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Section 1: 10-Q (10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________________________________________
Form 10-Q
________________________________________________________________________________________
 Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
For Quarter ended March 31, 2019
 
Commission File Number 1-35746
________________________________________________________________________________________

Bryn Mawr Bank Corporation
(Exact name of registrant as specified in its charter)
________________________________________________________________________________________
Pennsylvania
23-2434506
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
identification No.)
 
 
801 Lancaster Avenue, Bryn Mawr, Pennsylvania
19010
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code (610) 525-1700
Securities registered pursuant to Section 12(b) of the Act:
Title of class
Trading Symbol
Name of exchange on which registered
Common Stock, $1 par value
BMTC
The NASDAQ Stock Market
Not Applicable
Former name, former address and fiscal year, if changed since last report.
 ________________________________________________________________________________________
Indicate by checkmark whether the registrant (1) has filed all reports to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No   ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  ☒    Accelerated filer  ☐
Non-accelerated filer  ☐    Smaller reporting company  ☐ Emerging growth company  ☐ 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes  ☐    No   ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Classes
 
Outstanding at May 1, 2019
Common Stock, par value $1
 
20,147,151
 


Table of Contents

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
 
FORM 10-Q
 
QUARTER ENDED MARCH 31, 2019

Index 
 
PART I -
 
 
 
 
ITEM 1.
 
 
 
 
 
Page 3
 
 
 
 
Page 8
 
 
 
ITEM 2.
Page 54
 
 
 
ITEM 3.
Page 74
 
 
 
ITEM 4.
Page 74
 
 
 
PART II -
Page 75
 
 
 
ITEM 1.
Page 75
 
 
 
ITEM 1A.
Page 75
 
 
 
ITEM 2.
Page 76
 
 
 
ITEM 3.
Page 77
 
 
 
ITEM 4.
Page 77
 
 
 
ITEM 5.
Page 77
 
 
 
ITEM 6.
Page 78



Table of Contents

PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets - Unaudited
(dollars in thousands)
 
March 31,
2019
 
December 31,
2018
Assets
 
 
 
 
Cash and due from banks
 
$
13,656

 
$
14,099

Interest bearing deposits with banks
 
29,449

 
34,357

Cash and cash equivalents
 
43,105

 
48,456

Investment securities available for sale, at fair value (amortized cost of $562,528 and $745,328 as of March 31, 2019 and December 31, 2018, respectively)
 
559,983

 
737,442

Investment securities held to maturity, at amortized cost (fair value of $10,324 and $8,438 as of March 31, 2019 and December 31, 2018, respectively)
 
10,457

 
8,684

Investment securities, trading
 
8,189

 
7,502

Loans held for sale
 
2,884

 
1,749

Portfolio loans and leases, originated
 
3,032,270

 
2,885,251

Portfolio loans and leases, acquired
 
491,244

 
541,903

Total portfolio loans and leases
 
3,523,514

 
3,427,154

Less: Allowance for originated loan and lease losses
 
(20,519
)
 
(19,329
)
Less: Allowance for acquired loan and lease losses
 
(97
)
 
(97
)
Total allowance for loans and lease losses
 
(20,616
)

(19,426
)
Net portfolio loans and leases
 
3,502,898

 
3,407,728

Premises and equipment, net
 
67,279

 
65,648

Operating lease right-of-use assets
 
43,985

 

Accrued interest receivable
 
13,123

 
12,585

Mortgage servicing rights
 
4,910

 
5,047

Bank owned life insurance
 
58,138

 
57,844

Federal Home Loan Bank stock
 
10,526

 
14,530

Goodwill
 
184,012

 
184,012

Intangible assets
 
21,994

 
23,455

Other investments
 
16,526

 
16,526

Other assets
 
83,984

 
61,277

Total assets
 
$
4,631,993

 
$
4,652,485

Liabilities
 
 
 
 
Deposits:
 
 
 
 
Noninterest-bearing
 
$
882,310

 
$
901,619

Interest-bearing
 
2,755,307

 
2,697,468

Total deposits
 
3,637,617

 
3,599,087

 
 
 
 
 
Short-term borrowings
 
124,214

 
252,367

Long-term FHLB advances
 
55,407

 
55,374

Subordinated notes
 
98,571

 
98,526

Junior subordinated debentures
 
21,622

 
21,580

Operating lease liabilities
 
48,224

 

