NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(UNAUDITED)
1. SUMMARY OF SIGNFICANT ACCOUNTING POLICIES
The unaudited consolidated financial statements include the accounts of Fidelity Southern Corporation ("FSC" or "Fidelity") and its wholly-owned subsidiaries. FSC owns
100%
of Fidelity Bank (the “Bank”) and LionMark Insurance Company, an insurance agency offering consumer credit related insurance products. FSC also owns
three
subsidiaries established to issue trust preferred securities, which are not consolidated for financial reporting purposes in accordance with current accounting guidance, as FSC is not the primary beneficiary. The “Company” or "our", as used herein, includes FSC and its subsidiaries, unless the context otherwise requires.
These unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles followed within the financial services industry for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements.
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the periods. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the calculations of and the amortization of capitalized servicing rights, valuation of deferred income taxes, the valuation of loans held-for-sale and certain derivatives, the valuation of real estate or other assets acquired in connection with foreclosures or in satisfaction of loans, purchase accounting-related adjustments, and Federal Deposit Insurance Corporation (the "FDIC") receivable for loss share agreements. The Company principally operates in
one
business segment, which is community banking.
In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and results of operations for the interim periods have been included. All such adjustments are normal recurring accruals. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts have been reclassified to conform to current year presentation. These reclassifications had no impact on previously reported net income and shareholders’ equity.
The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements included in the
2013
Annual Report on Form 10-K/A filed with the Securities and Exchange Commission. There were no new accounting policies or changes to existing policies adopted in the first
six
months of
2014
, which had a significant effect on the results of operations or statement of financial condition. For interim reporting purposes, the Company follows the same basic accounting policies and considers each interim period as an integral part of an annual period.
Operating results for the three and
six
-month periods ended
June 30, 2014
, are not necessarily indicative of the results that may be expected for the year ended
December 31, 2014
. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K/A and Annual Report to Shareholders for the year ended
December 31, 2013
.
Recent Accounting Pronouncements
In January 2014, the FASB issued Accounting Standards Update ("ASU") 2014-04 "
Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.
" The amendments clarify when an in substance repossession or foreclosure occurs, such that the loan should be derecognized and real estate property should be recognized. The amendments will be effective for entities during annual reporting periods beginning after December 15, 2014, and interim reporting periods therein and those requirements should be applied prospectively. Early adoption is permitted. The adoption of this ASU is not expected to have a significant impact on the Company’s Consolidated Financial Statements.
In May 2014, the FASB issued ASU 2014-09 "
Revenue from Contracts with Customers
." The amendments in this guidance indicates that entities should recognize revenue to reflect the transfers of goods or services to customers in an amount equal to the consideration the entity receives or expects to receive. The amendments will be effective for entities during annual reporting periods beginning after December 15, 2016, and interim reporting periods therein and those requirements should be applied retrospectively. Early adoption is not permitted. The adoption of this ASU is not expected to have a significant impact on the Company's Consolidated Financial Statements.
In June 2014, the FASB issued ASU 2014-11 "
Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures."
The new guidance requires entities to account for repurchase-to-maturity transactions as secured borrowings, eliminates accounting guidance on linked repurchase financing transactions, and expands disclosure requirements for certain transfers of financial assets that are accounted for as sales and certain transfers accounted for as secured borrowings. The amendments are effected for entities during annual reporting periods beginning after December 15, 2014, and interim reporting periods therein. The guidance should be applied by making a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption for any transactions outstanding on the effective date. Early adoption is not permitted. The adoption of this ASU is not expected to have a significant impact on the Company's Consolidated Financial Statements.
Other accounting standards that have been issued or proposed by the FASB or other standard-settings bodies are not expected to have a material impact on the Company financial position, results of operations or cash flows.
Contingencies
Due to the nature of their activities, the Company and its subsidiaries are at times engaged in various legal proceedings that arise in the course of normal business, some of which were outstanding as of
June 30, 2014
. While it is difficult to predict or determine the outcome of these proceedings, it is the opinion of management, after consultation with its legal counsel, that the ultimate liabilities, if any, will not have a material adverse impact on the Company’s consolidated results of operations, financial position, or cash flows.
2. INVESTMENT SECURITIES
The amortized cost and fair value of debt securities are categorized in the table below by contractual maturity. The expected maturities may differ from the contractual maturities of callable agencies and municipal securities because the issuer has the right to redeem the callable security at predetermined prices at specified times prior to maturity. Securities not due at a single maturity (i.e., mortgage-backed securities) are shown separately.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
December 31, 2013
|
(in thousands)
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
Available-for-sale:
|
|
|
|
|
|
|
|
Obligations of U.S. Government sponsored enterprises:
|
|
|
|
|
|
|
|
Due five years through ten years
|
$
|
24,661
|
|
|
$
|
25,056
|
|
|
$
|
19,605
|
|
|
$
|
19,553
|
|
Due after ten years
|
1,510
|
|
|
1,545
|
|
|
1,518
|
|
|
1,486
|
|
Municipal securities:
|
|
|
|
|
|
|
|
Due within one year
|
823
|
|
|
830
|
|
|
—
|
|
|
—
|
|
Due after one year through five years
|
886
|
|
|
911
|
|
|
1,716
|
|
|
1,745
|
|
Due five years through ten years
|
690
|
|
|
713
|
|
|
691
|
|
|
700
|
|
Due after ten years
|
12,280
|
|
|
12,670
|
|
|
12,292
|
|
|
12,324
|
|
Residential mortgage-backed securities
|
118,817
|
|
|
122,465
|
|
|
131,481
|
|
|
133,057
|
|
Total available-for-sale
|
$
|
159,667
|
|
|
$
|
164,190
|
|
|
$
|
167,303
|
|
|
$
|
168,865
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
Residential mortgage-backed securities
|
$
|
3,532
|
|
|
$
|
3,944
|
|
|
$
|
4,051
|
|
|
$
|
4,437
|
|
Commercial mortgage-backed securities
|
4,319
|
|
|
4,319
|
|
|
—
|
|
|
—
|
|
Total held-to-maturity
|
$
|
7,851
|
|
|
$
|
8,263
|
|
|
$
|
4,051
|
|
|
$
|
4,437
|
|
The Bank did not sell any investment securities during the
six
months ended
June 30, 2014
or
June 30, 2013
.
The following table summarizes the amortized cost and estimated fair value of available-for-sale and held-to-maturity investment securities and the related gross unrealized gains and losses at
June 30, 2014
and
December 31, 2013
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
(in thousands)
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Other than
Temporary
Impairment
|
|
Fair Value
|
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. Government sponsored enterprises
|
$
|
26,171
|
|
|
$
|
430
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26,601
|
|
Municipal securities
|
14,679
|
|
|
475
|
|
|
(30
|
)
|
|
—
|
|
|
15,124
|
|
Mortgage-backed securities
|
118,817
|
|
|
3,695
|
|
|
(47
|
)
|
|
—
|
|
|
122,465
|
|
|
$
|
159,667
|
|
|
$
|
4,600
|
|
|
$
|
(77
|
)
|
|
$
|
—
|
|
|
$
|
164,190
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities
|
$
|
3,532
|
|
|
$
|
412
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,944
|
|
Commercial mortgage-backed securities
|
4,319
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,319
|
|
|
$
|
7,851
|
|
|
$
|
412
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
(in thousands)
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Other than
Temporary
Impairment
|
|
Fair Value
|
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. Government sponsored enterprises:
|
$
|
21,123
|
|
|
$
|
4
|
|
|
$
|
(88
|
)
|
|
$
|
—
|
|
|
$
|
21,039
|
|
Municipal securities
|
14,699
|
|
|
240
|
|
|
(170
|
)
|
|
—
|
|
|
14,769
|
|
Residential mortgage-backed securities
|
131,481
|
|
|
2,049
|
|
|
(473
|
)
|
|
—
|
|
|
133,057
|
|
|
$
|
167,303
|
|
|
$
|
2,293
|
|
|
$
|
(731
|
)
|
|
$
|
—
|
|
|
$
|
168,865
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities
|
$
|
4,051
|
|
|
$
|
386
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,437
|
|
At
June 30, 2014
, only
three
securities were in an unrealized loss position and all
three
have been in a loss position for greater than twelve months. The securities that have been in an unrealized loss position for twelve months or more consist of
two
mortgage-backed securities with an aggregate fair value of
$3.6 million
and unrealized losses of
$47,000
and
one
municipal security with a fair value of
$1.0 million
and an unrealized loss of
$30,000
. At
December 31, 2013
, all securities in an unrealized loss position had been in a loss position for less than twelve months.
Management believes that the impairment is the result of fluctuations in interest rates and not credit-related issues. Management does not intend to sell these securities and it is not more likely than not that the Company will be required to sell the investments before recovery of the amortized cost basis. Accordingly, as of
June 30, 2014
, management believes the impairment detailed in the prior table is temporary and no impairment loss has been recognized in the Company’s Consolidated Statements of Comprehensive Income.
