Loans and Leases

Summary of Major Loan and Lease Categories



	At March 31, 2019
(Dollars in thousands)	Originated			Acquired		Total
Commercial, financial and agricultural	$	910,493		$	17,145	$	927,638
Real estate-commercial	1,576,250			222,955		1,799,205
Real estate-construction	216,964			—		216,964
Real estate-residential secured for business purpose	304,574			56,348		360,922
Real estate-residential secured for personal purpose	361,488			47,652		409,140
Real estate-home equity secured for personal purpose	172,587			8,311		180,898
Loans to individuals	32,462			141		32,603
Lease financings	140,509			—		140,509
Total loans and leases held for investment, net of deferred income	$	3,715,327		$	352,552	$	4,067,879
Imputed interest on lease financings, included in the above table	$	(15,082	)	$	—	$	(15,082	)
Net deferred costs, included in the above table	4,426			—		4,426
Overdraft deposits included in the above table	208			—		208



	At December 31, 2018
(Dollars in thousands)	Originated			Acquired		Total
Commercial, financial and agricultural	$	913,166		$	24,519	$	937,685
Real estate-commercial	1,507,579			233,625		1,741,204
Real estate-construction	215,513			—		215,513
Real estate-residential secured for business purpose	302,393			60,403		362,796
Real estate-residential secured for personal purpose	338,451			49,959		388,410
Real estate-home equity secured for personal purpose	177,523			8,728		186,251
Loans to individuals	32,617			142		32,759
Lease financings	141,956			—		141,956
Total loans and leases held for investment, net of deferred income	$	3,629,198		$	377,376	$	4,006,574
Imputed interest on lease financings, included in the above table	$	(15,118	)	$	—	$	(15,118	)
Net deferred costs, included in the above table	3,930			—		3,930
Overdraft deposits included in the above table	139			—		139

Overdraft deposits are re-classified as loans and are included in the total loans and leases on the balance sheet.

The carrying amount of acquired loans at March 31, 2019 totaled $352.6 million, including $301.3 million of loans from the Fox Chase acquisition and $51.3 million from the Valley Green Bank acquisition. At March 31, 2019, loans acquired with deteriorated credit quality, or acquired credit impaired loans, totaled $693 thousand representing $62 thousand from the Fox Chase acquisition and $631 thousand from the Valley Green Bank acquisition. Acquired credit impaired loans are accounted for in accordance with Accounting Standards Codification (ASC) Topic 310-30.

The outstanding principal balance and carrying amount for acquired credit impaired loans at March 31, 2019 and December 31, 2018 were as follows:



(Dollars in thousands)	At March 31, 2019		At December 31, 2018
Outstanding principal balance	$	871	$	893
Carrying amount	693		695
Reserve for loan losses	—		—

The following table presents the changes in accretable yield on acquired credit impaired loans:



	Three Months Ended March 31,
(Dollars in thousands)	2019			2018
Beginning of period	$	—		$	11
Reclassification from nonaccretable discount	142			81
Accretable yield amortized to interest income	(142		)	(87		)
End of period	$	—		$	5

Age Analysis of Past Due Loans and Leases

The following presents, by class of loans and leases, an aging of past due loans and leases, loans and leases which are current and the recorded investment in loans and leases 90 days or more past due which are accruing interest at March 31, 2019 and December 31, 2018:



(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or more Past Due		Total Past Due		Current		Acquired Credit Impaired		Total Loans and Leases Held for Investment		Recorded Investment 90 Days or more Past Due and Accruing Interest
At March 31, 2019
Commercial, financial and agricultural	$	1,661	$	210	$	1,952	$	3,823	$	923,815	$	—	$	927,638	$	—
Real estate—commercial real estate and construction:
Commercial real estate	2,133		647		5,518		8,298		1,790,701		206		1,799,205		—
Construction	341		—		106		447		216,517		—		216,964		—
Real estate—residential and home equity:
Residential secured for business purpose	1,521		515		1,138		3,174		357,323		425		360,922		—
Residential secured for personal purpose	3,346		—		1,811		5,157		403,921		62		409,140		325
Home equity secured for personal purpose	304		90		1,389		1,783		179,115		—		180,898		—
Loans to individuals	173		94		54		321		32,282		—		32,603		54
Lease financings	723		438		477		1,638		138,871		—		140,509		257
Total	$	10,202	$	1,994	$	12,445	$	24,641	$	4,042,545	$	693	$	4,067,879	$	636
At December 31, 2018
Commercial, financial and agricultural	$	1,043	$	270	$	2,228	$	3,541	$	934,144	$	—	$	937,685	$	—
Real estate—commercial real estate and construction:
Commercial real estate	5,425		1,538		1,599		8,562		1,732,436		206		1,741,204		—
Construction	2,163		106		—		2,269		213,244		—		215,513		—
Real estate—residential and home equity:
Residential secured for business purpose	2,497		777		1,164		4,438		357,932		426		362,796		—
Residential secured for personal purpose	2,334		—		1,586		3,920		384,427		63		388,410		—
Home equity secured for personal purpose	305		96		1,341		1,742		184,509		—		186,251		—
Loans to individuals	207		29		55		291		32,468		—		32,759		55
Lease financings	2,460		411		307		3,178		138,778		—		141,956		137
Total	$	16,434	$	3,227	$	8,280	$	27,941	$	3,977,938	$	695	$	4,006,574	$	192

Nonperforming Loans and Leases

The following presents, by class of loans and leases, nonperforming loans and leases at March 31, 2019 and December 31, 2018. Nonperforming loans exclude acquired credit impaired loans from Fox Chase and Valley Green.



	At March 31, 2019								At December 31, 2018
(Dollars in thousands)	Nonaccrual Loans and Leases*		Accruing Troubled Debt Restructured Loans and Lease Modifications		Loans and Leases 90 Days or more Past Due and Accruing Interest		Total Nonperforming Loans and Leases		Nonaccrual Loans and Leases*		Accruing Troubled Debt Restructured Loans and Lease Modifications		Loans and Leases 90 Days or more Past Due and Accruing Interest		Total Nonperforming Loans and Leases
Commercial, financial and agricultural	$	2,904	$	270	$	—	$	3,174	$	3,365	$	382	$	—	$	3,747
Real estate—commercial real estate and construction:
Commercial real estate	18,361		—		—		18,361		18,214		—		—		18,214
Construction	106		—		—		106		106		—		—		106
Real estate—residential and home equity:
Residential secured for business purpose	1,232		—		—		1,232		1,318		160		—		1,478
Residential secured for personal purpose	1,636		—		325		1,961		1,587		—		—		1,587
Home equity secured for personal purpose	1,493		—		—		1,493		1,448		—		—		1,448
Loans to individuals	—		—		54		54		—		—		55		55
Lease financings	220		—		257		477		170		—		137		307
Total	$	25,952	$	270	$	636	$	26,858	$	26,208	$	542	$	192	$	26,942

* Includes nonaccrual troubled debt restructured loans of $3.2 million and $1.3 million at March 31, 2019 and December 31, 2018, respectively.

Credit Quality Indicators

The following tables present by class, the recorded investment in loans and leases held for investment by credit quality indicator at March 31, 2019 and December 31, 2018.

The Corporation employs a risk rating system related to the credit quality of commercial loans and residential real estate loans secured for a business purpose. The following is a description of the internal risk ratings and the likelihood of loss related to each risk rating. Loans with a relationship balance of less than $1 million are reviewed on a performance basis, with the primary monitored metrics being delinquency (60 days or more past due). Loans with relationships greater than $1 million are reviewed at least annually. Loan relationships exceeding $15 million or classified as special mention or substandard are reviewed at least quarterly, or more frequently based on management’s discretion.


