10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019.

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-15752

CENTURY BANCORP, INC.

(Exact name of registrant as specified in its charter)

COMMONWEALTH OF MASSACHUSETTS	04-2498617
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
400 MYSTIC AVENUE, MEDFORD, MA	02155
(Address of principal executive offices)	(Zip Code)

(781) 391-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of class	Trading Symbol(s)	Name of exchange
Class A Common Stock, $1.00 par value	CNBKA	Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes    ☐  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    ☒  Yes    ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

(Check one):

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐  Yes    ☒  No

As of October 31, 2019, the Registrant had outstanding:

Class A Common Stock, $1.00 par value	3,650,449 Shares
Class B Common Stock, $1.00 par value	1,917,460 Shares

Century Bancorp, Inc.

Index

		Page Number
Part I	Financial Information
	Forward Looking Statements		3
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheets: September 30, 2019 and December 31, 2018		4
	Consolidated Statements of Income: Three Months and Nine Months Ended September 30, 2019 and 2018		5
	Consolidated Statements of Comprehensive Income: Three Months and Nine Months Ended September 30, 2019 and 2018		6
	Consolidated Statements of Changes in Stockholders’ Equity: Three Months Ended September 30, 2019 and 2018		7
	Consolidated Statements of Changes in Stockholders’ Equity: Nine Months Ended September 30, 2019 and 2018		8
	Consolidated Statements of Cash Flows: Nine Months Ended September 30, 2019 and 2018		9
	Notes to Consolidated Financial Statements		10 - 34
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		35 - 45
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		46
Item 4.	Controls and Procedures		46
Part II.	Other Information
Item 1.	Legal Proceedings		47
Item 1A.	Risk Factors		47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		47
Item 3.	Defaults Upon Senior Securities		47
Item 4.	Mine Safety Disclosures		47
Item 5.	Other Information		47
Item 6.	Exhibits		47
Signatures			48
Exhibits	Ex-31.1
	Ex-31.2
	Ex-32.1
	Ex-32.2
	Ex-101 Instance Document
	Ex-101 Schema Document
	Ex-101 Calculation Linkbase Document
	Ex-101 Labels Linkbase Document
	Ex-101 Presentation Linkbase Document
	Ex-101 Definition Linkbase Document

Forward Looking Statements

Except for the historical information contained herein, this Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. Investors are cautioned that forward-looking statements are inherently uncertain. Actual performance and results of operations may differ materially from those projected or suggested in the forward-looking statements due to certain risks and uncertainties, including, without limitation, (i) the fact that the Company’s success is dependent to a significant extent upon general economic conditions in New England, (ii) the fact that the Company’s earnings depend to a great extent upon the level of net interest income (the difference between interest income earned on loans and investments and the interest expense paid on deposits and other borrowings) generated by the Bank and thus the Bank’s results of operations may be adversely affected by increases or decreases in interest rates, (iii) the fact that the banking business is highly competitive and the profitability of the Company depends upon the Bank’s ability to attract loans and deposits within its market area, where the Bank competes with a variety of traditional banking and other institutions such as credit unions and finance companies, and (iv) the fact that a significant portion of the Company’s loan portfolio is comprised of commercial loans, exposing the Company to the risks inherent in loans based upon analyses of credit risk, the value of underlying collateral, including real estate, and other more intangible factors, which are considered in making commercial loans. Accordingly, the Company’s profitability may be negatively impacted by errors in risk analyses, and by loan defaults, and the ability of certain borrowers to repay such loans may be adversely affected by any downturn in general economic conditions. These factors, as well as general economic and market conditions, may materially and adversely affect the market price of shares of the Company’s common stock. Because of these and other factors, past financial performance should not be considered an indicator of future performance. The forward-looking statements contained herein represent the Company’s judgment as of the date of this Form 10-Q, and the Company cautions readers not to place undue reliance on such statements.

Page 3 of 48

PART I – Item 1

Century Bancorp, Inc.

Consolidated Balance Sheets (unaudited)

(In thousands, except share data)

	September 30, 2019			December 31, 2018
Assets
Cash and due from banks	$	85,014		$	89,540
Federal funds sold and interest-bearing deposits in other banks		249,091			252,963
Total cash and cash equivalents		334,105			342,503
Securities available-for-sale, amortized cost $261,939 and $336,751, respectively		261,739			336,759
Securities held-to-maturity, fair value $2,188,465 and $1,991,421, respectively		2,164,135			2,046,647
Federal Home Loan Bank of Boston, stock at cost		14,025			17,974
Equity securities, amortized cost $1,635 and $1,635, respectively		1,672			1,596
Loans, net:
Construction and land development		7,824			13,628
Commercial and industrial		783,950			761,625
Municipal		121,802			97,290
Commercial real estate		765,385			750,362
Residential real estate		364,317			348,250
Consumer and overdrafts		21,748			22,083
Home equity		310,635			292,340
Total loans, net		2,375,661			2,285,578
Less: allowance for loan losses		29,097			28,543
Net loans		2,346,564			2,257,035
Bank premises and equipment		31,520			23,921
Accrued interest receivable		13,275			14,406
Goodwill		2,714			2,714
Other assets		129,432			120,380
Total assets	$	5,299,181		$	5,163,935
Liabilities
Deposits:
Demand deposits	$	797,455		$	813,478
Savings and NOW deposits		1,759,401			1,707,019
Money market accounts		1,249,923			1,325,888
Time deposits		533,074			560,579
Total deposits		4,339,853			4,406,964
Securities sold under agreements to repurchase		307,235			154,240
Other borrowed funds		209,188			202,378
Subordinated debentures		36,083			36,083
Other liabilities		77,862			63,831
Total liabilities		4,970,221			4,863,496
Stockholders’ Equity
Preferred Stock – $1.00 par value; 100,000 shares authorized; no shares issued and outstanding		—			—
Common stock, Class A, $1.00 par value per share; authorized 10,000,000 shares; issued 3,650,449 shares and 3,608,329 shares, respectively		3,650			3,608
Common stock, Class B, $1.00 par value per share; authorized 5,000,000 shares; issued 1,917,460 shares and 1,959,580 shares respectively		1,918			1,960
Additional paid-in capital		12,292			12,292
Retained earnings		328,801			301,488
		346,661			319,348
Unrealized losses on securities available-for-sale, net of taxes		(150	)		6
Unrealized losses on securities transferred to held-to-maturity, net of taxes		(1,991	)		(2,565	)
Pension liability, net of taxes		(15,560	)		(16,350	)
Total accumulated other comprehensive loss, net of taxes		(17,701	)		(18,909	)
Total stockholders’ equity		328,960			300,439
Total liabilities and stockholders’ equity	$	5,299,181		$	5,163,935

See accompanying notes to unaudited consolidated interim financial statements.

Page 4 of 48

Century Bancorp, Inc.

Consolidated Statements of Income (unaudited)

(In thousands, except share data)

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Interest income
Loans	$	22,117	$	20,167	$	65,106	$	57,613
Securities held-to-maturity		14,623		11,507		43,006		32,930
Securities available-for-sale		2,184		2,500		7,305		6,821
Federal funds sold and interest-bearing deposits in other banks		928		591		3,204		2,239
Total interest income		39,852		34,765		118,621		99,603
Interest expense
Savings and NOW deposits		5,445		2,972		16,788		7,778
Money market accounts		5,050		3,652		15,805		9,039
Time deposits		3,038		2,571		8,724		7,465
Securities sold under agreements to repurchase		697		288		1,572		657
Other borrowed funds and subordinated debentures		1,852		2,078		5,274		5,793
Total interest expense		16,082		11,561		48,163		30,732
Net interest income		23,770		23,204		70,458		68,871
Provision for loan losses		75		—		700		900
Net interest income after provision for loan losses		23,695		23,204		69,758		67,971
Other operating income
Service charges on deposit accounts		2,310		2,137		6,801		6,268
Lockbox fees		937		892		3,018		2,304
Net gains on sales of securities		53		105		61		302
Gains on sales of mortgage loans		—		—		154		—
Other income		986		1,035		3,676		3,210
Total other operating income		4,286		4,169		13,710		12,084
Operating expenses
Salaries and employee benefits		10,670		10,570		32,621		32,331
Occupancy		1,463		1,481		4,686		4,579
Equipment		862		781		2,440		2,355
Other		4,467		4,516		14,170		13,243
Total operating expenses		17,462		17,348		53,917		52,508
Income before income taxes		10,519		10,025		29,551		27,547
Provision for income taxes		435		444		584		1,259
Net income	$	10,084	$	9,581	$	28,967	$	26,288
Share data:
Weighted average number of shares outstanding, basic
Class A		3,650,449		3,608,329		3,627,076		3,608,129
Class B		1,917,460		1,959,580		1,940,833		1,959,780
Weighted average number of shares outstanding, diluted
Class A		5,567,909		5,567,909		5,567,909		5,567,909
Class B		1,917,460		1,959,580		1,940,833		1,959,780
Basic earnings per share:
Class A	$	2.19	$	2.09	$	6.30	$	5.73
Class B	$	1.09	$	1.04	$	3.15	$	2.86
Diluted earnings per share
Class A	$	1.81	$	1.72	$	5.20	$	4.72
Class B	$	1.09	$	1.04	$	3.15	$	2.86

See accompanying notes to unaudited consolidated interim financial statements.

Page 5 of 48

Century Bancorp, Inc.

Consolidated Statements of Comprehensive Income (unaudited)

(In thousands)

	Three months ended September 30,
	2019			2018
Net income	$	10,084		$	9,581
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on securities:
Unrealized gains (losses) arising during period		113			(88	)
Less: reclassification adjustment for gains included in net income		(39	)		(76	)
Total unrealized gains (losses) on securities		74			(164	)
Accretion of net unrealized losses transferred		155			238
Defined benefit pension plans:
Amortization of prior service cost and loss included in net periodic benefit cost		263			292
Other comprehensive income		492			366
Comprehensive income	$	10,576		$	9,947
	Nine months ended September 30,
	2019			2018
Net income	$	28,967		$	26,288
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on securities:
Unrealized (losses) gains arising during period		(112	)		412
Less: reclassification adjustment for gains included in net income		(44	)		(217	)
Total unrealized (losses) gains on securities		(156	)		195
Accretion of net unrealized losses transferred		574			872
Defined benefit pension plans:
Amortization of prior service cost and loss included in net periodic benefit cost		790			877
Other comprehensive income		1,208			1,944
Comprehensive income	$	30,175		$	28,232

See accompanying notes to unaudited consolidated interim financial statements.

Page 6 of 48

Century Bancorp, Inc.

Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

For the Three Months Ended September 30, 2019 and 2018

	Class A Common Stock		Class B Common Stock			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
	(In thousands)
Balance at June 30, 2018	$	3,608	$	1,960		$	12,292	$	283,084		$	(23,463	)	$	277,481
Net income		—		—			—		9,581			—			9,581
Other comprehensive income, net of tax:															—
Unrealized holding (losses) gains arising during period, net of $30 in taxes		—		—			—		—			(164	)		(164	)
Accretion of unrealized losses on securities transferred to held-to-maturity, net of $85 in taxes		—		—			—		—			238			238
Pension liability adjustment, net of $114 in taxes		—		—			—		—			292			292
Cash dividends paid, Class A common stock, $.12 per share		—		—			—		(432	)		—			(432	)
Cash dividends paid, Class B common stock, $.06 per share		—		—			—		(119	)		—			(119	)
Balance at September 30, 2018	$	3,608	$	1,960		$	12,292	$	292,114		$	(23,097	)	$	286,877
Balance at June 30, 2019	$	3,620	$	1,948		$	12,292	$	319,270		$	(18,193	)	$	318,937
Net income		—		—			—		10,084			—			10,084
Other comprehensive income, net of tax:															—
Unrealized holding (losses) gains arising during period, net of $23 in taxes and $53 in realized gains		—		—			—		—			74			74
Accretion of unrealized losses on securities transferred to held-to-maturity, net of $54 in taxes		—		—			—		—			155			155
Pension liability adjustment, net of $103 in taxes		—		—			—		—			263			263
Conversion of Class B Common Stock to Class A Common Stock, 30,000 shares		30		(30	)		—		—			—			—
Cash dividends paid, Class A common stock, $.12 per share		—		—			—		(438	)		—			(438	)
Cash dividends paid, Class B common stock, $.06 per share		—		—			—		(115	)		—			(115	)
Balance at September 30, 2019	$	3,650	$	1,918		$	12,292	$	328,801		$	(17,701	)	$	328,960

See accompanying notes to unaudited consolidated interim financial statements.

Page 7 of 48

Century Bancorp, Inc.

Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

For the Nine Months Ended September 30, 2019 and 2018

	Class A Common Stock		Class B Common Stock			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
	(In thousands)
Balance at December 31, 2017	$	3,606	$	1,962		$	12,292	$	263,666		$	(21,229	)	$	260,297
Net income		—		—			—		26,288			—			26,288
Other comprehensive income, net of tax:															—
Unrealized holding (losses) gains arising during period, net of $39 in taxes and $302 in realized gains		—		—			—		—			195			195
Accretion of unrealized losses on securities transferred to held-to-maturity, net of $314 in taxes		—		—			—		—			872			872
Pension liability adjustment, net of $342 in taxes		—		—			—		—			877			877
Adoption of ASU 2018-2, Income Statement-Reporting Comprehensive Income (Topic 220)-Reclassification of Certain Tax Effects from AOCI		—		—			—		3,783			(3,783	)		—
Adoption of ASU 2016-1, Financial Instruments-Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities		—		—			—		29			(29	)		—
Conversion of Class B Common Stock to Class A Common Stock, 2,500 shares		2		(2	)		—		—			—			—
Cash dividends paid, Class A common stock, $.36 per share		—		—			—		(1,299	)		—			(1,299	)
Cash dividends paid, Class B common stock, $.18 per share		—		—			—		(353	)		—			(353	)
Balance at September 30, 2018	$	3,608	$	1,960		$	12,292	$	292,114		$	(23,097	)	$	286,877
Balance at December 31, 2018	$	3,608	$	1,960		$	12,292	$	301,488		$	(18,909	)	$	300,439
Net income		—		—			—		28,967			—			28,967
Other comprehensive income, net of tax:															—
Unrealized holding (losses) gains arising during period, net of $52 in taxes and $61 in realized gains		—		—			—		—			(156	)		(156	)
Accretion of unrealized losses on securities transferred to held-to-maturity, net of $205 in taxes		—		—			—		—			574			574
Pension liability adjustment, net of $309 in taxes		—		—			—		—			790			790
Conversion of Class B Common Stock to Class A Common Stock, 42,120 shares		42		(42	)		—		—			—			—
Cash dividends paid, Class A common stock, $.36 per share		—		—			—		(1,304	)		—			(1,304	)
Cash dividends paid, Class B common stock, $.18 per share		—		—			—		(350	)		—			(350	)
Balance at September 30, 2019	$	3,650	$	1,918		$	12,292	$	328,801		$	(17,701	)	$	328,960

See accompanying notes to unaudited consolidated interim financial statements.

Page 8 of 48

Century Bancorp, Inc.

Consolidated Statements of Cash Flows (unaudited)

For the Nine Months Ended September 30, 2019 and 2018

	Nine months ended September 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	28,967		$	26,288
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Gain on sales of mortgage loans		(154	)		—
Net gains on sales of securities		(61	)		(302	)
Net (gain) loss on equity securities		(76	)		47
Provision for loan losses		700			900
Deferred income taxes		(593	)		(1,270	)
Net depreciation and amortization		(1,693	)		1,116
Decrease (increase) in accrued interest receivable		1,131			(1,699	)
(Increase) decrease in other assets		(1,037	)		1,542
Increase in other liabilities		2,029			4,825
Net cash provided by operating activities		29,213			31,447
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from redemptions of Federal Home Loan Bank of Boston stock		13,801			13,619
Purchase of Federal Home Loan Bank of Boston stock		(9,852	)		(14,583	)
Proceeds from calls/maturities of securities available-for-sale		115,574			111,922
Proceeds from sales of securities available-for-sale		16,285			27,517
Purchase of securities available-for-sale		(57,005	)		(108,871	)
Proceeds from calls/maturities of securities held-to-maturity		313,358			187,009
Purchase of securities held-to-maturity		(427,124	)		(358,824	)
Proceeds from sales of securities held-to-maturity		1,194			—
Proceeds from life insurance policies		5,124			375
Net increase in loans		(98,915	)		(83,967	)
Proceeds from sales of portfolio loans		8,871			—
Capital expenditures		(9,962	)		(2,900	)
Net cash used in investing activities		(128,651	)		(228,703	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in time deposits		(27,505	)		(45,475	)
Net decrease (increase) in demand, savings, money market and NOW deposits		(39,606	)		92,915
Cash dividends		(1,654	)		(1,652	)
Net increase (decrease) in securities sold under agreements to repurchase		152,995			(18,500	)
Net increase in other borrowed funds		6,810			24,828
Net cash provided by financing activities		91,040			52,116
Net decrease in cash and cash equivalents		(8,398	)		(145,140	)
Cash and cash equivalents at beginning of period		342,503			356,430
Cash and cash equivalents at end of period	$	334,105		$	211,290
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest	$	48,127		$	30,680
Income taxes		(6,604	)		590
Change in unrealized gains (losses) on securities available-for-sale, net of taxes		(156	)		195
Change in unrealized losses on securities transferred to held-to-maturity, net of taxes		574			872
Pension liability adjustment, net of taxes		790			877
Change in due to (from) to broker		—			897

See accompanying notes to unaudited consolidated interim financial statements.

Page 9 of 48

Century Bancorp, Inc.

Notes to Unaudited Consolidated Interim Financial Statements

Nine Months Ended September 30, 2019 and 2018

Note 1. Basis of Financial Statement Presentation

The consolidated financial statements include the accounts of Century Bancorp, Inc. (the “Company”) and its wholly owned subsidiary, Century Bank and Trust Company (the “Bank”). The consolidated financial statements also include the accounts of the Bank’s wholly owned subsidiaries, Century Subsidiary Investments, Inc. (“CSII”), Century Subsidiary Investments, Inc. II (“CSII II”), Century Subsidiary Investments, Inc. III (“CSII III”) and Century Financial Services Inc. (“CFSI”). CSII, CSII II, and CSII III are engaged in buying, selling and holding investment securities. CFSI has the power to engage in financial agency, securities brokerage, and investment and financial advisory services and related securities credit. The Company also owns 100% of Century Bancorp Capital Trust II (“CBCT II”). The entity is an unconsolidated subsidiary of the Company.

All significant intercompany accounts and transactions have been eliminated in consolidation. The Company provides a full range of banking services to individual, business and municipal customers in Massachusetts, New Hampshire, Rhode Island, Connecticut, and New York. As a bank holding company, the Company is subject to the regulation and supervision of the Federal Reserve Board. The Bank, a state chartered financial institution, is subject to supervision and regulation by applicable state and federal banking agencies, including the Federal Reserve Board, the Federal Deposit Insurance Corporation (the “FDIC”) and the Commonwealth of Massachusetts Commissioner of Banks. The Bank is also subject to various requirements and restrictions under federal and state law, including requirements to maintain reserves against deposits, restrictions on the types and amounts of loans that may be granted and the interest that may be charged thereon, and limitations on the types of investments that may be made and the types of services that may be offered. Various consumer laws and regulations also affect the operations of the Bank. In addition to the impact of regulation, commercial banks are affected significantly by the actions of the Federal Reserve Board as it attempts to control the money supply and credit availability in order to influence the economy. All aspects of the Company’s business are highly competitive. The Company faces aggressive competition from other lending institutions and from numerous other providers of financial services. The Company has one reportable operating segment.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and general practices within the banking industry. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ from those estimates. The Company’s quarterly report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission.

Material estimates that are susceptible to change in the near term relate to the allowance for loan losses. Management believes that the allowance for loan losses is adequate based on a review of factors, including historical charge-off rates with additional allocations based on qualitative risk factors for each category and general economic factors. While management uses available information to recognize loan losses, future additions to the allowance for loan losses may be necessary based on changes in economic conditions. In addition, regulatory agencies periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance for loan losses based on their judgments about information available to them at the time of their examination. Certain reclassifications are made to prior-year amounts whenever necessary to conform with the current-year presentation.

Note 2. Recent Accounting Developments

Recently Adopted Accounting Standards Updates

In July 2017, FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interest with a Scope Exception. For public entities, this ASU is effective for annual reporting periods beginning after December 15, 2018. The effect of this update did not have a material impact on the Company’s consolidated financial position.

In March 2017, the FASB issued ASU 2017-08, Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20) Premium Amortization of Purchased Callable Debt. The FASB is issuing this ASU to amend the amortization period for certain purchased callable debt securities held at a premium. The FASB is shortening the amortization period for the premium to the earliest call date. Under current generally accepted accounting principles (GAAP), entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The effect of this update did not have a material impact on the Company’s consolidated financial position.

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In February 2016, the FASB issued ASU 2016-02, Leases. This ASU required lessees to put most leases on their balance sheet but recognize expenses on their income statements in a manner similar to today’s accounting. This ASU also eliminated today’s real estate-specific provisions for all companies. For lessors, this ASU modified the classification criteria and the accounting for sales-type and direct financing leases. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods therein. The Company also reviewed contracts to determine if they contain embedded leases. The Company’s balance sheet impact was $15.1 million as of January 1, 2019. This amount was recorded as a right of use asset, included in other assets, with a corresponding lease liability, included in other liabilities.

In July 2018, ASU 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”) was issued to provide more detailed guidance and additional clarification for implementing ASU 2016-02. Also in July 2018, ASU 2018-11, “Targeted Improvements” (“ASU 2018-11”) was issued and allows for an optional transition method in which the provisions of Topic 842 would be applied upon the adoption date and would not have to be retroactively applied to the earliest reporting period presented in the consolidated financial statements.” The Company used this optional transition method for the adoption of Topic 842.

Accounting Standards Issued but not yet Adopted

The following list identifies ASUs applicable to the Company that have been issued by the FASB but are not yet effective:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU was issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.

To achieve this objective, the amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is in the process of implementing this ASU, has purchased a software solution and is capturing information needed to implement this ASU. As part of the FASB ASC 326 implementation process the company is using two models: a rating migration model and a probability of default model. The probability of default model is based primarily on four components: loss history, product lifecycle, behavioral attributes and the economic environment. The ratings migration model is designed to estimate loss reserves according to the CECL standard for rated loans or similar instruments. The model structure follows a grade migration approach, where the default rate is based on the probability of each grade transition which is modeled using historical data.

The Company has started to input information into the models, and is running the software program and comparing to existing results. In addition, the Company has also begun developing accounting policies, as well as designing and implementing new internal controls relevant to the updated methodologies and models. The Company has not determined the dollar impact as of September 30, 2019.

The securities held-to-maturity include U.S. Treasury, U.S. Government Sponsored Enterprises, BSA Backed Securities and U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities. The Company expects no impact from ASU 2016-13 to arise from this portfolio.

Since ASU 2016-13, the FASB has issued amendments intended on improving the clarification of the amendment, ASU 2018-19 Codification Improvements to Topic 326, Financial Instruments – Credit Losses and ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging. The amendment in ASU 2018-19 was issued in November 2018 and was intended to clarify that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. The amendment in ASU 2019-04 was issued in April 2019 and was intended to clarify stakeholders’ specific issues about certain aspects of the amendments in ASU 2016-13. ASU 2019-05 Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief was also issued in May 2019. This ASU provides entities the option to irrevocably elect the fair value option for certain financial assets previously measured at amortized costs basis. The fair value option election does not apply to held-to-maturity debt securities. An entity that elects the fair value option should subsequently apply the guidance in Subtopics 820-10, Fair Value Measurement—Overall. The amendments in this ASU should be applied on a modified-retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings balance in the statement of financial position as of the date that an entity early adopted the amendments in ASU 2016-13.

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In August 2018, FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). This ASU is effective for annual reporting periods beginning after December 15, 2019. The effect of this update is not expected to have a material impact on the Company’s consolidated financial position.

In August 2018, FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit plans. The amendments in this ASU remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. This ASU is effective for annual reporting periods beginning after December 15, 2020. The effect of this update is not expected to have a material impact on the Company’s consolidated financial position.

In August 2018, FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value. The amendments in this ASU modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. This ASU is effective for annual reporting periods beginning after December 15, 2019. The effect of this update is not expected to have a material impact on the Company’s disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles — Goodwill and Other (Topic 350). This ASU was issued to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. For public entities, this ASU is effective for the fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted and application should be on a prospective basis. The effect of this update is not expected to have a material impact on the Company’s consolidated financial position.

Securities and Exchange Commission (SEC) ruling:

In August 2018, the SEC issued a final rule that amends certain of the Commission’s disclosure requirements “that have become redundant, duplicative, overlapping, outdated, or superseded, in light of other Commission disclosure requirements, U.S. GAAP, or changes in the information environment.” The financial reporting implications of the final rule’s amendments may vary by company, but the changes are generally expected to reduce or eliminate some of an SEC registrant’s disclosure requirements. In limited circumstances, however, the amendments may expand those requirements, including those related to interim disclosures about changes in stockholders’ equity. Under the requirements, registrants must now analyze changes in stockholders’ equity, in the form of a reconciliation, for “the current and comparative year-to-date periods, with subtotals for each interim period.” Beginning with its March 31, 2019 filing, the Company included a reconciliation for the current quarter and year-to-date interim periods as well as the comparative periods of the prior years (i.e., a reconciliation covering each period for which an income statement is presented).

Note 3. Securities Available-for-Sale

	September 30, 2019								December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
U.S. Treasury	$	—	$	—	$	—	$	—	$	2,000	$	—	$	8	$	1,992
U.S. Government Sponsored Enterprises		—		—		—		—		3,946		—		31		3,915
SBA Backed Securities		58,714		51		101		58,664		70,477		1		284		70,194
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		170,532		189		439		170,282		162,604		536		250		162,890
Privately Issued Residential Mortgage-Backed Securities		574		6		1		579		679		3		10		672
Obligations Issued by States and Political Subdivisions		28,519		57		—		28,576		93,445		58		—		93,503
Other Debt Securities		3,600		64		26		3,638		3,600		37		44		3,593
Total	$	261,939	$	367	$	567	$	261,739	$	336,751	$	635	$	627	$	336,759

Included in SBA Backed Securities, U.S. Government Sponsored Enterprise Securities and U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities are securities at fair value pledged to secure public deposits and repurchase agreements amounting to $196,356,000 and $197,304,000 at September 30, 2019 and December 31, 2018, respectively. Also included in securities

Page 12 of 48

available-for-sale are securities at fair value pledged for borrowing at the Federal Home Loan Bank of Boston amounting to $32,590,000 and $34,787,000 at September 30, 2019 and December 31, 2018, respectively. The Company realized gross gains of $13,000 from the proceeds of $16,285,000 from the sales of available-for-sale securities for the nine months ended September 30, 2019. The Company realized gross gains of $302,000 from the proceeds of $27,517,000 from the sales of available-for-sale securities for the nine months ended September 30, 2018.

Debt securities of U.S. Government Sponsored Enterprises and U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities primarily refer to debt securities of Fannie Mae and Freddie Mac.

The following table shows the maturity distribution of the Company’s securities available-for-sale at September 30, 2019.

	Amortized Cost		Fair Value
	(in thousands)
Within one year	$	26,187	$	26,184
After one but within five years		134,881		134,811
After five but within ten years		85,551		85,378
More than 10 years		15,320		15,366
Total	$	261,939	$	261,739

The weighted average remaining life of investment securities available-for-sale at September 30, 2019 was 5.1 years. The contractual maturities, which were used in the table above, of mortgage-backed securities, will differ from the actual maturities, due to the ability of the issuers to prepay underlying obligations. Also $234,949,000 of the securities are floating rate or adjustable rate and reprice prior to maturity.

As of September 30, 2019 and December 31, 2018, management concluded that the unrealized losses of its investment securities are temporary in nature since they are not related to the underlying credit quality of the issuers, and the Company does not intend to sell these debt securities and it is not more likely than not that it will be required to sell these debt securities before the anticipated recovery of its remaining amortized cost. In making its other-than-temporary impairment evaluation, the Company considered that the principal and interest on these securities are from issuers that are investment grade.

The unrealized loss on SBA Backed Securities, U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities related primarily to interest rates and not credit quality, and because the Company has the ability and intent to hold these investments until recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2019 or December 31, 2018.

In evaluating the underlying credit quality of a security, management considers several factors such as the credit rating of the obligor and the issuer, if applicable. Internal reviews of issuer financial statements are performed as deemed necessary. In the case of privately issued mortgage-backed securities, the performance of the underlying loans is analyzed as deemed necessary to determine the estimated future cash flows of the securities. Factors considered include the level of subordination, current and estimated future default rates, current and estimated prepayment rates, estimated loss severity rates, geographic concentrations and origination dates of underlying loans.

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The following table shows the temporarily impaired securities of the Company’s available-for-sale portfolio at September 30, 2019. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for less than 12 months and a continuous loss position for 12 months or longer. There are 24 and 18 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 134 holdings at September 30, 2019.

	September 30, 2019
	Less than 12 months				12 months or longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury	$	—	$	—	$	—	$	—	$	—	$	—
U.S. Government Sponsored Enterprises		—		—		—		—		—		—
SBA Backed Securities		11,133		11		24,944		90		36,077		101
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		81,305		264		27,872		175		109,177		439
Privately Issued Residential Mortgage-Backed Securities		—		—		282		1		282		1
Obligations Issued by States and Political Subdivisions		—		—		—		—		—		—
Other Debt Securities		800		1		475		25		1,275		26
Total temporarily impaired securities	$	93,238	$	276	$	53,573	$	291	$	146,811	$	567

The following table shows the temporarily impaired securities of the Company’s available-for-sale portfolio at December 31, 2018. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for less than 12 months and a continuous loss position for 12 months or longer. There are 10 and 30 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 190 holdings at December 31, 2018.

	December 31, 2018
	Less than 12 months				12 months or longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury	$	—	$	—	$	1,992	$	8	$	1,992	$	8
U.S. Government Sponsored Enterprises		3,914		31		—		—		3,914		31
SBA Backed Securities		17,950		28		44,323		256		62,273		284
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		19,244		21		45,782		229		65,026		250
Privately Issued Residential Mortgage-Backed Securities		—		—		495		10		495		10
Obligations Issued by States and Political Subdivisions		—		—		—		—		—		—
Other Debt Securities		—		—		455		44		455		44
Total temporarily impaired securities	$	41,108	$	80	$	93,047	$	547	$	134,155	$	627

Note 4. Investment Securities Held-to-Maturity

	September 30, 2019								December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
U.S. Treasury	$	—	$	—	$	—	$	—	$	9,960	$	—	$	2	$	9,958
U.S. Government Sponsored Enterprises		121,516		653		67		122,102		234,228		336		803		233,761
SBA Backed Securities		47,126		452		66		47,512		52,051		—		2,065		49,986
U.S. Government Agency and Sponsored Enterprises Mortgage-Backed Securities		1,995,493		29,911		6,553		2,018,851		1,750,408		2,324		55,016		1,697,716
Total	$	2,164,135	$	31,016	$	6,686	$	2,188,465	$	2,046,647	$	2,660	$	57,886	$	1,991,421

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Included in U.S. Government and Agency Securities are securities pledged to secure public deposits and repurchase agreements at fair value amounting to $1,692,033,000 and $1,441,059,000 at September 30, 2019 and December 31, 2018, respectively. Also included are securities pledged for borrowing at the Federal Home Loan Bank of Boston at fair value amounting to $427,425,000 and $291,190,000 at September 30, 2019 and December 31, 2018, respectively. The Company realized gross gains of $48,000 from the proceeds of $1,194,000 from the sales of held-to-maturity securities for the nine months ended September 30, 2019. The sales of securities held-to-maturity relate to certain mortgage backed securities for which the company has previously collected a substantial portion of its principal investment. There were no sales of held-to-maturity securities for the nine months ended September 30, 2018.

At September 30, 2019 and December 31, 2018, all mortgage-backed securities are obligations of U.S. Government Agencies and Government Sponsored Enterprises. Debt securities of U.S. Government Sponsored Enterprises and U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities primarily refer to debt securities of Fannie Mae and Freddie Mac.

The following table shows the maturity distribution of the Company’s securities held-to-maturity at September 30, 2019.

	Amortized Cost		Fair Value
	(in thousands)
Within one year	$	70,980	$	71,260
After one but within five years		1,809,564		1,829,087
After five but within ten years		271,068		275,192
More than ten years		12,523		12,926
Total	$	2,164,135	$	2,188,465

The weighted average remaining life of investment securities held-to-maturity at September 30, 2019 was 3.6 years. Included in the weighted average remaining life calculation at September 30, 2019 were $66,196,000 of U.S. Government Sponsored Enterprises obligations that are callable at the discretion of the issuer. The contractual maturities, which were used in the table above, of mortgage-backed securities, will differ from the actual maturities, due to the ability of the issuers to prepay underlying obligations. Also $111,000 of the securities are floating rate or adjustable rate and reprice prior to maturity.

As of September 30, 2019 and December 31, 2018, management concluded that the unrealized losses of its investment securities are temporary in nature since they are not related to the underlying credit quality of the issuers, and the Company does not intend to sell these debt securities and it is not more likely than not that it will be required to sell these debt securities before the anticipated recovery of their remaining amortized costs. In making its other-than-temporary impairment evaluation, the Company considered the fact that the principal and interest on these securities are from issuers that are investment grade.

The unrealized loss on U.S. Government Sponsored Enterprises, SBA Backed Securities, and U.S. Government Sponsored Enterprises Mortgage-Backed Securities related primarily to interest rates and not credit quality, and because the Company does not intend to sell any of these securities and it is not more likely than not that it will be required to sell these securities before the anticipated recovery of the remaining amortized cost, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2019 or December 31, 2018.

In evaluating the underlying credit quality of a security, management considers several factors such as the credit rating of the obligor and the issuer, if applicable. Internal reviews of issuer financial statements are performed as deemed necessary.

