(State of incorporation) | (I.R.S. Employer Identification No.) | ||
(Address of principal executive offices) | (City) | (State) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | |
$.01 Par Value |
☒ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | Smaller reporting company | |
Emerging growth company |
Page | ||
Part I - Financial Information | ||
Item 1. | Financial Statements (Unaudited) | |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(dollars in thousands, except per share amounts) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Interest Income | |||||||||||||||
Interest and Fees on Loans and Leases | $ | $ | $ | $ | |||||||||||
Income on Investment Securities | |||||||||||||||
Available-for-Sale | |||||||||||||||
Held-to-Maturity | |||||||||||||||
Deposits | ( | ) | |||||||||||||
Funds Sold | |||||||||||||||
Other | |||||||||||||||
Total Interest Income | |||||||||||||||
Interest Expense | |||||||||||||||
Deposits | |||||||||||||||
Securities Sold Under Agreements to Repurchase | |||||||||||||||
Funds Purchased | |||||||||||||||
Short-Term Borrowings | |||||||||||||||
Other Debt | |||||||||||||||
Total Interest Expense | |||||||||||||||
Net Interest Income | |||||||||||||||
Provision for Credit Losses | |||||||||||||||
Net Interest Income After Provision for Credit Losses | |||||||||||||||
Noninterest Income | |||||||||||||||
Trust and Asset Management | |||||||||||||||
Mortgage Banking | |||||||||||||||
Service Charges on Deposit Accounts | |||||||||||||||
Fees, Exchange, and Other Service Charges | |||||||||||||||
Investment Securities Gains (Losses), Net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Annuity and Insurance | |||||||||||||||
Bank-Owned Life Insurance | |||||||||||||||
Other | |||||||||||||||
Total Noninterest Income | |||||||||||||||
Noninterest Expense | |||||||||||||||
Salaries and Benefits | |||||||||||||||
Net Occupancy | |||||||||||||||
Net Equipment | |||||||||||||||
Data Processing | |||||||||||||||
Professional Fees | |||||||||||||||
FDIC Insurance | |||||||||||||||
Other | |||||||||||||||
Total Noninterest Expense | |||||||||||||||
Income Before Provision for Income Taxes | |||||||||||||||
Provision for Income Taxes | |||||||||||||||
Net Income | $ | $ | $ | $ | |||||||||||
Basic Earnings Per Share | $ | $ | $ | $ | |||||||||||
Diluted Earnings Per Share | $ | $ | $ | $ | |||||||||||
Dividends Declared Per Share | $ | $ | $ | $ | |||||||||||
Basic Weighted Average Shares | |||||||||||||||
Diluted Weighted Average Shares |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net Income | $ | $ | $ | $ | |||||||||||
Other Comprehensive Income (Loss), Net of Tax: | |||||||||||||||
Net Unrealized Gains (Losses) on Investment Securities | ( | ) | ( | ) | |||||||||||
Defined Benefit Plans | |||||||||||||||
Total Other Comprehensive Income (Loss) | ( | ) | ( | ) | |||||||||||
Comprehensive Income | $ | $ | $ | $ |
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Assets | |||||||
Interest-Bearing Deposits in Other Banks | $ | $ | |||||
Funds Sold | |||||||
Investment Securities | |||||||
Available-for-Sale | |||||||
Held-to-Maturity (Fair Value of $2,973,229 and $3,413,994) | |||||||
Loans Held for Sale | |||||||
Loans and Leases | |||||||
Allowance for Loan and Lease Losses | ( | ) | ( | ) | |||
Net Loans and Leases | |||||||
Total Earning Assets | |||||||
Cash and Due From Banks | |||||||
Premises and Equipment, Net | |||||||
Operating Lease Right-of-Use Assets | |||||||
Accrued Interest Receivable | |||||||
Foreclosed Real Estate | |||||||
Mortgage Servicing Rights | |||||||
Goodwill | |||||||
Bank-Owned Life Insurance | |||||||
Other Assets | |||||||
Total Assets | $ | $ | |||||
Liabilities | |||||||
Deposits | |||||||
Noninterest-Bearing Demand | $ | $ | |||||
Interest-Bearing Demand | |||||||
Savings | |||||||
Time | |||||||
Total Deposits | |||||||
Short-Term Borrowings | |||||||
Securities Sold Under Agreements to Repurchase | |||||||
Other Debt | |||||||
Operating Lease Liabilities | |||||||
Retirement Benefits Payable | |||||||
Accrued Interest Payable | |||||||
Taxes Payable and Deferred Taxes | |||||||
Other Liabilities | |||||||
Total Liabilities | |||||||
Shareholders’ Equity | |||||||
Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: June 30, 2019 - 58,175,367 / 40,687,719 and December 31, 2018 - 58,063,689 / 41,499,898) | |||||||
Capital Surplus | |||||||
Accumulated Other Comprehensive Loss | ( | ) | ( | ) | |||
Retained Earnings | |||||||
Treasury Stock, at Cost (Shares: June 30, 2019 - 17,487,648 and December 31, 2018 - 16,563,791) | ( | ) | ( | ) | |||
Total Shareholders’ Equity | |||||||
Total Liabilities and Shareholders’ Equity | $ | $ |
(dollars in thousands) | Common Shares Outstanding | Common Stock | Capital Surplus | Accum. Other Compre- hensive Income (Loss) | Retained Earnings | Treasury Stock | Total | |||||||||||||||||||
Balance as of December 31, 2018 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||
Net Income | — | — | — | — | — | |||||||||||||||||||||
Other Comprehensive Income | — | — | — | — | — | |||||||||||||||||||||
Share-Based Compensation | — | — | — | — | — | |||||||||||||||||||||
Common Stock Issued under Purchase and Equity Compensation Plans | — | ( | ) | |||||||||||||||||||||||
Common Stock Repurchased | ( | ) | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||
Cash Dividends Declared ($0.62 per share) | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Balance as of March 31, 2019 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||
Net Income | — | — | — | — | — | |||||||||||||||||||||
Other Comprehensive Income | — | — | — | — | — | |||||||||||||||||||||
Share-Based Compensation | — | — | — | — | — | |||||||||||||||||||||
Common Stock Issued under Purchase and Equity Compensation Plans | — | |||||||||||||||||||||||||
Common Stock Repurchased | ( | ) | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||
Cash Dividends Declared ($0.65 per share) | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Balance as of June 30, 2019 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||
Balance as of December 31, 2017 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||
Net Income | — | — | — | — | — | |||||||||||||||||||||
Other Comprehensive Loss | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||
Reclassification of the Income Tax Effects of the Tax Cuts and Jobs Act from AOCI | — | — | — | ( | ) | — | ||||||||||||||||||||
Share-Based Compensation | — | — | — | — | — | |||||||||||||||||||||
Common Stock Issued under Purchase and Equity Compensation Plans | — | |||||||||||||||||||||||||
Common Stock Repurchased | ( | ) | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||
Cash Dividends Declared ($0.52 per share) | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Balance as of March 31, 2018 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||
Net Income | — | — | — | — | — | |||||||||||||||||||||
Other Comprehensive Loss | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||
Reclassification of the Income Tax Effects of the Tax Cuts and Jobs Act from AOCI | — | — | — | — | ||||||||||||||||||||||
Share-Based Compensation | — | — | — | — | — | |||||||||||||||||||||
Common Stock Issued under Purchase and Equity Compensation Plans | — | ( | ) | |||||||||||||||||||||||
Common Stock Repurchased | ( | ) | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||
Cash Dividends Declared ($0.60 per share) | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Balance as of June 30, 2018 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ |
Six Months Ended | |||||||
June 30, | |||||||
(dollars in thousands) | 2019 | 2018 | |||||
Operating Activities | |||||||
Net Income | $ | $ | |||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | |||||||
Provision for Credit Losses | |||||||
Depreciation and Amortization | |||||||
Amortization of Deferred Loan and Lease Fees | ( | ) | ( | ) | |||
Amortization and Accretion of Premiums/Discounts on Investment Securities, Net | |||||||
Amortization of Operating Lease Right-of-Use Assets | |||||||
Share-Based Compensation | |||||||
Benefit Plan Contributions | ( | ) | ( | ) | |||
Deferred Income Taxes | ( | ) | ( | ) | |||
Gains on Sale of Premises and Equipment | ( | ) | |||||
Net Gains on Sales of Loans and Leases | ( | ) | ( | ) | |||
Net Losses (Gains) on Sales of Investment Securities | |||||||
Proceeds from Sales of Loans Held for Sale | |||||||
Originations of Loans Held for Sale | ( | ) | ( | ) | |||
Net Tax Benefits from Share-Based Compensation | |||||||
Net Change in Other Assets and Other Liabilities | ( | ) | ( | ) | |||
Net Cash Provided by Operating Activities | |||||||
Investing Activities | |||||||
Investment Securities Available-for-Sale: | |||||||
Proceeds from Sales, Prepayments and Maturities | |||||||
Purchases | ( | ) | ( | ) | |||
Investment Securities Held-to-Maturity: | |||||||
Proceeds from Prepayments and Maturities | |||||||
Purchases | ( | ) | ( | ) | |||
Net Change in Loans and Leases | ( | ) | ( | ) | |||
Purchases of Premises and Equipment | ( | ) | ( | ) | |||
Proceeds from Sale of Premises and Equipment | |||||||
Net Cash Provided by (Used in) Investing Activities | ( | ) | |||||
Financing Activities | |||||||
Net Change in Deposits | |||||||
Net Change in Short-Term Borrowings | ( | ) | ( | ) | |||
Repayments of Long-Term Debt | ( | ) | ( | ) | |||
Proceeds from Issuance of Common Stock | |||||||
Repurchase of Common Stock | ( | ) | ( | ) | |||
Cash Dividends Paid | ( | ) | ( | ) | |||
Net Cash Provided by (Used in) Financing Activities | ( | ) | |||||
Net Change in Cash and Cash Equivalents | ( | ) | |||||
Cash and Cash Equivalents at Beginning of Period | |||||||
Cash and Cash Equivalents at End of Period | $ | $ | |||||
Supplemental Information | |||||||
Cash Paid for Interest | $ | $ | |||||
Cash Paid for Income Taxes | |||||||
Non-Cash Investing and Financing Activities: | |||||||
Initial Recognition of Operating Lease Right-of-Use Assets | |||||||
Initial Recognition of Operating Lease Liabilities | |||||||
Transfer from Investment Securities Held-To-Maturity to Investment Securities Available-For-Sale | |||||||
Transfer from Loans to Foreclosed Real Estate |
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Interest-Bearing Deposits in Other Banks | $ | $ | |||||
Funds Sold | |||||||
Cash and Due From Banks | |||||||
Total Cash and Cash Equivalents | $ | $ | |||||
(dollars in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
June 30, 2019 | |||||||||||||||
Available-for-Sale: | |||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | $ | $ | ( | ) | $ | |||||||||
Debt Securities Issued by States and Political Subdivisions | ( | ) | |||||||||||||
Debt Securities Issued by U.S. Government-Sponsored Enterprises | |||||||||||||||
Debt Securities Issued by Corporations | ( | ) | |||||||||||||
Mortgage-Backed Securities: | |||||||||||||||
Residential - Government Agencies | ( | ) | |||||||||||||
Residential - U.S. Government-Sponsored Enterprises | ( | ) | |||||||||||||
Commercial - Government Agencies | ( | ) | |||||||||||||
Total Mortgage-Backed Securities | ( | ) | |||||||||||||
Total | $ | $ | $ | ( | ) | $ | |||||||||
Held-to-Maturity: | |||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | $ | $ | ( | ) | $ | |||||||||
Debt Securities Issued by States and Political Subdivisions | |||||||||||||||
Debt Securities Issued by Corporations | ( | ) | |||||||||||||
Mortgage-Backed Securities: | |||||||||||||||
Residential - Government Agencies | ( | ) | |||||||||||||
Residential - U.S. Government-Sponsored Enterprises | ( | ) | |||||||||||||
Commercial - Government Agencies | ( | ) | |||||||||||||
Total Mortgage-Backed Securities | ( | ) | |||||||||||||
Total | $ | $ | $ | ( | ) | $ | |||||||||
December 31, 2018 | |||||||||||||||
Available-for-Sale: | |||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | $ | $ | ( | ) | $ | |||||||||
Debt Securities Issued by States and Political Subdivisions | ( | ) | |||||||||||||
Debt Securities Issued by U.S. Government-Sponsored Enterprises | 56 | ||||||||||||||
Debt Securities Issued by Corporations | ( | ) | |||||||||||||
Mortgage-Backed Securities: | |||||||||||||||
Residential - Government Agencies | ( | ) | |||||||||||||
Residential - U.S. Government-Sponsored Enterprises | ( | ) | |||||||||||||
Commercial - Government Agencies | ( | ) | |||||||||||||
Total Mortgage-Backed Securities | ( | ) | |||||||||||||
Total | $ | $ | $ | ( | ) | $ | |||||||||
Held-to-Maturity: | |||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | $ | $ | ( | ) | $ | |||||||||
Debt Securities Issued by States and Political Subdivisions | |||||||||||||||
Debt Securities Issued by Corporations | ( | ) | |||||||||||||
Mortgage-Backed Securities: | |||||||||||||||
Residential - Government Agencies | ( | ) | |||||||||||||
Residential - U.S. Government-Sponsored Enterprises | ( | ) | |||||||||||||
Commercial - Government Agencies | ( | ) | |||||||||||||
Total Mortgage-Backed Securities | ( | ) | |||||||||||||
Total | $ | $ | $ | ( | ) | $ |
(dollars in thousands) | Amortized Cost | Fair Value | |||||
Available-for-Sale: | |||||||
Due in One Year or Less | $ | $ | |||||
Due After One Year Through Five Years | |||||||
Due After Five Years Through Ten Years | |||||||
Due After Ten Years | |||||||
Debt Securities Issued by Government Agencies | |||||||
Mortgage-Backed Securities: | |||||||
Residential - Government Agencies | |||||||
Residential - U.S. Government-Sponsored Enterprises | |||||||
Commercial - Government Agencies | |||||||
Total Mortgage-Backed Securities | |||||||
Total | $ | $ | |||||
Held-to-Maturity: | |||||||
Due in One Year or Less | $ | $ | |||||
Due After One Year Through Five Years | |||||||
Due After Five Years Through Ten Years | |||||||
Due After Ten Years | |||||||
Mortgage-Backed Securities: | |||||||
Residential - Government Agencies | |||||||
Residential - U.S. Government-Sponsored Enterprises | |||||||
Commercial - Government Agencies | |||||||
Total Mortgage-Backed Securities | |||||||
Total | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Gross Gains on Sales of Investment Securities | $ | $ | $ | $ | |||||||||||
Gross Losses on Sales of Investment Securities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net Gains (Losses) on Sales of Investment Securities | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Less Than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||
(dollars in thousands) | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||
June 30, 2019 | |||||||||||||||||||||||
Available-for-Sale: | |||||||||||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
Debt Securities Issued by States and Political Subdivisions | ( | ) | ( | ) | |||||||||||||||||||
Debt Securities Issued by Corporations | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Mortgage-Backed Securities: | |||||||||||||||||||||||
Residential - Government Agencies | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Residential - U.S. Government-Sponsored Enterprises | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Commercial - Government Agencies | ( | ) | ( | ) | |||||||||||||||||||
Total Mortgage-Backed Securities | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
Held-to-Maturity: | |||||||||||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||
Debt Securities Issued by Corporations | ( | ) | ( | ) | |||||||||||||||||||
Mortgage-Backed Securities: | |||||||||||||||||||||||
Residential - Government Agencies | ( | ) | ( | ) | |||||||||||||||||||
Residential - U.S. Government-Sponsored Enterprises | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Commercial - Government Agencies | ( | ) | ( | ) | |||||||||||||||||||
Total Mortgage-Backed Securities | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
December 31, 2018 | |||||||||||||||||||||||
Available-for-Sale: | |||||||||||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
Debt Securities Issued by States and Political Subdivisions | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Debt Securities Issued by Corporations | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Mortgage-Backed Securities: | |||||||||||||||||||||||
Residential - Government Agencies | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Residential - U.S. Government-Sponsored Enterprises | ( | ) | ( | ) | |||||||||||||||||||
Commercial - Government Agencies | ( | ) | ( | ) | |||||||||||||||||||
Total Mortgage-Backed Securities | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
Held-to-Maturity: | |||||||||||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
Debt Securities Issued by Corporations | ( | ) | ( | ) | |||||||||||||||||||
Mortgage-Backed Securities: | |||||||||||||||||||||||
Residential - Government Agencies | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Residential - U.S. Government-Sponsored Enterprises | ( | ) | ( | ) | |||||||||||||||||||
Commercial - Government Agencies | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Total Mortgage-Backed Securities | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Taxable | $ | $ | $ | $ | |||||||||||
Non-Taxable | |||||||||||||||
Total Interest Income from Investment Securities | $ | $ | $ | $ |
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Federal Home Loan Bank Stock | $ | $ | |||||
Federal Reserve Bank Stock | |||||||
Total | $ | $ |
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Commercial | |||||||
Commercial and Industrial | $ | $ | |||||
Commercial Mortgage | |||||||
Construction | |||||||
Lease Financing | |||||||
Total Commercial | |||||||
Consumer | |||||||
Residential Mortgage | |||||||
Home Equity | |||||||
Automobile | |||||||
Other 1 | |||||||
Total Consumer | |||||||
Total Loans and Leases | $ | $ |
1 | Comprised of other revolving credit, installment, and lease financing. |
(dollars in thousands) | Commercial | Consumer | Total | ||||||||
Three Months Ended June 30, 2019 | |||||||||||
Allowance for Loan and Lease Losses: | |||||||||||
Balance at Beginning of Period | $ | $ | $ | ||||||||
Loans and Leases Charged-Off | ( | ) | ( | ) | ( | ) | |||||
Recoveries on Loans and Leases Previously Charged-Off | |||||||||||
Net Loans and Leases Recovered (Charged-Off) | ( | ) | ( | ) | |||||||
Provision for Credit Losses | |||||||||||
Balance at End of Period | $ | $ | $ | ||||||||
Six Months Ended June 30, 2019 | |||||||||||
Allowance for Loan and Lease Losses: | |||||||||||
Balance at Beginning of Period | $ | $ | $ | ||||||||
Loans and Leases Charged-Off | ( | ) | ( | ) | ( | ) | |||||
Recoveries on Loans and Leases Previously Charged-Off | |||||||||||
Net Loans and Leases Recovered (Charged-Off) | ( | ) | ( | ) | ( | ) | |||||
Provision for Credit Losses | |||||||||||
Balance at End of Period | $ | $ | $ | ||||||||
As of June 30, 2019 | |||||||||||
Allowance for Loan and Lease Losses: | |||||||||||
Individually Evaluated for Impairment | $ | $ | $ | ||||||||
Collectively Evaluated for Impairment | |||||||||||
Total | $ | $ | $ | ||||||||
Recorded Investment in Loans and Leases: | |||||||||||
Individually Evaluated for Impairment | $ | $ | $ | ||||||||
Collectively Evaluated for Impairment | |||||||||||
Total | $ | $ | $ | ||||||||
Three Months Ended June 30, 2018 | |||||||||||
Allowance for Loan and Lease Losses: | |||||||||||
Balance at Beginning of Period | $ | $ | $ | ||||||||
Loans and Leases Charged-Off | ( | ) | ( | ) | ( | ) | |||||
Recoveries on Loans and Leases Previously Charged-Off | |||||||||||
Net Loans and Leases Recovered (Charged-Off) | ( | ) | ( | ) | ( | ) | |||||
Provision for Credit Losses | ( | ) | |||||||||
Balance at End of Period | $ | $ | $ | ||||||||
Six Months Ended June 30, 2018 | |||||||||||
Allowance for Loan and Lease Losses: | |||||||||||
Balance at Beginning of Period | $ | $ | $ | ||||||||
Loans and Leases Charged-Off | ( | ) | ( | ) | ( | ) | |||||
Recoveries on Loans and Leases Previously Charged-Off | |||||||||||
Net Loans and Leases Recovered (Charged-Off) | ( | ) | ( | ) | |||||||
Provision for Credit Losses | ( | ) | |||||||||
Balance at End of Period | $ | $ | $ | ||||||||
As of June 30, 2018 | |||||||||||
Allowance for Loan and Lease Losses: | |||||||||||
Individually Evaluated for Impairment | $ | $ | $ | ||||||||
Collectively Evaluated for Impairment | |||||||||||
Total | $ | $ | $ | ||||||||
Recorded Investment in Loans and Leases: | |||||||||||
Individually Evaluated for Impairment | $ | $ | $ | ||||||||
Collectively Evaluated for Impairment | |||||||||||
Total | $ | $ | $ |
Pass: | Loans and leases in all classes within the commercial and consumer portfolio segments that are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan or lease agreement. Management believes that there is a low likelihood of loss related to those loans and leases that are considered Pass. |
Special Mention: | Loans and leases that have potential weaknesses that deserve management’s close attention. If not addressed, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease. Management believes that there is a moderate likelihood of some loss related to those loans and leases that are considered Special Mention. |
Classified: | Loans and leases in the classes within the commercial portfolio segment that are inadequately protected by the sound worth and paying capacity of the borrower or of the collateral pledged, if any. Classified loans and leases are also those in the classes within the consumer portfolio segment that are past due |
June 30, 2019 | |||||||||||||||||||
(dollars in thousands) | Commercial and Industrial | Commercial Mortgage | Construction | Lease Financing | Total Commercial | ||||||||||||||
Pass | $ | $ | $ | $ | $ | ||||||||||||||
Special Mention | |||||||||||||||||||
Classified | |||||||||||||||||||
Total | $ | $ | $ | $ | $ | ||||||||||||||
(dollars in thousands) | Residential Mortgage | Home Equity | Automobile | Other 1 | Total Consumer | ||||||||||||||
Pass | $ | $ | $ | $ | $ | ||||||||||||||
Classified | |||||||||||||||||||
Total | $ | $ | $ | $ | $ | ||||||||||||||
Total Recorded Investment in Loans and Leases | $ |
December 31, 2018 | |||||||||||||||||||
(dollars in thousands) | Commercial and Industrial | Commercial Mortgage | Construction | Lease Financing | Total Commercial | ||||||||||||||
Pass | $ | $ | $ | $ | $ | ||||||||||||||
Special Mention | |||||||||||||||||||
Classified | |||||||||||||||||||
Total | $ | $ | $ | $ | $ | ||||||||||||||
(dollars in thousands) | Residential Mortgage | Home Equity | Automobile | Other 1 | Total Consumer | ||||||||||||||
Pass | $ | $ | $ | $ | $ | ||||||||||||||
Classified | |||||||||||||||||||
Total | $ | $ | $ | $ | $ | ||||||||||||||
Total Recorded Investment in Loans and Leases | $ |
1 | Comprised of other revolving credit, installment, and lease financing. |
(dollars in thousands) | 30 - 59 Days Past Due | 60 - 89 Days Past Due | Past Due 90 Days or More | Non-Accrual | Total Past Due and Non-Accrual | Current | Total Loans and Leases | Non-Accrual Loans and Leases that are Current 2 | |||||||||||||||||||||||
As of June 30, 2019 | |||||||||||||||||||||||||||||||
Commercial | |||||||||||||||||||||||||||||||
Commercial and Industrial | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Commercial Mortgage | |||||||||||||||||||||||||||||||
Construction | |||||||||||||||||||||||||||||||
Lease Financing | |||||||||||||||||||||||||||||||
Total Commercial | |||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||
Residential Mortgage | |||||||||||||||||||||||||||||||
Home Equity | |||||||||||||||||||||||||||||||
Automobile | |||||||||||||||||||||||||||||||
Other 1 | |||||||||||||||||||||||||||||||
Total Consumer | |||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
As of December 31, 2018 | |||||||||||||||||||||||||||||||
Commercial | |||||||||||||||||||||||||||||||
Commercial and Industrial | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Commercial Mortgage | |||||||||||||||||||||||||||||||
Construction | |||||||||||||||||||||||||||||||
Lease Financing | |||||||||||||||||||||||||||||||
Total Commercial | |||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||
Residential Mortgage | |||||||||||||||||||||||||||||||
Home Equity | |||||||||||||||||||||||||||||||
Automobile | |||||||||||||||||||||||||||||||
Other 1 | |||||||||||||||||||||||||||||||
Total Consumer | |||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ |
1 | Comprised of other revolving credit, installment, and lease financing. |
2 | Represents non-accrual loans that are not past due |
(dollars in thousands) | Recorded Investment | Unpaid Principal Balance | Related Allowance for Loan Losses | ||||||||
June 30, 2019 | |||||||||||
Impaired Loans with No Related Allowance Recorded: | |||||||||||
Commercial | |||||||||||
Commercial and Industrial | $ | $ | $ | — | |||||||
Commercial Mortgage | — | ||||||||||
Construction | — | ||||||||||
Total Commercial | — | ||||||||||
Total Impaired Loans with No Related Allowance Recorded | $ | $ | $ | — | |||||||
Impaired Loans with an Allowance Recorded: | |||||||||||
Commercial | |||||||||||
Commercial and Industrial | $ | $ | $ | ||||||||
Commercial Mortgage | |||||||||||
Total Commercial | |||||||||||
Consumer | |||||||||||
Residential Mortgage | |||||||||||
Home Equity | |||||||||||
Automobile | |||||||||||
Other 1 | |||||||||||
Total Consumer | |||||||||||
Total Impaired Loans with an Allowance Recorded | $ | $ | $ | ||||||||
Impaired Loans: | |||||||||||
Commercial | $ | $ | $ | ||||||||
Consumer | |||||||||||
Total Impaired Loans | $ | $ | $ | ||||||||
December 31, 2018 | |||||||||||
Impaired Loans with No Related Allowance Recorded: | |||||||||||
Commercial | |||||||||||
Commercial and Industrial | $ | $ | $ | — | |||||||
Commercial Mortgage | — | ||||||||||
Construction | — | ||||||||||
Total Commercial | — | ||||||||||
Total Impaired Loans with No Related Allowance Recorded | $ | $ | $ | — | |||||||
Impaired Loans with an Allowance Recorded: | |||||||||||
Commercial | |||||||||||
Commercial and Industrial | $ | $ | $ | ||||||||
Commercial Mortgage | |||||||||||
Total Commercial | |||||||||||
Consumer | |||||||||||
Residential Mortgage | |||||||||||
Home Equity | |||||||||||
Automobile | |||||||||||
Other 1 | |||||||||||
Total Consumer | |||||||||||
Total Impaired Loans with an Allowance Recorded | $ | $ | $ | ||||||||
Impaired Loans: | |||||||||||
Commercial | $ | $ | $ | ||||||||
Consumer | |||||||||||
Total Impaired Loans | $ | $ | $ |
Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | ||||||||||||||
(dollars in thousands) | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||
Impaired Loans with No Related Allowance Recorded: | |||||||||||||||
Commercial | |||||||||||||||
Commercial and Industrial | $ | $ | $ | $ | |||||||||||
Commercial Mortgage | |||||||||||||||
Construction | |||||||||||||||
Total Commercial | |||||||||||||||
Total Impaired Loans with No Related Allowance Recorded | $ | $ | $ | $ | |||||||||||
Impaired Loans with an Allowance Recorded: | |||||||||||||||
Commercial | |||||||||||||||
Commercial and Industrial | $ | $ | $ | $ | |||||||||||
Commercial Mortgage | |||||||||||||||
Total Commercial | |||||||||||||||
Consumer | |||||||||||||||
Residential Mortgage | |||||||||||||||
Home Equity | |||||||||||||||
Automobile | |||||||||||||||
Other 1 | |||||||||||||||
Total Consumer | |||||||||||||||
Total Impaired Loans with an Allowance Recorded | $ | $ | $ | $ | |||||||||||
Impaired Loans: | |||||||||||||||
Commercial | $ | $ | $ | $ | |||||||||||
Consumer | |||||||||||||||
Total Impaired Loans | $ | $ | $ | $ | |||||||||||
Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | ||||||||||||||
(dollars in thousands) | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||