1.	Pass—Loans considered satisfactory with no indications of deterioration


2.	Special Mention—Potential weakness that deserves management's close attention


3.	Substandard—Well-defined weakness or weaknesses that jeopardize the liquidation of the debt


4.	Doubtful—Collection or liquidation in-full, on the basis of current existing facts, conditions and values, highly questionable and improbable

Commercial Credit Exposure Credit Risk by Internally Assigned Grades

The following table presents classifications for originated loans:



(Dollars in thousands)	Commercial, Financial and Agricultural		Real Estate— Commercial		Real Estate— Construction		Real Estate— Residential Secured for Business Purpose		Total
At March 31, 2019
Grade:
1. Pass	$	871,541	$	1,528,969	$	216,858	$	300,736	$	2,918,104
2. Special Mention	16,680		26,608		—		755		44,043
3. Substandard	22,272		20,673		106		3,083		46,134
4. Doubtful	—		—		—		—		—
Total	$	910,493	$	1,576,250	$	216,964	$	304,574	$	3,008,281
At December 31, 2018
Grade:
1. Pass	$	882,736	$	1,455,234	$	215,407	$	298,356	$	2,851,733
2. Special Mention	23,287		31,791		—		721		55,799
3. Substandard	7,143		20,554		106		3,316		31,119
4. Doubtful	—		—		—		—		—
Total	$	913,166	$	1,507,579	$	215,513	$	302,393	$	2,938,651

The following table presents classifications for acquired loans:



(Dollars in thousands)	Commercial, Financial and Agricultural		Real Estate— Commercial		Real Estate— Construction		Real Estate— Residential Secured for Business Purpose		Total
At March 31, 2019
Grade:
1. Pass	$	17,145	$	210,240	$	—	$	55,598	$	282,983
2. Special Mention	—		—		—		—		—
3. Substandard	—		12,715		—		750		13,465
4. Doubtful	—		—		—		—		—
Total	$	17,145	$	222,955	$	—	$	56,348	$	296,448
December 31, 2018
Grade:
1. Pass	$	24,450	$	220,911	$	—	$	59,567	$	304,928
2. Special Mention	—		—		—		—		—
3. Substandard	69		12,714		—		836		13,619
4. Doubtful	—		—		—		—		—
Total	$	24,519	$	233,625	$	—	$	60,403	$	318,547

Credit Exposure—Real Estate—Residential Secured for Personal Purpose, Real Estate—Home Equity Secured for Personal Purpose, Loans to individuals, Lease Financing Credit Risk Profile by Payment Activity

The Corporation monitors the credit risk profile by payment activity for the following classifications of loans and leases: residential real estate loans secured for a personal purpose, home equity loans secured for a personal purpose, loans to individuals and lease financings. Nonperforming loans and leases are loans and leases past due 90 days or more, loans and leases on nonaccrual of interest and troubled debt restructured loans and lease modifications. Performing loans and leases are reviewed only if the loan becomes 60 days or more past due. Nonperforming loans and leases are reviewed monthly. Performing loans and leases have a nominal to moderate risk of loss.

The following table presents classifications for originated loans:



(Dollars in thousands)	Real Estate— Residential Secured for Personal Purpose		Real Estate— Home Equity Secured for Personal Purpose		Loans to Individuals		Lease Financings		Total
At March 31, 2019
Performing	$	360,486	$	172,143	$	32,408	$	140,032	$	705,069
Nonperforming	1,002		444		54		477		1,977
Total	$	361,488	$	172,587	$	32,462	$	140,509	$	707,046
At December 31, 2018
Performing	$	337,762	$	177,139	$	32,562	$	141,649	$	689,112
Nonperforming	689		384		55		307		1,435
Total	$	338,451	$	177,523	$	32,617	$	141,956	$	690,547

The following table presents classifications for acquired loans:



(Dollars in thousands)	Real Estate— Residential Secured for Personal Purpose		Real Estate— Home Equity Secured for Personal Purpose		Loans to Individuals		Lease Financings		Total
At March 31, 2019
Performing	$	46,693	$	7,262	$	141	$	—	$	54,096
Nonperforming	959		1,049		—		—		2,008
Total	$	47,652	$	8,311	$	141	$	—	$	56,104
At December 31, 2018
Performing	$	49,061	$	7,664	$	142	$	—	$	56,867
Nonperforming	898		1,064		—		—		1,962
Total	$	49,959	$	8,728	$	142	$	—	$	58,829