The following table shows the temporarily impaired securities of the Company’s held-to-maturity portfolio September 30, 2019. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for 12 months or less and a continuous loss position for 12 months or longer. There are 44 and 112 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 505 holdings at September 30, 2019.

	September 30, 2019
	Less Than 12 Months				12 Months or Longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury	$	—	$	—	$	—	$	—	$	—	$	—
U.S. Government Sponsored Enterprises		9,976		22		9,954		45		19,930		67
SBA Backed Securities		13,673		66		—		—		13,673		66
U.S. Government Agency and Sponsored Enterprise Mortgage- Backed Securities		163,889		816		430,714		5,737		594,603		6,553
Total temporarily impaired securities	$	187,538	$	904	$	440,668	$	5,782	$	628,206	$	6,686

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The following table shows the temporarily impaired securities of the Company’s held-to-maturity portfolio at December 31, 2018. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for less than 12 months and a continuous loss position for 12 months or longer. There are 56 and 315 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 475 holdings at December 31, 2018.

	December 31, 2018
	Less Than 12 Months				12 Months or Longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury	$	9,958	$	2	$	—	$	—	$	9,958	$	2
U.S. Government Sponsored Enterprises		9,849		42		69,499		761		79,348		803
SBA Backed Securities		—		—		49,987		2,065		49,987		2,065
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		188,125		2,032		1,249,689		52,984		1,437,814		55,016
Total temporarily impaired securities	$	207,932	$	2,076	$	1,369,175	$	55,810	$	1,577,107	$	57,886

Note 5. Allowance for Loan Losses

The Company maintains an allowance for loan losses in an amount determined by management on the basis of the character of the loans, loan performance, financial condition of borrowers, the value of collateral securing loans and other relevant factors.

The following table summarizes the changes in the Company’s allowance for loan losses for the periods indicated.

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
	(in thousands)
Allowance for loan losses, beginning of period	$	29,070		$	27,144		$	28,543		$	26,255
Loans charged off		(118	)		(89	)		(336	)		(247	)
Recoveries on loans previously charged-off		70			1,490			190			1,637
Net recoveries (charge-offs)		(48	)		1,401			(146	)		1,390
Provision charged to expense		75			—			700			900
Allowance for loan losses, end of period	$	29,097		$	28,545		$	29,097		$	28,545

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Further information pertaining to the allowance for loan losses for the three months ending September 30, 2019 is as follows:

	Construction and Land Development			Commercial and Industrial			Municipal		Commercial Real Estate		Residential Real Estate			Consumer			Home Equity			Unallocated		Total
	(in thousands)
Allowance for loan losses:
Balance at June 30, 2019	$	1,052		$	11,338		$	1,832	$	10,848	$	2,210		$	380		$	1,120		$	290	$	29,070
Charge-offs		—			(57	)		—		—		—			(61	)		—			—		(118	)
Recoveries		—			23			—		—		—			47			—			—		70
Provision		(752	)		9			751		53		(24	)		(84	)		(33	)		155		75
Ending balance at September 30, 2019	$	300		$	11,313		$	2,583	$	10,901	$	2,186		$	282		$	1,087		$	445	$	29,097
Amount of allowance for loan losses for loans deemed to be impaired	$	—		$	2		$	—	$	86	$	—		$	—		$	—		$	—	$	88
Amount of allowance for loan losses for loans not deemed to be impaired	$	300		$	11,311		$	2,583	$	10,815	$	2,186		$	282		$	1,087		$	445	$	29,009
Loans:
Ending balance	$	7,824		$	783,950		$	121,802	$	765,385	$	364,317		$	21,748		$	310,635		$	—	$	2,375,661
Loans deemed to be impaired	$	—		$	203		$	—	$	2,373	$	—		$	—		$	—		$	—	$	2,576
Loans not deemed to be impaired	$	7,824		$	783,747		$	121,802	$	763,012	$	364,317		$	21,748		$	310,635		$	—	$	2,373,085

Further information pertaining to the allowance for loan losses for the nine months ending September 30, 2019 is as follows:

	Construction and Land Development			Commercial and Industrial			Municipal		Commercial Real Estate		Residential Real Estate			Consumer			Home Equity			Unallocated		Total
	(in thousands)
Allowance for loan losses:
Balance at December 31, 2018	$	1,092		$	10,998		$	1,838	$	10,663	$	2,190		$	365		$	1,111		$	286	$	28,543
Charge-offs		—			(108	)		—		—		—			(228	)		—			—		(336	)
Recoveries		—			49			—		—		—			141			—			—		190
Provision		(792	)		374			745		238		(4	)		4			(24	)		159		700
Ending balance at September 30, 2019	$	300		$	11,313		$	2,583	$	10,901	$	2,186		$	282		$	1,087		$	445	$	29,097
Amount of allowance for loan losses for loans deemed to be impaired	$	—		$	2		$	—	$	86	$	—		$	—		$	—		$	—	$	88
Amount of allowance for loan losses for loans not deemed to be impaired	$	300		$	11,311		$	2,583	$	10,815	$	2,186		$	282		$	1,087		$	445	$	29,009
Loans:
Ending balance	$	7,824		$	783,950		$	121,802	$	765,385	$	364,317		$	21,748		$	310,635		$	—	$	2,375,661
Loans deemed to be impaired	$	—		$	203		$	—	$	2,373	$	—		$	—		$	—		$	—	$	2,576
Loans not deemed to be impaired	$	7,824		$	783,747		$	121,802	$	763,012	$	364,317		$	21,748		$	310,635		$	—	$	2,373,085

During the nine months ending September 30, 2019, the Company’s provision was primarily attributable to an increase in municipal, Commercial and industrial, and commercial real estate balances offset, somewhat, by a decrease in construction and land development balances. During the three months ending September 30, 2019, the Company’s provision was primarily attributable to an increase in municipal balances offset, somewhat, by a decrease in construction and land development balances. The Company monitors the outlook for the industries in which our borrowers operate. Healthcare and higher education are two of the primary industries. In particular the Company utilizes outlooks and forecasts from various sources. The Company also monitors the volatility of the losses within the historical data. Overall there were improvements in historical loss rates.

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Further information pertaining to the allowance for loan losses for the three months ending September 30, 2018 follows:

	Construction and Land Development			Commercial and Industrial			Municipal		Commercial Real Estate		Residential Real Estate			Consumer			Home Equity			Unallocated			Total
	(in thousands)
Allowance for loan losses:
Balance at June 30, 2018	$	633		$	10,384		$	1,704	$	10,209	$	2,493		$	336		$	1,078		$	307		$	27,144
Charge-offs		—			(11	)		—		—		—			(78	)		—			—			(89	)
Recoveries		1,432			16			—		—		—			42			—			—			1,490
Provision		(1,155	)		895			84		415		(182	)		32			(28	)		(61	)		—
Ending balance at September 30, 2018	$	910		$	11,284		$	1,788	$	10,624	$	2,311		$	332		$	1,050		$	246		$	28,545
Amount of allowance for loan losses for loans deemed to be impaired	$	—		$	93		$	—	$	95	$	350		$	—		$	—		$	—		$	538
Amount of allowance for loan losses for loans not deemed to be impaired	$	910		$	11,191		$	1,788	$	10,529	$	1,961		$	332		$	1,050		$	246		$	28,007
Loans:
Ending balance	$	12,434		$	783,960		$	94,532	$	730,265	$	335,114		$	21,216		$	283,818		$	—		$	2,261,339
Loans deemed to be impaired	$	—		$	660		$	—	$	2,680	$	2,675		$	—		$	—		$	—		$	6,015
Loans not deemed to be impaired	$	12,434		$	783,300		$	94,532	$	727,585	$	332,439		$	21,216		$	283,818		$	—		$	2,255,324

Further information pertaining to the allowance for loan losses for the nine months ending September 30, 2018 follows:

	Construction and Land Development			Commercial and Industrial			Municipal		Commercial Real Estate		Residential Real Estate		Consumer			Home Equity		Unallocated			Total
	(in thousands)
Allowance for loan losses:
Balance at December 31, 2017	$	1,645		$	9,651		$	1,720	$	9,728	$	1,873	$	373		$	989	$	276		$	26,255
Charge-offs		—			(16	)		—		—		—		(231	)		—		—			(247	)
Recoveries		1,432			49			—		—		—		156			—		—			1,637
Provision		(2,167	)		1,600			68		896		438		34			61		(30	)		900
Ending balance at September 30, 2018	$	910		$	11,284		$	1,788	$	10,624	$	2,311	$	332		$	1,050	$	246		$	28,545
Amount of allowance for loan losses for loans deemed to be impaired	$	—		$	93		$	—	$	95	$	350	$	—		$	—	$	—		$	538
Amount of allowance for loan losses for loans not deemed to be impaired	$	910		$	11,191		$	1,788	$	10,529	$	1,961	$	332		$	1,050	$	246		$	28,007
Loans:
Ending balance	$	12,434		$	783,960		$	94,532	$	730,265	$	335,114	$	21,216		$	283,818	$	—		$	2,261,339
Loans deemed to be impaired	$	—		$	660		$	—	$	2,680	$	2,675	$	—		$	—	$	—		$	6,015
Loans not deemed to be impaired	$	12,434		$	783,300		$	94,532	$	727,585	$	332,439	$	21,216		$	283,818	$	—		$	2,255,324

During the nine months ending September 30, 2018, the Company’s provision was primarily attributable to an increase in residential real estate balances and increased qualitative allocations for commercial and industrial and commercial real estate loans, offset, somewhat by the recovery of a construction loan previously charged-off and a decrease in construction balances. During the three months ending September 30, 2018, the Company did not require a provision mainly as a result of recoveries of a construction loan previously charged-off and a decrease in construction loan balances offset by increased qualitative allocations for commercial and industrial and commercial real estate loans. The Company monitors the outlook for the industries in which our borrowers operate. Healthcare and higher education are two of the primary industries. In particular the Company utilizes outlooks and forecasts from various sources. Overall a general weakening in the outlook was noted resulting in a general increase in the general economic factors. The Company also monitors the volatility of the losses within the historical data.

Page 18 of 48

The Company utilizes a six grade internal loan rating system for commercial real estate, construction and commercial loans as follows:

Loans rated 1-3 (Pass):

Loans in this category are considered “pass” rated loans with low to average risk.

Loans rated 4 (Monitor):

These loans represent classified loans that management is closely monitoring for credit quality. These loans have had or may have minor credit quality deterioration as of September 30, 2019 and December 31, 2018.

Loans rated 5 (Substandard):

Substandard loans represent classified loans that management is closely monitoring for credit quality. These loans have had more significant credit quality deterioration as of September 30, 2019 and December 31, 2018.

Loans rated 6 (Doubtful):

Doubtful loans represent classified loans that management is closely monitoring for credit quality. These loans had more significant credit quality deterioration as of September 30, 2019 and December 31, 2018 and full collectability is doubtful.

Impaired:

Impaired loans represent classified loans that management is closely monitoring for credit quality. A loan is classified as impaired when it is probable that the Company will be unable to collect all amounts due.

The following table presents the Company’s loans by risk rating at September 30, 2019.

	Construction and Land Development		Commercial and Industrial		Municipal		Commercial Real Estate
	(in thousands)
Grade:
1-3 (Pass)	$	7,824	$	779,722	$	121,802	$	738,459
4 (Monitor)		—		4,025		—		24,553
5 (Substandard)		—		—		—		—
6 (Doubtful)		—		—		—		—
Impaired		—		203		—		2,373
Total	$	7,824	$	783,950	$	121,802	$	765,385

The following table presents the Company’s loans by risk rating at December 31, 2018.

	Construction and Land Development		Commercial and Industrial		Municipal		Commercial Real Estate
	(in thousands)
Grade:
1-3 (Pass)	$	13,628	$	757,089	$	97,290	$	723,170
4 (Monitor)		—		4,135		—		24,542
5 (Substandard)		—		—		—		—
6 (Doubtful)		—		—		—		—
Impaired		—		401		—		2,650
Total	$	13,628	$	761,625	$	97,290	$	750,362

Page 19 of 48

Credit ratings issued by national organizations were utilized as credit quality indicators as presented in the following table at September 30, 2019 and are included within the total loan portfolio.

	Commercial and Industrial		Municipal		Commercial Real Estate		Total
	(in thousands)
Credit Rating:
Aaa – Aa3	$	497,124	$	54,495	$	40,759	$	592,378
A1 – A3		187,970		7,479		148,735		344,184
Baa1 – Baa3		—		51,133		122,288		173,421
Ba2		—		5,895		—		5,895
Total	$	685,094	$	119,002	$	311,782	$	1,115,878

Credit ratings issued by national organizations were utilized as credit quality indicators as presented in the following table at December 31, 2018.

	Commercial and Industrial		Municipal		Commercial Real Estate		Total
	(in thousands)
Credit Rating:
Aaa – Aa3	$	491,247	$	54,105	$	42,790	$	588,142
A1 – A3		172,472		7,605		151,381		331,458
Baa1 – Baa3		—		26,970		118,197		145,167
Ba2		—		6,810		—		6,810
Total	$	663,719	$	95,490	$	312,368	$	1,071,577

The Company utilized payment performance as credit quality indicators for the loan types listed below. The indicators are depicted in the table “aging of past due loans,” below.

Further information pertaining to the allowance for loan losses at September 30, 2019 follows:

	Accruing 30-89 Days Past Due		Non Accrual		Accruing Greater than 90 Days		Total Past Due		Current Loans		Total
	(in thousands)
Construction and land development	$	—	$	—	$	—	$	—	$	7,824	$	7,824
Commercial and industrial		108		19		—		127		783,823		783,950
Municipal		—		—		—		—		121,802		121,802
Commercial real estate		155		167		—		322		765,063		765,385
Residential real estate		1,129		334		—		1,463		362,854		364,317
Consumer and overdrafts		15		—		—		15		21,733		21,748
Home equity		1,050		546		—		1,596		309,039		310,635
Total	$	2,457	$	1,066	$	—	$	3,523	$	2,372,138	$	2,375,661

Page 20 of 48

Further information pertaining to the allowance for loan losses at December 31, 2018 follows:

	Accruing 30-89 Days Past Due		Non Accrual		Accruing Greater than 90 Days		Total Past Due		Current Loans		Total
	(in thousands)
Construction and land development	$	—	$	—	$	—	$	—	$	13,628	$	13,628
Commercial and industrial		187		115		—		302		761,323		761,625
Municipal		—		—		—		—		97,290		97,290
Commercial real estate		774		190		—		964		749,398		750,362
Residential real estate		2,554		569		—		3,123		345,127		348,250
Consumer and overdrafts		24		14		—		38		22,045		22,083
Home equity		1,108		425		—		1,533		290,807		292,340
Total	$	4,647	$	1,313	$	—	$	5,960	$	2,279,618	$	2,285,578

Impaired loans

A loan is impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. When a loan is impaired, the Company measures impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, the Company measures impairment based on a loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. Loans are charged-off when management believes that the collectability of the loan’s principal is not probable. The specific factors that management considers in making the determination that the collectability of the loan’s principal is not probable include: the delinquency status of the loan, the fair value of the collateral, if secured, and the financial strength of the borrower and/or guarantors. For collateral dependent loans, the amount of the recorded investment in a loan that exceeds the fair value of the collateral is charged-off against the allowance for loan losses in lieu of an allocation of a specific allowance amount when such an amount has been identified definitively as uncollectible. The Company’s policy for recognizing interest income on impaired loans is contained within Note 1 of the consolidated financial statements contained in the Company’s Annual Report for the fiscal year ended December 31, 2018.

Page 21 of 48

The following is information pertaining to impaired loans for September 30, 2019:

	Carrying Value		Unpaid Principal Balance		Required Reserve		Average Carrying Value for 3 Months Ending 9/30/19		Interest Income Recognized for 3 Months Ending 9/30/19		Average Carrying Value for 9 Months Ending 9/30/19		Interest Income Recognized for 9 Months Ending 9/30/19
	(in thousands)
With no required reserve recorded:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		87		306		—		89		2		87		6
Municipal		—		—		—		—		—		—		—
Commercial real estate		167		194		—		729		—		529		—
Residential real estate		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	254	$	500	$	—	$	818	$	2	$	616	$	6
With required reserve recorded:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		116		116		2		310		2		299		6
Municipal		—		—		—		—		—		—		—
Commercial real estate		2,206		2,326		86		2,140		23		2,350		67
Residential real estate		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	2,322	$	2,442	$	88	$	2,450	$	25	$	2,649	$	73
Total:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		203		422		2		399		4		386		12
Municipal		—		—		—		—		—		—		—
Commercial real estate		2,373		2,520		86		2,869		23		2,879		67
Residential real estate		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	2,576	$	2,942	$	88	$	3,268	$	27	$	3,265	$	79

Page 22 of 48

The following is information pertaining to impaired loans for September 30, 2018:

	Carrying Value		Unpaid Principal Balance		Required Reserve		Average Carrying Value for 3 Months Ending 9/30/18		Interest Income Recognized for 3 Months Ending 9/30/18		Average Carrying Value for 9 Months Ending 9/30/18		Interest Income Recognized for 9 Months Ending 9/30/18
	(in thousands)
With no required reserve recorded:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		84		282		—		56		—		47		—
Municipal		—		—		—		—		—		—		—
Commercial real estate		196		219		—		280		—		267		—
Residential real estate		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	280	$	501	$	—	$	336	$	—	$	314	$	—
With required reserve recorded:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		576		593		93		589		5		490		14
Municipal		—		—		—		—		—		—		—
Commercial real estate		2,484		2,597		95		2,262		24		2,278		71
Residential real estate		2,675		2,675		350		2,675		—		3,136		80
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	5,735	$	5,865	$	538	$	5,526	$	29	$	5,904	$	165
Total:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		660		875		93		645		5		537		14
Municipal		—		—		—		—		—		—		—
Commercial real estate		2,680		2,816		95		2,542		24		2,545		71
Residential real estate		2,675		2,675		350		2,675		—		3,136		80
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	6,015	$	6,366	$	538	$	5,862	$	29	$	6,218	$	165

Troubled debt restructurings are identified as modifications in which a concession was granted to a customer who was having financial difficulties. This concession may be below market rate, longer amortization/term, or a lower payment amount. The present value calculation of the modification did not result in an increase in the allowance for these loans beyond any previously established allocations.

There was no troubled debt restructuring that occurred during the nine month period ended September 30, 2019. Also, there were no commitments to lend additional funds to troubled debt restructuring borrowers. There were no troubled debt restructurings that subsequently defaulted during the first nine months of 2019.

There was one residential real estate loan and one consumer loan that were modified during the first quarter of 2018. The loans were modified by reducing the interest rates as well as extending the terms on both loans. The pre-modification and post-modification outstanding recorded investment was $2,675,000 for the residential real estate loan that was not accruing interest and had a specific reserve of $350,000. The pre-modification and post-modification outstanding recorded investment was $17,000 for the consumer loan that was accruing and had a specific reserve of $1,000. The financial impact for the modifications was not material. There was one troubled debt restructuring, for $2,675,000, which subsequently defaulted during the first nine months of 2018. This troubled debt restructuring became other real estate owned during the fourth quarter of 2018 and subsequently sold during the third quarter of 2019.

Page 23 of 48

Note 6. Reclassifications Out of Accumulated Other Comprehensive Income (a)

Amount Reclassified from Accumulated Other Comprehensive Income

Details about Accumulated Other Comprehensive Income Components	Three Months Ended September 30, 2019			Three Months Ended September 30, 2018			Affected Line Item in the Statement where Net Income is Presented
(in thousands)
Unrealized gains and losses on available-for-sale securities	$	54		$	105		Net gains on sales of investments
Tax (expense) or benefit		(15	)		(29	)	Provision for income taxes
Net of tax	$	39		$	76		Net income
Accretion of unrealized losses transferred	$	(209	)	$	(323	)	Interest on securities held-to-maturity
Tax (expense) or benefit		54			85		Provision for income taxes
Net of tax	$	(155	)	$	(238	)	Net income
Amortization of defined benefit pension items
Prior-service costs	$	(29	)(b)	$	(4	)(b)	Salaries and employee benefits
Actuarial gains (losses)		(337	)(b)		(402	)(b)	Salaries and employee benefits
Total before tax		(366	)		(406	)	Income before taxes
Tax (expense) or benefit		103			114		Provision for income taxes
Net of tax	$	(263	)	$	(292	)	Net income
Details about Accumulated Other Comprehensive Income Components	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018			Affected Line Item in the Statement where Net Income is Presented
(in thousands)
Unrealized gains and losses on available-for-sale securities	$	61		$	302		Net gains on sales of investments
Tax (expense) or benefit		(17	)		(85	)	Provision for income taxes
Net of tax	$	44		$	217		Net income
Accretion of unrealized losses transferred	$	(779	)	$	(1,186	)	Interest on securities held-to-maturity
Tax (expense) or benefit		205			314		Provision for income taxes
Net of tax	$	(574	)	$	(872	)	Net income
Amortization of defined benefit pension items
Prior-service costs	$	(86	)(b)	$	(12	)(b)	Salaries and employee benefits
Actuarial gains (losses)		(1,013	)(b)		(1,207	)(b)	Salaries and employee benefits
Total before tax		(1,099	)		(1,219	)	Income before taxes
Tax (expense) or benefit		309			342		Provision for income taxes
Net of tax	$	(790	)	$	(877	)	Net income

(a) Amount in parentheses indicates reductions to net income.

(b) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Employee Benefits footnote (Note 8) for additional details).

Page 24 of 48

Note 7. Earnings per Share (“EPS”)

Class A and Class B shares participate equally in undistributed earnings. Under the Company’s Articles of Organization, the holders of Class A Common Stock are entitled to receive dividends per share equal to at least 200% of dividends paid, if any, from time to time, on each share of Class B Common Stock.

Diluted EPS includes the dilutive effect of common stock equivalents; basic EPS excludes all common stock equivalents. The Company had no common stock equivalents outstanding for the periods ended September 30, 2019 and 2018.

The following table is a reconciliation of basic EPS and diluted EPS.

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands except share and per share data)	2019		2018		2019		2018
Basic EPS Computation:
Numerator:
Net income, Class A	$	7,986	$	7,535	$	22,849	$	20,674
Net income, Class B		2,098		2,046		6,118		5,614
Denominator:
Weighted average shares outstanding, Class A		3,650,449		3,608,329		3,627,076		3,608,129
Weighted average shares outstanding, Class B		1,917,460		1,959,580		1,940,833		1,959,780
Basic EPS, Class A	$	2.19	$	2.09	$	6.30	$	5.73
Basic EPS, Class B		1.09		1.04		3.15		2.86
Diluted EPS Computation:
Numerator:
Net income, Class A	$	7,986	$	7,535	$	22,849	$	20,674
Net income, Class B		2,098		2,046		6,118		5,614
Total net income, for diluted EPS, Class A computation		10,084		9,581		28,967		26,288
Denominator:
Weighted average shares outstanding, basic, Class A		3,650,449		3,608,329		3,627,076		3,608,129
Weighted average shares outstanding, Class B		1,917,460		1,959,580		1,940,833		1,959,780
Weighted average shares outstanding diluted, Class A		5,567,909		5,567,909		5,567,909		5,567,909
Weighted average shares outstanding, Class B		1,917,460		1,959,580		1,940,833		1,959,780
Diluted EPS, Class A	$	1.81	$	1.72	$	5.20	$	4.72
Diluted EPS, Class B		1.09		1.04		3.15		2.86

Note 8. Employee Benefits

The Company provides pension benefits to its employees under a noncontributory, defined benefit plan which is funded on a current basis in compliance with the requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”) and recognizes costs over the estimated employee service period.

The Company also has a Supplemental Executive Insurance/Retirement Plan (the “Supplemental Plan”) which is limited to certain officers and employees of the Company. The Supplemental Plan is accrued on a current basis and recognizes costs over the estimated employee service period.

Executive officers of the Company and its subsidiaries who have at least one year of service may participate in the Supplemental Plan. The Supplemental Plan is voluntary, and participants are required to contribute to its cost. Life insurance policies, which are owned by the Company, are purchased covering the lives of each participant.

Page 25 of 48

Components of Net Periodic Benefit Cost for the Three Months Ended September 30,

	Pension Benefits						Supplemental Insurance/ Retirement Plan
	2019			2018			2019		2018
	(in thousands)
Service cost	$	276		$	353		$	256	$	277
Interest		473			371			482		346
Expected return on plan assets		(819	)		(954	)		—		—
Recognized prior service cost (benefit)		—			(25	)		28		29
Recognized net actuarial losses		229			226			109		176
Net periodic benefit cost (credit)	$	159		$	(29	)	$	875	$	828

Components of Net Periodic Benefit Cost for the Nine Months Ended September 30,

	Pension Benefits						Supplemental Insurance/ Retirement Plan
	2019			2018			2019		2018
	(in thousands)
Service cost	$	828		$	1,059		$	768	$	831
Interest		1,419			1,111			1,445		1,040
Expected return on plan assets		(2,457	)		(2,863	)		—		—
Recognized prior service cost (benefit)		—			(75	)		86		87
Recognized net actuarial losses		687			680			326		527
Net periodic benefit cost (credit)	$	477		$	(88	)	$	2,625	$	2,485

Approximately $1,506,000 and $507,000 of costs other than service costs, from the table above, are included in other expenses for the nine months ended September 30, 2019 and 2018, respectively.

Contributions

The Company does not intend to contribute to the Defined Benefit Pension Plan in 2019.

Note 9. Fair Value Measurements

The Company follows FASB ASC 820-10, Fair Value Measurements and Disclosures and ASU 2016-1, “Financial Instruments-Overall” (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities, which among other things, requires enhanced disclosures about assets and liabilities carried at fair value. ASC 820-10 establishes a hierarchal disclosure framework associated with the level of pricing observability utilized in measuring financial instruments at fair value. The three broad levels of the hierarchy are as follows:

Level I – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The type of financial instruments included in Level I are highly liquid cash instruments with quoted prices such as G-7 government, agency securities, listed equities and money market securities, as well as listed derivative instruments.

Level II – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these financial instruments include cash instruments for which quoted prices are available but traded less frequently, derivative instruments whose fair value have been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed. Instruments which are generally included in this category are corporate bonds and loans, mortgage whole loans, municipal bonds, and OTC derivatives.

Level III – Instruments that have little to no pricing observability as of the reported date. These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. Instruments that are included in this category generally include certain commercial mortgage loans, certain private equity investments, and distressed debt and non-investment grade residual interests in securitizations, as well as certain highly structured OTC derivative contracts.

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The results of the fair value hierarchy as of September 30, 2019, are as follows:

Financial Instruments Measured at Fair Value on a Recurring Basis:

	Securities AFS Fair Value Measurements Using
	Carrying Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
	(in thousands)
SBA Backed Securities	$	58,664	$	—	$	58,664	$	—
U.S. Government Agency and Sponsored Mortgage-Backed Securities		170,282		—		170,282		—
Privately Issued Residential Mortgage- Backed Securities		579		—		579		—
Obligations Issued by States and Political Subdivisions		28,576		—		4,775		23,801
Other Debt Securities		3,638		—		3,638		—
Total	$	261,739	$	—	$	237,938	$	23,801
Equity Securities	$	1,672	$	324	$	1,348	$	—
Financial Instruments Measured at Fair Value on a Non-recurring Basis:
Impaired Loans	$	173	$	—	$	—	$	173

Impaired loan balances represent those collateral dependent loans where management has estimated the credit loss by comparing the loan’s carrying value against the expected realizable fair value of the collateral. Fair value is generally determined through a review process that includes independent appraisals, discounted cash flows, or other external assessments of the underlying collateral, which generally include various Level 3 inputs which are not observable. The Company discounts the fair values, as appropriate, based on management’s observations of the local real estate market for loans in this category.

Appraisals, discounted cash flows and real estate tax assessments are reviewed quarterly. There is no specific policy regarding how frequently appraisals will be updated. Adjustments are made to appraisals and real estate tax assessments based on management’s estimate of changes in real estate values. All impaired loans have been reviewed during the past quarter using either a discounted cash flow analysis, appraisal of collateral or other type of real estate tax assessment. The types of adjustments that are made to specific provisions related to impaired loans recognized for the three and nine month periods ended September 30, 2019 amounted to $(204,837) and $37,099, respectively.

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The following table presents additional information about assets measured at fair value on a recurring and nonrecurring basis for which the Company has utilized Level 3 inputs to determine fair value (dollars in thousands). Management continues to monitor the assumptions used to value the assets listed below.

Asset	Fair Value		Valuation Technique	Unobservable Input	Unobservable Input Value or Range
Securities AFS (4)	$	23,801	Discounted cash flow	Discount rate	1.7%-3.1% (3)
Impaired Loans	$	173	Appraisal of collateral (1)	Appraisal adjustments (2)	0%-30% discount

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated expenses.

(3) Weighted averages.

(4) Municipal securities generally have maturities of one year or less and, therefore, the amortized cost equates to the fair value.

The changes in Level 3 securities for the nine month period ended September 30, 2019 are shown in the table below:

	Obligations Issued by States & Political Subdivisions
	(in thousands)
Balance at December 31, 2018	$	88,728
Purchases		13,290
Maturities and calls		(78,196	)
Amortization		(21	)
Balance at September 30, 2019	$	23,801

The amortized cost of Level 3 securities was $23,801,000 at September 30, 2019 with an unrealized loss of $0. The securities in this category are generally municipal securities with no readily determinable fair value. Management evaluated the fair value of these securities based on an evaluation of the underlying issuer, prevailing rates and market liquidity.

The fair value of impaired loans decreased by $78,000, for the first nine months of 2019, mainly attributable to one loan that was removed from impaired loans. There were no liabilities measured at fair value on a recurring or nonrecurring basis during the nine month period ended September 30, 2019.

The changes in Level 3 securities for the nine month period ended September 30, 2018, are shown in the table below:

	Auction Rate Securities			Obligations Issued by States & Political Subdivisions			Total
	(in thousands)
Balance at December 31, 2017	$	4,459		$	78,141		$	82,600
Purchases		—			105,837			105,837
Maturities and calls		—			(72,640	)		(72,640	)
Transfer to Level 2		(4,459	)		—			(4,459	)
Amortization		—			(104	)		(104	)
Changes in fair value		—			—			—
Balance at September 30, 2018	$	—		$	111,234		$	111,234

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The amortized cost of Level 3 securities was $111,234,000 at September 30, 2018 with an unrealized loss of $0. The securities in this category are generally municipal securities with no readily determinable fair. Management evaluated the fair value of these securities based on an evaluation of the underlying issuer, prevailing rates and market liquidity. There was one transfer of a security from level 3 to level 2 for the nine months ended September 30, 2018 as a result of increased trading activity and quoted market prices. There were no liabilities measured at fair value on a recurring or nonrecurring basis during the nine month period ended September 30, 2018.

The results of the fair value hierarchy as of December 31, 2018, are as follows:

Financial Instruments Measured at Fair Value on a Recurring Basis:
	Securities AFS Fair Value Measurements Using
	Carrying Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
	(in thousands)
U.S. Treasury	$	1,992	$	—	$	1,992	$	—
U.S. Government Sponsored Enterprises		3,915		—		3,915		—
SBA Backed Securities		70,194		—		70,194		—
U.S. Government Agency and Sponsored Mortgage-Backed Securities		162,890		—		162,890		—
Privately Issued Residential Mortgage- Backed Securities		672		—		672		—
Obligations Issued by States and Political Subdivisions		93,503		—		4,775		88,728
Other Debt Securities		3,593				3,593
Total	$	336,759	$	—	$	248,031	$	88,728
Equity Securities	$	1,596	$	293	$	1,303	$	—
Financial Instruments Measured at Fair Value on a Non-recurring Basis:
Other Real Estate Owned	$	2,225	$	—	$	—	$	2,225
Impaired Loans	$	251	$	—	$	—	$	251

Impaired loan balances represent those collateral dependent loans where management has estimated the credit loss by comparing the loan’s carrying value against the expected realizable fair value of the collateral. Fair value is generally determined through a review process that includes independent appraisals, discounted cash flows, or other external assessments of the underlying collateral, which generally include various Level 3 inputs which are not identifiable. The Company discounts the fair values, as appropriate, based on management’s observations of the local real estate market for loans in this category.

Appraisals, discounted cash flows and real estate tax assessments are reviewed quarterly. There is no specific policy regarding how frequently appraisals will be updated. Adjustments are made to appraisals and real estate tax assessments based on management’s estimate of changes in real estate values. Within the past twelve months there have been no updated appraisals, however, all impaired loans have been reviewed during the past quarter using either a discounted cash flow analysis, appraisal of collateral or other type of real estate tax assessment. The types of adjustments that are made to specific provisions relate to impaired loans recognized for 2018 for the estimated credit loss amounted to $540,000.

There was a transfer of an auction rate security during 2018 from level 3 to level 2. Quoted prices on the auction rate security became available but traded infrequently. There were no other transfers between level 1, 2 and 3 for the year ended December 31, 2018. There were no liabilities measured at fair value on a recurring or nonrecurring basis during the year ended December 31, 2018.

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The following table presents additional information about assets measured at fair value on a recurring and nonrecurring basis for which the Company has utilized Level 3 inputs to determine fair value (dollars in thousands). Management continues to monitor the assumptions used to value the assets listed below.

Asset	Fair Value		Valuation Technique	Unobservable Input	Unobservable Input Value or Range
Securities AFS (4)	$	88,728	Discounted cash flow	Discount rate	2.1%-4.1% (3)
Other Real Estate Owned	$	2,225	Appraisal of collateral (1)	Appraisal adjustments (2)	30% discount
Impaired Loans	$	251	Appraisal of collateral (1)	Appraisal adjustments (2)	0%-30% discount

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated expenses.

(3) Weighted averages.

(4) Municipal securities generally have maturities of one year or less and, therefore, the amortized cost equates to the fair value.