Accrued interest payable
 
8,674

 
6,652

Other liabilities
 
62,557

 
54,195

Total liabilities
 
4,056,886

 
4,087,781

Shareholders' equity
 
 
 
 
Common stock, par value $1; authorized 100,000,000 shares; issued 24,577,248 and 24,545,348 shares as of March 31, 2019 and December 31, 2018, respectively and outstanding of 20,167,729 and 20,163,816 as of March 31, 2019 and December 31, 2018, respectively
 
24,577

 
24,545

Paid-in capital in excess of par value
 
375,655

 
374,010

Less: Common stock in treasury at cost - 4,409,519 and 4,381,532 shares as of March 31, 2019 and December 31, 2018, respectively
 
(76,974
)
 
(75,883
)
Accumulated other comprehensive loss, net of tax
 
(3,278
)
 
(7,513
)
Retained earnings
 
255,813

 
250,230

Total Bryn Mawr Bank Corporation shareholders' equity
 
575,793

 
565,389

Noncontrolling interest
 
(686
)
 
(685
)
Total shareholders' equity
 
575,107

 
564,704

Total liabilities and shareholders' equity
 
$
4,631,993

 
$
4,652,485


The accompanying notes are an integral part of the Unaudited Consolidated Financial Statements.

Page 3

Table of Contents

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income - Unaudited
 
Three Months Ended
March 31,
(dollars in thousands, except share and per share data)
2019
 
2018
Interest income:
 
 
 
Interest and fees on loans and leases
$
44,837

 
$
40,689

Interest on cash and cash equivalents
132

 
53

Interest on investment securities:
 
 
 
Taxable
3,450

 
2,706

Non-taxable
47

 
84

Dividends
2

 
2

Total interest income
48,468

 
43,534

Interest expense:
 
 
 
Interest on deposits
8,097

 
3,472

Interest on short-term borrowings
943

 
630

Interest on FHLB advances and other borrowings
278

 
562

Interest on subordinated notes
1,145

 
1,143

Interest on junior subordinated debentures
358

 
288

Total interest expense
10,821

 
6,095

Net interest income
37,647

 
37,439

Provision for loan and lease losses
3,736

 
1,030

Net interest income after provision for loan and lease losses
33,911

 
36,409

Noninterest income:
 
 
 
Fees for wealth management services
10,392

 
10,308

Insurance commissions
1,672

 
1,693

Capital markets revenue
2,219

 
666

Service charges on deposits
808

 
713

Loan servicing and other fees
609

 
686

Net gain on sale of loans
319

 
518

Net gain on sale of investment securities available for sale

 
7

Net gain (loss) on sale of other real estate owned ("OREO")
(24
)
 
176

Dividends on FHLB and FRB stock
411

 
431

Other operating income
2,847

 
4,338

Total noninterest income
19,253

 
19,536

Noninterest expenses:
 
 
 
Salaries and wages
20,901

 
15,982

Employee benefits
4,166

 
3,708

Occupancy and bank premises
3,252

 
3,050

Furniture, fixtures, and equipment
2,389

 
1,898

Advertising
415

 
461

Amortization of intangible assets
938

 
879

Due diligence, merger-related and merger integration expenses

 
4,319

Professional fees
1,320

 
748

Pennsylvania bank shares tax
409

 
473

Data processing
1,320

 
1,195

Other operating expenses
4,614

 
3,317

Total noninterest expenses
39,724

 
36,030

Income before income taxes
13,440

 
19,915

Income tax expense
2,764

 
4,630

Net income
$
10,676

 
$
15,285

Net (loss) attributable to noncontrolling interest
(1
)
 
(1
)
Net income attributable to Bryn Mawr Bank Corporation
$
10,677

 
$
15,286

Basic earnings per common share
$
0.53

 
$
0.76

Diluted earnings per common share
$
0.53

 
$
0.75

Dividends paid or accrued per common share
$
0.25

 
$
0.22

Weighted-average basic shares outstanding
20,168,498

 
20,202,969

Dilutive shares
103,163

 
247,525

Adjusted weighted-average diluted shares
20,271,661

 
20,450,494

 
The accompanying notes are an integral part of the Unaudited Consolidated Financial Statements.