Reserve for Loan and Lease Losses and Recorded Investment in Loans and Leases

The following presents, by portfolio segment, a summary of the activity in the reserve for loan and lease losses for the three months ended March 31, 2019 and 2018:



(Dollars in thousands)	Commercial, Financial and Agricultural			Real Estate— Commercial and Construction			Real Estate— Residential Secured for Business Purpose			Real Estate— Residential and Home Equity Secured for Personal Purpose			Loans to Individuals			Lease Financings			Unallocated			Total
Three Months Ended March 31, 2019
Reserve for loan and lease losses:
Beginning balance	$	7,983		$	13,903		$	2,236		$	3,199		$	484		$	1,288		$	271		$	29,364
Charge-offs	(468		)	(41		)	—			(11		)	(85		)	(104		)	N/A			(709		)
Recoveries	82			91			4			5			22			58			N/A			262
Provision (recovery of provision)	1,353			1,028			62			185			48			33			(25		)	2,684
Provision for acquired credit impaired loans	—			—			—			1			—			—			—			1
Ending balance	$	8,950		$	14,981		$	2,302		$	3,379		$	469		$	1,275		$	246		$	31,602
Three Months Ended March 31, 2018
Reserve for loan and lease losses:
Beginning balance	$	6,742		$	9,839		$	1,661		$	1,754		$	373		$	1,132		$	54		$	21,555
Charge-offs	(601		)	(40		)	—			—			(92		)	(136		)	N/A			(869		)
Recoveries	226			73			251			57			30			34			N/A			671
Provision (recovery of provision)	575			1,306			(41		)	96			61			49			6			2,052
Provision for acquired credit impaired loans	—			—			—			1			—			—			—			1
Ending balance	$	6,942		$	11,178		$	1,871		$	1,908		$	372		$	1,079		$	60		$	23,410

N/A – Not applicable

The following presents, by portfolio segment, the balance in the reserve for loan and lease losses disaggregated on the basis of impairment method and the recorded investment in loans and leases disaggregated on the basis of impairment method at March 31, 2019 and 2018:



(Dollars in thousands)	Commercial, Financial and Agricultural		Real Estate— Commercial and Construction		Real Estate— Residential Secured for Business Purpose		Real Estate— Residential and Home Equity Secured for Personal Purpose		Loans to Individuals		Lease Financings		Unallocated		Total
At March 31, 2019
Reserve for loan and lease losses:
Ending balance: individually evaluated for impairment	$	243	$	925	$	—	$	335	$	—	$	—	N/A		$	1,503
Ending balance: collectively evaluated for impairment	8,707		14,049		2,302		3,044		469		1,275		246		30,092
Ending balance: acquired non-credit impaired loans evaluated for impairment	—		7		—		—		—		—		—		7
Total ending balance	$	8,950	$	14,981	$	2,302	$	3,379	$	469	$	1,275	$	246	$	31,602
Loans and leases held for investment:
Ending balance: individually evaluated for impairment	$	3,174	$	18,467	$	1,232	$	3,129	$	—	$	—			$	26,002
Ending balance: collectively evaluated for impairment	907,319		1,772,999		303,342		530,946		32,462		140,509				3,687,577
Loans measured at fair value	—		1,748		—		—		—		—				1,748
Acquired non-credit impaired loans	17,145		222,749		55,923		55,901		141		—				351,859
Acquired credit impaired loans	—		206		425		62		—		—				693
Total ending balance	$	927,638	$	2,016,169	$	360,922	$	590,038	$	32,603	$	140,509			$	4,067,879
At March 31, 2018
Reserve for loan and lease losses:
Ending balance: individually evaluated for impairment	$	34	$	684	$	14	$	—	$	—	$	—	N/A		$	732
Ending balance: collectively evaluated for impairment	6,776		10,378		1,815		1,908		372		1,079		60		22,388
Ending balance: acquired non-credit impaired loans evaluated for impairment	132		116		42		—		—		—		—		290
Total ending balance	$	6,942	$	11,178	$	1,871	$	1,908	$	372	$	1,079	$	60	$	23,410
Loans and leases held for investment:
Ending balance: individually evaluated for impairment	$	6,560	$	30,573	$	2,173	$	1,284	$	—	$	1,250			$	41,840
Ending balance: collectively evaluated for impairment	849,690		1,441,709		249,015		449,827		28,112		128,490				3,146,843
Loans measured at fair value	—		1,895		—		—		—		—				1,895
Acquired non-credit impaired loans	51,310		295,420		81,587		69,325		143		—				497,785
Acquired credit impaired loans	378		356		586		205		—		—				1,525
Total ending balance	$	907,938	$	1,769,953	$	333,361	$	520,641	$	28,255	$	129,740			$	3,689,888