Note 10. Fair Values of Financial Instruments

The following methods and assumptions were used by the Company in estimating fair values of its financial instruments. Excluded from this disclosure are all non-financial instruments. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

The assumptions used below are expected to approximate those that market participants would use in valuing these financial instruments.

Fair value estimates are made at a specific point in time, based on available market information and judgments about the financial instrument, including estimates of timing, amount of expected future cash flows and the credit standing of the issuer. Such estimates do not consider the tax impact of the realization of unrealized gains or losses. In some cases, the fair value estimates cannot be substantiated by comparison to independent markets. In addition, the disclosed fair value may not be realized in the immediate settlement of the financial instrument. Care should be exercised in deriving conclusions about our business, its value or financial position based on the fair value information of financial instruments presented below.

Securities Held-to-Maturity

The fair values of these securities were based on quoted market prices, where available, as provided by third-party investment portfolio pricing vendors. If quoted market prices were not available, fair values provided by the vendors were based on quoted market prices of comparable instruments in active markets and/or based on a matrix pricing methodology which employs The Bond Market Association’s standard calculations for cash flow and price/yield analysis, live benchmark bond pricing and terms/condition data available from major pricing sources. Management regards the inputs and methods used by third party pricing vendors to be “Level 2 inputs and methods” as defined in the “fair value hierarchy” provided by FASB.

Loans

The fair value of loans is estimated using the exit price notion consistent with Topic 820, Fair Value Measurement. Fair value is determined based on a discounted cash flow analysis. The discounted cash flow analysis was based on the contractual maturity of the loan and market indications of rates, prepayment speeds, defaults and credit risk. For certain non-performing assets, fair value of the underlying collateral is determined based on the estimated values of individual receipts.

Time Deposits

The fair value of time deposits was estimated using a discounted cash flow approach that applies prevailing market interest rates for similar maturity instruments. The fair values of the Company’s time deposit liabilities do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value.

Other Borrowed Funds

The fair value of other borrowed funds is based on the discounted value of contractual cash flows. The discount rate used is estimated based on the rates currently offered for other borrowed funds of similar remaining maturities.

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Subordinated Debentures

The fair value of subordinated debentures is based on the discounted value of contractual cash flows. The discount rate used is estimated based on the rates currently offered for other subordinated debentures of similar remaining maturities.

The following presents (in thousands) the carrying amount, estimated fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of September 30, 2019 and December 31, 2018. This table excludes financial instruments for which the carrying amount approximates fair value. Financial assets for which the fair value approximates carrying value include cash and cash equivalents, short-term investments, FHLBB stock and accrued interest receivable. Financial liabilities for which the fair value approximates carrying value include non-maturity deposits, short-term borrowings and accrued interest payable.

September 30, 2019	Carrying Amount		Estimated Fair Value		Fair Value Measurements Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(in thousands)
Financial assets:
Securities held-to-maturity	$	2,164,135	$	2,188,465	$	—	$	2,188,465	$	—
Loans (1)		2,346,564		2,398,515		—		—		2,398,515
Financial liabilities:
Time deposits		533,074		532,135		—		532,135		—
Other borrowed funds		209,188		209,263		—		209,263		—
Subordinated debentures		36,083		36,083		—		36,083		—
December 31, 2018
Financial assets:
Securities held-to-maturity	$	2,046,647	$	1,991,421	$	—	$	1,991,421	$	—
Loans (1)		2,257,035		2,279,712		—		—		2,279,712
Financial liabilities:
Time deposits		560,579		559,988		—		559,988		—
Other borrowed funds		202,378		203,122		—		203,122		—
Subordinated debentures		36,083		36,083		—		36,083		—

(1) Comprised of loans (including collateral dependent impaired loans), net of deferred loan costs and the allowance for loan losses.

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the type of financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Bank’s entire holdings of a particular financial instrument. Because no active market exists for some of the Bank’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, cash flows, current economic conditions, risk characteristics and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions and changes in the loan, debt and interest rate markets could significantly affect the estimates. Further, the income tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on the fair value estimates and have not been considered.

Note 11. Revenue from Contracts with Customers

Revenue from contracts with customers in the scope of ASC Topic 606 is measured based on the consideration specified in the contract with a customer, and excludes amounts collected on behalf of third parties. The Company recognizes revenue from contracts with customers when it satisfies its performance obligations.

The Company’s performance obligations are typically satisfied as services are rendered, and our contracts do not include multiple performance obligations. Payment is generally collected at the time services are rendered, or monthly. Unsatisfied performance obligations at the report date are not material to our consolidated financial statements.

The Company pays sales commissions to its employees in accordance with certain incentive plans. The Company expenses sales commissions when incurred if we do not expect to recover these costs from the terms of the contract with the customer. Sales commissions are included in compensation expense.

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In certain cases, other parties are involved with providing products and services to our customers. If the Company is a principal in the transaction (providing goods or services itself), revenues are reported based on the gross consideration received from the customer and any related expenses are reported gross in noninterest expense. If the Company is an agent in the transaction (arranging for another party to provide goods or services), the Company reports its net fee or commission retained as revenue.

Waivers and reversals are recorded as a reduction of revenue either when the revenue is recognized by the Company or at the time the waiver or reversal is earned by the customer.

A. Change in accounting policy

The Company adopted Topic 606 Revenue from Contracts with Customers with a date of initial application of January 1, 2018 through the third quarter of 2019 and has applied the guidance to all contracts within the scope of Topic 606 as of that date. As a result, the Company has changed its accounting policy for revenue recognition as detailed in this footnote.

The Company applied Topic 606 using the cumulative effect method. There was no cumulative effect adjustment as of January 1, 2018, and there were no material changes to the financial statements at or for the nine months ended September 30, 2019 and September 30, 2018, respectively, as a result of adopting Topic 606.

B. Practical Expedients

The Company applies the practical expedient in paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

The Company applies the practical expedient in paragraph 606-10-32-18 and does not adjust the consideration from customers for the effects of a significant financing component if at contract inception the period between when the entity transfers the goods or services and when the customer pays for that good or service will be one year or less.

C. Nature of goods and services

The vast majority of the Company’s revenue is specifically out-of-scope of Topic 606. For the revenue in-scope, the following is a description of principal activities, separated by the timing of revenue recognition, from which the Company generates its revenue from contracts with customers.

a. Revenue earned at a point in time – Examples of revenue earned at a point in time are ATM transaction fees, wire transfer fees, NSF fees, credit and debit card interchange fees and foreign exchange transaction fees. Revenue is generally derived from transactional information accumulated by our systems and is recognized as revenue immediately as the transactions occur or upon providing the service to complete the customer’s transaction. The Company is the principal in each of these contracts, with the exception of credit and debit card interchange fees, in which case we are acting as the agent and record revenue net of expenses paid to the principal.

b. Revenue earned over time – The Company earns revenue from contracts with customers in a variety of ways in which the revenue is earned over a period of time – generally monthly or quarterly. Examples of this type of revenue are deposit account service fees, lockbox fees, investment management fees, merchant referral services, and safe deposit box fees. Account service charges, management fees and referral fees are recognized on a monthly basis while any transaction based income is recorded as the activity occurs. Revenue is primarily based on the number and type of transactions or assets managed and is generally derived from transactional information accumulated by our systems. Revenue is recorded in the same period as the related transactions occur or services are rendered to the customer.

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D. Disaggregation of revenue

The following table presents total revenues as presented in the Consolidated Statements of Income and the related amounts which are from contracts with customers within the scope of Topic 606. As illustrated here, the vast majority of our revenues are specifically excluded from the scope of Topic 606.

	Nine Months Ended 9/30/2019		Revenue from Contracts in Scope of Topic 606		Nine Months Ended 9/30/2018		Revenue from Contracts in Scope of Topic 606
	(dollars in thousands)
Net interest income	$	70,458	$	—	$	68,871	$	—
Noninterest income:
Service charges on deposit accounts		6,801		6,801		6,268		6,268
Lockbox fees		3,018		3,018		2,304		2,304
Net gains on sales of securities		61		—		302		—
Gains on sales of mortgage loans		154		—		—		—
Other income		3,676		2,338		3,210		2,215
Total noninterest income		13,710		12,157		12,084		10,787
Total revenues	$	84,168	$	12,157	$	80,955	$	10,787
	Three Months Ended 9/30/2019		Revenue from Contracts in Scope of Topic 606		Three Months Ended 9/30/2018		Revenue from Contracts in Scope of Topic 606
	(dollars in thousands)
Net interest income	$	23,770	$	—	$	23,204	$	—
Noninterest income:
Service charges on deposit accounts		2,310		2,310		2,137		2,137
Lockbox fees		937		937		892		892
Net gains on sales of securities		53		—		105		—
Gains on sales of mortgage loans		—		—		—		—
Other income		986		728		1,035		751
Total noninterest income		4,286		3,975		4,169		3,780
Total revenues	$	28,056	$	3,975	$	27,373	$	3,780

The following table provides information about receivables with customers.

	September 30, 2019		December 31, 2018
(dollars in thousands)
Receivables, which are included in “Other assets”	$	1,142	$	1,205

Note 12. Leases

The Company has operating leases primarily for branch locations as well as data processing centers. The Company’s operating leases have remaining lease terms of 1 year to 32 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year. The Company also has one sublease for part of a data processing center that the Company currently leases from a lessor. The sublease expires in 2022 with an option to terminate and no option to extend. Lease income, for the sublease, totaled approximately $29,000 for the nine months ended September 30, 2019. Variable lease costs include costs that are not included in the lease liability.

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The components of lease expense were as follows:

	Three Months Ended 9/30/2019		Nine Months Ended 9/30/2019
(in thousands)
Operating lease cost	$	550	$	1,676
Variable lease cost		121		405
Total lease cost	$	671	$	2,081

Supplemental cash flow information related to leases was as follows:

	Three Months Ended 9/30/2019		Nine Months Ended 9/30/2019
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	528	$	1,605
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	433	$	1,318

Supplemental balance sheet information related to leases was as follows:

	9/30/2019
(in thousands, except lease term and discount rate)
Operating Leases:
Operating lease right-of-use assets	$	12,944
Operating lease liabilities	$	13,101
Weighted Average Remaining Lease Term:
Operating Leases		11 Years
Weighted Average Discount Rate:
Operating Leases		3.5	%

A summary of future minimum rental payments under such leases as the dates indicated follows:

	Minimum Rental Payments
	September 30, 2019			December 31, 2018
	(in thousands)
Year Ending December 31, 2019	$	459		$	2,490
2020		2,038			2,170
2021		1,759			1,694
2022		1,603			1,331
2023		1,541			1,104
Thereafter		8,570			1,074
Total lease payments	$	15,970		$	9,863
Less imputed interest		(2,869	)
Present value of lease liability	$	13,101

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

Century Bancorp, Inc. (together with its bank subsidiary, unless the context otherwise requires, the “Company”) is a Massachusetts state-chartered bank holding company headquartered in Medford, Massachusetts. The Company is a Massachusetts corporation formed in 1972 and has one banking subsidiary (the “Bank”): Century Bank and Trust Company formed in 1969. At September 30, 2019, the Company had total assets of $5.3 billion. Currently, the Company operates 27 banking offices in 20 cities and towns in Massachusetts, ranging from Braintree in the south to Andover in the north. The Bank’s customers consist primarily of small and medium-sized businesses and retail customers in these communities and surrounding areas, as well as local governments and large healthcare and higher educational institutions primarily throughout Massachusetts, New Hampshire, Rhode Island, Connecticut and New York.

The Company’s results of operations are largely dependent on net interest income, which is the difference between the interest earned on loans and securities and interest paid on deposits and borrowings. The results of operations are also affected by the level of income and fees from loans, deposits, as well as operating expenses, the provision for loan losses, the impact of federal and state income taxes and the relative levels of interest rates and economic activity.

The Company offers a wide range of services to commercial enterprises, state and local governments and agencies, non-profit organizations and individuals. It emphasizes service to small and medium sized businesses and retail customers in its market area. In recent years, the Company has increased business to larger institutions, specifically, healthcare and higher education. The Company makes commercial loans, real estate and construction loans and consumer loans, and accepts savings, time, and demand deposits. In addition, the Company offers its corporate and institutional customers automated lock box collection services, cash management services and account reconciliation services, and actively promotes the marketing of these services to the municipal market. Also, the Company provides full service securities brokerage services through a program called Investment Services at Century Bank, which is supported by LPL Financial, a third party full-service securities brokerage business.

The Company has municipal cash management client engagements in Massachusetts, New Hampshire and Rhode Island comprising of approximately 298 government entities.

Net income for the nine months ended September 30, 2019, was $28,967,000 or $5.20 per Class A share diluted, an increase of 10.2% compared to net income of $26,288,000, or $4.72 per Class A share diluted, for the same period a year ago.

Earnings per share (EPS) for each class of stock and time period is as follows:

	Three Months Ended September 30,
	2019		2018
Basic EPS – Class A common	$	2.19	$	2.09
Basic EPS – Class B common	$	1.09	$	1.04
Diluted EPS – Class A common	$	1.81	$	1.72
Diluted EPS – Class B common	$	1.09	$	1.04
	Nine Months Ended September 30
	2019		2018
Basic EPS – Class A common	$	6.30	$	5.73
Basic EPS – Class B common	$	3.15	$	2.86
Diluted EPS – Class A common	$	5.20	$	4.72
Diluted EPS – Class B common	$	3.15	$	2.86

Net interest income totaled $70,458,000 for the nine months ended September 30, 2019 compared to $68,871,000 for the same period in 2018. The 2.3% increase in net interest income for the period is primarily due to an increase in average earning assets. The net interest margin decreased from 2.19% on a fully taxable equivalent basis in 2018 to 2.08% for the same period in 2019. This was primarily the result of increased rates paid on deposits.

The average balances of earning assets increased by 7.9% combined with an average yield increase of 0.30%, resulting in an increase in interest income of $19,018,000. The average balance of interest bearing liabilities increased 7.6% combined with an average cost of funds increase of 0.50%, resulting in an increase in interest expense of $17,431,000.

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The trends in the net interest margin are illustrated in the graph below:

The net interest margin increased during 2017 primarily as a result of an increase in rates on earning assets. This increase was primarily the result of the yield on floating rate assets increasing as a result of recent increases in short term interest rates as well as an increase in prepayment penalties collected during the second quarter of 2017. Prepayment penalties collected amounted to $825,000 and contributed approximately seven basis points to the net interest margin for the second quarter of 2017. During 2017, the Company did not see a corresponding increase in short term rates on interest bearing liabilities. The margin decreased during 2018 mainly as a result of a decrease in the corporate tax rate from 34% to 21%. This decrease results in a lower tax equivalent yield on tax-exempt assets. During the fourth quarter of 2018 and first and second quarters of 2019, the Company increased its average interest-bearing deposits. These deposits increased net interest income but decreased the net interest margin. During the third quarter of 2019, the net interest margin increased mainly as a result of deposit rate decreases. While management will continue its efforts to improve the net interest margin, there can be no assurance that certain factors beyond its control, such as the prepayment of loans and changes in market interest rates, will continue to positively impact the net interest margin.

The provision for loan losses decreased by $200,000 from $900,000 for the nine months ended September 30, 2018 to $700,000 for the same period in 2019. Refer to the allowance for loan loss section of the management discussion and analysis for additional discussion. Non-performing assets totaled $1,066,000 at September 30, 2019, compared to $3,538,000 at December 31, 2018.

The Company’s effective tax rate decreased from 4.6% for the nine months ended September 30, 2018 to 2.0% for the same period in 2019. This was primarily as a result of a reduction in tax accruals related to sequestration of the refundable portion of our alternative minimum tax (AMT) credit carryforward. On January 14, 2019, the IRS updated its announcement “Effect of Sequestration on the Alternative Minimum Tax Credit for Corporations” to clarify that refundable AMT credits under Section 53(e) of the Internal Revenue Code are not subject to sequestration for taxable years beginning after December 31, 2017. Therefore, the full amount of the AMT credit carryover will be refunded to the Company.

During the third quarter of 2019, the Company purchased the existing Brookline branch location that the Company was leasing. Also, during the third quarter, the Company purchased a future branch location in Salem, New Hampshire. The Company plans to open this branch during the third quarter of 2020.

Recent Market Developments

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “D-F Act”) became law. The D-F Act was intended to address many issues arising in the recent financial crisis and is exceedingly broad in scope, affecting many aspects of bank and financial market regulation. The D-F Act requires, or permits by implementing regulation, enhanced prudential standards for banks and bank holding companies inclusive of capital, leverage, liquidity, concentration and exposure measures. In addition, traditional bank regulatory principles such as restrictions on transactions with affiliates and insiders were enhanced. The D-F Act also contains reforms of consumer mortgage lending practices and creates a Bureau of Consumer Financial Protection, which is granted broad authority over consumer financial practices of banks and others. It is expected as the specific new or incremental requirements applicable to the Company become effective that the costs and difficulties of remaining compliant with all such requirements will increase. The D-F Act broadened the base for FDIC assessments to average consolidated assets less tangible equity of financial institutions and also permanently raises the current standard maximum FDIC deposit insurance amount to $250,000. The Act extended unlimited deposit insurance on non-interest bearing transaction accounts through December 31, 2012.

In addition, the D-F Act added a new Section 13 to the Bank Holding Company Act, the so-called “Volcker Rule,” (the “Rule”) which generally restricts certain banking entities such as the Company and its subsidiaries or affiliates, from engaging in proprietary trading activities and owning equity in or sponsoring any private equity or hedge fund. The Rule became effective July 21, 2012. The final implementing regulations for the Rule were issued by various regulatory agencies in December 2013 and under an extended conformance regulation compliance was required to be achieved by July 21, 2015. The conformance period for investments in and relationships with certain “legacy covered funds” was extended to July 21, 2017. The final Rule amendments impact compliance and metrics, proprietary trading, and covered funds; a second round of revisions is anticipated. The final Rule has an effective date of January 1, 2020 though compliance is not required until January 1, 2021. Under the Rule, the Company may be restricted from engaging in

Page 36 of 48

proprietary trading, investing in third party hedge or private equity funds or sponsoring new funds unless it qualifies for an exemption from the rule. The Company has little involvement in prohibited proprietary trading or investment activities in covered funds and the Company does not expect that complying with the requirements of the Rule will have any material effect on the Company’s financial condition or results of operation. The federal banking agencies have issued notices of proposed rulemaking to make certain amendments to the Rule to simply and tailor compliance requirements and to conform the Rule to the EGRRCPA (discussed below).

Federal banking regulators have issued risk-based capital guidelines, which assign risk factors to asset categories and off-balance-sheet items. Also, the Basel Committee has issued capital standards entitled “Basel III: A global regulatory framework for more resilient banks and banking systems” (“Basel III”). The Federal Reserve Board has finalized its rule implementing the Basel III regulatory capital framework. The rule that came into effect in January 2015 sets the Basel III minimum regulatory capital requirements for all organizations. It included a new common equity Tier I ratio of 4.5 percent of risk-weighted assets, raised the minimum Tier I capital ratio from 4 percent to 6 percent of risk-weighted assets and would set a new conservation buffer of 2.5 percent of risk-weighted assets. The implementation of the framework did not have a material impact on the Company’s financial condition or results of operations.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, which represents the most comprehensive reform to the U.S. tax code in over thirty years. The majority of the provisions of the Tax Act took effect on January 1, 2018. The Tax Act lowered the Company’s federal tax rate from 34% to 21%. Also, for tax years beginning after December 31, 2017, the corporate Alternative Minimum Tax (“AMT”) has been repealed. For 2018 through 2021, the AMT credit carryforward can offset regular tax liability and is refundable in an amount equal to 50% (100% for 2021) of the excess of the minimum tax credit for the tax year over the amount of the credit allowable for the year against regular tax liability. Accordingly, it is anticipated that the full amount of the alternative minimum tax credit carryforward will be recovered in tax years beginning before 2022. The Tax Act also contains other provisions that may affect the Company currently or in future years. Among these are changes to the deductibility of meals and entertainment, the deductibility of executive compensation, the dividend received deduction and net operating loss carryforwards. Tax Act changes for individuals include lower tax rates, mortgage interest and state and local tax limitations as well as an increase in the standard deduction, among others.

On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act, or the EGRRCPA, became law. This is arguably the most significant financial institution legislation since the D-F Act. The EGRRCPA changes certain of the regulatory requirements of the D-F Act and includes provisions intended to relieve the regulatory burden on “community banks.” Among other things, for qualifying community banks with less than $10 billion in total consolidated assets, the EGRRCPA contains a safe harbor from the D-F Act “ability to repay” mortgage requirements, an exemption from the Volcker Rule, may permit filing of simplified Call Reports, and potentially will result in some alleviation of the D-F Act and U.S. Basel III capital mandates. The EGRRCPA requires the federal banking agencies to develop a community bank leverage ratio (defined as the ratio of tangible equity capital to average total consolidated assets) for banks and holding companies with total consolidated assets of less than $10 billion and an appropriate risk profile. The required regulations must specify a minimum community bank leverage ratio of not less than 8% and not more than 10%. The federal banking agencies jointly issued a notice of proposed rulemaking which would set the minimum ratio at 9%. Qualifying banks that exceed the minimum community bank leverage ratio will be deemed to be in compliance with all other capital and leverage requirements including the capital ratio requirements that are required to be considered well capitalized under Section 38 of Federal Deposit Insurance Act.

Financial Condition

Loans

On September 30, 2019, total loans outstanding were $2,375,661,000 up by $90,083,000 from the total on December 31, 2018. At September 30, 2019, commercial real estate loans accounted for 32.2%, commercial and industrial accounted for 33.0%, and residential real estate loans, including home equity loans, accounted for 28.4% of total loans.

Commercial and industrial loans increased to $783,950,000 at September 30, 2019 from $761,625,000 at December 31, 2018, primarily as a result of loan originations. Commercial real estate loans increased to $765,385,000 from $750,362,000 on December 31, 2018 primarily as a result of loan originations. Construction loans decreased to $7,824,000 at September 30, 2019 from $13,628,000 on December 31, 2018, primarily as a result of loan payoffs. Residential real estate loans increased to $364,317,000 on September 30, 2019 from $348,250,000 on December 31, 2018, primarily as a result of loan originations. Home equity loans increased to $310,635,000 on September 30, 2019 from $292,340,000 at December 31, 2018, primarily as a result of a home equity loan promotion. Municipal loans increased to $121,802,000 from $97,290,000, primarily as a result of loan originations.

In recent years, the Company has increased business to larger institutions, specifically, healthcare, higher education, and municipal organizations. Further discussion relating to changes in portfolio composition is discussed in the allowance for loan loss section of the management discussion and analysis.

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Allowance for Loan Losses

The allowance for loan loss at September 30, 2019 was $29,097,000 as compared to $28,543,000 at December 31, 2018. The level of the allowance for loan losses to total loans was 1.22% at September 30, 2019 and 1.25% at December 31, 2018. The coverage ratio has decreased primarily as a result of improvements in historical loss rates. The Company monitors the outlook for the industries in which our borrowers operate. Healthcare and higher education are two of the primary industries. In particular the Company utilizes outlooks and forecasts from various sources. The Company also monitors the volatility of the losses within the historical data.

By combining the credit rating, the industry outlook and the loss volatility, the Company arrives at the loss factor for each credit grade. For a large loan to large institutions with publicly available credit ratings the Company tracks these ratings. These ratings are tracked as a credit quality indicator for these loans. Credit ratings issued by national organizations were utilized as credit quality indicators as presented in the following table at September 30, 2019.

Credit ratings issued by national organizations were utilized as credit quality indicators as presented in the following table at September 30, 2019 and are included within the total loan portfolio.

	Commercial and Industrial		Municipal		Commercial Real Estate		Total
	(in thousands)
Credit Rating:
Aaa – Aa3	$	497,124	$	54,495	$	40,759	$	592,378
A1 – A3		187,970		7,479		148,735		344,184
Baa1 – Baa3		—		51,133		122,288		173,421
Ba2		—		5,895		—		5,895
Total	$	685,094	$	119,002	$	311,782	$	1,115,878

Credit ratings issued by national organizations are presented in the following table at December 31, 2018.

	Commercial and Industrial		Municipal		Commercial Real Estate		Total
	(in thousands)
Credit Rating:
Aaa – Aa3	$	491,247	$	54,105	$	42,790	$	588,142
A1 – A3		172,472		7,605		151,381		331,458
Baa1 – Baa3		—		26,970		118,197		145,167
Ba2		—		6,810		—		6,810
Total	$	663,719	$	95,490	$	312,368	$	1,071,577

The allowance for loan losses is an estimate of the amount needed for an adequate reserve to absorb losses in the existing loan portfolio. This amount is determined by an evaluation of the loan portfolio, including input from an independent organization engaged to review selected larger loans, a review of loan experience and current economic conditions. Although the allowance is allocated between categories, the entire allowance is available to absorb losses attributable to all loan categories.

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The following table summarizes the changes in the Company’s allowance for loan losses for the periods indicated.

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
	(in thousands)
Allowance for loan losses, beginning of period	$	29,070		$	27,144		$	28,543		$	26,255
Loans charged off		(118	)		(89	)		(336	)		(247	)
Recoveries on loans previously charged-off		70			1,490			190			1,637
Net (charge-offs) recoveries		(48	)		1,401			(146	)		1,390
Provision charged to expense		75			—			700			900
Allowance for loan losses, end of period	$	29,097		$	28,545		$	29,097		$	28,545

The Company may experience increased levels of nonaccrual loans if borrowers are negatively impacted by future negative economic conditions. Management continually monitors trends in the loan portfolio to determine the appropriate level of allowance for loan losses. At the current time, management believes that the allowance for loan losses is adequate.

Nonperforming Assets

The following table sets forth information regarding nonperforming assets held by the Bank at the dates indicated:

	September 30, 2019			December 31, 2018
	(dollars in thousands)
Nonaccruing loans	$	1,066		$	1,313
Total nonperforming assets	$	1,066		$	3,538
Loans past due 90 days or more and still accruing	$	—		$	—
Nonaccruing loans as a percentage of total loans		0.04	%		0.06	%
Nonperforming assets as a percentage of total assets		0.02	%		0.07	%
Accruing troubled debt restructures	$	2,404		$	2,559

The decrease in nonperforming assets was primarily the result of the sale of one property classified as other real estate owned.

Investments

Management continually evaluates its investment alternatives in order to properly manage the overall balance sheet mix. The timing of purchases, sales and reinvestments, if any, will be based on various factors including expectation of movements in market interest rates, deposit flows and loan demand. Notwithstanding these events, it is the intent of management to grow the earning asset base mainly through loan originations while funding this growth through a mix of retail deposits, FHLB advances, and retail repurchase agreements.

Securities Available-for-Sale (at Fair Value)

The securities available-for-sale portfolio totaled $261,739,000 at September 30, 2019, a decrease of 22.3% from December 31, 2018. The portfolio decreased mainly as a result of calls/maturities, sales and scheduled principal payments of $131,859,000. This was offset, somewhat, by purchases of securities available-for-sale totaling $57,005,000. The purchases include $13,290,000 of purchases that are obligations issued by States and Political Subdivisions. The portfolio is concentrated in United States Government Sponsored Enterprises, Mortgage-backed Securities and Obligations issued by States and Political Subdivisions and had an estimated weighted average remaining life of 5.1 years.

At September 30, 2019, 90.9% of the Company’s securities available-for-sale are classified as Level 2. The fair values of these securities are generally obtained from a pricing service, which provides the Company with a description of the inputs generally utilized for each type of security. These inputs include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. Market indicators and industry and economic events are also monitored.

Securities available-for-sale totaling $23,801,000 or 9.1% of securities available-for-sale are classified as Level 3. These securities are generally municipal securities with no observable fair value with an average life of one year or less. The securities are carried at cost which approximates fair value. A periodic review of underlying financial statements and credit ratings is performed to assess the appropriateness of these valuations.

During the first nine months of 2019, net unrealized loss on the securities available-for-sale increased to $200,000 from a net unrealized gain of $8,000 at December 31, 2018. This was primarily the result of a decrease in the value of floating rate securities.

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The following table sets forth the fair value of securities available-for-sale at the dates indicated.

	September 30, 2019		December 31, 2018
	(in thousands)
U.S. Treasury	$	—	$	1,992
U.S. Government Sponsored Enterprises		—		3,915
Small Business Administration		58,664		70,194
U.S Government Agency and Sponsored Enterprise Mortgage-backed Securities		170,282		162,890
Privately Issued Residential Mortgage-backed Securities		579		672
Obligations issued by States and Political Subdivisions		28,576		93,503
Other Debt Securities		3,638		3,593
Total Securities Available–for-Sale	$	261,739	$	336,759

The Company realized gross gains of $13,000 from the proceeds of $16,285,000 from the sales of available-for-sale securities for the nine months ended September 30, 2019. The Company realized gross gains of $302,000 from the proceeds of $27,517,000 from the sales of available-for-sales securities for the nine months ended September 30, 2018.

Securities Held-to-Maturity (at Amortized Cost)

The securities held-to-maturity portfolio totaled $2,164,135,000 on September 30, 2019, an increase of 5.7% from December 31, 2018. Purchases of securities held-to-maturity totaled $427,124,000 for the nine months ended September 30, 2019. The purchases were offset somewhat, by calls, maturities and scheduled principal payments of $313,358,000. The portfolio is concentrated in United States Government Sponsored Enterprises and Mortgage-backed Securities and had an estimated weighted average remaining life of 3.6 years. Unrealized losses decreased during the year primarily as a result of increases in interest rates.

The following table sets forth the amortized cost of securities held-to-maturity at the dates indicated.

	September 30, 2019		December 31, 2018
	(in thousands)
U.S. Treasury	$	—	$	9,960
U.S. Government Sponsored Enterprises		121,516		234,228
SBA Backed Securities		47,126		52,051
U.S. Government Agency and Sponsored Enterprise Mortgage-backed Securities		1,995,493		1,750,408
Total Securities Held-to-Maturity	$	2,164,135	$	2,046,647

The Company realized gross gains of $48,000 from the proceeds of $1,199,000 from the sales of securities held-to-maturity for the nine months ended September 30, 2019. There were no sales of held-to-maturity securities for the nine months ended September 30, 2018. The sales of securities held-to-maturity relate to certain mortgage backed securities for which the Company had previously collected a substantial portion of its principal investment.

The net unrealized gains on investment securities held-to-maturity was $24,330,000 or 1.1% of the total at September 30, 2019 and the net unrealized losses of $55,226,000 or 2.7% of the total at December 31, 2018. The decrease in the net unrealized losses on securities held-to-maturity related primarily to a decrease in interest rates. The gross unrealized losses relate primarily to interest rates and not credit quality, and because the Company does not intend to sell any of these securities and it is not likely that it will be required to sell these securities before the anticipated recovery of the remaining amortized cost, the Company does not consider these investments to be other-than-temporarily impaired September 30, 2019 and December 31, 2018.

At September 30, 2019 and December 31, 2018, all mortgage-backed securities are obligations of U.S. Government Sponsored Enterprises. Debt securities of Government Sponsored Enterprises primarily refer to debt securities of Fannie Mae and Freddie Mac.

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Federal Home Loan Bank of Boston Stock

The Bank, as a member of the Federal Home Loan Bank of Boston (“FHLBB”), is required to maintain an investment in capital stock of the FHLBB. Based on redemption provisions, the stock has no quoted market value and is carried at cost. At its discretion, the FHLBB may declare dividends on the stock. The Company reviews for impairment based on the ultimate recoverability of the cost basis in the stock. During the first nine months of 2019, the FHLBB redeemed $13,801,000 of FHLBB stock and the Company purchased $9,852,000 of FHLBB stock. As of September 30, 2019, no impairment has been recognized.

Equity Securities

At September 30, 2019 equity securities totaled $1,672,000 compared to $1,596,000 at December 31, 2018. Equity securities were reclassified from securities available-for-sale during the first quarter of 2018. The unrealized gain, of $29,000 on equity securities, at December 31, 2017, was transferred to retained earnings and the change in the unrealized gain for the first quarter of 2018 was classified as other income, in accordance with ASU 2016-1 as previously discussed in Note 9.

Deposits and Borrowed Funds

On September 30, 2019, deposits totaled $4,339,853, representing a 1.5% decrease from December 31, 2018. Total deposits decreased primarily as a result of a decrease in demand deposits, money market accounts, and time deposits. These types of deposits decreased primarily from increased competition and deposit seasonality. Demand deposits decreased mainly as a result of decreased corporate checking balances. Savings and NOW deposits increased mainly as a result of an increase in personal savings and municipal NOW accounts, offset somewhat, by decrease in corporate savings deposits. Money market accounts decreased mainly as a result of a decrease in corporate money market accounts as well as decreases in deposit gathering services accounts. Time deposits decreased primarily as a result of decreased personal, corporate and municipal time deposits.

Borrowed funds totaled $516,423,000 at September 30, 2019 compared to $356,618,000 at December 31, 2018. Borrowed funds increased mainly as a result of an increase in repurchase agreements. Repurchase agreements increased primarily as a result of short-term customer activity.

Stockholders’ Equity

At September 30, 2019, total equity was $328,960,000 compared to $300,439,000 on December 31, 2018. The Company’s equity increased primarily as a result of earnings, offset, somewhat, by dividends paid. The Company’s leverage ratio stood at 7.25% on September 30, 2019, compared to 6.91% at December 31, 2018. The increase in the leverage ratio was due to an increase in stockholders’ equity, offset somewhat by an increase in quarterly average assets. Book value as of September 30, 2019, was $59.08 as compared to $53.96 on December 31, 2018.

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Results of Operations

The following table sets forth the distribution of the Company’s average assets, liabilities and stockholders’ equity, and average rates earned or paid on a fully taxable equivalent basis for each of the three-month periods indicated.