Impaired Loans with No Related Allowance Recorded: | |||||||||||||||
Commercial | |||||||||||||||
Commercial and Industrial | $ | $ | $ | $ | |||||||||||
Commercial Mortgage | |||||||||||||||
Construction | |||||||||||||||
Total Commercial | |||||||||||||||
Total Impaired Loans with No Related Allowance Recorded | $ | $ | $ | $ | |||||||||||
Impaired Loans with an Allowance Recorded: | |||||||||||||||
Commercial | |||||||||||||||
Commercial and Industrial | $ | $ | $ | $ | |||||||||||
Commercial Mortgage | |||||||||||||||
Total Commercial | |||||||||||||||
Consumer | |||||||||||||||
Residential Mortgage | |||||||||||||||
Home Equity | |||||||||||||||
Automobile | |||||||||||||||
Other 1 | |||||||||||||||
Total Consumer | |||||||||||||||
Total Impaired Loans with an Allowance Recorded | $ | $ | $ | $ | |||||||||||
Impaired Loans: | |||||||||||||||
Commercial | $ | $ | $ | $ | |||||||||||
Consumer | |||||||||||||||
Total Impaired Loans | $ | $ | $ | $ |
1 | Comprised of other revolving credit and installment financing. |
Loans Modified as a TDR for the Three Months Ended June 30, 2019 | Loans Modified as a TDR for the Three Months Ended June 30, 2018 | ||||||||||||||||||||
Recorded | Increase in | Recorded | Increase in | ||||||||||||||||||
Troubled Debt Restructurings | Number of | Investment | Allowance | Number of | Investment | Allowance | |||||||||||||||
(dollars in thousands) | Contracts | (as of period end)1 | (as of period end) | Contracts | (as of period end)1 | (as of period end) | |||||||||||||||
Commercial | |||||||||||||||||||||
Commercial and Industrial | $ | $ | $ | $ | |||||||||||||||||
Total Commercial | |||||||||||||||||||||
Consumer | |||||||||||||||||||||
Residential Mortgage | |||||||||||||||||||||
Home Equity | |||||||||||||||||||||
Automobile | |||||||||||||||||||||
Other 2 | |||||||||||||||||||||
Total Consumer | |||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||
Loans Modified as a TDR for the Six Months Ended June 30, 2019 | Loans Modified as a TDR for the Six Months Ended June 30, 2018 | ||||||||||||||||||||
Recorded | Increase in | Recorded | Increase in | ||||||||||||||||||
Troubled Debt Restructurings | Number of | Investment | Allowance | Number of | Investment | Allowance | |||||||||||||||
(dollars in thousands) | Contracts | (as of period end)1 | (as of period end) | Contracts | (as of period end)1 | (as of period end) | |||||||||||||||
Commercial | |||||||||||||||||||||
Commercial and Industrial | $ | $ | $ | $ | |||||||||||||||||
Commercial Mortgage | |||||||||||||||||||||
Total Commercial | |||||||||||||||||||||
Consumer | |||||||||||||||||||||
Residential Mortgage | |||||||||||||||||||||
Home Equity | |||||||||||||||||||||
Automobile | |||||||||||||||||||||
Other 2 | |||||||||||||||||||||
Total Consumer | |||||||||||||||||||||
Total | $ | $ | $ | $ |
1 | The period end balances reflect all paydowns and charge-offs since the modification date. TDRs fully paid-off, charged-off, or foreclosed upon by period end are not included. |
2 | Comprised of other revolving credit and installment financing. |
Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | ||||||||||||
TDRs that Defaulted During the Period, | Recorded | Recorded | |||||||||||
Within Twelve Months of their Modification Date | Number of | Investment | Number of | Investment | |||||||||
(dollars in thousands) | Contracts | (as of period end)1 | Contracts | (as of period end)1 | |||||||||
Commercial | |||||||||||||
Commercial and Industrial | $ | $ | |||||||||||
Total Commercial | |||||||||||||
Consumer | |||||||||||||
Automobile | |||||||||||||
Other 2 | |||||||||||||
Total Consumer | |||||||||||||
Total | $ | $ | |||||||||||
Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | ||||||||||||
TDRs that Defaulted During the Period, | Recorded | Recorded | |||||||||||
Within Twelve Months of their Modification Date | Number of | Investment | Number of | Investment | |||||||||
(dollars in thousands) | Contracts | (as of period end)1 | Contracts | (as of period end)1 | |||||||||
Commercial | |||||||||||||
Commercial and Industrial | $ | $ | |||||||||||
Total Commercial | |||||||||||||
Consumer | |||||||||||||
Home Equity | |||||||||||||
Automobile | |||||||||||||
Other 2 | |||||||||||||
Total Consumer | |||||||||||||
Total | $ | $ |
1 | The period end balances reflect all paydowns and charge-offs since the modification date. TDRs fully paid-off, charged-off, or foreclosed upon by period end are not included. |
2 | Comprised of other revolving credit and installment financing. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Balance at Beginning of Period | $ | $ | $ | $ | |||||||||||
Change in Fair Value: | |||||||||||||||
Due to Payoffs | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total Changes in Fair Value of Mortgage Servicing Rights | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Balance at End of Period | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Balance at Beginning of Period | $ | $ | $ | $ | |||||||||||
Servicing Rights that Resulted From Asset Transfers | |||||||||||||||
Amortization | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Valuation Allowance Provision | ( | ) | ( | ) | |||||||||||
Balance at End of Period | $ | $ | $ | $ | |||||||||||
Valuation Allowance: | |||||||||||||||
Balance at Beginning of Period | $ | $ | $ | $ | |||||||||||
Valuation Allowance Provision | ( | ) | ( | ) | |||||||||||
Balance at End of Period | $ | ( | ) | $ | $ | ( | ) | $ | |||||||
Fair Value of Mortgage Servicing Rights Accounted for Under the Amortization Method | |||||||||||||||
Beginning of Period | $ | $ | $ | $ | |||||||||||
End of Period | $ | $ | $ | $ |
June 30, 2019 | December 31, 2018 | ||||
Weighted-Average Constant Prepayment Rate 1 | % | % | |||
Weighted-Average Life (in years) | |||||
Weighted-Average Note Rate | % | % | |||
Weighted-Average Discount Rate 2 | % | % |
1 | Represents annualized loan prepayment rate assumption. |
2 | Derived from multiple interest rate scenarios that incorporate a spread to a market yield curve and market volatilities. |
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Constant Prepayment Rate | |||||||
Decrease in fair value from 25 basis points (“bps”) adverse change | $ | ( | ) | $ | ( | ) | |
Decrease in fair value from 50 bps adverse change | ( | ) | ( | ) | |||
Discount Rate | |||||||
Decrease in fair value from 25 bps adverse change | ( | ) | ( | ) | |||
Decrease in fair value from 50 bps adverse change | ( | ) | ( | ) |
(dollars in thousands) | Amount | ||
2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total Unfunded Commitments | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Effective Yield Method | |||||||||||||||
Tax credits and other tax benefits recognized | $ | $ | $ | $ | |||||||||||
Amortization Expense in Provision for Income Taxes | |||||||||||||||
Proportional Amortization Method | |||||||||||||||
Tax credits and other tax benefits recognized | $ | $ | $ | $ | |||||||||||
Amortization Expense in Provision for Income Taxes |
Remaining Contractual Maturity of Repurchase Agreements | ||||||||||||||||||||
(dollars in thousands) | Up to 90 days | 91-365 days | 1-3 Years | After 3 Years | Total | |||||||||||||||
June 30, 2019 | ||||||||||||||||||||
Class of Collateral Pledged: | ||||||||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | $ | $ | $ | $ | |||||||||||||||
Debt Securities Issued by States and Political Subdivisions | ||||||||||||||||||||
Debt Securities Issued by Corporations | ||||||||||||||||||||
Mortgage-Backed Securities: | ||||||||||||||||||||
Residential - Government Agencies | ||||||||||||||||||||
Residential - U.S. Government-Sponsored Enterprises | ||||||||||||||||||||
Total | $ | $ | $ | $ | $ | |||||||||||||||
December 31, 2018 | ||||||||||||||||||||
Class of Collateral Pledged: | ||||||||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | $ | $ | $ | $ | |||||||||||||||
Debt Securities Issued by States and Political Subdivisions | ||||||||||||||||||||
Mortgage-Backed Securities: | ||||||||||||||||||||
Residential - Government Agencies | ||||||||||||||||||||
Residential - U.S. Government-Sponsored Enterprises | ||||||||||||||||||||
Total | $ | $ | $ | $ | $ |
(i) | (ii) | (iii) = (i)-(ii) | (iv) | (v) = (iii)-(iv) | ||||||||||||||||||||
Gross Amounts Recognized in the Statements of Condition | Gross Amounts Offset in the Statements of Condition | Net Amounts Presented in the Statements of Condition | Gross Amounts Not Offset in the Statements of Condition | |||||||||||||||||||||
(dollars in thousands) | Netting Adjustments per Master Netting Arrangements | Fair Value of Collateral Pledged/Received 1 | Net Amount | |||||||||||||||||||||
June 30, 2019 | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Interest Rate Swap Agreements: | ||||||||||||||||||||||||
Institutional Counterparties | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Interest Rate Swap Agreements: | ||||||||||||||||||||||||
Institutional Counterparties | ||||||||||||||||||||||||
Repurchase Agreements: | ||||||||||||||||||||||||
Private Institutions | — | |||||||||||||||||||||||
Government Entities | — | |||||||||||||||||||||||
$ | $ | $ | $ | — | $ | $ | ||||||||||||||||||
December 31, 2018 | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Interest Rate Swap Agreements: | ||||||||||||||||||||||||
Institutional Counterparties | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Interest Rate Swap Agreements: | ||||||||||||||||||||||||
Institutional Counterparties | ||||||||||||||||||||||||
Repurchase Agreements: | ||||||||||||||||||||||||
Private Institutions | — | |||||||||||||||||||||||
Government Entities | — | |||||||||||||||||||||||
$ | $ | $ | $ | — | $ | $ |
(dollars in thousands) | Before Tax | Tax Effect | Net of Tax | ||||||||
Three Months Ended June 30, 2019 | |||||||||||
Net Unrealized Gains (Losses) on Investment Securities: | |||||||||||
Net Unrealized Gains (Losses) Arising During the Period | $ | $ | $ | ||||||||
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) that (Increase) Decrease Net Income: | |||||||||||
(Gain) Loss on Sale | ( | ) | ( | ) | $ | ( | ) | ||||
Amortization of Unrealized Holding (Gains) Losses on Held-to-Maturity Securities 1 | |||||||||||
Net Unrealized Gains (Losses) on Investment Securities | |||||||||||
Defined Benefit Plans: | |||||||||||
Amortization of Net Actuarial Losses (Gains) | |||||||||||
Amortization of Prior Service Credit | ( | ) | ( | ) | ( | ) | |||||
Defined Benefit Plans, Net | |||||||||||
Other Comprehensive Income (Loss) | $ | $ | $ | ||||||||
Three Months Ended June 30, 2018 | |||||||||||
Net Unrealized Gains (Losses) on Investment Securities: | |||||||||||
Net Unrealized Gains (Losses) Arising During the Period | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) that (Increase) Decrease Net Income: | |||||||||||
Amortization of Unrealized Holding (Gains) Losses on Held-to-Maturity Securities 1 | |||||||||||
Net Unrealized Gains (Losses) on Investment Securities | ( | ) | ( | ) | ( | ) | |||||
Defined Benefit Plans: | |||||||||||
Amortization of Net Actuarial Losses (Gains) | |||||||||||
Amortization of Prior Service Credit | ( | ) | ( | ) | ( | ) | |||||
Defined Benefit Plans, Net | |||||||||||
Other Comprehensive Income (Loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Six Months Ended June 30, 2019 | |||||||||||
Net Unrealized Gains (Losses) on Investment Securities: | |||||||||||
Net Unrealized Gains (Losses) Arising During the Period | $ | $ | $ | ||||||||
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) that (Increase) Decrease Net Income: | |||||||||||
(Gain) Loss on Sale | ( | ) | ( | ) | ( | ) | |||||
Amortization of Unrealized Holding (Gains) Losses on Held-to-Maturity Securities 1 | |||||||||||
Net Unrealized Gains (Losses) on Investment Securities | |||||||||||
Defined Benefit Plans: | |||||||||||
Amortization of Net Actuarial Losses (Gains) | |||||||||||
Amortization of Prior Service Credit | ( | ) | ( | ) | ( | ) | |||||
Defined Benefit Plans, Net | |||||||||||
Other Comprehensive Income (Loss) | $ | $ | $ | ||||||||
Six Months Ended June 30, 2018 | |||||||||||
Net Unrealized Gains (Losses) on Investment Securities: | |||||||||||
Net Unrealized Gains (Losses) Arising During the Period | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) that (Increase) Decrease Net Income: | |||||||||||
Amortization of Unrealized Holding (Gains) Losses on Held-to-Maturity Securities 1 | |||||||||||
Net Unrealized Gains (Losses) on Investment Securities | ( | ) | ( | ) | ( | ) | |||||
Defined Benefit Plans: | |||||||||||
Amortization of Net Actuarial Losses (Gains) | |||||||||||
Amortization of Prior Service Credit | ( | ) | ( | ) | ( | ) | |||||
Defined Benefit Plans, Net | |||||||||||
Other Comprehensive Income (Loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
1 | The amount relates to the amortization/accretion of unrealized net gains and losses related to the Company’s reclassification of available-for-sale investment securities to the held-to-maturity category. The unrealized net gains/losses will be amortized/accreted over the remaining life of the investment securities as an adjustment of yield. |
(dollars in thousands) | Investment Securities-Available-for-Sale | Investment Securities-Held-to-Maturity | Defined Benefit Plans | Accumulated Other Comprehensive Income (Loss) | ||||||||||||
Three Months Ended June 30, 2019 | ||||||||||||||||
Balance at Beginning of Period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Other Comprehensive Income (Loss) Before Reclassifications | ||||||||||||||||
Transfers | ( | ) | ||||||||||||||
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) | ( | ) | ||||||||||||||
Total Other Comprehensive Income (Loss) | ||||||||||||||||
Balance at End of Period | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
Three Months Ended June 30, 2018 | ||||||||||||||||
Balance at Beginning of Period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Other Comprehensive Income (Loss) Before Reclassifications | ( | ) | ( | ) | ||||||||||||
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||
Total Other Comprehensive Income (Loss) | ( | ) | ( | ) | ||||||||||||
Balance at End of Period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Six Months Ended June 30, 2019 | ||||||||||||||||
Balance at Beginning of Period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Other Comprehensive Income (Loss) Before Reclassifications | ||||||||||||||||
Transfers | ( | ) | ||||||||||||||
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) | ( | ) | ||||||||||||||
Total Other Comprehensive Income (Loss) | ||||||||||||||||
Balance at End of Period | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
Six Months Ended June 30, 2018 | ||||||||||||||||
Balance at Beginning of Period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Other Comprehensive Income (Loss) Before Reclassifications | ( | ) | ( | ) | ||||||||||||
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||
Total Other Comprehensive Income (Loss) | ( | ) | ( | ) | ||||||||||||
Reclassification of the Income Tax Effects of the Tax Cuts and Jobs Act from AOCI | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Balance at End of Period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Details about Accumulated Other Comprehensive Income (Loss) Components | Amount Reclassified from Accumulated Other Comprehensive Income (Loss)1 | Affected Line Item in the Statement Where Net Income Is Presented | |||||
Three Months Ended June 30, | |||||||
(dollars in thousands) | 2019 | 2018 | |||||
Amortization of Unrealized Holding Gains (Losses) on Investment Securities Held-to-Maturity | $ | ( | ) | $ | ( | ) | Interest Income |
Provision for Income Tax | |||||||
( | ) | ( | ) | Net of Tax | |||
Sale of Investment Securities Available-for-Sale | Investment Securities Gains (Losses), Net | ||||||
( | ) | Provision for Income Tax | |||||
Net of tax | |||||||
Amortization of Defined Benefit Plan Items | |||||||
Prior Service Credit 2 | |||||||
Net Actuarial Losses 2 | ( | ) | ( | ) | |||
( | ) | ( | ) | Total Before Tax | |||
Provision for Income Tax | |||||||
( | ) | ( | ) | Net of Tax | |||
Total Reclassifications for the Period | $ | ( | ) | $ | ( | ) | Net of Tax |
Details about Accumulated Other Comprehensive Income (Loss) Components | Amount Reclassified from Accumulated Other Comprehensive Income (Loss)1 | Affected Line Item in the Statement Where Net Income Is Presented | |||||
Six Months Ended June 30, | |||||||
(dollars in thousands) | 2019 | 2018 | |||||
Amortization of Unrealized Holding Gains (Losses) on Investment Securities Held-to-Maturity | $ | ( | ) | $ | ( | ) | Interest Income |
Provision for Income Tax | |||||||
( | ) | ( | ) | Net of Tax | |||
Sale of Investment Securities Available-for-Sale | Investment Securities Gains (Losses), Net | ||||||
( | ) | Provision for Income Tax | |||||
Net of tax | |||||||
Amortization of Defined Benefit Plan Items | |||||||
Prior Service Credit 2 | |||||||
Net Actuarial Losses 2 | ( | ) | ( | ) | |||
( | ) | ( | ) | Total Before Tax | |||
Provision for Income Tax | |||||||
( | ) | ( | ) | Net of Tax | |||
Total Reclassifications for the Period | $ | ( | ) | $ | ( | ) | Net of Tax |
1 | Amounts in parentheses indicate reductions to net income. |
2 | These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost and are included in Other Noninterest Expense on the consolidated statements of income (see Note 11 Pension Plans and Postretirement Benefit Plan for additional details). |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Denominator for Basic Earnings Per Share | |||||||||||
Dilutive Effect of Equity Based Awards | |||||||||||
Denominator for Diluted Earnings Per Share | |||||||||||
Antidilutive Stock Options and Restricted Stock Outstanding |
(dollars in thousands) | Retail Banking | Commercial Banking | Investment Services and Private Banking | Treasury and Other | Consolidated Total | ||||||||||||||
Three Months Ended June 30, 2019 | |||||||||||||||||||
Net Interest Income | $ | $ | $ | $ | $ | ||||||||||||||
Provision for Credit Losses | ( | ) | ( | ) | |||||||||||||||
Net Interest Income After Provision for Credit Losses | ( | ) | |||||||||||||||||
Noninterest Income | |||||||||||||||||||
Noninterest Expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Income Before Provision for Income Taxes | ( | ) | |||||||||||||||||
Provision for Income Taxes | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Net Income | $ | $ | $ | $ | $ | ||||||||||||||
Total Assets as of June 30, 2019 | $ | $ | $ | $ | $ | ||||||||||||||
Three Months Ended June 30, 2018 | |||||||||||||||||||
Net Interest Income | $ | $ | $ | $ | $ | ||||||||||||||
Provision for Credit Losses | ( | ) | |||||||||||||||||
Net Interest Income After Provision for Credit Losses | |||||||||||||||||||
Noninterest Income | |||||||||||||||||||
Noninterest Expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Income Before Provision for Income Taxes | ( | ) | |||||||||||||||||
Provision for Income Taxes | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Net Income | $ | $ | $ | $ | $ | ||||||||||||||
Total Assets as of June 30, 2018 | $ | $ | $ | $ | $ | ||||||||||||||
Six Months Ended June 30, 2019 | |||||||||||||||||||
Net Interest Income | $ | $ | $ | $ | $ | ||||||||||||||
Provision for Credit Losses | ( | ) | |||||||||||||||||
Net Interest Income After Provision for Credit Losses | |||||||||||||||||||
Noninterest Income | |||||||||||||||||||
Noninterest Expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Income Before Provision for Income Taxes | |||||||||||||||||||
Provision for Income Taxes | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Net Income | $ | $ | $ | $ | $ | ||||||||||||||
Total Assets as of June 30, 2019 | $ | $ | $ | $ | $ | ||||||||||||||
Six Months Ended June 30, 2018 | |||||||||||||||||||
Net Interest Income | $ | $ | $ | $ | $ | ||||||||||||||
Provision for Credit Losses | ( | ) | ( | ) | |||||||||||||||
Net Interest Income After Provision for Credit Losses | |||||||||||||||||||
Noninterest Income | |||||||||||||||||||
Noninterest Expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Income Before Provision for Income Taxes | |||||||||||||||||||
Provision for Income Taxes | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Net Income | $ | $ | $ | $ | $ | ||||||||||||||
Total Assets as of June 30, 2018 | $ | $ | $ | $ | $ |
Pension Benefits | Postretirement Benefits | ||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Three Months Ended June 30, | |||||||||||||||
Service Cost | $ | $ | $ | $ | |||||||||||
Interest Cost | |||||||||||||||
Expected Return on Plan Assets | ( | ) | ( | ) | |||||||||||
Amortization of: | |||||||||||||||
Prior Service Credit | ( | ) | ( | ) | |||||||||||
Net Actuarial Losses (Gains) | ( | ) | ( | ) | |||||||||||
Net Periodic Benefit Cost | $ | $ | $ | $ | |||||||||||
Six Months Ended June 30, | |||||||||||||||
Service Cost | $ | $ | $ | $ | |||||||||||
Interest Cost | |||||||||||||||
Expected Return on Plan Assets | ( | ) | ( | ) | |||||||||||
Amortization of: | |||||||||||||||
Prior Service Credit | ( | ) | ( | ) | |||||||||||
Net Actuarial Losses (Gains) | ( | ) | ( | ) | |||||||||||
Net Periodic Benefit Cost | $ | $ | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||||||||||||
(dollars in thousands) | Notional Amount | Fair Value | Notional Amount | Fair Value | |||||||||||||
Interest Rate Lock Commitments | $ | $ | $ | $ | |||||||||||||
Forward Commitments | ( | ) | ( | ) | |||||||||||||
Interest Rate Swap Agreements | |||||||||||||||||
Receive Fixed/Pay Variable Swaps | ( | ) | |||||||||||||||
Pay Fixed/Receive Variable Swaps | ( | ) | |||||||||||||||
Foreign Exchange Contracts | |||||||||||||||||
Conversion Rate Swap Agreement |
Derivative Financial Instruments | June 30, 2019 | December 31, 2018 | |||||||||||||
Not Designated as Hedging Instruments 1 | Asset | Liability | Asset | Liability | |||||||||||
(dollars in thousands) | Derivatives | Derivatives | Derivatives | Derivatives | |||||||||||
Interest Rate Lock Commitments | $ | $ | $ | $ | |||||||||||
Forward Commitments | |||||||||||||||
Interest Rate Swap Agreements | |||||||||||||||
Foreign Exchange Contracts | |||||||||||||||
Total | $ | $ | $ | $ |
1 | Asset derivatives are included in other assets and liability derivatives are included in other liabilities in the consolidated statements of condition. |
Location of | |||||||||||||||||
Derivative Financial Instruments | Net Gains (Losses) | Three Months Ended | Six Months Ended | ||||||||||||||
Not Designated as Hedging Instruments | Recognized in the | June 30, | June 30, | ||||||||||||||
(dollars in thousands) | Statements of Income | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Interest Rate Lock Commitments | Mortgage Banking | $ | $ | $ | $ | ||||||||||||
Forward Commitments | Mortgage Banking | ( | ) | ( | ) | ||||||||||||
Interest Rate Swap Agreements | Other Noninterest Income | ||||||||||||||||
Foreign Exchange Contracts | Other Noninterest Income | ||||||||||||||||
Conversion Rate Swap Agreement | Investment Securities Gains (Losses), Net | ( | ) | ( | ) | ||||||||||||
Total | $ | $ | $ | $ |
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Unfunded Commitments to Extend Credit | $ | $ | |||||
Standby Letters of Credit | |||||||
Commercial Letters of Credit | |||||||
Total Credit Commitments | $ | $ |
Level 1: | Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and is used to measure fair value whenever available. A contractually binding sales price also provides reliable evidence of fair value. |
Level 2: | Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets; inputs to the valuation methodology include quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs to the valuation methodology that utilize model-based techniques for which all significant assumptions are observable in the market. |
Level 3: | Inputs to the valuation methodology are unobservable and significant to the fair value measurement; inputs to the valuation methodology that utilize model-based techniques for which significant assumptions are not observable in the market; or inputs to the valuation methodology that require significant management judgment or estimation, some of which may be internally developed. |
Quoted Prices in Active Markets for Identical Assets or Liabilities | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||
(dollars in thousands) | (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||
June 30, 2019 | |||||||||||||||
Assets: | |||||||||||||||
Investment Securities Available-for-Sale | |||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | $ | $ | $ | |||||||||||
Debt Securities Issued by States and Political Subdivisions | |||||||||||||||
Debt Securities Issued by U.S. Government-Sponsored Enterprises | |||||||||||||||
Debt Securities Issued by Corporations | |||||||||||||||
Mortgage-Backed Securities: | |||||||||||||||
Residential - Government Agencies | |||||||||||||||
Residential - U.S. Government-Sponsored Enterprises | |||||||||||||||
Commercial - Government Agencies | |||||||||||||||
Total Mortgage-Backed Securities | |||||||||||||||
Total Investment Securities Available-for-Sale | |||||||||||||||
Loans Held for Sale | |||||||||||||||
Mortgage Servicing Rights | |||||||||||||||
Other Assets | |||||||||||||||
Derivatives 1 | |||||||||||||||
Total Assets Measured at Fair Value on a Recurring Basis as of June 30, 2019 | $ | $ | $ | $ | |||||||||||
Liabilities: | |||||||||||||||
Derivatives 1 | $ | $ | $ | $ | |||||||||||
Total Liabilities Measured at Fair Value on a Recurring Basis as of June 30, 2019 | $ | $ | $ | $ | |||||||||||
December 31, 2018 | |||||||||||||||
Assets: | |||||||||||||||
Investment Securities Available-for-Sale | |||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | $ | $ | $ | |||||||||||
Debt Securities Issued by States and Political Subdivisions | |||||||||||||||
Debt Securities Issued by U.S. Government-Sponsored Enterprises | |||||||||||||||
Debt Securities Issued by Corporations | |||||||||||||||
Mortgage-Backed Securities: | |||||||||||||||
Residential - Government Agencies | |||||||||||||||
Residential - U.S. Government-Sponsored Enterprises | |||||||||||||||
Commercial - Government Agencies | |||||||||||||||
Total Mortgage-Backed Securities | |||||||||||||||
Total Investment Securities Available-for-Sale | |||||||||||||||
Loans Held for Sale | |||||||||||||||
Mortgage Servicing Rights | |||||||||||||||
Other Assets | |||||||||||||||
Derivatives 1 | |||||||||||||||
Total Assets Measured at Fair Value on a Recurring Basis as of December 31, 2018 | $ | $ | $ | $ | |||||||||||
Liabilities: | |||||||||||||||
Derivatives 1 | $ | $ | $ | $ | |||||||||||
Total Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2018 | $ | $ | $ | $ |
1 | The fair value of each class of derivatives is shown in Note 12 Derivative Financial Instruments. |
(dollars in thousands) | Mortgage Servicing Rights 1 | Net Derivative Assets and Liabilities 2 | |||||
Three Months Ended June 30, 2019 | |||||||
Balance as of April 1, 2019 | $ | $ | |||||
Realized and Unrealized Net Gains (Losses): | |||||||
Included in Net Income | ( | ) | |||||
Transfers to Loans Held for Sale | — | ( | ) | ||||
Variation Margin Payments | — | ||||||
Balance as of June 30, 2019 | $ | $ | |||||
Total Unrealized Net Gains (Losses) Included in Net Income Related to Assets Still Held as of June 30, 2019 | $ | $ | |||||
Three Months Ended June 30, 2018 | |||||||
Balance as of April 1, 2018 | $ | $ | |||||
Realized and Unrealized Net Gains (Losses): | |||||||