N/A – Not applicable

The Corporation does not provide a reserve for loan loss for acquired loans unless additional deterioration of the portfolio is identified over the projections utilized in the initial fair value analysis. After the acquisition measurement period, the present value of any decreases in expected cash flows of acquired credit impaired loans will generally result in an impairment charge recorded as a provision for loan loss.

Impaired Loans (excludes Lease Financings)

The following presents, by class of loans, the recorded investment and unpaid principal balance of impaired loans, the amounts of the impaired loans for which there is not a reserve for credit losses and the amounts for which there is a reserve for credit losses at March 31, 2019 and December 31, 2018. The impaired loans exclude acquired credit impaired loans.



	At March 31, 2019						At December 31, 2018
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Reserve		Recorded Investment		Unpaid Principal Balance		Related Reserve
Impaired loans with no related reserve recorded:
Commercial, financial and agricultural	$	2,581	$	3,195			$	2,776	$	3,361
Real estate—commercial real estate	5,600		6,569				6,578		7,516
Real estate—construction	106		111				106		111
Real estate—residential secured for business purpose	1,232		1,417				1,478		1,660
Real estate—residential secured for personal purpose	911		975				863		911
Real estate—home equity secured for personal purpose	1,418		1,469				1,373		1,404
Total impaired loans with no related reserve recorded	$	11,848	$	13,736			$	13,174	$	14,963
Impaired loans with a reserve recorded:
Commercial, financial and agricultural	$	593	$	939	$	243	$	971	$	1,024	$	413
Real estate—commercial real estate	12,761		13,423		925		11,637		12,162		675
Real estate—residential secured for personal purpose	725		725		260		724		724		252
Real estate—home equity secured for personal purpose	75		75		75		75		75		75
Total impaired loans with a reserve recorded	$	14,154	$	15,162	$	1,503	$	13,407	$	13,985	$	1,415



Total impaired loans:
Commercial, financial and agricultural	$	3,174	$	4,134	$	243	$	3,747	$	4,385	$	413
Real estate—commercial real estate	18,361		19,992		925		18,215		19,678		675
Real estate—construction	106		111		—		106		111		—
Real estate—residential secured for business purpose	1,232		1,417		—		1,478		1,660		—
Real estate—residential secured for personal purpose	1,636		1,700		260		1,587		1,635		252
Real estate—home equity secured for personal purpose	1,493		1,544		75		1,448		1,479		75
Total impaired loans	$	26,002	$	28,898	$	1,503	$	26,581	$	28,948	$	1,415

Impaired loans include nonaccrual loans and accruing troubled debt restructured loans for which it is probable that not all principal and interest payments due will be collectible in accordance with the original contractual terms. These loans are individually measured to determine the amount of potential impairment. The loans are reviewed for impairment based on the fair value of the collateral for collateral dependent loans and for certain loans based on discounted cash flows using the loans’ initial effective interest rates.

The following presents by class of loans, the average recorded investment in impaired loans and an analysis of interest on impaired loans. A loan may remain on accrual status if it is an accruing troubled debt restructured loan or if it is in the process of collection and is either guaranteed or well secured. Therefore, interest income on accruing impaired loans is recognized using the accrual method.