3. LOANS HELD-FOR-SALE
Loans held-for-sale at
June 30, 2014
and
December 31, 2013
totaled
$339.7 million
and
$187.4 million
, respectively, and are shown in the table below:
|
|
|
|
|
|
|
|
|
(in thousands)
|
June 30,
2014
|
|
December 31,
2013
|
SBA
|
$
|
8,053
|
|
|
$
|
9,516
|
|
Residential mortgage
|
191,666
|
|
|
127,850
|
|
Indirect automobile
|
140,000
|
|
|
50,000
|
|
Total loans held-for-sale
|
$
|
339,719
|
|
|
$
|
187,366
|
|
4. LOANS
Loans outstanding, by class, are summarized in the following table and are presented net of deferred fees and costs of
$5.9 million
and
$5.3 million
at
June 30, 2014
and
December 31, 2013
, respectively. Non-covered loans represent existing portfolio loans prior to the FDIC-assisted transactions, loans acquired but not covered under the Loss Share Agreements, and additional loans originated subsequent to the FDIC-assisted transactions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-covered
|
|
Covered
|
(in thousands)
|
June 30,
2014
|
|
December 31, 2013
|
|
June 30,
2014
|
|
December 31,
2013
|
Commercial
|
$
|
506,837
|
|
|
$
|
493,093
|
|
|
$
|
29,598
|
|
|
$
|
37,885
|
|
SBA
|
136,314
|
|
|
134,221
|
|
|
632
|
|
|
603
|
|
Total commercial loans
|
643,151
|
|
|
627,314
|
|
|
30,230
|
|
|
38,488
|
|
Construction loans
|
108,562
|
|
|
92,929
|
|
|
5,311
|
|
|
8,769
|
|
Indirect automobile
|
997,117
|
|
|
975,223
|
|
|
—
|
|
|
—
|
|
Installment
|
14,247
|
|
|
13,876
|
|
|
1,013
|
|
|
1,486
|
|
Total consumer loans
|
1,011,364
|
|
|
989,099
|
|
|
1,013
|
|
|
1,486
|
|
Residential mortgage
|
92,060
|
|
|
59,075
|
|
|
2,025
|
|
|
1,853
|
|
Home equity lines of credit
|
67,951
|
|
|
66,255
|
|
|
6,947
|
|
|
7,769
|
|
Total mortgage loans
|
160,011
|
|
|
125,330
|
|
|
8,972
|
|
|
9,622
|
|
Total loans
|
$
|
1,923,088
|
|
|
$
|
1,834,672
|
|
|
$
|
45,526
|
|
|
$
|
58,365
|
|
Loans in nonaccrual status totaled approximately
$48.2 million
, and
$59.6 million
at
June 30, 2014
and
December 31, 2013
, respectively. Period-end nonaccrual loans, segregated by class of loans, are described in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-covered
|
|
Covered
|
(in thousands)
|
June 30,
2014
|
|
December 31,
2013
|
|
June 30,
2014
|
|
December 31,
2013
|
Commercial
|
$
|
9,648
|
|
|
$
|
10,890
|
|
|
$
|
6,929
|
|
|
$
|
10,094
|
|
SBA
|
14,896
|
|
|
15,385
|
|
|
—
|
|
|
—
|
|
Total commercial loans
|
24,544
|
|
|
26,275
|
|
|
6,929
|
|
|
10,094
|
|
Construction
|
7,360
|
|
|
9,093
|
|
|
2,350
|
|
|
6,193
|
|
Indirect automobile
|
2,057
|
|
|
2,362
|
|
|
—
|
|
|
—
|
|
Installment
|
496
|
|
|
601
|
|
|
1,042
|
|
|
1,249
|
|
Total consumer loans
|
2,553
|
|
|
2,963
|
|
|
1,042
|
|
|
1,249
|
|
Residential mortgage
|
2,058
|
|
|
1,886
|
|
|
—
|
|
|
561
|
|
Home equity lines of credit
|
825
|
|
|
727
|
|
|
528
|
|
|
541
|
|
Total mortgage loans
|
2,883
|
|
|
2,613
|
|
|
528
|
|
|
1,102
|
|
Total loans
|
$
|
37,340
|
|
|
$
|
40,944
|
|
|
$
|
10,849
|
|
|
$
|
18,638
|
|
Accruing loans delinquent
30
-
89
days and troubled debt restructured loans ("TDRs") accruing interest, segregated by class of loans at
June 30, 2014
and
December 31, 2013
, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
December 31, 2013
|
(in thousands)
|
Accruing
Delinquent
30-89 Days
|
|
Troubled
Debt
Restructured
Loans
Accruing
|
|
Accruing
Delinquent
30-89 Days
|
|
Troubled
Debt
Restructured
Loans
Accruing
|
Commercial
|
$
|
456
|
|
|
$
|
7,092
|
|
|
$
|
1,620
|
|
|
$
|
7,242
|
|
SBA
|
239
|
|
|
2,804
|
|
|
169
|
|
|
2,520
|
|
Construction
|
—
|
|
|
456
|
|
|
—
|
|
|
1,662
|
|
Indirect automobile
|
1,363
|
|
|
—
|
|
|
1,561
|
|
|
—
|
|
Installment
|
117
|
|
|
18
|
|
|
305
|
|
|
—
|
|
Residential mortgage
|
112
|
|
|
640
|
|
|
1,314
|
|
|
647
|
|
Home equity lines of credit
|
587
|
|
|
—
|
|
|
163
|
|
|
—
|
|
Total loans
|
$
|
2,874
|
|
|
$
|
11,010
|
|
|
$
|
5,132
|
|
|
$
|
12,071
|
|
There were
no
loans 90 days or more past due and still accruing at
June 30, 2014
or
December 31, 2013
.
TDRs are loans in which the borrower is experiencing financial difficulty and the Company has granted an economic concession to the borrower. Prior to modifying a borrower’s loan terms, the Company performs an evaluation of the borrower’s financial condition and ability to service the loan under the potential modified loan terms. The types of concessions granted are generally interest rate reductions or term extensions. If a loan is accruing at the time of modification, the loan remains on accrual status and is subject to the Company’s charge-off and nonaccrual policies. If a loan is on nonaccrual status before it is determined to be a TDR, then the loan remains on nonaccrual status. TDRs may be returned to accrual status if there has been at least a six-month sustained period of repayment performance by the borrower. Interest income recognition on impaired loans is dependent upon nonaccrual status.
During the periods ended
June 30, 2014
and
2013
, certain loans were modified, resulting in TDRs. The modification of the terms of such loans included one or a combination of the following modifications: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk.
The following tables presents loans, by class, which were modified as TDRs that occurred during the three and
six
months ended
June 30, 2014
and
2013
along with the type of modification:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Troubled Debt Restructured
During the Three Months Ended
|
|
Troubled Debt Restructured
During the Three Months Ended
|
|
June 30, 2014
|
|
June 30, 2013
|
(in thousands)
|
Interest Rate
|
|
Term
|
|
Interest Rate
|
|
Term
|
Commercial
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
SBA
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Construction
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Indirect automobile
|
—
|
|
|
209
|
|
|
—
|
|
|
269
|
|
Installment
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
Residential mortgage
|
—
|
|
|
—
|
|
|
127
|
|
|
—
|
|
Home equity lines of credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total loans
|
$
|
—
|
|
|
$
|
227
|
|
|
$
|
127
|
|
|
$
|
269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Troubled Debt Restructured
During the Six Months Ended
|
|
Troubled Debt Restructured
During the Six Months Ended
|
|
June 30, 2014
|
|
June 30, 2013
|
(in thousands)
|
Interest Rate
|
|
Term
|
|
Interest Rate
|
|
Term
|
Commercial
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
214
|
|
|
$
|
—
|
|
SBA
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Construction
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Indirect automobile
|
—
|
|
|
382
|
|
|
—
|
|
|
702
|
|
Installment
|
127
|
|
|
18
|
|
|
|
|
|
—
|
|
Residential mortgage
|
155
|
|
|
—
|
|
|
127
|
|
|
76
|
|
Home equity lines of credit
|
—
|
|
|
217
|
|
|
—
|
|
|
140
|
|
Total loans
|
$
|
282
|
|
|
$
|
617
|
|
|
$
|
341
|
|
|
$
|
918
|
|
The following tables present the amount of loans which were restructured in the previous twelve months ended June 30, 2014 and June 30, 2013 and subsequently defaulting during the three and six months ended
June 30, 2014
and
June 30, 2013
:
|
|
|
|
|
|
|
|
|
|
Troubled Debt Restructured
during the last twelve months and subsequently
defaulting during the three months ended
(1)
|
(in thousands)
|
June 30, 2014
|
|
June 30, 2013
|
Commercial
|
$
|
—
|
|
|
$
|
148
|
|
SBA
|
—
|
|
|
—
|
|
Construction
|
—
|
|
|
—
|
|
Indirect automobile
|
—
|
|
|
50
|
|
Installment
|
—
|
|
|
—
|
|
Residential mortgage
|
—
|
|
|
203
|
|
Home equity lines of credit
|
15
|
|
|
—
|
|
Total loans
|
$
|
15
|
|
|
$
|
401
|
|
|
|
|
|
|
|
|
|
|
|
Troubled Debt Restructured
during the last twelve months and subsequently
defaulting during the six months ended
(1)
|
(in thousands)
|
June 30, 2014
|
|
June 30, 2013
|
Commercial
|
$
|
—
|
|
|
$
|
1,312
|
|
SBA
|
—
|
|
|
—
|
|
Construction
|
—
|
|
|
772
|
|
Indirect automobile
|
—
|
|
|
401
|
|
Installment
|
96
|
|
|
—
|
|
Residential mortgage
|
155
|
|
|
203
|
|
Home equity lines of credit
|
15
|
|
|
—
|
|
Total loans
|
$
|
266
|
|
|
$
|
2,688
|
|
(1)
A loan is considered to be in payment default once it is
30
days contractually past due under the modified terms.
The Company had TDRs with a balance of
$22.6 million
and
$25.6 million
at
June 30, 2014
and
December 31, 2013
, respectively. There were charge-offs of TDR loans of
$1.5 million
for the
six
months ended
June 30, 2014
and
$1.9 million
for the
six
months ended
June 30, 2013
. Charge-offs on such loans are factored into the rolling historical loss rate, which is one of the considerations used in establishing the allowance for loan losses. The Company was not committed to lend additional amounts as of
June 30, 2014
or
December 31, 2013
to customers with outstanding loans that are classified as TDRs.