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BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income - Unaudited
 
 
Three Months Ended
March 31,
(dollars in thousands)
2019
 
2018
Net income attributable to Bryn Mawr Bank Corporation
$
10,677

 
$
15,286

 
 
 
 
Other comprehensive income (loss):
 
 
 
Net change in unrealized gains (losses) on investment securities available for sale:
 
 
 
Net unrealized gains (losses) arising during the period, net of tax expense (benefit) of $1,121 and $(1,319), respectively
4,219

 
(4,961
)
Reclassification adjustment for net (gain) on sale realized in net income, net of tax expense of $0 and $1, respectively

 
(6
)
Reclassification adjustment for net (gain) realized on transfer of investment securities available for sale to trading, net of tax expense of $0 and $88, respectively

 
(329
)
Unrealized investment gains (losses), net of tax expense (benefit) of $1,121 and $(1,408), respectively
4,219

 
(5,296
)
Net change in unfunded pension liability:
 
 
 
Change in unfunded pension liability related to unrealized loss, prior service cost and transition obligation, net of tax expense of $4 and $12, respectively
16

 
46

 
 
 
 
Total other comprehensive income (loss)
4,235

 
(5,250
)
 
 
 
 
Total comprehensive income
$
14,912

 
$
10,036

 
The accompanying notes are an integral part of the Unaudited Consolidated Financial Statements.


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BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows - Unaudited

 
Three Months Ended March 31,
(dollars in thousands)
2019
 
2018
Operating activities:
 
 
 
Net income attributable to Bryn Mawr Bank Corporation
$
10,677

 
$
15,286

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Provision for loan and lease losses
3,736

 
1,030

Depreciation of fixed assets
1,908

 
1,493

Amortization of operating lease right-of-use assets
914

 

Net amortization of investment premiums and discounts
543

 
761

Net gain on sale of investment securities available for sale

 
(7
)
Net gain on sale of loans
(319
)
 
(518
)
Stock based compensation
1,137

 
620

Amortization and net impairment of mortgage servicing rights
137

 
171

Net accretion of fair value adjustments
(1,018
)
 
(3,004
)
Amortization of intangible assets
938

 
879

Net loss (gain) on sale of OREO
24

 
(176
)
Net increase in cash surrender value of bank owned life insurance ("BOLI")
(294
)
 
(279
)
Other, net
(642
)
 
(107
)
Loans originated for resale
(10,353
)
 
(19,534
)
Proceeds from loans sold
9,484

 
18,265

Provision for deferred income taxes
43

 
656

Change in income taxes payable/receivable, net
7,067

 
3,819

Change in accrued interest receivable
(538
)
 
1,725

Change in accrued interest payable
2,022

 
1,287

Change in operating lease liabilities
(850
)
 

Change in other assets
(28,612
)
 
(11,342
)
Change in other liabilities
10,814

 
(5,987
)
Net cash provided by operating activities
6,818

 
5,038

 
 
 
 
Investing activities:
 
 
 
Purchases of investment securities available for sale
(61,225
)
 
(74,029
)
Purchases of investment securities held to maturity
(1,827
)
 

Proceeds from maturity and paydowns of investment securities available for sale
217,990

 
218,393

Proceeds from maturity and paydowns of investment securities held to maturity
45

 
39

Proceeds from sale of investment securities available for sale

 
7

Net change in FHLB stock
4,004

 
4,584

Proceeds from calls of investment securities
25,500

 
65

Net change in other investments

 
500

Purchase of customer relationships
(18
)
 

Net portfolio loan and lease originations
(97,976
)
 
(21,230
)
Purchases of premises and equipment
(3,540
)
 
(2,063
)
Proceeds from sale of OREO
309

 
217

Net cash provided by investing activities
83,262

 
126,483

 
 
 
 
Financing activities:
 
 
 
Change in deposits
38,752

 
(57,879
)
Change in short-term borrowings
(128,153
)
 
(64,161
)
Dividends paid
(5,041
)
 
(4,523
)
Change in long-term FHLB advances and other borrowings

 
(31,371
)
Payment of contingent consideration for business combinations
(438
)
 

Cash payments to taxing authorities on employees' behalf from shares withheld from stock-based compensation
(34
)
 
(626
)
Net proceeds from sale of treasury stock for deferred compensation plans

 
171

Repurchase of warrants from U.S. Treasury

 
(1,755
)
Net purchase of treasury stock through publicly announced plans
(1,057
)
 

Proceeds from exercise of stock options
540

 
992

Net cash used in financing activities
(95,431
)
 
