X | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Oregon | 93-1034484 |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
INDEX | ||
Page | ||
PART I: FINANCIAL INFORMATION | ||
Item 1. | ||
March 31, 2017 and December 31, 2016 | ||
Three months ended March 31, 2017 and 2016 | ||
Condensed Consolidated Statements of Comprehensive Income: | ||
Three months ended March 31, 2017 and 2016 | ||
Three months ended March 31, 2017 and 2016 | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II: OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5 | ||
Item 6. | ||
March 31, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Cash and cash equivalents: | |||||||
Cash and due from banks | $ | 57,801 | $ | 52,561 | |||
Interest bearing deposits | 99,194 | 19,743 | |||||
Federal funds sold | 273 | 273 | |||||
Total cash and cash equivalents | 157,268 | 72,577 | |||||
Investment securities available-for-sale | 469,720 | 494,819 | |||||
Investment securities held-to-maturity, estimated fair value of $141,594 at March 31, 2017; $142,272 at December 31, 2016 | 139,196 | 140,557 | |||||
Federal Home Loan Bank (FHLB) stock | 3,838 | 3,268 | |||||
Loans held for sale | 4,066 | 8,651 | |||||
Loans, net | 2,088,174 | 2,077,358 | |||||
Premises and equipment, net | 45,880 | 48,658 | |||||
Bank-owned life insurance (BOLI) | 56,869 | 56,957 | |||||
Other real estate owned (OREO), net | 1,727 | 1,677 | |||||
Deferred tax asset (DTA), net | 40,333 | 45,172 | |||||
Core deposit intangible (CDI) | 11,943 | 12,317 | |||||
Goodwill | 85,852 | 85,852 | |||||
Other assets | 31,806 | 31,195 | |||||
Total assets | $ | 3,136,672 | $ | 3,079,058 | |||
LIABILITIES & STOCKHOLDERS’ EQUITY | |||||||
Liabilities: | |||||||
Deposits: | |||||||
Demand | $ | 935,110 | $ | 916,197 | |||
Interest bearing demand | 1,357,911 | 1,327,975 | |||||
Savings | 200,842 | 197,279 | |||||
Time | 220,918 | 220,362 | |||||
Total deposits | 2,714,781 | 2,661,813 | |||||
Other liabilities | 43,301 | 47,593 | |||||
Total liabilities | 2,758,082 | 2,709,406 | |||||
Stockholders’ equity: | |||||||
Preferred stock, no par value; 5,000,000 shares authorized; none issued or outstanding | — | — | |||||
Common stock, no par value; 100,000,000 shares authorized; 76,263,456 issued and outstanding as of March 31, 2017; 76,262,184 issued and outstanding as of December 31, 2016 | 472,564 | 471,718 | |||||
Accumulated deficit | (94,240 | ) | (101,001 | ) | |||
Accumulated other comprehensive income (loss) | 266 | (1,065 | ) | ||||
Total stockholders’ equity | 378,590 | 369,652 | |||||
Total liabilities and stockholders’ equity | $ | 3,136,672 | $ | 3,079,058 |
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
Interest income: | |||||||
Interest and fees on loans | $ | 21,554 | $ | 17,920 | |||
Interest on investments | 3,985 | 4,618 | |||||
Other interest income | 82 | 156 | |||||
Total interest income | 25,621 | 22,694 | |||||
Interest expense: | |||||||
Deposits: | |||||||
Interest bearing demand | 584 | 413 | |||||
Savings | 15 | 11 | |||||
Time | 131 | 85 | |||||
Other borrowings | 25 | 26 | |||||
Total interest expense | 755 | 535 | |||||
Net interest income | 24,866 | 22,159 | |||||
Loan loss (provision)/ recovery | — | — | |||||
Net interest income after loan loss (provision)/ recovery | 24,866 | 22,159 | |||||
Non-interest income: | |||||||
Service charges on deposit accounts | 1,651 | 1,372 | |||||
Card issuer and merchant services fees, net | 2,276 | 1,835 | |||||
Earnings on BOLI | 286 | 258 | |||||
Mortgage banking income, net | 1,147 | 495 | |||||
Swap fee income | 256 | 666 | |||||
SBA gain on sales and fee income | 798 | 174 | |||||
ATM income | 423 | 243 | |||||
Other income | 639 | 413 | |||||
Total non-interest income | 7,476 | 5,456 | |||||
Non-interest expense: | |||||||
Salaries and employee benefits | 12,628 | 13,029 | |||||
Occupancy | 1,744 | 2,680 | |||||
Information technology | 1,181 | 1,397 | |||||
Equipment | 467 | 448 | |||||
Communications | 593 | 610 | |||||
Federal Deposit Insurance Corporation (FDIC) insurance | 517 | 377 | |||||
OREO (income) expense | 10 | 212 | |||||
Professional services | 891 | 1,598 | |||||
Card issuer | 872 | 909 | |||||
Insurance | 160 | 175 | |||||
CDI Amortization | 374 | 205 | |||||
Other expenses | 1,898 | 2,878 | |||||
Total non-interest expense | 21,335 | 24,518 | |||||
Income before income taxes | 11,007 | 3,097 | |||||
Income tax provision | (4,245 | ) | (1,157 | ) | |||
Net income | $ | 6,762 | $ | 1,940 | |||
Basic and diluted income per share: | |||||||
Net income per common share | $ | 0.09 | $ | 0.03 | |||
Net income per common share (diluted) | $ | 0.09 | $ | 0.03 |
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
Net income | $ | 6,762 | $ | 1,940 | |||
Other comprehensive income: | |||||||
Change in unrealized gains on investment securities available-for-sale | 2,147 | 500 | |||||
Tax effect on securities | (816 | ) | (190 | ) | |||
Total other comprehensive income (loss) | 1,331 | 310 | |||||
Comprehensive income | $ | 8,093 | $ | 2,250 |
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
Net cash provided by operating activities | $ | 14,433 | $ | 4,462 | |||
Investing activities: | |||||||
Purchases of investment securities available-for-sale | (3 | ) | (145,318 | ) | |||
Purchases of investment securities held to maturity | — | (5,116 | ) | ||||
Proceeds from maturities, calls, sales and prepayments of investment securities available-for-sale | 26,937 | 28,391 | |||||
Proceeds from maturities and calls of investment securities held-to-maturity | 1,322 | 438 | |||||
Proceeds from redemption of FHLB stock | 5,494 | 10,283 | |||||
Purchases of FHLB stock | (6,064 | ) | (10,420 | ) | |||
Loan originations, net of collections | (10,816 | ) | (96,179 | ) | |||
Purchases of premises and equipment | (288 | ) | (512 | ) | |||
Proceeds from sales of premises and equipment | — | 28 | |||||
Proceeds from sales of other assets | 720 | — | |||||
Proceeds from sales of OREO | (50 | ) | — | ||||
Net cash assumed in Bank of America branch acquisition | — | 456,611 | |||||
Net cash used in investing activities | 17,252 | 238,206 | |||||
Financing activities: | |||||||
Net increase in deposits | 52,968 | 23,061 | |||||
Proceeds from stock options exercised | 38 | — | |||||
Tax effect of non-vested restricted stock | — | (11 | ) | ||||
FHLB advance borrowings | 145,902 | 257,000 | |||||
Repayment of FHLB advances | (145,902 | ) | (257,000 | ) | |||
Net cash provided by financing activities | 53,006 | 23,050 | |||||
Net increase in cash and cash equivalents | 84,691 | 265,718 | |||||
Cash and cash equivalents at beginning of period | 72,577 | 77,805 | |||||
Cash and cash equivalents at end of period | $ | 157,268 | $ | 343,523 | |||
Supplemental disclosures of cash flow information: | |||||||
Interest paid | $ | 762 | $ | 7,077 | |||
Taxes paid | $ | 490 | $ | 195 | |||
Transfers of property, plant & equipment to other assets | $ | 2,307 | $ | — |
Purchase Price (in thousands), except per share data | ||||||||
Cascade shares issued for PPFS shares | 2,921,012 | |||||||
Cascade share price | $ | 5.56 | ||||||
Consideration from common stock conversion (0.3050 ratio) | $ | 16,238 | ||||||
Cash paid in lieu of fractional shares | 1 | |||||||
Total purchase price | $ | 16,239 | ||||||
Assets | ||||||||
Cash and cash equivalents | $ | 7,625 | ||||||
FHLB stock | 424 | |||||||
Loans, net | 102,670 | |||||||
Premises and equipment | 5,333 | |||||||
Deferred tax asset | 2,488 | |||||||
Bank owned life insurance | 1,491 | |||||||
Other assets | 2,364 | |||||||
Total assets | $ | 122,395 | ||||||
Liabilities | ||||||||
Deposits | $ | 101,544 | ||||||
Other liabilities | 8,212 | |||||||
Total liabilities | $ | 109,756 | ||||||
Net identifiable assets acquired | 12,639 | |||||||
Intangible assets acquired (1) | 342 | |||||||
Goodwill | $ | 3,258 | ||||||
(1) Intangible assets consist of core deposit intangibles. The useful life for which the core deposit intangibles are being amortized is 10 years. |
ASSETS | ||||
Cash and cash equivalents | $ | 456,611 | ||
Premises and equipment, net | 3,113 | |||
Core deposit intangibles | 6,427 | |||
Goodwill | 3,984 | |||
Other assets | 463 | |||
Total assets | $ | 470,598 | ||
LIABILITIES | ||||
Deposits | $ | 469,889 | ||
Other liabilities | 709 | |||
Total liabilities | $ | 470,598 |
Amortized cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value | ||||||||||||
March 31, 2017 | |||||||||||||||
Available-for-sale | |||||||||||||||
U.S. Agency mortgage-backed securities (MBS) | $ | 158,881 | $ | 1,939 | $ | (317 | ) | $ | 160,503 | ||||||
Non-agency MBS | 232,213 | 271 | (2,202 | ) | 230,282 | ||||||||||
U.S. Agency asset-backed securities | 6,424 | 416 | (62 | ) | 6,778 | ||||||||||
Corporate securities | 71,232 | 583 | (215 | ) | 71,600 | ||||||||||
Mutual fund | 540 | 17 | — | 557 | |||||||||||
$ | 469,290 | $ | 3,226 | $ | (2,796 | ) | $ | 469,720 | |||||||
Held-to-maturity | |||||||||||||||
U.S. Agency MBS | $ | 100,305 | $ | 1,606 | $ | (110 | ) | $ | 101,801 | ||||||
Obligations of state and political subdivisions | 38,604 | 1,001 | (99 | ) | 39,506 | ||||||||||
Tax credit investments | 287 | — | — | 287 | |||||||||||
$ | 139,196 | $ | 2,607 | $ | (209 | ) | $ | 141,594 | |||||||
December 31, 2016 | |||||||||||||||
Available-for-sale | |||||||||||||||
U.S. Agency MBS | $ | 165,933 | $ | 1,828 | $ | (799 | ) | $ | 166,962 | ||||||
Non-agency MBS | 252,153 | 203 | (3,408 | ) | 248,948 | ||||||||||
U.S. Agency asset-backed securities | 6,700 | 419 | (57 | ) | 7,062 | ||||||||||
Corporate securities | 71,213 | 397 | (287 | ) | 71,323 | ||||||||||
Mutual fund | 537 | — | (13 | ) | 524 | ||||||||||
$ | 496,536 | $ | 2,847 | $ | (4,564 | ) | $ | 494,819 | |||||||
Held-to-maturity | |||||||||||||||
U.S. Agency MBS | $ | 101,563 | $ | 1,195 | $ | (148 | ) | $ | 102,610 | ||||||
Obligations of state and political subdivisions | 287 | — | — | 287 | |||||||||||
Tax credit investments | 38,707 | 770 | (102 | ) | 39,375 | ||||||||||
$ | 140,557 | $ | 1,965 | $ | (250 | ) | $ | 142,272 |
Available-for-sale | Held-to-maturity | ||||||||||||||
Amortized cost | Estimated fair value | Amortized cost | Estimated fair value | ||||||||||||
Due in one year or less | $ | 3,485 | $ | 3,495 | $ | 1,834 | $ | 1,836 | |||||||
Due after one year through five years | 75,171 | 75,533 | 37,830 | 38,134 | |||||||||||
Due after five years through ten years | 39,777 | 39,912 | 82,476 | 84,533 | |||||||||||
Due after ten years | 350,317 | 350,223 | 16,769 | 16,804 | |||||||||||
Mutual fund | 540 | 557 | — | — | |||||||||||
Tax credit investments | — | — | 287 | 287 | |||||||||||
$ | 469,290 | $ | 469,720 | $ | 139,196 | $ | 141,594 |
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
Estimated fair value | Unrealized losses | Estimated fair value | Unrealized losses | Estimated fair value | Unrealized losses | ||||||||||||||||||
March 31, 2017 | |||||||||||||||||||||||
Available-for-sale | |||||||||||||||||||||||
U.S. Agency MBS | $ | 43,949 | $ | (300 | ) | $ | 3,945 | $ | (17 | ) | $ | 47,894 | $ | (317 | ) | ||||||||
Non-Agency MBS | 160,190 | (2,062 | ) | 13,734 | (140 | ) | 173,924 | (2,202 | ) | ||||||||||||||
U.S. Agency asset-backed securities | — | — | 1,887 | (62 | ) | 1,887 | (62 | ) | |||||||||||||||
Corporate Securities | 6,781 | (215 | ) | — | — | 6,781 | (215 | ) | |||||||||||||||
$ | 210,920 | $ | (2,577 | ) | $ | 19,566 | $ | (219 | ) | $ | 230,486 | $ | (2,796 | ) | |||||||||
Held-to-maturity | |||||||||||||||||||||||
U.S. Agency MBS | $ | 4,868 | $ | (110 | ) | $ | — | $ | — | $ | 4,868 | $ | (110 | ) | |||||||||
Obligations of state and political subdivisions | 1,935 | (99 | ) | — | — | 1,935 | (99 | ) | |||||||||||||||
$ | 6,803 | $ | (209 | ) | $ | — | $ | — | $ | 6,803 | $ | (209 | ) | ||||||||||
December 31, 2016 | |||||||||||||||||||||||
Available-for-sale | |||||||||||||||||||||||
U.S. Agency MBS | $ | 51,082 | $ | (786 | ) | $ | 1,733 | $ | (13 | ) | $ | 52,815 | $ | (799 | ) | ||||||||
Non-Agency MBS | 211,909 | (3,268 | ) | 1,933 | (140 | ) | 213,842 | (3,408 | ) | ||||||||||||||
U.S. Agency asset-backed securities | — | — | 1,918 | (57 | ) | 1,918 | (57 | ) | |||||||||||||||
Corporate Securities | 6,709 | (287 | ) | — | — | 6,709 | (287 | ) | |||||||||||||||
Mutual Fund | 524 | (13 | ) | 524 | (13 | ) | |||||||||||||||||
$ | 270,224 | $ | (4,354 | ) | $ | 5,584 | $ | (210 | ) | $ | 275,808 | $ | (4,564 | ) | |||||||||
Held-to-maturity | |||||||||||||||||||||||
U.S. Agency MBS | 7,641 | (148 | ) | — | — | $ | 7,641 | $ | (148 | ) | |||||||||||||
Obligations of state and political subdivisions | 1,942 | (102 | ) | — | — | 1,942 | (102 | ) | |||||||||||||||
$ | 9,583 | $ | (250 | ) | $ | — | $ | — | $ | 9,583 | $ | (250 | ) |
March 31, 2017 | December 31, 2016 | ||||||||||||
Amount | Percent | Amount | Percent | ||||||||||
Originated loans (a): | |||||||||||||
Commercial real estate: | |||||||||||||
Owner occupied | $ | 297,105 | 16.0 | % | $ | 298,721 | 16.4 | % | |||||
Non-owner occupied | 529,025 | 28.5 | % | 514,363 | 28.3 | % | |||||||
Total commercial real estate loans | 826,130 | 44.5 | % | 813,084 | 44.7 | % | |||||||
Construction | 212,812 | 11.5 | % | 200,654 | 11.0 | % | |||||||
Residential real estate | 387,507 | 20.9 | % | 377,374 | 20.7 | % | |||||||
Commercial and industrial | 387,548 | 20.9 | % | 386,150 | 21.2 | % | |||||||
Consumer | 41,293 | 2.2 | % | 42,072 | 2.4 | % | |||||||
Total loans | 1,855,290 | 100.0 | % | 1,819,334 | 100.0 | % | |||||||
Less: | |||||||||||||
Deferred loan fees | (2,041 | ) | (1,764 | ) | |||||||||
Reserve for loan losses | (25,357 | ) | (25,290 | ) | |||||||||
Loans, net | $ | 1,827,892 | $ | 1,792,280 | |||||||||
Acquired loans (b): | |||||||||||||
Commercial real estate: | |||||||||||||
Owner occupied | $ | 84,113 | 32.4 | % | $ | 92,490 | 32.5 | % | |||||
Non-owner occupied | 94,863 | 36.4 | % | 98,034 | 34.4 | % | |||||||
Total commercial real estate loans | 178,976 | 68.8 | % | 190,524 | 66.9 | % | |||||||
Construction | 3,447 | 1.3 | % | 10,384 | 3.6 | % | |||||||
Residential real estate | 49,400 | 19.0 | % | 54,468 | 19.1 | % | |||||||
Commercial and industrial | 27,187 | 10.4 | % | 28,286 | 9.9 | % | |||||||
Consumer | 1,272 | 0.5 | % | 1,416 | 0.5 | % | |||||||
Total loans | $ | 260,282 | 100.0 | % | $ | 285,078 | 100.0 | % | |||||
Total loans: | |||||||||||||
Commercial real estate: | |||||||||||||
Owner occupied | $ | 381,218 | 18.0 | % | $ | 391,211 | 18.6 | % | |||||
Non-owner occupied | 623,888 | 29.5 | % | 612,397 | 29.1 | % | |||||||
Total commercial real estate loans | 1,005,106 | 47.5 | % | 1,003,608 | 47.7 | % | |||||||
Construction | 216,259 | 10.2 | % | 211,038 | 10.0 | % | |||||||
Residential real estate | 436,907 | 20.7 | % | 431,842 | 20.5 | % | |||||||
Commercial and industrial | 414,735 | 19.6 | % | 414,436 | 19.7 | % | |||||||
Consumer | 42,565 | 2.0 | % | 43,488 | 2.1 | % | |||||||
Total loans | 2,115,572 | 100.0 | % | 2,104,412 | 100.0 | % | |||||||
Less: | |||||||||||||
Deferred loan fees | (2,041 | ) | (1,764 | ) | |||||||||
Reserve for loan losses | (25,357 | ) | (25,290 | ) | |||||||||
Loans, net | $ | 2,088,174 | $ | 2,077,358 | |||||||||
(a) Loans organically made through the Company’s normal and customary origination process, including adjustable rate mortgage (“ARM”) purchases. | |||||||||||||
(b) Loans acquired in the acquisition of Home and PPFS. |
Three months ended | ||||
March 31, 2017 | ||||
Balance at beginning of period | $ | 76 | ||
Paid to FDIC | (76 | ) | ||