	Three Months Ended
	September 30, 2019									September 30, 2018
	Average Balance			Interest Income/ Expenses (1)			Rate Earned/ Paid (1)			Average Balance			Interest Income/ Expenses (1)			Rate Earned/ Paid (1)
	(dollars in thousands)
ASSETS
Interest-earning assets:
Loans (2)
Loans taxable	$	1,217,324		$	13,665			4.45	%	$	1,111,193		$	11,974			4.28	%
Loans tax-exempt		1,145,136			10,704			3.71	%		1,128,742			10,375			3.65	%
Securities available-for-sale (5):
Taxable		261,312			1,969			3.01	%		296,315			1,970			2.66	%
Tax-exempt		32,978			262			3.18	%		113,623			647			2.28	%
Securities held-to-maturity:
Taxable		2,141,931			14,623			2.73	%		1,858,695			11,507			2.48	%
Interest-bearing deposits in other banks		173,150			928			2.14	%		117,312			591			2.02	%
Total interest-earning assets		4,971,831			42,151			3.38	%		4,625,880			37,064			3.19	%
Non interest-earning assets		248,663									227,410
Allowance for loan losses		(29,079	)								(28,204	)
Total assets	$	5,191,415								$	4,825,086
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits:
NOW accounts	$	917,133		$	2,366			1.02	%	$	910,975		$	1,741			0.76	%
Savings accounts		868,891			3,079			1.41	%		562,133			1,231			0.87	%
Money market accounts		1,207,387			5,050			1.66	%		1,231,693			3,652			1.18	%
Time deposits		517,184			3,038			2.33	%		561,249			2,571			1.82	%
Total interest-bearing deposits		3,510,595			13,533			1.53	%		3,266,050			9,195			1.12	%
Securities sold under agreements to repurchase		252,270			697			1.10	%		151,605			288			0.75	%
Other borrowed funds and subordinated debentures		250,648			1,852			2.93	%		318,829			2,078			2.59	%
Total interest-bearing liabilities		4,013,513			16,082			1.59	%		3,736,484			11,561			1.23	%
Non-interest-bearing liabilities
Demand deposits		775,080									736,622
Other liabilities		79,104									69,724
Total liabilities		4,867,697									4,542,830
Stockholders’ equity		323,718									282,256
Total liabilities & stockholders’ equity	$	5,191,415								$	4,825,086
Net interest income on a fully taxable equivalent basis					26,069									25,503
Less taxable equivalent adjustment					(2,299	)								(2,299	)
Net interest income				$	23,770								$	23,204
Net interest spread (3)								1.79	%								1.96	%
Net interest margin (4)								2.08	%								2.19	%

(1) On a fully taxable equivalent basis calculated using a federal tax rate of 21%.

(2) Nonaccrual loans are included in average amounts outstanding.

(3) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(4) Net interest margin represents net interest income as a percentage of average interest-earning assets.

(5) Average balances of securities available-for-sale calculated utilizing amortized cost.

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The following table sets forth the distribution of the Company’s average assets, liabilities and stockholders’ equity, and average rates earned or paid on a fully taxable equivalent basis for each of the nine-month periods indicated.

	Nine Months Ended
	September 30, 2019									September 30, 2018
	Average Balance			Interest Income/ Expenses (1)			Rate Earned/ Paid (1)			Average Balance			Interest Income/ Expenses (1)			Rate Earned/ Paid (1)
	(dollars in thousands)
ASSETS
Interest-earning assets:
Loans (2)
Loans taxable	$	1,200,512		$	40,114			4.47	%	$	1,076,781		$	33,902			4.21	%
Loans tax-exempt		1,124,624			31,658			3.76	%		1,129,413			30,018			3.55	%
Securities available-for-sale (5):
Taxable		271,637			6,338			3.11	%		317,753			5,719			2.40	%
Tax-exempt		53,399			1,176			2.94	%		88,269			1,342			2.03	%
Securities held-to-maturity:
Taxable		2,128,082			43,006			2.69	%		1,816,745			32,930			2.42	%
Interest-bearing deposits in other banks		184,035			3,204			2.32	%		171,773			2,239			1.74	%
Total interest-earning assets		4,962,289			125,496			3.38	%		4,600,734			106,150			3.08	%
Non interest-earning assets		247,744									227,185
Allowance for loan losses		(28,936	)								(27,235	)
Total assets	$	5,181,097								$	4,800,684
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits:
NOW accounts	$	932,139		$	7,057			1.01	%	$	944,879		$	4,669			0.66	%
Savings accounts		885,878			9,731			1.47	%		550,585			3,109			0.75	%
Money market accounts		1,249,531			15,805			1.69	%		1,208,547			9,039			1.00	%
Time deposits		512,228			8,724			2.28	%		587,742			7,465			1.70	%
Total interest-bearing deposits		3,579,776			41,317			1.54	%		3,291,753			24,282			0.99	%
Securities sold under agreements to repurchase		205,185			1,572			1.02	%		149,970			657			0.59	%
Other borrowed funds and subordinated debentures		237,887			5,274			2.96	%		298,480			5,793			2.59	%
Total interest-bearing liabilities		4,022,848			48,163			1.60	%		3,740,203			30,732			1.10	%
Non-interest-bearing liabilities
Demand deposits		764,852									718,215
Other liabilities		79,327									69,404
Total liabilities		4,867,027									4,527,822
Stockholders’ equity		314,070									272,862
Total liabilities & stockholders’ equity	$	5,181,097								$	4,800,684
Net interest income on a fully taxable equivalent basis					77,333									75,418
Less taxable equivalent adjustment					(6,875	)								(6,547	)
Net interest income				$	70,458								$	68,871
Net interest spread (3)								1.78	%								1.98	%
Net interest margin (4)								2.08	%								2.19	%

(1) On a fully taxable equivalent basis calculated using a federal tax rate of 21%.

(2) Nonaccrual loans are included in average amounts outstanding.

(3) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(4) Net interest margin represents net interest income as a percentage of average interest-earning assets.

(5) Average balances of securities available-for-sale calculated utilizing amortized cost.

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The following table presents certain information on a fully-tax equivalent basis regarding changes in the Company’s interest income and interest expense for the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes attributable to changes in rate and changes in volume.

	Three Months Ended September 30, 2019 Compared with Three Months Ended September 30, 2018									Nine Months Ended September 30, 2019 Compared with Nine Months Ended September 30, 2018
	Increase/(Decrease) Due to Change in									Increase/(Decrease) Due to Change in
	Volume			Rate			Total			Volume			Rate			Total
	(in thousands)									(in thousands)
Interest income:
Loans
Taxable	$	1,177		$	514		$	1,691		$	4,051		$	2,161		$	6,212
Tax-exempt		152			177			329			(128	)		1,768			1,640
Securities available-for-sale
Taxable		(247	)		246			(1	)		(911	)		1,530			619
Tax-exempt		(576	)		191			(385	)		(642	)		476			(166	)
Securities held-to-maturity
Taxable		1,861			1,255			3,116			6,031			4,045			10,076
Interest-bearing deposits in other banks		297			40			337			169			796			965
Total interest income		2,664			2,423			5,087			8,570			10,776			19,346
Interest expense:
Deposits
NOW accounts		12			613			625			(64	)		2,452			2,388
Savings accounts		866			982			1,848			2,595			4,027			6,622
Money market accounts		(73	)		1,471			1,398			316			6,450			6,766
Time deposits		(214	)		681			467			(1,049	)		2,308			1,259
Total interest-bearing deposits		591			3,747			4,338			1,798			15,237			17,035
Securities sold under agreements to repurchase		243			166			409			302			613			915
Other borrowed funds and subordinated debentures		(481	)		255			(226	)		(1,274	)		755			(519	)
Total interest expense		353			4,168			4,521			826			16,605			17,431
Change in net interest income	$	2,311		$	(1,745	)	$	566		$	7,744		$	(5,829	)	$	1,915

Net Interest Income

For the three months ended September 30, 2019, net interest income on a fully taxable equivalent basis totaled $26,069,000 compared to $25,503,000 for the same period in 2018, an increase of $566,000 or 2.2%. The increase in net interest income for the period is primarily due to an increase in average earning assets. The net interest margin decreased from 2.19% on a fully taxable equivalent basis in 2018 to 2.08% for the same period in 2019. This was primarily the result of increased rates paid on deposits. The average balances of earning assets increased by 7.5% combined with an average yield increase of 0.19%, resulting in an increase in fully taxable equivalent interest income of $5,087,000. The average balance of interest bearing liabilities increased 7.4% combined with an average cost of funds increase of 0.36%, resulting in an increase in interest expense of $4,521,000.

For the nine months ended September 30, 2019, net interest income on a fully taxable equivalent basis totaled $77,333,000 compared to $75,418,000 for the same period in 2018, an increase of $1,915,000 or 2.5%. The increase in net interest income for the period is primarily due to an increase in average earning assets. The net interest margin decreased from 2.19% on a fully taxable equivalent basis in 2018 to 2.08% for the same period in 2019. This was primarily the result of increased rates paid on deposits. The average balances of earning assets increased by 7.9% combined with an average yield increase of 0.30%, resulting in an increase in fully taxable equivalent interest income of $19,346,000. The average balance of interest bearing liabilities increased 7.6% combined with an average cost of funds increase of 0.50%, resulting in an increase in interest expense of $17,431,000.

Page 44 of 48

As illustrated in the table above, the main contributors to the increase in net interest income were from, securities held-to-maturity, loans, securities available-for-sale, and interest-bearing deposits in other banks. Securities held-to-maturity income increased primarily as a result of an increase in volume as well as rates. Loan income increased primarily from an increase in volume and an overall increase in rates. Securities available-for-sale income increased from an increase in rates paid on the portfolio. The Company has a sizable floating rate available-for-sale portfolio. These securities reprice as interest rates rise or fall. Interest-bearing deposits expense increased primarily from an increase in rates. The increase in interest income was partially offset by an increase in interest expense. This was mainly the result of increased rates paid on interest-bearing liabilities. The Company has modestly raised interest rates on these products to remain competitive.

Provision for Loan Losses

For the three months ended September 30, 2019, the loan loss provision was $75,000 compared to a provision of $0 for the same period last year. For the nine months ended September 30, 2019, the loan loss provision was $700,000 compared to a provision of $900,000 for the same period last year. The increase in the provision for the third quarter of 2019 was primarily the result of net loan recoveries during the third quarter of 2019. The decrease in the provision, for the nine month period ending, was primarily the result of improvements in historical loss factors. Further discussion relating to changes in portfolio composition is discussed in Note 4.

Non-Interest Income and Expense

Other operating income for the quarter ended September 30, 2019 increased by $117,000 from the same period last year to $4,286,000. This was mainly attributable to an increase in lockbox fees of $45,000 and an increase in service charges on deposit accounts of $173,000. This was offset, somewhat, by a decrease in net gains on sales of securities of $52,000 and a decrease in other income of $49,000. Lockbox income increased as a result of an increase in customer accounts. Service charges on deposit accounts increased primarily as a result of an increase in customer activity. Other income decreased mainly as a result of decreases in gains on insurance policies.

Other operating income for the nine months ended September 30, 2019 increased by $1,626,000 from the same period last year to $13,710,000. This was mainly attributable to an increase in lockbox fees of $714,000, an increase in other income of $466,000, an increase in service charges on deposit accounts of $533,000, and gains on sales of mortgage loans of $154,000 offset, somewhat, by a decrease of $241,000 from the sales of securities. Lockbox income increased as a result of an increase in customer accounts. Other income increase mainly as a result of proceeds from life insurance policies. Service charges on deposit accounts increased primarily as a result of an increase in customer activity.

For the quarter ended September 30, 2019, operating expenses increased by $114,000 or 0.7% to $17,462,000, from the same period last year. This was primarily attributable to an increase in salaries and employee benefits of $100,000 and an increase equipment expenses of $81,000. This was offset, somewhat, by a decrease of $49,000 in other expenses and a decrease of $18,000 in occupancy expenses. The increase in salaries and employee benefits was mainly attributable to merit increases. Equipment expense increased mainly from an increase in service contracts. Occupancy costs decreased primarily as a result of decreases in building maintenance. Other expenses decreased mainly as a result of FDIC assessment credits recognized during the quarter, offset, somewhat, by an increase in pension expense.

For the nine months ended September 30, 2019, operating expenses increased by $1,409,000 or 2.7% to $53,917,000, from the same period last year. This was primarily attributable to an increase in other expenses of $927,000, salaries and employee benefits of $290,000, and occupancy expenses of $107,000, and equipment expenses of $85,000. Other expenses increased primarily as a result of increases in pension and consulting expense offset, somewhat, by FDIC assessment credits recognized during the third quarter of 2019. Salaries and employee benefits increased mainly as a result of merit increases. Occupancy costs increased primarily as a result of increases in rent expense associated with a new operating facility and other annual rent increases. Equipment expenses increased mainly as a result of increases in service contracts.

Income Taxes

For the third quarter of 2019, the Company’s income tax expense totaled $435,000 on pretax income of $10,519,000 resulting in an effective tax rate of 4.1%. For last year’s corresponding quarter, the Company’s income tax expense totaled $444,000 on pretax income of $10,025,000 resulting in an effective tax rate of 4.4%. For the first nine months of 2019, the Company’s income tax expense totaled $584,000 on pretax income of $29,551,000 resulting in an effective tax rate of 2.0%. For the first nine months of 2018, the Company’s income tax expense totaled $1,259,000 on pretax income of $27,547,000 resulting in an effective tax rate of 4.6%. The decrease in the effective tax rate, for the nine month period, was primarily as a result of a reduction in tax accruals related to sequestration of the refundable portion of our alternative minimum tax (AMT) credit carryforward. On January 14, 2019, the IRS updated its announcement “Effect of Sequestration on the Alternative Minimum Tax Credit for Corporations” to clarify that refundable AMT credits under Section 53(e) of the Internal Revenue Code are not subject to sequestration for taxable years beginning after December 31, 2017. Therefore, the full amount of the AMT credit carryover will be refunded to the Company.

Page 45 of 48

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Market risk is the risk of loss from adverse changes in market prices and rates. The Company’s market risk arises primarily from interest rate risk inherent in its lending and deposit taking activities. To that end, management actively monitors and manages its interest rate risk exposure. The Company’s profitability is affected by fluctuations in interest rates. A sudden and substantial increase or decrease in interest rates may adversely impact the Company’s earnings to the extent that the interest rates tied to specific assets and liabilities do not change at the same speed, to the same extent, or on the same basis. The Company monitors the impact of changes in interest rates on its net interest income using several tools. The Company’s primary objective in managing interest rate risk is to minimize the adverse impact of changes in interest rates on the Company’s net interest income and capital, while structuring the Company’s asset-liability structure to obtain the maximum yield-cost spread on that structure. Management believes that there has been no material changes in the interest rate risk reported in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the Securities and Exchange Commission. The information is contained in the Form 10-K within the Market Risk and Asset Liability Management section of Management’s Discussion and Analysis of Results of Operations and Financial Condition.

Item 4. Controls and Procedures

The Company’s management, with participation of the Company’s principal executive and financial officers, has evaluated its disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on this evaluation, the Company’s management, with participation of its principal executive and financial officers, has concluded that the Company’s disclosure controls and procedures are effective. The disclosure controls and procedures also effectively ensure that information required to be disclosed in the Company’s filings and submissions with the Securities and Exchange Commission under the Exchange Act is accumulated and reported to Company management (including the principal executive officer and the principal financial officer) as appropriate to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission. In addition, the Company has evaluated its internal control over financial reporting and during the first nine months of 2019 there were no changes that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Page 46 of 48

Part II – Other Information

Item 1 A number of legal claims against the Company arising in the normal course of business were outstanding at September 30, 2019. Management, after reviewing these claims with legal counsel, is of the opinion that their resolution will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

Item 1A Risk Factors – Please read “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. There have been no material changes since this 10-K was filed. These risks are not the only ones facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and operating results.

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds –

(a) – (b) Not applicable.

(c) None

Item 3 Defaults Upon Senior Securities – None

Item 4 Mine Safety Disclosures – Not applicable

Item 5 Other Information – None

Item 6 Exhibits

31.1	Certification of President and Chief Executive Officer of the Company Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14.
31.2	Certification of Chief Financial Officer of the Company Pursuant to Securities Exchange Act Rules  13a-14 and 15d-14.
+32.1	Certification of President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
+32.2	Certification of 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
++101.	SCH XBRL Taxonomy Extension Schema
++101.	CAL XBRL Taxonomy Extension Calculation Linkbase
++101.	LAB XBRL Taxonomy Extension Label Linkbase
++101.	PRE XBRL Taxonomy Extension Presentation Linkbase
++101.	DEF XBRL Taxonomy Definition Linkbase

+ This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

++ As provided in Rule 406T of regulation S-T, this information is filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934 and consists of the following materials from Century Bancorp Inc.’s Quarterly Report on 10-Q for the quarter ended September 30 2019, formatted in XBRL: (i) Consolidated Balance Sheets at September 30, 2019 and December 31, 2018; (ii) Consolidated Statements of Income for the nine months ended September 30, 2019 and 2018; (iii) Consolidated Statements of Comprehensive Income for the nine months ended September 30, 2019 and 2018; (iv) Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2019 and 2018; (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018; and (vi) Notes to Unaudited Consolidated Interim Financial Statements.

Page 47 of 48

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 8, 2019	Century Bancorp, Inc.
/s/ Barry R. Sloane
Barry R. Sloane
Chairman, President and Chief Executive Officer
/s/ William P. Hornby
William P. Hornby, CPA
Chief Financial Officer and Treasurer
(Principal Accounting Officer)

Page 48 of 48

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER OF THE COMPANY

PURSUANT TO SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14

I, Barry R. Sloane, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Century Bancorp, Inc.;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period presented in this quarterly report;

4. The registrant’s other certifying officers 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 quarterly 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 quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and;

d. Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter 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 officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of 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 involve management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2019	/s/ Barry R. Sloane
	Barry R. Sloane
	Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER OF THE COMPANY

PURSUANT TO SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14

I, William P. Hornby, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Century Bancorp, Inc.;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period presented in this quarterly report;

4. The registrant’s other certifying officers 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 quarterly 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 quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and;

d. Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter 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 officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of 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 involve management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2019	/s/ William P. Hornby
	William P. Hornby, CPA
	Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. Section 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Century Bancorp, Inc. (the “Company”) for the nine months ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, certifies, to the best knowledge and belief of the signatory, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Barry R. Sloane

Barry R. Sloane

Chairman, President and Chief Executive Officer

Date: November 8, 2019

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished solely pursuant to Subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. Section 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Century Bancorp, Inc. (the “Company”) for the nine months ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, certifies, to the best knowledge and belief of the signatory, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William P. Hornby

William P. Hornby, CPA

Chief Financial Officer and Treasurer

Date: November 8, 2019

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished solely pursuant to Subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

XML

Investment Securities Held-to-Maturity - Summary of Held-to-Maturity Securities (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 2,164,135	$ 2,046,647
Gross Unrealized Gains	31,016	2,660
Gross Unrealized Losses	6,686	57,886
Estimated Fair Value	2,188,465	1,991,421
U.S. Treasury [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost		9,960
Gross Unrealized Losses		2
Estimated Fair Value		9,958
U.S. Government Sponsored Enterprises [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	121,516	234,228
Gross Unrealized Gains	653	336
Gross Unrealized Losses	67	803
Estimated Fair Value	122,102	233,761
SBA Backed Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	47,126	52,051
Gross Unrealized Gains	452
Gross Unrealized Losses	66	2,065
Estimated Fair Value	47,512	49,986
Mortgage-Backed Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	1,995,493	1,750,408
Gross Unrealized Gains	29,911	2,324
Gross Unrealized Losses	6,553	55,016
Estimated Fair Value	$ 2,018,851	$ 1,697,716

XML

Securities Available-for-Sale - Summary of Securities Available-for-Sale (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 261,939	$ 336,751
Gross Unrealized Gains	367	635
Gross Unrealized Losses	567	627
Total, Fair Value	261,739	336,759
U.S. Treasury [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		2,000
Gross Unrealized Losses		8
Total, Fair Value		1,992
U.S. Government Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		3,946
Gross Unrealized Losses		31
Total, Fair Value		3,915
SBA Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	58,714	70,477
Gross Unrealized Gains	51	1
Gross Unrealized Losses	101	284
Total, Fair Value	58,664	70,194
U.S. Government Agency and Sponsored Enterprises Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	170,532	162,604
Gross Unrealized Gains	189	536
Gross Unrealized Losses	439	250
Total, Fair Value	170,282	162,890
Privately Issued Residential Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	574	679
Gross Unrealized Gains	6	3
Gross Unrealized Losses	1	10
Total, Fair Value	579	672
Obligations Issued by States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	28,519	93,445
Gross Unrealized Gains	57	58
Total, Fair Value	28,576	93,503
Other Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	3,600	3,600
Gross Unrealized Gains	64	37
Gross Unrealized Losses	26	44
Total, Fair Value	$ 3,638	$ 3,593

XML

Revenue from Contracts with Customers (Tables)

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Schedule of Revenue From Contracts

The following table presents total revenues as presented in the Consolidated Statements of Income and the related amounts which are from contracts with customers within the scope of Topic 606. As illustrated here, the vast majority of our revenues are specifically excluded from the scope of Topic 606.

	Nine Months Ended 9/30/2019		Revenue from Contracts in Scope of Topic 606		Nine Months Ended 9/30/2018		Revenue from Contracts in Scope of Topic 606
	(dollars in thousands)
Net interest income	$	70,458	$	—	$	68,871	$	—
Noninterest income:
Service charges on deposit accounts		6,801		6,801		6,268		6,268
Lockbox fees		3,018		3,018		2,304		2,304
Net gains on sales of securities		61		—		302		—
Gains on sales of mortgage loans		154		—		—		—
Other income		3,676		2,338		3,210		2,215
Total noninterest income		13,710		12,157		12,084		10,787
Total revenues	$	84,168	$	12,157	$	80,955	$	10,787
	Three Months Ended 9/30/2019		Revenue from Contracts in Scope of Topic 606		Three Months Ended 9/30/2018		Revenue from Contracts in Scope of Topic 606
	(dollars in thousands)
Net interest income	$	23,770	$	—	$	23,204	$	—
Noninterest income:
Service charges on deposit accounts		2,310		2,310		2,137		2,137
Lockbox fees		937		937		892		892
Net gains on sales of securities		53		—		105		—
Gains on sales of mortgage loans		—		—		—		—
Other income		986		728		1,035		751
Total noninterest income		4,286		3,975		4,169		3,780
Total revenues	$	28,056	$	3,975	$	27,373	$	3,780

Information about Receivables with Customers

The following table provides information about receivables with customers.

	September 30, 2019		December 31, 2018
(dollars in thousands)
Receivables, which are included in “Other assets”	$	1,142	$	1,205

XML

Allowance for Loan Losses

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Allowance for Loan Losses

Note 5. Allowance for Loan Losses

The Company maintains an allowance for loan losses in an amount determined by management on the basis of the character of the loans, loan performance, financial condition of borrowers, the value of collateral securing loans and other relevant factors.

The following table summarizes the changes in the Company’s allowance for loan losses for the periods indicated.

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
	(in thousands)
Allowance for loan losses, beginning of period	$	29,070		$	27,144		$	28,543		$	26,255
Loans charged off		(118	)		(89	)		(336	)		(247	)
Recoveries on loans previously charged-off		70			1,490			190			1,637
Net recoveries (charge-offs)		(48	)		1,401			(146	)		1,390
Provision charged to expense		75			—			700			900
Allowance for loan losses, end of period	$	29,097		$	28,545		$	29,097		$	28,545

Further information pertaining to the allowance for loan losses for the three months ending September 30, 2019 is as follows:

	Construction and Land Development			Commercial and Industrial			Municipal		Commercial Real Estate		Residential Real Estate			Consumer			Home Equity			Unallocated		Total
	(in thousands)
Allowance for loan losses:
Balance at June 30, 2019	$	1,052		$	11,338		$	1,832	$	10,848	$	2,210		$	380		$	1,120		$	290	$	29,070
Charge-offs		—			(57	)		—		—		—			(61	)		—			—		(118	)
Recoveries		—			23			—		—		—			47			—			—		70
Provision		(752	)		9			751		53		(24	)		(84	)		(33	)		155		75
Ending balance at September 30, 2019	$	300		$	11,313		$	2,583	$	10,901	$	2,186		$	282		$	1,087		$	445	$	29,097
Amount of allowance for loan losses for loans deemed to be impaired	$	—		$	2		$	—	$	86	$	—		$	—		$	—		$	—	$	88
Amount of allowance for loan losses for loans not deemed to be impaired	$	300		$	11,311		$	2,583	$	10,815	$	2,186		$	282		$	1,087		$	445	$	29,009
Loans:
Ending balance	$	7,824		$	783,950		$	121,802	$	765,385	$	364,317		$	21,748		$	310,635		$	—	$	2,375,661
Loans deemed to be impaired	$	—		$	203		$	—	$	2,373	$	—		$	—		$	—		$	—	$	2,576
Loans not deemed to be impaired	$	7,824		$	783,747		$	121,802	$	763,012	$	364,317		$	21,748		$	310,635		$	—	$	2,373,085

Further information pertaining to the allowance for loan losses for the nine months ending September 30, 2019 is as follows:

	Construction and Land Development			Commercial and Industrial			Municipal		Commercial Real Estate		Residential Real Estate			Consumer			Home Equity			Unallocated		Total
	(in thousands)
Allowance for loan losses:
Balance at December 31, 2018	$	1,092		$	10,998		$	1,838	$	10,663	$	2,190		$	365		$	1,111		$	286	$	28,543
Charge-offs		—			(108	)		—		—		—			(228	)		—			—		(336	)
Recoveries		—			49			—		—		—			141			—			—		190
Provision		(792	)		374			745		238		(4	)		4			(24	)		159		700
Ending balance at September 30, 2019	$	300		$	11,313		$	2,583	$	10,901	$	2,186		$	282		$	1,087		$	445	$	29,097
Amount of allowance for loan losses for loans deemed to be impaired	$	—		$	2		$	—	$	86	$	—		$	—		$	—		$	—	$	88
Amount of allowance for loan losses for loans not deemed to be impaired	$	300		$	11,311		$	2,583	$	10,815	$	2,186		$	282		$	1,087		$	445	$	29,009
Loans:
Ending balance	$	7,824		$	783,950		$	121,802	$	765,385	$	364,317		$	21,748		$	310,635		$	—	$	2,375,661
Loans deemed to be impaired	$	—		$	203		$	—	$	2,373	$	—		$	—		$	—		$	—	$	2,576
Loans not deemed to be impaired	$	7,824		$	783,747		$	121,802	$	763,012	$	364,317		$	21,748		$	310,635		$	—	$	2,373,085

During the nine months ending September 30, 2019, the Company’s provision was primarily attributable to an increase in municipal, Commercial and industrial, and commercial real estate balances offset, somewhat, by a decrease in construction and land development balances. During the three months ending September 30, 2019, the Company’s provision was primarily attributable to an increase in municipal balances offset, somewhat, by a decrease in construction and land development balances. The Company monitors the outlook for the industries in which our borrowers operate. Healthcare and higher education are two of the primary industries. In particular the Company utilizes outlooks and forecasts from various sources. The Company also monitors the volatility of the losses within the historical data. Overall there were improvements in historical loss rates.

Further information pertaining to the allowance for loan losses for the three months ending September 30, 2018 follows:

	Construction and Land Development			Commercial and Industrial			Municipal		Commercial Real Estate		Residential Real Estate			Consumer			Home Equity			Unallocated			Total
	(in thousands)
Allowance for loan losses:
Balance at June 30, 2018	$	633		$	10,384		$	1,704	$	10,209	$	2,493		$	336		$	1,078		$	307		$	27,144
Charge-offs		—			(11	)		—		—		—			(78	)		—			—			(89	)
Recoveries		1,432			16			—		—		—			42			—			—			1,490
Provision		(1,155	)		895			84		415		(182	)		32			(28	)		(61	)		—
Ending balance at September 30, 2018	$	910		$	11,284		$	1,788	$	10,624	$	2,311		$	332		$	1,050		$	246		$	28,545
Amount of allowance for loan losses for loans deemed to be impaired	$	—		$	93		$	—	$	95	$	350		$	—		$	—		$	—		$	538
Amount of allowance for loan losses for loans not deemed to be impaired	$	910		$	11,191		$	1,788	$	10,529	$	1,961		$	332		$	1,050		$	246		$	28,007
Loans:
Ending balance	$	12,434		$	783,960		$	94,532	$	730,265	$	335,114		$	21,216		$	283,818		$	—		$	2,261,339
Loans deemed to be impaired	$	—		$	660		$	—	$	2,680	$	2,675		$	—		$	—		$	—		$	6,015
Loans not deemed to be impaired	$	12,434		$	783,300		$	94,532	$	727,585	$	332,439		$	21,216		$	283,818		$	—		$	2,255,324

Further information pertaining to the allowance for loan losses for the nine months ending September 30, 2018 follows:

	Construction and Land Development			Commercial and Industrial			Municipal		Commercial Real Estate		Residential Real Estate		Consumer			Home Equity		Unallocated			Total
	(in thousands)
Allowance for loan losses:
Balance at December 31, 2017	$	1,645		$	9,651		$	1,720	$	9,728	$	1,873	$	373		$	989	$	276		$	26,255
Charge-offs		—			(16	)		—		—		—		(231	)		—		—			(247	)
Recoveries		1,432			49			—		—		—		156			—		—			1,637
Provision		(2,167	)		1,600			68		896		438		34			61		(30	)		900
Ending balance at September 30, 2018	$	910		$	11,284		$	1,788	$	10,624	$	2,311	$	332		$	1,050	$	246		$	28,545
Amount of allowance for loan losses for loans deemed to be impaired	$	—		$	93		$	—	$	95	$	350	$	—		$	—	$	—		$	538
Amount of allowance for loan losses for loans not deemed to be impaired	$	910		$	11,191		$	1,788	$	10,529	$	1,961	$	332		$	1,050	$	246		$	28,007
Loans:
Ending balance	$	12,434		$	783,960		$	94,532	$	730,265	$	335,114	$	21,216		$	283,818	$	—		$	2,261,339
Loans deemed to be impaired	$	—		$	660		$	—	$	2,680	$	2,675	$	—		$	—	$	—		$	6,015
Loans not deemed to be impaired	$	12,434		$	783,300		$	94,532	$	727,585	$	332,439	$	21,216		$	283,818	$	—		$	2,255,324

During the nine months ending September 30, 2018, the Company’s provision was primarily attributable to an increase in residential real estate balances and increased qualitative allocations for commercial and industrial and commercial real estate loans, offset, somewhat by the recovery of a construction loan previously charged-off and a decrease in construction balances. During the three months ending September 30, 2018, the Company did not require a provision mainly as a result of recoveries of a construction loan previously charged-off and a decrease in construction loan balances offset by increased qualitative allocations for commercial and industrial and commercial real estate loans. The Company monitors the outlook for the industries in which our borrowers operate. Healthcare and higher education are two of the primary industries. In particular the Company utilizes outlooks and forecasts from various sources. Overall a general weakening in the outlook was noted resulting in a general increase in the general economic factors. The Company also monitors the volatility of the losses within the historical data.  

The Company utilizes a six grade internal loan rating system for commercial real estate, construction and commercial loans as follows:

Loans rated 1-3 (Pass):

Loans in this category are considered “pass” rated loans with low to average risk.

Loans rated 4 (Monitor):

These loans represent classified loans that management is closely monitoring for credit quality. These loans have had or may have minor credit quality deterioration as of September 30, 2019 and December 31, 2018.

Loans rated 5 (Substandard):

Substandard loans represent classified loans that management is closely monitoring for credit quality. These loans have had more significant credit quality deterioration as of September 30, 2019 and December 31, 2018.

Loans rated 6 (Doubtful):

Doubtful loans represent classified loans that management is closely monitoring for credit quality. These loans had more significant credit quality deterioration as of September 30, 2019 and December 31, 2018 and full collectability is doubtful.

Impaired:

Impaired loans represent classified loans that management is closely monitoring for credit quality. A loan is classified as impaired when it is probable that the Company will be unable to collect all amounts due.

The following table presents the Company’s loans by risk rating at September 30, 2019.

	Construction and Land Development		Commercial and Industrial		Municipal		Commercial Real Estate
	(in thousands)
Grade:
1-3 (Pass)	$	7,824	$	779,722	$	121,802	$	738,459
4 (Monitor)		—		4,025		—		24,553
5 (Substandard)		—		—		—		—
6 (Doubtful)		—		—		—		—
Impaired		—		203		—		2,373
Total	$	7,824	$	783,950	$	121,802	$	765,385

The following table presents the Company’s loans by risk rating at December 31, 2018.

	Construction and Land Development		Commercial and Industrial		Municipal		Commercial Real Estate
	(in thousands)
Grade:
1-3 (Pass)	$	13,628	$	757,089	$	97,290	$	723,170
4 (Monitor)		—		4,135		—		24,542
5 (Substandard)		—		—		—		—
6 (Doubtful)		—		—		—		—
Impaired		—		401		—		2,650
Total	$	13,628	$	761,625	$	97,290	$	750,362

Credit ratings issued by national organizations were utilized as credit quality indicators as presented in the following table at September 30, 2019 and are included within the total loan portfolio.

	Commercial and Industrial		Municipal		Commercial Real Estate		Total
	(in thousands)
Credit Rating:
Aaa – Aa3	$	497,124	$	54,495	$	40,759	$	592,378
A1 – A3		187,970		7,479		148,735		344,184
Baa1 – Baa3		—		51,133		122,288		173,421
Ba2		—		5,895		—		5,895
Total	$	685,094	$	119,002	$	311,782	$	1,115,878

Credit ratings issued by national organizations were utilized as credit quality indicators as presented in the following table at December 31, 2018.

	Commercial and Industrial		Municipal		Commercial Real Estate		Total
	(in thousands)
Credit Rating:
Aaa – Aa3	$	491,247	$	54,105	$	42,790	$	588,142
A1 – A3		172,472		7,605		151,381		331,458
Baa1 – Baa3		—		26,970		118,197		145,167
Ba2		—		6,810		—		6,810
Total	$	663,719	$	95,490	$	312,368	$	1,071,577

The Company utilized payment performance as credit quality indicators for the loan types listed below. The indicators are depicted in the table “aging of past due loans,” below.