(159,152
)
 
 
 
 
Change in cash and cash equivalents
(5,351
)
 
(27,631
)
Cash and cash equivalents at beginning of period
48,456

 
60,024

Cash and cash equivalents at end of period
$
43,105

 
$
32,393

 
 
 
 
Supplemental cash flow information:
 
 
 
Cash paid during the year for:
 
 
 
Income taxes
$
199

 
$
146

Interest
$
8,799

 
$
4,808

 
 
 
 
Non-cash information:
 
 
 
Change in other comprehensive loss
$
4,235

 
$
(5,250
)
Change in deferred tax due to change in comprehensive income
$
1,125

 
$
(1,396
)
Transfer of loans to OREO and repossessed assets
$

 
$
37

 
The accompanying notes are an integral part of the Unaudited Consolidated Financial Statements.


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BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes In Shareholders’ Equity - Unaudited
 
For the Three Months Ended March 31, 2019
(dollars in thousands, except share and per share data)
Shares of Common Stock Issued
 
Common
Stock
 
Paid-in Capital
 
Treasury
Stock
 
Accumulated Other Comprehensive Loss
 
Retained
Earnings
 
Noncontrolling
Interest
 
Total Shareholders' Equity
Balance December 31, 2018
24,545,348

 
$
24,545

 
$
374,010

 
$
(75,883
)
 
$
(7,513
)
 
$
250,230

 
$
(685
)
 
$
564,704

Net income attributable to Bryn Mawr Bank Corporation

 

 

 

 

 
10,677

 

 
10,677

Net loss attributable to noncontrolling interest

 

 

 

 

 

 
(1
)
 
(1
)
Dividends paid or accrued, $0.25 per share

 

 

 

 

 
(5,094
)
 

 
(5,094
)
Other comprehensive income, net of tax expense of $1,125

 

 

 

 
4,235

 

 

 
4,235

Stock based compensation

 

 
1,137

 

 

 

 

 
1,137

Net purchase of treasury stock from stock awards for statutory tax withholdings

 

 

 
(34
)
 

 

 

 
(34
)
Purchase of treasury stock through publicly announced plans

 

 

 
(1,057
)
 

 

 

 
(1,057
)
Common stock issued:
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Common stock issued through share-based awards and options exercises
31,900

 
32

 
508

 

 

 

 

 
540

Balance March 31, 2019
24,577,248

 
$
24,577

 
$
375,655

 
$
(76,974
)
 
$
(3,278
)
 
$
255,813

 
$
(686
)
 
$
575,107


 
For the Three Months Ended March 31, 2018
(dollars in thousands, except share and per share data)
Shares of Common Stock Issued
 
Common
Stock
 
Paid-in Capital
 
Treasury
Stock
 
Accumulated Other Comprehensive Loss
 
Retained
Earnings
 
Noncontrolling
Interest
 
Total Shareholders' Equity
Balance December 31, 2017
24,360,049

 
$
24,360

 
$
371,486

 
$
(68,179
)
 
$
(4,414
)
 
$
205,549

 
$
(683
)
 
$
528,119

Net income attributable to Bryn Mawr Bank Corporation

 

 

 

 

 
15,286

 

 
15,286

Net loss attributable to noncontrolling interest

 

 

 

 

 

 
(1
)
 
(1
)
Dividends paid or accrued, $0.22 per share

 

 

 

 

 
(4,495
)
 

 
(4,495
)
Other comprehensive income, net of tax expense of $1,396

 

 

 

 
(5,250
)
 

 

 
(5,250
)
Stock based compensation

 

 
620

 

 

 

 

 
620

Net purchase of treasury stock from stock awards for statutory tax withholdings

 

 

 
(626
)
 

 

 

 
(626
)
Net treasury stock activity for deferred compensation trusts

 

 
153

 
18

 

 

 

 
171

Repurchase of warrants from U.S. Treasury

 

 
(1,853
)
 

 

 
98

 

 
(1,755
)
Common stock issued:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock issued through share-based awards and options exercises
78,709

 
79

 
913

 

 

 

 

 
992

Balance March 31, 2018
24,438,758

 
$
24,439

 
$
371,319

 
$
(68,787
)
 
$
(9,664
)
 
$
216,438

 
$
(684
)
 
$
533,061


The accompanying notes are an integral part of the Unaudited Consolidated Financial Statements.