Impaired loans are evaluated based on the present value of expected future cash flows discounted at each loan’s original effective interest rate, or at the loan’s observable market price, or the fair value of the collateral, if the loan is collateral-dependent. Impaired loans at
June 30, 2014
and
December 31, 2013
, by class, are shown in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
December 31, 2013
|
(in thousands)
|
Unpaid
Principal
|
|
Amortized
Cost
|
|
Related
Allowance
|
|
Unpaid
Principal
|
|
Amortized
Cost
|
|
Related
Allowance
|
Impaired loans with allowance
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
$
|
6,173
|
|
|
$
|
6,124
|
|
|
$
|
2,435
|
|
|
$
|
9,501
|
|
|
$
|
9,381
|
|
|
$
|
4,037
|
|
SBA
|
8,921
|
|
|
7,916
|
|
|
1,074
|
|
|
9,762
|
|
|
8,079
|
|
|
607
|
|
Construction
|
930
|
|
|
930
|
|
|
273
|
|
|
15,408
|
|
|
10,500
|
|
|
625
|
|
Indirect automobile
|
2,402
|
|
|
2,057
|
|
|
11
|
|
|
2,364
|
|
|
2,362
|
|
|
13
|
|
Installment
|
1,807
|
|
|
490
|
|
|
349
|
|
|
461
|
|
|
431
|
|
|
302
|
|
Residential mortgage
|
2,116
|
|
|
2,116
|
|
|
763
|
|
|
2,270
|
|
|
2,270
|
|
|
805
|
|
Home equity lines of credit
|
854
|
|
|
751
|
|
|
698
|
|
|
879
|
|
|
789
|
|
|
735
|
|
Total impaired loans with allowance
|
$
|
23,203
|
|
|
$
|
20,384
|
|
|
$
|
5,603
|
|
|
$
|
40,645
|
|
|
$
|
33,812
|
|
|
$
|
7,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
December 31, 2013
|
(in thousands)
|
Unpaid
Principal
|
|
Amortized
Cost
|
|
Unpaid
Principal
|
|
Amortized
Cost
|
Impaired loans with no allowance
|
|
|
|
|
|
|
|
Commercial
|
$
|
18,946
|
|
|
$
|
16,495
|
|
|
$
|
12,495
|
|
|
$
|
11,522
|
|
SBA
|
15,238
|
|
|
12,806
|
|
|
12,706
|
|
|
10,545
|
|
Construction
|
9,577
|
|
|
7,360
|
|
|
2,758
|
|
|
1,266
|
|
Indirect automobile
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Installment
|
15
|
|
|
7
|
|
|
1,461
|
|
|
170
|
|
Residential mortgage
|
882
|
|
|
882
|
|
|
725
|
|
|
725
|
|
Home equity lines of credit
|
205
|
|
|
189
|
|
|
62
|
|
|
56
|
|
Total impaired loans with no allowance
|
$
|
44,863
|
|
|
$
|
37,739
|
|
|
$
|
30,207
|
|
|
$
|
24,284
|
|
Average impaired loans and interest income recognized for the three and six months ended
June 30, 2014
and
June 30, 2013
, by class, are summarized in the tables below. Interest income recognized during the periods on a cash basis was de minimis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
2014
|
|
2013
|
(in thousands)
|
Average
Impaired
Loans
|
|
Interest Income
Recognized on
Impaired Loans
|
|
Average
Impaired
Loans
|
|
Interest Income
Recognized on
Impaired Loans
|
Commercial
|
$
|
23,776
|
|
|
$
|
309
|
|
|
$
|
24,629
|
|
|
$
|
247
|
|
SBA
|
21,191
|
|
|
533
|
|
|
25,285
|
|
|
292
|
|
Construction
|
9,254
|
|
|
76
|
|
|
10,933
|
|
|
43
|
|
Indirect automobile
|
2,105
|
|
|
47
|
|
|
3,131
|
|
|
38
|
|
Installment
|
500
|
|
|
48
|
|
|
702
|
|
|
33
|
|
Residential mortgage
|
2,827
|
|
|
9
|
|
|
3,268
|
|
|
9
|
|
Home equity lines of credit
|
970
|
|
|
47
|
|
|
2,194
|
|
|
10
|
|
Total
|
$
|
60,623
|
|
|
$
|
1,069
|
|
|
$
|
70,142
|
|
|
$
|
672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
2014
|
|
2013
|
(in thousands)
|
Average
Impaired
Loans
|
|
Interest Income
Recognized on
Impaired Loans
|
|
Average
Impaired
Loans
|
|
Interest Income
Recognized on
Impaired Loans
|
Commercial
|
$
|
23,067
|
|
|
$
|
602
|
|
|
$
|
27,172
|
|
|
$
|
244
|
|
SBA
|
21,285
|
|
|
789
|
|
|
25,107
|
|
|
856
|
|
Construction
|
10,173
|
|
|
213
|
|
|
13,708
|
|
|
174
|
|
Indirect automobile
|
2,141
|
|
|
93
|
|
|
3,261
|
|
|
90
|
|
Installment
|
534
|
|
|
131
|
|
|
611
|
|
|
68
|
|
Residential mortgage
|
2,905
|
|
|
18
|
|
|
3,467
|
|
|
8
|
|
Home equity lines of credit
|
961
|
|
|
95
|
|
|
2,150
|
|
|
24
|
|
Total
|
$
|
61,066
|
|
|
$
|
1,941
|
|
|
$
|
75,476
|
|
|
$
|
1,464
|
|
The Company uses an asset quality ratings system to assign a numeric indicator of the credit quality and level of existing credit risk inherent in a loan. These ratings are adjusted periodically as the Company becomes aware of changes in the credit quality of the underlying loans.
Mortgage and indirect automobile loans typically receive a risk rating only when being downgraded to an adverse rating. The Company uses a number of factors, including FICO scoring, to help evaluate the likelihood consumer borrowers will pay their credit obligations as agreed. The weighted-average FICO score for the indirect automobile portfolio was
745
at
June 30, 2014
and
733
at
December 31, 2013
.
The following are definitions of the asset ratings.
•
Rating #1 - #4 (High - Acceptable Quality)
– These categories include loans rated satisfactory with high, good, average or acceptable business and credit risk.
•
Rating #5 (Special Mention)
– A special mention asset has potential weaknesses that deserve management’s close attention.
•
Rating #6 (Substandard)
– A substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. A substandard asset has a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt.
•
Rating #7 (Doubtful)
– Doubtful assets have all the weaknesses inherent in assets classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
•
Rating #8 (Loss)
– Loss assets are considered uncollectable and of such little value that their continuance as recorded assets is not warranted.
The following tables present the recorded investment in loans, by loan grade, as of
June 30, 2014
and
December 31, 2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
|
Loan Grade
|
|
Commercial
|
|
SBA
|
|
Construction
|
|
Indirect Automobile
|
|
Installment
|
|
Residential Mortgage
|
|
Home Equity Lines of Credit
|
|
Total
|
1 - 4
|
|
$
|
483,441
|
|
|
$
|
111,450
|
|
|
$
|
101,975
|
|
|
$
|
—
|
|
|
$
|
11,779
|
|
|
$
|
1,328
|
|
|
$
|
70,290
|
|
|
$
|
780,263
|
|
5
|
|
18,480
|
|
|
7,714
|
|
|
211
|
|
|
—
|
|
|
697
|
|
|
—
|
|
|
1,169
|
|
|
28,271
|
|
6
|
|
34,514
|
|
|
17,782
|
|
|
11,687
|
|
|
3,250
|
|
|
1,966
|
|
|
3,107
|
|
|
1,780
|
|
|
74,086
|
|
7
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
8
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
536,435
|
|
|
136,946
|
|
|
113,873
|
|
|
3,250
|
|
|
14,442
|
|
|
4,435
|
|
|
73,239
|
|
|
882,620
|
|
Ungraded Performing
|
|
—
|
|
|
—
|
|
|
—
|
|
|
993,867
|
|
|
1,450
|
|
|
89,018
|
|
|
1,659
|
|
|
1,085,994
|
|
Total
|
|
$
|
536,435
|
|
|
$
|
136,946
|
|
|
$
|
113,873
|
|
|
$
|
997,117
|
|
|
$
|
15,892
|
|
|
$
|
93,453
|
|
|
$
|
74,898
|
|
|
$
|
1,968,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
|
|
|
Commercial
|
|
SBA
|
|
Construction
|
|
Indirect Automobile
|
|
Installment
|
|
Residential Mortgage
|
|
Home Equity Lines of Credit
|
|
Total
|
1 - 4
|
|
$
|
463,400
|
|
|
$
|
111,107
|
|
|
$
|
73,374
|
|
|
$
|
—
|
|
|
$
|
12,463
|
|
|
$
|
—
|
|
|
$
|
69,947
|
|
|
$
|
730,291
|
|
5
|
|
30,075
|
|
|
5,487
|
|
|
10,897
|
|
|
—
|
|
|
711
|
|
|
—
|
|
|
741
|
|
|
47,911
|
|
6
|
|
37,503
|
|
|
18,230
|
|
|
17,427
|
|
|
3,021
|
|
|
2,188
|
|
|
3,602
|
|
|
1,725
|
|
|
83,696
|
|
7
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
8
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
530,978
|
|
|
134,824
|
|
|
101,698
|
|
|
3,021
|
|
|
15,362
|
|
|
3,602
|
|
|
72,413
|
|
|
861,898
|
|
Ungraded Performing
|
|
—
|
|
|
—
|
|
|
—
|
|
|
972,202
|
|
|
—
|
|
|
57,326
|
|
|
1,611
|
|
|
1,031,139
|
|
Total
|
|
$
|
530,978
|
|
|
$
|
134,824
|
|
|
$
|
101,698
|
|
|
$
|
975,223
|
|
|
$
|
15,362
|
|
|
$
|
60,928
|
|
|
$
|
74,024
|
|
|
$
|
1,893,037
|
|
Purchased Credit Impaired ("PCI") Loans:
The carrying amount of PCI loans at
June 30, 2014
and
December 31, 2013
follows.
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
June 30,
2014
|
|
December 31,
2013
|
Commercial
|
|
$
|
31,706
|
|
|
$
|
40,060
|
|
Construction
|
|
5,311
|
|
|
8,769
|
|
Consumer
|
|
2,250
|
|
|
3,050
|
|
Mortgage
|
|
9,316
|
|
|
9,997
|
|
Total carrying amount
|
|
$
|
48,583
|
|
|
$
|
61,876
|
|
Total outstanding balance
|
|
$
|
55,720
|
|
|
$
|
72,910
|
|
Accretable yield, or income expected to be collected on PCI loans at
June 30, 2014
and
June 30, 2013
, is as follows.
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
June 30,
2014
|
|
June 30,
2013
|
Beginning balance, January 1
|
|
$
|
2,188
|
|
|
$
|
3,343
|
|
Accretion of income
|
|
(1,813
|
)
|
|
(1,870
|
)
|
Other activity, net
|
|
700
|
|
|
414
|
|
Ending balance
|
|
$
|
1,075
|
|
|
$
|
1,887
|
|
5. ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established as losses are estimated to have occurred through a provision charged to operations. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.
The allowance for loan losses is maintained at a level which, in management's opinion, is adequate to absorb credit losses inherent in the portfolio. The Company utilizes both peer group analysis, as well as a historical analysis of the Company's portfolio to validate the overall adequacy of the allowance for loan losses. In addition to these objective criteria, the Company subjectively assesses the adequacy of the allowance for loan losses with consideration given to current economic conditions, changes to loan policies, the volume and type of lending, composition of the portfolio, the level of classified and criticized credits, seasoning of the loan portfolio, payment status and other factors.