Included in Net Income | ( | ) | |||||
Transfers to Loans Held for Sale | — | ( | ) | ||||
Variation Margin Payments | — | ||||||
Balance as of June 30, 2018 | $ | $ | |||||
Total Unrealized Net Gains (Losses) Included in Net Income Related to Assets Still Held as of June 30, 2018 | $ | $ | |||||
Six Months Ended June 30, 2019 | |||||||
Balance as of January 1, 2019 | $ | $ | |||||
Realized and Unrealized Net Gains (Losses): | |||||||
Included in Net Income | ( | ) | |||||
Transfers to Loans Held for Sale | — | ( | ) | ||||
Variation Margin Payments | — | ||||||
Balance as of June 30, 2019 | $ | $ | |||||
Total Unrealized Net Gains (Losses) Included in Net Income Related to Assets Still Held as of June 30, 2019 | $ | $ | |||||
Six Months Ended June 30, 2018 | |||||||
Balance as of January 1, 2018 | $ | $ | |||||
Realized and Unrealized Net Gains (Losses): | |||||||
Included in Net Income | ( | ) | |||||
Transfers to Loans Held for Sale | — | ( | ) | ||||
Variation Margin Payments | — | ( | ) | ||||
Balance as of June 30, 2018 | $ | $ | |||||
Total Unrealized Net Gains (Losses) Included in Net Income Related to Assets Still Held as of June 30, 2018 | $ | $ |
1 | Realized and unrealized gains and losses related to mortgage servicing rights are reported as a component of mortgage banking income in the Company’s consolidated statements of income. |
2 | Realized and unrealized gains and losses related to interest rate lock commitments are reported as a component of mortgage banking income in the Company’s consolidated statements of income. Realized and unrealized gains and losses related to interest rate swap agreements are reported as a component of other noninterest income in the Company’s consolidated statements of income. |
Significant Unobservable Inputs (weighted-average) | Fair Value | |||||||||||||||||
(dollars in thousands) | Valuation Technique | Description | June 30, 2019 | Dec. 31, 2018 | June 30, 2019 | Dec. 31, 2018 | ||||||||||||
Mortgage Servicing Rights | Discounted Cash Flow | Constant Prepayment Rate 1 | % | % | $ | $ | ||||||||||||
Discount Rate 2 | % | % | ||||||||||||||||
Net Derivative Assets and Liabilities: | ||||||||||||||||||
Interest Rate Lock Commitments | Pricing Model | Closing Ratio | % | % | $ | $ | ||||||||||||
Interest Rate Swap Agreements | Discounted Cash Flow | Credit Factor | % | % | $ | $ |
1 | Represents annualized loan repayment rate assumption. |
2 | Derived from multiple interest rate scenarios that incorporate a spread to a market yield curve and market volatilities. |
(dollars in thousands) | Fair Value Hierarchy | Net Carrying Amount | Valuation Allowance | ||||||
June 30, 2019 | |||||||||
Mortgage Servicing Rights - amortization method | Level 3 | $ | $ | ( | ) |
(dollars in thousands) | Aggregate Fair Value | Aggregate Unpaid Principal | Aggregate Fair Value Less Aggregate Unpaid Principal | ||||||||||
June 30, 2019 | |||||||||||||
Loans Held for Sale | $ | $ | $ | ||||||||||
December 31, 2018 | |||||||||||||
Loans Held for Sale | $ | $ | $ |
Fair Value Measurements | |||||||||||||||||||
Carrying | Quoted Prices in Active Markets for Identical Assets or Liabilities | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||||
(dollars in thousands) | Amount | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||
June 30, 2019 | |||||||||||||||||||
Financial Instruments - Assets | |||||||||||||||||||
Investment Securities Held-to-Maturity | $ | $ | $ | $ | $ | ||||||||||||||
Loans 1 | |||||||||||||||||||
Financial Instruments - Liabilities | |||||||||||||||||||
Time Deposits | |||||||||||||||||||
Securities Sold Under Agreements to Repurchase | |||||||||||||||||||
Other Debt 2 | |||||||||||||||||||
December 31, 2018 | |||||||||||||||||||
Financial Instruments - Assets | |||||||||||||||||||
Investment Securities Held-to-Maturity | $ | $ | $ | $ | $ | ||||||||||||||
Loans 1 | |||||||||||||||||||
Financial Instruments - Liabilities | |||||||||||||||||||
Time Deposits | |||||||||||||||||||
Securities Sold Under Agreements to Repurchase | |||||||||||||||||||
Other Debt 2 |
1 | Carrying amount is net of unearned income and the Allowance. |
2 | Excludes capitalized lease obligations. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Noninterest Income | ||||||||||||||||
In-scope of Topic 606: | ||||||||||||||||
Trust and Asset Management | $ | $ | $ | $ | ||||||||||||
Service Charges on Deposit Accounts | ||||||||||||||||
Fees, Exchange, and Other Service Charges | ||||||||||||||||
Annuity and Insurance | ||||||||||||||||
Other | ||||||||||||||||
Noninterest Income (in-scope of Topic 606) | ||||||||||||||||
Noninterest Income (out-of-scope of Topic 606) | ||||||||||||||||
Total Noninterest Income | $ | $ | $ | $ |
(dollars in thousands) | June 30, 2019 | |||
Lease Right-of-Use Assets | Classification | |||
Operating lease right-of-use assets | Operating Lease Right-of-Use Assets | $ | ||
Finance lease right-of-use assets | Premises and Equipment, Net | |||
Total Lease Right-of-Use Assets | $ | |||
Lease Liabilities | ||||
Operating lease liabilities | Operating Lease Liabilities | $ | ||
Finance lease liabilities | Other Debt | |||
Total Lease Liabilities | $ |
June 30, 2019 | |||
Weighted-average remaining lease term | |||
Operating leases | |||
Finance leases | |||
Weighted-average discount rate | |||
Operating leases | % | ||
Finance leases | % |
(dollars in thousands) | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||||||
Lease Costs | ||||||||
Operating lease cost | $ | $ | ||||||
Variable lease cost | ||||||||
Short-term lease cost | ||||||||
Finance lease cost | ||||||||
Interest on lease liabilities 1 | ||||||||
Amortization of right-of-use assets | ||||||||
Sublease income | ( | ) | ( | ) | ||||
Net lease cost | $ | $ | ||||||
Other Information | ||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | $ | ||||||
Operating cash flows from finance leases | ||||||||
Financing cash flows from finance leases | ||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | ||||||||
Right-of-use assets obtained in exchange for new finance lease liabilities |
1 | Included in other debt interest expense in the Company’s consolidated statements of income. All other lease costs in this table are included in net occupancy expense. |
(dollars in thousands) | Finance Leases | Operating Leases | |||||
Twelve Months Ended: | |||||||
June 30, 2020 | $ | $ | |||||
June 30, 2021 | |||||||
June 30, 2022 | |||||||
June 30, 2023 | |||||||
June 30, 2024 | |||||||
Thereafter | |||||||
Total Future Minimum Lease Payments | |||||||
Amounts Representing Interest | ( | ) | ( | ) | |||
Present Value of Net Future Minimum Lease Payments | $ | $ |
• | Net interest income for the second quarter of 2019 was $124.1 million, an increase of $3.6 million or 3% compared to the same period in 2018. This increase was primarily due to a higher level of earning assets, including growth in both our commercial and consumer lending portfolios. The higher level of earning assets was primarily funded by higher deposit balances. Net interest margin was 3.04% for the second quarter of 2019, unchanged compared to the same period in 2018. We experienced higher yields in both our investment securities portfolio and loan portfolios, which were offset by higher rates paid on our interest-bearing deposits, a reflection of the higher short-term rate environment. |
• | Other noninterest income for the second quarter of 2019 was $6.4 million, an increase of $1.8 million or 40% compared to the same period in 2018 primarily due to a $1.2 million increase in fees received related to our customer interest rate swap derivatives combined with a $0.4 million increase in net gain on sale of leased assets. |
• | Mortgage banking income second quarter of 2019 was $3.3 million, an increase of $1.2 million or 53% compared to the same period in 2018. This increase was primarily due to increased sales of conforming saleable loans from current production. |
• | The provision for income taxes for the second quarter of 2019 was $15.9 million, an increase of $3.1 million or 24% compared to the same period in 2018 primarily due to higher pre-tax income. The effective tax rate for the second quarter of 2019 was 21.84%, compared to 18.94% for the same period in 2018. The increase was primarily due to a reduced tax benefit from municipal bonds, which were sold as part of a portfolio repositioning. |
• | Total salaries and benefits expense for the second quarter of 2019 was $53.5 million, an increase of $1.4 million or 3% compared to the same period in 2018 primarily due to a $1.0 million increase in incentive compensation. Commission expense increased by $0.4 million primarily due to an increase in mortgage banking production volume as refinancing activity increased. These increases were partially offset by a $0.4 million decrease in salaries expense primarily due to a higher amount of salaries deferred in the current year, the result of higher portfolio loan production compared to the prior year. |
• | Net interest income was $248.9 million for the first six months of 2019, an increase of $9.5 million or 4% compared to the same period in 2018. This increase was primarily due to a higher level of earning assets, including growth in both our commercial and consumer lending portfolios. The higher level of earning assets was primarily funded by higher deposit balances. Net interest margin was 3.08% for the first six months of 2019, an increase of six basis points compared to the same period in 2018 primarily due to our loans, which generally have higher yields than our investment securities, comprising a larger percentage of our earning assets compared to 2018. In addition, yields increased for our commercial loans due to higher variable rates. Our investments portfolio yields also increased due to higher variable rates on our floating rate securities coupled with lower premium amortization. These increases were partially offset by higher funding costs. |
• | Total other expense was $29.3 million, a decrease of $2.7 million or 8% for the first six months of 2019 compared to the same period in 2018 due to a $2.0 million legal reserve recorded in first quarter 2018 and a $1.7 million decrease in credit card expense due to the sale of the MyBankoh Rewards Credit Card portfolio on November 1, 2018. These items were partially offset by an increase in operating losses ($0.7 million) and education and recruitment ($0.4 million). |
• | FDIC insurance for the first six months of 2019 was $2.6 million, a decrease of $1.8 million or 41% compared to the same period in 2018 due to the end of an FDIC surcharge in September 2018 and a decrease in FDIC assessment rates. |
• | Annuity and insurance income for the first six months was $4.4 million, an increase of $1.3 million or 44% compared to the same period in 2018 primarily due to a one-time commission received related to insurance products offered through a third-party administrator. |
• | Mortgage banking income first six months of 2019 was $5.6 million, an increase of $1.3 million of 30% compared to the same period in 2018. This increase was primarily due to increased sales of conforming saleable loans from current production. |
• | The provision for income taxes for the first six months of 2019 was $29.6 million, an increase of $6.3 million or 27% compared to the same period in 2018 primarily due to higher pre-tax income. The effective tax rate for the first six months of 2019 was 20.35%, compared to 17.60% for the same period in 2018. The increase was primarily due to a reduced tax benefit from municipal bonds, which were sold as part of a portfolio repositioning. |
• | Total salaries and benefits expense for the first six months of 2019 was $110.1 million, an increase of $3.5 million or 3% compared to the same period in 2018. Incentive compensation increased by $1.8 million. Medical, dental, and life insurance increased by $1.1 million primarily due to an increase in group health plan costs. In addition, share-based compensation increased by $0.6 million due to the value of restricted stock units increasing as a result of the Company’s higher share price and additional restricted stock grants being amortized. These increases were partially offset by a $0.8 million decrease in salaries due to a higher amount of salaries deferred in the current year, the result of higher portfolio loan production compared to the prior year coupled with a $0.5 million decrease in separation expense |
• | Total loans and leases were $10.8 billion as of June 30, 2019, an increase of $310.4 million or 3% from December 31, 2018 due to growth in both our consumer and commercial lending portfolios. |
• | The allowance for loan and lease losses (the “Allowance”) was $107.7 million as of June 30, 2019, an increase of $1.0 million or 1% from December 31, 2018. The Allowance represents 1.00% of total loans and leases outstanding as of June 30, 2019 and 1.02% of total loans and leases outstanding as of December 31, 2018. The level of our Allowance was commensurate with the Company’s credit risk profile, loan portfolio growth and composition, and a healthy Hawaii economy. |
• | As of June 30, 2019, the total carrying value of our investment securities portfolio was $5.6 billion, an increase of $119.5 million or 2% compared to December 31, 2018. On June 10, 2019, prepayable debt securities with a carrying value of $1.0 billion and a net unrealized gain of $3.1 million were transferred from held-to-maturity to available-for-sale. The reclassified securities consisted of mortgage-backed securities issued by government agencies and U.S. government-sponsored enterprises, municipal debt securities, and corporate debt securities. During the first six months of 2019 we reduced our positions in municipal debt securities and certain mortgage-backed securities as part of a portfolio repositioning. Ginnie Mae mortgage-backed securities continue to be the largest concentration in our portfolio. |
• | Total deposits were $15.5 billion as of June 30, 2019, an increase of $461.6 million or 3% from December 31, 2018 primarily due to an increase in public and other deposits. In addition, consumer deposits increased due to an increase in time and core deposits. |
• | Total shareholders’ equity was $1.3 billion as of June 30, 2019, relatively unchanged from December 31, 2018. We continued to return capital to our shareholders in the form of share repurchases and dividends. During the first six months of 2019, we acquired 986,888 shares of our common stock at a total cost of $78.2 million under our share repurchase program and from shares obtained from employees and/or directors in connection with income tax withholdings related to the vesting of restricted stock and shares purchased for a deferred compensation plan, less shares distributed from the deferred compensation plan. We also paid cash dividends of $52.2 million during the first six months of 2019. |
Financial Highlights | Table 1 | ||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(dollars in thousands, except per share amounts) | 2019 | 2018 | 2019 | 2018 | |||||||||||
For the Period: | |||||||||||||||
Operating Results | |||||||||||||||
Net Interest Income | $ | 124,097 | $ | 120,496 | $ | 248,934 | $ | 239,452 | |||||||
Provision for Credit Losses | 4,000 | 3,500 | 7,000 | 7,625 | |||||||||||
Total Noninterest Income | 45,450 | 41,298 | 89,129 | 85,333 | |||||||||||
Total Noninterest Expense | 92,725 | 90,791 | 185,782 | 185,175 | |||||||||||
Net Income | 56,919 | 54,718 | 115,718 | 108,758 | |||||||||||
Basic Earnings Per Share | 1.40 | 1.31 | 2.84 | 2.59 | |||||||||||
Diluted Earnings Per Share | 1.40 | 1.30 | 2.82 | 2.57 | |||||||||||
Dividends Declared Per Share | 0.65 | 0.60 | 1.27 | 1.12 | |||||||||||
Performance Ratios | |||||||||||||||
Return on Average Assets | 1.31 | % | 1.30 | % | 1.34 | % | 1.29 | % | |||||||
Return on Average Shareholders’ Equity | 17.97 | 17.68 | 18.39 | 17.71 | |||||||||||
Efficiency Ratio 1 | 54.69 | 56.12 | 54.95 | 57.01 | |||||||||||
Net Interest Margin 2 | 3.04 | 3.04 | 3.08 | 3.02 | |||||||||||
Dividend Payout Ratio 3 | 46.43 | 45.80 | 44.72 | 43.24 | |||||||||||
Average Shareholders’ Equity to Average Assets | 7.27 | 7.34 | 7.31 | 7.31 | |||||||||||
Average Balances | |||||||||||||||
Average Loans and Leases | $ | 10,631,558 | $ | 9,962,860 | $ | 10,549,893 | $ | 9,883,746 | |||||||
Average Assets | 17,480,651 | 16,921,820 | 17,359,031 | 16,939,527 | |||||||||||
Average Deposits | 15,162,782 | 14,709,299 | 15,067,622 | 14,714,752 | |||||||||||
Average Shareholders’ Equity | 1,270,162 | 1,241,672 | 1,268,808 | 1,238,628 | |||||||||||
Market Price Per Share of Common Stock | |||||||||||||||
Closing | $ | 82.91 | $ | 83.42 | $ | 82.91 | $ | 83.42 | |||||||
High | 84.53 | 88.92 | 84.53 | 89.09 | |||||||||||
Low | 75.24 | 80.20 | 66.54 | 78.40 | |||||||||||
June 30, 2019 | December 31, 2018 | ||||||||||||||
As of Period End: | |||||||||||||||
Balance Sheet Totals | |||||||||||||||
Loans and Leases | $ | 10,759,129 | $ | 10,448,774 | |||||||||||
Total Assets | 17,688,845 | 17,143,974 | |||||||||||||
Total Deposits | 15,488,821 | 15,027,242 | |||||||||||||
Other Debt | 110,605 | 135,643 | |||||||||||||
Total Shareholders’ Equity | 1,285,948 | 1,268,200 | |||||||||||||
Asset Quality | |||||||||||||||
Non-Performing Assets | $ | 21,782 | $ | 12,930 | |||||||||||
Allowance for Loan and Lease Losses | 107,672 | 106,693 | |||||||||||||
Allowance to Loans and Leases Outstanding | 1.00 | % | 1.02 | % | |||||||||||
Capital Ratios | |||||||||||||||
Common Equity Tier 1 Capital Ratio | 12.46 | % | 13.07 | % | |||||||||||
Tier 1 Capital Ratio | 12.46 | 13.07 | |||||||||||||
Total Capital Ratio | 13.57 | 14.21 | |||||||||||||
Tier 1 Leverage Ratio | 7.36 | 7.60 | |||||||||||||
Total Shareholders’ Equity to Total Assets | 7.27 | 7.40 | |||||||||||||
Tangible Common Equity to Tangible Assets 4 | 7.10 | 7.23 | |||||||||||||
Tangible Common Equity to Risk-Weighted Assets 4 | 12.17 | 12.52 | |||||||||||||
Non-Financial Data | |||||||||||||||
Full-Time Equivalent Employees | 2,152 | 2,122 | |||||||||||||
Branches | 68 | 69 | |||||||||||||
ATMs | 383 | 382 |
1 | Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and total noninterest income). |
2 | Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets. |
3 | Dividend payout ratio is defined as dividends declared per share divided by basic earnings per share. |
4 | Tangible common equity to tangible assets and tangible common equity to risk-weighted assets are Non-GAAP financial measures. See the “Use of Non-GAAP Financial Measures” section below. |
GAAP to Non-GAAP Reconciliation | Table 2 | ||||||
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Total Shareholders’ Equity | $ | 1,285,948 | $ | 1,268,200 | |||
Less: Goodwill | 31,517 | 31,517 | |||||
Tangible Common Equity | $ | 1,254,431 | $ | 1,236,683 | |||
Total Assets | $ | 17,688,845 | $ | 17,143,974 | |||
Less: Goodwill | 31,517 | 31,517 | |||||
Tangible Assets | $ | 17,657,328 | $ | 17,112,457 | |||
Risk-Weighted Assets, determined in accordance with prescribed regulatory requirements | $ | 10,309,085 | $ | 9,878,904 | |||
Total Shareholders’ Equity to Total Assets | 7.27 | % | 7.40 | % | |||
Tangible Common Equity to Tangible Assets (Non-GAAP) | 7.10 | % | 7.23 | % | |||
Tier 1 Capital Ratio | 12.46 | % | 13.07 | % | |||
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) | 12.17 | % | 12.52 | % |
Average Balances and Interest Rates - Taxable-Equivalent Basis | Table 3 | ||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||||||||||||||||||||||||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||||||||||||||||||||||
(dollars in millions) | Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||||||||||||||||||
Earning Assets | |||||||||||||||||||||||||||||||||||||||||||
Interest-Bearing Deposits in Other Banks | $ | 2.9 | $ | — | 1.25 | % | $ | 2.9 | $ | — | (0.52 | )% | $ | 2.9 | $ | — | 1.65 | % | $ | 2.9 | $ | — | 0.94 | % | |||||||||||||||||||
Funds Sold | 123.6 | 0.8 | 2.34 | 185.2 | 0.8 | 1.81 | 182.3 | 2.2 | 2.37 | 194.9 | 1.6 | 1.64 | |||||||||||||||||||||||||||||||
Investment Securities | |||||||||||||||||||||||||||||||||||||||||||
Available-for-Sale | |||||||||||||||||||||||||||||||||||||||||||
Taxable | 2,004.3 | 14.3 | 2.87 | 1,564.5 | 9.2 | 2.35 | 1,801.2 | 25.9 | 2.88 | 1,579.7 | 18.0 | 2.29 | |||||||||||||||||||||||||||||||
Non-Taxable | 86.8 | 0.9 | 4.15 | 583.6 | 4.0 | 2.78 | 182.5 | 3.3 | 3.63 | 594.1 | 8.2 | 2.76 | |||||||||||||||||||||||||||||||
Held-to-Maturity | |||||||||||||||||||||||||||||||||||||||||||
Taxable | 3,358.0 | 21.0 | 2.50 | 3,471.7 | 19.2 | 2.22 | 3,365.7 | 41.5 | 2.46 | 3,551.0 | 39.0 | 2.20 | |||||||||||||||||||||||||||||||
Non-Taxable | 193.0 | 1.5 | 3.08 | 237.1 | 1.9 | 3.17 | 213.4 | 3.3 | 3.12 | 237.6 | 3.8 | 3.17 | |||||||||||||||||||||||||||||||
Total Investment Securities | 5,642.1 | 37.7 | 2.68 | 5,856.9 | 34.3 | 2.35 | 5,562.8 | 74.0 | 2.66 | 5,962.4 | 69.0 | 2.32 | |||||||||||||||||||||||||||||||
Loans Held for Sale | 18.7 | 0.2 | 4.05 | 14.8 | 0.2 | 4.44 | 15.6 | 0.3 | 4.16 | 14.5 | 0.3 | 4.11 | |||||||||||||||||||||||||||||||
Loans and Leases 1 | |||||||||||||||||||||||||||||||||||||||||||
Commercial and Industrial | 1,385.7 | 14.9 | 4.31 | 1,307.6 | 12.8 | 3.92 | 1,371.8 | 30.2 | 4.43 | 1,294.3 | 24.6 | 3.83 | |||||||||||||||||||||||||||||||
Commercial Mortgage | 2,386.3 | 25.9 | 4.35 | 2,123.5 | 21.9 | 4.13 | 2,348.6 | 50.7 | 4.36 | 2,110.0 | 42.4 | 4.06 | |||||||||||||||||||||||||||||||
Construction | 125.3 | 1.7 | 5.51 | 183.4 | 2.2 | 4.82 | 137.8 | 3.6 | 5.27 | 186.4 | 4.3 | 4.63 | |||||||||||||||||||||||||||||||
Commercial Lease Financing | 159.9 | 1.0 | 2.49 | 179.4 | 1.0 | 2.24 | 160.4 | 1.9 | 2.38 | 179.5 | 2.0 | 2.22 | |||||||||||||||||||||||||||||||
Residential Mortgage | 3,730.4 | 36.0 | 3.87 | 3,526.9 | 33.6 | 3.81 | 3,705.4 | 71.5 | 3.86 | 3,502.6 | 66.9 | 3.82 | |||||||||||||||||||||||||||||||
Home Equity | 1,694.9 | 16.2 | 3.83 | 1,612.7 | 15.1 | 3.76 | 1,692.5 | 32.3 | 3.85 | 1,604.1 | 29.7 | 3.73 | |||||||||||||||||||||||||||||||
Automobile | 688.5 | 6.2 | 3.62 | 573.6 | 5.7 | 3.97 | 678.4 | 12.3 | 3.64 | 557.7 | 11.3 | 4.08 | |||||||||||||||||||||||||||||||
Other 2 | 460.6 | 8.4 | 7.33 | 455.8 | 8.9 | 7.86 | 455.0 | 16.3 | 7.23 | 449.1 | 17.6 | 7.88 | |||||||||||||||||||||||||||||||
Total Loans and Leases | 10,631.6 | 110.3 | 4.16 | 9,962.9 | 101.2 | 4.07 | 10,549.9 | 218.8 | 4.17 | 9,883.7 | 198.8 | 4.04 | |||||||||||||||||||||||||||||||
Other | 35.0 | 0.2 | 2.40 | 39.8 | 0.4 | 3.43 | 35.2 | 0.5 | 3.00 | 40.3 | 0.7 | 3.19 | |||||||||||||||||||||||||||||||
Total Earning Assets 3 | 16,453.9 | 149.2 | 3.63 | 16,062.5 | 136.9 | 3.41 | 16,348.7 | 295.8 | 3.63 | 16,098.7 | 270.4 | 3.37 | |||||||||||||||||||||||||||||||
Cash and Due From Banks | 241.6 | 251.0 | 241.2 | 239.9 | |||||||||||||||||||||||||||||||||||||||
Other Assets | 785.2 | 608.3 | 769.1 | 600.9 | |||||||||||||||||||||||||||||||||||||||
Total Assets | $ | 17,480.7 | $ | 16,921.8 | $ | 17,359.0 | $ | 16,939.5 | |||||||||||||||||||||||||||||||||||
Interest-Bearing Liabilities | |||||||||||||||||||||||||||||||||||||||||||
Interest-Bearing Deposits | |||||||||||||||||||||||||||||||||||||||||||
Demand | $ | 2,902.5 | $ | 1.4 | 0.19 | % | $ | 2,969.8 | $ | 1.2 | 0.16 | % | $ | 2,921.1 | $ | 2.8 | 0.20 | % | $ | 2,974.0 | $ | 1.9 | 0.13 | % | |||||||||||||||||||
Savings | 6,002.0 | 8.9 | 0.60 | 5,392.2 | 3.1 | 0.23 | 5,882.1 | 15.7 | 0.54 | 5,379.3 | 5.3 | 0.20 | |||||||||||||||||||||||||||||||
Time | 1,866.6 | 8.3 | 1.79 | 1,705.7 | 5.2 | 1.21 | 1,785.4 | 15.4 | 1.74 | 1,709.6 | 9.8 | 1.16 | |||||||||||||||||||||||||||||||
Total Interest-Bearing Deposits | 10,771.1 | 18.6 | 0.69 | 10,067.7 | 9.5 | 0.38 | 10,588.6 | 33.9 | 0.65 | 10,062.9 | 17.0 | 0.34 | |||||||||||||||||||||||||||||||
Short-Term Borrowings | 82.3 | 0.5 | 2.46 | 21.0 | 0.1 | 1.80 | 56.8 | 0.7 | 2.47 | 20.0 | 0.2 | 1.64 | |||||||||||||||||||||||||||||||
Securities Sold Under Agreements to Repurchase | 504.3 | 4.7 | 3.63 | 505.1 | 4.6 | 3.62 | 504.3 | 9.2 | 3.63 | 505.2 | 9.2 | 3.61 | |||||||||||||||||||||||||||||||
Other Debt | 110.6 | 0.7 | 2.57 | 235.7 | 0.9 | 1.56 | 115.3 | 1.5 | 2.56 | 246.3 | 1.9 | 1.55 | |||||||||||||||||||||||||||||||
Total Interest-Bearing Liabilities | 11,468.3 | 24.5 | 0.85 | 10,829.5 | 15.1 | 0.56 | 11,265.0 | 45.3 | 0.81 | 10,834.4 | 28.3 | 0.52 | |||||||||||||||||||||||||||||||
Net Interest Income | $ | 124.7 | $ | 121.8 | $ | 250.5 | $ | 242.1 | |||||||||||||||||||||||||||||||||||
Interest Rate Spread | 2.78 | % | 2.85 | % | 2.82 | % | 2.85 | % | |||||||||||||||||||||||||||||||||||
Net Interest Margin | 3.04 | % | 3.04 | % | 3.08 | % | 3.02 | % | |||||||||||||||||||||||||||||||||||
Noninterest-Bearing Demand Deposits | 4,391.7 | 4,641.6 | 4,479.0 | 4,651.9 | |||||||||||||||||||||||||||||||||||||||
Other Liabilities | 350.5 | 209.0 | 346.2 | 214.6 | |||||||||||||||||||||||||||||||||||||||
Shareholders’ Equity | 1,270.2 | 1,241.7 | 1,268.8 | 1,238.6 | |||||||||||||||||||||||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 17,480.7 | $ | 16,921.8 | $ | 17,359.0 | $ | 16,939.5 |
1 | Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis. |
2 | Comprised of other consumer revolving credit, installment, and consumer lease financing. |
3 | Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 21%, of $0.6 million and $1.6 million for the three and six months ended June 30, 2019 and of $1.3 million and $2.6 million for the three and six months ended June 30, 2018, respectively. |
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis | Table 4 | ||||||||||
Six Months Ended June 30, 2019 | |||||||||||
Compared to June 30, 2018 | |||||||||||
(dollars in millions) | Volume 1 | Rate 1 | Total | ||||||||
Change in Interest Income: | |||||||||||
Funds Sold | $ | (0.1 | ) | $ | 0.7 | $ | 0.6 | ||||
Investment Securities | |||||||||||
Available-for-Sale | |||||||||||
Taxable | 2.8 | 5.1 | 7.9 | ||||||||
Non-Taxable | (6.9 | ) | 2.0 | (4.9 | ) | ||||||
Held-to-Maturity | |||||||||||
Taxable | (2.1 | ) | 4.6 | 2.5 | |||||||
Non-Taxable | (0.4 | ) | (0.1 | ) | (0.5 | ) | |||||
Total Investment Securities | (6.6 | ) | 11.6 | 5.0 | |||||||
Loans and Leases | |||||||||||
Commercial and Industrial | 1.5 | 4.1 | 5.6 | ||||||||
Commercial Mortgage | 5.0 | 3.3 | 8.3 | ||||||||
Construction | (1.2 | ) | 0.5 | (0.7 | ) | ||||||
Commercial Lease Financing | (0.2 | ) | 0.1 | (0.1 | ) | ||||||
Residential Mortgage | 3.9 | 0.7 | 4.6 | ||||||||
Home Equity | 1.7 | 0.9 | 2.6 | ||||||||
Automobile | 2.3 | (1.3 | ) | 1.0 | |||||||
Other 2 | 0.2 | (1.5 | ) | (1.3 | ) | ||||||
Total Loans and Leases | 13.2 | 6.8 | 20.0 | ||||||||
Other | (0.1 | ) | (0.1 | ) | (0.2 | ) | |||||
Total Change in Interest Income | 6.4 | 19.0 | 25.4 | ||||||||
Change in Interest Expense: | |||||||||||
Interest-Bearing Deposits | |||||||||||
Demand | — | 0.9 | 0.9 | ||||||||
Savings | 0.5 | 9.9 | 10.4 | ||||||||
Time | 0.5 | 5.1 | 5.6 | ||||||||
Total Interest-Bearing Deposits | 1.0 | 15.9 | 16.9 | ||||||||
Short-Term Borrowings | 0.4 | 0.1 | 0.5 | ||||||||
Other Debt | (1.3 | ) | 0.9 | (0.4 | ) | ||||||
Total Change in Interest Expense | 0.1 | 16.9 | 17.0 | ||||||||
Change in Net Interest Income | $ | 6.3 | $ | 2.1 | $ | 8.4 |
1 | The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns. |
2 | Comprised of other consumer revolving credit, installment, and consumer lease financing. |
Noninterest Income | Table 5 | ||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(dollars in thousands) | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||||||
Trust and Asset Management | $ | 11,385 | $ | 11,356 | $ | 29 | $ | 22,146 | $ | 22,537 | $ | (391 | ) | ||||||||||