FDIC reimbursement | 31 | |||
Balance at end of period | $ | 31 |
Commercial real estate | Construction | Residential real estate | Commercial and industrial | Consumer | Unallocated | Total | |||||||||||||||||||||
For the three months ended March 31, 2017 | |||||||||||||||||||||||||||
Reserve for loan losses | |||||||||||||||||||||||||||
Balance at December 31, 2016 | $ | 6,321 | $ | 2,196 | $ | 3,325 | $ | 10,657 | $ | 1,203 | $ | 1,588 | $ | 25,290 | |||||||||||||
Loan loss provision (credit) | 104 | 132 | 82 | 47 | 178 | (543 | ) | — | |||||||||||||||||||
Recoveries | 2 | 5 | 51 | 401 | 152 | — | 611 | ||||||||||||||||||||
Loans charged off | (30 | ) | — | (49 | ) | (126 | ) | (339 | ) | — | (544 | ) | |||||||||||||||
Balance at end of period | $ | 6,397 | $ | 2,333 | $ | 3,409 | $ | 10,979 | $ | 1,194 | $ | 1,045 | $ | 25,357 | |||||||||||||
Reserve for unfunded lending commitments | |||||||||||||||||||||||||||
Balance at December 31, 2016 | $ | 48 | $ | 268 | $ | 25 | $ | 75 | $ | 24 | $ | — | $ | 440 | |||||||||||||
Provision for unfunded loan commitments | — | — | — | — | — | — | — | ||||||||||||||||||||
Balance at end of period | $ | 48 | $ | 268 | $ | 25 | $ | 75 | $ | 24 | $ | — | $ | 440 | |||||||||||||
Reserve for credit losses | |||||||||||||||||||||||||||
Reserve for loan losses | $ | 6,397 | $ | 2,333 | $ | 3,409 | $ | 10,979 | $ | 1,194 | $ | 1,045 | $ | 25,357 | |||||||||||||
Reserve for unfunded lending commitments | 48 | 268 | 25 | 75 | 24 | — | 440 | ||||||||||||||||||||
Total reserve for credit losses | $ | 6,445 | $ | 2,601 | $ | 3,434 | $ | 11,054 | $ | 1,218 | $ | 1,045 | $ | 25,797 |
Commercial real estate | Construction | Residential real estate | Commercial and industrial | Consumer | Unallocated | Total | |||||||||||||||||||||
For the three months ended March 31, 2016 | |||||||||||||||||||||||||||
Reserve for loan losses | |||||||||||||||||||||||||||
Balance at December 31, 2015 | $ | 3,934 | $ | 1,044 | $ | 2,075 | $ | 13,969 | $ | 917 | $ | 2,476 | $ | 24,415 | |||||||||||||
Loan loss provision (credit) | (2,776 | ) | 16 | 204 | 1,129 | 265 | 1,162 | — | |||||||||||||||||||
Recoveries | 2,728 | 38 | 131 | 159 | 264 | — | 3,320 | ||||||||||||||||||||
Loans charged off | (40 | ) | — | (18 | ) | (2,760 | ) | (487 | ) | — | (3,305 | ) | |||||||||||||||
Balance at end of period | $ | 3,846 | $ | 1,098 | $ | 2,392 | $ | 12,497 | $ | 959 | $ | 3,638 | $ | 24,430 | |||||||||||||
Reserve for unfunded lending commitments | |||||||||||||||||||||||||||
Balance at December 31, 2015 | $ | 48 | $ | 268 | $ | 25 | $ | 75 | $ | 24 | $ | — | $ | 440 | |||||||||||||
Provision for unfunded loan commitments | — | — | — | — | — | — | — | ||||||||||||||||||||
Balance at end of period | $ | 48 | $ | 268 | $ | 25 | $ | 75 | $ | 24 | $ | — | $ | 440 | |||||||||||||
Reserve for credit losses | |||||||||||||||||||||||||||
Reserve for loan losses | $ | 3,846 | $ | 1,098 | $ | 2,392 | $ | 12,497 | $ | 959 | $ | 3,638 | $ | 24,430 | |||||||||||||
Reserve for unfunded lending commitments | 48 | 268 | 25 | 75 | 24 | — | 440 | ||||||||||||||||||||
Total reserve for credit losses | $ | 3,894 | $ | 1,366 | $ | 2,417 | $ | 12,572 | $ | 983 | $ | 3,638 | $ | 24,870 |
Reserve for loan losses | Recorded investment in loans | ||||||||||||||||||||||
Individually evaluated for impairment | Collectively evaluated for impairment | Total | Individually evaluated for impairment | Collectively evaluated for impairment | Total | ||||||||||||||||||
March 31, 2017 | |||||||||||||||||||||||
Commercial real estate | $ | — | $ | 6,397 | $ | 6,397 | $ | 490 | $ | 1,004,616 | $ | 1,005,106 | |||||||||||
Construction | — | 2,333 | 2,333 | — | 216,259 | 216,259 | |||||||||||||||||
Residential real estate | — | 3,409 | 3,409 | — | 436,907 | 436,907 | |||||||||||||||||
Commercial and industrial | 2,000 | 8,979 | 10,979 | 6,902 | 407,833 | 414,735 | |||||||||||||||||
Consumer | — | 1,194 | 1,194 | — | 42,565 | 42,565 | |||||||||||||||||
$ | 2,000 | $ | 22,312 | 24,312 | $ | 7,392 | $ | 2,108,180 | $ | 2,115,572 | |||||||||||||
Unallocated | 1,045 | ||||||||||||||||||||||
$ | 25,357 | ||||||||||||||||||||||
December 31, 2016 | |||||||||||||||||||||||
Commercial real estate | $ | — | $ | 6,321 | $ | 6,321 | $ | 640 | $ | 1,002,968 | $ | 1,003,608 | |||||||||||
Construction | — | 2,196 | 2,196 | — | 211,038 | 211,038 | |||||||||||||||||
Residential real estate | — | 3,325 | 3,325 | — | 431,842 | 431,842 | |||||||||||||||||
Commercial and industrial | 2,000 | 8,657 | 10,657 | 7,034 | 407,402 | 414,436 | |||||||||||||||||
Consumer | — | 1,203 | 1,203 | — | 43,488 | 43,488 | |||||||||||||||||
$ | 2,000 | $ | 21,702 | 23,702 | $ | 7,674 | $ | 2,096,738 | $ | 2,104,412 | |||||||||||||
Unallocated | 1,588 | ||||||||||||||||||||||
$ | 25,290 |
Loan grades | |||||||||||||||||||
Acceptable | Pass-Watch | Special Mention | Substandard | Total | |||||||||||||||
March 31, 2017 | |||||||||||||||||||
Originated loans (a): | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | $ | 283,767 | $ | 6,560 | $ | 4,046 | $ | 2,732 | $ | 297,105 | |||||||||
Non-owner occupied | 520,588 | 3,307 | 4,137 | 993 | 529,025 | ||||||||||||||
Total commercial real estate loans | 804,355 | 9,867 | 8,183 | 3,725 | 826,130 | ||||||||||||||
Construction | 212,436 | — | — | 376 | 212,812 | ||||||||||||||
Residential real estate | 386,808 | — | — | 699 | 387,507 | ||||||||||||||
Commercial and industrial | 347,597 | 15,595 | 3,249 | 21,107 | 387,548 | ||||||||||||||
Consumer | 41,264 | — | — | 29 | 41,293 | ||||||||||||||
$ | 1,792,460 | $ | 25,462 | $ | 11,432 | $ | 25,936 | $ | 1,855,290 | ||||||||||
Acquired loans (b): | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | $ | 77,254 | $ | 3,222 | $ | 1,641 | $ | 1,996 | $ | 84,113 | |||||||||
Non-owner occupied | 78,459 | 4,327 | 6,712 | 5,365 | 94,863 | ||||||||||||||
Total commercial real estate loans | 155,713 | 7,549 | 8,353 | 7,361 | 178,976 | ||||||||||||||
Construction | 3,414 | — | — | 33 | 3,447 | ||||||||||||||
Residential real estate | 47,909 | 814 | — | 677 | 49,400 | ||||||||||||||
Commercial and industrial | 26,546 | 56 | — | 585 | 27,187 | ||||||||||||||
Consumer | 1,272 | — | — | — | 1,272 | ||||||||||||||
$ | 234,854 | $ | 8,419 | $ | 8,353 | $ | 8,656 | $ | 260,282 | ||||||||||
Total loans: | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | $ | 361,021 | $ | 9,782 | $ | 5,687 | $ | 4,728 | $ | 381,218 | |||||||||
Non-owner occupied | 599,047 | 7,634 | 10,849 | 6,358 | 623,888 | ||||||||||||||
Total commercial real estate loans | 960,068 | 17,416 | 16,536 | 11,086 | 1,005,106 | ||||||||||||||
Construction | 215,850 | — | — | 409 | 216,259 | ||||||||||||||
Residential real estate | 434,717 | 814 | — | 1,376 | 436,907 | ||||||||||||||
Commercial and industrial | 374,143 | 15,651 | 3,249 | 21,692 | 414,735 | ||||||||||||||
Consumer | 42,536 | — | — | 29 | 42,565 | ||||||||||||||
$ | 2,027,314 | $ | 33,881 | $ | 19,785 | $ | 34,592 | $ | 2,115,572 | ||||||||||
(a) Loans organically made through the Company’s normal and customary origination process, including ARM purchases. | |||||||||||||||||||
(b) Loans acquired in the acquisition of Home and PPFS. |
Loan grades | |||||||||||||||||||
Acceptable | Pass-Watch | Special Mention | Substandard | Total | |||||||||||||||
December 31, 2016 | |||||||||||||||||||
Originated loans (a): | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | $ | 282,438 | $ | 9,007 | $ | 1,302 | $ | 5,974 | $ | 298,721 | |||||||||
Non-owner occupied | 506,946 | 2,234 | 4,180 | 1,003 | 514,363 | ||||||||||||||
Total commercial real estate loans | 789,384 | 11,241 | 5,482 | 6,977 | 813,084 | ||||||||||||||
Construction | 200,278 | — | — | 376 | 200,654 | ||||||||||||||
Residential real estate | 376,713 | — | — | 661 | 377,374 | ||||||||||||||
Commercial and industrial | 351,914 | 11,472 | 5,452 | 17,312 | 386,150 | ||||||||||||||
Consumer | 42,060 | — | — | 12 | 42,072 | ||||||||||||||
$ | 1,760,349 | $ | 22,713 | $ | 10,934 | $ | 25,338 | $ | 1,819,334 | ||||||||||
Acquired loans (b): | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | $ | 85,868 | $ | 3,222 | $ | 1,663 | $ | 1,737 | $ | 92,490 | |||||||||
Non-owner occupied | 81,494 | 3,967 | 7,962 | 4,611 | 98,034 | ||||||||||||||
Total commercial real estate loans | 167,362 | 7,189 | 9,625 | 6,348 | 190,524 | ||||||||||||||
Construction | 10,331 | — | — | 53 | 10,384 | ||||||||||||||
Residential real estate | 51,489 | 1,988 | — | 991 | 54,468 | ||||||||||||||
Commercial and industrial | 27,636 | 64 | — | 586 | 28,286 | ||||||||||||||
Consumer | 1,416 | — | — | — | 1,416 | ||||||||||||||
$ | 258,234 | $ | 9,241 | $ | 9,625 | $ | 7,978 | $ | 285,078 | ||||||||||
Total loans: | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | $ | 368,306 | $ | 12,229 | $ | 2,965 | $ | 7,711 | $ | 391,211 | |||||||||
Non-owner occupied | 588,440 | 6,201 | 12,142 | 5,614 | 612,397 | ||||||||||||||
Total commercial real estate loans | 956,746 | 18,430 | 15,107 | 13,325 | 1,003,608 | ||||||||||||||
Construction | 210,609 | — | — | 429 | 211,038 | ||||||||||||||
Residential real estate | 428,202 | 1,988 | — | 1,652 | 431,842 | ||||||||||||||
Commercial and industrial | 379,550 | 11,536 | 5,452 | 17,898 | 414,436 | ||||||||||||||
Consumer | 43,476 | — | — | 12 | 43,488 | ||||||||||||||
$ | 2,018,583 | $ | 31,954 | $ | 20,559 | $ | 33,316 | $ | 2,104,412 | ||||||||||
(a) Loans organically made through the Company’s normal and customary origination process, including ARM purchases. | |||||||||||||||||||
(b) Loans acquired in the acquisition of Home and PPFS. |
30-89 days past due | 90 days or more past due | Total past due | Current | Total loans | |||||||||||||||
March 31, 2017 | |||||||||||||||||||
Originated loans (a): | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | $ | 244 | $ | 490 | $ | 734 | $ | 296,371 | $ | 297,105 | |||||||||
Non-owner occupied | — | — | — | 529,025 | 529,025 | ||||||||||||||
Total commercial real estate loans | 244 | 490 | 734 | 825,396 | 826,130 | ||||||||||||||
Construction | 41 | 376 | 417 | 212,395 | 212,812 | ||||||||||||||
Residential real estate | 351 | 140 | 491 | 387,016 | 387,507 | ||||||||||||||
Commercial and industrial | 740 | 342 | 1,082 | 386,466 | 387,548 | ||||||||||||||
Consumer | 198 | 29 | 227 | 41,066 | 41,293 | ||||||||||||||
$ | 1,574 | $ | 1,377 | $ | 2,951 | $ | 1,852,339 | $ | 1,855,290 | ||||||||||
Acquired loans (b): | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | $ | — | $ | 600 | $ | 600 | $ | 83,513 | $ | 84,113 | |||||||||
Non-owner occupied | 786 | — | 786 | 94,077 | 94,863 | ||||||||||||||
Total commercial real estate loans | 786 | 600 | 1,386 | 177,590 | 178,976 | ||||||||||||||
Construction | — | — | — | 3,447 | 3,447 | ||||||||||||||
Residential real estate | 1,763 | 820 | 2,583 | 46,817 | 49,400 | ||||||||||||||
Commercial and industrial | 511 | 579 | 1,090 | 26,097 | 27,187 | ||||||||||||||
Consumer | 5 | — | 5 | 1,267 | 1,272 | ||||||||||||||
$ | 3,065 | $ | 1,999 | $ | 5,064 | $ | 255,218 | $ | 260,282 | ||||||||||
Total loans: | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | $ | 244 | $ | 1,090 | $ | 1,334 | $ | 379,884 | $ | 381,218 | |||||||||
Non-owner occupied | 786 | — | 786 | 623,102 | 623,888 | ||||||||||||||
Total commercial real estate loans | 1,030 | 1,090 | 2,120 | 1,002,986 | 1,005,106 | ||||||||||||||
Construction | 41 | 376 | 417 | 215,842 | 216,259 | ||||||||||||||
Residential real estate | 2,114 | 960 | 3,074 | 433,833 | 436,907 | ||||||||||||||
Commercial and industrial | 1,251 | 921 | 2,172 | 412,563 | 414,735 | ||||||||||||||
Consumer | 203 | 29 | 232 | 42,333 | 42,565 | ||||||||||||||
$ | 4,639 | $ | 3,376 | $ | 8,015 | $ | 2,107,557 | $ | 2,115,572 | ||||||||||
December 31, 2016 | |||||||||||||||||||
Originated loans (a): | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | $ | 205 | $ | 490 | $ | 695 | $ | 298,026 | $ | 298,721 | |||||||||
Non-owner occupied | 100 | — | 100 | 514,263 | 514,363 | ||||||||||||||
Total commercial real estate loans | 305 | 490 | 795 | 812,289 | 813,084 | ||||||||||||||
Construction | 97 | 376 | 473 | 200,181 | 200,654 | ||||||||||||||
Residential real estate | 1,488 | — | 1,488 | 375,886 | 377,374 | ||||||||||||||
Commercial and industrial | 290 | 338 | 628 | 385,522 | 386,150 | ||||||||||||||
Consumer | 322 | 12 | 334 | 41,738 | 42,072 | ||||||||||||||
$ | 2,502 | $ | 1,216 | $ | 3,718 | $ | 1,815,616 | $ | 1,819,334 |
Acquired loans (b): | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | $ | 317 | $ | — | $ | 317 | $ | 92,173 | $ | 92,490 | |||||||||
Non-owner occupied | — | — | — | 98,034 | 98,034 | ||||||||||||||
Total commercial real estate loans | 317 | — | 317 | 190,207 | 190,524 | ||||||||||||||
Construction | — | 17 | 17 | 10,367 | 10,384 | ||||||||||||||
Residential real estate | 2,053 | 543 | 2,596 | 51,872 | 54,468 | ||||||||||||||
Commercial and industrial | 257 | — | 257 | 28,029 | 28,286 | ||||||||||||||
Consumer | 9 | — | 9 | 1,407 | 1,416 | ||||||||||||||
$ | 2,636 | $ | 560 | $ | 3,196 | $ | 281,882 | $ | 285,078 | ||||||||||
Total loans: | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | $ | 522 | $ | 490 | $ | 1,012 | $ | 390,199 | $ | 391,211 | |||||||||
Non-owner occupied | 100 | — | 100 | 612,297 | 612,397 | ||||||||||||||
Total commercial real estate loans | 622 | 490 | 1,112 | 1,002,496 | 1,003,608 | ||||||||||||||
Construction | 97 | 393 | 490 | 210,548 | 211,038 | ||||||||||||||
Residential real estate | 3,541 | 543 | 4,084 | 427,758 | 431,842 | ||||||||||||||
Commercial and industrial | 547 | 338 | 885 | 413,551 | 414,436 | ||||||||||||||
Consumer | 331 | 12 | 343 | 43,145 | 43,488 | ||||||||||||||
$ | 5,138 | $ | 1,776 | $ | 6,914 | $ | 2,097,498 | $ | 2,104,412 | ||||||||||
(a) Loans organically made through the Company’s normal and customary origination process, including ARM purchases. | |||||||||||||||||||
(b) Loans acquired in the acquisition of Home and PPFS. |
Impaired loans | |||||||||||||||||||
With a related allowance | Without a related allowance | Total recorded balance | Unpaid principal balance | Related allowance | |||||||||||||||
March 31, 2017 | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | $ | — | $ | 490 | $ | 490 | $ | 490 | $ | — | |||||||||
Non-owner occupied | — | — | — | — | — | ||||||||||||||
Total commercial real estate loans | — | 490 | 490 | 490 | — | ||||||||||||||
Construction | — | — | — | — | — | ||||||||||||||
Residential real estate | — | — | — | — | — | ||||||||||||||
Commercial and industrial | 6,565 | 337 | 6,902 | 10,425 | 2,000 | ||||||||||||||
Consumer | — | — | — | — | — | ||||||||||||||
$ | 6,565 | $ | 827 | $ | 7,392 | $ | 10,915 | $ | 2,000 | ||||||||||
December 31, 2016 | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | $ | — | $ | 640 | $ | 640 | $ | 1,077 | $ | — | |||||||||
Non-owner occupied | — | — | — | — | — | ||||||||||||||
Total commercial real estate loans | — | 640 | 640 | 1,077 | — | ||||||||||||||
Construction | — | — | — | — | — | ||||||||||||||
Residential real estate | — | — | — | — | — | ||||||||||||||
Commercial and industrial | 6,701 | 333 | 7,034 | 10,359 | 2,000 | ||||||||||||||
Consumer | — | — | — | — | — | ||||||||||||||
$ | 6,701 | $ | 973 | $ | 7,674 | $ | 11,436 | $ | 2,000 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Commercial real estate: | |||||||
Owner occupied | $ | 565 | $ | 2,876 | |||
Non-owner occupied | — | 1,607 | |||||
Total commercial real estate loans | 565 | 4,483 | |||||
Construction | — | 183 | |||||
