilities | 5,757,246 | 5,507,694 | |||||
Commitments and contingencies | |||||||
Stockholders' equity | |||||||
Preferred stock, $.01 par value. authorized: 1,000,000 shares, outstanding: none | — | — | |||||
Common stock, $.01 par value. authorized: 75,000,000 shares, issued and outstanding: 23,911,678 shares at September 30, 2014 and 23,805,984 shares at December 31, 2013 (includes 254,030 and 268,290 shares of unvested participating restricted stock awards, respectively) | 237 | 235 | |||||
Shares held in rabbi trust at cost: 175,219 shares at September 30, 2014 and 178,765 shares at December 31, 2013 | (3,591 | ) | (3,404 | ) | |||
Deferred compensation obligation | 3,591 | 3,404 | |||||
Additional paid in capital | 308,723 | 305,179 | |||||
Retained earnings | 320,226 | 293,560 | |||||
Accumulated other comprehensive loss, net of tax | (2,004 | ) | (7,434 | ) | |||
Total stockholders’ equity | 627,182 | 591,540 | |||||
Total liabilities and stockholders' equity | $ | 6,384,428 | $ | 6,099,234 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30 | September 30 | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Interest income | |||||||||||||||
Interest on loans | $ | 49,514 | $ | 47,019 | $ | 147,111 | $ | 141,717 | |||||||
Taxable interest and dividends on securities | 4,563 | 3,763 | 13,903 | 10,798 | |||||||||||
Nontaxable interest and dividends on securities | 36 | 10 | 110 | 32 | |||||||||||
Interest on loans held for sale | 159 | 156 | 306 | 661 | |||||||||||
Interest on federal funds sold and short-term investments | 96 | 79 | 203 | 134 | |||||||||||
Total interest and dividend income | 54,368 | 51,027 | 161,633 | 153,342 | |||||||||||
Interest expense | |||||||||||||||
Interest on deposits | 2,735 | 2,649 | 8,314 | 7,857 | |||||||||||
Interest on borrowings | 2,070 | 3,182 | 7,095 | 9,812 | |||||||||||
Total interest expense | 4,805 | 5,831 | 15,409 | 17,669 | |||||||||||
Net interest income | 49,563 | 45,196 | 146,224 | 135,673 | |||||||||||
Provision for loan losses | 1,901 | 2,650 | 8,653 | 7,050 | |||||||||||
Net interest income after provision for loan losses | 47,662 | 42,546 | 137,571 | 128,623 | |||||||||||
Noninterest income | |||||||||||||||
Deposit account fees | 4,656 | 4,604 | 13,478 | 13,164 | |||||||||||
Interchange and ATM fees | 3,375 | 2,845 | 9,672 | 7,934 | |||||||||||
Investment management | 5,016 | 4,175 | 14,755 | 12,417 | |||||||||||
Mortgage banking income | 1,015 | 1,843 | 2,379 | 5,794 | |||||||||||
Loan level derivative income | 381 | 1,331 | 1,452 | 2,679 | |||||||||||
Increase in cash surrender value of life insurance policies | 774 | 793 | 2,217 | 2,325 | |||||||||||
Gain on extinguishment of debt | — | 763 | — | 763 | |||||||||||
Gain on life insurance benefits | — | — | 1,964 | — | |||||||||||
Gain (loss) on sale of equity securities, net | 67 | — | 138 | (4 | ) | ||||||||||
Other noninterest income | 1,814 | 1,776 | 5,414 | 5,473 | |||||||||||
Total noninterest income | 17,098 | 18,130 | 51,469 | 50,545 | |||||||||||
Noninterest expenses | |||||||||||||||
Salaries and employee benefits | 23,651 | 22,654 | 69,574 | 66,963 | |||||||||||
Occupancy and equipment expenses | 5,027 | 4,573 | 16,474 | 14,742 | |||||||||||
Data processing and facilities management | 1,178 | 1,179 | 3,609 | 3,564 | |||||||||||
FDIC assessment | 957 | 898 | 2,828 | 2,653 | |||||||||||
Advertising expense | 1,179 | 759 | 3,252 | 3,410 | |||||||||||
Consulting expense | 737 | 914 | 2,105 | 2,291 | |||||||||||
Debit card expense | 552 | 766 | 1,694 | 2,209 | |||||||||||
Loss on termination of derivatives | — | — | 1,122 | — | |||||||||||
Merger and acquisition expense | 677 | 366 | 754 | 2,465 | |||||||||||
Software maintenance | 579 | 599 | 1,850 | 1,878 | |||||||||||