Mortgage Banking | 3,336 | 2,179 | 1,157 | 5,623 | 4,324 | 1,299 | |||||||||||||||||
Service Charges on Deposit Accounts | 7,283 | 6,865 | 418 | 14,647 | 13,994 | 653 | |||||||||||||||||
Fees, Exchange, and Other Service Charges | 14,252 | 14,400 | (148 | ) | 28,460 | 28,733 | (273 | ) | |||||||||||||||
Investment Securities Gains (Losses), Net | (776 | ) | (1,702 | ) | 926 | (1,611 | ) | (2,368 | ) | 757 | |||||||||||||
Annuity and Insurance | 1,806 | 1,847 | (41 | ) | 4,384 | 3,053 | 1,331 | ||||||||||||||||
Bank-Owned Life Insurance | 1,779 | 1,796 | (17 | ) | 3,489 | 3,638 | (149 | ) | |||||||||||||||
Other Income | 6,385 | 4,557 | 1,828 | 11,991 | 11,422 | 569 | |||||||||||||||||
Total Noninterest Income | $ | 45,450 | $ | 41,298 | $ | 4,152 | $ | 89,129 | $ | 85,333 | $ | 3,796 |
Noninterest Expense | Table 6 | ||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(dollars in thousands) | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||||||
Salaries | $ | 32,834 | $ | 33,269 | $ | (435 | ) | $ | 65,314 | $ | 65,973 | $ | (659 | ) | |||||||||
Incentive Compensation | 5,464 | 4,416 | 1,048 | 11,368 | 9,594 | 1,774 | |||||||||||||||||
Share-Based Compensation | 1,994 | 2,423 | (429 | ) | 5,073 | 4,504 | 569 | ||||||||||||||||
Commission Expense | 1,704 | 1,272 | 432 | 2,634 | 2,226 | 408 | |||||||||||||||||
Retirement and Other Benefits | 4,580 | 4,178 | 402 | 9,687 | 9,019 | 668 | |||||||||||||||||
Payroll Taxes | 2,643 | 2,568 | 75 | 6,890 | 6,740 | 150 | |||||||||||||||||
Medical, Dental, and Life Insurance | 3,926 | 3,820 | 106 | 8,391 | 7,281 | 1,110 | |||||||||||||||||
Separation Expense | 366 | 202 | 164 | 740 | 1,233 | (493 | ) | ||||||||||||||||
Total Salaries and Benefits | 53,511 | 52,148 | 1,363 | 110,097 | 106,570 | 3,527 | |||||||||||||||||
Net Occupancy | 8,579 | 8,588 | (9 | ) | 16,173 | 17,122 | (949 | ) | |||||||||||||||
Net Equipment | 6,895 | 5,845 | 1,050 | 13,728 | 11,372 | 2,356 | |||||||||||||||||
Data Processing | 4,727 | 4,563 | 164 | 9,253 | 8,454 | 799 | |||||||||||||||||
Professional Fees | 2,177 | 2,546 | (369 | ) | 4,630 | 5,319 | (689 | ) | |||||||||||||||
FDIC Insurance | 1,290 | 2,182 | (892 | ) | 2,559 | 4,339 | (1,780 | ) | |||||||||||||||
Other Expense: | |||||||||||||||||||||||
Delivery and Postage Services | 1,914 | 2,132 | (218 | ) | 3,992 | 4,421 | (429 | ) | |||||||||||||||
Mileage Program Travel | 1,178 | 1,208 | (30 | ) | 2,358 | 2,343 | 15 | ||||||||||||||||
Merchant Transaction and Card Processing Fees | 1,344 | 1,196 | 148 | 2,619 | 2,524 | 95 | |||||||||||||||||
Advertising | 1,179 | 1,253 | (74 | ) | 2,706 | 2,508 | 198 | ||||||||||||||||
Amortization of Solar Energy Partnership Investments | 940 | 916 | 24 | 1,880 | 1,832 | 48 | |||||||||||||||||
Other | 8,991 | 8,214 | 777 | 15,787 | 18,371 | (2,584 | ) | ||||||||||||||||
Total Other Expense | 15,546 | 14,919 | 627 | 29,342 | 31,999 | (2,657 | ) | ||||||||||||||||
Total Noninterest Expense | $ | 92,725 | $ | 90,791 | $ | 1,934 | $ | 185,782 | $ | 185,175 | $ | 607 |
Provision for Income Taxes and Effective Tax Rates | Table 7 | ||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Provision for Income Taxes | $ | 15,903 | $ | 12,785 | $ | 29,563 | $ | 23,227 | |||||||
Effective Tax Rates | 21.84 | % | 18.94 | % | 20.35 | % | 17.60 | % |
Loan and Lease Portfolio Balances | Table 8 | ||||||
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Commercial | |||||||
Commercial and Industrial | $ | 1,408,729 | $ | 1,331,149 | |||
Commercial Mortgage | 2,411,289 | 2,302,356 | |||||
Construction | 119,228 | 170,061 | |||||
Lease Financing | 163,070 | 176,226 | |||||
Total Commercial | 4,102,316 | 3,979,792 | |||||
Consumer | |||||||
Residential Mortgage | 3,785,006 | 3,673,796 | |||||
Home Equity | 1,694,577 | 1,681,442 | |||||
Automobile | 703,523 | 658,133 | |||||
Other 1 | 473,707 | 455,611 | |||||
Total Consumer | 6,656,813 | 6,468,982 | |||||
Total Loans and Leases | $ | 10,759,129 | $ | 10,448,774 |
1 | Comprised of other revolving credit, installment, and lease financing. |
Geographic Distribution of Loan and Lease Portfolio | Table 9 | ||||||||||||||||||||||
(dollars in thousands) | Hawaii | U.S. Mainland 1 | Guam | Other Pacific Islands | Foreign 2 | Total | |||||||||||||||||
June 30, 2019 | |||||||||||||||||||||||
Commercial | |||||||||||||||||||||||
Commercial and Industrial | $ | 1,211,376 | $ | 103,948 | $ | 85,410 | $ | 7,422 | $ | 573 | $ | 1,408,729 | |||||||||||
Commercial Mortgage | 2,048,183 | 119,196 | 243,439 | 471 | — | 2,411,289 | |||||||||||||||||
Construction | 119,228 | — | — | — | — | 119,228 | |||||||||||||||||
Lease Financing | 67,081 | 92,311 | 679 | — | 2,999 | 163,070 | |||||||||||||||||
Total Commercial | 3,445,868 | 315,455 | 329,528 | 7,893 | 3,572 | 4,102,316 | |||||||||||||||||
Consumer | |||||||||||||||||||||||
Residential Mortgage | 3,710,065 | — | 73,662 | 1,279 | — | 3,785,006 | |||||||||||||||||
Home Equity | 1,655,202 | 133 | 38,370 | 872 | — | 1,694,577 | |||||||||||||||||
Automobile | 547,518 | — | 139,633 | 16,372 | — | 703,523 | |||||||||||||||||
Other 3 | 387,407 | — | 57,696 | 28,604 | — | 473,707 | |||||||||||||||||
Total Consumer | 6,300,192 | 133 | 309,361 | 47,127 | — | 6,656,813 | |||||||||||||||||
Total Loans and Leases | $ | 9,746,060 | $ | 315,588 | $ | 638,889 | $ | 55,020 | $ | 3,572 | $ | 10,759,129 | |||||||||||
December 31, 2018 | |||||||||||||||||||||||
Commercial | |||||||||||||||||||||||
Commercial and Industrial | $ | 1,142,172 | $ | 100,786 | $ | 86,763 | $ | 1,277 | $ | 151 | $ | 1,331,149 | |||||||||||
Commercial Mortgage | 1,926,172 | 115,209 | 260,501 | 474 | — | 2,302,356 | |||||||||||||||||
Construction | 170,061 | — | — | — | — | 170,061 | |||||||||||||||||
Lease Financing | 61,813 | 109,933 | 786 | — | 3,694 | 176,226 | |||||||||||||||||
Total Commercial | 3,300,218 | 325,928 | 348,050 | 1,751 | 3,845 | 3,979,792 | |||||||||||||||||
Consumer | |||||||||||||||||||||||
Residential Mortgage | 3,596,908 | — | 75,373 | 1,515 | — | 3,673,796 | |||||||||||||||||
Home Equity | 1,643,529 | 161 | 36,571 | 1,181 | — | 1,681,442 | |||||||||||||||||
Automobile | 513,836 | — | 131,967 | 12,330 | — | 658,133 | |||||||||||||||||
Other 3 | 372,767 | — | 53,992 | 28,852 | — | 455,611 | |||||||||||||||||
Total Consumer | 6,127,040 | 161 | 297,903 | 43,878 | — | 6,468,982 | |||||||||||||||||
Total Loans and Leases | $ | 9,427,258 | $ | 326,089 | $ | 645,953 | $ | 45,629 | $ | 3,845 | $ | 10,448,774 |
1 | For secured loans and leases, classification as U.S. Mainland is made based on where the collateral is located. For unsecured loans and leases, classification as U.S. Mainland is made based on the location where the majority of the borrower’s business operations are conducted. |
2 | Loans and leases classified as Foreign represent those which are recorded in the Company’s international business units. |
3 | Comprised of other revolving credit, installment, and lease financing. |
Other Assets | Table 10 | ||||||
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Federal Home Loan Bank and Federal Reserve Bank Stock | $ | 34,970 | $ | 35,858 | |||
Derivative Financial Instruments | 27,869 | 14,604 | |||||
Low-Income Housing and Other Equity Investments | 78,866 | 85,860 | |||||
Deferred Compensation Plan Assets | 36,941 | 31,871 | |||||
Prepaid Expenses | 12,119 | 8,533 | |||||
Accounts Receivable | 18,496 | 18,996 | |||||
Other | 38,983 | 35,160 | |||||
Total Other Assets | $ | 248,244 | $ | 230,882 |
Deposits | Table 11 | ||||||
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Consumer | $ | 7,880,284 | $ | 7,726,731 | |||
Commercial | 6,178,984 | 6,098,186 | |||||
Public and Other | 1,429,553 | 1,202,325 | |||||
Total Deposits | $ | 15,488,821 | $ | 15,027,242 |
Savings Deposits | Table 12 | ||||||
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Money Market | $ | 2,345,970 | $ | 1,973,979 | |||
Regular Savings | 3,658,558 | 3,565,220 | |||||
Total Savings Deposits | $ | 6,004,528 | $ | 5,539,199 |
Securities Sold Under Agreements to Repurchase | Table 13 | ||||||
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Private Institutions | $ | 500,000 | $ | 500,000 | |||
Government Entities | 4,299 | 4,296 | |||||
Total Securities Sold Under Agreements to Repurchase | $ | 504,299 | $ | 504,296 |
Other Debt | Table 14 | ||||||
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Federal Home Loan Bank Advances | $ | 100,000 | $ | 125,000 | |||
Capital Lease Obligations | 10,605 | 10,643 | |||||
Total | $ | 110,605 | $ | 135,643 |
Business Segment Net Income | Table 15 | ||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Retail Banking | $ | 25,481 | $ | 22,424 | $ | 49,998 | $ | 41,441 | |||||||
Commercial Banking | 23,611 | 23,118 | 49,559 | 44,653 | |||||||||||
Investment Services and Private Banking | 6,075 | 6,533 | 10,903 | 11,989 | |||||||||||
Total | 55,167 | 52,075 | 110,460 | 98,083 | |||||||||||
Treasury and Other | 1,752 | 2,643 | 5,258 | 10,675 | |||||||||||
Consolidated Total | $ | 56,919 | $ | 54,718 | $ | 115,718 | $ | 108,758 |
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More | Table 16 | ||||||
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Non-Performing Assets | |||||||
Non-Accrual Loans and Leases | |||||||
Commercial | |||||||
Commercial and Industrial | $ | 552 | $ | 542 | |||
Commercial Mortgage | 11,310 | 2,040 | |||||
Total Commercial | 11,862 | 2,582 | |||||
Consumer | |||||||
Residential Mortgage | 4,697 | 5,321 | |||||
Home Equity | 2,486 | 3,671 | |||||
Total Consumer | 7,183 | 8,992 | |||||
Total Non-Accrual Loans and Leases | 19,045 | 11,574 | |||||
Foreclosed Real Estate | 2,737 | 1,356 | |||||
Total Non-Performing Assets | $ | 21,782 | $ | 12,930 | |||
Accruing Loans and Leases Past Due 90 Days or More | |||||||
Commercial | |||||||
Commercial and Industrial | $ | — | $ | 10 | |||
Total Commercial | — | 10 | |||||
Consumer | |||||||
Residential Mortgage | $ | 1,859 | $ | 2,446 | |||
Home Equity | 2,981 | 2,684 | |||||
Automobile | 607 | 513 | |||||
Other 1 | 963 | 914 | |||||
Total Consumer | 6,410 | 6,557 | |||||
Total Accruing Loans and Leases Past Due 90 Days or More | $ | 6,410 | $ | 6,567 | |||
Restructured Loans on Accrual Status and Not Past Due 90 Days or More | $ | 48,563 | $ | 48,731 | |||
Total Loans and Leases | $ | 10,759,129 | $ | 10,448,774 | |||
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases | 0.18 | % | 0.11 | % | |||
Ratio of Non-Performing Assets to Total Loans and Leases and Foreclosed Real Estate | 0.20 | % | 0.12 | % | |||
Ratio of Commercial Non-Performing Assets to Total Commercial Loans and Leases and Commercial Foreclosed Real Estate | 0.29 | % | 0.06 | % | |||
Ratio of Consumer Non-Performing Assets to Total Consumer Loans and Leases and Consumer Foreclosed Real Estate | 0.15 | % | 0.16 | % | |||
Ratio of Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More to Total Loans and Leases and Foreclosed Real Estate | 0.26 | % | 0.19 | % | |||
Changes in Non-Performing Assets | |||||||
Balance as of December 31, 2018 | $ | 12,930 | |||||
Additions | 14,403 | ||||||
Reductions | |||||||
Payments | (1,430 | ) | |||||
Return to Accrual Status | (1,660 | ) | |||||
Sales of Foreclosed Real Estate | (374 | ) | |||||
Charge-offs/Write-downs | (2,087 | ) | |||||
Total Reductions | (5,551 | ) | |||||
Balance as of June 30, 2019 | $ | 21,782 |
1 | Comprised of other revolving credit, installment, and lease financing. |
Loans Modified in a Troubled Debt Restructuring | Table 17 | ||||||
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||
Commercial | |||||||
Commercial and Industrial | $ | 6,287 | $ | 6,198 | |||
Commercial Mortgage | 7,131 | 4,144 | |||||
Construction | 1,267 | 1,321 | |||||
Total Commercial | 14,685 | 11,663 | |||||
Consumer | |||||||
Residential Mortgage | 19,045 | 19,753 | |||||
Home Equity | 3,495 | 3,359 | |||||
Automobile | 17,626 | 17,117 | |||||
Other 1 | 1,805 | 2,098 | |||||
Total Consumer | 41,971 | 42,327 | |||||
Total | $ | 56,656 | $ | 53,990 |
1 | Comprised of other revolving credit, installment, and lease financing. |
Reserve for Credit Losses | Table 18 | ||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Balance at Beginning of Period | $ | 112,845 | $ | 114,760 | $ | 113,515 | $ | 114,168 | |||||||
Loans and Leases Charged-Off | |||||||||||||||
Commercial | |||||||||||||||
Commercial and Industrial | (206 | ) | (485 | ) | (576 | ) | (691 | ) | |||||||
Commercial Mortgage | — | — | (1,616 | ) | — | ||||||||||
Consumer | |||||||||||||||
Residential Mortgage | (51 | ) | (3 | ) | (55 | ) | (100 | ) | |||||||
Home Equity | (145 | ) | (44 | ) | (440 | ) | (135 | ) | |||||||
Automobile | (1,691 | ) | (1,515 | ) | (3,444 | ) | (3,769 | ) | |||||||
Other 1 | (3,036 | ) | (3,614 | ) | (5,826 | ) | (6,954 | ) | |||||||
Total Loans and Leases Charged-Off | (5,129 | ) | (5,661 | ) | (11,957 | ) | (11,649 | ) | |||||||
Recoveries on Loans and Leases Previously Charged-Off | |||||||||||||||
Commercial | |||||||||||||||
Commercial and Industrial | 401 | 366 | 902 | 694 | |||||||||||
Consumer | |||||||||||||||
Residential Mortgage | 95 | 214 | 579 | 434 | |||||||||||
Home Equity | 746 | 451 | 1,334 | 1,076 | |||||||||||
Automobile | 908 | 738 | 1,789 | 1,337 | |||||||||||
Other 1 | 628 | 642 | 1,332 | 1,325 | |||||||||||
Total Recoveries on Loans and Leases Previously Charged-Off | 2,778 | 2,411 | 5,936 | 4,866 | |||||||||||
Net Loans and Leases Charged-Off | (2,351 | ) | (3,250 | ) | (6,021 | ) | (6,783 | ) | |||||||
Provision for Credit Losses | 4,000 | 3,500 | 7,000 | 7,625 | |||||||||||
Balance at End of Period 2 | $ | 114,494 | $ | 115,010 | $ | 114,494 | $ | 115,010 | |||||||
Components | |||||||||||||||
Allowance for Loan and Lease Losses | $ | 107,672 | $ | 108,188 | $ | 107,672 | $ | 108,188 | |||||||
Reserve for Unfunded Commitments | 6,822 | 6,822 | 6,822 | 6,822 | |||||||||||
Total Reserve for Credit Losses | $ | 114,494 | $ | 115,010 | $ | 114,494 | $ | 115,010 | |||||||
Average Loans and Leases Outstanding | $ | 10,631,558 | $ | 9,962,860 | $ | 10,549,893 | $ | 9,883,746 | |||||||
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding (annualized) | 0.09 | % | 0.13 | % | 0.12 | % | 0.14 | % | |||||||
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding | 1.00 | % | 1.08 | % | 1.00 | % | 1.08 | % |
1 | Comprised of other revolving credit, installment, and lease financing. |
2 | Included in this analysis is activity related to the Company’s reserve for unfunded commitments, which is separately recorded in other liabilities in the consolidated statements of condition. |
• | adjusting the balance sheet mix or altering the interest rate characteristics of assets and liabilities; |
• | changing product pricing strategies; |
• | modifying characteristics of the investment securities portfolio; and |
• | using derivative financial instruments. |
Net Interest Income Sensitivity Profile | Table 19 | ||||||||||||
Impact on Future Annual Net Interest Income | |||||||||||||
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||||||||
Gradual Change in Interest Rates (basis points) | |||||||||||||
+200 | $ | 15,990 | 3.1 | % | $ | 11,014 | 2.2 | % | |||||
+100 | 8,178 | 1.6 | 5,673 | 1.1 | |||||||||
-100 | (8,571 | ) | (1.7 | ) | (6,289 | ) | (1.2 | ) | |||||
Immediate Change in Interest Rates (basis points) | |||||||||||||
+200 | $ | 35,202 | 6.9 | % | $ | 23,309 | 4.6 | % | |||||
+100 | 20,311 | 4.0 | 12,517 | 2.5 | |||||||||
-100 | (26,687 | ) | (5.2 | ) | (17,665 | ) | (3.5 | ) |
Regulatory Capital and Ratios | Table 20 | ||||||||
(dollars in thousands) | June 30, 2019 | December 31, 2018 | |||||||
Regulatory Capital | |||||||||
Shareholders’ Equity | $ | 1,285,948 | $ | 1,268,200 | |||||
Less: | Goodwill 1 | 28,718 | 28,718 | ||||||
Postretirement Benefit Liability Adjustments | (35,519 | ) | (36,010 | ) | |||||
Net Unrealized Gains (Losses) on Investment Securities 2 | 8,095 | (15,033 | ) | ||||||
Other | (198 | ) | (198 | ) | |||||
Common Equity Tier 1 Capital | 1,284,852 | 1,290,723 | |||||||
Tier 1 Capital | 1,284,852 | 1,290,723 | |||||||
Allowable Reserve for Credit Losses | 114,494 | 113,515 | |||||||
Total Regulatory Capital | $ | 1,399,346 | $ | 1,404,238 | |||||
Risk-Weighted Assets | $ | 10,309,085 | $ | 9,878,904 | |||||
Key Regulatory Capital Ratios | |||||||||
Common Equity Tier 1 Capital Ratio | 12.46 | % | 13.07 | % | |||||
Tier 1 Capital Ratio | 12.46 | 13.07 | |||||||
Total Capital Ratio | 13.57 | 14.21 | |||||||
Tier 1 Leverage Ratio | 7.36 | 7.60 |
Issuer Purchases of Equity Securities | ||||||||||||||
Period | Total Number of Shares Purchased 1 | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 2 | ||||||||||
April 1 - 30, 2019 | 167,067 | $ | 81.20 | 165,000 | $ | 108,387,900 | ||||||||
May 1 - 31, 2019 | 159,000 | 80.38 | 159,000 | 95,608,109 | ||||||||||
June 1 - 30, 2019 | 109,432 | 79.57 | 109,432 | 86,900,914 | ||||||||||
Total | 435,499 | $ | 80.49 | 433,432 |
1 | During the second quarter of 2019, 2,067 shares were acquired from employees in connection with income tax withholdings related to the vesting of restricted stock and acquired by the trustee of a trust established pursuant to the Bank of Hawaii Corporation Director Deferred Compensation Plan (the “DDCP”) directly from the Parent in satisfaction of the Company’s obligations to participants under the DDCP. The issuance of these shares was made in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) by Section 4(a)(2) thereof. The trustee under the trust and the participants under the DDCP are “Accredited Investors”, as defined in Rule 501(a) under the Securities Act. These transactions did not involve a public offering and occurred without general solicitation or advertising. The shares were purchased at the closing price of the Parent’s common stock on the dates of purchase. |
2 | The share repurchase program was first announced in July 2001. The program has no set expiration or termination date. The actual amount and timing of future share repurchases, if any, will depend on market and economic conditions, regulatory rules, applicable SEC rules, and various other factors. |
Date: | July 22, 2019 | Bank of Hawaii Corporation | |
By: | /s/ Peter S. Ho | ||
Peter S. Ho | |||
Chairman of the Board, | |||
Chief Executive Officer, and | |||
President | |||
By: | /s/ Dean Y. Shigemura | ||
Dean Y. Shigemura | |||
Chief Financial Officer |
Exhibit Number | |
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Amended, Adopted Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 | |
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Amended, Adopted Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 | |
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
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101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
1. | I have reviewed this quarterly report on Form 10-Q of Bank of Hawaii Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit and risk committee of the registrant’s board of directors: |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 22, 2019 | /s/ Peter S. Ho |
Peter S. Ho | ||
Chairman of the Board, | ||
Chief Executive Officer, and | ||
President |
1. | I have reviewed this quarterly report on Form 10-Q of Bank of Hawaii Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit and risk committee of the registrant’s board of directors: |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 22, 2019 | /s/ Dean Y. Shigemura |
Dean Y. Shigemura | ||
Chief Financial Officer |
• | fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | July 22, 2019 | /s/ Peter S. Ho |
Peter S. Ho | ||
Chairman of the Board, | ||
Chief Executive Officer, and | ||
President | ||
/s/ Dean Y. Shigemura | ||
Dean Y. Shigemura | ||
Chief Financial Officer |
Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Interest Income | ||||
Interest and Fees on Loans and Leases | $ 110,401 | $ 101,311 | $ 218,912 | $ 198,945 |
Income on Investment Securities | ||||
Available-for-Sale | 15,072 | 12,380 | 28,504 | 24,521 |
Held-to-Maturity | 22,149 | 20,711 | 44,070 | 42,007 |
Deposits | 9 | (4) | 24 | 14 |
Funds Sold | 730 | 846 | 2,174 | 1,603 |
Other | 210 | 341 | 529 | 641 |
Total Interest Income | 148,571 | 135,585 | 294,213 | 267,731 |
Interest Expense | ||||
Deposits | 18,628 | 9,459 | 33,912 | 17,040 |
Securities Sold Under Agreements to Repurchase | 4,623 | 4,617 | 9,194 | 9,181 |
Funds Purchased | 512 | 83 | 669 | 136 |
Short-Term Borrowings | 1 | 13 | 37 | 29 |
Other Debt | 710 | 917 | 1,467 | 1,893 |
Total Interest Expense | 24,474 | 15,089 | 45,279 | 28,279 |
Net Interest Income | 124,097 | 120,496 | 248,934 | 239,452 |
Provision for Credit Losses | 4,000 | 3,500 | 7,000 | 7,625 |
Net Interest Income After Provision for Credit Losses | 120,097 | 116,996 | 241,934 | 231,827 |
Noninterest Income | ||||
Trust and Asset Management | 11,385 | 11,356 | 22,146 | 22,537 |
Mortgage Banking | 3,336 | 2,179 | 5,623 | 4,324 |
Service Charges on Deposit Accounts | 7,283 | 6,865 | 14,647 | 13,994 |
Fees, Exchange, and Other Service Charges | 14,252 | 14,400 | 28,460 | 28,733 |
Investment Securities Gains (Losses), Net | (776) | (1,702) | (1,611) | (2,368) |
Annuity and Insurance | 1,806 | 1,847 | 4,384 | 3,053 |
Bank-Owned Life Insurance | 1,779 | 1,796 | 3,489 | 3,638 |
Other | 6,385 | 4,557 | 11,991 | 11,422 |
Total Noninterest Income | 45,450 | 41,298 | 89,129 | 85,333 |
Noninterest Expense | ||||
Salaries and Benefits | 53,511 | 52,148 | 110,097 | 106,570 |
Net Occupancy | 8,579 | 8,588 | 16,173 | 17,122 |
Net Equipment | 6,895 | 5,845 | 13,728 | 11,372 |
Data Processing | 4,727 | 4,563 | 9,253 | 8,454 |
Professional Fees | 2,177 | 2,546 | 4,630 | 5,319 |
FDIC Insurance | 1,290 | 2,182 | 2,559 | 4,339 |
Other | 15,546 | 14,919 | 29,342 | 31,999 |
Total Noninterest Expense | 92,725 | 90,791 | 185,782 | 185,175 |
Income Before Provision for Income Taxes | 72,822 | 67,503 | 145,281 | 131,985 |
Provision for Income Taxes | 15,903 | 12,785 | 29,563 | 23,227 |
Net Income | $ 56,919 | $ 54,718 | $ 115,718 | $ 108,758 |
Basic Earnings Per Share (in dollars per share) | $ 1.40 | $ 1.31 | $ 2.84 | $ 2.59 |
Diluted Earnings Per Share (in dollars per share) | 1.40 | 1.30 | 2.82 | 2.57 |
Dividends Declared Per Share (in dollars per share) | $ 0.65 | $ 0.60 | $ 1.27 | $ 1.12 |
Basic Weighted Average Shares (in shares) | 40,541,594 | 41,884,221 | 40,738,772 | 41,960,743 |
Diluted Weighted Average Shares (in shares) | 40,769,767 | 42,152,200 | 40,988,001 | 42,252,900 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 56,919 | $ 54,718 | $ 115,718 | $ 108,758 |
Other Comprehensive Income (Loss), Net of Tax: | ||||
Net Unrealized Gains (Losses) on Investment Securities | 16,209 | (2,974) | 23,128 | (12,095) |
Defined Benefit Plans | 245 | 216 | 491 | 432 |
Total Other Comprehensive Income (Loss) | 16,454 | (2,758) | 23,619 | (11,663) |
Comprehensive Income | $ 73,373 | $ 51,960 | $ 139,337 | $ 97,095 |
Consolidated Statements of Condition (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
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Statement of Financial Position [Abstract] | ||
Held-to-Maturity: Fair Value | $ 2,973,229 | $ 3,413,994 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, authorized (in shares) | 500,000,000 | 500,000,000 |
Common Stock, issued (in shares) | 58,175,367 | 58,063,689 |
Common Stock, outstanding (in shares) | 40,687,719 | 41,499,898 |
Treasury Stock (in shares) | 17,487,648 | 16,563,791 |
Consolidated Statements of Shareholders' Equity (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||||
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Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Statement of Stockholders' Equity [Abstract] | ||||||
Dividends Declared Per Share (in dollars per share) | $ 0.65 | $ 620.00 | $ 0.60 | $ 520.00 | $ 1.27 | $ 1.12 |
Summary of Significant Accounting Policies |
6 Months Ended |