Residential real estate | — | 9 | |||||
Commercial and industrial | 6,968 | 5,201 | |||||
Consumer | — | — | |||||
$ | 7,533 | $ | 9,876 |
March 31, 2017 | December 31, 2016 | ||||||
Commercial real estate: | |||||||
Owner occupied | $ | 2,337 | $ | 1,739 | |||
Non-owner occupied | 278 | 2,659 | |||||
Total commercial real estate loans | 2,615 | 4,398 | |||||
Construction | 409 | 429 | |||||
Residential real estate | 1,411 | 1,598 | |||||
Commercial and industrial | 7,706 | 7,270 | |||||
Consumer | — | — | |||||
Total non-accrual loans | $ | 12,141 | $ | 13,695 | |||
Accruing loans which are contractually past due 90 days or more: | |||||||
Residential real estate | 583 | — | |||||
Commercial and industrial | 12 | 5 | |||||
Consumer | 29 | 12 | |||||
Total accruing loans which are contractually past due 90 days or more | $ | 624 | $ | 17 |
Three months ended March 31, | |||||||||||||
2017 | 2016 | ||||||||||||
Number of loans | TDR outstanding recorded investment | Number of loans | TDR outstanding recorded investment | ||||||||||
Commercial real estate | — | $ | — | — | $ | — | |||||||
Construction | — | — | — | — | |||||||||
Residential real estate | — | — | — | — | |||||||||
Commercial and industrial | — | — | 1 | 22 | |||||||||
Consumer | — | — | — | — | |||||||||
— | $ | — | 1 | $ | 22 |
Three months ended March 31, 2017 | Rate reduction | Term extension | Rate reduction and term extension | Total | ||||||||||||
Commercial real estate | $ | — | $ | — | $ | — | $ | — | ||||||||
Construction | — | — | — | — | ||||||||||||
Residential real estate | — | — | — | — | ||||||||||||
Commercial and industrial | — | — | — | — | ||||||||||||
Consumer | — | — | — | — | ||||||||||||
$ | — | $ | — | $ | — | $ | — |
Three months ended March 31, 2016 | Rate reduction | Term extension | Rate reduction and term extension | Total | ||||||||||||
Commercial real estate | $ | — | $ | — | $ | — | $ | — | ||||||||
Construction | — | — | — | — | ||||||||||||
Residential real estate | — | — | — | — | ||||||||||||
Commercial and industrial | — | 22 | — | 22 | ||||||||||||
Consumer | — | — | — | — | ||||||||||||
$ | — | $ | 22 | $ | — | $ | 22 |
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
Balance at beginning of period | $ | 1,677 | $ | 3,274 | |||
Additions | 50 | — | |||||
Balances at end of period | $ | 1,727 | $ | 3,274 |
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
Balance at beginning of period | $ | 776 | $ | 776 | |||
Additions to the valuation allowance | — | — | |||||
Reductions due to sales | — | — | |||||
Balance at end of period | $ | 776 | $ | 776 |
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
Operating costs | $ | 10 | $ | 45 | |||
Increases in valuation allowance | — | 167 | |||||
Total | $ | 10 | $ | 212 |
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
Balance at beginning of period | $ | 2,348 | $ | 2,186 | |||
Additions | 242 | 128 | |||||
Amortization | (167 | ) | (163 | ) | |||
Balances at end of period | $ | 2,423 | $ | 2,151 |
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
Origination and processing fees | $ | 103 | $ | 58 | |||
Gain on sales of loans, net | 986 | 439 | |||||
Servicing fees | 225 | 161 | |||||
Amortization | (167 | ) | (163 | ) | |||
Mortgage banking income, net | $ | 1,147 | $ | 495 |
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
Gross CDI balance, beginning of period | $ | 14,966 | $ | 8,196 | |||
Accumulated amortization, beginning of period | (2,649 | ) | (1,333 | ) | |||
CDI, net, beginning of period | 12,317 | 6,863 | |||||
Established through acquisitions | — | 6,427 | |||||
CDI current period amortization | (374 | ) | (205 | ) | |||
Total CDI, end of period | $ | 11,943 | $ | 13,085 |
Years Ending December 31, | ||||
2017 | $ | 1,122 | ||
2018 | 1,497 | |||
2019 | 1,497 | |||
2020 | 1,497 | |||
2021 | 1,497 |
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
Net income | $ | 6,762 | $ | 1,940 | |||
Weighted-average shares outstanding - basic | 75,059,838 | 71,883,745 | |||||
Dilutive securities | 882,770 | 269,191 | |||||
Weighted-average shares outstanding - diluted | 75,942,608 | 72,152,936 | |||||
Common stock equivalent shares excluded due to antidilutive effect | — | 3,361,524 | |||||
Basic and diluted: | |||||||
Net income per common share | $ | 0.09 | $ | 0.03 | |||
Net income per common share (diluted) | $ | 0.09 | $ | 0.03 |
Options | Weighted- average exercise price | Weighted- average remaining contractual term (years) | Aggregate intrinsic value (000) | |||||||||
Options outstanding at January 1, 2017 | 3,383,972 | $ | 5.32 | 8.0 | $ | 11,180.8 | ||||||
Granted | — | — | N/A | N/A | ||||||||
Canceled / forfeited | (907 | ) | 3.62 | N/A | N/A | |||||||
Exercised | (8,150 | ) | 4.60 | N/A | N/A | |||||||
Expired | (3,207 | ) | 273.20 | N/A | N/A | |||||||
Options outstanding at March 31, 2017 | 3,371,708 | $ | 5.06 | 7.8 | $ | 9,769.3 | ||||||
Options exercisable at March 31, 2017 | 71,708 | $ | 17.68 | 4.1 | $ | 133.3 | ||||||
Options outstanding at January 1, 2016 | 3,375,909 | $ | 5.44 | 9.0 | $ | 4,243.7 | ||||||
Granted | — | — | N/A | N/A | ||||||||
Canceled / forfeited | (234 | ) | 78.08 | N/A | N/A | |||||||
Expired | (1,634 | ) | $ | 151.20 | N/A | N/A | ||||||
Options outstanding at March 31, 2016 | 3,374,041 | $ | 5.34 | 8.8 | $ | 3,038.4 | ||||||
Options exercisable at March 31, 2016 | 74,041 | 29.80 | 4.5 | $ | 2.4 |
Number of shares | Weighted- average grant date fair value per share | |||||
Non-vested as of January 1, 2017 | 1,148,975 | $ | 6.39 | |||
Granted | — | — | ||||
Vested | — | — | ||||
Canceled / forfeited | (2,841 | ) | 5.28 | |||
Non-vested as of March 31, 2017 | 1,146,134 | $ | 6.39 |
Asset Derivatives | Liability Derivatives | |||||||||||||||||||||||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||
Notional/ Contract Amount | Fair Value (1) | Notional/ Contract Amount | Fair Value (1) | Notional/ Contract Amount | Fair Value (2) | Notional/ Contract Amount | Fair Value (2) | |||||||||||||||||||||||||
Interest rate swaps | $ | 263,281 | $ | 3,053 | $ | 256,950 | $ | 5,239 | $ | 263,281 | $ | 3,053 | $ | 256,950 | $ | 5,239 | ||||||||||||||||
(1) Included in Other Assets on the condensed consolidated balance sheet. | ||||||||||||||||||||||||||||||||
(2) Included in Other Liabilities on the condensed consolidated balance sheet. |
March 31, 2017 | ||||||||||||||||||||||||
Gross Amounts of Financial Instruments Not Offset in the Balance Sheet | ||||||||||||||||||||||||
Gross Amounts Recognized | Amounts offset in the Balance Sheet | Net Amounts in the Balance Sheet | Netting Adjustment Per Applicable Master Netting Agreements | Fair Value of Financial Collateral in the Balance Sheet | Net Amount | |||||||||||||||||||
Asset Derivatives | ||||||||||||||||||||||||
Interest rate swaps | $ | 3,053 | $ | — | $ | 3,053 | $ | — | $ | — | $ | 3,053 | ||||||||||||
Liability Derivatives | ||||||||||||||||||||||||
Interest rate swaps | $ | 3,053 | $ | — | $ | 3,053 | $ | — | $ | 6,300 | $ | (3,247 | ) | |||||||||||
December 31, 2016 | ||||||||||||||||||||||||
Gross Amounts of Financial Instruments Not Offset in the Balance Sheet | ||||||||||||||||||||||||
Gross Amounts Recognized | Amounts offset in the Balance Sheet | Net Amounts in the Balance Sheet | Netting Adjustment Per Applicable Master Netting Agreements | Fair Value of Financial Collateral in the Balance Sheet | Net Amount | |||||||||||||||||||
Asset Derivatives | ||||||||||||||||||||||||
Interest rate swaps | $ | 5,239 | $ | — | $ | 5,239 | $ | — | $ | — | $ | 5,239 | ||||||||||||
Liability Derivatives | ||||||||||||||||||||||||
Interest rate swaps | $ | 5,239 | $ | — | $ | 5,239 | $ | — | $ | 5,000 | $ | 239 |
• | Level 1: Inputs that are quoted unadjusted prices in active markets - that the Company has the ability to access at the measurement date - for identical assets or liabilities. |
• | Level 2: Inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, and inputs derived principally from, or corroborated by, observable market data by correlation or other means. |
• | Level 3: Inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. |
Level 1 | Level 2 | Level 3 | |||||||||
March 31, 2017 | |||||||||||
Assets: | |||||||||||
Investment securities available-for-sale | $ | — | $ | 469,720 | $ | — | |||||
Interest rate swap derivatives | — | 3,053 | — | ||||||||
Total assets | $ | — | $ | 472,773 | $ | — | |||||
Liabilities: | |||||||||||
Interest rate swap derivatives | $ | — | $ | 3,053 | $ | — | |||||
December 31, 2016 | |||||||||||
Assets: | |||||||||||
Investment securities available-for-sale | $ | — | $ | 494,819 | $ | — | |||||
Interest rate swap derivatives | — | 5,239 | — | ||||||||
Total assets | $ | — | $ | 500,058 | $ | — | |||||
Liabilities: | |||||||||||
Interest rate swap derivatives | — | 5,239 | — |
Level 1 | Level 2 | Level 3 | |||||||||
March 31, 2017 | |||||||||||
Impaired loans | $ | — | $ | — | $ | 140 | |||||
Other real estate owned | — | — | 50 | ||||||||
$ | — | $ | — | $ | 190 | ||||||
December 31, 2016 | |||||||||||
Impaired loans | $ | — | $ | — | $ | 66 | |||||
Other real estate owned | — | — | 1,677 | ||||||||
$ | — | $ | — | $ | 1,743 |
March 31, 2017 | |||||||
Fair Value Estimate | Valuation Techniques | Unobservable Input | |||||
Impaired loans | $ | 140 | Market approach | Appraised value less selling costs of 5% to 10% Additional discounts of 5% to 90% to appraised value to reflect liquidation value | |||
Other real estate owned | $ | 50 | Market approach | Appraised value less selling costs of 5% to 10% | |||
December 31, 2016 | |||||||
Fair Value Estimate | Valuation Techniques | Unobservable Input | |||||
Impaired loans | $ | 66 | Market approach | Appraised value less selling costs of 5% to 10% Additional discounts of 70% to 100% to appraised value to reflect liquidation value | |||
Other real estate owned | $ | 1,677 | Market approach | Appraised value less selling costs of 5% to 10% |
March 31, 2017 | December 31, 2016 | ||||||||||||||||
Level in Fair Value Hierarchy | Carrying value | Estimated fair value | Carrying value | Estimated fair value | |||||||||||||
Financial assets: | |||||||||||||||||
Cash and cash equivalents | Level 1 | $ | 157,268 | $ | 157,268 | $ | 72,577 | $ | 72,577 | ||||||||
Investment securities: | |||||||||||||||||
Available-for-sale | Level 2 | 469,720 | 469,720 | 494,819 | 494,819 | ||||||||||||
Held-to-maturity | Level 2 | 139,196 | 141,594 | 140,557 | 142,272 | ||||||||||||
FHLB stock | Level 2 | 3,838 | 3,838 | 3,268 | 3,268 | ||||||||||||
Loans held-for-sale | Level 2 | 4,066 | 4,066 | 8,651 | 8,651 | ||||||||||||
Loans, net | Level 3 | 2,088,174 | 2,078,424 | 2,077,358 | 2,064,937 | ||||||||||||
BOLI | Level 3 | 56,869 | 56,869 | 56,957 | 56,957 | ||||||||||||
MSRs | Level 3 | 2,423 | 3,701 | 2,348 | 3,321 | ||||||||||||
Interest rate swap derivatives | Level 2 | 3,053 | 3,053 | 5,239 | 5,239 | ||||||||||||
Financial liabilities: | |||||||||||||||||
Deposits | Level 2 | 2,714,781 | 2,713,431 | 2,661,813 | 2,661,045 | ||||||||||||
Interest rate swap derivatives | Level 2 | 3,053 | 3,053 | 5,239 | 5,239 |
Actual | Regulatory minimum to be “adequately capitalized” | Basel III Minimum Capital Adequacy with Capital Conservation Buffer | Regulatory minimum to be “well capitalized” | |||||||||||||||||||||||
Capital Amount | Ratio | Capital Amount | Ratio | Capital Amount | Ratio | Capital Amount | Ratio | |||||||||||||||||||
March 31, 2017 | ||||||||||||||||||||||||||
Tier 1 leverage (to average assets) | ||||||||||||||||||||||||||
Bancorp | $ | 268,576 | 9.0 | % | $ | 119,006 | 4.0 | % | N/A | N/A | $ | 148,758 | 5.0 | % | ||||||||||||
Bank | 263,389 | 8.9 | % | 118,810 | 4.0 | % | N/A | N/A | 148,512 | 5.0 | % | |||||||||||||||
CET1 capital (to risk weighted assets) | ||||||||||||||||||||||||||
Bancorp | 268,576 | 10.9 | 111,111 | 4.5 | 143,210 | 5.8 | 160,494 | 6.5 | ||||||||||||||||||
Bank | 263,389 | 10.6 | 111,460 | 4.5 | 143,660 | 5.8 | 160,998 | 6.5 | ||||||||||||||||||
Tier 1 capital (to risk-weighted assets) | ||||||||||||||||||||||||||
Bancorp | 268,576 | 10.9 | 148,148 | 6.0 | 180,247 | 7.3 | 197,531 | 8.0 | ||||||||||||||||||
Bank | 263,389 | 10.6 | 148,614 | 6.0 | 180,813 | 7.3 | 198,152 | 8.0 | ||||||||||||||||||
Total capital (to risk-weighted assets) | ||||||||||||||||||||||||||
Bancorp | 294,376 | 11.9 | 197,531 | 8.0 | 229,630 | 9.3 | 246,914 | 10.0 | ||||||||||||||||||
Bank | 289,189 | 11.7 | 198,152 | 8.0 | 230,351 | 9.3 | 247,690 | 10.0 | ||||||||||||||||||
December 31, 2016 | ||||||||||||||||||||||||||
Tier 1 leverage (to average assets) | ||||||||||||||||||||||||||
Bancorp | $ | 259,216 | 8.6 | % | $ | 120,604 | 4.0 | % | N/A | N/A | $ | 150,754 | 5.0 | % | ||||||||||||
Bank | 254,270 | 8.4 | % | 120,462 | 4.0 | % | N/A | N/A | 150,578 | 5.0 | % | |||||||||||||||
CET1 capital (to risk weighted assets) | ||||||||||||||||||||||||||
Bancorp | 259,216 | 10.5 | 110,738 | 4.5 | $ | 125,504 | 5.1 | 159,955 | 6.5 | |||||||||||||||||
Bank | 254,270 | 10.3 | 110,933 | 4.5 | $ | 125,724 | 5.1 | 160,237 | 6.5 | |||||||||||||||||
Tier 1 capital (to risk-weighted assets) | ||||||||||||||||||||||||||
Bancorp | 259,216 | 10.5 | 147,651 | 6.0 | $ | 162,416 | 6.6 | 196,868 | 8.0 | |||||||||||||||||
Bank | 254,270 | 10.3 | 147,911 | 6.0 | $ | 162,702 | 6.6 | 197,214 | 8.0 | |||||||||||||||||
Total capital (to risk-weighted assets) | ||||||||||||||||||||||||||
Bancorp | 284,949 | 11.6 | 196,868 | 8.0 | $ | 211,633 | 8.6 | 246,085 | 10.0 | |||||||||||||||||
Bank | 280,003 | 11.4 | 197,214 | 8.0 | 212,005 | 8.6 | 246,518 | 10.0 |
• | Net income for the first quarter of 2017 was $6.8 million, or $0.09 per share, compared to $5.9 million, or $0.08 per share, for the linked quarter. |
• | Gross loan balances at March 31, 2017 were up $10.9 million from the linked quarter to $2.1 billion. Organic loan growth was 7.3% (annualized), or $30.2 million for the first quarter. This increase was partially offset by $19.3 million in net runoff within the wholesale loan book (shared national credits and ARM portfolios). |
• | Investment securities declined $26.5 million to $608.9 million from the linked quarter. The decline resulted from runoff in wholesale assets that were not replaced in consideration of the pending merger with First Interstate. |
• | Deposit balances at March 31, 2017 were $2.7 billion, up 8.1% annualized as compared to the linked quarter. |
• | Net interest margin (“NIM”) improved to 3.63% from 3.55% in the linked quarter. The NIM benefited from a higher yield on earning assets. |
• | Net interest income was $24.9 million for the first quarter, seasonally flat compared to the linked quarter. Revenue arising from the wholesale loan assets eased because payoffs in these portfolios were not redeployed pending the First Interstate merger. |
• | Non-interest income was $7.5 million, or 98 basis points of average assets (annualized), as compared to $8.3 million in the linked quarter. The linked quarter included a gain on disposition of closed branches while the first quarter was affected by seasonal factors, including shorter day count and relatively severe winter weather conditions that reduced customer card and transaction volume. |
• | Non-interest expense was $21.3 million for the first quarter, as compared to $23.2 million for the linked quarter. The linked quarter included $1.3 million in merger and acquisition (“M&A”) expenses, as well as $0.9 million in increased salary costs due to above-target incentive payouts. |