Further information pertaining to the allowance for loan losses at September 30, 2019 follows:

	Accruing 30-89 Days Past Due		Non Accrual		Accruing Greater than 90 Days		Total Past Due		Current Loans		Total
	(in thousands)
Construction and land development	$	—	$	—	$	—	$	—	$	7,824	$	7,824
Commercial and industrial		108		19		—		127		783,823		783,950
Municipal		—		—		—		—		121,802		121,802
Commercial real estate		155		167		—		322		765,063		765,385
Residential real estate		1,129		334		—		1,463		362,854		364,317
Consumer and overdrafts		15		—		—		15		21,733		21,748
Home equity		1,050		546		—		1,596		309,039		310,635
Total	$	2,457	$	1,066	$	—	$	3,523	$	2,372,138	$	2,375,661

Further information pertaining to the allowance for loan losses at December 31, 2018 follows:

	Accruing 30-89 Days Past Due		Non Accrual		Accruing Greater than 90 Days		Total Past Due		Current Loans		Total
	(in thousands)
Construction and land development	$	—	$	—	$	—	$	—	$	13,628	$	13,628
Commercial and industrial		187		115		—		302		761,323		761,625
Municipal		—		—		—		—		97,290		97,290
Commercial real estate		774		190		—		964		749,398		750,362
Residential real estate		2,554		569		—		3,123		345,127		348,250
Consumer and overdrafts		24		14		—		38		22,045		22,083
Home equity		1,108		425		—		1,533		290,807		292,340
Total	$	4,647	$	1,313	$	—	$	5,960	$	2,279,618	$	2,285,578

Impaired loans

A loan is impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. When a loan is impaired, the Company measures impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, the Company measures impairment based on a loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. Loans are charged-off when management believes that the collectability of the loan’s principal is not probable. The specific factors that management considers in making the determination that the collectability of the loan’s principal is not probable include: the delinquency status of the loan, the fair value of the collateral, if secured, and the financial strength of the borrower and/or guarantors. For collateral dependent loans, the amount of the recorded investment in a loan that exceeds the fair value of the collateral is charged-off against the allowance for loan losses in lieu of an allocation of a specific allowance amount when such an amount has been identified definitively as uncollectible. The Company’s policy for recognizing interest income on impaired loans is contained within Note 1 of the consolidated financial statements contained in the Company’s Annual Report for the fiscal year ended December 31, 2018.  

The following is information pertaining to impaired loans for September 30, 2019:

	Carrying Value		Unpaid Principal Balance		Required Reserve		Average Carrying Value for 3 Months Ending 9/30/19		Interest Income Recognized for 3 Months Ending 9/30/19		Average Carrying Value for 9 Months Ending 9/30/19		Interest Income Recognized for 9 Months Ending 9/30/19
	(in thousands)
With no required reserve recorded:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		87		306		—		89		2		87		6
Municipal		—		—		—		—		—		—		—
Commercial real estate		167		194		—		729		—		529		—
Residential real estate		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	254	$	500	$	—	$	818	$	2	$	616	$	6
With required reserve recorded:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		116		116		2		310		2		299		6
Municipal		—		—		—		—		—		—		—
Commercial real estate		2,206		2,326		86		2,140		23		2,350		67
Residential real estate		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	2,322	$	2,442	$	88	$	2,450	$	25	$	2,649	$	73
Total:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		203		422		2		399		4		386		12
Municipal		—		—		—		—		—		—		—
Commercial real estate		2,373		2,520		86		2,869		23		2,879		67
Residential real estate		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	2,576	$	2,942	$	88	$	3,268	$	27	$	3,265	$	79

The following is information pertaining to impaired loans for September 30, 2018:

	Carrying Value		Unpaid Principal Balance		Required Reserve		Average Carrying Value for 3 Months Ending 9/30/18		Interest Income Recognized for 3 Months Ending 9/30/18		Average Carrying Value for 9 Months Ending 9/30/18		Interest Income Recognized for 9 Months Ending 9/30/18
	(in thousands)
With no required reserve recorded:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		84		282		—		56		—		47		—
Municipal		—		—		—		—		—		—		—
Commercial real estate		196		219		—		280		—		267		—
Residential real estate		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	280	$	501	$	—	$	336	$	—	$	314	$	—
With required reserve recorded:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		576		593		93		589		5		490		14
Municipal		—		—		—		—		—		—		—
Commercial real estate		2,484		2,597		95		2,262		24		2,278		71
Residential real estate		2,675		2,675		350		2,675		—		3,136		80
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	5,735	$	5,865	$	538	$	5,526	$	29	$	5,904	$	165
Total:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		660		875		93		645		5		537		14
Municipal		—		—		—		—		—		—		—
Commercial real estate		2,680		2,816		95		2,542		24		2,545		71
Residential real estate		2,675		2,675		350		2,675		—		3,136		80
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	6,015	$	6,366	$	538	$	5,862	$	29	$	6,218	$	165

Troubled debt restructurings are identified as modifications in which a concession was granted to a customer who was having financial difficulties. This concession may be below market rate, longer amortization/term, or a lower payment amount. The present value calculation of the modification did not result in an increase in the allowance for these loans beyond any previously established allocations.

There was no troubled debt restructuring that occurred during the nine month period ended September 30, 2019. Also, there were no commitments to lend additional funds to troubled debt restructuring borrowers. There were no troubled debt restructurings that subsequently defaulted during the first nine months of 2019.

There was one residential real estate loan and one consumer loan that were modified during the first quarter of 2018. The loans were modified by reducing the interest rates as well as extending the terms on both loans. The pre-modification and post-modification outstanding recorded investment was $2,675,000 for the residential real estate loan that was not accruing interest and had a specific reserve of $350,000. The pre-modification and post-modification outstanding recorded investment was $17,000 for the consumer loan that was accruing and had a specific reserve of $1,000. The financial impact for the modifications was not material. There was one troubled debt restructuring, for $2,675,000, which subsequently defaulted during the first nine months of 2018. This troubled debt restructuring became other real estate owned during the fourth quarter of 2018 and subsequently sold during the third quarter of 2019.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 9. Fair Value Measurements

The Company follows FASB ASC 820-10, Fair Value Measurements and Disclosures and ASU 2016-1, “Financial Instruments-Overall” (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities, which among other things, requires enhanced disclosures about assets and liabilities carried at fair value. ASC 820-10 establishes a hierarchal disclosure framework associated with the level of pricing observability utilized in measuring financial instruments at fair value. The three broad levels of the hierarchy are as follows:

Level I – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The type of financial instruments included in Level I are highly liquid cash instruments with quoted prices such as G-7 government, agency securities, listed equities and money market securities, as well as listed derivative instruments.

Level II – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these financial instruments include cash instruments for which quoted prices are available but traded less frequently, derivative instruments whose fair value have been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed. Instruments which are generally included in this category are corporate bonds and loans, mortgage whole loans, municipal bonds, and OTC derivatives.

Level III – Instruments that have little to no pricing observability as of the reported date. These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. Instruments that are included in this category generally include certain commercial mortgage loans, certain private equity investments, and distressed debt and non-investment grade residual interests in securitizations, as well as certain highly structured OTC derivative contracts.

The results of the fair value hierarchy as of September 30, 2019, are as follows:

Financial Instruments Measured at Fair Value on a Recurring Basis:

	Securities AFS Fair Value Measurements Using
	Carrying Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
	(in thousands)
SBA Backed Securities	$	58,664	$	—	$	58,664	$	—
U.S. Government Agency and Sponsored Mortgage-Backed Securities		170,282		—		170,282		—
Privately Issued Residential Mortgage- Backed Securities		579		—		579		—
Obligations Issued by States and Political Subdivisions		28,576		—		4,775		23,801
Other Debt Securities		3,638		—		3,638		—
Total	$	261,739	$	—	$	237,938	$	23,801
Equity Securities	$	1,672	$	324	$	1,348	$	—
Financial Instruments Measured at Fair Value on a Non-recurring Basis:
Impaired Loans	$	173	$	—	$	—	$	173

Impaired loan balances represent those collateral dependent loans where management has estimated the credit loss by comparing the loan’s carrying value against the expected realizable fair value of the collateral. Fair value is generally determined through a review process that includes independent appraisals, discounted cash flows, or other external assessments of the underlying collateral, which generally include various Level 3 inputs which are not observable. The Company discounts the fair values, as appropriate, based on management’s observations of the local real estate market for loans in this category.

Appraisals, discounted cash flows and real estate tax assessments are reviewed quarterly. There is no specific policy regarding how frequently appraisals will be updated. Adjustments are made to appraisals and real estate tax assessments based on management’s estimate of changes in real estate values. All impaired loans have been reviewed during the past quarter using either a discounted cash flow analysis, appraisal of collateral or other type of real estate tax assessment. The types of adjustments that are made to specific provisions related to impaired loans recognized for the three and nine month periods ended September 30, 2019 amounted to $(204,837) and $37,099, respectively.

The following table presents additional information about assets measured at fair value on a recurring and nonrecurring basis for which the Company has utilized Level 3 inputs to determine fair value (dollars in thousands). Management continues to monitor the assumptions used to value the assets listed below.

Asset	Fair Value		Valuation Technique	Unobservable Input	Unobservable Input Value or Range
Securities AFS (4)	$	23,801	Discounted cash flow	Discount rate	1.7%-3.1% (3)
Impaired Loans	$	173	Appraisal of collateral (1)	Appraisal adjustments (2)	0%-30% discount

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated expenses.

(3) Weighted averages.

(4) Municipal securities generally have maturities of one year or less and, therefore, the amortized cost equates to the fair value.

The changes in Level 3 securities for the nine month period ended September 30, 2019 are shown in the table below:

	Obligations Issued by States & Political Subdivisions
	(in thousands)
Balance at December 31, 2018	$	88,728
Purchases		13,290
Maturities and calls		(78,196	)
Amortization		(21	)
Balance at September 30, 2019	$	23,801

The amortized cost of Level 3 securities was $23,801,000 at September 30, 2019 with an unrealized loss of $0. The securities in this category are generally municipal securities with no readily determinable fair value. Management evaluated the fair value of these securities based on an evaluation of the underlying issuer, prevailing rates and market liquidity.

The fair value of impaired loans decreased by $78,000, for the first nine months of 2019, mainly attributable to one loan that was removed from impaired loans. There were no liabilities measured at fair value on a recurring or nonrecurring basis during the nine month period ended September 30, 2019.

The changes in Level 3 securities for the nine month period ended September 30, 2018, are shown in the table below:

	Auction Rate Securities			Obligations Issued by States & Political Subdivisions			Total
	(in thousands)
Balance at December 31, 2017	$	4,459		$	78,141		$	82,600
Purchases		—			105,837			105,837
Maturities and calls		—			(72,640	)		(72,640	)
Transfer to Level 2		(4,459	)		—			(4,459	)
Amortization		—			(104	)		(104	)
Changes in fair value		—			—			—
Balance at September 30, 2018	$	—		$	111,234		$	111,234

The amortized cost of Level 3 securities was $111,234,000 at September 30, 2018 with an unrealized loss of $0. The securities in this category are generally municipal securities with no readily determinable fair. Management evaluated the fair value of these securities based on an evaluation of the underlying issuer, prevailing rates and market liquidity. There was one transfer of a security from level 3 to level 2 for the nine months ended September 30, 2018 as a result of increased trading activity and quoted market prices. There were no liabilities measured at fair value on a recurring or nonrecurring basis during the nine month period ended September 30, 2018.

The results of the fair value hierarchy as of December 31, 2018, are as follows:

Financial Instruments Measured at Fair Value on a Recurring Basis:

	Securities AFS Fair Value Measurements Using
	Carrying Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
	(in thousands)
U.S. Treasury	$	1,992	$	—	$	1,992	$	—
U.S. Government Sponsored Enterprises		3,915		—		3,915		—
SBA Backed Securities		70,194		—		70,194		—
U.S. Government Agency and Sponsored Mortgage-Backed Securities		162,890		—		162,890		—
Privately Issued Residential Mortgage- Backed Securities		672		—		672		—
Obligations Issued by States and Political Subdivisions		93,503		—		4,775		88,728
Other Debt Securities		3,593				3,593
Total	$	336,759	$	—	$	248,031	$	88,728
Equity Securities	$	1,596	$	293	$	1,303	$	—
Financial Instruments Measured at Fair Value on a Non-recurring Basis:
Other Real Estate Owned	$	2,225	$	—	$	—	$	2,225
Impaired Loans	$	251	$	—	$	—	$	251

Impaired loan balances represent those collateral dependent loans where management has estimated the credit loss by comparing the loan’s carrying value against the expected realizable fair value of the collateral. Fair value is generally determined through a review process that includes independent appraisals, discounted cash flows, or other external assessments of the underlying collateral, which generally include various Level 3 inputs which are not identifiable. The Company discounts the fair values, as appropriate, based on management’s observations of the local real estate market for loans in this category.

Appraisals, discounted cash flows and real estate tax assessments are reviewed quarterly. There is no specific policy regarding how frequently appraisals will be updated. Adjustments are made to appraisals and real estate tax assessments based on management’s estimate of changes in real estate values. Within the past twelve months there have been no updated appraisals, however, all impaired loans have been reviewed during the past quarter using either a discounted cash flow analysis, appraisal of collateral or other type of real estate tax assessment. The types of adjustments that are made to specific provisions relate to impaired loans recognized for 2018 for the estimated credit loss amounted to $540,000.

There was a transfer of an auction rate security during 2018 from level 3 to level 2. Quoted prices on the auction rate security became available but traded infrequently. There were no other transfers between level 1, 2 and 3 for the year ended December 31, 2018. There were no liabilities measured at fair value on a recurring or nonrecurring basis during the year ended December 31, 2018.

The following table presents additional information about assets measured at fair value on a recurring and nonrecurring basis for which the Company has utilized Level 3 inputs to determine fair value (dollars in thousands). Management continues to monitor the assumptions used to value the assets listed below.

Asset	Fair Value		Valuation Technique	Unobservable Input	Unobservable Input Value or Range
Securities AFS (4)	$	88,728	Discounted cash flow	Discount rate	2.1%-4.1% (3)
Other Real Estate Owned	$	2,225	Appraisal of collateral (1)	Appraisal adjustments (2)	30% discount
Impaired Loans	$	251	Appraisal of collateral (1)	Appraisal adjustments (2)	0%-30% discount

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated expenses.

(3) Weighted averages.

(4) Municipal securities generally have maturities of one year or less and, therefore, the amortized cost equates to the fair value.

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Earnings Per Share ("EPS") - Reconciliation of Basic EPS and Diluted EPS (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net income	$ 10,084	$ 9,581	$ 28,967	$ 26,288
Class A Common Stock [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net income	$ 7,986	$ 7,535	$ 22,849	$ 20,674
Weighted average shares outstanding, basic	3,650,449	3,608,329	3,627,076	3,608,129
Basic earnings per share	$ 2.19	$ 2.09	$ 6.30	$ 5.73
Net income	$ 7,986	$ 7,535	$ 22,849	$ 20,674
Weighted average shares outstanding, diluted	5,567,909	5,567,909	5,567,909	5,567,909
Diluted earnings per share	$ 1.81	$ 1.72	$ 5.20	$ 4.72
Class B Common Stock [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net income	$ 2,098	$ 2,046	$ 6,118	$ 5,614
Weighted average shares outstanding, basic	1,917,460	1,959,580	1,940,833	1,959,780
Basic earnings per share	$ 1.09	$ 1.04	$ 3.15	$ 2.86
Net income	$ 2,098	$ 2,046	$ 6,118	$ 5,614
Weighted average shares outstanding, diluted	1,917,460	1,959,580	1,940,833	1,959,780
Diluted earnings per share	$ 1.09	$ 1.04	$ 3.15	$ 2.86

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Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Total	Class A Common Stock [Member]	Class B Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Retained Earnings [Member] Class A Common Stock [Member]	Retained Earnings [Member] Class B Common Stock [Member]	Accumulated Other Comprehensive Loss [Member]
Beginning balance at Dec. 31, 2017	$ 260,297	$ 3,606	$ 1,962	$ 12,292	$ 263,666			$ (21,229)
Net income	26,288				26,288
Other comprehensive income, net of tax:
Unrealized holding gains arising during period, net of taxes	195							195
Accretion of net unrealized losses transferred during the period, net of taxes	872							872
Pension liability adjustment, net of taxes	877							877
Adoption of ASU 2018-2, Income Statement-Reporting Comprehensive Income (Topic 220)-Reclassification of Certain Tax Effects from AOCI					3,783			(3,783)
Adoption of ASU 2016-1, Financial Instruments-Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities					29			(29)
Conversion of Class B Common Stock to Class A Common Stock		2	(2)
Cash dividends		(1,299)	(353)			$ (1,299)	$ (353)
Ending balance at Sep. 30, 2018	286,877	3,608	1,960	12,292	292,114			(23,097)
Beginning balance at Jun. 30, 2018	277,481	3,608	1,960	12,292	283,084			(23,463)
Net income	9,581				9,581
Other comprehensive income, net of tax:
Unrealized holding gains arising during period, net of taxes	(164)							(164)
Accretion of net unrealized losses transferred during the period, net of taxes	238							238
Pension liability adjustment, net of taxes	292							292
Cash dividends		(432)	(119)			(432)	(119)
Ending balance at Sep. 30, 2018	286,877	3,608	1,960	12,292	292,114			(23,097)
Beginning balance at Dec. 31, 2018	300,439	3,608	1,960	12,292	301,488			(18,909)
Net income	28,967				28,967
Other comprehensive income, net of tax:
Unrealized holding gains arising during period, net of taxes	(156)							(156)
Accretion of net unrealized losses transferred during the period, net of taxes	574							574
Pension liability adjustment, net of taxes	790							790
Conversion of Class B Common Stock to Class A Common Stock		42	(42)
Cash dividends		(1,304)	(350)			(1,304)	(350)
Ending balance at Sep. 30, 2019	328,960	3,650	1,918	12,292	328,801			(17,701)
Beginning balance at Jun. 30, 2019	318,937	3,620	1,948	12,292	319,270			(18,193)
Net income	10,084			0	10,084			0
Other comprehensive income, net of tax:
Unrealized holding gains arising during period, net of taxes	74							74
Accretion of net unrealized losses transferred during the period, net of taxes	155							155
Pension liability adjustment, net of taxes	263							263
Conversion of Class B Common Stock to Class A Common Stock		30	(30)
Cash dividends		(438)	(115)			$ (438)	$ (115)
Ending balance at Sep. 30, 2019	$ 328,960	$ 3,650	$ 1,918	$ 12,292	$ 328,801			$ (17,701)

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Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Assets
Cash and due from banks	$ 85,014	$ 89,540
Federal funds sold and interest-bearing deposits in other banks	249,091	252,963
Total cash and cash equivalents	334,105	342,503
Securities available-for-sale, amortized cost $261,939 and $336,751, respectively	261,739	336,759
Securities held-to-maturity, fair value $2,188,465 and $1,991,421, respectively	2,164,135	2,046,647
Federal Home Loan Bank of Boston, stock at cost	14,025	17,974
Equity securities, amortized cost $1,635 and $1,635, respectively	1,672	1,596
Loans, net:
Total loans, net	2,375,661	2,285,578
Less: allowance for loan losses	29,097	28,543
Net loans	2,346,564	2,257,035
Bank premises and equipment	31,520	23,921
Accrued interest receivable	13,275	14,406
Goodwill	2,714	2,714
Other assets	129,432	120,380
Total assets	5,299,181	5,163,935
Deposits:
Demand deposits	797,455	813,478
Savings and NOW deposits	1,759,401	1,707,019
Money market accounts	1,249,923	1,325,888
Time deposits	533,074	560,579
Total deposits	4,339,853	4,406,964
Securities sold under agreements to repurchase	307,235	154,240
Other borrowed funds	209,188	202,378
Subordinated debentures	36,083	36,083
Other liabilities	77,862	63,831
Total liabilities	4,970,221	4,863,496
Stockholders' Equity
Preferred Stock – $1.00 par value; 100,000 shares authorized; no shares issued and outstanding
Additional paid-in capital	12,292	12,292
Retained earnings	328,801	301,488
Stockholders' equity before adjustment of accumulated other comprehensive income (loss)	346,661	319,348
Unrealized losses on securities available-for-sale, net of taxes	(150)	6
Unrealized losses on securities transferred to held-to-maturity, net of taxes	(1,991)	(2,565)
Pension liability, net of taxes	(15,560)	(16,350)
Total accumulated other comprehensive loss, net of taxes	(17,701)	(18,909)
Total stockholders' equity	328,960	300,439
Total liabilities and stockholders' equity	5,299,181	5,163,935
Construction and land development [Member]
Loans, net:
Total loans, net	7,824	13,628
Commercial and industrial [Member]
Loans, net:
Total loans, net	783,950	761,625
Municipal [Member]
Loans, net:
Total loans, net	121,802	97,290
Commercial real estate [Member]
Loans, net:
Total loans, net	765,385	750,362
Residential real estate [Member]
Loans, net:
Total loans, net	364,317	348,250
Consumer and overdrafts [Member]
Loans, net:
Total loans, net	21,748	22,083
Home equity [Member]
Loans, net:
Total loans, net	310,635	292,340
Class A Common Stock [Member]
Stockholders' Equity
Common stock value	3,650	3,608
Total stockholders' equity	3,650	3,608
Class B Common Stock [Member]
Stockholders' Equity
Common stock value	1,918	1,960
Total stockholders' equity	$ 1,918	$ 1,960

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Fair Value Measurements - Assets Measured at Fair Value (Detail) $ in Thousands		9 Months Ended	12 Months Ended
		Sep. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Fair Value	[1]		$ 88,728
Securities AFS [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Fair Value		$ 23,801
Valuation Technique	[1]	Discounted cash flow	Discounted cash flow
Unobservable Input	[1]	Discount rate	Discount rate
Impaired Loans [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Fair Value		$ 173	$ 251
Valuation Technique			Appraisal of collateral
Unobservable Input			Appraisal adjustments
Other Real Estate Owned [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Fair Value			$ 2,225
Valuation Technique		Appraisal of collateral	Appraisal of collateral
Unobservable Input		Appraisal adjustments	Appraisal adjustments
Unobservable Input Value or Range			30.00%
Minimum [Member] | Securities AFS [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Securities AFS, Unobservable Input Value or Range		1.7	2.1
Minimum [Member] | Impaired Loans [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Impaired Loans, Unobservable Input Value or Range		0	0
Maximum [Member] | Securities AFS [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Securities AFS, Unobservable Input Value or Range		3.1	4.1
Maximum [Member] | Impaired Loans [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Impaired Loans, Unobservable Input Value or Range		30	30

[1] Municipal securities generally have maturities of one year or less and, therefore, the amortized cost equates to the fair value

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Revenue from Contracts with Customers - Schedule of Revenue from Contracts (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Net interest income	$ 23,770	$ 23,204	$ 70,458	$ 68,871
Noninterest income:
Service charges on deposit accounts	2,310	2,137	6,801	6,268
Lockbox fees	937	892	3,018	2,304
Net gains on sales of securities	53	105	61	302
Gains on sales of mortgage loans	0		154
Other income	986	1,035	3,676	3,210
Total noninterest income	4,286	4,169	13,710	12,084
ASU 2014-09 [Member]
Disaggregation of Revenue [Line Items]
Net interest income	23,770	23,204	70,458	68,871
Noninterest income:
Service charges on deposit accounts	2,310	2,137	6,801	6,268
Lockbox fees	937	892	3,018	2,304
Net gains on sales of securities	53	105	61	302
Gains on sales of mortgage loans			154
Other income	986	1,035	3,676	3,210
Total noninterest income	4,286	4,169	13,710	12,084
Total revenues	28,056	27,373	84,168	80,955
ASU 2014-09 [Member] | Revenue Guidance Contracts in Scope of Topic 606 [Member]
Noninterest income:
Service charges on deposit accounts	2,310	2,137	6,801	6,268
Lockbox fees	937	892	3,018	2,304
Other income	728	751	2,338	2,215
Total noninterest income	3,975	3,780	12,157	10,787
Total revenues	$ 3,975	$ 3,780	$ 12,157	$ 10,787

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Leases - Supplemental cash flow information related to leases (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 528	$ 1,605
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$ 433	$ 1,318

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Allowance for Loan Losses - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2019 USD ($) Contracts Contract	Sep. 30, 2018 USD ($)
Financing Receivable, Allowance for Credit Losses [Line Items]
Specific reserves	$ 88,000	$ 538,000
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of troubled debt restructurings | Contracts	1
Post-modification outstanding recorded investment		2,675,000
Specific reserves		350,000
Troubled debt restructurings, subsequently defaulted		$ 2,675,000
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of troubled debt restructurings | Contract	1
Pre-modification outstanding recorded investment	$ 17,000
Post-modification outstanding recorded investment	17,000
Specific reserves	$ 1,000

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Allowance for Loan Losses - Loans by Risk Rating (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Loans by risk rating
Financing Receivable, Net	$ 2,375,661	$ 2,285,578	$ 2,261,339
Construction and Land Development [Member]
Loans by risk rating
Financing Receivable, Net	7,824	13,628	12,434
Commercial and Industrial [Member]
Loans by risk rating
Financing Receivable, Net	783,950	761,625	783,960
Municipal [Member]
Loans by risk rating
Financing Receivable, Net	121,802	97,290	94,532
Commercial Real Estate [Member]
Loans by risk rating
Financing Receivable, Net	765,385	750,362	$ 730,265
1-3 (Pass) [Member] | Construction and Land Development [Member]
Loans by risk rating
Financing Receivable, Net	7,824	13,628
1-3 (Pass) [Member] | Commercial and Industrial [Member]
Loans by risk rating
Financing Receivable, Net	779,722	757,089
1-3 (Pass) [Member] | Municipal [Member]
Loans by risk rating
Financing Receivable, Net	121,802	97,290
1-3 (Pass) [Member] | Commercial Real Estate [Member]
Loans by risk rating
Financing Receivable, Net	738,459	723,170
4 (Monitor) [Member] | Commercial and Industrial [Member]
Loans by risk rating
Financing Receivable, Net	4,025	4,135
4 (Monitor) [Member] | Commercial Real Estate [Member]
Loans by risk rating
Financing Receivable, Net	24,553	24,542
Impaired [Member] | Commercial and Industrial [Member]
Loans by risk rating
Financing Receivable, Net	203	401
Impaired [Member] | Commercial Real Estate [Member]
Loans by risk rating
Financing Receivable, Net	$ 2,373	$ 2,650

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Investment Securities Held-to-Maturity - Company's Securities Held-to-Maturity (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Investments, Debt and Equity Securities [Abstract]
Within one year, Amortized Cost	$ 70,980
After one but within five years, Amortized Cost	1,809,564
After five but within ten years, Amortized Cost	271,068
More than ten years, Amortized Cost	12,523
Amortized Cost	2,164,135	$ 2,046,647
Within one year, Fair Value	71,260
After one but within five years, Fair Value	1,829,087
After five but within ten years, Fair Value	275,192
More than ten years, Fair Value	12,926
Estimated Fair Value	$ 2,188,465	$ 1,991,421

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Recent Accounting Developments (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Developments

Recently Adopted Accounting Standards Updates

In July 2017, FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interest with a Scope Exception. For public entities, this ASU is effective for annual reporting periods beginning after December 15, 2018. The effect of this update did not have a material impact on the Company’s consolidated financial position.

In March 2017, the FASB issued ASU 2017-08, Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20) Premium Amortization of Purchased Callable Debt. The FASB is issuing this ASU to amend the amortization period for certain purchased callable debt securities held at a premium. The FASB is shortening the amortization period for the premium to the earliest call date. Under current generally accepted accounting principles (GAAP), entities generally amortize the premium as an adjustment of yield

over the contractual life of the instrument. For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The effect of this update did not have a material impact on the Company’s consolidated financial position.

In February 2016, the FASB issued ASU 2016-02, Leases. This ASU required lessees to put most leases on their balance sheet but recognize expenses on their income statements in a manner similar to today’s accounting. This ASU also eliminated today’s real estate-specific provisions for all companies. For lessors, this ASU modified the classification criteria and the accounting for sales-type and direct financing leases. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods therein. The Company also reviewed contracts to determine if they contain embedded leases. The Company’s balance sheet impact was $15.1 million as of January 1, 2019. This amount was recorded as a right of use asset, included in other assets, with a corresponding lease liability, included in other liabilities.

In July 2018, ASU 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”) was issued to provide more detailed guidance and additional clarification for implementing ASU 2016-02. Also in July 2018, ASU 2018-11, “Targeted Improvements” (“ASU 2018-11”) was issued and allows for an optional transition method in which the provisions of Topic 842 would be applied upon the adoption date and would not have to be retroactively applied to the earliest reporting period presented in the consolidated financial statements.” The Company used this optional transition method for the adoption of Topic 842.

Accounting Standards Issued but not yet Adopted

The following list identifies ASUs applicable to the Company that have been issued by the FASB but are not yet effective:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU was issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.

To achieve this objective, the amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is in the process of implementing this ASU, has purchased a software solution and is capturing information needed to implement this ASU. As part of the FASB ASC 326 implementation process the company is using two models: a rating migration model and a probability of default model. The probability of default model is based primarily on four components: loss history, product lifecycle, behavioral attributes and the economic environment. The ratings migration model is designed to estimate loss reserves according to the CECL standard for rated loans or similar instruments. The model structure follows a grade migration approach, where the default rate is based on the probability of each grade transition which is modeled using historical data.

The Company has started to input information into the models, and is running the software program and comparing to existing results. In addition, the Company has also begun developing accounting policies, as well as designing and implementing new internal controls relevant to the updated methodologies and models. The Company has not determined the dollar impact as of September 30, 2019.

The securities held-to-maturity include U.S. Treasury, U.S. Government Sponsored Enterprises, BSA Backed Securities and U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities. The Company expects no impact from ASU 2016-13 to arise from this portfolio.

Since ASU 2016-13, the FASB has issued amendments intended on improving the clarification of the amendment, ASU 2018-19 Codification Improvements to Topic 326, Financial Instruments – Credit Losses and ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging. The amendment in ASU 2018-19 was issued in November 2018 and was intended to clarify that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. The amendment in ASU 2019-04 was issued in April 2019 and was intended to clarify stakeholders’ specific issues about certain aspects of the amendments in ASU 2016-13. ASU 2019-05 Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief was also issued in May 2019. This ASU provides entities the option to irrevocably elect the fair value option for certain financial assets previously measured at amortized costs basis. The fair value option election does not apply to held-to-maturity debt securities. An entity that elects the fair value option should subsequently apply the guidance in Subtopics 820-10, Fair Value Measurement—Overall. The amendments in this ASU should be applied on a modified-retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings balance in the statement of financial position as of the date that an entity early adopted the amendments in ASU 2016-13.

In August 2018, FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). This ASU is effective for annual reporting periods beginning after December 15, 2019. The effect of this update is not expected to have a material impact on the Company’s consolidated financial position.

In August 2018, FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit plans. The amendments in this ASU remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. This ASU is effective for annual reporting periods beginning after December 15, 2020. The effect of this update is not expected to have a material impact on the Company’s consolidated financial position.

In August 2018, FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value. The amendments in this ASU modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. This ASU is effective for annual reporting periods beginning after December 15, 2019. The effect of this update is not expected to have a material impact on the Company’s disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles — Goodwill and Other (Topic 350). This ASU was issued to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. For public entities, this ASU is effective for the fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted and application should be on a prospective basis. The effect of this update is not expected to have a material impact on the Company’s consolidated financial position.

Securities and Exchange Commission (SEC) ruling:

In August 2018, the SEC issued a final rule that amends certain of the Commission’s disclosure requirements “that have become redundant, duplicative, overlapping, outdated, or superseded, in light of other Commission disclosure requirements, U.S. GAAP, or changes in the information environment.” The financial reporting implications of the final rule’s amendments may vary by company, but the changes are generally expected to reduce or eliminate some of an SEC registrant’s disclosure requirements. In limited circumstances, however, the amendments may expand those requirements, including those related to interim disclosures about changes in stockholders’ equity. Under the requirements, registrants must now analyze changes in stockholders’ equity, in the form of a reconciliation, for “the current and comparative year-to-date periods, with subtotals for each interim period.” Beginning with its March 31, 2019 filing, the Company included a reconciliation for the current quarter and year-to-date interim periods as well as the comparative periods of the prior years (i.e., a reconciliation covering each period for which an income statement is presented).

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Reclassifications Out of Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2019

Text Block [Abstract]

Reclassifications Out of Accumulated Other Comprehensive Income

Amount Reclassified from Accumulated Other Comprehensive Income

Details about Accumulated Other Comprehensive Income Components	Three Months Ended September 30, 2019			Three Months Ended September 30, 2018			Affected Line Item in the Statement where Net Income is Presented
(in thousands)
Unrealized gains and losses on available-for-sale securities	$	54		$	105		Net gains on sales of investments
Tax (expense) or benefit		(15	)		(29	)	Provision for income taxes
Net of tax	$	39		$	76		Net income
Accretion of unrealized losses transferred	$	(209	)	$	(323	)	Interest on securities held-to-maturity
Tax (expense) or benefit		54			85		Provision for income taxes
Net of tax	$	(155	)	$	(238	)	Net income
Amortization of defined benefit pension items
Prior-service costs	$	(29	)(b)	$	(4	)(b)	Salaries and employee benefits
Actuarial gains (losses)		(337	)(b)		(402	)(b)	Salaries and employee benefits
Total before tax		(366	)		(406	)	Income before taxes
Tax (expense) or benefit		103			114		Provision for income taxes
Net of tax	$	(263	)	$	(292	)	Net income
Details about Accumulated Other Comprehensive Income Components	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018			Affected Line Item in the Statement where Net Income is Presented
(in thousands)
Unrealized gains and losses on available-for-sale securities	$	61		$	302		Net gains on sales of investments
Tax (expense) or benefit		(17	)		(85	)	Provision for income taxes
Net of tax	$	44		$	217		Net income
Accretion of unrealized losses transferred	$	(779	)	$	(1,186	)	Interest on securities held-to-maturity
Tax (expense) or benefit		205			314		Provision for income taxes
Net of tax	$	(574	)	$	(872	)	Net income
Amortization of defined benefit pension items
Prior-service costs	$	(86	)(b)	$	(12	)(b)	Salaries and employee benefits
Actuarial gains (losses)		(1,013	)(b)		(1,207	)(b)	Salaries and employee benefits
Total before tax		(1,099	)		(1,219	)	Income before taxes
Tax (expense) or benefit		309			342		Provision for income taxes
Net of tax	$	(790	)	$	(877	)	Net income

(a) Amount in parentheses indicates reductions to net income.