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Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation Bank of Hawaii Corporation (the “Parent”) is a Delaware corporation and a bank holding company headquartered in Honolulu, Hawaii. Bank of Hawaii Corporation and its subsidiaries (collectively, the “Company”) provide a broad range of financial products and services to customers in Hawaii, Guam, and other Pacific Islands. The accompanying consolidated financial statements include the accounts of the Parent and its subsidiaries. The Parent’s principal operating subsidiary is Bank of Hawaii (the “Bank”). The consolidated financial statements in this report have not been audited by an independent registered public accounting firm, but, in the opinion of management, reflect all adjustments necessary for a fair presentation of the results for the interim periods. All such adjustments are of a normal recurring nature. Intercompany accounts and transactions have been eliminated in consolidation. Certain prior period information has been reclassified to conform to the current period presentation. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for the full fiscal year or for any future period. The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and accompanying notes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from those estimates and such differences could be material to the financial statements. Variable Interest Entities Variable interests are defined as contractual ownership or other interests in an entity that change with fluctuations in an entity’s net asset value. The primary beneficiary consolidates the variable interest entity (“VIE”). The primary beneficiary is defined as the enterprise that has both (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses or the right to receive benefits that could be significant to the VIE. The Company has limited partnership interests in several low-income housing partnerships. These partnerships provide funds for the construction and operation of apartment complexes that provide affordable housing to lower-income households. If these developments successfully attract a specified percentage of residents falling in that lower-income range, state and/or federal income tax credits are made available to the partners. The tax credits are generally recognized over 10 years. In order to continue receiving the tax credits each year over the life of the partnership, the low-income residency targets must be maintained. Prior to January 1, 2015, the Company utilized the effective yield method whereby the Company recognized tax credits generally over 10 years and amortized the initial cost of the investment to provide a constant effective yield over the period that tax credits are allocated to the Company. On January 1, 2015, the Company adopted ASU No. 2014-01, “Accounting for Investments in Qualified Affordable Housing Projects” prospectively for new investments. ASU No. 2014-01 permits reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. As permitted by ASU No. 2014-01, the Company elected to continue to utilize the effective yield method for investments made prior to January 1, 2015. Unfunded commitments to fund these low-income housing partnerships were $12.8 million and $15.2 million as of June 30, 2019 and December 31, 2018, respectively. These unfunded commitments are unconditional and legally binding and are recorded in other liabilities in the consolidated statements of condition. See Note 6 Affordable Housing Projects Tax Credit Partnerships for more information. The Company also has limited partnership interests in solar energy tax credit partnership investments. These partnerships develop, build, own and operate solar renewable energy projects. Over the course of these investments, the Company expects to receive federal and state tax credits, tax-related benefits, and excess cash available for distribution, if any. The Company may be called to sell its interest in the limited partnerships through a call option once all investment tax credits have been recognized. Tax benefits associated with these investments are generally recognized over 6 years. Although these entities meet the definition of a VIE, the Company is not the primary beneficiary of the entities as the general partner has both the power to direct the activities that most significantly impact the economic performance of the entities and the obligation to absorb losses or the right to receive benefits that could be significant to the entities. While the partnership agreements allow the limited partners, through a majority vote, to remove the general partner, this right is not deemed to be substantive as the general partner can only be removed for cause. The investments in these entities are initially recorded at cost, which approximates the maximum exposure to loss as a result of the Company’s involvement with these unconsolidated entities. The balance of the Company’s investments in these entities was $78.9 million and $85.9 million as of June 30, 2019 and December 31, 2018, respectively, and is included in other assets in the consolidated statements of condition. Accounting Standards Adopted in 2019 In February 2016, the FASB issued ASU No. 2016-02, “Leases.” Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases): 1) a lease liability, which is the present value of a lessee’s obligation to make lease payments, and 2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessor accounting under the new guidance remains largely unchanged as it is substantially equivalent to existing guidance for sales-type leases, direct financing leases, and operating leases. Leveraged leases have been eliminated, although lessors can continue to account for existing leveraged leases using the current accounting guidance. Other limited changes were made to align lessor accounting with the lessee accounting model and the new revenue recognition standard. All entities will classify leases to determine how to recognize lease-related revenue and expense. Quantitative and qualitative disclosures will be required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The intention is to require enough information to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an entity’s leasing activities. ASU No. 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018. All entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. As the Company elected the transition option provided in ASU No. 2018-11 (see below), the modified retrospective approach was applied on January 1, 2019 (as opposed to January 1, 2017). The Company also elected certain relief options offered in ASU 2016-02 including the package of practical expedients, the option not to separate lease and non-lease components and instead to account for them as a single lease component, and the option not to recognize right-of-use assets and lease liabilities that arise from short-term leases (i.e., leases with terms of twelve months or less). The Company did not elect the hindsight practical expedient, which allows entities to use hindsight when determining lease term and impairment of right-of-use assets. The Company has several lease agreements, such as branch locations, which are considered operating leases, and therefore, were not previously recognized on the Company’s consolidated statements of condition. The new guidance requires these lease agreements to be recognized on the consolidated statements of condition as a right-of-use asset and a corresponding lease liability. The new guidance did not have a material impact on the consolidated statements of income or the consolidated statements of cash flows. See Note 16 Leases for more information. In August 2017, the FASB issued ASU No. 2017-12, “Targeted Improvements to Accounting for Hedging Activities.” This ASU’s objectives are to (1) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities; and (2) reduce the complexity of and simplify the application of hedge accounting by preparers. ASU No. 2017-12 is effective for interim and annual reporting periods beginning after December 15, 2018. The Company currently does not designate any derivative financial instruments as formal hedging relationships, and therefore, does not currently utilize hedge accounting. As such, ASU No. 2017-12 did not impact the Company’s Consolidated Financial Statements. In July 2018, the FASB issued ASU No. 2018-11, “Leases - Targeted Improvements” to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU No. 2016-02. Specifically, under the amendments in ASU 2018-11: (1) entities may elect not to recast the comparative periods presented when transitioning to the new leasing standard, and (2) lessors may elect not to separate lease and non-lease components when certain conditions are met. The amendments have the same effective date as ASU 2016-02 (January 1, 2019 for the Company). The Company adopted ASU 2018-11 on its required effective date of January 1, 2019 and elected both transition options mentioned above. ASU 2018-11 did not have a material impact on the Company’s Consolidated Financial Statements. In December 2018, the FASB issued ASU No. 2018-20, “Narrow-Scope Improvements for Lessors.” This ASU (1) allows lessors to make an accounting policy election of presenting sales taxes and other similar taxes collected from lessees on a net basis, (2) requires a lessor to exclude lessor costs paid directly by a lessee to third parties on the lessor’s behalf and include lessor costs that are paid by the lessor and reimbursed by the lessee in the measurement of variable lease revenue and the associated expense, and (3) clarifies that when lessors allocate variable payments to lease and non-lease components they are required to follow the recognition guidance in the new leases standard for the lease component and other applicable guidance, such as the new revenue standard, for the non-lease component. The Company adopted ASU 2018-20 on its required effective date of January 1, 2019 and elected to present sales taxes and other similar taxes collected from lessees on a net basis as described in (1) above. ASU 2018-20 did not have a material impact on the Company’s Consolidated Financial Statements. In March 2019, the FASB issued ASU No. 2019-01, “Leases: Codification Improvements.” This ASU (1) states that for lessors that are not manufacturers or dealers, the fair value of the underlying asset is its cost, less any volume or trade discounts, as long as there isn’t a significant amount of time between acquisition of the asset and lease commencement; (2) clarifies that lessors in the scope of ASC 942 (such as the Company) must classify principal payments received from sales-type and direct financing leases in investing activities in the statement of cash flows; and (3) clarifies the transition guidance related to certain interim disclosures provided in the year of adoption. To coincide with the adoption of ASU No. 2016-02, the Company elected to early adopt ASU 2019-01 on January 1, 2019. The adoption of this ASU did not have a material impact on the Company’s Consolidated Financial Statements. In April 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” With respect to Topic 815, Derivatives and Hedging, ASU 2019-04 clarifies that the reclassification of a debt security from held-to-maturity (“HTM”) to available-for-sale (“AFS”) under the transition guidance in ASU 2017-12 would not (1) call into question the classification of other HTM securities, (2) be required to actually designate any reclassified security in a last-of-layer hedge, or (3) be restricted from selling any reclassified security. As part of the transition of ASU 2019-04, entities may reclassify securities that would qualify for designation as the hedged item in a last-of-layer hedging relationship from HTM to AFS; however, entities that already made such a reclassification upon their adoption of ASU 2017-12 are precluded from reclassifying additional securities. The Company did not reclassify any securities from HTM to AFS upon adoption of ASU 2017-12. The Company elected to early adopt the amendments to Topic 815 in June 2019. See Note 3 Investment Securities for more information regarding the impact of the transfer of certain HTM debt securities to AFS. The amendments and pending adoption to Topics 326 and 825 are described in the section below. Accounting Standards Pending Adoption In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” approach known as current expected credit loss (“CECL”), which will apply to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held-to-maturity securities, loan commitments, and financial guarantees. The CECL approach will not apply to AFS debt securities. For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the credit losses will be recognized as allowances rather than reductions in the amortized cost of the securities. As a result, entities will recognize improvements to estimated credit losses immediately in earnings rather than as interest income over time, as they do today. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. ASU 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU No. 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019 and the Company is planning to adopt the standard in the first quarter of 2020. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach). The Company is continuing its implementation efforts through its Company-wide implementation team. This team has assigned roles and responsibilities, key tasks to complete, and a general timeline to be followed. The team meets periodically to discuss the latest developments and ensure progress is being made. The team has been working with an advisory consultant and has finalized and documented the methodologies that will be utilized. The team is currently developing controls, processes, policies and disclosures in preparation for performing a full end to end parallel run. The Company’s preliminary evaluation indicates the provisions of ASU No. 2016-13 are expected to impact the Company’s Consolidated Financial Statements, in particular the level of the reserve for credit losses. The Company is continuing to evaluate the extent of the potential impact and expects that portfolio composition and economic conditions at the time of adoption will be a factor. In August 2018, the FASB issued ASU No. 2018-13, “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU No. 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted. As ASU No. 2018-13 only revises disclosure requirements, it will not have a material impact on the Company’s Consolidated Financial Statements. As mentioned in the previous section the FASB issued ASU No. 2019-04 in April 2019. With respect to Topic 326, Financial Instruments - Credit Losses, ASU 2019-04 clarifies the scope of the credit losses standard and addresses issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other things. With respect to Topic 825, Financial Instruments, on recognizing and measuring financial instruments, ASU 2019-04 addresses the scope of the guidance, the requirement for remeasurement under ASC 820 when using the measurement alternative, certain disclosure requirements and which equity securities have to be remeasured at historical exchange rates. The amendments to Topic 326 have the same effective dates as ASU 2016-13 (i.e., the first quarter of 2020). The Company is currently evaluating the potential impact of Topic 326 amendments on the Company’s Consolidated Financial Statements. The amendments to Topic 825 are effective for interim and annual reporting periods beginning after December 15, 2019 and are not expected to have a material impact on the Company’s Consolidated Financial Statements. In May 2019, the FASB issued ASU No. 2019-05, “Financial Instruments - Credit Losses (Topic 326); Targeted Transition Relief.” This ASU allows entities to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of ASC 326-20 if the instruments are eligible for the fair value option under ASC 825-10. The fair value option election does not apply to held-to-maturity debt securities. Entities are required to make this election on an instrument-by-instrument basis. ASU 2019-05 has the same effective date as ASU 2016-13 (i.e., the first quarter of 2020). The Company does not expect to elect the fair value option, and therefore, ASU 2019-05 is not expected to impact the Company’s Consolidated Financial Statements.
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Cash and Cash Equivalents |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents The following table provides a reconciliation of cash and cash equivalents reported within the consolidated statements of condition that sum to the total of the same such amounts shown in the consolidated statements of cash flows:
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Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | Investment Securities The amortized cost, gross unrealized gains and losses, and fair value of the Company’s investment securities as of June 30, 2019 and December 31, 2018 were as follows:
As mentioned in Note 1 the FASB issued ASU No. 2019-04 in April 2019. In June 2019, the Company elected to early adopt the amendments to Topic 815, Derivatives and Hedging, which allowed the Company a one-time reclassification of certain prepayable debt securities from held-to-maturity to available-for-sale. On June 10, 2019, prepayable debt securities with a carrying value of $1.0 billion and a net unrealized gain of $3.1 million were transferred from held-to-maturity to available-for-sale. The reclassified securities consisted of mortgage-backed securities issued by U.S. government agencies and government-sponsored enterprises, municipal debt securities, and corporate debt securities. The table below presents an analysis of the contractual maturities of the Company’s investment securities as of June 30, 2019. Debt securities issued by government agencies (Small Business Administration securities) and mortgage-backed securities are disclosed separately in the table below as these investment securities may prepay prior to their scheduled contractual maturity dates.
Investment securities with carrying values of $2.5 billion and $2.3 billion as of June 30, 2019 and December 31, 2018, respectively, were pledged to secure deposits of governmental entities and securities sold under agreements to repurchase. The table below presents the gains and losses from the sales of investment securities for the three and six months ended June 30, 2019 and 2018.
The gross gains and losses on sales of investment securities during the three and six months ended June 30, 2019 included sales of municipal debt securities, mortgage-backed securities, and corporate debt securities as part of a portfolio repositioning. In addition, fees paid to the counterparties of our prior Visa Class B share sale transactions which are expensed as incurred also contributed to the losses during the three and six months ended June 30, 2019 and June 30, 2018. In addition, the second quarter of 2018 included a $1.0 million liability recorded related to a change in the Visa Class B conversion ratio. The Company’s gross unrealized losses and the related fair value of investment securities, aggregated by investment category and length of time in a continuous unrealized loss position, were as follows:
The Company does not believe that the investment securities that were in an unrealized loss position as of June 30, 2019, which were comprised of 258 individual securities, represent an other-than-temporary impairment. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. As of June 30, 2019 and December 31, 2018, the gross unrealized losses reported for mortgage-backed securities were mostly related to investment securities issued by the Government National Mortgage Association. The Company does not intend to sell the investment securities that were in an unrealized loss position and it is not more likely than not that the Company will be required to sell the investment securities before recovery of their amortized cost basis, which may be at maturity. Interest income from taxable and non-taxable investment securities for the three and six months ended June 30, 2019 and 2018 were as follows:
As of June 30, 2019, included in the Company’s investment securities portfolio were debt securities issued by political subdivisions within the State of Hawaii of $127.8 million, representing 99% of the total fair value of the Company’s municipal debt securities. Of the entire Hawaii municipal bond portfolio, 80% were credit-rated Aa2 or better by Moody’s. Most of the remaining Hawaii municipal bonds were credit-rated A1 or better by at least one nationally recognized statistical rating organization. Of the Company’s total Hawaii municipal bond holdings, 75% were general obligation issuances. As of June 30, 2019 and December 31, 2018, the carrying value of the Company’s Federal Home Loan Bank of Des Moines stock and Federal Reserve Bank stock was as follows:
These securities can only be redeemed or sold at their par value and only to the respective issuing institution or to another member institution. The Company records these non-marketable equity securities as a component of other assets and periodically evaluates these securities for impairment. Management considers these non-marketable equity securities to be long-term investments. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value. Visa Class B Restricted Shares In 2008, the Company received Visa Class B restricted shares as part of Visa’s initial public offering. These shares are transferable only under limited circumstances until they can be converted into the publicly traded Class A common shares. This conversion will not occur until the settlement of certain litigation which will be indemnified by Visa members, including the Company. Visa funded an escrow account from its initial public offering to settle these litigation claims. Should this escrow account be insufficient to cover these litigation claims, Visa is entitled to fund additional amounts to the escrow account by reducing each member bank’s Class B conversion ratio to unrestricted Class A shares. As of June 30, 2019, the conversion ratio was 1.6298. See Note 12 Derivative Financial Instruments for more information. |
Loans and Leases and the Allowance for Loan and Lease Losses |
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Loans and Leases and Allowance for Loan and Lease Losses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Leases and the Allowance for Loan and Lease Losses | Loans and Leases and the Allowance for Loan and Lease Losses Loans and Leases The Company’s loan and lease portfolio was comprised of the following as of June 30, 2019 and December 31, 2018:
The majority of the Company’s lending activity is with customers located in the State of Hawaii. A substantial portion of the Company’s real estate loans are secured by real estate in Hawaii. Net gains related to sales of residential mortgage loans, recorded as a component of mortgage banking income were $1.1 million and $0.5 million for the three months ended June 30, 2019 and 2018, respectively, and $1.6 million and $0.8 million for the six months ended June 30, 2019 and 2018, respectively. Allowance for Loan and Lease Losses (the “Allowance”) The following presents by portfolio segment, the activity in the Allowance for the three and six months ended June 30, 2019 and 2018. The following also presents by portfolio segment, the balance in the Allowance disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans and leases as of June 30, 2019 and 2018.
Credit Quality Indicators The Company uses several credit quality indicators to manage credit risk in an ongoing manner. The Company uses an internal credit risk rating system that categorizes loans and leases into pass, special mention, or classified categories. Credit risk ratings are applied individually to those classes of loans and leases that have significant or unique credit characteristics that benefit from a case-by-case evaluation. These are typically loans and leases to businesses or individuals in the classes which comprise the commercial portfolio segment. Groups of loans and leases that are underwritten and structured using standardized criteria and characteristics, such as statistical models (e.g., credit scoring or payment performance), are typically risk-rated and monitored collectively. These are typically loans and leases to individuals in the classes which comprise the consumer portfolio segment. The following are the definitions of the Company’s credit quality indicators:
The Company’s credit quality indicators are periodically updated on a case-by-case basis. The following presents by class and by credit quality indicator, the recorded investment in the Company’s loans and leases as of June 30, 2019 and December 31, 2018.
Aging Analysis The following presents by class, an aging analysis of the Company’s loan and lease portfolio as of June 30, 2019 and December 31, 2018.
Impaired Loans The following presents by class, information related to impaired loans as of June 30, 2019 and December 31, 2018.
1 Comprised of other revolving credit and installment financing. The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the three and six months ended June 30, 2019 and 2018.
For the three and six months ended June 30, 2019 and 2018, the amounts of interest income recognized by the Company within the periods that the loans were impaired were primarily related to loans modified in a troubled debt restructuring (“TDR”) that remained on accrual status. For the three and six months ended June 30, 2019 and 2018, the amount of interest income recognized using a cash-basis method of accounting during the periods that the loans were impaired was not material. Modifications A modification of a loan constitutes a TDR when the Company, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. Loans modified in a TDR were $56.7 million and $54.0 million as of June 30, 2019 and December 31, 2018, respectively. There were $0.3 million and $0.2 million commitments to lend additional funds on loans modified in a TDR as of June 30, 2019 and December 31, 2018, respectively. The Company offers various types of concessions when modifying a loan or lease. Commercial and industrial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor is often requested. Commercial mortgage and construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a co-borrower or guarantor. Construction loans modified in a TDR may also involve extending the interest-only payment period. Residential mortgage loans modified in a TDR generally include a lower interest rate and the loan being fully amortized for up to 40 years from the modification effective date. In some cases, the Company may forbear a portion of the unpaid principal balance with a balloon payment due upon maturity or pay-off of the loan. Land loans are also included in the class of residential mortgage loans. Land loans are typically structured as interest-only monthly payments with a balloon payment due at maturity. Land loan modifications usually involve extending the interest-only monthly payments up to an additional five years with a balloon payment due at maturity, or re-amortizing the remaining balance over a period up to 360 months. Interest rates are not changed for land loan modifications. Home equity modifications are made infrequently and uniquely designed to meet the specific needs of each borrower. Automobile loans modified in a TDR are primarily comprised of loans where the Company has lowered monthly payments by extending the term. Loans modified in a TDR are typically already on non-accrual status and partial charge-offs have in some cases already been taken against the outstanding loan balance. As a result, loans modified in a TDR may have the financial effect of increasing the specific Allowance associated with the loan. An Allowance for impaired commercial and consumer loans that have been modified in a TDR is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates. The following presents by class, information related to loans modified in a TDR during the three and six months ended June 30, 2019 and 2018.
The following presents by class, all loans modified in a TDR that defaulted during the three and six months ended June 30, 2019 and 2018, and within twelve months of their modification date. A TDR is considered to be in default once it becomes 60 days or more past due following a modification.
Commercial and consumer loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a TDR subsequently default, the Company evaluates the loan for possible further impairment. The specific Allowance associated with the loan may be increased, adjustments may be made in the allocation of the Allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan. Foreclosure Proceedings Consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure totaled $2.7 million as of June 30, 2019.
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Mortgage Servicing Rights |
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Transfers and Servicing of Financial Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Servicing Rights | Mortgage Servicing Rights The Company’s portfolio of residential mortgage loans serviced for third parties was $3.0 billion and $2.9 billion as of June 30, 2019 and December 31, 2018, respectively. Substantially all of these loans were originated by the Company and sold to third parties on a non-recourse basis with servicing rights retained. These retained servicing rights are recorded as a servicing asset and are initially recorded at fair value (see Note 14 Fair Value of Assets and Liabilities for more information). Changes to the balance of mortgage servicing rights are recorded in mortgage banking income in the Company’s consolidated statements of income. The Company’s mortgage servicing activities include collecting principal, interest, and escrow payments from borrowers; making tax and insurance payments on behalf of borrowers; monitoring delinquencies and executing foreclosure proceedings; and accounting for and remitting principal and interest payments to investors. Servicing income, including late and ancillary fees, was $1.8 million for the three months ended June 30, 2019 and 2018, and $3.6 million for the six months ended June 30, 2019 and 2018. Servicing income is recorded in mortgage banking income in the Company’s consolidated statements of income. The Company’s residential mortgage investor loan servicing portfolio is primarily comprised of fixed rate loans concentrated in Hawaii. For the three and six months ended June 30, 2019 and 2018, the change in the carrying value of the Company’s mortgage servicing rights accounted for under the fair value measurement method was as follows:
For the three and six months ended June 30, 2019 and 2018, the change in the carrying value of the Company’s mortgage servicing rights accounted for under the amortization method was as follows:
The key data and assumptions used in estimating the fair value of the Company’s mortgage servicing rights as of June 30, 2019 and December 31, 2018 were as follows:
A sensitivity analysis of the Company’s fair value of mortgage servicing rights to changes in certain key assumptions as of June 30, 2019 and December 31, 2018 is presented in the following table.