• | The ALLL at the end of the first quarter was 1.20% of gross loans, stable as compared to the linked quarter. No provision or credit for loan losses was recorded in the first quarter. |
• | At March 31, 2017, stockholders’ equity increased over the linked quarter to $378.6 million, primarily due to the net income from the first quarter. Book value per share and tangible book value per share2 were $4.96 and $3.68, respectively. |
• | Return on average assets and return on average tangible assets3 in the first quarter were 0.89% and 0.92%, respectively, compared to 0.75% and 0.78% in the linked quarter, respectively. |
Reconciliation of period end total stockholders’ equity to period end tangible book value per common share: | March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
Total stockholders’ equity | $ | 378,590 | $ | 369,652 | $ | 339,725 | ||||||
Core deposit intangible | 11,943 | 12,317 | 13,085 | |||||||||
Goodwill | 85,852 | 85,852 | 82,594 | |||||||||
Tangible stockholders equity | $ | 280,795 | $ | 271,483 | $ | 244,046 | ||||||
Common shares outstanding | 76,263,456 | 76,262,184 | 72,774,980 | |||||||||
Tangible book value per common share | $ | 3.68 | $ | 3.56 | $ | 3.35 |
Three Months Ended | ||||||||||||
Reconciliation of return on average tangible assets: | March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
Average total assets | $ | 3,083,692 | $ | 3,126,143 | $ | 2,638,568 | ||||||
Average core deposit intangible | 12,079 | 12,454 | 6,800 | |||||||||
Average goodwill | 85,852 | 84,873 | 78,653 | |||||||||
Average tangible assets | $ | 2,985,761 | $ | 3,028,816 | $ | 2,553,115 | ||||||
Net income | 6,762 | 5,918 | 1,940 | |||||||||
Return on average tangible assets (annualized) | 0.92 | % | 0.78 | % | 0.31 | % |
Reconciliation of year-over-year total loan growth to organic loan growth (from March 31, 2016): | Year over year March 31, 2017 | |||
Total loan growth | $ | 330,503 | ||
Wholesale loan portfolio net paydowns | (7,191 | ) | ||
Acquired Prime loans | 104,253 | |||
Organic loan growth, excluding PPFS | $ | 233,441 | ||
Reconciliation of quarterly total loan growth to organic loan growth (from December 31, 2016): | QTD March 31, 2017 | |||
Total loan growth | $ | 10,883 | ||
Wholesale loan portfolio net paydowns | (19,315 | ) | ||
Organic loan growth | $ | 30,198 |
Three Months Ended March 31, | |||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||
Average Balance | Interest Income/ Expense | Average Yield or Rates | Average Balance | Interest Income/ Expense | Average Yield or Rates | ||||||||||||||||
Assets | |||||||||||||||||||||
Investment securities | $ | 621,585 | $ | 3,985 | 2.60 | % | $ | 508,533 | $ | 4,618 | 3.65 | % | |||||||||
Interest bearing balances due from other banks | 33,600 | 82 | 0.99 | % | 115,612 | 156 | 0.54 | % | |||||||||||||
Federal funds sold | 273 | — | — | % | 273 | — | — | % | |||||||||||||
Federal Home Loan Bank stock | 3,760 | — | — | % | 3,898 | — | — | % | |||||||||||||
Loans (1)(2)(3) | 2,116,352 | 21,554 | 4.13 | % | 1,720,086 | 17,920 | 4.19 | % | |||||||||||||
Total earning assets/interest income | 2,775,570 | 25,621 | 3.74 | % | 2,348,402 | 22,694 | 3.89 | % | |||||||||||||
Reserve for loan losses | (25,301 | ) | (26,591 | ) | |||||||||||||||||
Cash and due from banks | 52,494 | 49,250 | |||||||||||||||||||
Premises and equipment, net | 47,094 | 42,090 | |||||||||||||||||||
Bank-owned life insurance | 57,052 | 54,558 | |||||||||||||||||||
Deferred tax asset | 43,785 | 49,781 | |||||||||||||||||||
Goodwill | 85,852 | 78,653 | |||||||||||||||||||
Core deposit intangibles | 12,079 | 6,800 | |||||||||||||||||||
Accrued interest and other assets | 35,067 | 35,625 | |||||||||||||||||||
Total assets | $ | 3,083,692 | $ | 2,638,568 | |||||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||
Interest bearing demand deposits | $ | 1,328,712 | 584 | 0.18 | % | $ | 1,129,592 | 413 | 0.15 | % | |||||||||||
Savings deposits | 200,755 | 15 | 0.03 | % | 146,257 | 11 | 0.03 | % | |||||||||||||
Time deposits | 221,371 | 131 | 0.24 | % | 186,316 | 85 | 0.18 | % | |||||||||||||
Other borrowings | 12,310 | 25 | 0.82 | % | 22,846 | 26 | 0.46 | % | |||||||||||||
Total interest bearing liabilities/interest expense | 1,763,148 | 755 | 0.17 | % | 1,485,011 | 535 | 0.14 | % | |||||||||||||
Demand deposits | 901,257 | 763,496 | |||||||||||||||||||
Other liabilities | 45,503 | 50,825 | |||||||||||||||||||
Total liabilities | 2,709,908 | 2,299,332 | |||||||||||||||||||
Stockholders’ equity | 373,784 | 339,236 | |||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 3,083,692 | $ | 2,638,568 | |||||||||||||||||
Net interest income | $ | 24,866 | $ | 22,159 | |||||||||||||||||
Net interest spread | 3.57 | % | 3.74 | % | |||||||||||||||||
Net interest income to earning assets | 3.63 | % | 3.80 | % |
(1) | Average non-performing loans included in the computation of average loans for the three months ended March 31, 2017 and 2016 was approximately $13.6 million and $6.4 million, respectively. |
(2) | Loan related fees, including prepayment penalties, recognized during the period and included in the yield calculation totaled approximately $0.5 million and $0.3 million in three months ended March 31, 2017 and 2016, respectively. |
(3) | Includes loans held for sale. |
Three Months Ended March 31, | |||||||||||
2017 over 2016 | |||||||||||
Total Increase | Amount of Change Attributed to | ||||||||||
(Decrease) | Volume | Rate | |||||||||
Interest income: | |||||||||||
Interest and fees on loans | $ | 3,634 | $ | 4,020 | $ | (386 | ) | ||||
Interest on investment securities | (633 | ) | 999 | (1,632 | ) | ||||||
Other investment income | (74 | ) | (111 | ) | 37 | ||||||
Total interest income | 2,927 | 4,908 | (1,981 | ) | |||||||
Interest expense: | |||||||||||
Interest on deposits: | |||||||||||
Interest bearing demand | 171 | 70 | 101 | ||||||||
Savings | 4 | 4 | — | ||||||||
Time deposits | 46 | 15 | 31 | ||||||||
Other borrowings | (1 | ) | (12 | ) | 11 | ||||||
Total interest expense | 220 | 77 | 143 | ||||||||
Net interest income | $ | 2,707 | $ | 4,831 | $ | (2,124 | ) |
Three Months Ended March 31, 2017 | Three Months Ended March 31, 2016 | % Change | |||||||||
Service charges on deposit accounts | $ | 1,651 | $ | 1,372 | 20.3 | % | |||||
Card issuer and merchant services fees, net | 2,276 | 1,835 | 24.0 | % | |||||||
Earnings on BOLI | 286 | 258 | 10.9 | % | |||||||
Mortgage banking income, net | 1,147 | 495 | 131.7 | % | |||||||
Swap fee income | 256 | 666 | (61.6 | )% | |||||||
SBA gain on sales and fee income | 798 | 174 | 358.6 | % | |||||||
ATM income | 423 | 243 | 74.1 | % | |||||||
Other income | 639 | 413 | 54.7 | % | |||||||
Total non-interest income | $ | 7,476 | $ | 5,456 | 37.0 | % |
Three Months Ended March 31, 2017 | Three Months Ended March 31, 2016 | % Change | |||||||||
Salaries and employee benefits | $ | 12,628 | $ | 13,029 | (3.1 | )% | |||||
Occupancy | 1,744 | 2,680 | (34.9 | )% | |||||||
Information technology | 1,181 | 1,397 | (15.5 | )% | |||||||
Equipment | 467 | 448 | 4.2 | % | |||||||
Communications | 593 | 610 | (2.8 | )% | |||||||
FDIC insurance | 517 | 377 | 37.1 | % | |||||||
OREO | 10 | 212 | (95.3 | )% | |||||||
Professional services | 891 | 1,598 | (44.2 | )% | |||||||
Card issuer | 872 | 909 | (4.1 | )% | |||||||
Insurance | 160 | 175 | (8.6 | )% | |||||||
CDI Amortization | 374 | 205 | 82.4 | % | |||||||
Other expenses | 1,898 | 2,878 | (34.1 | )% | |||||||
Total non-interest expense | $ | 21,335 | $ | 24,518 | (13.0 | )% |
Actual | Regulatory minimum to be “well capitalized” | ||||||||||||
Capital Amount | Ratio | Capital Amount | Ratio | ||||||||||
March 31, 2017 | |||||||||||||
Tier 1 leverage (to average assets) | |||||||||||||
Bancorp | $ | 268,576 | 9.0 | % | $ | 148,758 | 5.0 | % | |||||
Bank | 263,389 | 8.9 | % | 148,512 | 5.0 | % | |||||||
CET1 capital (to risk weighted assets) | |||||||||||||
Bancorp | 268,576 | 10.9 | 160,494 | 6.5 | |||||||||
Bank | 263,389 | 10.6 | 160,998 | 6.5 | |||||||||
Tier 1 capital (to risk-weighted assets) | |||||||||||||
Bancorp | 268,576 | 10.9 | 197,531 | 8.0 | |||||||||
Bank | 263,389 | 10.6 | 198,152 | 8.0 | |||||||||
Total capital (to risk-weighted assets) | |||||||||||||
Bancorp | 294,376 | 11.9 | 246,914 | 10.0 | |||||||||
Bank | 289,189 | 11.7 | 247,690 | 10.0 | |||||||||
December 31, 2016 | |||||||||||||
Tier 1 leverage (to average assets) | |||||||||||||
Bancorp | $ | 259,216 | 8.6 | % | $ | 150,754 | 5.0 | % | |||||
Bank | 254,270 | 8.4 | % | 150,578 | 5.0 | % | |||||||
CET1 capital (to risk weighted assets) | |||||||||||||
Bancorp | 259,216 | 10.5 | 159,955 | 6.5 | |||||||||
Bank | 254,270 | 10.3 | 160,237 | 6.5 | |||||||||
Tier 1 capital (to risk-weighted assets) | |||||||||||||
Bancorp | 259,216 | 10.5 | 196,868 | 8.0 | |||||||||
Bank | 254,270 | 10.3 | 197,214 | 8.0 | |||||||||
Total capital (to risk-weighted assets) | |||||||||||||
Bancorp | 284,949 | 11.6 | 246,085 | 10.0 | |||||||||
Bank | 280,003 | 11.4 | 246,518 | 10.0 |
March 31, 2017 | December 31, 2016 | ||||||
Commitments to extend credit | $ | 582,915 | $ | 580,450 | |||
Commitments under credit card lines of credit | 80,889 | 80,612 | |||||
Standby letters of credit | 6,973 | 5,887 | |||||
Total off-balance sheet financial instruments | $ | 670,777 | $ | 666,949 |
Exhibit Number | Description | |
31.1 | Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-4(a) | |
31.2 | Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-4(a) | |
32 | Certification of Principal Executive Officer and Principal 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 Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
CASCADE BANCORP (Registrant) | |||
Date | May 5, 2017 | By | /s/ Terry E. Zink |
Terry E. Zink, President & Chief Executive Officer (Principal Executive Officer) | |||
Date | May 5, 2017 | By | /s/ Gregory D. Newton |
Gregory D. Newton, EVP & Chief Financial Officer (Principal Financial and Chief Accounting Officer) |
1) | I have reviewed this quarterly report on Form 10-Q of Cascade Bancorp; |
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5) | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated | May 5, 2017 | /s/ Terry E. Zink | ||
Terry E. Zink | ||||
President & Chief Executive Officer |
1) | I have reviewed this quarterly report on Form 10-Q of Cascade Bancorp; |
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5) | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: | May 5, 2017 | /s/ Gregory D. Newton | ||
Gregory D. Newton | ||||
EVP & Chief Financial Officer |
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 result of operations of the registrant. |
/s/ Terry E. Zink | |
Terry E. Zink | |
President & Chief Executive Officer | |
/s/ Gregory D. Newton | |
Gregory D. Newton | |
EVP & Chief Financial Officer |
Dated: | May 5, 2017 |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 03, 2017 |
|
Document Documentand Entity Information [Abstract] | ||
Entity Registrant Name | CASCADE BANCORP | |
Entity Central Index Key | 0000865911 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Trading Symbol | cacb | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 76,263,746 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Investment Securities held-to-maturity, estimated fair value (in dollars) | $ 141,594 | $ 142,272 |
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 76,263,456 | 76,262,184 |
Common stock, shares outstanding (in shares) | 76,263,456 | 76,262,184 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 6,762 | $ 1,940 |
Other comprehensive income: | ||
Change in unrealized gains on investment securities available-for-sale | 2,147 | 500 |
Tax effect on securities | (816) | (190) |
Total other comprehensive income (loss) | 1,331 | 310 |
Comprehensive income | $ 8,093 | $ 2,250 |
Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying interim condensed consolidated financial statements include the accounts of Cascade Bancorp (“Bancorp”), an Oregon-chartered single bank holding company, and its wholly-owned subsidiary, Bank of the Cascades (the “Bank”) (collectively, the “Company” or “Cascade”). All significant inter-company accounts and transactions have been eliminated in consolidation. The interim condensed consolidated financial statements have been prepared by the Company without audit and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, certain financial information and footnotes have been omitted or condensed. In the opinion of management, the interim condensed consolidated financial statements include all adjustments (all of which are of a normal and recurring nature) necessary for the fair presentation of the results of the interim periods presented. In preparing the interim condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the balance sheets and income and expenses for the reporting periods. Actual results could differ from those estimates. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period. The condensed consolidated financial statements as of and for the year ended December 31, 2016 were derived from the Company’s audited consolidated financial statements, but do not include all disclosures contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Annual Report”). The interim condensed consolidated financial statements should be read in conjunction with the December 31, 2016 consolidated financial statements, including the notes thereto, included in the 2016 Annual Report. |
Business Combinations (Notes) |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | Business Combinations Prime Pacific Financial Services, Inc. At close of business on August 1, 2016 (the “PPFS Acquisition Date”), the Company acquired Prime Pacific Financial Services, Inc. (“PPFS”), the holding company of Prime Pacific Bank, National Association, a Snohomish county, national banking association (the “PPFS merger”). In the PPFS merger, each share of PPFS common stock was converted into the right to receive 0.3050 shares of Cascade common stock. The conversion resulted in Cascade issuing 2,921,012 shares of its common stock. The PPFS merger was accounted for using the acquisition method of accounting and accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the acquisition date. Preliminary goodwill of $3.3 million was calculated as the purchase premium after adjusting for the fair value of net assets acquired and represents the value expected from the synergies created and the economies of scale expected from combining the two banking organizations. In most instances, determining the fair value of the acquired assets and assumed liabilities required us to estimate cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of those determinations relates to the valuation of acquired loans. For such loans, the excess of cash flows expected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and other factors, such as prepayments. In accordance with the applicable accounting guidance for business combinations, there was no carry-over of PPFS’s previously established reserve for loan losses. The following table provides a summary of the purchase price calculation as of the PPFS Acquisition Date and the identifiable assets purchased and the liabilities assumed at their estimated fair values. These fair value measurements are provisional based on third-party valuations that are currently under review and are subject to refinement for up to one year after the PPFS Acquisition Date based on additional information that may be obtained by us that existed as of the PPFS Acquisition Date.