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 BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
 
Note 1 – Basis of Presentation
 
The Unaudited Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In the opinion of Bryn Mawr Bank Corporation’s ("BMBC," and together with its direct and indirect subsidiaries, the “Corporation”) management, all adjustments, which are normal and recurring in nature, necessary for a fair presentation of the consolidated financial position and the results of operations for the interim periods presented have been included. These Unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto in the Corporation’s Annual Report on Form 10-K for the twelve months ended December 31, 2018 (the “2018 Annual Report”).
 
The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the full year.
 
Principles of Consolidation
 
The Unaudited Consolidated Financial Statements include the accounts of BMBC and its consolidated subsidiaries; BMBC's primary subsidiary is The Bryn Mawr Trust Company (the “Bank”). In connection with the RBPI Merger (defined in Note 3 – Business Combinations below), the Corporation acquired two Delaware trusts, Royal Bancshares Capital Trust I and Royal Bancshares Capital Trust II. These two entities are not consolidated per requirements under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation” (“ASC Topic 810”). All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current-year presentation.
 
Note 2 – Recent Accounting Pronouncements
 
The following FASB Accounting Standards Updates ("ASUs") are divided into pronouncements which have been adopted by the Corporation since January 1, 2019, and those which are not yet effective and have been evaluated or are currently being evaluated by management as of March 31, 2019.
 
Adopted Pronouncements:

FASB ASU 2016-02 (Topic 842), “Leases”
 
In February 2016, the FASB established Topic 842, Leases, by issuing ASU 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU 2018-10, Codification Improvements to Topic 842, Leases; and ASU 2018-11, Targeted Improvements. The new standard establishes a right-of-use ("ROU") model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

The new standard became effective for us on January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. Management has elected to use the effective date as its date of initial application. Consequently, financial information was not be updated, and the disclosures required under the new standard are not be provided for dates and periods before January 1, 2019.

The new standard provided a number of optional practical expedients in transition. We have elected the ‘package of practical expedients’, which permitted us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs.

This standard had a material effect on our Consolidated Balance Sheet and related disclosures but did not have a material impact on our Consolidated Statement of Income. The additional assets recorded as a result of adoption had a negative impact on the Corporation and Bank capital ratios under current regulatory guidance. On adoption, we had:


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recognized operating lease liabilities of approximately $49.1 million, with corresponding ROU assets of the same amount, based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases, and

derecognized $541 thousand of favorable lease assets, $2.2 million in unfavorable lease liabilities, and $2.5 million in deferred rent, with a corresponding adjustment to the ROU asset for the same amounts.

The new standard also provides practical expedients for an entity’s ongoing accounting. We have elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we did not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. We also have elected the practical expedient to not separate lease and non-lease components for all of our leases.

FASB ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting”

Issued in June 2018, ASU 2018-07: Compensation - Stock Compensation (Topic 718), “Improvements to Nonemployee Share-Based Payment Accounting” expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers.

The amendments in this update became effective for us January 1, 2019. The adoption did not have an impact on our Consolidated Financial Statements and related disclosures as the Corporation has not historically granted share based payment awards to nonemployees other than to the Corporation’s Board of Directors, who are treated as employees for share-based payment accounting.
 
Pronouncements Not Yet Effective:
 
FASB ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments”
 
Issued in June 2016, ASU 2016-13 (Topic 326 -Credit Losses), commonly referenced as the Current Expected Credit Loss (“CECL”), eliminates the Provision for Loan and Lease Losses ("PLLL") and Allowance for Loan and Lease Losses ("ALLL") line items and establishes the Provision for Credit Losses ("PCL") and Allowance for Credit Losses ("ACL") line items.

Under the legacy “Incurred Loss” notion, management presents an ALLL intended to represent “probable and estimable” incurred but not yet realized credit losses on assets in scope. When management deems collection of contractual cashflows for an instrument unlikely, a specific reserve is calculated under ASC 310-10. Management further calculates a general reserve for performing assets under ASC 450-20, using historical loss experience and adjustments for several qualitative factors, including current economic conditions. The “Incurred Loss” standard does not allow for projections beyond the likely ‘emergence period’ of losses, or for forward-looking economic conditions; for example, loss contingencies in 2022 are not currently presented, nor is the presentation adjusted for the likelihood of future economic condition change.