A summary of changes in the allowance for loan losses, by loan portfolio segment, for the three-month and
six
-month periods ended
June 30, 2014
and
2013
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2014
|
(in thousands)
|
Commercial
|
|
Construction
|
|
Consumer
|
|
Mortgage
|
|
Covered
|
|
Acquired, Non- Covered
|
|
Unallocated
|
|
Total
|
Beginning balance
|
$
|
17,749
|
|
|
$
|
1,229
|
|
|
$
|
5,592
|
|
|
$
|
2,814
|
|
|
$
|
2,205
|
|
|
$
|
313
|
|
|
$
|
895
|
|
|
$
|
30,797
|
|
Charge-offs
|
(1,470
|
)
|
|
(57
|
)
|
|
(989
|
)
|
|
(94
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(2,613
|
)
|
Recoveries
|
3
|
|
|
43
|
|
|
366
|
|
|
11
|
|
|
164
|
|
|
1
|
|
|
—
|
|
|
588
|
|
Net(charge-offs)/recoveries
|
(1,467
|
)
|
|
(14
|
)
|
|
(623
|
)
|
|
(83
|
)
|
|
161
|
|
|
1
|
|
|
—
|
|
|
(2,025
|
)
|
Decrease in FDIC loss share receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(426
|
)
|
|
—
|
|
|
—
|
|
|
(426
|
)
|
Provision for loan losses
(1)
|
(856
|
)
|
|
64
|
|
|
670
|
|
|
361
|
|
|
(84
|
)
|
|
—
|
|
|
411
|
|
|
566
|
|
Ending balance
|
$
|
15,426
|
|
|
$
|
1,279
|
|
|
$
|
5,639
|
|
|
$
|
3,092
|
|
|
$
|
1,856
|
|
|
$
|
314
|
|
|
$
|
1,306
|
|
|
$
|
28,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2013
|
(in thousands)
|
Commercial
|
|
Construction
|
|
Consumer
|
|
Mortgage
|
|
Covered
|
|
Acquired, Non- Covered
|
|
Unallocated
|
|
Total
|
Beginning balance
|
$
|
15,280
|
|
|
$
|
5,450
|
|
|
$
|
5,998
|
|
|
$
|
3,327
|
|
|
$
|
1,977
|
|
|
$
|
167
|
|
|
$
|
1,711
|
|
|
$
|
33,910
|
|
Charge-offs
|
(723
|
)
|
|
(130
|
)
|
|
(1,347
|
)
|
|
(30
|
)
|
|
(8
|
)
|
|
(10
|
)
|
|
—
|
|
|
(2,248
|
)
|
Recoveries
|
18
|
|
|
90
|
|
|
416
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
527
|
|
Net charge-offs
|
(705
|
)
|
|
(40
|
)
|
|
(931
|
)
|
|
(27
|
)
|
|
(8
|
)
|
|
(10
|
)
|
|
—
|
|
|
(1,721
|
)
|
Increase in FDIC loss share receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
550
|
|
|
—
|
|
|
—
|
|
|
550
|
|
Provision for loan losses
(1)
|
976
|
|
|
(1,291
|
)
|
|
1,068
|
|
|
(9
|
)
|
|
(145
|
)
|
|
371
|
|
|
(400
|
)
|
|
570
|
|
Ending balance
|
$
|
15,551
|
|
|
$
|
4,119
|
|
|
$
|
6,135
|
|
|
$
|
3,291
|
|
|
$
|
2,374
|
|
|
$
|
528
|
|
|
$
|
1,311
|
|
|
$
|
33,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2014
|
(in thousands)
|
Commercial
|
|
Construction
|
|
Consumer
|
|
Mortgage
|
|
Covered
|
|
Acquired, Non- Covered
|
|
Unallocated
|
|
Total
|
Beginning balance
|
$
|
17,348
|
|
|
$
|
2,044
|
|
|
$
|
6,410
|
|
|
$
|
3,376
|
|
|
$
|
3,331
|
|
|
$
|
278
|
|
|
$
|
897
|
|
|
$
|
33,684
|
|
Charge-offs
|
(1,843
|
)
|
|
(111
|
)
|
|
(2,046
|
)
|
|
(148
|
)
|
|
(496
|
)
|
|
—
|
|
|
—
|
|
|
(4,644
|
)
|
Recoveries
|
12
|
|
|
1,777
|
|
|
680
|
|
|
30
|
|
|
209
|
|
|
16
|
|
|
—
|
|
|
2,724
|
|
Net (charge-offs)/recoveries
|
(1,831
|
)
|
|
1,666
|
|
|
(1,366
|
)
|
|
(118
|
)
|
|
(287
|
)
|
|
16
|
|
|
—
|
|
|
(1,920
|
)
|
Decrease in FDIC loss share receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(968
|
)
|
|
—
|
|
|
—
|
|
|
(968
|
)
|
Provision for loan losses
(1)
|
(91
|
)
|
|
(2,431
|
)
|
|
595
|
|
|
(166
|
)
|
|
(220
|
)
|
|
20
|
|
|
409
|
|
|
(1,884
|
)
|
Ending balance
|
$
|
15,426
|
|
|
$
|
1,279
|
|
|
$
|
5,639
|
|
|
$
|
3,092
|
|
|
$
|
1,856
|
|
|
$
|
314
|
|
|
$
|
1,306
|
|
|
$
|
28,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2013
|
(in thousands)
|
Commercial
|
|
Construction
|
|
Consumer
|
|
Mortgage
|
|
Covered
|
|
Acquired, Non- Covered
|
|
Unallocated
|
|
Total
|
Beginning balance
|
$
|
13,965
|
|
|
$
|
7,578
|
|
|
$
|
6,135
|
|
|
$
|
3,122
|
|
|
$
|
1,964
|
|
|
$
|
188
|
|
|
$
|
1,030
|
|
|
$
|
33,982
|
|
Charge-offs
|
(3,175
|
)
|
|
(320
|
)
|
|
(2,530
|
)
|
|
(398
|
)
|
|
(125
|
)
|
|
(30
|
)
|
|
—
|
|
|
(6,578
|
)
|
Recoveries
|
135
|
|
|
162
|
|
|
902
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,205
|
|
Net charge-offs
|
(3,040
|
)
|
|
(158
|
)
|
|
(1,628
|
)
|
|
(392
|
)
|
|
(125
|
)
|
|
(30
|
)
|
|
—
|
|
|
(5,373
|
)
|
Increase in FDIC loss share receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
654
|
|
|
—
|
|
|
—
|
|
|
654
|
|
Provision for loan losses
(1)
|
4,626
|
|
|
(3,301
|
)
|
|
1,628
|
|
|
561
|
|
|
(119
|
)
|
|
370
|
|
|
281
|
|
|
4,046
|
|
Ending balance
|
$
|
15,551
|
|
|
$
|
4,119
|
|
|
$
|
6,135
|
|
|
$
|
3,291
|
|
|
$
|
2,374
|
|
|
$
|
528
|
|
|
$
|
1,311
|
|
|
$
|
33,309
|
|
(1)
Net of benefit attributable to FDIC loss share receivable.
The following table presents, by portfolio segment, the balance in the allowance for loan losses disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans as of
June 30, 2014
and
December 31, 2013
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
(in thousands)
|
Commercial
|
|
Construction
|
|
Consumer
|
|
Mortgage
|
|
Acquired, Covered and Noncovered
|
|
Unallocated
|
|
Total
|
Individually evaluated for impairment
|
$
|
3,509
|
|
|
$
|
273
|
|
|
$
|
360
|
|
|
$
|
1,461
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,603
|
|
Collectively evaluated for impairment
|
11,917
|
|
|
1,006
|
|
|
5,279
|
|
|
1,631
|
|
|
—
|
|
|
1,306
|
|
|
21,139
|
|
Acquired with deteriorated credit quality
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,170
|
|
|
—
|
|
|
$
|
2,170
|
|
Total allowance for loan losses
|
$
|
15,426
|
|
|
$
|
1,279
|
|
|
$
|
5,639
|
|
|
$
|
3,092
|
|
|
$
|
2,170
|
|
|
$
|
1,306
|
|
|
$
|
28,912
|
|
Individually evaluated for impairment
|
$
|
43,341
|
|
|
$
|
8,290
|
|
|
$
|
2,554
|
|
|
$
|
3,938
|
|
|
|
|
|
|
$
|
58,123
|
|
Collectively evaluated for impairment
|
598,334
|
|
|
100,272
|
|
|
1,007,573
|
|
|
155,729
|
|
|
|
|
|
|
1,861,908
|
|
Acquired with deteriorated credit quality
|
31,706
|
|
|
5,311
|
|
|
2,250
|
|
|
9,316
|
|
|
|
|
|
|
48,583
|
|
Total loans
|
$
|
673,381
|
|
|
$
|
113,873
|
|
|
$
|
1,012,377
|
|
|
$
|
168,983
|
|
|
|
|
|
|
$
|
1,968,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
(in thousands)
|
Commercial
|
|
Construction
|
|
Consumer
|
|
Mortgage
|
|
Acquired, Covered and Noncovered
|
|
Unallocated
|
|
Total
|
Individually evaluated for impairment
|
$
|
4,644
|
|
|
$
|
625
|
|
|
$
|
315
|
|
|
$
|
1,540
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,124
|
|
Collectively evaluated for impairment
|
12,704
|
|
|
1,419
|
|
|
6,095
|
|
|
1,836
|
|
|
—
|
|
|
897
|
|
|
22,951
|
|
Acquired with deteriorated credit quality
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,609
|
|
|
—
|
|
|
3,609
|
|
Total allowance for loan losses
|
$
|
17,348
|
|
|
$
|
2,044
|
|
|
$
|
6,410
|
|
|
$
|
3,376
|
|
|
$
|
3,609
|
|
|
$
|
897
|
|
|
$
|
33,684
|
|
Individually evaluated for impairment
|
$
|
39,527
|
|
|
$
|
11,766
|
|
|
$
|
2,963
|
|
|
$
|
3,840
|
|
|
|
|
|
|
$
|
58,096
|
|
Collectively evaluated for impairment
|
586,215
|
|
|
81,163
|
|
|
984,572
|
|
|
121,115
|
|
|
|
|
|
|
1,773,065
|
|
Acquired with deteriorated credit quality
|
40,060
|
|
|
8,769
|
|
|
3,050
|
|
|
9,997
|
|
|
|
|
|
|
61,876
|
|
Total loans
|
$
|
665,802
|
|
|
$
|
101,698
|
|
|
$
|
990,585
|
|
|
$
|
134,952
|
|
|
|
|
|
|
$
|
1,893,037
|
|
6. BORROWINGS
The following schedule details the Company’s borrowings at
June 30, 2014
and
December 31, 2013
.
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
June 30,
2014
|
|
December 31,
2013
|
Overnight repurchase agreements, primarily with commercial customers at an average rate of 0.15% and 0.14% at June 30, 2014 and December 31, 2013
|
|
$
|
15,894
|
|
|
$
|
14,233
|
|
Federal funds purchased at an average rate of 0.66% at June 30, 2014
|
|
61,921
|
|
|
—
|
|
Other short-term borrowings
|
|
110,000
|
|
|
45,000
|
|
Total other borrowings
|
|
$
|
187,815
|
|
|
$
|
59,233
|
|
Overnight repurchase agreements consist primarily of balances in the transaction accounts of commercial customers swept nightly to an overnight investment account. Overnight repurchase agreements are collateralized by investment securities having a market value equal to or greater than the balance borrowed. Federal funds purchased are unsecured lines of credit with correspondent banks.