This analysis generally cannot be extrapolated because the relationship of a change in one key assumption to the change in the fair value of the Company’s mortgage servicing rights usually is not linear. Also, the effect of changing one key assumption without changing other assumptions is not realistic.
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Low Income Housing Tax Credit Partnerships |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Low Income Housing Tax Credit Partnerships | Affordable Housing Projects Tax Credit Partnerships The Company makes equity investments in various limited partnerships that sponsor affordable housing projects utilizing the Low Income Housing Tax Credit (“LIHTC”) pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants. Generally, these types of investments are funded through a combination of debt and equity. The Company is a limited partner in each LIHTC limited partnership. Each limited partnership is managed by an unrelated third party general partner who exercises significant control over the affairs of the limited partnership. The general partner has all the rights, powers and authority granted or permitted to be granted to a general partner of a limited partnership. Duties entrusted to the general partner of each limited partnership include, but are not limited to: investment in operating companies, company expenditures, investment of excess funds, borrowing funds, employment of agents, disposition of fund property, prepayment and refinancing of liabilities, votes and consents, contract authority, disbursement of funds, accounting methods, tax elections, bank accounts, insurance, litigation, cash reserve, and use of working capital reserve funds. Except for limited rights granted to the limited partner(s) relating to the approval of certain transactions, the limited partner(s) may not participate in the operation, management, or control of the limited partnership’s business, transact any business in the limited partnership’s name or have any power to sign documents for or otherwise bind the limited partnership. In addition, the general partner may only be removed by the limited partner(s) in the event the general partner fails to comply with the terms of the agreement or is negligent in performing its duties. The general partner of each limited partnership has both the power to direct the activities which most significantly affect the performance of each partnership and the obligation to absorb losses or the right to receive benefits that could be significant to the entities. Therefore, the Company has determined that it is not the primary beneficiary of any LIHTC partnership. The Company uses the effective yield method to account for its pre-2015 investments in these entities. Beginning January 1, 2015, any new investments that meet the requirements of the proportional amortization method are recognized using the proportional amortization method. The Company’s net affordable housing tax credit investments and related unfunded commitments were $68.6 million and $73.7 million as of June 30, 2019 and December 31, 2018, respectively, and are included in other assets in the consolidated statements of condition. Unfunded Commitments As of June 30, 2019, the expected payments for unfunded affordable housing commitments were as follows:
The following table presents tax credits and other tax benefits recognized and amortization expense related to affordable housing for the three and six months ended June 30, 2019 and 2018.
There were no impairment losses related to LIHTC investments during the six months ended June 30, 2019 and 2018. During the first quarter of 2018, the Company recorded a $2.0 million adjustment to increase its LIHTC investments. This adjustment resulted in a decrease to the provision for income tax.
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Balance Sheet Offsetting |
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Offsetting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Offsetting | Balance Sheet Offsetting Interest Rate Swap Agreements (“Swap Agreements”) The Company enters into swap agreements to facilitate the risk management strategies of a small number of commercial banking customers. The Company mitigates the risk of entering into these agreements by entering into equal and offsetting swap agreements with highly-rated third party financial institutions. The swap agreements are free-standing derivatives and are recorded at fair value in the Company’s consolidated statements of condition (asset positions are included in other assets and liability positions are included in other liabilities). The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. The master netting arrangements provide for a single net settlement of all swap agreements, as well as collateral, in the event of default on, or termination of, any one contract. Collateral, usually in the form of cash or marketable securities, is posted by the party (i.e., the Company or the financial institution counterparty) with net liability positions in accordance with contract thresholds. The Company had net liability positions with its financial institution counterparties totaling $5.8 million and $0.3 million as of June 30, 2019 and December 31, 2018, respectively. See Note 12 Derivative Financial Instruments for more information. Parties to a centrally cleared over-the-counter derivative exchange daily payments that reflect the daily change in value of the derivative. Effective 2017, these payments, commonly referred to as variation margin, are recorded as settlements of the derivatives’ mark-to-market exposure rather than collateral against the exposures. This rule change effectively results in any centrally cleared derivative having a fair value that approximates zero on a daily basis, and therefore, these swap agreements were not included in the offsetting table at the end of this section. See Note 12 Derivative Financial Instruments for more information. Securities Sold Under Agreements to Repurchase (“Repurchase Agreements”) The Company enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing arrangements (i.e., secured borrowings) and not as sales and subsequent repurchases of securities. The obligation to repurchase the securities is reflected as a liability in the Company’s consolidated statements of condition, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts. As a result, there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. In addition, as the Company does not enter into reverse repurchase agreements, there is no such offsetting to be done with the repurchase agreements. The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral pledged by the Company would be used to settle the fair value of the repurchase agreement should the Company be in default (e.g., fail to make an interest payment to the counterparty). For private institution repurchase agreements, if the private institution counterparty were to default (e.g., declare bankruptcy), the Company could cancel the repurchase agreement (i.e., cease payment of principal and interest) and attempt collection on the amount of collateral value in excess of the repurchase agreement fair value. The collateral is held by a third party financial institution in the counterparty’s custodial account. The counterparty has the right to sell or repledge the investment securities. For government entity repurchase agreements, the collateral is held by the Company in a segregated custodial account under a tri-party agreement. The Company is required by the counterparty to maintain adequate collateral levels. In the event the collateral fair value falls below stipulated levels, the Company will pledge additional securities. The Company closely monitors collateral levels to ensure adequate levels are maintained, while mitigating the potential risk of over-collateralization in the event of counterparty default. The following table presents the remaining contractual maturities of the Company’s repurchase agreements as of June 30, 2019 and December 31, 2018, disaggregated by the class of collateral pledged.
The following table presents the assets and liabilities subject to an enforceable master netting arrangement, or repurchase agreements, as of June 30, 2019 and December 31, 2018. The swap agreements the Company has with our commercial banking customers are not subject to an enforceable master netting arrangement, and therefore, are excluded from this table. As previously mentioned, centrally cleared swap agreements between the Company and institutional counterparties are also excluded from this table.
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Accumulated Other Comprehensive Income (Loss) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following table presents the components of other comprehensive income (loss) for the three and six months ended June 30, 2019 and 2018:
The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax, for the three and six months ended June 30, 2019 and 2018:
The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and six months ended June 30, 2019 and 2018:
2 These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost and are included in Other Noninterest Expense on the consolidated statements of income (see Note 11 Pension Plans and Postretirement Benefit Plan for additional details).
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Earnings Per Share |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share There were no adjustments to net income, the numerator, for purposes of computing earnings per share. The following is a reconciliation of the weighted average number of common shares outstanding for computing diluted earnings per share and antidilutive stock options and restricted stock outstanding for the three and six months ended June 30, 2019 and 2018:
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Business Segments |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | Business Segments The Company’s business segments are defined as Retail Banking, Commercial Banking, Investment Services and Private Banking, and Treasury and Other. The Company’s internal management accounting process measures the performance of these business segments. This process, which is not necessarily comparable with the process used by any other financial institution, uses various techniques to assign balance sheet and income statement amounts to the business segments, including allocations of income, expense, the provision for credit losses, and capital. This process is dynamic and requires certain allocations based on judgment and other subjective factors. Unlike financial accounting, there is no comprehensive authoritative guidance for management accounting that is equivalent to GAAP. Previously reported results have been reclassified to conform to the current reporting structure. The net interest income of the business segments reflects the results of a funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity and maturity characteristics and reflects the allocation of net interest income related to the Company’s overall asset and liability management activities on a proportionate basis. The basis for the allocation of net interest income is a function of the Company’s assumptions that are subject to change based on changes in current interest rates and market conditions. Funds transfer pricing also serves to transfer interest rate risk to Treasury. However, the other business segments have some latitude to retain certain interest rate exposures related to customer pricing decisions within guidelines. The provision for credit losses reflects the actual net charge-offs of the business segments. The amount of the consolidated provision for loan and lease losses is based on the methodology that we use to estimate the Company’s consolidated Allowance. The residual provision for credit losses to arrive at the consolidated provision for credit losses is included in Treasury and Other. Noninterest income and expense includes allocations from support units to business units. These allocations are based on actual usage where practicably calculated or by management’s estimate of such usage. The provision for income taxes is allocated to business segments using a 26% effective income tax rate. However, the provision for income taxes for the Company’s Leasing business unit (included in the Commercial Banking segment) and Auto Leasing portfolio and Pacific Century Life Insurance business unit (both included in the Retail Banking segment) are assigned their actual effective income tax rates due to the unique relationship that income taxes have with their products. The residual income tax expense or benefit to arrive at the consolidated effective income tax rate is included in Treasury and Other. Retail Banking Retail Banking offers a broad range of financial products and services to consumers and small businesses. Loan and lease products include residential mortgage loans, home equity lines of credit, automobile loans and leases, personal lines of credit, installment loans, and small business loans and leases. Deposit products include checking, savings, and time deposit accounts. Retail Banking also offers co-branded credit cards and some types of consumer insurance products. Products and services from Retail Banking are delivered to customers through 68 branch locations and 383 ATMs throughout Hawaii and the Pacific Islands, e-Bankoh (on-line banking service), a 24-hour customer service center, and a mobile banking service. Commercial Banking Commercial Banking offers products including corporate banking, commercial real estate loans, commercial lease financing, auto dealer financing, and deposit products. Commercial lending and deposit products are offered to middle-market and large companies in Hawaii and the Pacific Islands. In addition, Commercial Banking offers deposit products to government entities in Hawaii. Commercial real estate mortgages focus on customers that include investors, developers, and builders predominantly domiciled in Hawaii. Commercial Banking also includes international banking and provides merchant services to its customers. Investment Services and Private Banking Investment Services and Private Banking includes private banking and international client banking services, trust services, investment management, and institutional investment advisory services. A significant portion of this segment’s income is derived from fees, which are generally based on the market values of assets under management. The private banking and personal trust groups assist individuals and families in building and preserving their wealth by providing investment, credit, and trust services to high-net-worth individuals. The investment management group manages portfolios utilizing a variety of investment products. Institutional client services offer investment advice to corporations, government entities, and foundations. This segment also provides a full service brokerage offering equities, mutual funds, life insurance, and annuity products. Treasury and Other Treasury consists of corporate asset and liability management activities, including interest rate risk management and a foreign currency exchange business. This segment’s assets and liabilities (and related interest income and expense) consist of interest-bearing deposits, investment securities, federal funds sold and purchased, and short and long-term borrowings. The primary sources of noninterest income are from bank-owned life insurance, net gains from the sale of investment securities, and foreign exchange income related to customer-driven currency requests from merchants and island visitors. The net residual effect of the transfer pricing of assets and liabilities is included in Treasury, along with the elimination of intercompany transactions. Other organizational units (Technology, Operations, Marketing, Human Resources, Finance, Credit and Risk Management, and Corporate and Regulatory Administration) provide a wide-range of support to the Company’s other income earning segments. Expenses incurred by these support units are charged to the business segments through an internal cost allocation process. Selected business segment financial information as of and for the three and six months ended June 30, 2019 and 2018 were as follows:
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Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments The notional amount and fair value of the Company’s derivative financial instruments as of June 30, 2019 and December 31, 2018 were as follows:
The following table presents the Company’s derivative financial instruments, their fair values, and their location in the consolidated statements of condition as of June 30, 2019 and December 31, 2018:
The following table presents the Company’s derivative financial instruments and the amount and location of the net gains or losses recognized in the consolidated statements of income for the three and six months ended June 30, 2019 and 2018:
Management has received authorization from the Bank’s Board of Directors to use derivative financial instruments as an end-user in connection with the Bank’s risk management activities and to accommodate the needs of the Bank’s customers. As with any financial instrument, derivative financial instruments have inherent risks. Market risk is defined as the risk of adverse financial impact due to fluctuations in interest rates, foreign exchange rates, and equity prices. Market risks associated with derivative financial instruments are balanced with the expected returns to enhance earnings performance and shareholder value, while limiting the volatility of each. The Company uses various processes to monitor its overall market risk exposure, including sensitivity analysis, value-at-risk calculations, and other methodologies. Derivative financial instruments are also subject to credit and counterparty risk, which is defined as the risk of financial loss if a borrower or counterparty is either unable or unwilling to repay borrowings or settle transactions in accordance with the underlying contractual terms. Credit and counterparty risks associated with derivative financial instruments are similar to those relating to traditional financial instruments. The Company manages derivative credit and counterparty risk by evaluating the creditworthiness of each borrower or counterparty, adhering to the same credit approval process used for commercial lending activities. As of June 30, 2019 and December 31, 2018, the Company did not designate any derivative financial instruments as formal hedging relationships. The Company’s free-standing derivative financial instruments are required to be carried at their fair value on the Company’s consolidated statements of condition. These financial instruments have been limited to interest rate lock commitments (“IRLCs”), forward commitments, Swap Agreements, foreign exchange contracts, and conversion rate swap agreements. The Company enters into IRLCs for residential mortgage loans which commit us to lend funds to a potential borrower at a specific interest rate and within a specified period of time. IRLCs that relate to the origination of mortgage loans that will be held for sale are considered derivative financial instruments under applicable accounting guidance. Outstanding IRLCs expose the Company to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. To mitigate this risk, the Company utilizes forward commitments as economic hedges against the potential decreases in the values of the loans held for sale. IRLCs and forward commitments are free-standing derivatives which are carried at fair value with changes recorded in the mortgage banking component of noninterest income in the Company’s consolidated statements of income. The Company enters into Swap Agreements to facilitate the risk management strategies of a small number of commercial banking customers. The Company mitigates the interest rate risk of entering into these agreements by entering into equal and offsetting interest rate swap agreements with highly rated third party financial institutions. The interest rate swap agreements are free-standing derivatives and are recorded at fair value in the Company’s consolidated statements of condition. Fair value changes are recorded in other noninterest income in the Company’s consolidated statements of income. The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. Collateral, usually in the form of cash or marketable securities, is posted by the counterparty with net liability positions in accordance with contract thresholds. See Note 7 Balance Sheet Offsetting for more information. The Company’s interest rate swap agreements with financial institution counterparties may contain credit-risk-related contingent features tied to a specified credit rating of the Company. Under these provisions, should the Company’s specified rating fall below a particular level (e.g., investment grade), or if the Company no longer obtains the specified rating, the counterparty may require the Company to pledge collateral on an immediate and ongoing basis (subject to the requirement that such swaps are in a net liability position beyond the level specified in the contract), or require immediate settlement of the swap agreement. Other credit-risk-related contingent features may also allow the counterparty to require immediate settlement of the swap agreement if the Company fails to maintain a specified minimum level of capitalization. With regard to derivative contracts not centrally cleared through a clearinghouse, regulations require collateral to be posted by the party with a net liability position (i.e., the threshold for posting collateral was reduced to zero, subject to certain minimum transfer amounts). The requirements generally applied to new derivative contracts entered into by the Company after March 1, 2017, although certain counterparties may elect to apply lower thresholds to existing contracts. Parties to a centrally cleared over-the-counter derivative exchange daily payments that reflect the daily change in value of the derivative. These payments are commonly referred to as variation margin. Historically, variation margin payments have typically been treated as collateral against the derivative position. Effective 2017, the Chicago Mercantile Exchange and LCH.Clearnet Limited (collectively, the “clearinghouses”) amended their rulebooks to legally characterize variation margin payments for over-the-counter derivatives they clear as settlements of the derivatives’ mark-to-market exposure rather than collateral against the exposures. This rule change effectively causes any derivative cleared through one of the clearinghouses to have a fair value that approximates zero on a daily basis. The majority of the Company’s swap agreements executed with third party financial institutions are now required to be cleared through one of the clearinghouses. The uncleared swap agreements executed with third party financial institutions will remain subject to the collateral requirements and credit-risk-related contingent features described in the previous paragraphs, and therefore, are not subject to the variation margin rule change. Likewise, the swap agreements executed with the Company’s commercial banking customers will remain uncleared and will also not be subject to the variation margin rule change. The Company utilizes foreign exchange contracts to offset risks related to transactions executed on behalf of customers. The foreign exchange contracts are free-standing derivatives which are carried at fair value with changes included in other noninterest income in the Company’s consolidated statements of income. As each sale of Visa Class B restricted shares was completed, the Company entered into a conversion rate swap agreement with the buyer that requires payment to the buyer in the event Visa further reduces the conversion ratio of Class B into Class A unrestricted common shares. In the event of Visa increasing the conversion ratio, the buyer would be required to make payment to the Company. As of June 30, 2019, the conversion rate swap agreement was valued at zero (i.e., no contingent liability recorded) as further reductions to the conversion ratio were deemed neither probable nor reasonably estimable by management. However, in June 2018, Visa announced a reduction of the conversion ratio from 1.6483 to 1.6298 effective June 28, 2018. As a result, the Company recorded a $1.0 million liability in June 2018 which represents the amount due to the buyers of the Visa Class B shares in July 2018. See Note 3 Investment Securities for more information.
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Pension Plans and Postretirement Benefit Plan |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plans and Postretirement Benefit Plan | Pension Plans and Postretirement Benefit Plan Components of net periodic benefit cost for the Company’s pension plans and the postretirement benefit plan are presented in the following table for the three and six months ended June 30, 2019 and 2018.
The service cost component of net periodic benefit cost are included in salaries and benefits and all other components of net periodic benefit cost are included in other noninterest expense in the consolidated statements of income for the Company’s pension plans and postretirement benefit plan. For the three and six months ended June 30, 2019, the Company contributed $0.1 million and $0.2 million, respectively, to the pension plans and $0.3 million and $0.6 million, respectively, to the postretirement benefit plan. The Company expects to contribute a total of $0.5 million to the pension plans and $0.9 million to the postretirement benefit plan for the year ending December 31, 2019.
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Commitments, Contingencies, and Guarantees |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments, Contingencies, and Guarantees | Commitments, Contingencies, and Guarantees The Company’s credit commitments as of June 30, 2019 and December 31, 2018 were as follows:
Unfunded Commitments to Extend Credit Commitments to extend credit are agreements to lend to a customer as long as there is no violation of the terms or conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since commitments may expire without being drawn, the total commitment amount does not necessarily represent future cash requirements. Standby and Commercial Letters of Credit Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally become payable upon the failure of the customer to perform according to the terms of the underlying contract with the third party, while commercial letters of credit are issued specifically to facilitate commerce and typically result in the commitment being drawn on when the underlying transaction is consummated between the customer and a third party. The contractual amount of these letters of credit represents the maximum potential future payments guaranteed by the Company. The Company has recourse against the customer for any amount it is required to pay to a third party under a standby letter of credit, and generally holds cash or deposits as collateral on those standby letters of credit for which collateral is deemed necessary. Contingencies On September 9, 2016, a purported class action lawsuit was filed by a Bank customer primarily alleging Bank of Hawaii’s practice of determining whether consumer deposit accounts were overdrawn based on “available balance” (which deducts debit card transactions that have taken place but which have not yet been posted) was not properly applied or disclosed to customers. Additionally, on January 20, 2017, another purported class action lawsuit was filed by a Bank customer alleging Bank of Hawaii’s practice of assessing continuous negative balance overdraft fees on accounts remaining in a negative balance for extended periods of time beyond the date of the initial overdraft constituted a usurious interest charge and a breach of contract with the customer. This lawsuit was resolved by way of settlement for an amount that was not material. These lawsuits are similar to lawsuits filed against other financial institutions pertaining to available balance overdraft fee disclosures and continuing negative balance overdraft fees. The outcome of the first lawsuit remains uncertain at this time. Management disputes any wrongdoing and the case is being vigorously defended. In addition to the litigation noted above, the Company is subject to various other pending and threatened legal proceedings arising out of the normal course of business or operations. On at least a quarterly basis, the Company assesses its liabilities and contingencies in connection with outstanding legal proceedings using the most recent information available. On a case-by-case basis, reserves are established for those legal claims for which it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. Based on information currently available, management believes that the eventual outcome of these claims against the Company will not be materially in excess of such amounts reserved by the Company. However, in the event of unexpected future developments, it is possible that the ultimate resolution of these matters may result in a loss that materially exceeds the reserves established by the Company. Risks Related to Representation and Warranty Provisions The Company sells residential mortgage loans in the secondary market primarily to the Federal National Mortgage Association (“Fannie Mae”). The Company also pools Federal Housing Administration (“FHA”) insured and U.S. Department of Veterans Affairs (“VA”) guaranteed residential mortgage loans for sale to the Government National Mortgage Corporation (“Ginnie Mae”). These pools of FHA-insured and VA-guaranteed residential mortgage loans are securitized by Ginnie Mae. The agreements under which the Company sells residential mortgage loans to Fannie Mae or Ginnie Mae and the insurance or guaranty agreements with FHA and VA contain provisions that include various representations and warranties regarding the origination and characteristics of the residential mortgage loans. Although the specific representations and warranties vary among investors, insurance or guarantee agreements, they typically cover ownership of the loan, validity of the lien securing the loan, the absence of delinquent taxes or liens against the property securing the loan, compliance with loan criteria set forth in the applicable agreement, compliance with applicable federal, state, and local laws, and other matters. As of June 30, 2019, the unpaid principal balance of residential mortgage loans sold by the Company was $2.7 billion. The agreements under which the Company sells residential mortgage loans require delivery of various documents to the investor or its document custodian. Although these loans are primarily sold on a non-recourse basis, the Company may be obligated to repurchase residential mortgage loans or reimburse investors for losses incurred if a loan review reveals that underwriting and documentation standards were potentially not met. Some agreements may require the Company to repurchase delinquent loans. Upon receipt of a repurchase request, the Company works with investors or insurers to arrive at a mutually agreeable resolution. Repurchase demands are typically reviewed on an individual loan-by-loan basis to validate the claims made by the investor or insurer and to determine if a contractually required repurchase event has occurred. The Company manages the risk associated with potential repurchases or other forms of settlement through its underwriting and quality assurance practices and by servicing mortgage loans to meet investor and secondary market standards. During the six months ended June 30, 2019, there was one residential mortgage loan repurchased with an aggregate unpaid principal balance of $0.4 million as a result of the representation and warranty provisions contained in the applicable contract. The one loan was delinquent in payment of principal and interest at the time of repurchase, however no material loss was incurred related to this repurchase. As of June 30, 2019, there were no pending repurchase requests related to representation and warranty provisions. Risks Relating to Residential Mortgage Loan Servicing Activities In addition to servicing loans in the Company’s portfolio, substantially all of the loans the Company sells to investors are sold with servicing rights retained. The Company also services loans originated by other mortgage loan originators. As servicer, the Company’s primary duties are to: (1) collect payments due from borrowers; (2) advance certain delinquent payments of principal and interest; (3) maintain and administer any hazard, title, or primary mortgage insurance policies relating to the mortgage loans; (4) maintain any required escrow accounts for payment of taxes and insurance and administer escrow payments; and (5) foreclose on defaulted mortgage loans or, to the extent consistent with the documents governing a securitization, consider alternatives to foreclosure, such as loan modifications or short sales. Each agreement under which the Company acts as servicer generally specifies a standard of responsibility for actions taken by the Company in such capacity and provides protection against expenses and liabilities incurred by the Company when acting in compliance with the respective servicing agreements. However, if the Company commits a material breach of obligations as servicer, the Company may be subject to termination if the breach is not cured within a specified period following notice. The standards governing servicing and the possible remedies for violations of such standards vary by investor. These standards and remedies are determined by servicing guides issued by the investors as well as the contract provisions established between the investors and the Company. Remedies could include repurchase of an affected loan. For the six months ended June 30, 2019, there were no loans repurchased related to loan servicing activities. As of June 30, 2019, there were no pending repurchase requests related to loan servicing activities. Although to date repurchase requests related to representation and warranty provisions and servicing activities have been limited, it is possible that requests to repurchase mortgage loans may increase in frequency as investors more aggressively pursue all means of recovering losses on their purchased loans. However, as of June 30, 2019, management believes that this exposure is not material due to the historical level of repurchase requests and loss trends and thus has not established a liability for losses related to mortgage loan repurchases. As of June 30, 2019, 99% of the Company’s residential mortgage loans serviced for investors were current. The Company maintains ongoing communications with investors and continues to evaluate this exposure by monitoring the level and number of repurchase requests as well as the delinquency rates in the loans sold to investors.