(b) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Employee Benefits footnote (Note 8) for additional details).

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Fair Values of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2019

Investments, All Other Investments [Abstract]

Carrying Amounts and Fair Values of Company's Financial Instruments

The following presents (in thousands) the carrying amount, estimated fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of September 30, 2019 and December 31, 2018. This table excludes financial instruments for which the carrying amount approximates fair value. Financial assets for which the fair value approximates carrying value include cash and cash equivalents, short-term investments, FHLBB stock and accrued interest receivable. Financial liabilities for which the fair value approximates carrying value include non-maturity deposits, short-term borrowings and accrued interest payable.

September 30, 2019	Carrying Amount		Estimated Fair Value		Fair Value Measurements Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(in thousands)
Financial assets:
Securities held-to-maturity	$	2,164,135	$	2,188,465	$	—	$	2,188,465	$	—
Loans (1)		2,346,564		2,398,515		—		—		2,398,515
Financial liabilities:
Time deposits		533,074		532,135		—		532,135		—
Other borrowed funds		209,188		209,263		—		209,263		—
Subordinated debentures		36,083		36,083		—		36,083		—
December 31, 2018
Financial assets:
Securities held-to-maturity	$	2,046,647	$	1,991,421	$	—	$	1,991,421	$	—
Loans (1)		2,257,035		2,279,712		—		—		2,279,712
Financial liabilities:
Time deposits		560,579		559,988		—		559,988		—
Other borrowed funds		202,378		203,122		—		203,122		—
Subordinated debentures		36,083		36,083		—		36,083		—

(1) Comprised of loans (including collateral dependent impaired loans), net of deferred loan costs and the allowance for loan losses.

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Leases - Components of lease expense (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Operating lease cost	$ 550	$ 1,676
Variable lease cost	121	405
Total lease cost	$ 671	$ 2,081

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Allowance for Loan Losses - Loans by Credit Rating (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	$ 1,115,878	$ 1,071,577
Aaa - Aa3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	592,378	588,142
A1 - A3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	344,184	331,458
Baa1 - Baa3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	173,421	145,167
Ba2 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	5,895	6,810
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	685,094	663,719
Commercial and Industrial [Member] | Aaa - Aa3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	497,124	491,247
Commercial and Industrial [Member] | A1 - A3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	187,970	172,472
Municipal [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	119,002	95,490
Municipal [Member] | Aaa - Aa3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	54,495	54,105
Municipal [Member] | A1 - A3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	7,479	7,605
Municipal [Member] | Baa1 - Baa3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	51,133	26,970
Municipal [Member] | Ba2 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	5,895	6,810
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	311,782	312,368
Commercial Real Estate [Member] | Aaa - Aa3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	40,759	42,790
Commercial Real Estate [Member] | A1 - A3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	148,735	151,381
Commercial Real Estate [Member] | Baa1 - Baa3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable net of deferred income credit quality	$ 122,288	$ 118,197

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Investment Securities Held-to-Maturity - Unrealized Market Loss of Securities (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule of Held-to-maturity Securities [Line Items]
Less Than 12 Months, Fair Value	$ 187,538	$ 207,932
Less Than 12 Months, Unrealized Losses	904	2,076
12 Months or Longer, Fair Value	440,668	1,369,175
12 Months or Longer, Unrealized Losses	5,782	55,810
Total, Fair Value	628,206	1,577,107
Total, Unrealized Losses	6,686	57,886
U.S. Treasury [Member]
Schedule of Held-to-maturity Securities [Line Items]
Less Than 12 Months, Fair Value		9,958
Less Than 12 Months, Unrealized Losses		2
Total, Fair Value		9,958
Total, Unrealized Losses		2
U.S. Government Sponsored Enterprises [Member]
Schedule of Held-to-maturity Securities [Line Items]
Less Than 12 Months, Fair Value	9,976	9,849
Less Than 12 Months, Unrealized Losses	22	42
12 Months or Longer, Fair Value	9,954	69,499
12 Months or Longer, Unrealized Losses	45	761
Total, Fair Value	19,930	79,348
Total, Unrealized Losses	67	803
SBA Backed Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Less Than 12 Months, Fair Value	13,673
Less Than 12 Months, Unrealized Losses	66
12 Months or Longer, Fair Value		49,987
12 Months or Longer, Unrealized Losses		2,065
Total, Fair Value	13,673	49,987
Total, Unrealized Losses	66	2,065
U.S. Government Agency and Sponsored Enterprises Mortgage-Backed Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Less Than 12 Months, Fair Value	163,889	188,125
Less Than 12 Months, Unrealized Losses	816	2,032
12 Months or Longer, Fair Value	430,714	1,249,689
12 Months or Longer, Unrealized Losses	5,737	52,984
Total, Fair Value	594,603	1,437,814
Total, Unrealized Losses	$ 6,553	$ 55,016

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Reclassifications Out of Accumulated Other Comprehensive Income - Reclassifications Out of Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net gains on sales of securities	$ 53	$ 105	$ 61	$ 302
Provision for income taxes	(435)	(444)	(584)	(1,259)
Net income	10,084	9,581	28,967	26,288
Salaries and employee benefits	(10,670)	(10,570)	(32,621)	(32,331)
Reclassification Out of Accumulated Other Comprehensive Income [Member] | Unrealized Gains and Losses on Available-for-Sale Securities [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net gains on sales of securities	54	105	61	302
Provision for income taxes	(15)	(29)	(17)	(85)
Net income	39	76	44	217
Reclassification Out of Accumulated Other Comprehensive Income [Member] | Accretion of Unrealized Losses Transferred [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net gains on sales of securities	(209)	(323)	(779)	(1,186)
Provision for income taxes	54	85	205	314
Net income	(155)	(238)	(574)	(872)
Reclassification Out of Accumulated Other Comprehensive Income [Member] | Prior-Service Costs [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Salaries and employee benefits	(29)	(4)	(86)	(12)
Reclassification Out of Accumulated Other Comprehensive Income [Member] | Actuarial Gains (Losses) [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Salaries and employee benefits	(337)	(402)	(1,013)	(1,207)
Reclassification Out of Accumulated Other Comprehensive Income [Member] | Amortization of Defined Benefit Pension Items [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income before taxes	(366)	(406)	(1,099)	(1,219)
Provision for income taxes	103	114	309	342
Net income	$ (263)	$ (292)	$ (790)	$ (877)

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Financial Instruments Measured at Fair Value on a Recurring and Non-recurring Basis

The results of the fair value hierarchy as of September 30, 2019, are as follows:

Financial Instruments Measured at Fair Value on a Recurring Basis:

	Securities AFS Fair Value Measurements Using
	Carrying Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
	(in thousands)
SBA Backed Securities	$	58,664	$	—	$	58,664	$	—
U.S. Government Agency and Sponsored Mortgage-Backed Securities		170,282		—		170,282		—
Privately Issued Residential Mortgage- Backed Securities		579		—		579		—
Obligations Issued by States and Political Subdivisions		28,576		—		4,775		23,801
Other Debt Securities		3,638		—		3,638		—
Total	$	261,739	$	—	$	237,938	$	23,801
Equity Securities	$	1,672	$	324	$	1,348	$	—
Financial Instruments Measured at Fair Value on a Non-recurring Basis:
Impaired Loans	$	173	$	—	$	—	$	173

Financial Instruments Measured at Fair Value on a Recurring Basis:

	Securities AFS Fair Value Measurements Using
	Carrying Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
	(in thousands)
U.S. Treasury	$	1,992	$	—	$	1,992	$	—
U.S. Government Sponsored Enterprises		3,915		—		3,915		—
SBA Backed Securities		70,194		—		70,194		—
U.S. Government Agency and Sponsored Mortgage-Backed Securities		162,890		—		162,890		—
Privately Issued Residential Mortgage- Backed Securities		672		—		672		—
Obligations Issued by States and Political Subdivisions		93,503		—		4,775		88,728
Other Debt Securities		3,593				3,593
Total	$	336,759	$	—	$	248,031	$	88,728
Equity Securities	$	1,596	$	293	$	1,303	$	—
Financial Instruments Measured at Fair Value on a Non-recurring Basis:
Other Real Estate Owned	$	2,225	$	—	$	—	$	2,225
Impaired Loans	$	251	$	—	$	—	$	251

Assets Measured at Fair Value

The following table presents additional information about assets measured at fair value on a recurring and nonrecurring basis for which the Company has utilized Level 3 inputs to determine fair value (dollars in thousands). Management continues to monitor the assumptions used to value the assets listed below.

Asset	Fair Value		Valuation Technique	Unobservable Input	Unobservable Input Value or Range
Securities AFS (4)	$	23,801	Discounted cash flow	Discount rate	1.7%-3.1% (3)
Impaired Loans	$	173	Appraisal of collateral (1)	Appraisal adjustments (2)	0%-30% discount

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated expenses.

(3) Weighted averages.

(4) Municipal securities generally have maturities of one year or less and, therefore, the amortized cost equates to the fair value.

The following table presents additional information about assets measured at fair value on a recurring and nonrecurring basis for which the Company has utilized Level 3 inputs to determine fair value (dollars in thousands). Management continues to monitor the assumptions used to value the assets listed below.

Asset	Fair Value		Valuation Technique	Unobservable Input	Unobservable Input Value or Range
Securities AFS (4)	$	88,728	Discounted cash flow	Discount rate	2.1%-4.1% (3)
Other Real Estate Owned	$	2,225	Appraisal of collateral (1)	Appraisal adjustments (2)	30% discount
Impaired Loans	$	251	Appraisal of collateral (1)	Appraisal adjustments (2)	0%-30% discount

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated expenses.

(3) Weighted averages.

(4) Municipal securities generally have maturities of one year or less and, therefore, the amortized cost equates to the fair value.

Changes in Level 3 Securities

The changes in Level 3 securities for the nine month period ended September 30, 2019 are shown in the table below:

	Obligations Issued by States & Political Subdivisions
	(in thousands)
Balance at December 31, 2018	$	88,728
Purchases		13,290
Maturities and calls		(78,196	)
Amortization		(21	)
Balance at September 30, 2019	$	23,801

	Auction Rate Securities			Obligations Issued by States & Political Subdivisions			Total
	(in thousands)
Balance at December 31, 2017	$	4,459		$	78,141		$	82,600
Purchases		—			105,837			105,837
Maturities and calls		—			(72,640	)		(72,640	)
Transfer to Level 2		(4,459	)		—			(4,459	)
Amortization		—			(104	)		(104	)
Changes in fair value		—			—			—
Balance at September 30, 2018	$	—		$	111,234		$	111,234

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Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Note 12. Leases

The Company has operating leases primarily for branch locations as well as data processing centers. The Company’s operating leases have remaining lease terms of 1 year to 32 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year. The Company also has one sublease for part of a data processing center that the Company currently leases from a lessor. The sublease expires in 2022 with an option to terminate and no option to extend. Lease income, for the sublease, totaled approximately $29,000 for the nine months ended September 30, 2019. Variable lease costs include costs that are not included in the lease liability.

The components of lease expense were as follows:  

	Three Months Ended 9/30/2019		Nine Months Ended 9/30/2019
(in thousands)
Operating lease cost	$	550	$	1,676
Variable lease cost		121		405
Total lease cost	$	671	$	2,081

Supplemental cash flow information related to leases was as follows:

	Three Months Ended 9/30/2019		Nine Months Ended 9/30/2019
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	528	$	1,605
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	433	$	1,318

Supplemental balance sheet information related to leases was as follows:

	9/30/2019
(in thousands, except lease term and discount rate)
Operating Leases:
Operating lease right-of-use assets	$	12,944
Operating lease liabilities	$	13,101
Weighted Average Remaining Lease Term:
Operating Leases		11 Years
Weighted Average Discount Rate:
Operating Leases		3.5	%

A summary of future minimum rental payments under such leases as the dates indicated follows:

	Minimum Rental Payments
	September 30, 2019			December 31, 2018
	(in thousands)
Year Ending December 31, 2019	$	459		$	2,490
2020		2,038			2,170
2021		1,759			1,694
2022		1,603			1,331
2023		1,541			1,104
Thereafter		8,570			1,074
Total lease payments	$	15,970		$	9,863
Less imputed interest		(2,869	)
Present value of lease liability	$	13,101

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Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Analysis of the allowance for loan losses

The following table summarizes the changes in the Company’s allowance for loan losses for the periods indicated.

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
	(in thousands)
Allowance for loan losses, beginning of period	$	29,070		$	27,144		$	28,543		$	26,255
Loans charged off		(118	)		(89	)		(336	)		(247	)
Recoveries on loans previously charged-off		70			1,490			190			1,637
Net recoveries (charge-offs)		(48	)		1,401			(146	)		1,390
Provision charged to expense		75			—			700			900
Allowance for loan losses, end of period	$	29,097		$	28,545		$	29,097		$	28,545

Summary of Allowance for Loan Losses

Further information pertaining to the allowance for loan losses for the three months ending September 30, 2019 is as follows:

	Construction and Land Development			Commercial and Industrial			Municipal		Commercial Real Estate		Residential Real Estate			Consumer			Home Equity			Unallocated		Total
	(in thousands)
Allowance for loan losses:
Balance at June 30, 2019	$	1,052		$	11,338		$	1,832	$	10,848	$	2,210		$	380		$	1,120		$	290	$	29,070
Charge-offs		—			(57	)		—		—		—			(61	)		—			—		(118	)
Recoveries		—			23			—		—		—			47			—			—		70
Provision		(752	)		9			751		53		(24	)		(84	)		(33	)		155		75
Ending balance at September 30, 2019	$	300		$	11,313		$	2,583	$	10,901	$	2,186		$	282		$	1,087		$	445	$	29,097
Amount of allowance for loan losses for loans deemed to be impaired	$	—		$	2		$	—	$	86	$	—		$	—		$	—		$	—	$	88
Amount of allowance for loan losses for loans not deemed to be impaired	$	300		$	11,311		$	2,583	$	10,815	$	2,186		$	282		$	1,087		$	445	$	29,009
Loans:
Ending balance	$	7,824		$	783,950		$	121,802	$	765,385	$	364,317		$	21,748		$	310,635		$	—	$	2,375,661
Loans deemed to be impaired	$	—		$	203		$	—	$	2,373	$	—		$	—		$	—		$	—	$	2,576
Loans not deemed to be impaired	$	7,824		$	783,747		$	121,802	$	763,012	$	364,317		$	21,748		$	310,635		$	—	$	2,373,085

Further information pertaining to the allowance for loan losses for the nine months ending September 30, 2019 is as follows:

	Construction and Land Development			Commercial and Industrial			Municipal		Commercial Real Estate		Residential Real Estate			Consumer			Home Equity			Unallocated		Total
	(in thousands)
Allowance for loan losses:
Balance at December 31, 2018	$	1,092		$	10,998		$	1,838	$	10,663	$	2,190		$	365		$	1,111		$	286	$	28,543
Charge-offs		—			(108	)		—		—		—			(228	)		—			—		(336	)
Recoveries		—			49			—		—		—			141			—			—		190
Provision		(792	)		374			745		238		(4	)		4			(24	)		159		700
Ending balance at September 30, 2019	$	300		$	11,313		$	2,583	$	10,901	$	2,186		$	282		$	1,087		$	445	$	29,097
Amount of allowance for loan losses for loans deemed to be impaired	$	—		$	2		$	—	$	86	$	—		$	—		$	—		$	—	$	88
Amount of allowance for loan losses for loans not deemed to be impaired	$	300		$	11,311		$	2,583	$	10,815	$	2,186		$	282		$	1,087		$	445	$	29,009
Loans:
Ending balance	$	7,824		$	783,950		$	121,802	$	765,385	$	364,317		$	21,748		$	310,635		$	—	$	2,375,661
Loans deemed to be impaired	$	—		$	203		$	—	$	2,373	$	—		$	—		$	—		$	—	$	2,576
Loans not deemed to be impaired	$	7,824		$	783,747		$	121,802	$	763,012	$	364,317		$	21,748		$	310,635		$	—	$	2,373,085

Further information pertaining to the allowance for loan losses for the three months ending September 30, 2018 follows:

	Construction and Land Development			Commercial and Industrial			Municipal		Commercial Real Estate		Residential Real Estate			Consumer			Home Equity			Unallocated			Total
	(in thousands)
Allowance for loan losses:
Balance at June 30, 2018	$	633		$	10,384		$	1,704	$	10,209	$	2,493		$	336		$	1,078		$	307		$	27,144
Charge-offs		—			(11	)		—		—		—			(78	)		—			—			(89	)
Recoveries		1,432			16			—		—		—			42			—			—			1,490
Provision		(1,155	)		895			84		415		(182	)		32			(28	)		(61	)		—
Ending balance at September 30, 2018	$	910		$	11,284		$	1,788	$	10,624	$	2,311		$	332		$	1,050		$	246		$	28,545
Amount of allowance for loan losses for loans deemed to be impaired	$	—		$	93		$	—	$	95	$	350		$	—		$	—		$	—		$	538
Amount of allowance for loan losses for loans not deemed to be impaired	$	910		$	11,191		$	1,788	$	10,529	$	1,961		$	332		$	1,050		$	246		$	28,007
Loans:
Ending balance	$	12,434		$	783,960		$	94,532	$	730,265	$	335,114		$	21,216		$	283,818		$	—		$	2,261,339
Loans deemed to be impaired	$	—		$	660		$	—	$	2,680	$	2,675		$	—		$	—		$	—		$	6,015
Loans not deemed to be impaired	$	12,434		$	783,300		$	94,532	$	727,585	$	332,439		$	21,216		$	283,818		$	—		$	2,255,324

Further information pertaining to the allowance for loan losses for the nine months ending September 30, 2018 follows:

	Construction and Land Development			Commercial and Industrial			Municipal		Commercial Real Estate		Residential Real Estate		Consumer			Home Equity		Unallocated			Total
	(in thousands)
Allowance for loan losses:
Balance at December 31, 2017	$	1,645		$	9,651		$	1,720	$	9,728	$	1,873	$	373		$	989	$	276		$	26,255
Charge-offs		—			(16	)		—		—		—		(231	)		—		—			(247	)
Recoveries		1,432			49			—		—		—		156			—		—			1,637
Provision		(2,167	)		1,600			68		896		438		34			61		(30	)		900
Ending balance at September 30, 2018	$	910		$	11,284		$	1,788	$	10,624	$	2,311	$	332		$	1,050	$	246		$	28,545
Amount of allowance for loan losses for loans deemed to be impaired	$	—		$	93		$	—	$	95	$	350	$	—		$	—	$	—		$	538
Amount of allowance for loan losses for loans not deemed to be impaired	$	910		$	11,191		$	1,788	$	10,529	$	1,961	$	332		$	1,050	$	246		$	28,007
Loans:
Ending balance	$	12,434		$	783,960		$	94,532	$	730,265	$	335,114	$	21,216		$	283,818	$	—		$	2,261,339
Loans deemed to be impaired	$	—		$	660		$	—	$	2,680	$	2,675	$	—		$	—	$	—		$	6,015
Loans not deemed to be impaired	$	12,434		$	783,300		$	94,532	$	727,585	$	332,439	$	21,216		$	283,818	$	—		$	2,255,324

Loans by Risk Rating

The following table presents the Company’s loans by risk rating at September 30, 2019.

	Construction and Land Development		Commercial and Industrial		Municipal		Commercial Real Estate
	(in thousands)
Grade:
1-3 (Pass)	$	7,824	$	779,722	$	121,802	$	738,459
4 (Monitor)		—		4,025		—		24,553
5 (Substandard)		—		—		—		—
6 (Doubtful)		—		—		—		—
Impaired		—		203		—		2,373
Total	$	7,824	$	783,950	$	121,802	$	765,385

The following table presents the Company’s loans by risk rating at December 31, 2018.

	Construction and Land Development		Commercial and Industrial		Municipal		Commercial Real Estate
	(in thousands)
Grade:
1-3 (Pass)	$	13,628	$	757,089	$	97,290	$	723,170
4 (Monitor)		—		4,135		—		24,542
5 (Substandard)		—		—		—		—
6 (Doubtful)		—		—		—		—
Impaired		—		401		—		2,650
Total	$	13,628	$	761,625	$	97,290	$	750,362

Loans by Credit Rating

Credit ratings issued by national organizations were utilized as credit quality indicators as presented in the following table at September 30, 2019 and are included within the total loan portfolio.

	Commercial and Industrial		Municipal		Commercial Real Estate		Total
	(in thousands)
Credit Rating:
Aaa – Aa3	$	497,124	$	54,495	$	40,759	$	592,378
A1 – A3		187,970		7,479		148,735		344,184
Baa1 – Baa3		—		51,133		122,288		173,421
Ba2		—		5,895		—		5,895
Total	$	685,094	$	119,002	$	311,782	$	1,115,878

Credit ratings issued by national organizations were utilized as credit quality indicators as presented in the following table at December 31, 2018.

	Commercial and Industrial		Municipal		Commercial Real Estate		Total
	(in thousands)
Credit Rating:
Aaa – Aa3	$	491,247	$	54,105	$	42,790	$	588,142
A1 – A3		172,472		7,605		151,381		331,458
Baa1 – Baa3		—		26,970		118,197		145,167
Ba2		—		6,810		—		6,810
Total	$	663,719	$	95,490	$	312,368	$	1,071,577

Aging of Past Due Loan Losses

Further information pertaining to the allowance for loan losses at September 30, 2019 follows:

	Accruing 30-89 Days Past Due		Non Accrual		Accruing Greater than 90 Days		Total Past Due		Current Loans		Total
	(in thousands)
Construction and land development	$	—	$	—	$	—	$	—	$	7,824	$	7,824
Commercial and industrial		108		19		—		127		783,823		783,950
Municipal		—		—		—		—		121,802		121,802
Commercial real estate		155		167		—		322		765,063		765,385
Residential real estate		1,129		334		—		1,463		362,854		364,317
Consumer and overdrafts		15		—		—		15		21,733		21,748
Home equity		1,050		546		—		1,596		309,039		310,635
Total	$	2,457	$	1,066	$	—	$	3,523	$	2,372,138	$	2,375,661

Further information pertaining to the allowance for loan losses at December 31, 2018 follows:

	Accruing 30-89 Days Past Due		Non Accrual		Accruing Greater than 90 Days		Total Past Due		Current Loans		Total
	(in thousands)
Construction and land development	$	—	$	—	$	—	$	—	$	13,628	$	13,628
Commercial and industrial		187		115		—		302		761,323		761,625
Municipal		—		—		—		—		97,290		97,290
Commercial real estate		774		190		—		964		749,398		750,362
Residential real estate		2,554		569		—		3,123		345,127		348,250
Consumer and overdrafts		24		14		—		38		22,045		22,083
Home equity		1,108		425		—		1,533		290,807		292,340
Total	$	4,647	$	1,313	$	—	$	5,960	$	2,279,618	$	2,285,578

Information Pertaining to Impaired Loans

The following is information pertaining to impaired loans for September 30, 2019:

	Carrying Value		Unpaid Principal Balance		Required Reserve		Average Carrying Value for 3 Months Ending 9/30/19		Interest Income Recognized for 3 Months Ending 9/30/19		Average Carrying Value for 9 Months Ending 9/30/19		Interest Income Recognized for 9 Months Ending 9/30/19
	(in thousands)
With no required reserve recorded:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		87		306		—		89		2		87		6
Municipal		—		—		—		—		—		—		—
Commercial real estate		167		194		—		729		—		529		—
Residential real estate		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	254	$	500	$	—	$	818	$	2	$	616	$	6
With required reserve recorded:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		116		116		2		310		2		299		6
Municipal		—		—		—		—		—		—		—
Commercial real estate		2,206		2,326		86		2,140		23		2,350		67
Residential real estate		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	2,322	$	2,442	$	88	$	2,450	$	25	$	2,649	$	73
Total:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		203		422		2		399		4		386		12
Municipal		—		—		—		—		—		—		—
Commercial real estate		2,373		2,520		86		2,869		23		2,879		67
Residential real estate		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	2,576	$	2,942	$	88	$	3,268	$	27	$	3,265	$	79

The following is information pertaining to impaired loans for September 30, 2018:

	Carrying Value		Unpaid Principal Balance		Required Reserve		Average Carrying Value for 3 Months Ending 9/30/18		Interest Income Recognized for 3 Months Ending 9/30/18		Average Carrying Value for 9 Months Ending 9/30/18		Interest Income Recognized for 9 Months Ending 9/30/18
	(in thousands)
With no required reserve recorded:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		84		282		—		56		—		47		—
Municipal		—		—		—		—		—		—		—
Commercial real estate		196		219		—		280		—		267		—
Residential real estate		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	280	$	501	$	—	$	336	$	—	$	314	$	—
With required reserve recorded:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		576		593		93		589		5		490		14
Municipal		—		—		—		—		—		—		—
Commercial real estate		2,484		2,597		95		2,262		24		2,278		71
Residential real estate		2,675		2,675		350		2,675		—		3,136		80
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	5,735	$	5,865	$	538	$	5,526	$	29	$	5,904	$	165
Total:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial		660		875		93		645		5		537		14
Municipal		—		—		—		—		—		—		—
Commercial real estate		2,680		2,816		95		2,542		24		2,545		71
Residential real estate		2,675		2,675		350		2,675		—		3,136		80
Consumer		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Total	$	6,015	$	6,366	$	538	$	5,862	$	29	$	6,218	$	165

XML

Securities Available-for-Sale - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($) Security	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) Security	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($) Security
Schedule of Available-for-sale Securities [Line Items]
Securities at fair value pledged to secure public deposits and repurchase agreements	$ 1,692,033,000		$ 1,692,033,000		$ 1,441,059,000
Securities available-for-sale are securities at fair value pledged for borrowing	32,590,000		32,590,000		$ 34,787,000
Gross gains on sales of securities	53,000	$ 105,000	61,000	$ 302,000
Proceeds from sales of securities available-for-sale			16,285,000	$ 27,517,000
Securities at floating rate or adjustable rate	$ 234,949,000		234,949,000
Federal Home Loan Bank [Member]
Schedule of Available-for-sale Securities [Line Items]
Gross gains on sales of securities			$ 13,000
Securities AFS [Member]
Schedule of Available-for-sale Securities [Line Items]
Weighted average remaining life of investment securities available-for-sale			5 years 1 month 6 days
Number of securities, temporarily impaired for less than 12 months | Security	24		24		10
Number of securities, temporarily impaired for 12 months or longer | Security	18		18		30
Number of securities, temporarily impaired, total | Security	134		134		190
U.S. Government Agency and Sponsored Enterprises Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities at fair value pledged to secure public deposits and repurchase agreements	$ 196,356,000		$ 196,356,000		$ 197,304,000

XML

Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Components of lease expense

The components of lease expense were as follows:  

	Three Months Ended 9/30/2019		Nine Months Ended 9/30/2019
(in thousands)
Operating lease cost	$	550	$	1,676
Variable lease cost		121		405
Total lease cost	$	671	$	2,081

Supplemental cash flow information related to leases

Supplemental cash flow information related to leases was as follows:

	Three Months Ended 9/30/2019		Nine Months Ended 9/30/2019
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	528	$	1,605
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	433	$	1,318

Supplemental balance sheet information related to leases

Supplemental balance sheet information related to leases was as follows:

	9/30/2019
(in thousands, except lease term and discount rate)
Operating Leases:
Operating lease right-of-use assets	$	12,944
Operating lease liabilities	$	13,101
Weighted Average Remaining Lease Term:
Operating Leases		11 Years
Weighted Average Discount Rate:
Operating Leases		3.5	%

Maturities of lease liabilities

A summary of future minimum rental payments under such leases as the dates indicated follows:

	Minimum Rental Payments
	September 30, 2019			December 31, 2018
	(in thousands)
Year Ending December 31, 2019	$	459		$	2,490
2020		2,038			2,170
2021		1,759			1,694
2022		1,603			1,331
2023		1,541			1,104
Thereafter		8,570			1,074
Total lease payments	$	15,970		$	9,863
Less imputed interest		(2,869	)
Present value of lease liability	$	13,101

XML

Investment Securities Held-to-Maturity - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2019 USD ($) Security	Dec. 31, 2018 USD ($) Security
Schedule of Held-to-maturity Securities [Line Items]
Securities at fair value pledged to secure public deposits and repurchase agreements	$ 1,692,033,000	$ 1,441,059,000
Securities held to maturity at floating rate or adjustable rate	111,000
Sales of held-to-maturity securities	1,194,000
Commercial Mortgage Backed Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Gross realised gains on sale of held to maturity securities	48,000
Sales of held-to-maturity securities	$ 1,194,000
Held-to-Maturity Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Weighted average remaining life of investment securities held-to-maturity	3 years 7 months 6 days
Number of securities, temporarily impaired for less than 12 months | Security	44	56
Number of securities, temporarily impaired for 12 months or longer | Security	112	315
Number of securities, temporarily impaired, total | Security	505	475
Held-to-Maturity Securities [Member] | U.S. Government Sponsored Enterprises [Member]
Schedule of Held-to-maturity Securities [Line Items]
Weighted average remaining life	$ 66,196,000
Federal Home Loan Bank [Member]
Schedule of Held-to-maturity Securities [Line Items]
Securities pledged for borrowing at the Federal Home Loan Bank	$ 427,425,000	$ 291,190,000

XML

Investment Securities Held-to-Maturity

9 Months Ended

Sep. 30, 2019

Text Block [Abstract]

Investment Securities Held-to-Maturity

Note 4. Investment Securities Held-to-Maturity

	September 30, 2019								December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated  Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
U.S. Treasury	$	—	$	—	$	—	$	—	$	9,960	$	—	$	2	$	9,958
U.S. Government Sponsored Enterprises		121,516		653		67		122,102		234,228		336		803		233,761
SBA Backed Securities		47,126		452		66		47,512		52,051		—		2,065		49,986
U.S. Government Agency and Sponsored Enterprises Mortgage-Backed Securities		1,995,493		29,911		6,553		2,018,851		1,750,408		2,324		55,016		1,697,716
Total	$	2,164,135	$	31,016	$	6,686	$	2,188,465	$	2,046,647	$	2,660	$	57,886	$	1,991,421

Included in U.S. Government and Agency Securities are securities pledged to secure public deposits and repurchase agreements at fair value amounting to $1,692,033,000 and $1,441,059,000 at September 30, 2019 and December 31, 2018, respectively. Also included are securities pledged for borrowing at the Federal Home Loan Bank of Boston at fair value amounting to $427,425,000 and $291,190,000 at September 30, 2019 and December 31, 2018, respectively. The Company realized gross gains of $48,000 from the proceeds of $1,194,000 from the sales of held-to-maturity securities for the nine months ended September 30, 2019. The sales of securities held-to-maturity relate to certain mortgage backed securities for which the company has previously collected a substantial portion of its principal investment. There were no sales of held-to-maturity securities for the nine months ended September 30, 2018.

At September 30, 2019 and December 31, 2018, all mortgage-backed securities are obligations of U.S. Government Agencies and Government Sponsored Enterprises. Debt securities of U.S. Government Sponsored Enterprises and U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities primarily refer to debt securities of Fannie Mae and Freddie Mac.

The following table shows the maturity distribution of the Company’s securities held-to-maturity at September 30, 2019.

	Amortized Cost		Fair Value
	(in thousands)
Within one year	$	70,980	$	71,260
After one but within five years		1,809,564		1,829,087
After five but within ten years		271,068		275,192
More than ten years		12,523		12,926
Total	$	2,164,135	$	2,188,465

The weighted average remaining life of investment securities held-to-maturity at September 30, 2019 was 3.6 years. Included in the weighted average remaining life calculation at September 30, 2019 were $66,196,000 of U.S. Government Sponsored Enterprises obligations that are callable at the discretion of the issuer. The contractual maturities, which were used in the table above, of mortgage-backed securities, will differ from the actual maturities, due to the ability of the issuers to prepay underlying obligations. Also $111,000 of the securities are floating rate or adjustable rate and reprice prior to maturity.

As of September 30, 2019 and December 31, 2018, management concluded that the unrealized losses of its investment securities are temporary in nature since they are not related to the underlying credit quality of the issuers, and the Company does not intend to sell these debt securities and it is not more likely than not that it will be required to sell these debt securities before the anticipated recovery of their remaining amortized costs. In making its other-than-temporary impairment evaluation, the Company considered the fact that the principal and interest on these securities are from issuers that are investment grade.

The unrealized loss on U.S. Government Sponsored Enterprises, SBA Backed Securities, and U.S. Government Sponsored Enterprises Mortgage-Backed Securities related primarily to interest rates and not credit quality, and because the Company does not intend to sell any of these securities and it is not more likely than not that it will be required to sell these securities before the anticipated recovery of the remaining amortized cost, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2019 or December 31, 2018.

In evaluating the underlying credit quality of a security, management considers several factors such as the credit rating of the obligor and the issuer, if applicable. Internal reviews of issuer financial statements are performed as deemed necessary.

The following table shows the temporarily impaired securities of the Company’s held-to-maturity portfolio September 30, 2019. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for 12 months or less and a continuous loss position for 12 months or longer. There are 44 and 112 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 505 holdings at September 30, 2019.