Other short-term borrowings mature either overnight or have a remaining fixed maturity not to exceed one year and consist of advances from the Federal Home Loan Bank of Atlanta (the "FHLB") collateralized with pledged qualifying real estate loans or investment securities.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company reports the fair value of its financial assets and liabilities based on three levels of the fair value hierarchy as described below:
Level 1
– Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2
– Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly;
Level 3
– Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
A financial instrument’s level within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Fair value enables a company to mitigate the non-economic earnings volatility caused from financial assets and financial liabilities being carried at different bases of accounting, as well as to more accurately portray the active and dynamic management of a company’s balance sheet.
Mortgage Loans Held-for-Sale
The Company records mortgage loans held-for-sale at fair value. The Company chose to fair value these mortgage loans held-for-sale in order to eliminate the complexities and inherent difficulties of achieving hedge accounting and to better align reported results with the underlying economic changes in value of the loans and related hedge instruments. This election impacts the timing and recognition of origination fees and costs, as well as servicing value. Specifically, origination fees and costs, which had previously been deferred and previously recognized as part of the gain/loss on sale of the loans, are now recognized in earnings at the time of origination. Interest income on mortgage loans held-for-sale is recorded on an accrual basis in the Consolidated Statements of Comprehensive Income under the heading “Interest income-loans, including fees.” The servicing value is included in the fair value of the mortgage loan held-for-sale and initially recognized at the time the Company enters into Interest Rate Lock Commitments (“IRLCs”) with borrowers. The mark-to-market adjustments related to loans held-for-sale and the associated economic hedges are reported in noninterest income from mortgage banking activities in the Consolidated Statements of Comprehensive Income.
Valuation Methodologies and Fair Value Hierarchy
The primary financial instruments that the Company carries at fair value include investment securities, IRLCs, derivative instruments, and mortgage loan held-for-sale.
Debt securities issued by U.S. Government corporations and agencies, debt securities issued by states and political subdivisions, and agency residential mortgage-backed securities classified as available-for-sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The investments in the Company’s portfolio are generally not quoted on an exchange but are actively traded in the secondary institutional markets.
The fair value of mortgage loans held-for-sale is based on what secondary markets are currently offering for portfolios with similar characteristics. The fair value measurements consider observable data that may include market trade pricing from brokers and the mortgage-backed security markets. As such, the Company classifies these loans as Level 2.
The Company classifies IRLCs on residential mortgage loans held-for-sale, which are derivatives under ASC 815-10-15, on a gross basis within other liabilities or other assets. The fair value of these commitments, while based on interest rates observable in the market, is highly dependent on the ultimate closing of the loans. These “pull-through” rates are based on both the Company’s historical data and the current interest rate environment and reflect the Company’s best estimate of the likelihood that a commitment will ultimately result in a closed loan. The loan servicing value is also included in the fair value of IRLCs. Because these inputs are not transparent in market trades, IRLCs are considered to be Level 3 assets.
Derivative instruments are primarily transacted in the secondary mortgage and institutional dealer markets and priced with observable market assumptions at a mid-market valuation point, with appropriate valuation adjustments for liquidity and credit risk. For purposes of valuation adjustments to its derivative positions, the Company has evaluated liquidity premiums that may be demanded by market participants, as well as the credit risk of its counterparties and its own credit if applicable. To date, no material losses due to a counterparty’s inability to pay any net uncollateralized position have occurred.
The credit risk associated with the underlying cash flows of an instrument carried at fair value was a consideration in estimating the fair value of certain financial instruments. Credit risk was considered in the valuation through a variety of inputs, as applicable, including, the actual default and loss severity of the collateral, and level of subordination. The assumption used to estimate credit risk applied relevant information that a market participant would likely use in valuing an instrument. Because mortgage loans held-for-sale are sold within a few weeks of origination, they were unlikely to demonstrate any of the credit weaknesses discussed above and as a result, there were no credit-related adjustments to fair value during the three and
six
-month periods ended
June 30, 2014
and
2013
.
The following tables present financial instruments measured at fair value at
June 30, 2014
and
December 31, 2013
, on a recurring basis
.
There have been no transfers between Level 1, 2, and 3.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at June 30, 2014
|
(in thousands)
|
Total
|
|
Quoted Prices
in Active
Markets for
Identical Assets
or Liabilities
Level 1
|
|
Significant
Other
Observable
Inputs
Level 2
|
|
Significant
Unobservable
Inputs
Level 3
|
Obligations of U.S. Government sponsored enterprises:
|
$
|
26,601
|
|
|
$
|
—
|
|
|
$
|
26,601
|
|
|
$
|
—
|
|
Municipal securities
|
15,124
|
|
|
—
|
|
|
15,124
|
|
|
—
|
|
Residential mortgage-backed securities
|
122,465
|
|
|
—
|
|
|
122,465
|
|
|
—
|
|
Mortgage loans held-for-sale
|
191,666
|
|
|
—
|
|
|
191,666
|
|
|
—
|
|
Other assets
(1)
|
4,243
|
|
|
—
|
|
|
—
|
|
|
4,243
|
|
Other liabilities
(1)
|
(2,234
|
)
|
|
—
|
|
|
—
|
|
|
(2,234
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2013
|
(in thousands)
|
Total
|
|
Quoted Prices
in Active
Markets for
Identical Assets
or Liabilities
Level 1
|
|
Significant
Other
Observable
Inputs
Level 2
|
|
Significant
Unobservable
Inputs
Level 3
|
Obligations of U.S. Government sponsored enterprises:
|
$
|
21,039
|
|
|
$
|
—
|
|
|
$
|
21,039
|
|
|
$
|
—
|
|
Municipal securities
|
14,769
|
|
|
—
|
|
|
14,769
|
|
|
—
|
|
Residential mortgage-backed securities
|
133,057
|
|
|
—
|
|
|
133,057
|
|
|
—
|
|
Mortgage loans held-for-sale
|
127,850
|
|
|
—
|
|
|
127,850
|
|
|
—
|
|
Other assets
(1)
|
3,271
|
|
|
—
|
|
|
—
|
|
|
3,271
|
|
Other liabilities
(1)
|
(156
|
)
|
|
—
|
|
|
—
|
|
|
(156
|
)
|
(1)
Includes mortgage-related IRLCs and derivative financial instruments to hedge interest rate risk. IRLCs were recorded on a gross basis.
The following table presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three and
six
-month periods ended
June 30, 2014
and
2013
. The changes in the fair value of economic hedges were recorded in noninterest income from mortgage banking activities and are designed to partially offset the change in fair value of the financial instruments referenced in the following table.
|
|
|
|
|
|
|
|
|
(in thousands)
|
Other
assets
(1)
|
|
Other
liabilities
(1)
|
Beginning balance January 1, 2014
|
$
|
3,271
|
|
|
$
|
(156
|
)
|
Total gains (losses) included in earnings:
(2)
|
|
|
|
Issuances
|
7,566
|
|
|
(2,350
|
)
|
Settlements and closed loans
|
(6,501
|
)
|
|
262
|
|
Expirations
|
(93
|
)
|
|
10
|
|
Ending balance June 30, 2014
|
$
|
4,243
|
|
|
$
|
(2,234
|
)
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Other
assets
(1)
|
|
Other
liabilities
(1)
|
Beginning balance January 1, 2013
|
$
|
4,864
|
|
|
$
|
(1,053
|
)
|
Total gains (losses) included in earnings:
(2)
|
|
|
|
Issuances
|
26,878
|
|
|
(6,035
|
)
|
Settlements and closed loans
|
(10,916
|
)
|
|
—
|
|
Expirations
|
(7,715
|
)
|
|
3,942
|
|
Ending balance June 30, 2013
|
$
|
13,111
|
|
|
$
|
(3,146
|
)
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Other
assets
(
1)
|
|
Other
liabilities
(1)
|
Beginning balance April 1, 2014
|
$
|
3,323
|
|
|
$
|
(116
|
)
|
Total gains (losses) included in earnings:
(2)
|
|
|
|
Issuances
|
4,243
|
|
|
(2,234
|
)
|
Settlements and closed loans
|
(3,311
|
)
|
|
116
|
|
Expirations
|
(12
|
)
|
|
—
|
|
Ending balance June 30, 2014
|
$
|
4,243
|
|
|
$
|
(2,234
|
)
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Other
assets
(1)
|
|
Other
liabilities
(1)
|
Beginning balance April 1, 2013
|
$
|
5,521
|
|
|
$
|
(2,889
|
)
|
Total gains (losses) included in earnings:
(2)
|
|
|
|
Issuances
|
20,701
|
|
|
(3,146
|
)
|
Settlements and closed loans
|
(5,518
|
)
|
|
—
|
|
Expirations
|
(7,593
|
)
|
|
2,889
|
|
Ending balance June 30, 2013
|
$
|
13,111
|
|
|
$
|
(3,146
|
)
|
(1)
Includes mortgage-related IRLCs and derivative financial instruments entered into to hedge interest rate risk.
(2)
Amounts included in earnings are recorded in noninterest income from mortgage banking activities.
The fair value gain (loss) related to mortgage banking activities for items measured at fair value, pursuant to election of fair value option, was
$1.6 million
and
$3.0 million
, for the three and six months ended June 30, 2014 and
$(6.6) million
and
$(9.0) million
for the three and six months ended June 30, 2013.