Other noninterest expenses | 8,070 | 8,014 | 24,212 | 25,630 | |||||||||||
Total noninterest expenses | 42,607 | 40,722 | 127,474 | 125,805 | |||||||||||
Income before income taxes | 22,153 | 19,954 | 61,566 | 53,363 | |||||||||||
Provision for income taxes | 6,415 | 5,299 | 17,699 | 13,698 | |||||||||||
Net income | $ | 15,738 | $ | 14,655 | $ | 43,867 | $ | 39,665 | |||||||
Basic earnings per share | $ | 0.66 | $ | 0.64 | $ | 1.84 | $ | 1.73 | |||||||
Diluted earnings per share | $ | 0.66 | $ | 0.64 | $ | 1.83 | $ | 1.73 | |||||||
Weighted average common shares (basic) | 23,911,678 | 22,946,308 | 23,876,391 | 22,886,521 | |||||||||||
Common shares equivalents | 90,685 | 100,806 | 95,320 | 72,799 | |||||||||||
Weighted average common shares (diluted) | 24,002,363 | 23,047,114 | 23,971,711 | 22,959,320 | |||||||||||
Cash dividends declared per common share | $ | 0.24 | $ | 0.22 | $ | 0.72 | $ | 0.66 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30 | September 30 | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income | $ | 15,738 | $ | 14,655 | $ | 43,867 | $ | 39,665 | |||||||
Other comprehensive income, net of tax | |||||||||||||||
Unrealized gains (losses) on securities | |||||||||||||||
Change in fair value of securities available for sale | (810 | ) | (148 | ) | 3,544 | (5,517 | ) | ||||||||
Less: net security gains (losses) reclassified into earnings | 40 | — | 82 | (3 | ) | ||||||||||
Net change in fair value of securities available for sale | (850 | ) | (148 | ) | 3,462 | (5,514 | ) | ||||||||
Unrealized gains (losses) on cash flow hedges | |||||||||||||||
Change in fair value of cash flow hedges | 149 | (411 | ) | (315 | ) | 350 | |||||||||
Less: net cash flow hedge losses reclassified into earnings | (429 | ) | (866 | ) | (2,400 | ) | (2,557 | ) | |||||||
Net change in fair value of cash flow hedges | 578 | 455 | 2,085 | 2,907 | |||||||||||
Net gain (loss) during the period and amortization of certain costs included in net periodic retirement costs | (39 | ) | 30 | (117 | ) | 73 | |||||||||
Total other comprehensive income (loss) | (311 | ) | 337 | 5,430 | (2,534 | ) | |||||||||
Total comprehensive income | $ | 15,427 | $ | 14,992 | $ | 49,297 | $ | 37,131 |
Common Stock Outstanding | Common Stock | Value of Shares Held in Rabbi Trust at Cost | Deferred Compensation Obligation | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||
Balance at December 31, 2013 | 23,805,984 | $ | 235 | $ | (3,404 | ) | $ | 3,404 | $ | 305,179 | $ | 293,560 | $ | (7,434 | ) | $ | 591,540 | |||||||||||||
Net income | — | — | — | — | — | 43,867 | — | 43,867 | ||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 5,430 | 5,430 | ||||||||||||||||||||||
Common dividend declared ($0.72 per share) | — | — | — | — | — | (17,201 | ) | — | (17,201 | ) | ||||||||||||||||||||
Proceeds from exercise of stock options | 24,609 | 1 | — | — | 582 | — | — | 583 | ||||||||||||||||||||||
Tax benefit related to equity award activity | — | — | — | — | 438 | — | — | 438 | ||||||||||||||||||||||
Equity based compensation | — | — | — | — | 2,075 | — | — | 2,075 | ||||||||||||||||||||||
Restricted stock awards issued, net of awards surrendered | 55,675 | 1 | — | — | (644 | ) | — | — | (643 | ) | ||||||||||||||||||||
Shares issued under direct stock purchase plan | 25,410 | — | — | — | 959 | — | — | 959 | ||||||||||||||||||||||
Deferred compensation obligation | — | — | (187 | ) | 187 | — | — | — | — | |||||||||||||||||||||
Tax benefit related to deferred compensation distributions | — | — | — | — | 134 | — | — | 134 | ||||||||||||||||||||||
Balance at September 30, 2014 | 23,911,678 | $ | 237 | $ | (3,591 | ) | $ | 3,591 | $ | 308,723 | $ | 320,226 | $ | (2,004 | ) | $ | 627,182 | |||||||||||||