Due to the small nature of the PPFS acquisition, 2016 pro forma statements are not being presented. Bank of America, National Association branches On March 4, 2016, the Bank completed the acquisition of twelve Oregon branch locations and three Washington branch locations from Bank of America, National Association (the “branch acquisition” and together with the PPFS merger, the “2016 acquisitions”). This transaction allowed Cascade the opportunity to enhance and strengthen its footprint in Oregon, while providing entry into the Washington market. The Bank assumed approximately $469.9 million of branch deposits, paying a 2.00% premium on the average balance of deposits assumed, for a cash purchase price of $9.7 million. The following is a condensed balance sheet disclosing the estimated fair value amounts of the branches acquired in the branch acquisition assigned to the major consolidated asset and liability captions at the acquisition date (dollars in thousands):
The core deposit intangible asset recognized as part of the branch acquisition will be amortized over its estimated useful life of approximately 10 years. The fair value of demand deposit accounts assumed from the branch acquisition approximated the carrying value as checking and savings accounts have no stated maturity and are payable on demand. Certificates of deposit were valued by comparing the contractual cost of the portfolio to a similar portfolio bearing current market rates. Direct costs related to the branch acquisition were expensed as incurred in the quarter ended March 31, 2016. Such expenses primarily related to professional and legal services, human resource costs and information system charges. For the year ended December 31, 2016, the Company incurred $2.3 million of expenses related to the branch acquisition. Pro forma income statements are not being presented as the information is not practicable to produce. |
Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | Investment Securities The following table presents investment securities at March 31, 2017 and December 31, 2016, showing that available-for-sale and held-to-maturity securities decreased from December 31, 2016 primarily due to payoffs in MBS securities with runoff not replaced to facilitate the pending merger with FIBK (dollars in thousands):
The following table presents the contractual maturities of investment securities at March 31, 2017 (dollars in thousands):
The following table presents the fair value and gross unrealized losses of the Bank’s investment securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2017 and December 31, 2016 (dollars in thousands):
The unrealized losses on investments in U.S. Agency and non-agency MBS, U.S. Agency asset-backed securities, and corporate securities are primarily due to elevated yield/rate spreads at March 31, 2017 and December 31, 2016 as compared to yield/rate spread relationships prevailing at the time specific investment securities were purchased. The Company had 79 and 87 securities in the loss position at March 31, 2017 and December 31, 2016, respectively. Management expects the fair value of these investment securities to recover as securities approach their maturity dates. Management does not believe that the above gross unrealized losses on investment securities are other-than-temporary. Accordingly, no impairment adjustments have been recorded. Management intends to hold the investment securities classified as held-to-maturity until they mature, at which time the Company will receive full amortized cost value for such investment securities. Furthermore, as of March 31, 2017, management did not have the intent to sell any of the securities classified as held-to-maturity in the table above and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. |
Loans and reserve for credit losses |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and reserve for credit losses | Loans and reserve for credit losses The composition of the loan portfolio at March 31, 2017 and December 31, 2016 was as follows (dollars in thousands):
The following describes the distinction between originated and acquired loan portfolios and certain significant accounting policies relevant to each of these portfolios. Originated loans Loans originated for investment are stated at their principal amount outstanding adjusted for partial charge-offs, the reserve for loan losses and net deferred loan fees and costs. Interest income on loans is accrued over the term of the loans. Interest is not accrued on loans where collectability is uncertain. Accrued interest on loans is presented in “Other assets” on the condensed consolidated balance sheet. Loan origination fees and certain direct costs incurred to extend credit are deferred and amortized over the term of the loan as an adjustment to the related loan yield. Approximately 76.9% of the Bank’s originated loan portfolio at March 31, 2017 consisted of real estate-related loans, including construction and development loans, residential mortgage loans, and commercial loans secured by commercial real estate. At March 31, 2017, approximately 78.4% of the Bank’s total portfolio (inclusive of acquired loans) consisted of real estate-related loans as described above. The Bank’s results of operations and financial condition are affected by general economic trends and in particular, the strength of the local residential and commercial real estate markets in Central, Southern and Northwest Oregon, as well as the greater Boise/Treasure Valley, Idaho and Seattle, Washington metro areas. Real estate values could be affected by, among other things, a worsening of national and local economic conditions, an increase in foreclosures, a decline in home sale volumes, and an increase in interest rates. Furthermore, the Bank may experience an increase in the number of borrowers who become delinquent, file for protection under bankruptcy laws, or default on their loans or other obligations to the Bank in the event of a sustained downturn in business and economic conditions generally or specifically in the principal markets in which the Bank does business. An increase in the number of delinquencies, bankruptcies, or defaults could result in a higher level of non-performing assets, net charge-offs, and loan loss provision. Management expects to diversify its commercial real estate (“CRE”) concentration over time, but real estate-related loans will remain a significant portfolio component due to the nature of the economies, businesses, and markets the Bank serves. The Company originates commercial and industrial (“C&I”) loans mainly to businesses in its footprint. Repayment of such loans is dependent upon future cash flows of the obligor businesses that are subject to various industry sector risk. In addition, the Company has purchased C&I participations typically referred to as shared national credits (“SNCs”). The SNC portfolio strategy is intended to diversify the Company’s credit risk profile geographically and by industry. Additionally, such loans enhance the Company’s interest rate risk profile as they float with LIBOR rates. C&I loans are subject to the variety of credit risks described above but they are not directly secured by real estate. In the normal course of business, the Bank may participate portions of loans to third parties in order to extend the Bank’s lending capability or to mitigate risk. At March 31, 2017 and December 31, 2016, the portion of loans participated to third parties (which are not included in the accompanying condensed consolidated financial statements) totaled $125.5 million and $128.8 million, respectively. Acquired loans PPFS Acquired loans include those loans purchased by the Company in its acquisition of PPFS, which was completed on August 1, 2016. These loans were recorded at estimated fair value at the PPFS Acquisition Date. The fair value estimates for acquired loans are based on expected prepayments, charge-offs and the amount and timing of undiscounted expected principal, interest and other cash flows. The net fair value adjustment to the PPFS acquired loans at acquisition was a reduction of $2.5 million, representing a valuation adjustment for interest rate and credit which will be accreted over the life of the loans (approximately 10 years). As of March 31, 2017, the remaining net fair value adjustment to the PPFS acquired loans was $1.6 million. Home Acquired loans also include those loans purchased by the Company in its acquisition (the “Home merger”) of Home Federal Bancorp, Inc. (“Home”), which was completed on May 16, 2014 (the “Home Acquisition Date”). These loans were recorded at estimated fair value at the Home Acquisition Date. The fair value estimates for acquired loans are based on expected prepayments, charge-offs and the amount and timing of undiscounted expected principal, interest and other cash flows. The net fair value adjustment to the Home acquired loans at acquisition was a reduction of $6.0 million, representing a valuation adjustment for interest rate and credit which will be accreted over the life of the loans (approximately 10 years). As of March 31, 2017, the remaining net fair value adjustment was $1.5 million. Of the PPFS and Home loans acquired on the PPFS Acquisition Date and Home Acquisition Date, as applicable, and still held at March 31, 2017, $8.7 million, or 3.3%, were graded substandard. With the amount of classified loans acquired being nominal, all loans acquired are treated in a manner consistent with originated loans for credit risk management and accounting purposes. As of March 31, 2017, $18.2 million, or 7.0% of the $260.3 million, in acquired loans were covered under loss sharing agreements with the FDIC (“covered loans”) that were entered into in September 2009 and September 2010 between the FDIC and Home. The loss sharing agreements have limited terms (10 years for net losses on single-family residential real estate loans, as defined by the FDIC, five years for losses on non-residential real estate loans, as defined by the FDIC, and an additional three years with respect to recoveries on non-residential real estate loans). After the expiration of the loss sharing agreements, the Company will not be indemnified for losses and related expenses on covered loans. Nearly all of the assets remaining in the covered loans portfolio are non-single family covered loans. Therefore, most of the covered loans were no longer indemnified after September 30, 2014 or were no longer indemnified after September 30, 2015. When the loss sharing agreements expire, the Company’s and the Bank’s risk-based capital ratios will be reduced. While the agreements are in place, the covered loans receive a 20% risk-weighting. When the agreements expire, the risk-weighting for previously covered loans will most likely increase to 100%, based on current regulatory capital definitions. With the amount of classified loans covered under these agreements being nominal, amounts that may be due to or due from the FDIC under loss sharing agreements will be accounted for on a cash basis. A net loss share payable was recorded at the Home Acquisition Date that represents the estimated value of reimbursement the Company expects to pay to the FDIC for recoveries net of incurred losses on covered loans. These expected reimbursements are recorded as part of covered loans in the accompanying consolidated balance sheets. Upon the determination of an incurred loss or recovery, the loss share receivable/payable will be changed by the amount due to or due from the FDIC. Changes in the loss share payable associated with covered loans for the three months ended March 31, 2017 were as follows (dollars in thousands):
Reserve for loan losses The reserve for loan losses represents management’s estimate of known and inherent losses in the loan portfolio as of the condensed consolidated balance sheet date and is recorded as a reduction to loans. The reserve for loan losses is increased by charges to operating expense through the loan loss provision, and decreased by loans charged-off, net of recoveries. The reserve for loan losses requires complex subjective judgments as a result of the need to make estimates about matters that are uncertain. The reserve for loan losses is maintained at a level currently considered adequate to provide for potential loan losses based on management’s assessment of various factors affecting the loan portfolio. However, the reserve for loan losses is based on estimates and actual losses may vary from the current estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the periods in which they become known. Therefore, management cannot provide assurance that, in any particular period, the Company will not have significant losses in relation to the amount reserved. The level of the reserve for loan losses is also determined after consideration of bank regulatory guidance and recommendations and is subject to review by such regulatory authorities who may require increases or decreases to the reserve based on their evaluation of the information available to them at the time of their examinations of the Bank. For purposes of assessing the appropriate level of the reserve for loan losses, the Company analyzes loans and commitments to loan, and the amount of reserves allocated to loans and commitments to loan in each of the following reserve categories: pooled reserves, specifically identified reserves for impaired loans, and the unallocated reserve. Also, for purposes of analyzing loan portfolio credit quality and determining the appropriate level of reserve for loan losses, the Company identifies loan portfolio segments and classes based on the nature of the underlying loan collateral. Risk ratings for individual SNCs are estimated using analysis of both public debt ratings and internal ratings. Expected loss rates are determined based upon historical published specific loss data for similar loans based on average losses and losses stratified by public debt ratings. Public ratings combined with internal risk rates are used to determine a minimum historical loss factor for each SNC loan. This amount may be increased for qualitative conditions including macroeconomic environment and observations by the Company’s SNC management group. The SNC lending strategy is intended to diversify the Company’s credit risk profile geographically and by industry. Additionally, such loans enhance the Company’s interest rate risk profile as they float with LIBOR rates. The increase in the reserve for loan losses from December 31, 2016 to March 31, 2017 was related to a decrease in net recoveries and loan portfolio growth during the period. Management believes the amount of allowance for loan losses (“ALLL”) is appropriate as of March 31, 2017. The unallocated reserve for loan losses at March 31, 2017 has decreased $0.5 million from the balance at December 31, 2016. Management believes that the amount of unallocated reserve for loan losses is appropriate and will continue to evaluate the amount going forward. Acquired reserve for loan losses The fair value estimates for acquired loans are based on expected prepayments, charge-offs, and the amount and timing of undiscounted expected principal, interest and other cash flows. The net fair value adjustment to the acquired loans was $6.0 million and $2.5 million for Home and PPFS, respectively, at the time of acquisition representing a valuation adjustment for interest rate and credit quality. The credit portion of the fair value adjustment not accreted at any point in time represents the estimated reserve for loan losses for acquired loans. If the Company determines that this amount is insufficient, a provision to the reserve for loan losses will be made. As of March 31, 2017, the remaining net fair value adjustment was $1.5 million and $1.6 million for Home and PPFS, respectively, and no additional reserve for acquired loans was required. Transactions and allocations in the reserve for loan losses and unfunded loan commitments, by portfolio segment, for the three months ended March 31, 2017 and 2016 were as follows (dollars in thousands):
An individual loan is impaired when, based on current information and events, management believes that it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. The following table presents the reserve for loan losses and the recorded investment in loans by portfolio segment and impairment evaluation method at March 31, 2017 and December 31, 2016 (dollars in thousands):
The above reserve for loan losses includes an unallocated allowance of $1.0 million at March 31, 2017 and $1.6 million at December 31, 2016. The change in the unallocated allowance is due to the increase in qualitative factors impacting the reserve, partially offset by net recoveries. The Company uses credit risk ratings, which reflect the Bank’s assessment of a loan’s risk or loss potential, for purposes of assessing the appropriate level of reserve for loan losses. The Bank’s credit risk rating definitions along with applicable borrower characteristics for each credit risk rating are as follows: Acceptable The borrower is a reasonable credit risk and demonstrates the ability to repay the loan from normal business operations. Loans are generally made to companies operating in an economy and/or industry that is generally sound. The borrower tends to operate in regional or local markets and has achieved sufficient revenues for the business to be financially viable. The borrowers financial performance has been consistent in normal economic times and has been average or better than average for its industry. A loan can also be considered Acceptable even though the borrower may have some vulnerability to downturns in the economy due to marginally satisfactory working capital and debt service cushion. Availability of alternate financing sources may be limited or nonexistent. In some cases, the borrower’s management may have limited depth or continuity but is still considered capable. An adequate primary source of repayment is identified while secondary sources may be illiquid, more speculative, less readily identified, or reliant upon collateral liquidation. Loan agreements will be well defined, including several financial performance covenants and detailed operating covenants. This category also includes commercial loans to individuals with average or better than average capacity to repay. Pass-Watch Loans are graded Pass-Watch when temporary situations increase the level of the Bank’s risk associated with the loan, and remain graded Pass-Watch until the situation has been corrected. These situations may involve one or more weaknesses in cash flow, collateral value or indebtedness that could, if not corrected within a reasonable period of time, jeopardize the full repayment of the debt. In general, loans in this category remain adequately protected by the borrower’s net worth and paying capacity, or pledged collateral. Special Mention A Special Mention credit has potential weaknesses that may, if not checked or corrected, weaken the loan or leave the Bank inadequately protected at some future date. Loans in this category are deemed by management of the Bank to be currently protected but reflect potential problems that warrant more than the usual management attention but do not justify a Substandard classification. Substandard Substandard loans are those inadequately protected by the net worth and paying capacity of the obligor and/or by the value of the pledged collateral, if any. Substandard loans have a high probability of payment default or they have other well-defined weaknesses. They require more intensive supervision and borrowers are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization. Repayment may depend on collateral or other credit risk mitigants. CRE and construction loans are classified Substandard when well-defined weaknesses are present which jeopardize the orderly liquidation of the loan. Well-defined weaknesses include a project’s lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time, and/or the project’s failure to fulfill economic expectations. These loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Substandard loans also include impaired loans. Impaired loans bear the characteristics of Substandard loans as described above, and the Company has determined it does not expect timely payment of all contractually due interest and principal. Impaired loans may be adequately secured by collateral. During the three months ended March 31, 2017, the Bank saw relatively steady credit quality metrics. An improvement in Special Mention loans was offset by an increase in the Substandard portfolio. Increases in the Substandard loan balances were largely due to certain energy/mining sector SNCs included in C&I loans. Aggregate portfolio exposure to the energy/mining sector is less than 1% of total loans outstanding. The following table presents, by portfolio class, the recorded investment in loans by internally assigned grades at March 31, 2017 and December 31, 2016 (dollars in thousands):
The following table presents, by portfolio class, an age analysis of past due loans, including loans placed on non-accrual at March 31, 2017 and December 31, 2016 (dollars in thousands):
Loans contractually past due 90 days or more on which the Company continued to accrue interest were $0.62 million and $0.02 million at March 31, 2017 and December 31, 2016, respectively. The following table presents information related to impaired loans, by portfolio class, at March 31, 2017 and December 31, 2016 (dollars in thousands):
At March 31, 2017 and December 31, 2016, the total recorded balance of impaired loans in the above table included no troubled debt restructuring (“TDR”) loans. The following table presents, by portfolio class, the average recorded investment in impaired loans for the three months ended March 31, 2017 and 2016 (dollars in thousands):
Interest income recognized for cash payments received on impaired loans for the three months ended March 31, 2017 and 2016 was $0.2 million and $0.1 million, respectively. Information with respect to the Company’s non-performing loans, by portfolio class, at March 31, 2017 and December 31, 2016 is as follows (dollars in thousands):
TDRs The Company allocated no specific reserves to customers whose loan terms had been modified in TDRs as of March 31, 2017 and December 31, 2016. TDRs involve the restructuring of loan terms to allow customers to mitigate the risk of foreclosure by meeting a lower loan payment requirement based upon their current cash flow. As indicated above, TDRs may also include loans to borrowers experiencing financial distress that renewed at existing contractual rates, but below market rates for comparable credit quality. The Company has been actively utilizing these programs and working with its customers to improve obligor cash flow and related prospects for repayment. Concessions may include, but are not limited to, interest rate reductions, principal forgiveness, deferral of interest payments, extension of the maturity date, and other actions intended to minimize potential losses to the Company. For each commercial loan restructuring, a comprehensive credit underwriting analysis of the borrower’s financial condition and prospects of repayment under the revised terms is performed to assess whether the new structure can be successful and whether cash flows will be sufficient to support the restructured debt. Generally, if the loan is on accrual status at the time of restructuring, it will remain on accrual status after the restructuring. After six consecutive payments under the restructured terms, a non-accrual restructured loan is reviewed for possible upgrade to accrual status. Typically, once a loan is identified as a TDR it will retain that designation until it is paid off, because restructured loans generally are not at market rates following restructuring. Under certain circumstances, a TDR may be removed from TDR status if it is determined to no longer be impaired and the loan is at a competitive interest rate. Under such circumstances, allowance allocations for loans removed from TDR status would be based on the historical allocation for the applicable loan grade and loan class. There were no loans modified and recorded as TDRs during the three months ended March 31, 2017 and one loan modified and recorded as a TDR during the three months ended March 31, 2016. The following table presents, by portfolio segment, the information with respect to the Company’s loans that were modified and recorded as TDRs during the three months ended March 31, 2017 and 2016 (dollars in thousands).