The following tables present the assets that are measured at fair value on a non-recurring basis by level within the fair value hierarchy as reported on the consolidated balance sheets at
June 30, 2014
and
December 31, 2013
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at June 30, 2014
|
(in thousands)
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets Level 1
|
|
Significant
Other
Observable
Inputs Level 2
|
|
Significant
Unobservable
Inputs
Level 3
|
Impaired loans
|
$
|
27,540
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,540
|
|
ORE
|
11,018
|
|
|
—
|
|
|
—
|
|
|
11,018
|
|
Mortgage servicing rights
|
26,581
|
|
|
—
|
|
|
—
|
|
|
26,581
|
|
SBA servicing rights
|
4,623
|
|
|
—
|
|
|
—
|
|
|
4,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2013
|
(in thousands)
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets Level 1
|
|
Significant
Other
Observable
Inputs Level 2
|
|
Significant
Unobservable
Inputs
Level 3
|
Impaired loans
|
$
|
28,013
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28,013
|
|
ORE
|
12,779
|
|
|
—
|
|
|
—
|
|
|
12,779
|
|
Mortgage servicing rights
|
22,779
|
|
|
—
|
|
|
—
|
|
|
22,779
|
|
SBA servicing rights
|
4,140
|
|
|
—
|
|
|
—
|
|
|
4,140
|
|
Quantitative Information about Level 3 Fair Value Measurements
The following table shows significant unobservable inputs used in the fair value measurement of Level 3 assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands)
|
|
Fair Value at
June 30, 2014
|
|
Fair Value at
December 31, 2013
|
|
Valuation
Technique
|
|
Unobservable
Inputs
|
|
Range/Weighted Average at June 30, 2014
|
|
Range/Weighted Average at December 31, 2013
|
Nonrecurring:
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
27,540
|
|
|
$
|
28,013
|
|
|
Discounted appraisals less estimated selling costs
|
|
Collateral discounts; Estimated selling costs
|
|
NM
(1)
|
|
NM
(1)
|
Other real estate
|
|
11,018
|
|
|
12,779
|
|
|
Discounted appraisals less estimated selling costs
|
|
Collateral discounts; Estimated selling costs
|
|
NM
(1)
|
|
NM
(1)
|
Mortgage servicing rights
|
|
26,581
|
|
|
22,779
|
|
|
Discounted cash flows
|
|
Discount rate
|
|
9.63% - 12.39%
|
|
10.00% - 12.75%
|
|
|
|
|
|
|
|
|
Prepayment speeds
|
|
6.81% - 19.59%
|
|
6.33% - 17.33%
|
SBA servicing rights
|
|
4,623
|
|
|
4,140
|
|
|
Discounted cash flows
|
|
Discount rate
|
|
13.50%
|
|
13.50%
|
|
|
|
|
|
|
|
|
Prepayment speeds
|
|
7.12%
|
|
5.94%
|
Recurring:
|
|
|
|
|
|
|
|
|
|
|
|
|
IRLCs
|
|
4,243
|
|
|
3,271
|
|
|
Pricing model
|
|
Pull-through ratio
|
|
76.00% - 80.00%
|
|
71.00% - 80.00%
|
Forward commitments
|
|
(2,234
|
)
|
|
(156
|
)
|
|
Investor pricing
|
|
Pricing spreads
|
|
101.55% -106.91%
|
|
101.10% -106.14%
|
(1) Not Meaningful
Impaired loans are evaluated and valued at the time the loan is identified as impaired, at the lower of cost or fair value less estimated selling costs. For collateral-dependent loans, fair value is measured based on the value of the collateral securing these loans and is classified as a Level 3 in the fair value hierarchy. Collateral may include real estate or business assets, including equipment, inventory and accounts receivable. The value of real estate collateral is determined based on an appraisal by qualified licensed appraisers hired by the Company. If significant, the value of business equipment is based on an appraisal by qualified licensed appraisers hired by the Company; otherwise, the equipment’s net book value on the business’ financial statements is the basis for the value of business equipment. Inventory and accounts receivable collateral are valued based on independent field examiner review or aging reports.
Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business. Impaired loans are evaluated on at least a quarterly basis for additional impairment and adjusted accordingly.
Foreclosed assets are adjusted to fair value less estimated selling costs upon transfer of the loans to ORE which becomes the new carrying value of the ORE. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value less estimated selling costs. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the foreclosed asset as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the foreclosed asset as nonrecurring Level 3. Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business. Increases or decreases in realization for properties sold may impact the comparability adjustment for similar assets remaining on the balance sheet.
Mortgage and SBA servicing rights are initially recorded at fair value when loans are sold with servicing retained. These assets are then amortized in proportion to and over the period of estimated net servicing income. On at least a quarterly basis, these servicing assets are assessed for impairment based on fair value. Management determines fair value by stratifying the servicing portfolio into homogeneous subsets with unique behavior characteristics, converting those characteristics into income and expense streams, adjusting those streams for prepayments, present valuing the adjusted streams, and combining the present values into a total. If the cost basis of any loan stratification tranche is higher than the present value of the tranche, an impairment is recorded. See Note 10 for additional disclosures related to assumptions used in the fair value calculation for mortgage and SBA servicing rights.
Management makes certain estimates and assumptions related to costs to service varying types of loans and pools of loans, prepayment speeds, the projected lives of loans and pools of loans sold servicing retained, and discount factors used in calculating the present values of servicing fees projected to be received. No less frequently than quarterly, management reviews the status of mortgage loans held-for-sale for which fair value has been elected and pools of servicing assets to determine if there is any impairment to those assets due to such factors as earlier than estimated repayments or significant prepayments. Any impairment identified in these assets will result in reductions in their carrying values through a valuation allowance and a corresponding increase in operating expenses.
The significant unobservable input used in the fair value measurement of the Company's IRLCs is the pull-through ratio, which represents the percentage of loans currently in a lock position which management estimates will ultimately close. Generally, the fair value of an IRLC is positive (negative) if the prevailing interest rate is lower (higher) than the IRLC rate. Therefore, an increase in the pull-through ratio (i.e., higher percentage of loans are estimated to close) will result in the fair value of the IRLC increasing if in a gain position, or decreasing if in a loss position. The pull-through ratio is largely dependent on the processing stage that a loan is currently in and the change in prevailing interest rates from the time of the rate lock. The pull-through ratio is computed by the secondary marketing system using historical data and the ratio is periodically reviewed by the Company's Secondary Marketing Department of the Mortgage Banking Division for reasonableness.
Forward commitments are instruments that are used to hedge the value of the IRLCs and mortgage loans held-for-sale. The Company takes investor commitments to sell a loan or pool of newly-originated loans to an investor for an agreed upon price for delivery in the future. This type of forward commitment is also known as a mandatory commitment. Generally, the fair value of a forward commitment is negative (positive) if the prevailing interest rate is lower (higher) than the current commitment interest rate. The value of these commitments is ultimately determined by the investor that sold the commitment and represents a significant unobservable input used in the fair value measurement of the Company's fair value of forward commitments.
The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of loans held-for-sale for which the fair value option ("FVO") had been elected as of
June 30, 2014
and
December 31, 2013
. There was
one
loan held-for-sale with an outstanding principal balance of
$403,000
that was past due 90 days or more and in nonaccrual status at
June 30, 2014
. There were no loans held-for-sale measured under the fair value option that were
90
days or more past due or in nonaccrual status at
December 31, 2013
.
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Aggregate Fair Value
June 30, 2014
|
|
Aggregate Unpaid
Principal Balance Under
FVO at June 30, 2014
|
|
Fair Value Over
Unpaid Principal
|
Loans held-for-sale
|
$
|
191,666
|
|
|
$
|
187,500
|
|
|
$
|
4,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Aggregate Fair Value
December 31, 2013
|
|
Aggregate Unpaid
Principal Balance Under
FVO at December 31, 2013
|
|
Fair Value Over
Unpaid Principal
|
Loans held-for-sale
|
$
|
127,850
|
|
|
$
|
127,759
|
|
|
$
|
91
|
|
ASC 825-10 requires interim disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on settlements using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets, and, in many cases, could not be realized in immediate settlement of the instrument. The aggregate fair value amounts presented in the table below do not represent the underlying value of the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at June 30, 2014:
|
(in thousands)
|
Carrying
Amount
|
|
Quoted Prices in
Active Markets
for Identical
Assets
Level 1
|
|
Significant
Other
Observable
Inputs
Level 2
|
|
Significant
Unobservable
Inputs
Level 3
|
|
Total Fair Value
|
Financial instruments (assets):
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
55,139
|
|
|
$
|
55,139
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
55,139
|
|
Investment securities available-for-sale
|
164,190
|
|
|
—
|
|
|
164,190
|
|
|
—
|
|
|
164,190
|
|
Investment securities held-to-maturity
|
7,851
|
|
|
—
|
|
|
8,263
|
|
|
—
|
|
|
8,263
|
|
Total loans, net
(1)
|
2,279,421
|
|
|
—
|
|
|
191,666
|
|
|
2,033,690
|
|
|
2,225,356
|
|
Financial instruments (liabilities):
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand deposits
|
$
|
560,932
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
560,932
|
|
|
$
|
560,932
|
|
Interest-bearing deposits
|
1,664,487
|
|
|
—
|
|
|
—
|
|
|
1,667,667
|
|
|
1,667,667
|
|
Other borrowings
|
187,815
|
|
|
—
|
|
|
187,815
|
|
|
—
|
|
|
187,815
|
|
Subordinated debt
|
46,393
|
|
|
—
|
|
|
48,975
|
|
|
—
|
|
|
48,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2013:
|
(in thousands)
|
Carrying
Amount
|
|
Quoted Prices in
Active Markets
for Identical
Assets
Level 1
|
|
Significant
Other
Observable
Inputs
Level 2
|
|
Significant
Unobservable
Inputs
Level 3
|
|
Total Fair Value
|
Financial instruments (assets):
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
116,559
|
|
|
$
|
116,559
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
116,559
|
|
Investment securities available-for-sale
|
168,865
|
|
|
—
|
|
|
168,865
|
|
|
—
|
|
|
168,865
|
|
Investment securities held-to-maturity
|
4,051
|
|
|
—
|
|
|
4,437
|
|
|
—
|
|
|
4,437
|
|
Total loans, net
(1)
|
2,046,719
|
|
|
—
|
|
|
127,850
|
|
|
1,889,821
|
|
|
2,017,671
|
|
Financial instruments (liabilities):
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand deposits
|
$
|
488,224
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
488,224
|
|
|
$
|
488,224
|
|
Interest-bearing deposits
|
1,714,228
|
|
|
—
|
|
|
—
|
|
|
1,719,562
|
|
|
1,719,562
|
|
Other borrowings
|
59,233
|
|
|
—
|
|
|
59,233
|
|
|
—
|
|
|
59,233
|
|
Subordinated debt
|
46,393
|
|
|
—
|
|
|
45,737
|
|
|
—
|
|
|
45,737
|
|
(1)
Includes
$191,666
and
$127,850
in mortgage loans held-for-sale at fair value at
June 30, 2014
and
December 31, 2013
, respectively
The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents approximate the fair values of those assets. For investment securities, fair value equals quoted market prices, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities or dealer quotes.
Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type. The fair value of performing loans is calculated by discounting scheduled cash flows through the remaining maturities using estimated market discount rates that reflect the credit and interest rate risk inherent in the loans along with a market risk premium and liquidity discount.
Fair value for significant nonperforming loans is estimated taking into consideration recent external appraisals of the underlying collateral for loans that are collateral-dependent. If appraisals are not available or if the loan is not collateral-dependent, estimated cash flows are discounted using a rate commensurate with the risk associated with the estimated cash flows. Assumptions regarding credit risk, cash flows, and discount rates are judgmentally determined using available market information and specific borrower information.
The fair value of deposits with no stated maturities, such as noninterest-bearing demand deposits, savings, interest-bearing demand, and money market accounts, is equal to the amount payable on demand. The fair value of time deposits is based on the discounted value of contractual cash flows based on the discount rates currently offered for deposits of similar remaining maturities.
The fair value of the Company’s borrowings is estimated based on the quoted market prices for the same or similar issues or on the current rates offered for debt of the same remaining maturities.