Balance at December 31, 2012 | 22,774,009 | $ | 225 | $ | (3,179 | ) | $ | 3,179 | $ | 269,950 | $ | 263,671 | $ | (4,526 | ) | $ | 529,320 | |||||||||||||
Net income | — | — | — | — | — | 39,665 | — | 39,665 | ||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | (2,534 | ) | (2,534 | ) | ||||||||||||||||||||
Common dividend declared ($0.66 per share) | — | — | — | — | — | (15,128 | ) | — | (15,128 | ) | ||||||||||||||||||||
Proceeds from exercise of stock options | 76,253 | 1 | — | — | 1,993 | — | — | 1,994 | ||||||||||||||||||||||
Tax benefit related to equity award activity | — | — | — | — | 412 | — | — | 412 | ||||||||||||||||||||||
Equity based compensation | — | — | — | — | 1,923 | — | — | 1,923 | ||||||||||||||||||||||
Restricted stock awards issued, net of awards surrendered | 89,431 | 1 | — | — | (670 | ) | — | — | (669 | ) | ||||||||||||||||||||
Shares issued under direct stock purchase plan | 19,594 | — | — | — | 656 | — | — | 656 | ||||||||||||||||||||||
Deferred compensation obligation | — | — | (165 | ) | 165 | — | — | — | — | |||||||||||||||||||||
Tax benefit related to deferred compensation distributions | — | — | — | — | 105 | — | — | 105 | ||||||||||||||||||||||
Balance September 30, 2013 | 22,959,287 | $ | 227 | $ | (3,344 | ) | $ | 3,344 | $ | 274,369 | $ | 288,208 | $ | (7,060 | ) | $ | 555,744 |
Nine Months Ended | |||||||
September 30 | |||||||
2014 | 2013 | ||||||
Cash flow from operating activities | |||||||
Net income | $ | 43,867 | $ | 39,665 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Depreciation and amortization | 8,451 | 6,268 | |||||
Provision for loan losses | 8,653 | 7,050 | |||||
Deferred income tax expense | 459 | 5 | |||||
Net (gain) loss on sale of equity securities | (138 | ) | 4 | ||||
Net loss on fixed assets | 505 | 27 | |||||
Gain on extinguishment of debt | — | (763 | ) | ||||
Loss on termination of derivatives | 1,122 | — | |||||
Net loss on sale of other real estate owned and foreclosed assets | 361 | 47 | |||||
Realized gain on sale leaseback transaction | (775 | ) | (775 | ) | |||
Stock based compensation | 2,075 | 1,923 | |||||
Excess tax benefit related to equity award activity | (438 | ) | (412 | ) | |||
Increase in cash surrender value of life insurance policies | (2,213 | ) | (2,325 | ) | |||
Gain on life insurance benefits | (1,964 | ) | — | ||||
Change in fair value on loans held for sale | (1 | ) | (274 | ) | |||
Net change in: | |||||||
Loans held for sale | (3,697 | ) | 37,794 | ||||
Other assets | 6,321 | 43,094 | |||||
Other liabilities | (3,320 | ) | (14,264 | ) | |||
Total adjustments | 15,401 | 77,399 | |||||
Net cash provided by operating activities | 59,268 | 117,064 | |||||
Cash flows used in investing activities | |||||||
Proceeds from sales of securities available for sale | 945 | 169 | |||||
Proceeds from maturities and principal repayments of securities available for sale | 35,936 | 69,732 | |||||
Purchase of securities available for sale | (36,577 | ) | (34,864 | ) | |||
Proceeds from maturities and principal repayments of securities held to maturity | 32,864 | 39,713 | |||||
Purchase of securities held to maturity | (54,681 | ) | (179,226 | ) | |||
Redemption of Federal Home Loan Bank stock | 6,693 | 3,093 | |||||
Investment in Low Income Housing Projects | (5,566 | ) | — | ||||
Purchase of life insurance policies | (10,116 | ) | (219 | ) | |||
Proceeds from life insurance policies | 6,309 | — | |||||
Net increase in loans | (242,207 | ) | (44,975 | ) | |||
Purchase of bank premises and equipment | (5,987 | ) | (6,121 | ) | |||
Proceeds from the sale of bank premises and equipment | 1,064 | 19 | |||||
Payments on early termination of hedging relationship | (1,122 | ) | — | ||||