In contrast, the future accounting standard requires projection of credit loss over the contract lifetime of the asset, adjusted for prepayment tendencies. Further, management’s specific expectations for the future economic environment must be incorporated in the projection, with loss expectations to revert to the long-run historical mean after such time as management can make or obtain a reasonable and supportable forecast. This valuation reserve will be established in the ACL and maintained through expense (provision) in the PCL. In the event that additional allocation is required to fund the ACL at adoption, investors will see a cumulative-effect (one time) adjustment to retained earnings upon adoption of the new standard. The new CECL standard will become effective for the Corporation for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years.

The Corporation has engaged with a leading vendor to assist in computing and establishing the ACL, and management has completed the data gathering and model selection efforts, with continued effort through 2019 to operationalize the practice for establishing the ACL and preparing its presentation. Significant additional quantitative analysis is included in management’s contemplated measurement regime, including examination of loss experience at representative peer institutions when the Corporation’s first-party loss history does not result in estimations that are meaningful to users of the Corporation’s

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Consolidated Financial Statements. Preliminary evaluations were performed by discounting instrument-level cashflows adjusted for timing (e.g. prepayment) and credit (default and loss) expectations. Management will continue to evaluate other estimation methodologies and disaggregation approaches through the 2019 year.

The Corporation will comply with the new disclosure and presentation requirements enumerated in ASU 2016-13, including presentation of the vintage disclosure organizing certain credit performance data by year of origination/renewal (“policy year”).

Financial statement users should be aware that the ACL is, by design, inherently sensitive to changes in economic outlook, loan and lease portfolio composition, portfolio duration, and other factors. The following factors could lead to a material impact to retained earnings - in either direction - as of the adoption date:

Increases / decreases to the time period management deems reasonably and supportably forecastable
Inclusion / exclusion of forecast factors
Adverse changes to reasonable and supportable forecasts
Detectable increases / decreases in the Corporation’s or comparable industry credit loss parameters
Deterioration / improvement in the risk profile of the Corporation’s loan and lease portfolio
Decreased / increased prepayment behavior or other factors impacting loan and lease portfolio duration
Changes in credit risk through the ordinary course of operations, such as launch or expansion of higher risk-bearing products
Interest rate fluctuations impacting effective yield on certain instruments.

Management cautions that this list is not exhaustive. Further, management may adjust quantitatively-established allocations based on factors that defy numerical modeling, leading to a material adjustment not due to factors specified above. Moreover, interpretations and clarifications of the guidance through the FASB’s ongoing Transition Resource Group efforts may change management’s estimates of the impact. Finally, the impact of accounting treatment changes for establishing the ACL for purchased assets under future acquisitions may effect a cumulative-effect adjustment to retained earnings that proves material.

Ongoing financial statement behavior will be impacted by the standard, regardless of any cumulative-effect adjustment at adoption. Under our currently-contemplated cashflow projection model, assets will originate with a specific allocation for the contract life of that instrument, adjusted for prepayment behavior and probabilistic credit performance expectations to arrive at an expected cashflow projection. All else being equal, as that continues toward its contract maturity, estimates of lifetime credit loss at the instrument level will decrease. Under steady-state conditions, portfolio-segment-level aggregation of management’s expected loss estimates should be stable or track with portfolio-segment growth (contraction and runoff). When management’s expectations of the likely future economic environment change based on reasonable and supportable forecasts, portfolio allocation may increase (decrease) rapidly between periods. The establishment of the ACL will be more responsive to deteriorating (improving) economic conditions than prior establishment of the ALLL, which is based on historical experience and agnostic to future conditions. In dynamic economic environments, users of financial statements should expect expense (income) in the PCL to be concentrated in fewer quarters than was typical for the PLLL. Users of financial statements should be aware that this accounting treatment does not determine the ultimate, realized loss or recovery for assets in scope; ASU 2016-13 impacts timing and possibly the magnitude of the impact on our financial condition and results of operations in dynamic economic environments.

Criteria for establishment of specific reserves are still under evaluation. Specific reserve impact to instruments meeting the legacy “impairment” criteria are not anticipated to change, though the volume of such credits may change before the adoption date due to deterioration (improvement) of portfolio credit quality. Management is evaluating additional criteria to identify instruments for specific evaluation under the future standard’s broader allowable criteria.

Management does not currently plan to implement an accounting election to recognize changes in the ACL valuation account due to timing (prepayment) behavior as interest income (expense).