For off-balance sheet instruments, fair values are based on rates currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing for loan commitments and letters of credit. Fees related to these instruments were immaterial at
June 30, 2014
and
December 31, 2013
, and the carrying amounts represent a reasonable approximation of their fair values. Loan commitments, letters and lines of credit, and similar obligations typically have variable interest rates and clauses that deny funding if the customer’s credit quality deteriorates. Therefore, the fair values of these items are not significant and are not included in the foregoing schedule.
Netting of Financial Instruments
Overnight repurchase agreements consist primarily of balances in the transaction accounts of commercial customers swept nightly to an overnight investment account. Overnight repurchase agreements are collateralized with investment securities having a market value that approximates the balance borrowed. Overnight repurchase agreements are not subject to offset. As of
June 30, 2014
, the Company had
$15.9 million
in overnight repurchase agreements included in other borrowings in the Consolidated Balance Sheet, collateralized by securities with a fair value of
$20.4 million
, resulting in a net position of
$4.5 million
. As of
December 31, 2013
, the Company had
$14.2 million
in overnight repurchase agreements included in other borrowings in the Consolidated Balance Sheet, with securities of
$21.2 million
pledged, with a net position of
$7.0 million
. There are no derivative contracts subject to master netting agreements or are offset.
8. DERIVATIVE FINANCIAL INSTRUMENTS
The Company maintains a risk management program to manage interest rate risk and pricing risk associated with its mortgage lending activities. The risk management program includes the use of forward contracts and other derivatives that are recorded in the financial statements at fair value and are used to offset changes in value of the mortgage inventory due to changes in market interest rates. As a normal part of its operations, the Company enters into derivative contracts to economically hedge risks associated with overall price risk related to IRLCs and mortgage loans held-for-sale for which the fair value option has been elected. Fair value changes occur as a result of interest rate movements as well as changes in the value of the associated servicing. Derivative instruments used include forward sale commitments and IRLCs. All derivatives are carried at fair value in the Consolidated Balance Sheets in other assets or other liabilities.
Gross gains/(losses) of
$(1.2) million
and
$(1.1) million
were recorded for the three and six months ended
June 30, 2014
, respectively, and
$7.3 million
and
$6.2 million
for the three and six months ended
June 30, 2013
, respectively, for all related commitments, and are recorded in the Consolidated Statements of Comprehensive Income. The Company's derivative contracts are not subject to master netting arrangements.
The Company’s risk management derivatives are based on underlying risks primarily related to interest rates and forward sales commitments. Forward sales commitments are contracts for the delayed delivery or net settlement of an underlying instrument, such as a mortgage loan, in which the seller agrees to deliver on a specified future date, either a specified instrument at a specified price or yield or the net cash equivalent of an underlying instrument. These hedges are used to preserve the Company’s position relative to future sales of mortgage loans to third parties in an effort to minimize the volatility of the expected gain on sale from changes in interest rate and the associated pricing changes.
Credit and Market Risk Associated with Derivatives
Derivatives expose the Company to credit risk. If the counterparty fails to perform, most counterparties are government sponsored enterprises, so the credit risk at that time would be equal to the net derivative asset position, if any, for that counterparty. The Company minimizes the credit or repayment risk in derivative instruments by entering into transactions with high-quality counterparties that are reviewed periodically.
The Company’s derivative positions as of
June 30, 2014
and
December 31, 2013
were as follows:
|
|
|
|
|
|
|
|
|
|
Contract or Notional Amount
|
(in thousands)
|
June 30,
2014
|
|
December 31,
2013
|
Forward rate commitments
|
$
|
389,662
|
|
|
$
|
240,574
|
|
Interest rate lock commitments
|
195,896
|
|
|
122,343
|
|
Total derivatives contracts
|
$
|
585,558
|
|
|
$
|
362,917
|
|
9. EARNINGS PER SHARE
Earnings per share were calculated as follows:
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
(in thousands, except per share data)
|
2014
|
|
2013
|
Net income
|
$
|
7,958
|
|
|
$
|
9,433
|
|
Less dividends on preferred stock and accretion of discount
|
—
|
|
|
(823
|
)
|
Net income available to common equity
|
$
|
7,958
|
|
|
$
|
8,610
|
|
Average common shares outstanding
(1)
|
21,301
|
|
|
16,136
|
|
Effect of stock dividends
|
—
|
|
|
431
|
|
Average common shares outstanding – basic
|
21,301
|
|
|
16,567
|
|
Dilutive stock options and warrant
|
2,127
|
|
|
2,011
|
|
Average common shares outstanding – diluted
|
23,428
|
|
|
18,578
|
|
Earnings per common share – basic
|
$
|
0.37
|
|
|
$
|
0.52
|
|
Earnings per common share – diluted
|
$
|
0.34
|
|
|
$
|
0.46
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
(in thousands, except per share data)
|
2014
|
|
2013
|
Net income
|
$
|
14,021
|
|
|
$
|
15,924
|
|
Less dividends on preferred stock and accretion of discount
|
—
|
|
|
(1,646
|
)
|
Net income available to common equity
|
$
|
14,021
|
|
|
$
|
14,278
|
|
Average common shares outstanding
(1)
|
21,274
|
|
|
15,486
|
|
Effect of stock dividends
|
—
|
|
|
431
|
|
Average common shares outstanding – basic
|
21,274
|
|
|
15,917
|
|
Dilutive stock options and warrant
|
2,143
|
|
|
1,966
|
|
Average common shares outstanding – diluted
|
23,417
|
|
|
17,883
|
|
Earnings per common share – basic
|
$
|
0.66
|
|
|
$
|
0.90
|
|
Earnings per common share – diluted
|
$
|
0.60
|
|
|
$
|
0.80
|
|
(1)
Average number of common shares outstanding for the three and
six
months ended
June 30, 2014
and
2013
includes participating securities related to unvested restricted stock awards, net of forfeitures during the period.
For the three and
six
months ended
June 30, 2014
, there were
402,000
common stock options with an average exercise price of
$14.11
, which were not included in the dilutive stock options and warrant. For the three and six months ended
June 30, 2013
, there were
100,000
shares with an average exercise price of
$9.00
per share, which were not included in the dilutive stock options and warrant. These shares would have been included in the calculation of dilutive earnings per share, except that to do so would have an anti-dilutive impact on earnings per share.
10. CERTAIN TRANSFERS OF FINANCIAL ASSETS
The Company has transferred certain residential mortgage loans, SBA loans, and indirect automobile loans in which the Company has continuing involvement to third parties. The Company has not engaged in securitization activities with respect to such loans. All such transfers have been accounted for as sales by the Company. The Company’s continuing involvement in such transfers has been limited to certain servicing responsibilities. The Company is not required to provide additional financial support to any of these entities, nor has the Company provided any support it was not obligated to provide. Servicing rights may give rise to servicing assets, which are initially recognized at fair value, subsequently amortized, and tested for impairment. Gains or losses upon sale, in addition to servicing fees and collateral management fees, are recorded as part of noninterest income from mortgage banking activities in the Consolidated Statements of Comprehensive Income.
As seller, the Company has made various representations and warranties related to, among other things, the ownership of the loans, the validity of the liens, the loan selection and origination process, and the compliance to the origination criteria established by the purchasers. In the event of a breach of these representations and warranties, the Company may be obligated to repurchase the loans with identified defects or to indemnify the buyers. The contractual obligation arises only when the breach of representations and warranties are discovered and repurchase is demanded. Generally, the maximum amount the Company would be required to make for breaches of these representations and warranties would be equal to the unpaid principal balance of such loans that are deemed to have defects that were sold to purchasers, plus, in certain circumstances, accrued interest on such loans and certain expenses. The Company estimates its reserves under such arrangements predominantly based on historical experience adjusted for any risk factors not captured in the historical losses. As of June 30, 2014 and December 31, 2013, the Company’s estimate of reserve related to this liability and repurchases were de minimis.
When the contractually-specific servicing fees on loans sold with servicing retained are expected to be more than adequate compensation to a servicer for performing the servicing, a capitalized servicing asset is recognized based on fair value. When the expected costs to a servicer for performing loan servicing are not expected to adequately compensate a servicer, a capitalized servicing liability is recognized based on fair value. Servicing assets and servicing liabilities are amortized over the expected lives of the serviced loans utilizing the interest method. Management makes certain estimates and assumptions related to costs to service varying types of loans and pools of loans, prepayment speeds, the projected lives of loans and pools of loans sold servicing retained, and discount factors used in calculating the present values of servicing fees projected to be received.
Loan servicing rights are initially recorded on the Consolidated Balance Sheets at fair value and then accounted for at the lower of cost or market and amortized in proportion to, and over the estimated period that, net servicing income is expected to be received based on projections of the amount and timing of estimated future net cash flows. The amount and timing of estimated future net cash flows are updated based on actual results and updated projections.
The Company evaluates its loan servicing rights for impairment on at least a quarterly basis. The Company uses a number of assumptions and estimates in determining the impairment of its loan servicing rights. These assumptions include prepayment speeds and discount rates commensurate with the risks involved and comparable to assumptions used by market participants to value and bid servicing rights available for sale in the market.
At
June 30, 2014
and
December 31, 2013
, the total fair value of servicing for mortgage loans was
$58.8 million
and
$53.7 million
, respectively. The fair value of servicing for SBA loans was
$4.9 million
and
$4.7 million
at
June 30, 2014
and
December 31, 2013
, respectively. To estimate the fair values of these servicing assets, consideration was given to dealer indications of market value, where applicable, as well as the results of discounted cash flow models using key assumptions and inputs for prepayment rates, credit losses, and discount rates. The fair value of servicing for indirect loans approximates carrying value.
Carrying value of servicing assets is shown in the table below:
|
|
|
|
|
|
|
|
|
(in thousands)
|
June 30,
2014
|
|
December 31,
2013
|
Mortgage servicing
|
$
|
50,190
|
|
|
$
|
46,785
|
|
SBA servicing
|
4,765
|
|
|
4,529
|
|
Indirect servicing
|
2,571
|
|
|
1,888
|
|
Total carrying value of servicing assets
|
$
|
57,526
|
|
|
$
|
53,202
|
|
Residential Mortgage Loans
The Company typically sells first-lien residential mortgage loans to third party investors, primarily Fannie Mae, Ginnie Mae, and Freddie Mac. Certain of these loans are exchanged for cash and servicing rights, which generate servicing assets for the Company. The servicing assets are recorded initially at fair value and subsequently at the lower of cost or market and amortized in proportion to, and over the estimated period that, net servicing income is expected to be received.