Proceeds from the sale of other real estate owned and foreclosed assets | 4,269 | 7,119 | |||||
Net capital improvements to other real estate owned | (1,772 | ) | (2,035 | ) | |||
Net cash used in investing activities | (269,948 | ) | (147,595 | ) |
Cash flows provided by financing activities | |||||||
Net decrease in time deposits | (71,164 | ) | (61,509 | ) | |||
Net increase in other deposits | 387,180 | 272,141 | |||||
Net repayments of short-term Federal Home Loan Bank borrowings | (75,000 | ) | (6,507 | ) | |||
Repayments of long-term Federal Home Loan Bank borrowings | (5,000 | ) | (73,134 | ) | |||
Net increase in customer repurchase agreements | 3,904 | 10,821 | |||||
Net decrease in other borrowings | (5,000 | ) | (12,000 | ) | |||
Proceeds from exercise of stock options, net of cash paid | 583 | 1,994 | |||||
Restricted stock awards issued, net of awards surrendered | (643 | ) | (669 | ) | |||
Excess tax benefit from stock based compensation | 438 | 412 | |||||
Tax benefit from deferred compensation distribution | 134 | 105 | |||||
Proceeds from shares issued under direct stock purchase plan | 959 | 656 | |||||
Common dividends paid | (16,704 | ) | (10,070 | ) | |||
Net cash provided by financing activities | 219,687 | 122,240 | |||||
Net increase in cash and cash equivalents | 9,007 | 91,709 | |||||
Cash and cash equivalents at beginning of year | 216,325 | 215,474 | |||||
Cash and cash equivalents at end of period | $ | 225,332 | $ | 307,183 | |||
Supplemental schedule of noncash investing and financing activities | |||||||
Transfer of loans to other real estate owned & foreclosed assets | $ | 5,039 | $ | 2,346 | |||
Capital commitment relating to Low Income Housing Project investments | $ | 22,273 | $ | — |
September 30, 2014 | December 31, 2013 | ||||||||||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||
Available for sale securities | |||||||||||||||||||||||||||||||
U.S. Government agency securities | $ | 41,357 | $ | 23 | $ | (93 | ) | $ | 41,287 | $ | 41,331 | $ | 3 | $ | (885 | ) | $ | 40,449 | |||||||||||||
Agency mortgage-backed securities | 224,336 | 6,397 | (1,529 | ) | 229,204 | 232,742 | 6,405 | (4,556 | ) | 234,591 | |||||||||||||||||||||
Agency collateralized mortgage obligations | 66,244 | 285 | (943 | ) | 65,586 | 58,765 | 490 | (1,102 | ) | 58,153 | |||||||||||||||||||||
State, county, and municipal securities | 5,125 | 128 | — | 5,253 | 5,439 | 1 | (28 | ) | 5,412 | ||||||||||||||||||||||
Single issuer trust preferred securities issued by banks | 2,925 | 14 | (16 | ) | 2,923 | 2,960 | 14 | (22 | ) | 2,952 | |||||||||||||||||||||
Pooled trust preferred securities issued by banks and insurers (1) | 7,961 | 32 | (2,607 | ) | 5,386 | 8,083 | — | (4,242 | ) | 3,841 | |||||||||||||||||||||
Equity securities | 11,173 | 851 | (208 | ) | 11,816 | 10,997 | 762 | (295 | ) | 11,464 | |||||||||||||||||||||
Total available for sale securities | $ | 359,121 | $ | 7,730 | $ | (5,396 | ) | $ | 361,455 | $ | 360,317 | $ | 7,675 | $ | (11,130 | ) | $ | 356,862 | |||||||||||||
Held to maturity securities | |||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | 1,010 | $ | 50 | $ | — | $ | 1,060 | $ | 1,011 | $ | 31 | $ | — | $ | 1,042 | |||||||||||||||
Agency mortgage-backed securities | 164,531 | 3,511 | (42 | ) | 168,000 | 155,067 | 1,917 | (1,033 | ) | 155,951 | |||||||||||||||||||||
Agency collateralized mortgage obligations | 199,950 | 1,821 | (4,494 | ) | 197,277 | 187,388 | 824 | (6,176 | ) | 182,036 | |||||||||||||||||||||
State, county, and municipal securities | 424 | 9 | — | 433 | 678 | 7 | — | 685 | |||||||||||||||||||||||
Single issuer trust preferred securities issued by banks | 1,500 | 30 | — | 1,530 | 1,503 | 23 | — | 1,526 | |||||||||||||||||||||||