	September 30, 2019
	Less Than 12 Months				12 Months or Longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury	$	—	$	—	$	—	$	—	$	—	$	—
U.S. Government Sponsored Enterprises		9,976		22		9,954		45		19,930		67
SBA Backed Securities		13,673		66		—		—		13,673		66
U.S. Government Agency and Sponsored Enterprise Mortgage- Backed Securities		163,889		816		430,714		5,737		594,603		6,553
Total temporarily impaired securities	$	187,538	$	904	$	440,668	$	5,782	$	628,206	$	6,686

The following table shows the temporarily impaired securities of the Company’s held-to-maturity portfolio at December 31, 2018. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for less than 12 months and a continuous loss position for 12 months or longer. There are 56 and 315 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 475 holdings at December 31, 2018.

	December 31, 2018
	Less Than 12 Months				12 Months or Longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury	$	9,958	$	2	$	—	$	—	$	9,958	$	2
U.S. Government Sponsored Enterprises		9,849		42		69,499		761		79,348		803
SBA Backed Securities		—		—		49,987		2,065		49,987		2,065
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		188,125		2,032		1,249,689		52,984		1,437,814		55,016
Total temporarily impaired securities	$	207,932	$	2,076	$	1,369,175	$	55,810	$	1,577,107	$	57,886

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Employee Benefits

9 Months Ended

Sep. 30, 2019

Retirement Benefits [Abstract]

Employee Benefits

Note 8. Employee Benefits

The Company provides pension benefits to its employees under a noncontributory, defined benefit plan which is funded on a current basis in compliance with the requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”) and recognizes costs over the estimated employee service period.

The Company also has a Supplemental Executive Insurance/Retirement Plan (the “Supplemental Plan”) which is limited to certain officers and employees of the Company. The Supplemental Plan is accrued on a current basis and recognizes costs over the estimated employee service period.

Executive officers of the Company and its subsidiaries who have at least one year of service may participate in the Supplemental Plan. The Supplemental Plan is voluntary, and participants are required to contribute to its cost. Life insurance policies, which are owned by the Company, are purchased covering the lives of each participant.

Components of Net Periodic Benefit Cost for the Three Months Ended September 30,

	Pension Benefits						Supplemental Insurance/ Retirement Plan
	2019			2018			2019		2018
	(in thousands)
Service cost	$	276		$	353		$	256	$	277
Interest		473			371			482		346
Expected return on plan assets		(819	)		(954	)		—		—
Recognized prior service cost (benefit)		—			(25	)		28		29
Recognized net actuarial losses		229			226			109		176
Net periodic benefit cost (credit)	$	159		$	(29	)	$	875	$	828

Components of Net Periodic Benefit Cost for the Nine Months Ended September 30,

	Pension Benefits						Supplemental Insurance/ Retirement Plan
	2019			2018			2019		2018
	(in thousands)
Service cost	$	828		$	1,059		$	768	$	831
Interest		1,419			1,111			1,445		1,040
Expected return on plan assets		(2,457	)		(2,863	)		—		—
Recognized prior service cost (benefit)		—			(75	)		86		87
Recognized net actuarial losses		687			680			326		527
Net periodic benefit cost (credit)	$	477		$	(88	)	$	2,625	$	2,485

Approximately $1,506,000 and $507,000 of costs other than service costs, from the table above, are included in other expenses for the nine months ended September 30, 2019 and 2018, respectively.

Contributions

The Company does not intend to contribute to the Defined Benefit Pension Plan in 2019.

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Fair Values of Financial Instruments - Carrying Amount and Fair Value of Company's Financial Instruments (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Financial assets:
Securities held-to-maturity	$ 2,164,135	$ 2,046,647
Loans	2,346,564	2,257,035
Financial liabilities:
Time deposits	533,074	560,579
Other borrowed funds	209,188	202,378
Subordinated debentures	36,083	36,083
Carrying Value [Member]
Financial assets:
Securities held-to-maturity	2,164,135	2,046,647
Loans	2,346,564	2,257,035	[1]
Financial liabilities:
Time deposits	533,074	560,579
Other borrowed funds	209,188	202,378
Subordinated debentures	36,083	36,083
Estimated Fair Value [Member]
Financial assets:
Securities held-to-maturity	2,188,465	1,991,421
Loans	2,398,515	2,279,712	[1]
Financial liabilities:
Time deposits	532,135	559,988
Other borrowed funds	209,263	203,122
Subordinated debentures	36,083	36,083
Fair Value Measurements, Level 2 Inputs [Member]
Financial assets:
Securities held-to-maturity	2,188,465	1,991,421
Financial liabilities:
Time deposits	532,135	559,988
Other borrowed funds	209,263	203,122
Subordinated debentures	36,083	36,083
Fair Value Measurements, Level 3 Inputs [Member]
Financial assets:
Loans	$ 2,398,515	$ 2,279,712

[1] Comprised of loans (including collateral dependent impaired loans), net of deferred loan costs and the allowance for loan losses.

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Earnings per Share ("EPS") - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2019
Class A Common Stock [Member] | Minimum [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Class A common stock entitled dividend per share percent in comparison to Class B common stock	200.00%

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Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Unrealized holding gains arising during period, taxes	$ 23	$ 30	$ 52	$ 39
Realized net gains	53		61	302
Accretion of net unrealized losses transferred during the period, taxes	54	85	205	314
Pension liability adjustment, taxes	$ 103	$ 114	$ 309	$ 342
Class A Common Stock [Member]
Conversion of Class B Common Stock to Class A Common Stock, shares	30,000		42,120	2,500
Cash dividends, per share	$ 0.12	$ 0.12	$ 0.36	$ 0.36
Class B Common Stock [Member]
Conversion of Class B Common Stock to Class A Common Stock, shares	30,000		42,120	2,500
Cash dividends, per share	$ 0.06	$ 0.06	$ 0.18	$ 0.18

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Amortized cost	$ 261,939	$ 336,751
Held-to-maturity securities, fair value	2,188,465	1,991,421
Equity securities, amortized cost	$ 1,635	$ 1,635
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, shares authorized	100,000	100,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Class A Common Stock [Member]
Common stock, par value	$ 1.00	$ 1.00
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	3,650,449	3,608,329
Class B Common Stock [Member]
Common stock, par value	$ 1.00	$ 1.00
Common stock, shares authorized	5,000,000	5,000,000
Common stock, shares issued	1,917,460	1,959,580

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Fair Value Measurements - Additional Information (Detail) - USD ($)	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Specific adjustments to impaired loans recognized	$ (204,837)	$ 37,099	$ 540,000
Amortized cost of Level 3 securities	1,635,000	1,635,000	1,635,000
Liabilities measured at fair value on a recurring or nonrecurring basis	0	0	$ 0	$ 0
Unrealized loss				0
Impaired Loans [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of loans		(78,000)
Fair Value Measurements, Level 3 Inputs [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amortized cost of Level 3 securities	23,801,000,000	23,801,000,000		$ 111,234,000,000
Unrealized loss	$ 0	$ 0

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Allowance for Loan Losses - Information Pertaining to Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Financing Receivable, Allowance for Credit Losses [Line Items]
With no required reserve recorded, Carrying Value	$ 254	$ 280	$ 254	$ 280
With no required reserve recorded, Unpaid Balance Principal	500	501	500	501
With no required reserve recorded, Average Carrying Value Recognized	818	336	616	314
With no required reserve recorded, Interest Income	2		6
With required reserve recorded, Carrying Value	2,322	5,735	2,322	5,735
With required reserve recorded, Unpaid Balance Principal	2,442	5,865	2,442	5,865
With required reserve recorded, Required Reserve	88	538	88	538
With required reserve recorded, Average Carrying Value Recognized	2,450	5,526	2,649	5,904
With required reserve recorded, Interest Income	25	29	73	165
Carrying Value	2,576	6,015	2,576	6,015
Unpaid Balance Principal	2,942	6,366	2,942	6,366
With required reserve recorded, Required Reserve	88	538	88	538
Average Carrying Value Recognized	3,268		3,265	6,218
Interest Income	27	29	79	165
Construction and Land Development [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
With no required reserve recorded, Carrying Value		84		84
With no required reserve recorded, Unpaid Balance Principal		282		282
With no required reserve recorded, Average Carrying Value Recognized		56		47
Commercial and Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
With no required reserve recorded, Carrying Value	87		87
With no required reserve recorded, Unpaid Balance Principal	306		306
With no required reserve recorded, Average Carrying Value Recognized	89		87
With no required reserve recorded, Interest Income	2		6
With required reserve recorded, Carrying Value	116	576	116	576
With required reserve recorded, Unpaid Balance Principal	116	593	116	593
With required reserve recorded, Required Reserve	2	93	2	93
With required reserve recorded, Average Carrying Value Recognized	310	589	299	490
With required reserve recorded, Interest Income	2	5	6	14
Carrying Value	203	660	203	660
Unpaid Balance Principal	422	875	422	875
With required reserve recorded, Required Reserve	2	93	2	93
Average Carrying Value Recognized		645	386	537
Interest Income	4	5	12	14
Municipal [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Average Carrying Value Recognized	399
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
With no required reserve recorded, Carrying Value	167	196	167	196
With no required reserve recorded, Unpaid Balance Principal	194	219	194	219
With no required reserve recorded, Average Carrying Value Recognized	729	280	529	267
With required reserve recorded, Carrying Value	2,206	2,484	2,206	2,484
With required reserve recorded, Unpaid Balance Principal	2,326	2,597	2,326	2,597
With required reserve recorded, Required Reserve	86	95	86	95
With required reserve recorded, Average Carrying Value Recognized	2,140	2,262	2,350	2,278
With required reserve recorded, Interest Income	23	24	67	71
Carrying Value	2,373	2,680	2,373	2,680
Unpaid Balance Principal	2,520	2,816	2,520	2,816
With required reserve recorded, Required Reserve	86	95	86	95
Average Carrying Value Recognized	2,869	2,542	2,879	2,545
Interest Income	$ 23	24	$ 67	71
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
With required reserve recorded, Carrying Value		2,675		2,675
With required reserve recorded, Unpaid Balance Principal		2,675		2,675
With required reserve recorded, Required Reserve		350		350
With required reserve recorded, Average Carrying Value Recognized		2,675		3,136
With required reserve recorded, Interest Income				80
Carrying Value		2,675		2,675
Unpaid Balance Principal		2,675		2,675
With required reserve recorded, Required Reserve		350		350
Average Carrying Value Recognized		2,675		3,136
Interest Income				$ 80
Home Equity [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Average Carrying Value Recognized		$ 5,862

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Allowance for Loan Losses - Summary of Allowance for Loan Losses (Detail) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Allowance for Loan Losses:
Allowance for loan losses, beginning of year	$ 29,070	$ 27,144		$ 28,543	$ 26,255
Charge-offs	(118)	(89)		(336)	(247)
Recoveries	70	1,490		190	1,637
Provision	75			700	900
Allowance for loan losses, end of year	29,097	28,545	$ 27,144	29,097	28,545
Amount of allowance for loan losses for loans deemed to be impaired	88	538		88	538
Amount of allowance for loan losses for loans not deemed to be impaired	29,009	28,007		29,009	28,007
Loans:
Total loans, net	2,375,661	2,261,339		2,375,661	2,261,339	$ 2,285,578
Loans deemed to be impaired	2,576	6,015		2,576	6,015
Loans not deemed to be impaired	2,373,085	2,255,324		2,373,085	2,255,324
Construction and Land Development [Member]
Allowance for Loan Losses:
Allowance for loan losses, beginning of year	1,052	633		1,092	1,645
Recoveries		1,432			1,432
Provision	(752)	(1,155)		(792)	(2,167)
Allowance for loan losses, end of year	300	910	633	300	910
Amount of allowance for loan losses for loans not deemed to be impaired	300	910		300	910
Loans:
Total loans, net	7,824	12,434		7,824	12,434	13,628
Loans not deemed to be impaired	7,824	12,434		7,824	12,434
Commercial and Industrial [Member]
Allowance for Loan Losses:
Allowance for loan losses, beginning of year	11,338	10,384		10,998	9,651
Charge-offs	(57)	(11)		(108)	(16)
Recoveries	23	16		49	49
Provision	9	895		374	1,600
Allowance for loan losses, end of year	11,313	11,284	10,384	11,313	11,284
Amount of allowance for loan losses for loans deemed to be impaired	2	93		2	93
Amount of allowance for loan losses for loans not deemed to be impaired	11,311	11,191		11,311	11,191
Loans:
Total loans, net	783,950	783,960		783,950	783,960	761,625
Loans deemed to be impaired	203	660		203	660
Loans not deemed to be impaired	783,747	783,300		783,747	783,300
Municipal [Member]
Allowance for Loan Losses:
Allowance for loan losses, beginning of year	1,832	1,704		1,838	1,720
Provision	751	84		745	68
Allowance for loan losses, end of year	2,583	1,788	1,704	2,583	1,788
Amount of allowance for loan losses for loans not deemed to be impaired	2,583	1,788		2,583	1,788
Loans:
Total loans, net	121,802	94,532		121,802	94,532	97,290
Loans not deemed to be impaired	121,802	94,532		121,802	94,532
Commercial Real Estate [Member]
Allowance for Loan Losses:
Allowance for loan losses, beginning of year	10,848	10,209		10,663	9,728
Provision	53	415		238	896
Allowance for loan losses, end of year	10,901	10,624	10,209	10,901	10,624
Amount of allowance for loan losses for loans deemed to be impaired	86	95		86	95
Amount of allowance for loan losses for loans not deemed to be impaired	10,815	10,529		10,815	10,529
Loans:
Total loans, net	765,385	730,265		765,385	730,265	750,362
Loans deemed to be impaired	2,373	2,680		2,373	2,680
Loans not deemed to be impaired	763,012	727,585		763,012	727,585
Residential Real Estate [Member]
Allowance for Loan Losses:
Allowance for loan losses, beginning of year	2,210	2,493		2,190	1,873
Provision	(24)	(182)		(4)	438
Allowance for loan losses, end of year	2,186	2,311	2,493	2,186	2,311
Amount of allowance for loan losses for loans deemed to be impaired		350			350
Amount of allowance for loan losses for loans not deemed to be impaired	2,186	1,961		2,186	1,961
Loans:
Total loans, net	364,317	335,114		364,317	335,114	348,250
Loans deemed to be impaired		2,675			2,675
Loans not deemed to be impaired	364,317	332,439		364,317	332,439
Consumer [Member]
Allowance for Loan Losses:
Allowance for loan losses, beginning of year	380	336		365	373
Charge-offs	(61)	(78)		(228)	(231)
Recoveries	47	42		141	156
Provision	(84)	32		4	34
Allowance for loan losses, end of year	282	332	336	282	332
Amount of allowance for loan losses for loans not deemed to be impaired	282	332		282	332
Loans:
Total loans, net	21,748	21,216		21,748	21,216	22,083
Loans not deemed to be impaired	21,748	21,216		21,748	21,216
Home Equity [Member]
Allowance for Loan Losses:
Allowance for loan losses, beginning of year	1,120	1,078		1,111	989
Provision	(33)	(28)		(24)	61
Allowance for loan losses, end of year	1,087	1,050	1,078	1,087	1,050
Amount of allowance for loan losses for loans not deemed to be impaired	1,087	1,050		1,087	1,050
Loans:
Total loans, net	310,635	283,818		310,635	283,818	$ 292,340
Loans not deemed to be impaired	310,635	283,818		310,635	283,818
Unallocated [Member]
Allowance for Loan Losses:
Allowance for loan losses, beginning of year	290	307		286	276
Provision	155	(61)		159	(30)
Allowance for loan losses, end of year	445	$ 246	307	445	246
Amount of allowance for loan losses for loans not deemed to be impaired	445		$ 246	445	$ 246
Loans:
Total loans, net	$ 2,375,661			$ 2,375,661

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Revenue from Contracts with Customers - Information about Receivables with Customers (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Other Assets [Member]
Disaggregation of Revenue [Line Items]
Receivables, which are included in "Other assets"	$ 1,142	$ 1,205

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Leases - Supplemental balance sheet information related to leases (Detail) $ in Thousands	Sep. 30, 2019 USD ($)
Operating Leases:
Operating lease right-of-use assets, included in other assets	$ 12,944
Operating lease liabilities, included in other liabilities	$ 13,101
Weighted Average Remaining Lease Term:
Operating Leases	11 years
Weighted Average Discount Rate:
Operating Leases	3.50%

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Securities Available-for-Sale (Tables)

9 Months Ended

Sep. 30, 2019

Text Block [Abstract]

Summary of Securities Available-for-Sale

	September 30, 2019								December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
U.S. Treasury	$	—	$	—	$	—	$	—	$	2,000	$	—	$	8	$	1,992
U.S. Government Sponsored Enterprises		—		—		—		—		3,946		—		31		3,915
SBA Backed Securities		58,714		51		101		58,664		70,477		1		284		70,194
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		170,532		189		439		170,282		162,604		536		250		162,890
Privately Issued Residential Mortgage-Backed Securities		574		6		1		579		679		3		10		672
Obligations Issued by States and Political Subdivisions		28,519		57		—		28,576		93,445		58		—		93,503
Other Debt Securities		3,600		64		26		3,638		3,600		37		44		3,593
Total	$	261,939	$	367	$	567	$	261,739	$	336,751	$	635	$	627	$	336,759

Estimated Maturity Distribution of Securities Available-for-Sale

The following table shows the maturity distribution of the Company’s securities available-for-sale at September 30, 2019.

	Amortized Cost		Fair Value
	(in thousands)
Within one year	$	26,187	$	26,184
After one but within five years		134,881		134,811
After five but within ten years		85,551		85,378
More than 10 years		15,320		15,366
Total	$	261,939	$	261,739

Continuous Unrealized Loss Position for 12 Months or Less and 12 Months and Longer

The following table shows the temporarily impaired securities of the Company’s available-for-sale portfolio at September 30, 2019. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for less than 12 months and a continuous loss position for 12 months or longer. There are 24 and 18 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 134 holdings at September 30, 2019.

	September 30, 2019
	Less than 12 months				12 months or longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury	$	—	$	—	$	—	$	—	$	—	$	—
U.S. Government Sponsored Enterprises		—		—		—		—		—		—
SBA Backed Securities		11,133		11		24,944		90		36,077		101
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		81,305		264		27,872		175		109,177		439
Privately Issued Residential Mortgage-Backed Securities		—		—		282		1		282		1
Obligations Issued by States and Political Subdivisions		—		—		—		—		—		—
Other Debt Securities		800		1		475		25		1,275		26
Total temporarily impaired securities	$	93,238	$	276	$	53,573	$	291	$	146,811	$	567

The following table shows the temporarily impaired securities of the Company’s available-for-sale portfolio at December 31, 2018. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for less than 12 months and a continuous loss position for 12 months or longer. There are 10 and 30 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 190 holdings at December 31, 2018.

	December 31, 2018
	Less than 12 months				12 months or longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury	$	—	$	—	$	1,992	$	8	$	1,992	$	8
U.S. Government Sponsored Enterprises		3,914		31		—		—		3,914		31
SBA Backed Securities		17,950		28		44,323		256		62,273		284
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		19,244		21		45,782		229		65,026		250
Privately Issued Residential Mortgage-Backed Securities		—		—		495		10		495		10
Obligations Issued by States and Political Subdivisions		—		—		—		—		—		—
Other Debt Securities		—		—		455		44		455		44
Total temporarily impaired securities	$	41,108	$	80	$	93,047	$	547	$	134,155	$	627

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Earnings per share ("EPS") (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Reconciliation of Basic EPS and Diluted EPS

The following table is a reconciliation of basic EPS and diluted EPS.

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands except share and per share data)	2019		2018		2019		2018
Basic EPS Computation:
Numerator:
Net income, Class A	$	7,986	$	7,535	$	22,849	$	20,674
Net income, Class B		2,098		2,046		6,118		5,614
Denominator:
Weighted average shares outstanding, Class A		3,650,449		3,608,329		3,627,076		3,608,129
Weighted average shares outstanding, Class B		1,917,460		1,959,580		1,940,833		1,959,780
Basic EPS, Class A	$	2.19	$	2.09	$	6.30	$	5.73
Basic EPS, Class B		1.09		1.04		3.15		2.86
Diluted EPS Computation:
Numerator:
Net income, Class A	$	7,986	$	7,535	$	22,849	$	20,674
Net income, Class B		2,098		2,046		6,118		5,614
Total net income, for diluted EPS, Class A computation		10,084		9,581		28,967		26,288
Denominator:
Weighted average shares outstanding, basic, Class A		3,650,449		3,608,329		3,627,076		3,608,129
Weighted average shares outstanding, Class B		1,917,460		1,959,580		1,940,833		1,959,780
Weighted average shares outstanding diluted, Class A		5,567,909		5,567,909		5,567,909		5,567,909
Weighted average shares outstanding, Class B		1,917,460		1,959,580		1,940,833		1,959,780
Diluted EPS, Class A	$	1.81	$	1.72	$	5.20	$	4.72
Diluted EPS, Class B		1.09		1.04		3.15		2.86

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Recent Accounting Developments

9 Months Ended

Sep. 30, 2019

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Developments

Note 2. Recent Accounting Developments

Recently Adopted Accounting Standards Updates

In July 2017, FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interest with a Scope Exception. For public entities, this ASU is effective for annual reporting periods beginning after December 15, 2018. The effect of this update did not have a material impact on the Company’s consolidated financial position.

In March 2017, the FASB issued ASU 2017-08, Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20) Premium Amortization of Purchased Callable Debt. The FASB is issuing this ASU to amend the amortization period for certain purchased callable debt securities held at a premium. The FASB is shortening the amortization period for the premium to the earliest call date. Under current generally accepted accounting principles (GAAP), entities generally amortize the premium as an adjustment of yield

over the contractual life of the instrument. For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The effect of this update did not have a material impact on the Company’s consolidated financial position.

In February 2016, the FASB issued ASU 2016-02, Leases. This ASU required lessees to put most leases on their balance sheet but recognize expenses on their income statements in a manner similar to today’s accounting. This ASU also eliminated today’s real estate-specific provisions for all companies. For lessors, this ASU modified the classification criteria and the accounting for sales-type and direct financing leases. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods therein. The Company also reviewed contracts to determine if they contain embedded leases. The Company’s balance sheet impact was $15.1 million as of January 1, 2019. This amount was recorded as a right of use asset, included in other assets, with a corresponding lease liability, included in other liabilities.

In July 2018, ASU 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”) was issued to provide more detailed guidance and additional clarification for implementing ASU 2016-02. Also in July 2018, ASU 2018-11, “Targeted Improvements” (“ASU 2018-11”) was issued and allows for an optional transition method in which the provisions of Topic 842 would be applied upon the adoption date and would not have to be retroactively applied to the earliest reporting period presented in the consolidated financial statements.” The Company used this optional transition method for the adoption of Topic 842.

Accounting Standards Issued but not yet Adopted

The following list identifies ASUs applicable to the Company that have been issued by the FASB but are not yet effective:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU was issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.

To achieve this objective, the amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is in the process of implementing this ASU, has purchased a software solution and is capturing information needed to implement this ASU. As part of the FASB ASC 326 implementation process the company is using two models: a rating migration model and a probability of default model. The probability of default model is based primarily on four components: loss history, product lifecycle, behavioral attributes and the economic environment. The ratings migration model is designed to estimate loss reserves according to the CECL standard for rated loans or similar instruments. The model structure follows a grade migration approach, where the default rate is based on the probability of each grade transition which is modeled using historical data.

The Company has started to input information into the models, and is running the software program and comparing to existing results. In addition, the Company has also begun developing accounting policies, as well as designing and implementing new internal controls relevant to the updated methodologies and models. The Company has not determined the dollar impact as of September 30, 2019.

The securities held-to-maturity include U.S. Treasury, U.S. Government Sponsored Enterprises, BSA Backed Securities and U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities. The Company expects no impact from ASU 2016-13 to arise from this portfolio.

Since ASU 2016-13, the FASB has issued amendments intended on improving the clarification of the amendment, ASU 2018-19 Codification Improvements to Topic 326, Financial Instruments – Credit Losses and ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging. The amendment in ASU 2018-19 was issued in November 2018 and was intended to clarify that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. The amendment in ASU 2019-04 was issued in April 2019 and was intended to clarify stakeholders’ specific issues about certain aspects of the amendments in ASU 2016-13. ASU 2019-05 Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief was also issued in May 2019. This ASU provides entities the option to irrevocably elect the fair value option for certain financial assets previously measured at amortized costs basis. The fair value option election does not apply to held-to-maturity debt securities. An entity that elects the fair value option should subsequently apply the guidance in Subtopics 820-10, Fair Value Measurement—Overall. The amendments in this ASU should be applied on a modified-retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings balance in the statement of financial position as of the date that an entity early adopted the amendments in ASU 2016-13.

In August 2018, FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). This ASU is effective for annual reporting periods beginning after December 15, 2019. The effect of this update is not expected to have a material impact on the Company’s consolidated financial position.

In August 2018, FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit plans. The amendments in this ASU remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. This ASU is effective for annual reporting periods beginning after December 15, 2020. The effect of this update is not expected to have a material impact on the Company’s consolidated financial position.

In August 2018, FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value. The amendments in this ASU modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. This ASU is effective for annual reporting periods beginning after December 15, 2019. The effect of this update is not expected to have a material impact on the Company’s disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles — Goodwill and Other (Topic 350). This ASU was issued to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. For public entities, this ASU is effective for the fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted and application should be on a prospective basis. The effect of this update is not expected to have a material impact on the Company’s consolidated financial position.

Securities and Exchange Commission (SEC) ruling:

In August 2018, the SEC issued a final rule that amends certain of the Commission’s disclosure requirements “that have become redundant, duplicative, overlapping, outdated, or superseded, in light of other Commission disclosure requirements, U.S. GAAP, or changes in the information environment.” The financial reporting implications of the final rule’s amendments may vary by company, but the changes are generally expected to reduce or eliminate some of an SEC registrant’s disclosure requirements. In limited circumstances, however, the amendments may expand those requirements, including those related to interim disclosures about changes in stockholders’ equity. Under the requirements, registrants must now analyze changes in stockholders’ equity, in the form of a reconciliation, for “the current and comparative year-to-date periods, with subtotals for each interim period.” Beginning with its March 31, 2019 filing, the Company included a reconciliation for the current quarter and year-to-date interim periods as well as the comparative periods of the prior years (i.e., a reconciliation covering each period for which an income statement is presented).

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Reclassifications Out of Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2019

Text Block [Abstract]

Reclassifications Out of Accumulated Other Comprehensive Income

Note 6. Reclassifications Out of Accumulated Other Comprehensive Income (a)

Amount Reclassified from Accumulated Other Comprehensive Income

Details about Accumulated Other Comprehensive Income Components	Three Months Ended September 30, 2019			Three Months Ended September 30, 2018			Affected Line Item in the Statement where Net Income is Presented
(in thousands)
Unrealized gains and losses on available-for-sale securities	$	54		$	105		Net gains on sales of investments
Tax (expense) or benefit		(15	)		(29	)	Provision for income taxes
Net of tax	$	39		$	76		Net income
Accretion of unrealized losses transferred	$	(209	)	$	(323	)	Interest on securities held-to-maturity
Tax (expense) or benefit		54			85		Provision for income taxes
Net of tax	$	(155	)	$	(238	)	Net income
Amortization of defined benefit pension items
Prior-service costs	$	(29	)(b)	$	(4	)(b)	Salaries and employee benefits
Actuarial gains (losses)		(337	)(b)		(402	)(b)	Salaries and employee benefits
Total before tax		(366	)		(406	)	Income before taxes
Tax (expense) or benefit		103			114		Provision for income taxes
Net of tax	$	(263	)	$	(292	)	Net income
Details about Accumulated Other Comprehensive Income Components	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018			Affected Line Item in the Statement where Net Income is Presented
(in thousands)
Unrealized gains and losses on available-for-sale securities	$	61		$	302		Net gains on sales of investments
Tax (expense) or benefit		(17	)		(85	)	Provision for income taxes
Net of tax	$	44		$	217		Net income
Accretion of unrealized losses transferred	$	(779	)	$	(1,186	)	Interest on securities held-to-maturity
Tax (expense) or benefit		205			314		Provision for income taxes
Net of tax	$	(574	)	$	(872	)	Net income
Amortization of defined benefit pension items
Prior-service costs	$	(86	)(b)	$	(12	)(b)	Salaries and employee benefits
Actuarial gains (losses)		(1,013	)(b)		(1,207	)(b)	Salaries and employee benefits
Total before tax		(1,099	)		(1,219	)	Income before taxes
Tax (expense) or benefit		309			342		Provision for income taxes
Net of tax	$	(790	)	$	(877	)	Net income

(a) Amount in parentheses indicates reductions to net income.

(b) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Employee Benefits footnote (Note 8) for additional details).

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Fair Values of Financial Instruments

9 Months Ended

Sep. 30, 2019

Investments, All Other Investments [Abstract]

Fair Values of Financial Instruments

Note 10. Fair Values of Financial Instruments

The following methods and assumptions were used by the Company in estimating fair values of its financial instruments. Excluded from this disclosure are all non-financial instruments. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

The assumptions used below are expected to approximate those that market participants would use in valuing these financial instruments.

Fair value estimates are made at a specific point in time, based on available market information and judgments about the financial instrument, including estimates of timing, amount of expected future cash flows and the credit standing of the issuer. Such estimates do not consider the tax impact of the realization of unrealized gains or losses. In some cases, the fair value estimates cannot be substantiated by comparison to independent markets. In addition, the disclosed fair value may not be realized in the immediate settlement of the financial instrument. Care should be exercised in deriving conclusions about our business, its value or financial position based on the fair value information of financial instruments presented below.

Securities Held-to-Maturity

The fair values of these securities were based on quoted market prices, where available, as provided by third-party investment portfolio pricing vendors. If quoted market prices were not available, fair values provided by the vendors were based on quoted market prices of comparable instruments in active markets and/or based on a matrix pricing methodology which employs The Bond Market Association’s standard calculations for cash flow and price/yield analysis, live benchmark bond pricing and terms/condition data available from major pricing sources. Management regards the inputs and methods used by third party pricing vendors to be “Level 2 inputs and methods” as defined in the “fair value hierarchy” provided by FASB.

Loans

The fair value of loans is estimated using the exit price notion consistent with Topic 820, Fair Value Measurement. Fair value is determined based on a discounted cash flow analysis. The discounted cash flow analysis was based on the contractual maturity of the loan and market indications of rates, prepayment speeds, defaults and credit risk. For certain non-performing assets, fair value of the underlying collateral is determined based on the estimated values of individual receipts.

Time Deposits

The fair value of time deposits was estimated using a discounted cash flow approach that applies prevailing market interest rates for similar maturity instruments. The fair values of the Company’s time deposit liabilities do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value.

Other Borrowed Funds

The fair value of other borrowed funds is based on the discounted value of contractual cash flows. The discount rate used is estimated based on the rates currently offered for other borrowed funds of similar remaining maturities.

Subordinated Debentures

The fair value of subordinated debentures is based on the discounted value of contractual cash flows. The discount rate used is estimated based on the rates currently offered for other subordinated debentures of similar remaining maturities.

The following presents (in thousands) the carrying amount, estimated fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of September 30, 2019 and December 31, 2018. This table excludes financial instruments for which the carrying amount approximates fair value. Financial assets for which the fair value approximates carrying value include cash and cash equivalents, short-term investments, FHLBB stock and accrued interest receivable. Financial liabilities for which the fair value approximates carrying value include non-maturity deposits, short-term borrowings and accrued interest payable.

September 30, 2019	Carrying Amount		Estimated Fair Value		Fair Value Measurements Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(in thousands)
Financial assets:
Securities held-to-maturity	$	2,164,135	$	2,188,465	$	—	$	2,188,465	$	—
Loans (1)		2,346,564		2,398,515		—		—		2,398,515
Financial liabilities:
Time deposits		533,074		532,135		—		532,135		—
Other borrowed funds		209,188		209,263		—		209,263		—
Subordinated debentures		36,083		36,083		—		36,083		—
December 31, 2018
Financial assets:
Securities held-to-maturity	$	2,046,647	$	1,991,421	$	—	$	1,991,421	$	—
Loans (1)		2,257,035		2,279,712		—		—		2,279,712
Financial liabilities:
Time deposits		560,579		559,988		—		559,988		—
Other borrowed funds		202,378		203,122		—		203,122		—
Subordinated debentures		36,083		36,083		—		36,083		—

(1) Comprised of loans (including collateral dependent impaired loans), net of deferred loan costs and the allowance for loan losses.

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the type of financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Bank’s entire holdings of a particular financial instrument. Because no active market exists for some of the Bank’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, cash flows, current economic conditions, risk characteristics and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions and changes in the loan, debt and interest rate markets could significantly affect the estimates. Further, the income tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on the fair value estimates and have not been considered.