During the three months ended
June 30, 2014
and
2013
, the Company sold residential mortgage loans with unpaid principal balances of $400.5 million and $633.5 million, respectively. During the
six
months ended
June 30, 2014
and
2013
, the Company sold residential mortgage loans with unpaid principal balances of
$687.2 million
and
$1.2 billion
, respectively. The Company retained the related mortgage servicing rights ("MSRs") and receives servicing fees. At
June 30, 2014
, and
December 31, 2013
the approximate weighted average net servicing fee was
0.26%
, and
0.25%
, respectively. The weighted average coupon interest rate was
3.94%
and
3.88%
at
June 30, 2014
and
December 31, 2013
, respectively.
The table below is an analysis of the activity in the Company’s residential MSRs and impairment for the three and
six
months ended
June 30, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
(in thousands)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Residential mortgage servicing rights
|
|
|
|
|
|
|
|
Beginning carrying value, net
|
$
|
48,335
|
|
|
$
|
29,163
|
|
|
$
|
46,785
|
|
|
$
|
23,085
|
|
Additions
|
5,384
|
|
|
7,474
|
|
|
9,128
|
|
|
13,650
|
|
Amortization
|
(1,692
|
)
|
|
(1,544
|
)
|
|
(3,266
|
)
|
|
(3,249
|
)
|
Recovery/(impairment), net
|
(1,837
|
)
|
|
1,556
|
|
|
(2,457
|
)
|
|
3,163
|
|
Ending carrying value, net
|
$
|
50,190
|
|
|
$
|
36,649
|
|
|
$
|
50,190
|
|
|
$
|
36,649
|
|
|
|
|
|
|
|
|
|
Residential mortgage servicing impairment
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
3,749
|
|
|
$
|
3,463
|
|
|
$
|
3,129
|
|
|
$
|
5,070
|
|
Additions
|
1,837
|
|
|
—
|
|
|
2,504
|
|
|
—
|
|
Recoveries
|
—
|
|
|
(1,556
|
)
|
|
(47
|
)
|
|
(3,163
|
)
|
Ending balance
|
$
|
5,586
|
|
|
$
|
1,907
|
|
|
$
|
5,586
|
|
|
$
|
1,907
|
|
At
June 30, 2014
, the sensitivity of the current fair value of the residential mortgage servicing rights to immediate
10%
and
20%
adverse changes in key economic assumptions are included in the accompanying table.
|
|
|
|
|
($ in thousands)
|
June 30,
2014
|
Residential mortgage servicing rights
|
|
Fair value
|
$
|
58,764
|
|
Composition of residential loans serviced for others:
|
|
Fixed-rate
|
99.6
|
%
|
Adjustable-rate
|
0.4
|
%
|
Total
|
100.0
|
%
|
Weighted average remaining term (years)
|
26.0
|
|
Prepayment speed
|
8.33
|
%
|
Effect on fair value of a 10% increase
|
$
|
(2,072
|
)
|
Effect on fair value of a 20% increase
|
(3,998
|
)
|
Weighted average discount rate
|
9.82
|
%
|
Effect on fair value of a 10% increase
|
$
|
(2,420
|
)
|
Effect on fair value of a 20% increase
|
(4,666
|
)
|
The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the value of the MSRs is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change.
Information about the asset quality of residential mortgage loans managed by Fidelity at
June 30, 2014
is shown in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
Six Months Ended
|
|
Unpaid
Principal
|
|
Delinquent (days)
|
|
June 30, 2014
|
(in thousands)
|
30 to 89
|
|
90+
|
|
Net Charge-offs
|
Mortgage loan servicing portfolio
|
$
|
4,845,166
|
|
|
$
|
9,660
|
|
|
$
|
1,924
|
|
|
$
|
—
|
|
Mortgage loans held-for-sale
|
187,500
|
|
|
—
|
|
|
403
|
|
|
—
|
|
Mortgage loans held-for-investment
|
89,661
|
|
|
398
|
|
|
94
|
|
|
87
|
|
Total residential mortgages serviced
|
$
|
5,122,327
|
|
|
$
|
10,058
|
|
|
$
|
2,421
|
|
|
$
|
87
|
|
SBA Loans
The Company has executed certain transfers of SBA loans with third parties. These loans, which are typically partially guaranteed by the SBA or otherwise credit enhanced, are generally secured by business property such as real estate, inventory, equipment and accounts receivable.
During the
six
months ended
June 30, 2014
and
2013
, the Company sold SBA loans with unpaid principal balances of
$26.6 million
and
$25.3 million
, respectively. The Company retained the related loan servicing rights and receives servicing fees. The approximate weighted average net servicing fee was
0.90%
and
0.88%
at
June 30, 2014
and
December 31, 2013
, respectively. The weighted average coupon interest rate was
5.67%
and
5.69%
at
June 30, 2014
and
December 31, 2013
, respectively.
The following is an analysis of the activity in the Company’s SBA loan servicing rights and impairment for the
six
months ended
June 30, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
(in thousands)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
SBA loan servicing rights
|
|
|
|
|
|
|
|
Beginning carrying value, net
|
$
|
4,536
|
|
|
$
|
6,233
|
|
|
$
|
4,529
|
|
|
$
|
6,192
|
|
Additions
|
563
|
|
|
613
|
|
|
837
|
|
|
1,102
|
|
Amortization
|
(400
|
)
|
|
(355
|
)
|
|
(576
|
)
|
|
(600
|
)
|
Recovery/(impairment), net
|
66
|
|
|
(58
|
)
|
|
(25
|
)
|
|
(261
|
)
|
Ending carrying value, net
|
$
|
4,765
|
|
|
$
|
6,433
|
|
|
$
|
4,765
|
|
|
$
|
6,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
(in thousands)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
SBA servicing rights impairment
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
2,309
|
|
|
$
|
542
|
|
|
$
|
2,218
|
|
|
$
|
339
|
|
Additions
|
—
|
|
|
403
|
|
|
91
|
|
|
800
|
|
Recoveries
|
(66
|
)
|
|
(345
|
)
|
|
(66
|
)
|
|
(539
|
)
|
Ending balance
|
$
|
2,243
|
|
|
$
|
600
|
|
|
$
|
2,243
|
|
|
$
|
600
|
|
At
June 30, 2014
, the sensitivity of the current fair value of the SBA loan servicing rights to immediate
10%
and
20%
adverse changes in key economic assumptions are included in the accompanying table.
|
|
|
|
|
($ in thousands)
|
June 30,
2014
|
SBA loan servicing rights
|
|
Fair value
|
$
|
4,862
|
|
Composition of loans serviced for others:
|
|
Fixed-rate
|
99.6
|
%
|
Adjustable-rate
|
0.4
|
%
|
Total
|
100.0
|
%
|
Weighted average remaining term (years)
|
20.7
|
|
Prepayment speed
|
7.12
|
%
|
Effect on fair value of a 10% increase
|
$
|
(93
|
)
|
Effect on fair value of a 20% increase
|
(186
|
)
|
Weighted average discount rate
|
13.50
|
%
|
Effect on fair value of a 10% increase
|
$
|
(177
|
)
|
Effect on fair value of a 20% increase
|
(345
|
)
|
The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in value may not be linear. Also in this table, the effect of an adverse variation in a particular assumption on the value of the SBA servicing rights is calculated without changing any other assumption. In reality, changes in one factor may magnify or counteract the effect of the change.
Information about the asset quality of SBA loans managed by Fidelity at
June 30, 2014
is shown in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
Six Months Ended
|
|
Unpaid
Principal
|
|
Delinquent (days)
|
|
June 30, 2014
|
($ in thousands)
|
30 to 89
|
|
90+
|
|
Net Charge-offs
|
SBA serviced for others portfolio
|
$
|
227,647
|
|
|
$
|
2,004
|
|
|
$
|
633
|
|
|
$
|
—
|
|
SBA loans held-for-sale
|
8,053
|
|
|
—
|
|
|
—
|
|
|
—
|
|
SBA loans held-for-investment
|
136,946
|
|
|
239
|
|
|
10,008
|
|
|
207
|
|
Total SBA loans serviced
|
$
|
372,646
|
|
|
$
|
2,243
|
|
|
$
|
10,641
|
|
|
$
|
207
|
|
Indirect Automobile Loans
The Company purchases, on a nonrecourse basis, consumer installment contracts secured by new and used vehicles purchased by consumers from franchised motor vehicle dealers and selected independent dealers. A portion of the indirect automobile loans originated is sold with servicing retained. Certain of these loans are exchanged for cash and servicing rights, which generate servicing assets for the Company. As of
June 30, 2014
, the Company's indirect servicing asset had a balance of $
2.6 million
with no impairment.
During the
six
months ended
June 30, 2014
and
2013
, the Company sold indirect loans with unpaid principal balances of
$313.8 million
and
$210.8 million
, respectively. The Company retained the related loan servicing rights and receives servicing fees. The approximate weighted average net servicing fee was
0.55%
and
0.53%
at
June 30, 2014
and
December 31, 2013
, respectively. The weighted average coupon interest rate was
4.61%
and
4.89%
at
June 30, 2014
and
December 31, 2013
, respectively. Included in sales for the
six
months ended
June 30, 2014
, was one of the Company's largest indirect sale transactions at
$101.2 million
in unpaid principal balance.
The following is an analysis of the activity in the Company’s indirect loan servicing rights for the
six
months ended
June 30, 2014
and
2013
. There was no impairment recorded on indirect loan servicing rights during the
six
months ended
June 30, 2014
or
June 30, 2013
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
(in thousands)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Indirect loan servicing rights
|
|
|
|
|
|
|
|
Beginning carrying value
|
$
|
2,410
|
|
|
$
|
1,133
|
|
|
$
|
1,888
|
|
|
$
|
967
|
|
Additions
|
427
|
|
|
670
|
|
|
1,157
|
|
|
943
|
|
Amortization
|
(266
|
)
|
|
(150
|
)
|
|
(474
|
)
|
|
(257
|
)
|
Ending carrying value
|
$
|
2,571
|
|
|
$
|
1,653
|
|
|
$
|
2,571
|
|
|
$
|
1,653
|
|
Information about the asset quality of indirect automobile loans managed by Fidelity at
June 30, 2014
is shown in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
Six Months Ended
|
|
Unpaid
Principal
|
|
Delinquent (days)
|
|
June 30, 2014
|
($ in thousands)
|
30 to 89
|
|
90+
|
|
Net Charge-offs
|
Indirect serviced for others portfolio
|
$
|
663,668
|
|
|
$
|
822
|
|
|
$
|
664
|
|
|
$
|
558
|
|
Indirect loans held-for-sale
|
140,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Indirect loans held-for-investment
|
997,117
|
|
|
1,363
|
|
|
629
|
|
|
1,368
|
|
Total indirect automobile loans serviced
|
$
|
1,800,785
|
|
|
$
|
2,185
|
|
|
$
|
1,293
|
|
|
$
|
1,926
|
|