FASB ASU 2017-04 (Topic 350), “Intangibles – Goodwill and Others”
 
Issued in January 2017, ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 is effective for annual periods beginning after December 15, 2019 including interim periods within those periods. Management does not expect the adoption of this ASU to have a material impact on our Consolidated Financial Statements and related disclosures.



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FASB ASU 2018-12 (Topic 944), “Targeted Improvements to the Accounting for Long-Duration Contracts”

Issued in August 2018, ASU 2018-12 makes targeted improvements to the existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by an insurance entity. Specifically, the ASU is intended to (1) improve the timeliness of recognizing changes in the liability for future policy benefits and modify the rate used to discount future cash flows, (2) simplify and improve the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts, (3) simplify the amortization of deferred acquisition costs, and (4) improve the effectiveness of the required disclosures. ASU 2018-12 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early application of the amendments is permitted. As an independent insurance agent, the Corporation does not issue insurance contracts. As a result, management does not expect the adoption of this ASU to have an impact on our Consolidated Financial Statements and related disclosures.

FASB ASU 2018-13, "Fair Value Measurement Disclosure Framework"

Issued in August 2018, ASU No. 2018-13 modifies, adds and removes certain disclosures aimed to improve the overall usefulness of the disclosure requirements for fair value measurements. The guidance is effective in annual and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted. Adoption is required on both a prospective and retrospective basis depending on the amendment. Management does not expect the adoption of this ASU to have a material impact on our Consolidated Financial Statements and related disclosures.

FASB ASU 2018-14 (Topic 715), "Compensation-Retirement Benefits - Defined Benefit Plans-General"

Issued in August 2018, the ASU 2018-14, modifies, adds and removes certain disclosures aimed to improve the overall usefulness of the disclosure requirements to financial statement users. The guidance is effective for annual periods beginning after December 15, 2020. Early adoption is permitted. Use of the retrospective method is required. Management does not expect the adoption of this ASU to have a material impact on our Consolidated Financial Statements and related disclosures.

FASB ASU 2018-15 (Topic 350), "Intangibles - Goodwill and Other - Internal-Use Software"

Issued in August 2018, ASU No. 2018-15 provides clarity on capitalizing and expensing implementation costs for cloud computing arrangements in a service contract. If an implementation cost is capitalized, the cost should be recognized over the noncancellable term and periodically assessed for impairment. The guidance is effective in annual and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted. Adoption should be applied retrospectively or prospectively to all implementation costs incurred after the date of adoption. Management is currently evaluating the potential impact of ASU 2018-15 on our Consolidated Financial Statements and related disclosures.



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Note 3 – Business Combinations

Domenick & Associates (“Domenick”)

The Bank’s subsidiary, BMT Insurance Advisors, Inc., completed the acquisition of Domenick, a full-service insurance agency established in 1993 and headquartered in Philadelphia, on May 1, 2018. The consideration paid was $1.5 million, of which $750 thousand was paid at closing, with three contingent cash payments, not to exceed $250 thousand each, to be payable on each of May 1, 2019, May 1, 2020, and May 1, 2021, subject to the attainment of certain targets during the related periods.

The following table details the consideration paid, the initial estimated fair value of identifiable assets acquired and liabilities assumed as of the date of acquisition and the resulting goodwill recorded:
(dollars in thousands)
 
Consideration paid:
 
Cash paid at closing
$
750

Contingent payment liability (present value)
706

Value of consideration
1,456

 
 
Assets acquired:
 
Cash and due from banks
370

Intangible assets - customer relationships
779

Premises and equipment
1

Other assets
316

Total assets
1,466

 
 
Liabilities assumed:
 
Accounts payable
657

Other liabilities
30

Total liabilities
687

 
 
Net assets acquired
779

 
 
Goodwill resulting from acquisition of Domenick
$
677


As of June 30, 2018, the estimates of the fair value of identifiable assets acquired and liabilities assumed in the Domenick acquisition were final.

Royal Bancshares of Pennsylvania, Inc.
 