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Fair Value of Assets and Liabilities |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities Fair Value Hierarchy Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. GAAP established a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:
In some instances, an instrument may fall into multiple levels of the fair value hierarchy. In such instances, the instrument’s level within the fair value hierarchy is based on the lowest of the three levels (with Level 3 being the lowest) that is significant to the fair value measurement. Our assessment of the significance of an input requires judgment and considers factors specific to the instrument. Assets and Liabilities Measured at Fair Value on a Recurring Basis Investment Securities Available-for-Sale Fair values of investment securities available-for-sale were primarily measured using information from a third-party pricing service. This service provides pricing information by utilizing evaluated pricing models supported with market data information. Standard inputs include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data from market research publications. Level 1 investment securities are comprised of debt securities issued by the U.S. Treasury, as quoted prices were available, unadjusted, for identical securities in active markets. Level 2 investment securities were primarily comprised of debt securities issued by the Small Business Administration, states and municipalities, corporations, as well as mortgage-backed securities issued by government agencies and government-sponsored enterprises. Fair values were estimated primarily by obtaining quoted prices for similar assets in active markets or through the use of pricing models. In cases where there may be limited or less transparent information provided by the Company’s third-party pricing service, fair value may be estimated by the use of secondary pricing services or through the use of non-binding third-party broker quotes. On a quarterly basis, management reviews the pricing information received from the Company’s third-party pricing service. This review process includes a comparison to a second source. The Company’s third-party pricing service has also established processes for us to submit inquiries regarding quoted prices. Periodically, based on these reviews, the Company will challenge the quoted prices provided by the Company’s third-party pricing service. The Company’s third-party pricing service will review the inputs to the evaluation in light of the new market data presented by us. The Company’s third-party pricing service may then affirm the original quoted price or may update the evaluation on a going-forward basis. Generally, we do not adjust the price from the third-party service provider. On a quarterly basis, management also reviews a sample of securities priced by the Company’s third-party pricing service to review the significant assumptions and valuation methodologies used by the service. The information provided is comprised of market reference data, which may include reported trades; bids, offers, or broker-dealer dealer quotes; benchmark yields and spreads; as well as other reference data as appropriate. Based on this review, management determines whether the current placement of the security in the fair value hierarchy is appropriate or whether transfers may be warranted. Loans Held for Sale The fair value of the Company’s residential mortgage loans held for sale was determined based on quoted prices for similar loans in active markets, and therefore, is classified as a Level 2 measurement. Mortgage Servicing Rights Mortgage servicing rights do not trade in an active market with readily observable market data. As a result, the Company estimates the fair value of mortgage servicing rights by using a discounted cash flow model to calculate the present value of estimated future net servicing income. The Company stratifies its mortgage servicing portfolio on the basis of loan type. The assumptions used in the discounted cash flow model are those that the Company believes market participants would use in estimating future net servicing income. Significant assumptions in the valuation of mortgage servicing rights include estimated loan repayment rates, the discount rate, servicing costs, and the timing of cash flows, among other factors. Mortgage servicing rights are classified as Level 3 measurements due to the use of significant unobservable inputs, as well as significant management judgment and estimation. Other Assets Other assets recorded at fair value on a recurring basis are primarily comprised of investments related to deferred compensation arrangements. Quoted prices for these investments, primarily in mutual funds, are available in active markets. Thus, the Company’s investments related to deferred compensation arrangements are classified as Level 1 measurements in the fair value hierarchy. Derivative Financial Instruments Derivative financial instruments recorded at fair value on a recurring basis are comprised of IRLCs, forward commitments, interest rate swap agreements, foreign exchange contracts, and Visa Class B to Class A shares conversion rate swap agreements. The fair values of IRLCs are calculated based on the value of the underlying loan held for sale, which in turn is based on quoted prices for similar loans in the secondary market. However, this value is adjusted by a factor which considers the likelihood that the loan in a locked position will ultimately close. This factor, the closing ratio, is derived from the Bank’s internal data and is adjusted using significant management judgment. As such, IRLCs are classified as Level 3 measurements. Forward commitments are classified as Level 2 measurements as they are primarily based on quoted prices from the secondary market based on the settlement date of the contracts, interpolated or extrapolated, if necessary, to estimate a fair value as of the end of the reporting period. The fair values of interest rate swap agreements are calculated using a discounted cash flow approach and utilize Level 2 observable inputs such as a market yield curve, effective date, maturity date, notional amount, and stated interest rate. In addition, the Company includes in its fair value calculation a credit factor adjustment which is based primarily on management judgment. Thus, interest rate swap agreements are classified as a Level 3 measurement. The fair values of foreign exchange contracts are calculated using the Bank’s multi-currency accounting system which utilizes contract specific information such as currency, maturity date, contractual amount, and strike price, along with market data information such as the spot rates of specific currency and yield curves. Foreign exchange contracts are classified as Level 2 measurements because while they are valued using the Bank’s multi-currency accounting system, significant management judgment or estimation is not required. The fair value of the Visa Class B restricted shares to Class A unrestricted common shares conversion rate swap agreements represent the amount owed by the Company to the buyer of the Visa Class B shares as a result of a reduction of the conversion ratio subsequent to the sales date. As of June 30, 2019 and December 31, 2018, the conversion rate swap agreements were valued at zero as reductions to the conversion ratio were neither probable nor reasonably estimable by management. See Note 12 Derivative Financial Instruments for more information. The Company is exposed to credit risk if borrowers or counterparties fail to perform. The Company seeks to minimize credit risk through credit approvals, limits, monitoring procedures, and collateral requirements. The Company generally enters into transactions with borrowers and counterparties that carry high quality credit ratings. Credit risk associated with borrowers or counterparties as well as the Company’s non-performance risk is factored into the determination of the fair value of derivative financial instruments. The table below presents the balances of assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018:
For the three and six months ended June 30, 2019 and 2018, the changes in Level 3 assets and liabilities measured at fair value on a recurring basis were as follows:
For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of June 30, 2019 and December 31, 2018, the significant unobservable inputs used in the fair value measurements were as follows:
The significant unobservable inputs used in the fair value measurement of the Company’s mortgage servicing rights are the weighted-average constant prepayment rate and weighted-average discount rate. Significant increases (decreases) in any of those inputs in isolation could result in a significantly lower (higher) fair value measurement. Although the constant prepayment rate and the discount rate are not directly interrelated, they generally move in opposite directions of each other. The Company estimates the fair value of mortgage servicing rights by using a discounted cash flow model to calculate the present value of estimated future net servicing income. The Company’s Treasury Division enters observable and unobservable inputs into the model to arrive at an estimated fair value. To assess the reasonableness of the fair value measurement, the Treasury Division performs a back-test by comparing the model’s results to historical prepayment data. The Treasury Division also compares the fair value of the Company’s mortgage servicing rights to a value calculated by an independent third party. Discussions are held with members from the Treasury, Mortgage Banking, and Controllers Divisions, along with the independent third party to discuss and reconcile the fair value estimates and key assumptions used by the respective parties in arriving at those estimates. A subcommittee of the Company’s Asset/Liability Management Committee is responsible for providing oversight over the valuation methodology and key assumptions. The significant unobservable input used in the fair value measurement of the Company’s IRLCs is the closing 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 closing ratio (i.e., higher percentage of loans are estimated to close) will increase the gain or loss. The closing ratio is largely dependent on the loan processing stage that a loan is currently in and the change in prevailing interest rates from the time of the rate lock. The closing ratio is computed by the Company’s secondary marketing system using historical data and the ratio is periodically reviewed by the Company for reasonableness. The unobservable input used in the fair value measurement of the Company’s interest rate swap agreements is the credit factor. This factor represents the risk that a counterparty is either unable or unwilling to settle a transaction in accordance with the underlying contractual terms. A significant increase (decrease) in the credit factor could result in a significantly lower (higher) fair value measurement. The credit factor is determined by the Treasury Division based on the risk rating assigned to each counterparty in which the Company holds a net asset position. The Company’s Credit Policy Committee periodically reviews and approves the Expected Default Frequency of the Economic Capital Model for Credit Risk. The Expected Default Frequency is used as the credit factor for interest rate swap agreements. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The Company may be required periodically to measure certain assets and liabilities at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from the application of lower-of-cost-or-fair value accounting or impairment write-downs of individual assets. The following table represents the assets measured at fair value on a nonrecurring basis as of June 30, 2019. There were no assets measured at fair value on a nonrecurring basis as of December 31, 2018.
The write-down of mortgage servicing rights accounted for under the amortization method was primarily due to changes in certain key assumptions used to estimate fair value. As previously mentioned, all of the Company's mortgage servicing rights are classified as Level 3 measurements due to the use of significant unobservable inputs, as well as significant management judgment and estimation. Fair Value Option The Company elects the fair value option for all residential mortgage loans held for sale. This election allows for a more effective offset of the changes in fair values of the loans held for sale and the derivative financial instruments used to financially hedge them without having to apply complex hedge accounting requirements. As noted above, the fair value of the Company’s residential mortgage loans held for sale was determined based on quoted prices for similar loans in active markets. The following table reflects the difference between the aggregate fair value and the aggregate unpaid principal balance of the Company’s residential mortgage loans held for sale as of June 30, 2019 and December 31, 2018.
Changes in the estimated fair value of residential mortgage loans held for sale are reported as a component of mortgage banking income in the Company’s consolidated statements of income. For the three and six months ended June 30, 2019 and 2018, the net gains or losses from the change in fair value of the Company’s residential mortgage loans held for sale were not material. Financial Instruments Not Recorded at Fair Value on a Recurring Basis The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments not recorded at fair value on a recurring basis as of June 30, 2019 and December 31, 2018. This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For non-marketable equity securities such as Federal Home Loan Bank and Federal Reserve Bank stock, the carrying amount is a reasonable estimate of fair value as these securities can only be redeemed or sold at their par value and only to the respective issuing government supported institution or to another member institution. For financial liabilities such as noninterest-bearing demand, interest-bearing demand, and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.
2 Excludes capitalized lease obligations.
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Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition On January 1, 2018, the Company adopted ASU No. 2014-09 “Revenue from Contracts with Customers” (Topic 606) and all subsequent ASUs that modified Topic 606. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities, which comprise the majority of the Company’s revenue. In addition, certain noninterest income streams such as fees associated with mortgage servicing rights, financial guarantees, derivatives, and certain credit card fees are also not within the scope of the new guidance. Topic 606 is applicable to noninterest revenue streams such as trust and asset management income, deposit related fees, interchange fees, merchant income, and annuity and insurance commissions. However, the recognition of these covered revenue streams did not change significantly upon adoption of Topic 606. Substantially all of the Company’s revenue is generated from contracts with customers. Noninterest revenue streams in-scope of Topic 606 are discussed below. Trust and Asset Management Trust and asset management income is primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to customers’ accounts. The Company does not earn performance-based incentives. Optional services such as real estate sales and tax return preparation services are also available to existing trust and asset management customers. The Company’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered. Service Charges on Deposit Accounts Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts. Fees, Exchange, and Other Service Charges Fees, exchange, and other service charges are primarily comprised of debit card income, ATM fees, merchant services income, and other service charges. Debit card income is primarily comprised of interchange fees earned whenever the Company’s debit cards are processed through card payment networks such as Visa. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees. Other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month. Annuity and Insurance Annuity and insurance income primarily consists of commissions received on annuity product sales. The Company acts as an intermediary between the Company’s customer and the insurance carrier. The Company’s performance obligation is generally satisfied upon the issuance of the annuity policy. Shortly after the policy is issued, the carrier remits the commission payment to the Company, and the Company recognizes the revenue. The Company does not earn a significant amount of trailer fees on annuity sales. The majority of the trailer fees relates to variable annuity products and are calculated based on a percentage of market value at period end. Revenue is not recognized until the annuity’s market value can be determined. Other Other noninterest income consists of other recurring revenue streams such as commissions from sales of mutual funds and other investments, investment advisor fees from the Company’s Managed Account Platform Services (MAPS) wealth management product, safety deposit box rental fees, and other miscellaneous revenue streams. Commissions from the sale of mutual funds and other investments are recognized on trade date, which is when the Company has satisfied its performance obligation. The Company also receives periodic service fees (i.e., trailers) from mutual fund companies typically based on a percentage of net asset value. Trailer revenue is recorded over time, usually monthly or quarterly, as net asset value is determined. Investment advisor fees from the MAPS wealth management product is earned over time and based on an annual percentage rate of the net asset value. The investment advisor fees are charged to the customer’s account in advance on the first month of the quarter, and the revenue is recognized over the following three-month period. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation. The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and six months ended June 30, 2019 and 2018.
Contract Balances A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The Company’s noninterest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of June 30, 2019 and December 31, 2018, the Company did not have any significant contract balances. Contract Acquisition Costs In connection with the adoption of Topic 606, an entity is required to capitalize, and subsequently amortize into expense, certain incremental costs of obtaining a contract with a customer if these costs are expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, sales commission). The Company utilizes the practical expedient which allows entities to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less. Upon adoption of Topic 606, the Company did not capitalize any contract acquisition cost.
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Leases Leases |
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Lessee, Operating Leases | Leases A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842. For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee. Lessee Accounting Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches, ATM locations, and office space with terms extending through 2052. Portions of certain properties are subleased for terms extending through 2033. Substantially all of the Company’s leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated statements of condition. With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated statements of condition as a right-of-use (“ROU”) asset and a corresponding lease liability. The Company has one existing finance lease (previously referred to as a capital lease) for a portion of the Company’s headquarters’ building with a lease term through 2052. As this lease was previously required to be recorded on the Company’s consolidated statements of condition, Topic 842 did not materially impact the accounting for this lease. The following table represents the consolidated statements of condition classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the consolidated statements of condition.
The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019 was used. For the Company’s only finance lease, the Company utilized its incremental borrowing rate at lease inception.
The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities. Variable lease cost also includes payments for ATM location leases in which payments are based on a percentage of ATM transactions (i.e., ATM surcharge fees), rather than a fixed amount.
Future minimum payments for finance leases and operating leases with initial or remaining terms of one year or more as of June 30, 2019 were as follows:
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Lessee, Finance Leases | Leases A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842. For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee. Lessee Accounting Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches, ATM locations, and office space with terms extending through 2052. Portions of certain properties are subleased for terms extending through 2033. Substantially all of the Company’s leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated statements of condition. With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated statements of condition as a right-of-use (“ROU”) asset and a corresponding lease liability. The Company has one existing finance lease (previously referred to as a capital lease) for a portion of the Company’s headquarters’ building with a lease term through 2052. As this lease was previously required to be recorded on the Company’s consolidated statements of condition, Topic 842 did not materially impact the accounting for this lease. The following table represents the consolidated statements of condition classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the consolidated statements of condition.
The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019 was used. For the Company’s only finance lease, the Company utilized its incremental borrowing rate at lease inception.
The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities. Variable lease cost also includes payments for ATM location leases in which payments are based on a percentage of ATM transactions (i.e., ATM surcharge fees), rather than a fixed amount.
Future minimum payments for finance leases and operating leases with initial or remaining terms of one year or more as of June 30, 2019 were as follows:
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Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Bank of Hawaii Corporation (the “Parent”) is a Delaware corporation and a bank holding company headquartered in Honolulu, Hawaii. Bank of Hawaii Corporation and its subsidiaries (collectively, the “Company”) provide a broad range of financial products and services to customers in Hawaii, Guam, and other Pacific Islands. The accompanying consolidated financial statements include the accounts of the Parent and its subsidiaries. The Parent’s principal operating subsidiary is Bank of Hawaii (the “Bank”). The consolidated financial statements in this report have not been audited by an independent registered public accounting firm, but, in the opinion of management, reflect all adjustments necessary for a fair presentation of the results for the interim periods. All such adjustments are of a normal recurring nature. Intercompany accounts and transactions have been eliminated in consolidation. Certain prior period information has been reclassified to conform to the current period presentation. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for the full fiscal year or for any future period. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from those estimates and such differences could be material to the financial statements.
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Variable Interest Entities | Variable Interest Entities Variable interests are defined as contractual ownership or other interests in an entity that change with fluctuations in an entity’s net asset value. The primary beneficiary consolidates the variable interest entity (“VIE”). The primary beneficiary is defined as the enterprise that has both (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses or the right to receive benefits that could be significant to the VIE. The Company has limited partnership interests in several low-income housing partnerships. These partnerships provide funds for the construction and operation of apartment complexes that provide affordable housing to lower-income households. If these developments successfully attract a specified percentage of residents falling in that lower-income range, state and/or federal income tax credits are made available to the partners. The tax credits are generally recognized over 10 years. In order to continue receiving the tax credits each year over the life of the partnership, the low-income residency targets must be maintained. Prior to January 1, 2015, the Company utilized the effective yield method whereby the Company recognized tax credits generally over 10 years and amortized the initial cost of the investment to provide a constant effective yield over the period that tax credits are allocated to the Company. On January 1, 2015, the Company adopted ASU No. 2014-01, “Accounting for Investments in Qualified Affordable Housing Projects” prospectively for new investments. ASU No. 2014-01 permits reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. As permitted by ASU No. 2014-01, the Company elected to continue to utilize the effective yield method for investments made prior to January 1, 2015. Unfunded commitments to fund these low-income housing partnerships were $12.8 million and $15.2 million as of June 30, 2019 and December 31, 2018, respectively. These unfunded commitments are unconditional and legally binding and are recorded in other liabilities in the consolidated statements of condition. See Note 6 Affordable Housing Projects Tax Credit Partnerships for more information. The Company also has limited partnership interests in solar energy tax credit partnership investments. These partnerships develop, build, own and operate solar renewable energy projects. Over the course of these investments, the Company expects to receive federal and state tax credits, tax-related benefits, and excess cash available for distribution, if any. The Company may be called to sell its interest in the limited partnerships through a call option once all investment tax credits have been recognized. Tax benefits associated with these investments are generally recognized over 6 years. Although these entities meet the definition of a VIE, the Company is not the primary beneficiary of the entities as the general partner has both the power to direct the activities that most significantly impact the economic performance of the entities and the obligation to absorb losses or the right to receive benefits that could be significant to the entities. While the partnership agreements allow the limited partners, through a majority vote, to remove the general partner, this right is not deemed to be substantive as the general partner can only be removed for cause. The investments in these entities are initially recorded at cost, which approximates the maximum exposure to loss as a result of the Company’s involvement with these unconsolidated entities. The balance of the Company’s investments in these entities was $78.9 million and $85.9 million as of June 30, 2019 and December 31, 2018, respectively, and is included in other assets in the consolidated statements of condition.
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Accounting Standards Adopted in the Current Year or Pending Adoption | Accounting Standards Adopted in 2019 In February 2016, the FASB issued ASU No. 2016-02, “Leases.” Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases): 1) a lease liability, which is the present value of a lessee’s obligation to make lease payments, and 2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessor accounting under the new guidance remains largely unchanged as it is substantially equivalent to existing guidance for sales-type leases, direct financing leases, and operating leases. Leveraged leases have been eliminated, although lessors can continue to account for existing leveraged leases using the current accounting guidance. Other limited changes were made to align lessor accounting with the lessee accounting model and the new revenue recognition standard. All entities will classify leases to determine how to recognize lease-related revenue and expense. Quantitative and qualitative disclosures will be required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The intention is to require enough information to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an entity’s leasing activities. ASU No. 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018. All entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. As the Company elected the transition option provided in ASU No. 2018-11 (see below), the modified retrospective approach was applied on January 1, 2019 (as opposed to January 1, 2017). The Company also elected certain relief options offered in ASU 2016-02 including the package of practical expedients, the option not to separate lease and non-lease components and instead to account for them as a single lease component, and the option not to recognize right-of-use assets and lease liabilities that arise from short-term leases (i.e., leases with terms of twelve months or less). The Company did not elect the hindsight practical expedient, which allows entities to use hindsight when determining lease term and impairment of right-of-use assets. The Company has several lease agreements, such as branch locations, which are considered operating leases, and therefore, were not previously recognized on the Company’s consolidated statements of condition. The new guidance requires these lease agreements to be recognized on the consolidated statements of condition as a right-of-use asset and a corresponding lease liability. The new guidance did not have a material impact on the consolidated statements of income or the consolidated statements of cash flows. See Note 16 Leases for more information. In August 2017, the FASB issued ASU No. 2017-12, “Targeted Improvements to Accounting for Hedging Activities.” This ASU’s objectives are to (1) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities; and (2) reduce the complexity of and simplify the application of hedge accounting by preparers. ASU No. 2017-12 is effective for interim and annual reporting periods beginning after December 15, 2018. The Company currently does not designate any derivative financial instruments as formal hedging relationships, and therefore, does not currently utilize hedge accounting. As such, ASU No. 2017-12 did not impact the Company’s Consolidated Financial Statements. In July 2018, the FASB issued ASU No. 2018-11, “Leases - Targeted Improvements” to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU No. 2016-02. Specifically, under the amendments in ASU 2018-11: (1) entities may elect not to recast the comparative periods presented when transitioning to the new leasing standard, and (2) lessors may elect not to separate lease and non-lease components when certain conditions are met. The amendments have the same effective date as ASU 2016-02 (January 1, 2019 for the Company). The Company adopted ASU 2018-11 on its required effective date of January 1, 2019 and elected both transition options mentioned above. ASU 2018-11 did not have a material impact on the Company’s Consolidated Financial Statements. In December 2018, the FASB issued ASU No. 2018-20, “Narrow-Scope Improvements for Lessors.” This ASU (1) allows lessors to make an accounting policy election of presenting sales taxes and other similar taxes collected from lessees on a net basis, (2) requires a lessor to exclude lessor costs paid directly by a lessee to third parties on the lessor’s behalf and include lessor costs that are paid by the lessor and reimbursed by the lessee in the measurement of variable lease revenue and the associated expense, and (3) clarifies that when lessors allocate variable payments to lease and non-lease components they are required to follow the recognition guidance in the new leases standard for the lease component and other applicable guidance, such as the new revenue standard, for the non-lease component. The Company adopted ASU 2018-20 on its required effective date of January 1, 2019 and elected to present sales taxes and other similar taxes collected from lessees on a net basis as described in (1) above. ASU 2018-20 did not have a material impact on the Company’s Consolidated Financial Statements. In March 2019, the FASB issued ASU No. 2019-01, “Leases: Codification Improvements.” This ASU (1) states that for lessors that are not manufacturers or dealers, the fair value of the underlying asset is its cost, less any volume or trade discounts, as long as there isn’t a significant amount of time between acquisition of the asset and lease commencement; (2) clarifies that lessors in the scope of ASC 942 (such as the Company) must classify principal payments received from sales-type and direct financing leases in investing activities in the statement of cash flows; and (3) clarifies the transition guidance related to certain interim disclosures provided in the year of adoption. To coincide with the adoption of ASU No. 2016-02, the Company elected to early adopt ASU 2019-01 on January 1, 2019. The adoption of this ASU did not have a material impact on the Company’s Consolidated Financial Statements. In April 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” With respect to Topic 815, Derivatives and Hedging, ASU 2019-04 clarifies that the reclassification of a debt security from held-to-maturity (“HTM”) to available-for-sale (“AFS”) under the transition guidance in ASU 2017-12 would not (1) call into question the classification of other HTM securities, (2) be required to actually designate any reclassified security in a last-of-layer hedge, or (3) be restricted from selling any reclassified security. As part of the transition of ASU 2019-04, entities may reclassify securities that would qualify for designation as the hedged item in a last-of-layer hedging relationship from HTM to AFS; however, entities that already made such a reclassification upon their adoption of ASU 2017-12 are precluded from reclassifying additional securities. The Company did not reclassify any securities from HTM to AFS upon adoption of ASU 2017-12. The Company elected to early adopt the amendments to Topic 815 in June 2019. See Note 3 Investment Securities for more information regarding the impact of the transfer of certain HTM debt securities to AFS. The amendments and pending adoption to Topics 326 and 825 are described in the section below. Accounting Standards Pending Adoption In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” approach known as current expected credit loss (“CECL”), which will apply to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held-to-maturity securities, loan commitments, and financial guarantees. The CECL approach will not apply to AFS debt securities. For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the credit losses will be recognized as allowances rather than reductions in the amortized cost of the securities. As a result, entities will recognize improvements to estimated credit losses immediately in earnings rather than as interest income over time, as they do today. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. ASU 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU No. 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019 and the Company is planning to adopt the standard in the first quarter of 2020. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach). The Company is continuing its implementation efforts through its Company-wide implementation team. This team has assigned roles and responsibilities, key tasks to complete, and a general timeline to be followed. The team meets periodically to discuss the latest developments and ensure progress is being made. The team has been working with an advisory consultant and has finalized and documented the methodologies that will be utilized. The team is currently developing controls, processes, policies and disclosures in preparation for performing a full end to end parallel run. The Company’s preliminary evaluation indicates the provisions of ASU No. 2016-13 are expected to impact the Company’s Consolidated Financial Statements, in particular the level of the reserve for credit losses. The Company is continuing to evaluate the extent of the potential impact and expects that portfolio composition and economic conditions at the time of adoption will be a factor. In August 2018, the FASB issued ASU No. 2018-13, “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU No. 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted. As ASU No. 2018-13 only revises disclosure requirements, it will not have a material impact on the Company’s Consolidated Financial Statements. As mentioned in the previous section the FASB issued ASU No. 2019-04 in April 2019. With respect to Topic 326, Financial Instruments - Credit Losses, ASU 2019-04 clarifies the scope of the credit losses standard and addresses issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other things. With respect to Topic 825, Financial Instruments, on recognizing and measuring financial instruments, ASU 2019-04 addresses the scope of the guidance, the requirement for remeasurement under ASC 820 when using the measurement alternative, certain disclosure requirements and which equity securities have to be remeasured at historical exchange rates. The amendments to Topic 326 have the same effective dates as ASU 2016-13 (i.e., the first quarter of 2020). The Company is currently evaluating the potential impact of Topic 326 amendments on the Company’s Consolidated Financial Statements. The amendments to Topic 825 are effective for interim and annual reporting periods beginning after December 15, 2019 and are not expected to have a material impact on the Company’s Consolidated Financial Statements. In May 2019, the FASB issued ASU No. 2019-05, “Financial Instruments - Credit Losses (Topic 326); Targeted Transition Relief.” This ASU allows entities to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of ASC 326-20 if the instruments are eligible for the fair value option under ASC 825-10. The fair value option election does not apply to held-to-maturity debt securities. Entities are required to make this election on an instrument-by-instrument basis. ASU 2019-05 has the same effective date as ASU 2016-13 (i.e., the first quarter of 2020). The Company does not expect to elect the fair value option, and therefore, ASU 2019-05 is not expected to impact the Company’s Consolidated Financial Statements.
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Cash and Cash Equivalents (Tables) |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents reported within the consolidated statements of condition that sum to the total of the same such amounts shown in the consolidated statements of cash flows:
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Investment Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of amortized cost, gross unrealized gains and losses, and fair value of investment securities | The amortized cost, gross unrealized gains and losses, and fair value of the Company’s investment securities as of June 30, 2019 and December 31, 2018 were as follows:
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Analysis of the contractual maturities of investment securities | The table below presents an analysis of the contractual maturities of the Company’s investment securities as of June 30, 2019. Debt securities issued by government agencies (Small Business Administration securities) and mortgage-backed securities are disclosed separately in the table below as these investment securities may prepay prior to their scheduled contractual maturity dates.
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Schedule of gains (losses) on sale of investment securities | The table below presents the gains and losses from the sales of investment securities for the three and six months ended June 30, 2019 and 2018.
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Schedule of investment securities in an unrealized loss position | The Company’s gross unrealized losses and the related fair value of investment securities, aggregated by investment category and length of time in a continuous unrealized loss position, were as follows:
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Schedule of interest income from taxable and non-taxable investment securities | Interest income from taxable and non-taxable investment securities for the three and six months ended June 30, 2019 and 2018 were as follows:
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Schedule of carrying value of company's Federal Home Loan Bank and Federal Reserve Bank | As of June 30, 2019 and December 31, 2018, the carrying value of the Company’s Federal Home Loan Bank of Des Moines stock and Federal Reserve Bank stock was as follows:
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Loans and Leases and the Allowance for Loan and Lease Losses (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Leases and Allowance for Loan and Lease Losses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loan and Lease Portfolio | The Company’s loan and lease portfolio was comprised of the following as of June 30, 2019 and December 31, 2018:
1 Comprised of other revolving credit, installment, and lease financing.
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Schedule of Portfolio Segment and Balance in Allowance Disaggregated on the Basis of Impairment Measurement Method | The following presents by portfolio segment, the activity in the Allowance for the three and six months ended June 30, 2019 and 2018. The following also presents by portfolio segment, the balance in the Allowance disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans and leases as of June 30, 2019 and 2018.
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Schedule of Recorded Investment in Loans and Leases by Class and by Credit Quality Indicator | The following presents by class and by credit quality indicator, the recorded investment in the Company’s loans and leases as of June 30, 2019 and December 31, 2018.
1 Comprised of other revolving credit, installment, and lease financing.
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Schedule of Aging Analysis by Class of Loan and Lease Portfolio | The following presents by class, an aging analysis of the Company’s loan and lease portfolio as of June 30, 2019 and December 31, 2018.
2 Represents non-accrual loans that are not past due 30 days or more; however, full payment of principal and interest is still not expected.
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Schedule of Information Related to Impaired Loans | The following presents by class, information related to impaired loans as of June 30, 2019 and December 31, 2018.
1 Comprised of other revolving credit and installment financing.
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Schedule of the Average Recorded Investment and Interest Income Recognized on Impaired Loans | The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the three and six months ended June 30, 2019 and 2018.
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Schedule of Loans Modified in a TDR and TDRs that Defaulted During the Period Within 12 mos of Modification Date | The following presents by class, information related to loans modified in a TDR during the three and six months ended June 30, 2019 and 2018.
The following presents by class, all loans modified in a TDR that defaulted during the three and six months ended June 30, 2019 and 2018, and within twelve months of their modification date. A TDR is considered to be in default once it becomes 60 days or more past due following a modification.