Corporate debt securities | 5,003 | 162 | — | 5,165 | 5,005 | 210 | — | 5,215 | |||||||||||||||||||||||
Total held to maturity securities | $ | 372,418 | $ | 5,583 | $ | (4,536 | ) | $ | 373,465 | $ | 350,652 | $ | 3,012 | $ | (7,209 | ) | $ | 346,455 | |||||||||||||
Total | $ | 731,539 | $ | 13,313 | $ | (9,932 | ) | $ | 734,920 | $ | 710,969 | $ | 10,687 | $ | (18,339 | ) | $ | 703,317 |
Available for Sale | Held to Maturity | ||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Due in one year or less | $ | 118 | $ | 124 | $ | 199 | $ | 204 | |||||||
Due after one year to five years | 37,513 | 38,373 | 5,492 | 5,674 | |||||||||||
Due after five years to ten years | 92,385 | 91,581 | 32,731 | 33,115 | |||||||||||
Due after ten years | 217,932 | 219,561 | 333,996 | 334,472 | |||||||||||
Total debt securities | $ | 347,948 | $ | 349,639 | $ | 372,418 | $ | 373,465 | |||||||
Equity securities | $ | 11,173 | $ | 11,816 | $ | — | $ | — | |||||||
Total | $ | 359,121 | $ | 361,455 | $ | 372,418 | $ | 373,465 |
September 30, 2014 | ||||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||||
# of holdings | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||
U.S. Government agency securities | 25 | $ | 33,836 | $ | (93 | ) | $ | — | $ | — | $ | 33,836 | $ | (93 | ) | |||||||||||
Agency mortgage-backed securities | 54 | 44,458 | (60 | ) | 45,437 | (1,511 | ) | 89,895 | (1,571 | ) | ||||||||||||||||
Agency collateralized mortgage obligations | 15 | 34,062 | (345 | ) | 104,095 | (5,092 | ) | 138,157 | (5,437 | ) | ||||||||||||||||
Single issuer trust preferred securities issued by banks and insurers | 1 | 1,083 | (16 | ) | — | — | 1,083 | (16 | ) | |||||||||||||||||
Pooled trust preferred securities issued by banks and insurers | 2 | — | — | 2,580 | (1,512 | ) | 2,580 | (1,512 | ) | |||||||||||||||||
Equity securities | 17 | 935 | (26 | ) | 4,052 | (182 | ) | 4,987 | (208 | ) | ||||||||||||||||
Total temporarily impaired securities | 114 | $ | 114,374 | $ | (540 | ) | $ | 156,164 | $ | (8,297 | ) | $ | 270,538 | $ | (8,837 | ) |
December 31, 2013 | ||||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||||
# of holdings | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||
U.S. government agency securities | 39 | $ | 39,950 | $ | (885 | ) | $ | — | $ | — | $ | 39,950 | $ | (885 | ) | |||||||||||
Agency mortgage-backed securities | 124 | 202,004 | (5,217 | ) | 5,108 | (372 | ) | 207,112 | (5,589 | ) | ||||||||||||||||
Agency collateralized mortgage obligations | 19 | 183,721 | (7,278 | ) | — | — | 183,721 | (7,278 | ) | |||||||||||||||||
State, county, and municipal securities | 13 | 3,838 | (28 | ) | — | — | 3,838 | (28 | ) | |||||||||||||||||
Single issuer trust preferred securities issued by banks and insurers | 2 | 1,341 | (22 | ) | — | — | 1,341 | (22 | ) | |||||||||||||||||
Pooled trust preferred securities issued by banks and insurers | 2 | — | — | 2,300 | (1,913 | ) | 2,300 | (1,913 | ) | |||||||||||||||||
Equity securities | 22 | 2,376 | (90 | ) | 3,520 | (205 | ) | 5,896 | (295 | ) | ||||||||||||||||
Total temporarily impaired securities | 221 | $ | 433,230 | $ | (13,520 | ) | $ | 10,928 | $ | (2,490 | ) | $ | 444,158 | $ | (16,010 | ) |
• | U.S. Government Agency Securities, Agency Mortgage-Backed Securities and Collateralized Mortgage Obligations: This portfolio has contractual terms that generally do not permit the issuer to settle the securities at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. Additionally, these securities are implicitly guaranteed by the U.S. Government or one of its agencies. |
• | Single Issuer Trust Preferred Securities: This portfolio consists of one security which is below investment grade. The unrealized loss on this security is attributable to the illiquid nature of the trust preferred market in the current economic environment. Management evaluates various financial metrics for the issuer, including regulatory capital ratios of the issuer. |