At both March 31, 2017 and 2016, the Company had no remaining commitments to lend on loans accounted for as TDRs. The following table presents, by portfolio segment, the post modification recorded investment for TDRs restructured during the three months ended March 31, 2017 and 2016.
There were no TDRs that had payment defaults during the three months ended March 31, 2017 or 2016 that had been previously restructured within the twelve months prior to March 31, 2017 or 2016. |
Other Real Estate Owned ("OREO"), net |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Real Estate Owned (OREO), net | Other Real Estate Owned (“OREO”), net The following table presents activity related to OREO for the periods shown (dollars in thousands):
The following table summarizes activity in the OREO valuation allowance for the periods shown (dollars in thousands):
The following table summarizes OREO (income) expenses for the periods shown (dollars in thousands):
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Mortgage Servicing Rights ("MSRs") |
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Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Servicing Rights (MSRs) | Mortgage Servicing Rights (“MSRs”) The Bank sells a predominant share of the fixed rate mortgage loans it originates into the secondary market while retaining servicing of such loans. Mortgage Servicing Rights (“MSRs”), included in other assets in the condensed consolidated financial statements as of March 31, 2017 and December 31, 2016, are accounted for at the lower of origination value less accumulated amortization or current fair value. The net carrying value of MSRs at March 31, 2017 and December 31, 2016 was $2.4 million and $2.3 million, respectively. There was no valuation allowance at March 31, 2017 or December 31, 2016. The following table presents activity in MSRs for the periods shown (dollars in thousands):
Mortgage banking income, net, consisted of the following for the periods shown (dollars in thousands):
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Goodwill and other intangible assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and other intangible assets | Goodwill and other intangible assets The Company recorded $3.3 million of goodwill in connection with the PPFS merger. The Company recorded $4.0 million of goodwill in connection with the branch acquisition. The Company recorded $78.6 million of goodwill in connection with the Home merger. In accordance with the Intangibles - Goodwill and Other topic of the Financial Accounting Standards Board (“FASB”) ASC, goodwill is not amortized but is reviewed for potential impairment at the reporting unit level. Management analyzes its goodwill for impairment on an annual basis and between annual tests in certain circumstances, such as upon material adverse changes in legal, business, regulatory and economic factors. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value. The Company performed an impairment assessment as of December 31, 2016 and 2015 and concluded that there was no impairment to goodwill. Core deposit intangibles (“CDI”) are evaluated for impairment if events and circumstances indicate a possible impairment. The CDI are amortized on a straight-line basis over an estimated life of 10 years. The following table sets forth activity for CDI for the three months ended March 31, 2017 and 2016 (dollars in thousands).
The following table provides the estimated future amortization expense of CDI for the remaining period ending December 31, 2017 and the succeeding four years (dollars in thousands):
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Basic and Diluted Net Income per Share |
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Basic and Diluted Net Income per Share | Basic and Diluted Net Income per Share The Company’s basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. The Company’s diluted net income per share is computed by dividing net income by the weighted-average number of common shares outstanding plus any incremental shares arising from the dilutive effect of stock-based compensation. The numerators and denominators used in computing basic and diluted net income per common share for the three months ended March 31, 2017 and 2016 can be reconciled as follows (dollars in thousands, except per share data):
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Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation At March 31, 2017, 1,630,830 shares reserved under the Company’s stock-based compensation plans were available for future grants. During the three months ended March 31, 2017 and 2016, no shares of restricted stock or stock options were granted by the Company. The following table presents the activity related to stock options for the three months ended March 31, 2017 and 2016:
Stock-based compensation expense related to stock options for the three months ended March 31, 2017 and 2016 was $0.3 million. As of March 31, 2017, there was approximately $3.1 million of unrecognized compensation cost related to non-vested stock options that will be recognized over the remaining vesting periods of the stock options. The following table presents the activity related to non-vested restricted stock for the three months ended March 31, 2017:
Non-vested restricted stock is scheduled to vest over a three to five year period. The unearned compensation on restricted stock is being amortized to expense on a straight-line basis over the estimated applicable service or vesting periods. As of March 31, 2017, unrecognized compensation cost related to non-vested restricted stock totaled approximately $4.5 million, which is expected to be recognized over the next five years. Total expense recognized by the Company for non-vested restricted stock for the three months ended March 31, 2017 and 2016 was $0.5 million and $0.4 million, respectively. There was $0.2 million unrecognized compensation cost related to restricted stock units (“RSUs”) at March 31, 2017 and December 31, 2016. |
Interest Rate Swap Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Rate Swap Derivatives | Interest Rate Swap Derivatives Derivative instruments are contracts between two or more parties that have a notional amount and an underlying variable, require no net investment and allow for the net settlement of positions. The notional amount serves as the basis for the payment provision of the contract and takes the form of units, such as shares or dollars. The underlying variable represents a specified interest rate, index, or other component. The interaction between the notional amount and the underlying variable determines the number of units to be exchanged between the parties and influences the market value of the derivative contract. The Company obtains dealer quotation to value its derivative contracts. The Company periodically enters into certain commercial loan interest rate swap agreements in order to provide commercial loan customers the ability to convert from variable to fixed interest rates. Under these agreements, the Company provides the customer with a variable rate loan and enters into an interest rate swap in which the customer receives a variable rate payment in exchange for a fixed rate payment. The Company offsets its risk exposure by entering into an offsetting interest rate swap with a dealer counterparty for the same notional amount and length of term as the customer interest rate swap providing the dealer counterparty with a fixed rate payment in exchange for a variable rate payment. Generally, these instruments help the Company manage exposure to market risk and meet customer financing needs. Market risk represents the possibility that economic value or net interest income will be adversely affected by fluctuations in external factors such as market-driven interest rates and prices or other economic factors. The Company is exposed to credit-related losses in the event of non-performance by the counterparty to these agreements. Credit risk of the financial contract is controlled through the credit approval, limits, and monitoring procedures and management does not expect the counterparties to fail their obligations. In connection with the interest rate swaps between the Company and the dealer counterparties, the agreements contain a provision that if the Company fails to maintain its status as a well-capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations. Similarly, the Company could be required to settle its obligations under certain of its agreements if certain credit ratings fall below specified standards or if specific regulatory events occur, such as a publicly issued memorandum of understanding, cease and desist order, or a termination of insurance coverage by the FDIC. As of March 31, 2017 and December 31, 2016, the notional values or contractual amounts and fair values of the Company’s derivatives not designated in hedge relationships were as follows (dollars in thousands):
Swap fee income, as included in non-interest income, was $0.3 million for the three months ended March 31, 2017 and $0.7 million for the three months ended March 31, 2016. The Company generally posts collateral against derivative liabilities in the form of cash. Collateral posted against derivative liabilities was $6.3 million and $5.0 million as of March 31, 2017 and December 31, 2016, respectively. Derivative assets and liabilities are recorded at fair value on the balance sheet and do not take into account the effects of master netting agreements. Master netting agreements allow the Company to settle all derivative contracts held with a single counterparty on a net basis and to offset net derivative position with related collateral where applicable. The following table illustrates the potential effect of the Company’s derivative master netting arrangements, by type of financial instrument, on the Company’s condensed consolidated balance sheet as of March 31, 2017 and December 31, 2016 (dollars in thousands):
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Income Taxes |
3 Months Ended |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes In determining the valuation of deferred tax assets (“DTA”), management considers whether it is more likely than not that some portion or all of the DTA will or will not be realized. The Company’s ultimate realization of the DTA is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. Management considers the nature and amount of historical and projected future taxable income, the scheduled reversal of DTA and liabilities, and available tax planning strategies in making this assessment. The amount of deferred taxes recognized could be impacted by changes to any of these variables. During the three months ended March 31, 2017, the Company recorded a $4.2 million income tax provision. During the three months ended March 31, 2016, the Company recorded a $1.2 million income tax provision. As of March 31, 2017, the net DTA was $40.3 million compared with a net DTA of $45.2 million as of December 31, 2016. During the first quarter of 2017 and 2016, the Company’s current taxes consisted of federal and state alternative minimum taxes and other state minimum taxes. The Company’s estimated effective income tax rate differs from the statutory income tax rate primarily due to the exclusion of certain BOLI and municipal bond interest income from taxable income, less the impact of tax affected disallowed merger costs. Other differences to the effective tax rate were related to normal recurring permanent differences and tax credits. There are a number of tax issues that impact the deferred tax asset balance, including changes in temporary differences between the financial statement recognition of revenue and expenses, applicable federal and state corporate tax rates, estimates as to the deductibility of prior losses and potential consequence of Section 382 of the Internal Revenue Code. See also “Critical Accounting Policies and Accounting Estimates - Deferred Income Taxes” included in Part II, Item 7 of the 2016 Annual Report. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements GAAP establishes a hierarchy for determining fair value measurements that includes three levels and is based upon the valuation techniques used to measure assets and liabilities. The three levels are as follows:
A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s assets and liabilities carried at fair value. Where available, fair value is based upon quoted market prices. Significant balances of the Bank’s financial assets and liabilities do not have quoted market prices. In such circumstances, fair value is based upon internal or third party models that primarily use, as inputs, observable market-based parameters, such as yields and discount rates of comparable instruments of like duration or credit quality. Valuation adjustments may be made to model results with respect to various assets or liabilities. These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes that the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain assets and liabilities could result in a different estimate of fair value at the reporting date. Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and, therefore, estimates of fair value after the condensed consolidated balance sheet date may differ significantly from the amounts presented herein. The following is a description of the valuation methodologies used for assets measured at fair value on a recurring or nonrecurring basis, as well as the general classification of such assets pursuant to valuation hierarchy: Investment securities available-for-sale: Where quoted prices for identical assets are available in an active market, investment securities available-for-sale are classified within level 1 of the hierarchy. If quoted market prices for identical securities are not available, then fair values are estimated by independent sources using pricing models and/or quoted prices of investment securities with similar characteristics or discounted cash flows. The Company has categorized its investment securities available-for-sale as level 2, since a majority of such securities are MBS which are mainly priced in this latter manner. Interest rate swap derivatives: The fair value of the interest rate lock commitments and forward sales commitments are estimated using quoted or published market prices for similar instruments, adjusted for factors such as pull-through rate assumptions based on historical information, where appropriate. The fair value of the interest rate swaps is determined using a discounted cash flow technique with values provided by third party swap dealers or consultants. The Company has determined that the majority of the inputs used to value its interest rate swap derivatives fall within Level 2. Impaired loans: In accordance with GAAP, loans are measured for impairment using one of three methods: an observable market price (if available), the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the fair value of the loan’s collateral (if collateral dependent). Estimated fair value of the loan’s collateral is determined by appraisals or independent valuations which are then adjusted for the estimated costs related to liquidation of the collateral. Management’s ongoing review of appraisal information may result in additional discounts or adjustments to valuation based upon more recent market sales activity or more current appraisal information derived from properties of similar type and/or locale. A significant portion of the Bank’s impaired loans are measured using the estimated fair market value of the collateral less the estimated costs to sell. The Company has categorized all its loans impaired during the calendar year utilizing fair value metrics as level 3. Loans that were impaired during the calendar year based on the present value of expected future cash flows discounted at the loans’ effective interest rates are not included in the table below as the loans’ effective interest rates are not based on current market rates. OREO: The Company’s OREO is measured at estimated fair value less estimated costs to sell. Fair value is generally determined based on third-party appraisals of fair value in an orderly sale. Historically, appraisals have considered comparable sales of like assets in reaching a conclusion as to fair value. Since many recent real estate sales could be termed “distressed sales”, and since a preponderance have been short-sale or foreclosure related, this has directly impacted appraisal valuation estimates. Estimated costs to sell OREO are based on standard market factors. The valuation of OREO is subject to significant external and internal judgment. Management periodically reviews OREO to determine whether the property continues to be carried at the lower of its recorded book value or estimated fair value, net of estimated costs to sell. The Company has categorized its OREO as level 3. The Company’s only financial assets measured at fair value on a recurring basis at March 31, 2017 and December 31, 2016 were as follows (dollars in thousands):
Certain assets are measured at fair value on a nonrecurring basis (e.g., the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments when there is evidence of impairment). The following table represents the assets measured at fair value on a nonrecurring basis by the Company at March 31, 2017 and December 31, 2016 (dollars in thousands):
The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at March 31, 2017 and December 31, 2016 (dollars in thousands):
The Company did not change the methodology used to determine fair value for any assets or liabilities during the three months ended March 31, 2017 or during 2016. In addition, for any given class of assets, the Company did not have any transfers between level 1, level 2, or level 3 during the three months ended March 31, 2017 or during 2016. The following disclosures are made in accordance with the provisions of GAAP, which requires the disclosure of fair value information about financial instruments where it is practicable to estimate that value. In cases where quoted market values are not available, the Company primarily uses present value techniques to estimate the fair value of its financial instruments. Valuation methods require considerable judgment, and the resulting estimates of fair value can be significantly affected by the assumptions made and methods used. Accordingly, the estimates provided herein do not necessarily indicate amounts which could be realized in a current market exchange. In addition, as the Company normally intends to hold the majority of its financial instruments until maturity, it does not expect to realize many of the estimated amounts disclosed. The disclosures also do not include estimated fair value amounts for items which are not defined as financial instruments but which may have significant value. The Company does not believe that it would be practicable to estimate a representational fair value for these types of items as of March 31, 2017 and December 31, 2016. Because GAAP excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements, any aggregation of the fair value amounts presented would not represent the underlying value of the Company. The Company uses the following methods and assumptions to estimate the fair value of its financial instruments: Cash and cash equivalents: The carrying amount approximates the estimated fair value of these instruments. Investment securities: See above description. FHLB stock: The carrying amount approximates the estimated fair value of this investment. Loans: The estimated fair value of non-impaired loans is calculated by discounting the contractual cash flows of the loans using March 31, 2017 and December 31, 2016 origination rates. The resulting amounts are adjusted to estimate the effect of changes in the credit quality of borrowers since the loans were originated. Estimated fair values for impaired loans are determined using an observable market price (if available) or the fair value of the loan’s collateral (if collateral dependent) as described above. Observable market prices for community bank loans are not generally available given the non-homogenous characteristics of such loans. BOLI: The carrying amount of both the separate and general account BOLI approximates the estimated fair value of these instruments. Fair values of insurance policies owned are based on the insurance contracts’ cash surrender values. MSRs: The estimated fair value of MSRs is calculated by discounting the expected future contractual cash flows. Factors considered in the estimated fair value calculation include prepayment speed forecasts, market discount rates, earning rates, servicing costs, acquisition costs, ancillary income, and borrower rates. Deposits: The estimated fair value of demand deposits, consisting of checking, interest bearing demand, and savings deposit accounts, is represented by the amounts payable on demand. At the reporting date, the estimated fair value of time deposits is calculated by discounting the scheduled cash flows using the March 31, 2017 and December 31, 2016 rates offered on those instruments. Other borrowings: The fair value of other borrowings (including federal funds purchased, if any) is estimated using discounted cash flow analysis based on the Bank’s March 31, 2017 and December 31, 2016 incremental borrowing rates for similar types of borrowing arrangements. Loan commitments and standby letters of credit: The majority of the Bank’s commitments to extend credit have variable interest rates and “escape” clauses if the customer’s credit quality deteriorates. Therefore, the fair values of these items are not significant and are not included in the following table. The estimated fair values of the Company’s significant on-balance sheet financial instruments at March 31, 2017 and December 31, 2016 were approximately as follows (dollars in thousands):
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Regulatory Matters |
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Regulated Operations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Matters | Regulatory Matters Bancorp and the Bank are subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Bancorp and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Bancorp’s and the Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to provide for capital adequacy require Bancorp and the Bank to maintain minimum amounts and ratios (set forth in the tables below) of Tier 1 capital to average assets, common equity Tier 1 capital to risk-weighted assets (“CET1”), and Tier 1 and total capital to risk-weighted assets (all as defined in the regulations). Federal banking regulators are required to take prompt corrective action if an insured depository institution fails to satisfy certain minimum capital requirements. Such actions could potentially include a leverage capital limit, a risk-based capital requirement, and any other measure of capital deemed appropriate by the federal banking regulator for measuring the capital adequacy of an insured depository institution. In addition, payment of dividends by Bancorp and the Bank are subject to restriction by state and federal regulators and availability of retained earnings. In July 2013, the Board of Governors of the Federal Reserve System and the FDIC approved the final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (“Basel III”). Under the final rules, which became effective for the Bancorp and the Bank on January 1, 2015 and are subject to a phase-in period through January 1, 2019, minimum requirements increased for both the quantity and quality of capital held by the Bancorp and the Bank. The rules include a CET1ratio of 4.5% and a capital conservation buffer of 2.5% above the regulatory minimum risk-based capital requirements, which when fully phased-in, effectively results in a minimum CET1 ratio of 7.0%. Basel III also (i) raises the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0% (which, with the capital conservation buffer, effectively results in a minimum Tier 1 capital ratio of 8.5% when fully phased-in), (ii) effectively results in a minimum total capital to risk-weighted assets ratio of 10.5% (with the capital conservation buffer fully phased-in), and (iii) requires a minimum leverage ratio of 4.0%. Basel III also makes changes to risk weights for certain assets and off-balance-sheet exposures. Bancorp’s and Bank’s actual capital amounts and ratios and the required capital ratios under the prompt corrective action framework as of March 31, 2017 and December 31, 2016 are presented in the following table (dollars in thousands):
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is subject to legal proceedings, claims, and litigation arising in the ordinary course of business. While the outcome of these matters is currently not determinable, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. |