2 Comprised of other revolving credit and installment financing.
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Mortgage Servicing Rights (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing of Financial Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysis of mortgage servicing rights accounted for under the fair value measurement method | For the three and six months ended June 30, 2019 and 2018, the change in the carrying value of the Company’s mortgage servicing rights accounted for under the fair value measurement method was as follows:
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Analysis of mortgage servicing rights accounted for under the amortization method | For the three and six months ended June 30, 2019 and 2018, the change in the carrying value of the Company’s mortgage servicing rights accounted for under the amortization method was as follows:
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Schedule of key data and assumptions used in estimating the fair value of mortgage servicing rights | The key data and assumptions used in estimating the fair value of the Company’s mortgage servicing rights as of June 30, 2019 and December 31, 2018 were as follows:
2 Derived from multiple interest rate scenarios that incorporate a spread to a market yield curve and market volatilities.
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Schedule of sensitivity analysis of the fair value of mortgage servicing rights | A sensitivity analysis of the Company’s fair value of mortgage servicing rights to changes in certain key assumptions as of June 30, 2019 and December 31, 2018 is presented in the following table.
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Low Income Housing Tax Credit Partnerships (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments | As of June 30, 2019, the expected payments for unfunded affordable housing commitments were as follows:
The following table presents tax credits and other tax benefits recognized and amortization expense related to affordable housing for the three and six months ended June 30, 2019 and 2018.
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Balance Sheet Offsetting (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Offsetting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Repurchase Agreements - by maturity date and collateral type | The following table presents the remaining contractual maturities of the Company’s repurchase agreements as of June 30, 2019 and December 31, 2018, disaggregated by the class of collateral pledged.
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Schedule of assets and liabilities subject to an enforceable master netting arrangement | The following table presents the assets and liabilities subject to an enforceable master netting arrangement, or repurchase agreements, as of June 30, 2019 and December 31, 2018. The swap agreements the Company has with our commercial banking customers are not subject to an enforceable master netting arrangement, and therefore, are excluded from this table. As previously mentioned, centrally cleared swap agreements between the Company and institutional counterparties are also excluded from this table.
1 The application of collateral cannot reduce the net amount below zero. Therefore, excess collateral is not reflected in this table. For repurchase agreements with private institutions, the fair value of investment securities pledged was $542.0 million and $526.7 million as of June 30, 2019 and December 31, 2018, respectively. For repurchase agreements with government entities, the fair value of investment securities pledged was $5.2 million and $6.8 million as of June 30, 2019 and December 31, 2018, respectively. |
Accumulated Other Comprehensive Income (Loss) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of other comprehensive income | The following table presents the components of other comprehensive income (loss) for the three and six months ended June 30, 2019 and 2018:
1 The amount relates to the amortization/accretion of unrealized net gains and losses related to the Company’s reclassification of available-for-sale investment securities to the held-to-maturity category. The unrealized net gains/losses will be amortized/accreted over the remaining life of the investment securities as an adjustment of yield.
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Schedule of accumulated other comprehensive income (loss) | The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax, for the three and six months ended June 30, 2019 and 2018:
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Reclassification out of accumulated other comprehensive income | The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and six months ended June 30, 2019 and 2018:
2 These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost and are included in Other Noninterest Expense on the consolidated statements of income (see Note 11 Pension Plans and Postretirement Benefit Plan for additional details).
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Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of the weighted average number of common shares outstanding for computing diluted earnings per share and antidilutive stock options and restricted stock outstanding | The following is a reconciliation of the weighted average number of common shares outstanding for computing diluted earnings per share and antidilutive stock options and restricted stock outstanding for the three and six months ended June 30, 2019 and 2018:
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Business Segments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Business Segment Financial Information | Selected business segment financial information as of and for the three and six months ended June 30, 2019 and 2018 were as follows:
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Derivative Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the notional amount and fair value of the derivative financial instruments | The notional amount and fair value of the Company’s derivative financial instruments as of June 30, 2019 and December 31, 2018 were as follows:
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Derivative financial instruments, their fair values, and balance sheet location | The following table presents the Company’s derivative financial instruments, their fair values, and their location in the consolidated statements of condition as of June 30, 2019 and December 31, 2018:
1 Asset derivatives are included in other assets and liability derivatives are included in other liabilities in the consolidated statements of condition.
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Derivative financial instruments and the amount and location of the net gains or losses recognized in the statements of income | The following table presents the Company’s derivative financial instruments and the amount and location of the net gains or losses recognized in the consolidated statements of income for the three and six months ended June 30, 2019 and 2018:
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Pension Plans and Postretirement Benefit Plan (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of net periodic benefit cost | Components of net periodic benefit cost for the Company’s pension plans and the postretirement benefit plan are presented in the following table for the three and six months ended June 30, 2019 and 2018.
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Commitments, Contingencies, and Guarantees (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit commitments | The Company’s credit commitments as of June 30, 2019 and December 31, 2018 were as follows:
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Fair Value of Assets and Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances of assets and liabilities measured at fair value on a recurring basis | The table below presents the balances of assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018:
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Changes in Level 3 assets and liabilities measured at fair value on a recurring basis | For the three and six months ended June 30, 2019 and 2018, the changes in Level 3 assets and liabilities measured at fair value on a recurring basis were as follows:
2 Realized and unrealized gains and losses related to interest rate lock commitments are reported as a component of mortgage banking income in the Company’s consolidated statements of income. Realized and unrealized gains and losses related to interest rate swap agreements are reported as a component of other noninterest income in the Company’s consolidated statements of income.
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Summary of the significant unobservable inputs | For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of June 30, 2019 and December 31, 2018, the significant unobservable inputs used in the fair value measurements were as follows:
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Assets and liabilities measured at fair value on a nonrecurring basis | The Company may be required periodically to measure certain assets and liabilities at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from the application of lower-of-cost-or-fair value accounting or impairment write-downs of individual assets. The following table represents the assets measured at fair value on a nonrecurring basis as of June 30, 2019. There were no assets measured at fair value on a nonrecurring basis as of December 31, 2018.
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Schedule of difference between the aggregate fair value and the aggregate unpaid principal balance of the Company's residential mortgage loans held for sale | The following table reflects the difference between the aggregate fair value and the aggregate unpaid principal balance of the Company’s residential mortgage loans held for sale as of June 30, 2019 and December 31, 2018.
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Schedule of carrying amount, fair value, and fair value hierarchy of financial instruments | The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments not recorded at fair value on a recurring basis as of June 30, 2019 and December 31, 2018. This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For non-marketable equity securities such as Federal Home Loan Bank and Federal Reserve Bank stock, the carrying amount is a reasonable estimate of fair value as these securities can only be redeemed or sold at their par value and only to the respective issuing government supported institution or to another member institution. For financial liabilities such as noninterest-bearing demand, interest-bearing demand, and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.
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Revenue Recognition (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and six months ended June 30, 2019 and 2018.
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Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease Assets and Liabilities | The following table represents the consolidated statements of condition classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the consolidated statements of condition.
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Lease cost and other information |
The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities. Variable lease cost also includes payments for ATM location leases in which payments are based on a percentage of ATM transactions (i.e., ATM surcharge fees), rather than a fixed amount.
1 Included in other debt interest expense in the Company’s consolidated statements of income. All other lease costs in this table are included in net occupancy expense.
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Finance Lease, Liability, Maturity | Future minimum payments for finance leases and operating leases with initial or remaining terms of one year or more as of June 30, 2019 were as follows:
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Lessee, Operating Lease, Liability, Maturity | Future minimum payments for finance leases and operating leases with initial or remaining terms of one year or more as of June 30, 2019 were as follows:
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Summary of Significant Accounting Policies (Variable Interest Entities) (Details 1) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Variable Interest Entity [Line Items] | ||
Unfunded commitments to fund low-income housing partnerships | $ 12,781 | |
Other Assets | ||
Variable Interest Entity [Line Items] | ||
Variable Interest Entity, Nonconsolidated, Carrying Amount, Assets | 78,900 | $ 85,900 |
Other Liabilities | ||
Variable Interest Entity [Line Items] | ||
Unfunded commitments to fund low-income housing partnerships | $ 12,800 | $ 15,200 |
Low-income housing partnerships | ||
Variable Interest Entity [Line Items] | ||
Period over which tax credits or benefits are generally recognized (in years) | 10 years | |
Solar energy partnerships [Member] | ||
Variable Interest Entity [Line Items] | ||
Period over which tax credits or benefits are generally recognized (in years) | 6 years |
Cash and Cash Equivalents (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Cash and Cash Equivalents [Abstract] | ||||
Interest-Bearing Deposits in Other Banks | $ 3,859 | $ 3,028 | ||
Funds Sold | 204,340 | 198,860 | ||
Cash and Due From Banks | 282,164 | 324,081 | ||
Total Cash and Cash Equivalents | $ 490,363 | $ 525,969 | $ 677,760 | $ 447,851 |
Investment Securities (Gains and Losses on Sales) (Details 3) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Investments, Debt and Equity Securities [Abstract] | ||||
Gain on Sale of Investments | $ 5,633 | $ 0 | $ 7,663 | $ 0 |
Gain (Loss) on Sale of Investments | (776) | (1,702) | (1,611) | (2,368) |
Loss on Sale of Investments | $ (6,409) | $ (1,702) | $ (9,274) | $ (2,368) |
(Interest Income - Taxable/Non-Taxable Invest. Sec.) (Details 5) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Investments, Debt and Equity Securities [Abstract] | ||||
Interest Income from Investment Securities, Taxable | $ 35,336 | $ 28,405 | $ 67,328 | $ 57,076 |
Interest Income from Investment Securities, Non-Taxable | 1,885 | 4,686 | 5,246 | 9,452 |
Total Interest Income from Investment Securities | $ 37,221 | $ 33,091 | $ 72,574 | $ 66,528 |
(FHLB and FRB Stocks) (Details 7) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Federal Home Loan Bank Stock | $ 14,000 | $ 15,000 |
Federal Reserve Bank Stock | 20,970 | 20,858 |
Total | $ 34,970 | $ 35,858 |
Investment Securities (Visa Class B Restricted Shares Narrative) (Details 8) |
3 Months Ended |
---|---|
Jun. 30, 2019
shares
| |
Visa Conversion Rate Swap Agreement | |
Net Investment Income [Line Items] | |
Debt Instrument, Convertible, Conversion Ratio | 1.6298 |
Equity securities remaining, shares | 83,014 |
Visa Class A Unrestricted Securities | |
Net Investment Income [Line Items] | |
Equity securities remaining, shares | 135,296 |
Loans and Leases and the Allowance for Loan and Lease Losses (Foreclosure Proceedings Narrative) (Details 8) $ in Millions |
Jun. 30, 2019
USD ($)
|
---|---|
Loans and Leases and Allowance for Loan and Lease Losses [Abstract] | |
Consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure | $ 2.7 |
Mortgage Servicing Rights (Narrative) (Details 1) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Dec. 31, 2018 |
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Transfers and Servicing of Financial Assets [Abstract] | ||||
Residential mortgage loans serviced for third parties | $ 3,000.0 | $ 3,000.0 | $ 2,900.0 | |
Servicing income, including late and ancillary fees | $ 1.8 | $ 1.8 | $ 3.6 |
Mortgage Servicing Rights (Fair value method rollforward) (Details 2) - Mortgage Servicing Rights - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Mortgage servicing rights accounted for under the fair value measurement method [Rollforward] | ||||
Balance at Beginning of Period | $ 1,268 | $ 1,404 | $ 1,290 | $ 1,454 |
Due to Payoffs | (56) | (38) | (78) | (88) |
Total Changes in Fair Value of Mortgage Servicing Rights | (56) | (38) | (78) | (88) |
Balance at End of Period | $ 1,212 | $ 1,366 | $ 1,212 | $ 1,366 |
Mortgage Servicing Rights (Amortization method rollforward) (Details 3) - Mortgage Servicing Rights - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Servicing Asset at Amortized Cost [Line Items] | ||||||||
Valuation Allowance | $ 10 | $ 0 | $ 10 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Mortgage Servicing Rights Accounted for Under the Amortization Method {Rollforward) | ||||||||
Balance at Beginning of Period | 22,881 | 23,089 | 23,020 | 23,168 | ||||
Servicing Rights that Resulted From Asset Transfers | 974 | 775 | 1,524 | 1,396 | ||||
Amortization | (824) | (647) | (1,513) | (1,347) | ||||
Balance at End of Period | 23,021 | 23,217 | 23,021 | 23,217 | ||||
Fair Value of Mortgage Servicing Rights Accounted for Under the Amortization Method | ||||||||
Beginning of Period | 26,814 | 28,600 | 29,218 | 26,716 | ||||
End of Period | $ 24,905 | $ 29,746 | $ 24,905 | $ 29,746 |
Mortgage Servicing Rights (Key assumptions) (Details 4) - Mortgage Servicing Rights |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Key data and assumptions used in estimating the fair value of mortgage servicing rights | ||
Weighted-Average Constant Prepayment Rate (as a percent) | 10.39% | 7.01% |
Weighted-Average Life (in years) | 6 years 3 months 29 days | 7 years 10 months 20 days |
Weighted-Average Note Rate (as a percent) | 4.06% | 4.06% |
Weighted-Average Discount Rate (as a percent) | 7.49% | 9.59% |
Mortgage Servicing Rights (Sensitivity analysis) (Details 5) - Mortgage Servicing Rights - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
|
Sensitivity analysis of fair value of mortgage servicing rights to changes in certain key assumptions | |||||
Valuation Allowance for Impairment of Recognized Servicing Assets, Additions (Deductions) for Expenses (Recoveries) | $ 10 | $ 0 | $ 10 | $ 0 | |
Constant Prepayment Rate | |||||
Decrease in fair value from 25 basis points (“bps”) adverse change | (292) | (292) | $ (361) | ||
Decrease in fair value from 50 bps adverse change | (577) | (577) | (716) | ||
Discount Rate | |||||
Decrease in fair value from 25 bps adverse change | (253) | (253) | (325) | ||
Decrease in fair value from 50 bps adverse change | $ (502) | $ (502) | $ (643) |
Low Income Housing Tax Credit Partnerships (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
|
Affordable Housing Tax Credit Investments, Unfunded Commitment [Abstract] | ||||||
2019 | $ 3,050 | $ 3,050 | ||||
2020 | 8,317 | 8,317 | ||||
2021 | 42 | 42 | ||||
2022 | 49 | 49 | ||||
2023 | 42 | 42 | ||||
Thereafter | 1,281 | 1,281 | ||||
Total Unfunded Commitments | 12,781 | 12,781 | ||||
Effective Yield Method | ||||||
Tax credits and other tax benefits recognized | 2,930 | $ 3,380 | 5,859 | $ 6,812 | ||
Amortization Expense in Provision for Income Taxes | 1,891 | 2,078 | 3,783 | 4,155 | ||
Proportional Amortization Method | ||||||
Tax credits and other tax benefits recognized | 753 | 410 | 1,507 | 820 | ||
Amortization Expense in Provision for Income Taxes | 645 | $ 333 | 1,289 | 666 | ||
Net affordable housing tax credit investments and related unfunded commitments | $ 68,600 | 68,600 | $ 73,700 | |||
Write down from impairment of LIHTC Investments | $ 0 | $ 0 | ||||
Low income housing investment partnerships basis adjustments, provision income tax expense | $ 2,000 |
Earnings Per Share (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Reconciliation of Diluted Shares | ||||
Denominator for Basic Earnings Per Share (in shares) | 40,541,594 | 41,884,221 | 40,738,772 | 41,960,743 |
Dilutive Effect of Equity Based Awards (in shares) | 228,173 | 267,979 | 249,229 | 292,157 |
Denominator for Diluted Earnings Per Share (in shares) | 40,769,767 | 42,152,200 | 40,988,001 | 42,252,900 |
Antidilutive Stock Options and Restricted Stock Outstanding (in shares) | 4,706 | 1,293 | 4,706 | 1,293 |
Business Segments (Business Segments Financial Information and Narrative) (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jun. 30, 2019
USD ($)
|
Mar. 31, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Mar. 31, 2018
USD ($)
|
Jun. 30, 2019
USD ($)
atm
branch
|
Jun. 30, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Business segment financial information | |||||||
Federal and State effective tax rate used for segment reporting | 26.00% | ||||||
Net Interest Income | $ 124,097 | $ 120,496 | $ 248,934 | $ 239,452 | |||
Provision for Credit Losses | 4,000 | 3,500 | 7,000 | 7,625 | |||
Net Interest Income After Provision for Credit Losses | 120,097 | 116,996 | 241,934 | 231,827 | |||
Noninterest Income | 45,450 | 41,298 | 89,129 | 85,333 | |||
Noninterest Expense | (92,725) | (90,791) | (185,782) | (185,175) | |||
Income Before Provision for Income Taxes | 72,822 | 67,503 | 145,281 | 131,985 | |||
Provision for Income Taxes | (15,903) | (12,785) | (29,563) | (23,227) | |||
Net Income | 56,919 | $ 58,799 | 54,718 | $ 54,040 | 115,718 | 108,758 | |
Total Assets | 17,688,845 | 17,124,162 | $ 17,688,845 | 17,124,162 | $ 17,143,974 | ||
Retail Banking | |||||||
Business segment financial information | |||||||
Number of branch locations through which products and services are delivered to customers | branch | 68 | ||||||
Number of ATM's through which products and services are delivered to customers | atm | 383 | ||||||
Net Interest Income | 67,217 | 65,683 | $ 133,371 | 130,080 | |||
Provision for Credit Losses | 2,527 | 3,445 | 4,768 | 7,188 | |||
Net Interest Income After Provision for Credit Losses | 64,690 | 62,238 | 128,603 | 122,892 | |||
Noninterest Income | 21,108 | 19,598 | 42,341 | 38,851 | |||
Noninterest Expense | (52,086) | (51,939) | (104,610) | (106,538) | |||
Income Before Provision for Income Taxes | 33,712 | 29,897 | 66,334 | 55,205 | |||
Provision for Income Taxes | (8,231) | (7,473) | (16,336) | (13,764) | |||
Net Income | 25,481 | 22,424 | 49,998 | 41,441 | |||
Total Assets | 6,586,854 | 6,142,457 | 6,586,854 | 6,142,457 | |||
Commercial Banking | |||||||
Business segment financial information | |||||||
Net Interest Income | 45,703 | 44,010 | 92,993 | 86,908 | |||
Provision for Credit Losses | (175) | (194) | 1,271 | (345) | |||
Net Interest Income After Provision for Credit Losses | 45,878 | 44,204 | 91,722 | 87,253 | |||
Noninterest Income | 6,938 | 5,512 | 13,999 | 11,154 | |||
Noninterest Expense | (21,260) | (19,858) | (42,215) | (40,190) | |||
Income Before Provision for Income Taxes | 31,556 | 29,858 | 63,506 | 58,217 | |||
Provision for Income Taxes | (7,945) | (6,740) | (13,947) | (13,564) | |||
Net Income | 23,611 | 23,118 | 49,559 | 44,653 | |||
Total Assets | 4,089,452 | 3,799,535 | 4,089,452 | 3,799,535 | |||
Investment Services and Private Banking | |||||||
Business segment financial information | |||||||
Net Interest Income | 9,846 | 10,526 | 20,044 | 20,413 | |||
Provision for Credit Losses | (1) | 0 | (18) | (60) | |||
Net Interest Income After Provision for Credit Losses | 9,847 | 10,526 | 20,062 | 20,473 | |||
Noninterest Income | 14,859 | 14,745 | 28,104 | 28,415 | |||
Noninterest Expense | (16,457) | (16,400) | (33,360) | (32,607) | |||
Income Before Provision for Income Taxes | 8,249 | 8,871 | 14,806 | 16,281 | |||
Provision for Income Taxes | (2,174) | (2,338) | (3,903) | (4,292) | |||
Net Income | 6,075 | 6,533 | 10,903 | 11,989 | |||
Total Assets | 337,484 | 342,464 | 337,484 | 342,464 | |||
Treasury and Other | |||||||
Business segment financial information | |||||||
Net Interest Income | 1,331 | 277 | 2,526 | 2,051 | |||
Provision for Credit Losses | 1,649 | 249 | 979 | 842 | |||
Net Interest Income After Provision for Credit Losses | (318) | 28 | 1,547 | 1,209 | |||
Noninterest Income | 2,545 | 1,443 | 4,685 | 6,913 | |||
Noninterest Expense | (2,922) | (2,594) | (5,597) | (5,840) | |||
Income Before Provision for Income Taxes | (695) | (1,123) | 635 | 2,282 | |||
Provision for Income Taxes | 2,447 | 3,766 | 4,623 | 8,393 | |||
Net Income | 1,752 | 2,643 | 5,258 | 10,675 | |||
Total Assets | $ 6,675,055 | $ 6,839,706 | $ 6,675,055 | $ 6,839,706 |
Derivative Financial Instruments (Notional Amounts) (Details 1) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Interest Rate Lock Commitments | ||
Derivative [Line Items] | ||
Notional Amount | $ 84,652 | $ 33,133 |
Fair Value | 2,143 | 871 |
Forward Commitments | ||
Derivative [Line Items] | ||
Notional Amount | 89,635 | 34,102 |
Fair Value | (800) | (352) |
Receive Fixed / Pay Variable Swap | ||
Derivative [Line Items] | ||
Notional Amount | 686,865 | 505,034 |
Fair Value | 23,015 | (2,537) |
Pay Fixed / Receive Variable Swap | ||
Derivative [Line Items] | ||
Notional Amount | 686,865 | 505,034 |
Fair Value | (5,202) | 6,082 |
Foreign Exchange Contracts | ||
Derivative [Line Items] | ||
Notional Amount | 55,317 | 55,663 |
Fair Value | 421 | 793 |
Visa Conversion Rate Swap Agreement | ||
Derivative [Line Items] | ||
Notional Amount | 106,211 | 80,746 |
Fair Value | $ 0 | $ 0 |
Derivative Financial Instruments (Narrative) (Details 4) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
Jun. 30, 2018
USD ($)
|
|
Derivative [Line Items] | ||||
Document Period End Date | Jun. 30, 2019 | |||
Liability Derivatives | $ 8,292,000 | $ 8,292,000 | $ 9,747,000 | |
Visa Conversion Rate Swap Agreement | ||||
Derivative [Line Items] | ||||
Liability Derivatives | $ 1,000,000.0 | |||
Visa Conversion Rate Swap Agreement | ||||
Derivative [Line Items] | ||||
Liability Derivatives | $ 0 | $ 0 | ||
Visa Conversion Rate Swap Agreement | ||||
Derivative [Line Items] | ||||
Debt Instrument, Convertible, Conversion Ratio | 1.6298 |
Commitments, Contingencies, and Guarantees (Credit Commitments) (Details 1) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Credit Commitments [Line Items] | ||
Credit Commitments | $ 2,778,708 | $ 2,717,840 |
Unfunded Commitments to Extend Credit | ||
Credit Commitments [Line Items] | ||
Credit Commitments | 2,701,892 | 2,646,085 |
Standby Letters of Credit | ||
Credit Commitments [Line Items] | ||
Credit Commitments | 61,923 | 62,344 |
Commercial Letters of Credit | ||
Credit Commitments [Line Items] | ||
Credit Commitments | $ 14,893 | $ 9,411 |
Commitments, Contingencies, and Guarantees (Narrative) (Details 2) - Residential Mortgage $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
Loan
| |
Representations and Warranties [Line Items] | |
Continuing Involvement with Transferred Financial Assets, Principal Amount Outstanding | $ | $ 2,700.0 |
Number of Mortgage Loans Repurchased | 1,000 |
Unpaid principle balance on mortgages repurchased | $ | $ 0.4 |
Number of Mortgage Loans Repurchased, Pending | 0 |
Number of Mortgage Loans Repurchased due to Loan Servicing Activities | 0 |
Number of Mortgage Loans Repurchased due to Loan Servicing Activities, Pending | 0 |
Current Residential Mortgage Loans Serviced for Third Parties as Percentage of Total | 99.00% |
Fair Value of Assets and Liabilities (Narrative) (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
---|---|---|---|
Derivative [Line Items] | |||
Liability Derivatives | $ 8,292 | $ 9,747 | |
Visa Conversion Rate Swap Agreement | |||
Derivative [Line Items] | |||
Liability Derivatives | $ 1,000 |
Fair Value of Assets and Liabilities (Fair value on a nonrecurring basis) (Details 4) - Significant Other Unobservable Inputs (Level 3) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Net Carrying Amount | $ 24,905 |
Valuation Allowance | $ (10) |
Fair Value of Assets and Liabilities (FV option) (Details 5) - Residential mortgage loans held for sale - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value Option | ||
Aggregate Fair Value | $ 22,706 | $ 10,987 |
Aggregate Unpaid Principal | 22,102 | 10,656 |
Aggregate Fair Value Less Aggregate Unpaid Principal | $ 604 | $ 331 |
Leases (Lease Assets and Lease Liabilities) (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
Jan. 01, 2018 |
---|---|---|---|---|
Lease Right-of-Use Assets | ||||
Operating lease right-of-use assets | $ 103,336 | $ 106,514 | $ 0 | $ 0 |
Finance lease right-of-use assets | 2,412 | |||
Total Lease Right-of-Use Assets | 105,748 | |||
Lease Liabilities | ||||
Operating lease liabilities | 110,483 | $ 113,394 | $ 0 | $ 0 |
Finance lease liabilities | 10,605 | |||
Total Lease Liabilities | $ 121,088 |
Leases (Lessee, Finance Lease, Incremental Borrowing Rates) (Details) |
Jun. 30, 2019 |
---|---|
Weighted-average Remaining Lease Term [Abstract] | |
Operating leases | 17 years 2 months 12 days |
Finance leases | 33 years 6 months |
Weighted-average Discount Rate [Abstract] | |
Operating leases | 3.67% |
Finance leases | 7.04% |
Leases (Lease Cost and other Lease Information) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Lease, Cost [Abstract] | ||
Operating lease cost | $ 3,175 | $ 6,359 |
Variable lease cost | 734 | 1,594 |
Short-term lease cost | 134 | 217 |
Interest on lease liabilities | 187 | 374 |
Amortization of right-of-use assets | 18 | 36 |
Sublease income | (2,035) | (4,261) |
Net lease cost | 2,213 | 4,319 |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | 3,174 | 6,325 |
Operating cash flows from finance leases | 187 | 374 |
Financing cash flows from finance leases | 19 | 38 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 1,725 | 1,725 |
Right-of-use assets obtained in exchange for new finance lease liabilities | $ 0 | $ 0 |
Leases (Lease Maturity Schedule) (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
Jan. 01, 2018 |
---|---|---|---|---|
Finance Leases | ||||
June 30, 2020 | $ 825 | |||
June 30, 2021 | 825 | |||
June 30, 2022 | 825 | |||
June 30, 2023 | 825 | |||
June 30, 2024 | 825 | |||
Thereafter | 23,518 | |||
Total Future Minimum Lease Payments | 27,643 | |||
Amounts Representing Interest | (17,038) | |||
Present Value of Net Future Minimum Lease Payments, Finance Leases | 10,605 | |||
Operating Leases | ||||
June 30, 2020 | 12,438 | |||
June 30, 2021 | 11,308 | |||
June 30, 2022 | 10,989 | |||
June 30, 2023 | 9,910 | |||
June 30, 2024 | 8,929 | |||
Thereafter | 103,800 | |||
Total Future Minimum Lease Payments | 157,374 | |||
Amounts Representing Interest | (46,891) | |||
Present Value of Net Future Minimum Lease Payments, Operating Leases | $ 110,483 | $ 113,394 | $ 0 | $ 0 |
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