• | Pooled Trust Preferred Securities: This portfolio consists of two below investment grade securities both of which are performing. The unrealized loss on these securities is attributable to the illiquid nature of the trust preferred market and the significant risk premiums required in the current economic environment. Management evaluates collateral credit and instrument structure, including current and expected deferral and default rates and timing. In addition, discount rates are determined by evaluating comparable spreads observed currently in the market for similar instruments. |
• | Equity Securities: This portfolio consists of mutual funds and other equity investments. During some periods, the mutual funds in the Company’s investment portfolio may have unrealized losses resulting from market fluctuations as well as the risk premium associated with that particular asset class. For example, emerging market equities tend to trade at a higher risk premium than U.S. government bonds and thus, will fluctuate to a greater degree on both the upside and the downside. In the context of a well-diversified portfolio, however, the correlation amongst the various asset classes represented by the funds serves to minimize downside risk. The Company evaluates each mutual fund in the portfolio regularly and measures performance on both an absolute and relative basis. A reasonable recovery period for positions with an unrealized loss is based on management’s assessment of general economic data, trends within a particular asset class, valuations, earnings forecasts and bond durations. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30 | September 30 | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Gross change in OTTI recorded on certain investments | $ | 235 | $ | 303 | $ | 1,264 | $ | 674 | |||||||
Portion of OTTI recognized in OCI | (235 | ) | (303 | ) | (1,264 | ) | (674 | ) | |||||||
Total credit related OTTI losses recognized in earnings | $ | — | $ | — | $ | — | $ | — |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30 | September 30 | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Balance at beginning of period | $ | (9,997 | ) | $ | (10,847 | ) | $ | (9,997 | ) | $ | (10,847 | ) | |||
Add | |||||||||||||||
Incurred on securities not previously impaired | — | — | — | — | |||||||||||
Incurred on securities previously impaired | — | — | — | — | |||||||||||
Less | |||||||||||||||
Securities sold during the period | — | — | — | — | |||||||||||
Reclassification due to changes in Company’s intent | — | — | — | — | |||||||||||
Increases in cash flow expected to be collected | — | — | — | — | |||||||||||
Balance at end of period | $ | (9,997 | ) | $ | (10,847 | ) | $ | (9,997 | ) | $ | (10,847 | ) |
September 30, 2014 | |||||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||
Commercial and Industrial | Commercial Real Estate | Commercial Construction | Small Business | Residential Real Estate | Home Equity | Other Consumer | Total | ||||||||||||||||||||||||||
Financing receivables ending balance: | |||||||||||||||||||||||||||||||||
Total loans by group | $ | 842,833 | $ | 2,338,641 | $ | 276,593 | $ | 81,435 | $ | 536,822 | $ | 854,646 | $ | 16,885 | $ | 4,947,855 | (1 | ) | |||||||||||||||
Individually evaluated for impairment | $ | 7,592 | $ | 33,765 | $ | 311 | $ | 1,244 | $ | 15,503 | $ | 5,492 | $ | 974 | $ | 64,881 | |||||||||||||||||
Purchase credit impaired loans | $ | — | $ | 15,071 | $ | 184 | $ | — | $ | 9,784 | $ | 241 | $ | 5 | $ | 25,285 | |||||||||||||||||