New Authoritative Accounting Guidance |
3 Months Ended |
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Mar. 31, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
New Authoritative Accounting Guidance | New Authoritative Accounting Guidance In March 2017, the FASB issued ASU 2017-08, “Receivables- Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities” (“ASU 2017-08”). ASU 2017-08 shortens the amortization period for certain purchased callable debt securities held at a premium. The amendment requires the premium to be amortized to the earliest call date. ASU 2017-08 does not require an accounting change for securities held at a discount; the discount will continue to be amortized to maturity. ASU 2017-08 is effective for fiscal years beginning after December 15, 2018. As we approach the effective date, we will consult our third party investment carriers to insure that the securities held at a premium are being accounted for effectively. In March 2017, the FASB issued ASU 2017-07, “Compensation- Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 2017-07”). The amendment requires that the benefit service costs be segregated from other components of the net benefit cost. Further, it is required that the service costs and other benefit costs be presented as a separate line item in the income statement, or if the two are presented together then the line item description must disclose both costs. ASU 2017-07 is effective for fiscal years beginning after December 15, 2017. As we approach the effective date, we will evaluate which classification is the most useful and transparent to our shareholders. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating a step from the goodwill impairment test. The amendments in this update provide that an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. As we approach the effective date, we will consult the updated goodwill impairment test steps to determine if an impairment charge should be recognized. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2016-15”). ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update provide a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this update (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. As we approach the effective date, we will consult the framework to determine if the event should be disclosed as an acquisition or disposal of an asset or business. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 addresses the classification of debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of Corporate-Owned Life Insurance policies, including Bank-Owned Life Insurance policies, distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating which classifications apply to our business and will be prepared to report these classifications in the statement of cash flows. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 requires financial assets that are measured at amortized cost to be presented as the net amount expected to be collected. The income statement will reflect the measurement of credit losses for newly recognized financial assets and for the expected increase or decrease of expected credit losses. ASU 2016-13 notes that credit losses related to available-for-sale debt securities should be recorded through an allowance for credit losses. The initial allowance for credit losses, for purchased available-for-sale securities, is added to the purchase price rather than reported as a credit loss expense. Subsequent changes in the allowance are recorded as credit loss expense. Interest income should be recognized based on the effective interest rate, excluding the discount attributed to the assessment of credit loss at acquisition. ASU 2016-13 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating our available-for-sale security portfolio in order to determine the most efficient way to track the net amount expected to be collected on the security. As we approach the effective date, we will continue to develop this process in order to report on the expected increase or decrease of expected credit losses. In March 2016, the FASB issued ASU 2016-09, “Compensation- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 describes simplifications related to accounting and presenting share-based payment awards. ASU 2016-09 states that excess tax benefits and tax deficiencies are to be recognized as income tax expense or benefit in the income statement; excess tax benefits should be classified with other income tax as an operating activity on the statement of cash flows; an entity may make an entity-wide accounting policy to either estimate the number of awards that are expected to vest or account for forfeitures as they occur; and cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Adoption of ASU 2016-09 did not have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. While the effect of the pronouncement has not yet been quantified, we are continuing to evaluate the impact of recording the right-of-use assets and liabilities on our balance sheet. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments- Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). ASU 2016-01 simplifies the impairment assessment of equity investments, clarifies reporting disclosure requirements for financial instruments measured at amortized cost, and requires the exit price notion be disclosed when measuring fair value of financial instruments. ASU 2016-01 details the required separate presentation in other comprehensive income for the change in fair value of a liability related to change in instrument specific credit risk and details the required separate presentation of financial assets and liabilities by measurement category, and clarifies the need for a valuation allowance on DTA related to available-for-sale securities. ASU 2016-01 is effective for annual and interim reporting periods beginning after December 15, 2017. Adoption of ASU 2016-01 is not expected to have a material impact on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 establishes a comprehensive revenue recognition standard for virtually all industries under GAAP, including those that previously followed industry-specific guidance such as the real estate, construction and software industries. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires five basic steps: i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016 with three transition methods available - full retrospective, retrospective and cumulative effect approach. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers: Deferral of the Effective Date” (“ASU 2015-14”). ASU 2015-14 amended the effective date to December 15, 2017. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers: Principal Versus Agent Considerations” (“ASU 2016-08”). ASU 2016-08 defines the roles of a principal and agent in revenue recognition and determines when control of the good or service is transferred to the customer. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” (“ASU 2016-10”). ASU 2016-10 establishes guidance on identifying performance obligations and licensing implementation. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers: Narrow- Scope Improvements and Practical Expedients” (“ASU 2016-12”). ASU 2016-12 clarifies the objective of the collectability criteria and notes the differences in applying the update at transition and on an ongoing basis. In December 2016, the FASB issued ASU 2016-20, “Revenue from Contracts with Customers: Technical Corrections and Improvements to Topic 606” (“ASU 2016-20”). ASU 2016-20 provides clarity on codification or to correct unintended application of guidance. Adoption of ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 are not expected to have a material effect on our consolidated financial statements. |
Basis of Presentation (Policies) |
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Mar. 31, 2017 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Basis of Accounting | The accompanying interim condensed consolidated financial statements include the accounts of Cascade Bancorp (“Bancorp”), an Oregon-chartered single bank holding company, and its wholly-owned subsidiary, Bank of the Cascades (the “Bank”) (collectively, the “Company” or “Cascade”). All significant inter-company accounts and transactions have been eliminated in consolidation. |
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Consolidation | The interim condensed consolidated financial statements have been prepared by the Company without audit and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, certain financial information and footnotes have been omitted or condensed. In the opinion of management, the interim condensed consolidated financial statements include all adjustments (all of which are of a normal and recurring nature) necessary for the fair presentation of the results of the interim periods presented. |
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Use of Estimates | In preparing the interim condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the balance sheets and income and expenses for the reporting periods. Actual results could differ from those estimates. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period. |
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New Accounting Pronouncements | New Authoritative Accounting Guidance In March 2017, the FASB issued ASU 2017-08, “Receivables- Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities” (“ASU 2017-08”). ASU 2017-08 shortens the amortization period for certain purchased callable debt securities held at a premium. The amendment requires the premium to be amortized to the earliest call date. ASU 2017-08 does not require an accounting change for securities held at a discount; the discount will continue to be amortized to maturity. ASU 2017-08 is effective for fiscal years beginning after December 15, 2018. As we approach the effective date, we will consult our third party investment carriers to insure that the securities held at a premium are being accounted for effectively. In March 2017, the FASB issued ASU 2017-07, “Compensation- Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 2017-07”). The amendment requires that the benefit service costs be segregated from other components of the net benefit cost. Further, it is required that the service costs and other benefit costs be presented as a separate line item in the income statement, or if the two are presented together then the line item description must disclose both costs. ASU 2017-07 is effective for fiscal years beginning after December 15, 2017. As we approach the effective date, we will evaluate which classification is the most useful and transparent to our shareholders. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating a step from the goodwill impairment test. The amendments in this update provide that an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. As we approach the effective date, we will consult the updated goodwill impairment test steps to determine if an impairment charge should be recognized. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2016-15”). ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update provide a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this update (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. As we approach the effective date, we will consult the framework to determine if the event should be disclosed as an acquisition or disposal of an asset or business. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 addresses the classification of debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of Corporate-Owned Life Insurance policies, including Bank-Owned Life Insurance policies, distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating which classifications apply to our business and will be prepared to report these classifications in the statement of cash flows. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 requires financial assets that are measured at amortized cost to be presented as the net amount expected to be collected. The income statement will reflect the measurement of credit losses for newly recognized financial assets and for the expected increase or decrease of expected credit losses. ASU 2016-13 notes that credit losses related to available-for-sale debt securities should be recorded through an allowance for credit losses. The initial allowance for credit losses, for purchased available-for-sale securities, is added to the purchase price rather than reported as a credit loss expense. Subsequent changes in the allowance are recorded as credit loss expense. Interest income should be recognized based on the effective interest rate, excluding the discount attributed to the assessment of credit loss at acquisition. ASU 2016-13 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating our available-for-sale security portfolio in order to determine the most efficient way to track the net amount expected to be collected on the security. As we approach the effective date, we will continue to develop this process in order to report on the expected increase or decrease of expected credit losses. In March 2016, the FASB issued ASU 2016-09, “Compensation- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 describes simplifications related to accounting and presenting share-based payment awards. ASU 2016-09 states that excess tax benefits and tax deficiencies are to be recognized as income tax expense or benefit in the income statement; excess tax benefits should be classified with other income tax as an operating activity on the statement of cash flows; an entity may make an entity-wide accounting policy to either estimate the number of awards that are expected to vest or account for forfeitures as they occur; and cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Adoption of ASU 2016-09 did not have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. While the effect of the pronouncement has not yet been quantified, we are continuing to evaluate the impact of recording the right-of-use assets and liabilities on our balance sheet. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments- Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). ASU 2016-01 simplifies the impairment assessment of equity investments, clarifies reporting disclosure requirements for financial instruments measured at amortized cost, and requires the exit price notion be disclosed when measuring fair value of financial instruments. ASU 2016-01 details the required separate presentation in other comprehensive income for the change in fair value of a liability related to change in instrument specific credit risk and details the required separate presentation of financial assets and liabilities by measurement category, and clarifies the need for a valuation allowance on DTA related to available-for-sale securities. ASU 2016-01 is effective for annual and interim reporting periods beginning after December 15, 2017. Adoption of ASU 2016-01 is not expected to have a material impact on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 establishes a comprehensive revenue recognition standard for virtually all industries under GAAP, including those that previously followed industry-specific guidance such as the real estate, construction and software industries. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires five basic steps: i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016 with three transition methods available - full retrospective, retrospective and cumulative effect approach. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers: Deferral of the Effective Date” (“ASU 2015-14”). ASU 2015-14 amended the effective date to December 15, 2017. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers: Principal Versus Agent Considerations” (“ASU 2016-08”). ASU 2016-08 defines the roles of a principal and agent in revenue recognition and determines when control of the good or service is transferred to the customer. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” (“ASU 2016-10”). ASU 2016-10 establishes guidance on identifying performance obligations and licensing implementation. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers: Narrow- Scope Improvements and Practical Expedients” (“ASU 2016-12”). ASU 2016-12 clarifies the objective of the collectability criteria and notes the differences in applying the update at transition and on an ongoing basis. In December 2016, the FASB issued ASU 2016-20, “Revenue from Contracts with Customers: Technical Corrections and Improvements to Topic 606” (“ASU 2016-20”). ASU 2016-20 provides clarity on codification or to correct unintended application of guidance. Adoption of ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 are not expected to have a material effect on our consolidated financial statements. |
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Fair Value Measurement | Fair Value Measurements GAAP establishes a hierarchy for determining fair value measurements that includes three levels and is based upon the valuation techniques used to measure assets and liabilities. The three levels are as follows:
A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s assets and liabilities carried at fair value. Where available, fair value is based upon quoted market prices. Significant balances of the Bank’s financial assets and liabilities do not have quoted market prices. In such circumstances, fair value is based upon internal or third party models that primarily use, as inputs, observable market-based parameters, such as yields and discount rates of comparable instruments of like duration or credit quality. Valuation adjustments may be made to model results with respect to various assets or liabilities. These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes that the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain assets and liabilities could result in a different estimate of fair value at the reporting date. Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and, therefore, estimates of fair value after the condensed consolidated balance sheet date may differ significantly from the amounts presented herein. The following is a description of the valuation methodologies used for assets measured at fair value on a recurring or nonrecurring basis, as well as the general classification of such assets pursuant to valuation hierarchy: Investment securities available-for-sale: Where quoted prices for identical assets are available in an active market, investment securities available-for-sale are classified within level 1 of the hierarchy. If quoted market prices for identical securities are not available, then fair values are estimated by independent sources using pricing models and/or quoted prices of investment securities with similar characteristics or discounted cash flows. The Company has categorized its investment securities available-for-sale as level 2, since a majority of such securities are MBS which are mainly priced in this latter manner. Interest rate swap derivatives: The fair value of the interest rate lock commitments and forward sales commitments are estimated using quoted or published market prices for similar instruments, adjusted for factors such as pull-through rate assumptions based on historical information, where appropriate. The fair value of the interest rate swaps is determined using a discounted cash flow technique with values provided by third party swap dealers or consultants. The Company has determined that the majority of the inputs used to value its interest rate swap derivatives fall within Level 2. Impaired loans: In accordance with GAAP, loans are measured for impairment using one of three methods: an observable market price (if available), the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the fair value of the loan’s collateral (if collateral dependent). Estimated fair value of the loan’s collateral is determined by appraisals or independent valuations which are then adjusted for the estimated costs related to liquidation of the collateral. Management’s ongoing review of appraisal information may result in additional discounts or adjustments to valuation based upon more recent market sales activity or more current appraisal information derived from properties of similar type and/or locale. A significant portion of the Bank’s impaired loans are measured using the estimated fair market value of the collateral less the estimated costs to sell. The Company has categorized all its loans impaired during the calendar year utilizing fair value metrics as level 3. Loans that were impaired during the calendar year based on the present value of expected future cash flows discounted at the loans’ effective interest rates are not included in the table below as the loans’ effective interest rates are not based on current market rates. OREO: The Company’s OREO is measured at estimated fair value less estimated costs to sell. Fair value is generally determined based on third-party appraisals of fair value in an orderly sale. Historically, appraisals have considered comparable sales of like assets in reaching a conclusion as to fair value. Since many recent real estate sales could be termed “distressed sales”, and since a preponderance have been short-sale or foreclosure related, this has directly impacted appraisal valuation estimates. Estimated costs to sell OREO are based on standard market factors. The valuation of OREO is subject to significant external and internal judgment. Management periodically reviews OREO to determine whether the property continues to be carried at the lower of its recorded book value or estimated fair value, net of estimated costs to sell. The Company has categorized its OREO as level 3. The Company uses the following methods and assumptions to estimate the fair value of its financial instruments: Cash and cash equivalents: The carrying amount approximates the estimated fair value of these instruments. Investment securities: See above description. FHLB stock: The carrying amount approximates the estimated fair value of this investment. Loans: The estimated fair value of non-impaired loans is calculated by discounting the contractual cash flows of the loans using March 31, 2017 and December 31, 2016 origination rates. The resulting amounts are adjusted to estimate the effect of changes in the credit quality of borrowers since the loans were originated. Estimated fair values for impaired loans are determined using an observable market price (if available) or the fair value of the loan’s collateral (if collateral dependent) as described above. Observable market prices for community bank loans are not generally available given the non-homogenous characteristics of such loans. BOLI: The carrying amount of both the separate and general account BOLI approximates the estimated fair value of these instruments. Fair values of insurance policies owned are based on the insurance contracts’ cash surrender values. MSRs: The estimated fair value of MSRs is calculated by discounting the expected future contractual cash flows. Factors considered in the estimated fair value calculation include prepayment speed forecasts, market discount rates, earning rates, servicing costs, acquisition costs, ancillary income, and borrower rates. Deposits: The estimated fair value of demand deposits, consisting of checking, interest bearing demand, and savings deposit accounts, is represented by the amounts payable on demand. At the reporting date, the estimated fair value of time deposits is calculated by discounting the scheduled cash flows using the March 31, 2017 and December 31, 2016 rates offered on those instruments. Other borrowings: The fair value of other borrowings (including federal funds purchased, if any) is estimated using discounted cash flow analysis based on the Bank’s March 31, 2017 and December 31, 2016 incremental borrowing rates for similar types of borrowing arrangements. Loan commitments and standby letters of credit: The majority of the Bank’s commitments to extend credit have variable interest rates and “escape” clauses if the customer’s credit quality deteriorates. Therefore, the fair values of these items are not significant and are not included in the following table. |
Business Combinations (Tables) |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table provides a summary of the purchase price calculation as of the PPFS Acquisition Date and the identifiable assets purchased and the liabilities assumed at their estimated fair values. These fair value measurements are provisional based on third-party valuations that are currently under review and are subject to refinement for up to one year after the PPFS Acquisition Date based on additional information that may be obtained by us that existed as of the PPFS Acquisition Date.