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Securities Available-for-Sale - Continuous Unrealized Loss Position for 12 Months or Less and 12 Months and Longer (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	$ 93,238	$ 41,108
Less Than 12 Months, Unrealized Losses	276	80
12 Months or Longer, Fair Value	53,573	93,047
12 Months or Longer, Unrealized Losses	291	547
Total, Fair Value	146,811	134,155
Total, Unrealized Losses	567	627
U.S. Treasury [Member]
Schedule of Available-for-sale Securities [Line Items]
12 Months or Longer, Fair Value		1,992
12 Months or Longer, Unrealized Losses		8
Total, Fair Value		1,992
Total, Unrealized Losses		8
U.S. Government Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value		3,914
Less Than 12 Months, Unrealized Losses		31
Total, Fair Value		3,914
Total, Unrealized Losses		31
SBA Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	11,133	17,950
Less Than 12 Months, Unrealized Losses	11	28
12 Months or Longer, Fair Value	24,944	44,323
12 Months or Longer, Unrealized Losses	90	256
Total, Fair Value	36,077	62,273
Total, Unrealized Losses	101	284
U.S. Government Agency and Sponsored Enterprises Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	81,305	19,244
Less Than 12 Months, Unrealized Losses	264	21
12 Months or Longer, Fair Value	27,872	45,782
12 Months or Longer, Unrealized Losses	175	229
Total, Fair Value	109,177	65,026
Total, Unrealized Losses	439	250
Privately Issued Residential Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
12 Months or Longer, Fair Value	282	495
12 Months or Longer, Unrealized Losses	1	10
Total, Fair Value	282	495
Total, Unrealized Losses	1	10
Other Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	800
Less Than 12 Months, Unrealized Losses	1
12 Months or Longer, Fair Value	475	455
12 Months or Longer, Unrealized Losses	25	44
Total, Fair Value	1,275	455
Total, Unrealized Losses	$ 26	$ 44

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Recent Accounting Developments - Additional Information (Detail) $ in Thousands	Sep. 30, 2019 USD ($)
Operating Lease, Right-of-Use Asset	$ 12,944
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset	$ 15,100

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Basis of Financial Statement Presentation

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Financial Statement Presentation

Note 1. Basis of Financial Statement Presentation

The consolidated financial statements include the accounts of Century Bancorp, Inc. (the “Company”) and its wholly owned subsidiary, Century Bank and Trust Company (the “Bank”). The consolidated financial statements also include the accounts of the Bank’s wholly owned subsidiaries, Century Subsidiary Investments, Inc. (“CSII”), Century Subsidiary Investments, Inc. II (“CSII II”), Century Subsidiary Investments, Inc. III (“CSII III”) and Century Financial Services Inc. (“CFSI”). CSII, CSII II, and CSII III are engaged in buying, selling and holding investment securities. CFSI has the power to engage in financial agency, securities brokerage, and investment and financial advisory services and related securities credit. The Company also owns 100% of Century Bancorp Capital Trust II (“CBCT II”). The entity is an unconsolidated subsidiary of the Company.

All significant intercompany accounts and transactions have been eliminated in consolidation. The Company provides a full range of banking services to individual, business and municipal customers in Massachusetts, New Hampshire, Rhode Island, Connecticut, and New York. As a bank holding company, the Company is subject to the regulation and supervision of the Federal Reserve Board. The Bank, a state chartered financial institution, is subject to supervision and regulation by applicable state and federal banking agencies, including the Federal Reserve Board, the Federal Deposit Insurance Corporation (the “FDIC”) and the Commonwealth of Massachusetts Commissioner of Banks. The Bank is also subject to various requirements and restrictions under federal and state law, including requirements to maintain reserves against deposits, restrictions on the types and amounts of loans that may be granted and the interest that may be charged thereon, and limitations on the types of investments that may be made and the types of services that may be offered. Various consumer laws and regulations also affect the operations of the Bank. In addition to the impact of regulation, commercial banks are affected significantly by the actions of the Federal Reserve Board as it attempts to control the money supply and credit availability in order to influence the economy. All aspects of the Company’s business are highly competitive. The Company faces aggressive competition from other lending institutions and from numerous other providers of financial services. The Company has one reportable operating segment.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and general practices within the banking industry. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ from those estimates. The Company’s quarterly report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission.

Material estimates that are susceptible to change in the near term relate to the allowance for loan losses. Management believes that the allowance for loan losses is adequate based on a review of factors, including historical charge-off rates with additional allocations based on qualitative risk factors for each category and general economic factors. While management uses available information to recognize loan losses, future additions to the allowance for loan losses may be necessary based on changes in economic conditions. In addition, regulatory agencies periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance for loan losses based on their judgments about information available to them at the time of their examination. Certain reclassifications are made to prior-year amounts whenever necessary to conform with the current-year presentation.

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Employee Benefits - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Expected Future Employer Contributions, Current Fiscal Year	$ 0
Accounting Standards Update 2017-07 [Member]
Defined Benefit Plan Disclosure [Line Items]
Reclassification from salaries and employee benefits to other expenses	$ 1,506,000	$ 507,000

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 10,084	$ 9,581	$ 28,967	$ 26,288
Unrealized gains (losses) on securities:
Unrealized gains (losses) arising during period	113	(88)	(112)	412
Less: reclassification adjustment for gains included in net income	(39)	(76)	(44)	(217)
Total unrealized gains (losses) on securities	74	(164)	(156)	195
Accretion of net unrealized losses transferred	155	238	574	872
Defined benefit pension plans:
Amortization of prior service cost and loss included in net periodic benefit cost	263	292	790	877
Other comprehensive income	492	366	1,208	1,944
Comprehensive income	$ 10,576	$ 9,947	$ 30,175	$ 28,232

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Cover Page - shares	9 Months Ended
	Sep. 30, 2019	Oct. 31, 2019
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Trading Symbol	CNBKA
Entity Registrant Name	CENTURY BANCORP INC
Entity Central Index Key	0000812348
Entity Shell Company	false
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Address, State or Province	MA
Title of 12(b) Security	Class A Common Stock
Security Exchange Name	NASDAQ
Class A Common Stock [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		3,650,449
Class B Common Stock [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		1,917,460

XML

Fair Value Measurements - Changes in Level 3 Securities (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance		$ 82,600
Purchases		105,837
Maturities/redemptions		(72,640)
Transfer to Level 2		(4,459)
Amortization		(104)
Ending Balance		111,234
Auction Rate Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance		4,459
Transfer to Level 2		(4,459)
Obligations Issued by States and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	$ 88,728	78,141
Purchases	13,290	105,837
Maturities/redemptions	(78,196)	(72,640)
Amortization	(21)	(104)
Ending Balance	$ 23,801	$ 111,234

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Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Note 11. Revenue from Contracts with Customers

Revenue from contracts with customers in the scope of ASC Topic 606 is measured based on the consideration specified in the contract with a customer, and excludes amounts collected on behalf of third parties. The Company recognizes revenue from contracts with customers when it satisfies its performance obligations.

The Company’s performance obligations are typically satisfied as services are rendered, and our contracts do not include multiple performance obligations. Payment is generally collected at the time services are rendered, or monthly. Unsatisfied performance obligations at the report date are not material to our consolidated financial statements.

The Company pays sales commissions to its employees in accordance with certain incentive plans. The Company expenses sales commissions when incurred if we do not expect to recover these costs from the terms of the contract with the customer. Sales commissions are included in compensation expense.  

In certain cases, other parties are involved with providing products and services to our customers. If the Company is a principal in the transaction (providing goods or services itself), revenues are reported based on the gross consideration received from the customer and any related expenses are reported gross in noninterest expense. If the Company is an agent in the transaction (arranging for another party to provide goods or services), the Company reports its net fee or commission retained as revenue.

Waivers and reversals are recorded as a reduction of revenue either when the revenue is recognized by the Company or at the time the waiver or reversal is earned by the customer.

A. Change in accounting policy

The Company adopted Topic 606 Revenue from Contracts with Customers with a date of initial application of January 1, 2018 through the third quarter of 2019 and has applied the guidance to all contracts within the scope of Topic 606 as of that date. As a result, the Company has changed its accounting policy for revenue recognition as detailed in this footnote.

The Company applied Topic 606 using the cumulative effect method. There was no cumulative effect adjustment as of January 1, 2018, and there were no material changes to the financial statements at or for the nine months ended September 30, 2019 and September 30, 2018, respectively, as a result of adopting Topic 606.

B. Practical Expedients

The Company applies the practical expedient in paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

The Company applies the practical expedient in paragraph 606-10-32-18 and does not adjust the consideration from customers for the effects of a significant financing component if at contract inception the period between when the entity transfers the goods or services and when the customer pays for that good or service will be one year or less.

C. Nature of goods and services

The vast majority of the Company’s revenue is specifically out-of-scope of Topic 606. For the revenue in-scope, the following is a description of principal activities, separated by the timing of revenue recognition, from which the Company generates its revenue from contracts with customers.

a. Revenue earned at a point in time – Examples of revenue earned at a point in time are ATM transaction fees, wire transfer fees, NSF fees, credit and debit card interchange fees and foreign exchange transaction fees. Revenue is generally derived from transactional information accumulated by our systems and is recognized as revenue immediately as the transactions occur or upon providing the service to complete the customer’s transaction. The Company is the principal in each of these contracts, with the exception of credit and debit card interchange fees, in which case we are acting as the agent and record revenue net of expenses paid to the principal.

b. Revenue earned over time – The Company earns revenue from contracts with customers in a variety of ways in which the revenue is earned over a period of time – generally monthly or quarterly. Examples of this type of revenue are deposit account service fees, lockbox fees, investment management fees, merchant referral services, and safe deposit box fees. Account service charges, management fees and referral fees are recognized on a monthly basis while any transaction based income is recorded as the activity occurs. Revenue is primarily based on the number and type of transactions or assets managed and is generally derived from transactional information accumulated by our systems. Revenue is recorded in the same period as the related transactions occur or services are rendered to the customer.

D. Disaggregation of revenue

The following table presents total revenues as presented in the Consolidated Statements of Income and the related amounts which are from contracts with customers within the scope of Topic 606. As illustrated here, the vast majority of our revenues are specifically excluded from the scope of Topic 606.

	Nine Months Ended 9/30/2019		Revenue from Contracts in Scope of Topic 606		Nine Months Ended 9/30/2018		Revenue from Contracts in Scope of Topic 606
	(dollars in thousands)
Net interest income	$	70,458	$	—	$	68,871	$	—
Noninterest income:
Service charges on deposit accounts		6,801		6,801		6,268		6,268
Lockbox fees		3,018		3,018		2,304		2,304
Net gains on sales of securities		61		—		302		—
Gains on sales of mortgage loans		154		—		—		—
Other income		3,676		2,338		3,210		2,215
Total noninterest income		13,710		12,157		12,084		10,787
Total revenues	$	84,168	$	12,157	$	80,955	$	10,787
	Three Months Ended 9/30/2019		Revenue from Contracts in Scope of Topic 606		Three Months Ended 9/30/2018		Revenue from Contracts in Scope of Topic 606
	(dollars in thousands)
Net interest income	$	23,770	$	—	$	23,204	$	—
Noninterest income:
Service charges on deposit accounts		2,310		2,310		2,137		2,137
Lockbox fees		937		937		892		892
Net gains on sales of securities		53		—		105		—
Gains on sales of mortgage loans		—		—		—		—
Other income		986		728		1,035		751
Total noninterest income		4,286		3,975		4,169		3,780
Total revenues	$	28,056	$	3,975	$	27,373	$	3,780

The following table provides information about receivables with customers.

	September 30, 2019		December 31, 2018
(dollars in thousands)
Receivables, which are included in “Other assets”	$	1,142	$	1,205

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Securities Available-for-Sale

9 Months Ended

Sep. 30, 2019

Text Block [Abstract]

Securities Available-for-Sale

Note 3. Securities Available-for-Sale

	September 30, 2019								December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
U.S. Treasury	$	—	$	—	$	—	$	—	$	2,000	$	—	$	8	$	1,992
U.S. Government Sponsored Enterprises		—		—		—		—		3,946		—		31		3,915
SBA Backed Securities		58,714		51		101		58,664		70,477		1		284		70,194
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		170,532		189		439		170,282		162,604		536		250		162,890
Privately Issued Residential Mortgage-Backed Securities		574		6		1		579		679		3		10		672
Obligations Issued by States and Political Subdivisions		28,519		57		—		28,576		93,445		58		—		93,503
Other Debt Securities		3,600		64		26		3,638		3,600		37		44		3,593
Total	$	261,939	$	367	$	567	$	261,739	$	336,751	$	635	$	627	$	336,759

Included in SBA Backed Securities, U.S. Government Sponsored Enterprise Securities and U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities are securities at fair value pledged to secure public deposits and repurchase agreements amounting to $196,356,000 and $197,304,000 at September 30, 2019 and December 31, 2018, respectively. Also included in securities available-for-sale are securities at fair value pledged for borrowing at the Federal Home Loan Bank of Boston amounting to $32,590,000 and $34,787,000 at September 30, 2019 and December 31, 2018, respectively. The Company realized gross gains of $13,000 from the proceeds of $16,285,000 from the sales of available-for-sale securities for the nine months ended September 30, 2019. The Company realized gross gains of $302,000 from the proceeds of $27,517,000 from the sales of available-for-sale securities for the nine months ended September 30, 2018.

Debt securities of U.S. Government Sponsored Enterprises and U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities primarily refer to debt securities of Fannie Mae and Freddie Mac.

The following table shows the maturity distribution of the Company’s securities available-for-sale at September 30, 2019.

	Amortized Cost		Fair Value
	(in thousands)
Within one year	$	26,187	$	26,184
After one but within five years		134,881		134,811
After five but within ten years		85,551		85,378
More than 10 years		15,320		15,366
Total	$	261,939	$	261,739

The weighted average remaining life of investment securities available-for-sale at September 30, 2019 was 5.1 years. The contractual maturities, which were used in the table above, of mortgage-backed securities, will differ from the actual maturities, due to the ability of the issuers to prepay underlying obligations. Also $234,949,000 of the securities are floating rate or adjustable rate and reprice prior to maturity.

As of September 30, 2019 and December 31, 2018, management concluded that the unrealized losses of its investment securities are temporary in nature since they are not related to the underlying credit quality of the issuers, and the Company does not intend to sell these debt securities and it is not more likely than not that it will be required to sell these debt securities before the anticipated recovery of its remaining amortized cost. In making its other-than-temporary impairment evaluation, the Company considered that the principal and interest on these securities are from issuers that are investment grade.

The unrealized loss on SBA Backed Securities, U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities related primarily to interest rates and not credit quality, and because the Company has the ability and intent to hold these investments until recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2019 or December 31, 2018.

In evaluating the underlying credit quality of a security, management considers several factors such as the credit rating of the obligor and the issuer, if applicable. Internal reviews of issuer financial statements are performed as deemed necessary. In the case of privately issued mortgage-backed securities, the performance of the underlying loans is analyzed as deemed necessary to determine the estimated future cash flows of the securities. Factors considered include the level of subordination, current and estimated future default rates, current and estimated prepayment rates, estimated loss severity rates, geographic concentrations and origination dates of underlying loans.

The following table shows the temporarily impaired securities of the Company’s available-for-sale portfolio at September 30, 2019. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for less than 12 months and a continuous loss position for 12 months or longer. There are 24 and 18 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 134 holdings at September 30, 2019.

	September 30, 2019
	Less than 12 months				12 months or longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury	$	—	$	—	$	—	$	—	$	—	$	—
U.S. Government Sponsored Enterprises		—		—		—		—		—		—
SBA Backed Securities		11,133		11		24,944		90		36,077		101
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		81,305		264		27,872		175		109,177		439
Privately Issued Residential Mortgage-Backed Securities		—		—		282		1		282		1
Obligations Issued by States and Political Subdivisions		—		—		—		—		—		—
Other Debt Securities		800		1		475		25		1,275		26
Total temporarily impaired securities	$	93,238	$	276	$	53,573	$	291	$	146,811	$	567

The following table shows the temporarily impaired securities of the Company’s available-for-sale portfolio at December 31, 2018. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for less than 12 months and a continuous loss position for 12 months or longer. There are 10 and 30 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 190 holdings at December 31, 2018.

	December 31, 2018
	Less than 12 months				12 months or longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury	$	—	$	—	$	1,992	$	8	$	1,992	$	8
U.S. Government Sponsored Enterprises		3,914		31		—		—		3,914		31
SBA Backed Securities		17,950		28		44,323		256		62,273		284
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		19,244		21		45,782		229		65,026		250
Privately Issued Residential Mortgage-Backed Securities		—		—		495		10		495		10
Obligations Issued by States and Political Subdivisions		—		—		—		—		—		—
Other Debt Securities		—		—		455		44		455		44
Total temporarily impaired securities	$	41,108	$	80	$	93,047	$	547	$	134,155	$	627

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Earnings per share ("EPS")

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Earnings per share ("EPS")

Note 7. Earnings per Share (“EPS”)

Class A and Class B shares participate equally in undistributed earnings. Under the Company’s Articles of Organization, the holders of Class A Common Stock are entitled to receive dividends per share equal to at least 200% of dividends paid, if any, from time to time, on each share of Class B Common Stock.

Diluted EPS includes the dilutive effect of common stock equivalents; basic EPS excludes all common stock equivalents. The Company had no common stock equivalents outstanding for the periods ended September 30, 2019 and 2018.

The following table is a reconciliation of basic EPS and diluted EPS.

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands except share and per share data)	2019		2018		2019		2018
Basic EPS Computation:
Numerator:
Net income, Class A	$	7,986	$	7,535	$	22,849	$	20,674
Net income, Class B		2,098		2,046		6,118		5,614
Denominator:
Weighted average shares outstanding, Class A		3,650,449		3,608,329		3,627,076		3,608,129
Weighted average shares outstanding, Class B		1,917,460		1,959,580		1,940,833		1,959,780
Basic EPS, Class A	$	2.19	$	2.09	$	6.30	$	5.73
Basic EPS, Class B		1.09		1.04		3.15		2.86
Diluted EPS Computation:
Numerator:
Net income, Class A	$	7,986	$	7,535	$	22,849	$	20,674
Net income, Class B		2,098		2,046		6,118		5,614
Total net income, for diluted EPS, Class A computation		10,084		9,581		28,967		26,288
Denominator:
Weighted average shares outstanding, basic, Class A		3,650,449		3,608,329		3,627,076		3,608,129
Weighted average shares outstanding, Class B		1,917,460		1,959,580		1,940,833		1,959,780
Weighted average shares outstanding diluted, Class A		5,567,909		5,567,909		5,567,909		5,567,909
Weighted average shares outstanding, Class B		1,917,460		1,959,580		1,940,833		1,959,780
Diluted EPS, Class A	$	1.81	$	1.72	$	5.20	$	4.72
Diluted EPS, Class B		1.09		1.04		3.15		2.86

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Securities Available-for-Sale - Estimated Maturity Distribution of Securities Available-for-Sale (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Investments, Debt and Equity Securities [Abstract]
Within one year, Amortized Cost	$ 26,187
After one but within five years, Amortized Cost	134,881
After five but within ten years, Amortized Cost	85,551
More than ten years, Amortized Cost	15,320
Amortized Cost	261,939	$ 336,751
Within one year, Fair Value	26,184
After one but within five years, Fair Value	134,811
After five but within ten years, Fair Value	85,378
More than ten years, Fair Value	15,366
Total, Fair Value	$ 261,739	$ 336,759

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Basis of Financial Statement Presentation - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2019 Segment
Number of Reportable Segments	1
Century Bancorp Capital Trust II [Member]
Equity ownership interest	100.00%

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Employee Benefits - Components of Net Periodic Benefit Cost (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Defined Benefit Pension Plan [Member]
Components of net periodic benefit cost
Service cost	$ 276	$ 353	$ 828	$ 1,059
Interest cost	473	371	1,419	1,111
Expected return on plan assets	(819)	(954)	(2,457)	(2,863)
Recognized prior service cost		(25)		(75)
Recognized net losses	229	226	687	680
Net periodic benefit cost (credit)	159	(29)	477	(88)
Supplemental Insurance/ Retirement Plan [Member]
Components of net periodic benefit cost
Service cost	256	277	768	831
Interest cost	482	346	1,445	1,040
Recognized prior service cost	28	29	86	87
Recognized net losses	109	176	326	527
Net periodic benefit cost (credit)	$ 875	$ 828	$ 2,625	$ 2,485

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Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Interest income
Loans	$ 22,117	$ 20,167	$ 65,106	$ 57,613
Securities held-to-maturity	14,623	11,507	43,006	32,930
Securities available-for-sale	2,184	2,500	7,305	6,821
Federal funds sold and interest-bearing deposits in other banks	928	591	3,204	2,239
Total interest income	39,852	34,765	118,621	99,603
Interest expense
Savings and NOW deposits	5,445	2,972	16,788	7,778
Money market accounts	5,050	3,652	15,805	9,039
Time deposits	3,038	2,571	8,724	7,465
Securities sold under agreements to repurchase	697	288	1,572	657
Other borrowed funds and subordinated debentures	1,852	2,078	5,274	5,793
Total interest expense	16,082	11,561	48,163	30,732
Net interest income	23,770	23,204	70,458	68,871
Provision for loan losses	75		700	900
Net interest income after provision for loan losses	23,695	23,204	69,758	67,971
Other operating income
Service charges on deposit accounts	2,310	2,137	6,801	6,268
Lockbox fees	937	892	3,018	2,304
Net gains on sales of securities	53	105	61	302
Gains on sales of mortgage loans	0		154
Other income	986	1,035	3,676	3,210
Total other operating income	4,286	4,169	13,710	12,084
Operating expenses
Salaries and employee benefits	10,670	10,570	32,621	32,331
Occupancy	1,463	1,481	4,686	4,579
Equipment	862	781	2,440	2,355
Other	4,467	4,516	14,170	13,243
Total operating expenses	17,462	17,348	53,917	52,508
Income before income taxes	10,519	10,025	29,551	27,547
Provision for income taxes	435	444	584	1,259
Net income	$ 10,084	$ 9,581	$ 28,967	$ 26,288
Class A Common Stock [Member]
Share data:
Weighted average number of shares outstanding, basic	3,650,449	3,608,329	3,627,076	3,608,129
Weighted average number of shares outstanding, diluted	5,567,909	5,567,909	5,567,909	5,567,909
Basic earnings per share	$ 2.19	$ 2.09	$ 6.30	$ 5.73
Diluted earnings per share	$ 1.81	$ 1.72	$ 5.20	$ 4.72
Class B Common Stock [Member]
Share data:
Weighted average number of shares outstanding, basic	1,917,460	1,959,580	1,940,833	1,959,780
Weighted average number of shares outstanding, diluted	1,917,460	1,959,580	1,940,833	1,959,780
Basic earnings per share	$ 1.09	$ 1.04	$ 3.15	$ 2.86
Diluted earnings per share	$ 1.09	$ 1.04	$ 3.15	$ 2.86

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Fair Value Measurements - Financial Instruments Measured at Fair Value on a Recurring and Non-recurring Basis (Detail) - USD ($) $ in Thousands		Sep. 30, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		$ 261,739	$ 336,759
Financial Instruments Measured at Fair Value on a Non-recurring Basis Impaired Loans	[1]		88,728
Fair Value Measurements, Level 2 Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		237,938	248,031
Fair Value Measurements, Level 3 Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		23,801	88,728
Other Real Estate Owned			2,225
Financial Instruments Measured at Fair Value on a Non-recurring Basis Impaired Loans		173	251
U.S. Treasury [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS			1,992
U.S. Treasury [Member] | Fair Value Measurements, Level 2 Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS			1,992
U.S. Government Sponsored Enterprises [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS			3,915
U.S. Government Sponsored Enterprises [Member] | Fair Value Measurements, Level 2 Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS			3,915
SBA Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		58,664	70,194
SBA Backed Securities [Member] | Fair Value Measurements, Level 2 Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		58,664	70,194
U.S. Government Agency and Sponsored Enterprises Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		170,282	162,890
U.S. Government Agency and Sponsored Enterprises Mortgage-Backed Securities [Member] | Fair Value Measurements, Level 2 Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		170,282	162,890
Privately Issued Residential Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		579	672
Privately Issued Residential Mortgage-Backed Securities [Member] | Fair Value Measurements, Level 2 Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		579	672
Obligations Issued by States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		28,576	93,503
Obligations Issued by States and Political Subdivisions [Member] | Fair Value Measurements, Level 2 Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		4,775	4,775
Obligations Issued by States and Political Subdivisions [Member] | Fair Value Measurements, Level 3 Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		23,801	88,728
Other Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		3,638	3,593
Other Debt Securities [Member] | Fair Value Measurements, Level 2 Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		3,638	3,593
Equity Securities [Member] | Fair Value Measurements, Level 1 Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Instruments Measured at Fair Value on a Non Recurring Basis Equity Securities		324	293
Equity Securities [Member] | Fair Value Measurements, Level 2 Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Instruments Measured at Fair Value on a Non Recurring Basis Equity Securities		1,348	1,303
Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		261,739	336,759
Other Real Estate Owned			2,225
Financial Instruments Measured at Fair Value on a Non-recurring Basis Impaired Loans		173	251
Carrying Value [Member] | U.S. Treasury [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS			1,992
Carrying Value [Member] | U.S. Government Sponsored Enterprises [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS			3,915
Carrying Value [Member] | SBA Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		58,664	70,194
Carrying Value [Member] | U.S. Government Agency and Sponsored Enterprises Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		170,282	162,890
Carrying Value [Member] | Privately Issued Residential Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		579	672
Carrying Value [Member] | Obligations Issued by States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		28,576	93,503
Carrying Value [Member] | Other Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities AFS		3,638	3,593
Carrying Value [Member] | Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Instruments Measured at Fair Value on a Non Recurring Basis Equity Securities		$ 1,672	$ 1,596

[1] Municipal securities generally have maturities of one year or less and, therefore, the amortized cost equates to the fair value

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 28,967	$ 26,288
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Gain on sales of mortgage loans	(154)
Net gains on sales of securities	(61)	(302)
Net (gain) loss on equity securities	(76)	47
Provision for loan losses	700	900
Deferred income taxes	(593)	(1,270)
Net depreciation and amortization	(1,693)	1,116
Decrease (increase) in accrued interest receivable	1,131	(1,699)
(Increase) decrease in other assets	(1,037)	1,542
Increase in other liabilities	2,029	4,825
Net cash provided by operating activities	29,213	31,447
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from redemptions of Federal Home Loan Bank of Boston stock	13,801	13,619
Purchase of Federal Home Loan Bank of Boston stock	(9,852)	(14,583)
Proceeds from calls/maturities of securities available-for-sale	115,574	111,922
Proceeds from sales of securities available-for-sale	16,285	27,517
Purchase of securities available-for-sale	(57,005)	(108,871)
Proceeds from calls/maturities of securities held-to-maturity	313,358	187,009
Purchase of securities held-to-maturity	(427,124)	(358,824)
Proceeds from sales of securities held-to-maturity	1,194
Proceeds from life insurance policies	5,124	375
Net increase in loans	(98,915)	(83,967)
Proceeds from sales of portfolio loans	8,871
Capital expenditures	(9,962)	(2,900)
Net cash used in investing activities	(128,651)	(228,703)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in time deposits	(27,505)	(45,475)
Net decrease (increase) in demand, savings, money market and NOW deposits	(39,606)	92,915
Cash dividends	(1,654)	(1,652)
Net increase (decrease) in securities sold under agreements to repurchase	152,995	(18,500)
Net increase in other borrowed funds	6,810	24,828
Net cash provided by financing activities	91,040	52,116
Net decrease in cash and cash equivalents	(8,398)	(145,140)
Cash and cash equivalents at beginning of period	342,503	356,430
Cash and cash equivalents at end of period	334,105	211,290
Cash paid (received) during the period for:
Interest	48,127	30,680
Income tax refunds	(6,604)
Income taxes		590
Change in unrealized gains (losses) on securities available-for-sale, net of taxes	(156)	195
Change in unrealized losses on securities transferred to held-to-maturity, net of taxes	574	872
Pension liability adjustment, net of taxes	$ 790	877
Change in due to (from) to broker		$ 897

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Allowance for Loan Losses - Aging of Past Due Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Financing Receivable, Allowance for Credit Losses [Line Items]
Accruing 30-89 Days Past Due	$ 2,457	$ 4,647
Non Accrual	1,066	1,313
Total Past Due	3,523	5,960
Current Loans	2,372,138	2,279,618
Total loans, net	2,375,661	2,285,578	$ 2,261,339
Construction and Land Development [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Current Loans	7,824	13,628
Total loans, net	7,824	13,628	12,434
Commercial and Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Accruing 30-89 Days Past Due	108	187
Non Accrual	19	115
Total Past Due	127	302
Current Loans	783,823	761,323
Total loans, net	783,950	761,625	783,960
Municipal [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Current Loans	121,802	97,290
Total loans, net	121,802	97,290	94,532
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Accruing 30-89 Days Past Due	155	774
Non Accrual	167	190
Total Past Due	322	964
Current Loans	765,063	749,398
Total loans, net	765,385	750,362	730,265
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Accruing 30-89 Days Past Due	1,129	2,554
Non Accrual	334	569
Total Past Due	1,463	3,123
Current Loans	362,854	345,127
Total loans, net	364,317	348,250	335,114
Consumer and overdrafts [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Accruing 30-89 Days Past Due	15	24
Non Accrual		14
Total Past Due	15	38
Current Loans	21,733	22,045
Total loans, net	21,748	22,083	21,216
Home Equity [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Accruing 30-89 Days Past Due	1,050	1,108
Non Accrual	546	425
Total Past Due	1,596	1,533
Current Loans	309,039	290,807
Total loans, net	$ 310,635	$ 292,340	$ 283,818

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Allowance for Loan Losses - Analysis of Allowance for Loan Losses (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Receivables [Abstract]
Allowance for loan losses, beginning of year	$ 29,070	$ 27,144	$ 28,543	$ 26,255
Loans charged-off	(118)	(89)	(336)	(247)
Recoveries on loans previously charged-off	70	1,490	190	1,637
Net recoveries (charge-offs)	(48)	1,401	(146)	1,390
Provision charged to expense	75		700	900
Allowance for loan losses, end of year	$ 29,097	$ 28,545	$ 29,097	$ 28,545

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Leases - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2019 USD ($)
Operating lease option to extend	options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year.
Sublease Income	$ 29,000
Sublease option to terminate	sublease expires in 2022 with an option to terminate and no option to extend.
Maximum [Member]
Operating lease remaining lease term	32 years
Minimum [Member]
Operating lease remaining lease term	1 year

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Leases - Summary of Future Minimum Rental Payments (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Year Ending December 31, 2019	$ 459	$ 2,490
2020	2,038	2,170
2021	1,759	1,694
2022	1,603	1,331
2023	1,541	1,104
Thereafter	8,570	1,074
Total lease payments	15,970	$ 9,863
Less imputed interest	(2,869)
Present value of lease liability	$ 13,101

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Investment Securities Held-to-Maturity (Tables)

9 Months Ended

Sep. 30, 2019

Text Block [Abstract]

Summary of Held-to-Maturity Securities

	September 30, 2019								December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated  Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
U.S. Treasury	$	—	$	—	$	—	$	—	$	9,960	$	—	$	2	$	9,958
U.S. Government Sponsored Enterprises		121,516		653		67		122,102		234,228		336		803		233,761
SBA Backed Securities		47,126		452		66		47,512		52,051		—		2,065		49,986
U.S. Government Agency and Sponsored Enterprises Mortgage-Backed Securities		1,995,493		29,911		6,553		2,018,851		1,750,408		2,324		55,016		1,697,716
Total	$	2,164,135	$	31,016	$	6,686	$	2,188,465	$	2,046,647	$	2,660	$	57,886	$	1,991,421

Company's Securities Held-to-Maturity

The following table shows the maturity distribution of the Company’s securities held-to-maturity at September 30, 2019.

	Amortized Cost		Fair Value
	(in thousands)
Within one year	$	70,980	$	71,260
After one but within five years		1,809,564		1,829,087
After five but within ten years		271,068		275,192
More than ten years		12,523		12,926
Total	$	2,164,135	$	2,188,465

Unrealized Market Loss of Securities

The following table shows the temporarily impaired securities of the Company’s held-to-maturity portfolio September 30, 2019. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for 12 months or less and a continuous loss position for 12 months or longer. There are 44 and 112 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 505 holdings at September 30, 2019.

	September 30, 2019
	Less Than 12 Months				12 Months or Longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury	$	—	$	—	$	—	$	—	$	—	$	—
U.S. Government Sponsored Enterprises		9,976		22		9,954		45		19,930		67
SBA Backed Securities		13,673		66		—		—		13,673		66
U.S. Government Agency and Sponsored Enterprise Mortgage- Backed Securities		163,889		816		430,714		5,737		594,603		6,553
Total temporarily impaired securities	$	187,538	$	904	$	440,668	$	5,782	$	628,206	$	6,686

The following table shows the temporarily impaired securities of the Company’s held-to-maturity portfolio at December 31, 2018. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for less than 12 months and a continuous loss position for 12 months or longer. There are 56 and 315 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 475 holdings at December 31, 2018.

	December 31, 2018
	Less Than 12 Months				12 Months or Longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury	$	9,958	$	2	$	—	$	—	$	9,958	$	2
U.S. Government Sponsored Enterprises		9,849		42		69,499		761		79,348		803
SBA Backed Securities		—		—		49,987		2,065		49,987		2,065
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		188,125		2,032		1,249,689		52,984		1,437,814		55,016
Total temporarily impaired securities	$	207,932	$	2,076	$	1,369,175	$	55,810	$	1,577,107	$	57,886

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Employee Benefits (Tables)

9 Months Ended

Sep. 30, 2019

Retirement Benefits [Abstract]

Components of Net Periodic Benefit Cost

Components of Net Periodic Benefit Cost for the Three Months Ended September 30,

	Pension Benefits						Supplemental Insurance/ Retirement Plan
	2019			2018			2019		2018
	(in thousands)
Service cost	$	276		$	353		$	256	$	277
Interest		473			371			482		346
Expected return on plan assets		(819	)		(954	)		—		—
Recognized prior service cost (benefit)		—			(25	)		28		29
Recognized net actuarial losses		229			226			109		176
Net periodic benefit cost (credit)	$	159		$	(29	)	$	875	$	828

Components of Net Periodic Benefit Cost for the Nine Months Ended September 30,

	Pension Benefits						Supplemental Insurance/ Retirement Plan
	2019			2018			2019		2018
	(in thousands)
Service cost	$	828		$	1,059		$	768	$	831
Interest		1,419			1,111			1,445		1,040
Expected return on plan assets		(2,457	)		(2,863	)		—		—
Recognized prior service cost (benefit)		—			(75	)		86		87
Recognized net actuarial losses		687			680			326		527
Net periodic benefit cost (credit)	$	477		$	(88	)	$	2,625	$	2,485