Collectively evaluated for impairment | $ | 835,241 | $ | 2,289,805 | $ | 276,098 | $ | 80,191 | $ | 511,535 | $ | 848,913 | $ | 15,906 | $ | 4,857,689 |
December 31, 2013 | |||||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||
Commercial and Industrial | Commercial Real Estate | Commercial Construction | Small Business | Residential Real Estate | Home Equity | Other Consumer | Total | ||||||||||||||||||||||||||
Financing receivables ending balance: | |||||||||||||||||||||||||||||||||
Total loans by group | $ | 784,202 | $ | 2,249,260 | $ | 223,859 | $ | 77,240 | $ | 541,443 | $ | 822,141 | $ | 20,162 | $ | 4,718,307 | (1 | ) | |||||||||||||||
Individually evaluated for impairment | $ | 9,148 | $ | 39,516 | $ | 100 | $ | 1,903 | $ | 15,200 | $ | 4,890 | $ | 1,298 | $ | 72,055 | |||||||||||||||||
Purchase credit impaired loans | $ | 1 | $ | 18,612 | $ | 197 | $ | — | $ | 10,389 | $ | 326 | $ | 19 | $ | 29,544 | |||||||||||||||||
Collectively evaluated for impairment | $ | 775,053 | $ | 2,191,132 | $ | 223,562 | $ | 75,337 | $ | 515,854 | $ | 816,925 | $ | 18,845 | $ | 4,616,708 |
(1) | The amount of net deferred fees included in the ending balance was $2.7 million and $2.3 million at September 30, 2014 and December 31, 2013. |
Three Months Ended September 30, 2014 | |||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||
Commercial and Industrial | Commercial Real Estate | Commercial Construction | Small Business | Residential Real Estate | Home Equity | Other Consumer | Total | ||||||||||||||||||||||||
Allowance for loan losses | |||||||||||||||||||||||||||||||
Beginning balance | $ | 15,929 | $ | 25,095 | $ | 3,757 | $ | 1,154 | $ | 2,879 | $ | 4,969 | $ | 755 | $ | 54,538 | |||||||||||||||
Charge-offs | (504 | ) | (691 | ) | — | (73 | ) | (199 | ) | (160 | ) | (279 | ) | (1,906 | ) | ||||||||||||||||
Recoveries | 6 | 57 | — | 29 | 178 | 67 | 135 | 472 | |||||||||||||||||||||||
Provision | 91 | 1,248 | 356 | 45 | (36 | ) | 71 | 126 | 1,901 | ||||||||||||||||||||||
Ending balance | $ | 15,522 | $ | 25,709 | $ | 4,113 | $ | 1,155 | $ | 2,822 | $ | 4,947 | $ | 737 | $ | 55,005 |
Three Months Ended September 30, 2013 | |||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||
Commercial and Industrial | Commercial Real Estate | Commercial Construction | Small Business | Residential Real Estate | Home Equity | Other Consumer | Total | ||||||||||||||||||||||||
Allowance for loan losses | |||||||||||||||||||||||||||||||
Beginning balance | $ | 14,325 | $ | 23,029 | $ | 3,422 | $ | 1,295 | $ | 2,959 | $ | 7,267 | $ | 679 | $ | 52,976 | |||||||||||||||
Charge-offs | (866 | ) | (209 | ) | (308 | ) | (84 | ) | (210 | ) | (420 | ) | (273 | ) | (2,370 | ) | |||||||||||||||
Recoveries | 24 | 89 | — | 47 | 5 | 22 | 119 | 306 | |||||||||||||||||||||||
Provision | 1,531 | 2,069 | 387 | (43 | ) | 141 | (1,555 | ) | 120 | 2,650 | |||||||||||||||||||||
Ending balance | $ | 15,014 | $ | 24,978 | $ | 3,501 | $ | 1,215 | $ | 2,895 | $ | 5,314 | $ | 645 | $ | 53,562 |
Nine Months Ended September 30, 2014 | |||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||
Commercial and Industrial | Commercial Real Estate | Commercial Construction | Small Business | Residential Real Estate | Home Equity | Other Consumer | Total | ||||||||||||||||||||||||
Allowance for loan losses | |||||||||||||||||||||||||||||||
Beginning balance | $ | 15,622 | $ | 24,541 | $ | 3,371 | $ | 1,215 | $ | 2,760 | $ | 5,036 | $ | 694 | $ | 53,239 | |||||||||||||||
Charge-offs | (1,757 | ) | (4,273 | ) | — | (469 | ) | (653 | ) | (562 | ) | (908 | ) | (8,622 | ) | ||||||||||||||||
Recoveries | 213 | 322 | — | 168 | 368 | 215 | 449 | 1,735 | |||||||||||||||||||||||
Provision | 1,444 | 5,119 | 742 | 241 | 347 | 258 | 502 | 8,653 | |||||||||||||||||||||||
Ending balance | $ |