The following is a condensed balance sheet disclosing the estimated fair value amounts of the branches acquired in the branch acquisition assigned to the major consolidated asset and liability captions at the acquisition date (dollars in thousands):
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Investment Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Gain (Loss) on Investments | The following table presents investment securities at March 31, 2017 and December 31, 2016, showing that available-for-sale and held-to-maturity securities decreased from December 31, 2016 primarily due to payoffs in MBS securities with runoff not replaced to facilitate the pending merger with FIBK (dollars in thousands):
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Investments Classified by Contractual Maturity Date | The following table presents the contractual maturities of investment securities at March 31, 2017 (dollars in thousands):
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Available For Sale Securities Continuous Unrealized Loss Position Fair Value | The following table presents the fair value and gross unrealized losses of the Bank’s investment securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2017 and December 31, 2016 (dollars in thousands):
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Loans and reserve for credit losses (Tables) |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable | The composition of the loan portfolio at March 31, 2017 and December 31, 2016 was as follows (dollars in thousands):
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Changes in Loss Share Payable Associated with Covered Loans | Changes in the loss share payable associated with covered loans for the three months ended March 31, 2017 were as follows (dollars in thousands):
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Allowance for Credit Losses on Financing Receivables | Transactions and allocations in the reserve for loan losses and unfunded loan commitments, by portfolio segment, for the three months ended March 31, 2017 and 2016 were as follows (dollars in thousands):
An individual loan is impaired when, based on current information and events, management believes that it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. The following table presents the reserve for loan losses and the recorded investment in loans by portfolio segment and impairment evaluation method at March 31, 2017 and December 31, 2016 (dollars in thousands):
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Financing Receivable Credit Quality Indicators | The following table presents, by portfolio class, the recorded investment in loans by internally assigned grades at March 31, 2017 and December 31, 2016 (dollars in thousands):
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Past Due Financing Receivables | The following table presents, by portfolio class, an age analysis of past due loans, including loans placed on non-accrual at March 31, 2017 and December 31, 2016 (dollars in thousands):
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Impaired Financing Receivables, By Portfolio Class | The following table presents information related to impaired loans, by portfolio class, at March 31, 2017 and December 31, 2016 (dollars in thousands):
The following table presents, by portfolio class, the average recorded investment in impaired loans for the three months ended March 31, 2017 and 2016 (dollars in thousands):
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Average Recorded Investment In Impaired Loans | The following table presents information related to impaired loans, by portfolio class, at March 31, 2017 and December 31, 2016 (dollars in thousands):
The following table presents, by portfolio class, the average recorded investment in impaired loans for the three months ended March 31, 2017 and 2016 (dollars in thousands):
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Schedule of Financing Receivables, Non Accrual Status | Information with respect to the Company’s non-performing loans, by portfolio class, at March 31, 2017 and December 31, 2016 is as follows (dollars in thousands):
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Troubled Debt Restructurings on Financing Receivables | The following table presents, by portfolio segment, the post modification recorded investment for TDRs restructured during the three months ended March 31, 2017 and 2016.
The following table presents, by portfolio segment, the information with respect to the Company’s loans that were modified and recorded as TDRs during the three months ended March 31, 2017 and 2016 (dollars in thousands).
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Post Modification Troubled Debt Restructurings on Financing Receivables | The following table presents, by portfolio segment, the post modification recorded investment for TDRs restructured during the three months ended March 31, 2017 and 2016.
The following table presents, by portfolio segment, the information with respect to the Company’s loans that were modified and recorded as TDRs during the three months ended March 31, 2017 and 2016 (dollars in thousands).
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Other Real Estate Owned ("OREO"), net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Real Estate Roll Forward | The following table presents activity related to OREO for the periods shown (dollars in thousands):
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Schedule Of Activity In Other Real Estate Owned Valuation Allowance | The following table summarizes activity in the OREO valuation allowance for the periods shown (dollars in thousands):
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Schedule Of Other Real Estate Owned Expenses | The following table summarizes OREO (income) expenses for the periods shown (dollars in thousands):
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Mortgage Servicing Rights ("MSRs") (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Servicing Assets at Fair Value | The following table presents activity in MSRs for the periods shown (dollars in thousands):
|
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Mortgage Banking Income | Mortgage banking income, net, consisted of the following for the periods shown (dollars in thousands):
|
Goodwill and other intangible assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of CDI activity | The following table sets forth activity for CDI for the three months ended March 31, 2017 and 2016 (dollars in thousands).
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of CDI future amortization expenses | The following table provides the estimated future amortization expense of CDI for the remaining period ending December 31, 2017 and the succeeding four years (dollars in thousands):
|
Basic and Diluted Net Income per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share Reconciliation | The numerators and denominators used in computing basic and diluted net income per common share for the three months ended March 31, 2017 and 2016 can be reconciled as follows (dollars in thousands, except per share data):
|
Stock-Based Compensation (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity | The following table presents the activity related to stock options for the three months ended March 31, 2017 and 2016:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Nonvested Restricted Stock Units Activity | The following table presents the activity related to non-vested restricted stock for the three months ended March 31, 2017:
|
Interest Rate Swap Derivatives (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Outstanding Derivative Positions | As of March 31, 2017 and December 31, 2016, the notional values or contractual amounts and fair values of the Company’s derivatives not designated in hedge relationships were as follows (dollars in thousands):
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Offsetting Assets and Liabilities | The following table illustrates the potential effect of the Company’s derivative master netting arrangements, by type of financial instrument, on the Company’s condensed consolidated balance sheet as of March 31, 2017 and December 31, 2016 (dollars in thousands):
|
Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Financial Assets Measured On Recurring Basis | The Company’s only financial assets measured at fair value on a recurring basis at March 31, 2017 and December 31, 2016 were as follows (dollars in thousands):
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Fair Value, Assets and Liabilities Measured on Nonrecurring Basis | The following table represents the assets measured at fair value on a nonrecurring basis by the Company at March 31, 2017 and December 31, 2016 (dollars in thousands):
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Fair Value Inputs, Assets, Quantitative Information | The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at March 31, 2017 and December 31, 2016 (dollars in thousands):
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Fair Value, by Balance Sheet Grouping | The estimated fair values of the Company’s significant on-balance sheet financial instruments at March 31, 2017 and December 31, 2016 were approximately as follows (dollars in thousands):
|
Regulatory Matters (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulated Operations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations | Bancorp’s and Bank’s actual capital amounts and ratios and the required capital ratios under the prompt corrective action framework as of March 31, 2017 and December 31, 2016 are presented in the following table (dollars in thousands):
|
Business Combinations Liabilities and Assets Acquired (Details) - USD ($) $ / shares in Units, $ in Thousands |
Aug. 01, 2016 |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 85,852 | $ 85,852 | |
Prime Pacific Financial Services | |||
Business Acquisition [Line Items] | |||
Cash paid in lieu of fractional shares | $ 1 | ||
Total purchase price | 16,239 | ||
Cash and cash equivalents | 7,625 | ||
FHLB stock | 424 | ||
Loans, net | 102,670 | ||
Premises and equipment | 5,333 | ||
Deferred tax asset | 2,488 | ||
Bank owned life insurance | 1,491 | ||
Other assets | 2,364 | ||
Total assets | 122,395 | ||
Deposits | 101,544 | ||
Other liabilities | 8,212 | ||
Total liabilities | 109,756 | ||
Net identifiable assets acquired | 12,639 | ||
Intangible asset acquired | 342 | ||
Goodwill | $ 3,258 | ||
Common Stock | Prime Pacific Financial Services | |||
Business Acquisition [Line Items] | |||
Cascade shares issued for PPFS shares | 2,921,012 | ||
Cascade share price (usd per share) | $ 5.56 | ||
Consideration from common stock conversion (0.3050 ratio) | $ 16,238 |
Business Combinations Branch Acquisitions Liabilities and Assets Acquired (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
Mar. 04, 2016 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 85,852 | $ 85,852 | |
Bank Of America, Branch Locations | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 456,611 | ||
Premises and equipment, net | 3,113 | ||
Core deposit intangibles | 6,427 | ||
Goodwill | 3,984 | ||
Other assets | 463 | ||
Total assets | 470,598 | ||
Deposits | 469,889 | ||
Other liabilities | 709 | ||
Total liabilities | $ 470,598 |
Investment Securities Narrative (Details) - securities |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Number of securities in the loss position | 79 | 87 |
Loans and reserve for credit losses (Receivable) (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Covered Loans, Loss Share Payable (Receivable) [Roll Forward] | |
Balance at beginning of period | $ 76 |
Paid to FDIC | (76) |
FDIC reimbursement | 31 |
Balance at end of period | $ 31 |
Other Real Estate Owned ("OREO"), net (Other Real Estate Roll Forward) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Other Real Estate Owned [Roll Forward] | ||
Balance at beginning of period | $ 1,677 | $ 3,274 |
Additions | 50 | 0 |
Balances at end of period | $ 1,727 | $ 3,274 |
Other Real Estate Owned ("OREO"), net (Schedule of Activity in Other Real Estate Owned Valuation Allowance) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Real Estate Owned Valuation Allowance [Roll Forward] | ||
Balance at beginning of period | $ 776 | $ 776 |
Additions to the valuation allowance | 0 | 0 |
Reductions due to sales | 0 | 0 |
Balance at end of period | $ 776 | $ 776 |
Other Real Estate Owned ("OREO"), net (Schedule of Other Real Estate Owned Expenses) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Real Estate [Abstract] | ||
Operating costs | $ 10 | $ 45 |
Additions to the valuation allowance | 0 | 167 |
Total | $ 10 | $ 212 |
Mortgage Servicing Rights ("MSRs") (Narrative) (Details) - MSRs - USD ($) |
Mar. 31, 2017 |
Dec. 31, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|
Servicing Assets at Fair Value [Line Items] | ||||
MSRs | $ 2,423,000 | $ 2,348,000 | $ 2,151,000 | $ 2,186,000 |
Valuation allowance | $ 0 | $ 0 |
Mortgage Servicing Rights ("MSRs") (Schedule of Serving Assets at Fair Value) (Details) - MSRs - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Servicing Asset at Fair Value, Amount [Roll Forward] | ||
Balance at beginning of period | $ 2,348 | $ 2,186 |
Additions | 242 | 128 |
Amortization | (167) | (163) |
Balances at end of period | $ 2,423 | $ 2,151 |
Mortgage Servicing Rights ("MSRs") (Mortgage Banking Income) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Servicing Assets at Fair Value [Line Items] | ||
Mortgage banking income, net | $ 1,147 | $ 495 |
MSRs | ||
Servicing Assets at Fair Value [Line Items] | ||
Origination and processing fees, MBAs | 103 | 58 |
Gain on sales of loans, net, MBAs | 986 | 439 |
Servicing fees | 225 | 161 |
Amortization | (167) | (163) |
Mortgage banking income, net | $ 1,147 | $ 495 |
Goodwill and other intangible assets (Details) - USD ($) $ in Thousands |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 04, 2016 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Aug. 01, 2016 |
Dec. 31, 2014 |
|
Goodwill [Line Items] | |||||
Goodwill | $ 85,852 | $ 85,852 | |||
Core Deposits | |||||
Goodwill [Line Items] | |||||
Useful life | 10 years | ||||
Prime Pacific Financial Services | |||||
Goodwill [Line Items] | |||||
Goodwill | $ 3,258 | ||||
Bank Of America, Branch Locations | |||||
Goodwill [Line Items] | |||||
Goodwill | $ 3,984 | ||||
Bank Of America, Branch Locations | Core Deposits | |||||
Goodwill [Line Items] | |||||
Useful life | 9 years 12 months | ||||
Home Federal Bank | |||||
Goodwill [Line Items] | |||||
Goodwill | $ 78,600 |
Goodwill and other intangible assets - Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Finite-lived Intangible Assets [Roll Forward] | ||||
CDI current period amortization | $ (374) | $ (205) | ||
Core Deposits | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross CDI balance, beginning of period | $ 14,966 | $ 8,196 | ||
Accumulated amortization, beginning of period | $ (2,649) | $ (1,333) | ||
Finite-lived Intangible Assets [Roll Forward] | ||||
CDI, net, beginning of period | 12,317 | 6,863 | ||
Established through acquisitions | 0 | 6,427 | ||
CDI current period amortization | (374) | (205) | ||
Total CDI, end of period | $ 11,943 | $ 13,085 |
Goodwill and other intangible assets - Future Amortization Expense (Details) $ in Thousands |
Mar. 31, 2017
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2017 | $ 1,122 |
2018 | 1,497 |
2019 | 1,497 |
2020 | 1,497 |
2021 | $ 1,497 |
Basic and Diluted Net Income per Share (Schedule of Earnings Per Share Reconciliation) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Earnings Per Share [Abstract] | ||
Net income | $ 6,762 | $ 1,940 |
Weighted-average shares outstanding - basic (in shares) | 75,059,838 | 71,883,745 |
Dilutive securities (in shares) | 882,770 | 269,191 |
Weighted-average shares outstanding - diluted (in shares) | 75,942,608 | 72,152,936 |
Common stock equivalent shares excluded due to antidilutive effect (in shares) | 0 | 3,361,524 |
Basic and diluted: | ||
Net income per common share (in dollars per share) | $ 0.09 | $ 0.03 |
Net income per common share (diluted) (in dollars per share) | $ 0.09 | $ 0.03 |
Stock-Based Compensation (Schedule of Nonvested Restricted Stock Units Activity) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2017
$ / shares
shares
| |
Number of shares | |
Non-vested at beginning of period (in shares) | shares | 1,148,975 |
Granted (in shares) | shares | 0 |
Vested (in shares) | shares | 0 |
Canceled / forfeited (in shares) | shares | (2,841) |
Non-vested at end of period (in shares) | shares | 1,146,134 |
Weighted- average grant date fair value per share | |
Non-vested at beginning of period (in dollars per share) | $ / shares | $ 6.39 |
Granted (in dollars per share) | $ / shares | 0.00 |
Vested (in dollars per share) | $ / shares | 0.00 |
Canceled / forfeited (in dollars per share) | $ / shares | 5.28 |
Non-vested at end of period (in dollars per share) | $ / shares | $ 6.39 |
Interest Rate Swap Derivatives (Schedule Of Notional Amounts Of Outstanding Derivative Positions) (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Derivative [Line Items] | |||
Swap fee income | $ (256) | $ (666) | |
Collateral already posted, fair value | 6,300 | $ 5,000 | |
Not Designated as Hedging Instrument | Interest Rate Swap | |||
Derivative [Line Items] | |||
Asset derivative, notional/contract amount | 263,281 | 256,950 | |
Liability derivatives, notional/contract amount | 263,281 | 256,950 | |
Not Designated as Hedging Instrument | Interest Rate Swap | Other Assets | |||
Derivative [Line Items] | |||
Asset derivative, fair value | 3,053 | 5,239 | |
Not Designated as Hedging Instrument | Interest Rate Swap | Other Liabilities | |||
Derivative [Line Items] | |||
Liability derivatives, fair value | $ 3,053 | $ 5,239 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Income tax expense (benefit) | $ 4,245 | $ 1,157 | |
Deferred tax assets, net | $ 40,333 | $ 45,172 |
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