	Three Months Ended March 31, 2019						Three Months Ended March 31, 2018
(Dollars in thousands)	Average Recorded Investment		Interest Income Recognized*		Additional Interest Income That Would Have Been Recognized Under Original Terms		Average Recorded Investment		Interest Income Recognized*		Additional Interest Income That Would Have Been Recognized Under Original Terms
Commercial, financial and agricultural	$	3,650	$	5	$	54	$	7,703	$	40	$	77
Real estate—commercial real estate	18,245		3		254		19,916		172		287
Real estate—construction	106		—		1		183		—		2
Real estate—residential secured for business purpose	1,277		—		20		2,217		5		24
Real estate—residential secured for personal purpose	1,619		—		25		544		1		11
Real estate—home equity secured for personal purpose	1,426		—		23		549		—		8
Total	$	26,323	$	8	$	377	$	31,112	$	218	$	409


*	Includes interest income recognized on a cash basis for nonaccrual loans of $3 thousand and $6 thousand for the three months ended March 31, 2019 and 2018, respectively, and interest income recognized on the accrual method for accruing impaired loans of $5 thousand and $212 thousand for the three months ended March 31, 2019 and 2018, respectively.

Impaired Leases

The Corporation had no impaired leases at March 31, 2019 and December 31, 2018.

Troubled Debt Restructured Loans

The following presents, by class of loans, information regarding accruing and nonaccrual loans that were restructured:



	Three Months Ended March 31, 2019							Three Months Ended March 31, 2018
(Dollars in thousands)	Number of Loans	Pre- Restructuring Outstanding Recorded Investment		Post- Restructuring Outstanding Recorded Investment		Related Reserve		Number of Loans	Pre- Restructuring Outstanding Recorded Investment		Post- Restructuring Outstanding Recorded Investment		Related Reserve
Accruing Troubled Debt Restructured Loans:
Total	—	$	—	$	—	$	—	—	$	—	$	—	$	—
Nonaccrual Troubled Debt Restructured Loans:
Commercial, financial and agricultural*	2	$	956	$	956	$	—	—	$	—	$	—	$	—
Real estate—commercial real estate*	1	1,313		1,313		—		—	—		—		—
Total	3	$	2,269	$	2,269	$	—	—	$	—	$	—	$	—

* The three loans in the above table were modified via the execution of a forbearance agreement. These loans relate to one borrower and were on nonaccrual status at the time of modification.

The Corporation grants concessions to existing borrowers primarily related to extensions of interest-only payment periods and an occasional payment modification. These modifications typically are for up to one year. The goal when restructuring a credit is to establish a reasonable period of time to provide cash flow relief to customers experiencing cash flow difficulties. Accruing troubled debt restructured loans are primarily comprised of loans on which interest is being accrued under the restructured terms, and the loans are current or less than ninety days past due.

The following presents, by class of loans, information regarding the types of concessions granted on accruing and nonaccrual loans that were restructured during the three months ended March 31, 2019 and 2018.



	Amortization Period Extension			Total Concessions Granted
(Dollars in thousands)	No. of Loans	Amount		No. of Loans	Amount
Three Months Ended March 31, 2019
Accruing Troubled Debt Restructured Loans:
Total	—	$	—	—	$	—
Nonaccrual Troubled Debt Restructured Loans:
Commercial, financial and agricultural	2	$	956	2	$	956
Real estate—commercial real estate	1	1,313		1	1,313
Total	3	$	2,269	3	$	2,269
Three Months Ended March 31, 2018
Accruing Troubled Debt Restructured Loans:
Total	—	$	—	—	$	—
Nonaccrual Troubled Debt Restructured Loans:
Total	—	$	—	—	$	—

The following presents, by class of loans, information regarding accruing and nonaccrual troubled debt restructured loans, for which there were payment defaults within twelve months of the restructuring date:



	Three Months Ended March 31,
	2019			2018
(Dollars in thousands)	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
Accruing Troubled Debt Restructured Loans:
Total	—	$	—	—	$	—
Nonaccrual Troubled Debt Restructured Loans:
Commercial, financial and agricultural	—	$	—	1	$	953
Total	—	$	—	1	$	953

The following presents, by class of loans, information regarding consumer mortgages collateralized by residential real estate property that are in the process of foreclosure at March 31, 2019 and December 31, 2018:



(Dollars in thousands)	At March 31, 2019		At December 31, 2018
Real estate-residential secured for personal purpose	$	563	$	563
Real estate-home equity secured for personal purpose	1,134		1,134
Total	$	1,697	$	1,697

The Corporation held no foreclosed residential real estate property at March 31, 2019 and December 31, 2018.

Lease Financings

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)", and subsequent related updates, to revise the accounting for leases. The Corporation adopted this guidance effective January 1, 2019 on a modified retrospective basis at January 1, 2019. Additionally, the Corporation early adopted (ASU) No. 2019-01, "Codification Improvements" , as of January 1, 2019, which serves as an an update to (ASU) No. 2016-02, and is effective for the first interim period within annual periods beginning after December 15, 2019, or January 1, 2020, for the Corporation. See Note 1, "Summary of Significant Accounting Policies - Accounting Pronouncements Adopted in 2019" for additional information. Lessor accounting was largely unchanged as a result of the standard. Additional disclosures required under the standard are included in the following section.

The Corporation, through Univest Capital, Inc., an equipment financing business and a subsidiary of the Bank, provides lease financing to customers primarily in the form of sales-type leases with fixed payment terms and $1.00 dollar buyout clauses. A minor number of contracts are classified as either direct financing leases or operating leases. The fair value of the identified assets within sales-type and direct financing leases are equal to the carrying amount such that there is no profit or loss recorded or deferred upon lease commencement. All receivables related to the equipment financing business are recorded within lease financings as of March 31, 2019.

The primary risks that are involved with lease financing receivables are credit underwriting and borrower industry concentrations. The Corporation has strict underwriting, review and monitoring procedures in place to mitigate this risk. Risk also lies in the residual value of the underlying equipment. Residual values are subject to judgments as to the value of the underlying equipment that can be affected by changes in economic and market conditions and the financial viability of the residual guarantors and insurers. To the extent not guaranteed or assumed by a third party, or otherwise insured against, the Corporation bears the risk of ownership of the leased assets. This includes the risk that the actual value of the leased assets at the end of the lease term will be less than the residual value. The Corporation greatly reduces this risk primarily by using $1.00 buyout leases, in which the entire cost of the leased equipment is included in the contractual payments, leaving no residual payment at the end of the lease term for the majority of its lease portfolio.

Lease financings are stated at net investment amount, consisting of the present value of lease payments and unguaranteed residual value, plus initial direct costs. Initial direct costs, comprised of commissions paid that would not have been incurred if the lease had not been obtained, are deferred and amortized over the life of the contract, and are presented within net interest income on leases.

The following presents the schedule of minimum lease payments receivable:



(Dollars in thousands)	At March 31, 2019			At December 31, 2018
2019 (excluding the three months ended March 31, 2019)	$	42,206		$	55,201
2020	46,128			43,355
2021	32,719			29,678
2022	20,447			17,687
2023	8,895			6,674
Thereafter	2,647			1,975
Total future minimum lease payments receivable	153,042			154,570
Plus: Unguaranteed residual	672			600
Plus: Initial direct costs	1,877			1,904
Less: Imputed interest	(15,082		)	(15,118		)
Lease financings	$	140,509		$	141,956

Included within the "2019 (excluding the three months ended March 31, 2019)" line item above as of March 31, 2019 and December 31, 2018 are $7 thousand and $0 thousand, respectively, of receivables related to an operating lease contract.

For the three months ended March 31, 2019 and 2018, the Corporation recognized $2.0 million and $1.8 million, respectively, of interest income on lease financings within total interest and fees on loans and leases on the condensed consolidated statements of income. The Corporation did not record any profit or loss upon commencement date of its leases or any lease income related to variable lease payments.