On December 15, 2017, the previously announced merger of Royal Bancshares of Pennsylvania, Inc. (“RBPI”) with and into BMBC (the “Effective Date”), and the merger of Royal Bank America with and into the Bank (collectively, the "RBPI Merger"), pursuant to the Agreement and Plan of Merger, by and between RBPI and BMBC, dated as of January 30, 2017 (the “Agreement”) was completed. In accordance with the Agreement, the aggregate share consideration paid to RBPI shareholders consisted of 3,101,316 shares of BMBC’s common stock. Shareholders of RBPI received 0.1025 shares of BMBC common stock for each share of RBPI Class A common stock and 0.1179 shares of BMBC common stock for each share of RBPI Class B common stock owned as of the Effective Date of the RBPI Merger, with cash-in-lieu of fractional shares totaling $7 thousand. Holders of in-the-money options to purchase RBPI Class A common stock received cash totaling $112 thousand. In addition, 1,368,040 warrants to purchase Class A common stock of RBPI, valued at $1.9 million were converted to 140,224 warrants to purchase BMBC common stock. In accordance with the acquisition method of accounting, assets acquired and liabilities assumed were preliminarily adjusted to their fair values as of the Effective Date. The excess of consideration paid above the fair value of net assets acquired was recorded as goodwill. This goodwill is not amortizable nor is it deductible for income tax purposes.
 


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In connection with the RBPI Merger, the consideration paid and the estimated fair value of identifiable assets acquired and liabilities assumed as of the Effective Date, which include the effects of any measurement period adjustments in accordance with ASC 805-10, are summarized in the following table:
 
(dollars in thousands)
 
Consideration paid:
 
Common shares issued (3,101,316)
$
136,768

Cash in lieu of fractional shares
7

Cash-out of certain options
112

Fair value of warrants assumed
1,853

Value of consideration
138,740

 
 
Assets acquired:
 
Cash and due from banks
17,092

Investment securities available for sale
121,587

Loans
566,228

Premises and equipment
8,264

Deferred income taxes
34,823

Bank-owned life insurance
16,550

Core deposit intangible
4,670

Favorable lease asset
566

Other assets
13,611

Total assets
783,391

 
 
Liabilities assumed:
 
Deposits
593,172

FHLB and other long-term borrowings
59,568

Short-term borrowings
15,000

Junior subordinated debentures
21,416

Unfavorable lease liability
322

Other liabilities
31,381

Total liabilities
720,859

 
 
Net assets acquired
62,532

 
 
Goodwill resulting from acquisition of RBPI
$
76,208

 
As of December 31, 2018, the estimates of the fair value of identifiable assets acquired and liabilities assumed in the RBPI merger were final.

Due Diligence, Merger-Related and Merger Integration Expenses
 
Due diligence, merger-related and merger integration expenses include consultant costs, investment banker fees, contract breakage fees, retention bonuses for severed employees, salary and wages for redundant staffing involved in the integration of the institutions and bonus accruals for members of the merger integration team. The following table details the costs identified and classified as due diligence, merger-related and merger integration costs for the periods indicated:

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Three Months Ended March 31,
(dollars in thousands)
2019
 
2018
Advertising
$

 
$
59

Employee Benefits

 
203

Occupancy and bank premises

 
1,856

Furniture, fixtures, and equipment

 
179

Data processing

 
112

Professional fees

 
747

Salaries and wages

 
346

Other

 
817

Total due diligence, merger-related and merger integration expenses
$

 
$
4,319


Note 4 – Investment Securities
 
The amortized cost and fair value of investment securities available for sale as of March 31, 2019 and December 31, 2018 are as follows:
 
As of March 31, 2019
(dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
 
Fair Value
U.S. Treasury securities
$
100

 
$

 
$

 
$
100

Obligations of the U.S. government and agencies
188,079

 
103

 
(1,436
)
 
186,746

Obligations of state and political subdivisions
8,644

 
5

 
(11
)
 
8,638

Mortgage-backed securities
323,610

 
1,365

 
(2,062
)
 
322,913

Collateralized mortgage obligations
40,995

 
182

 
(691
)
 
40,486

Other investment securities
1,100

 

 

 
1,100

Total
$
562,528

 
$
1,655

 
$
(4,200
)
 
$
559,983

 
As of December 31, 2018
(dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
 
Fair Value
U.S. Treasury securities
$
200,026

 
$

 
$
(13
)
 
$
200,013

Obligations of the U.S. government and agencies
198,604

 
107

 
(2,856
)
 
195,855

Obligations of state and political subdivisions
11,372

 
3

 
(43
)
 
11,332

Mortgage-backed securities
294,076

 
554

 
(4,740
)
 
289,890

Collateralized mortgage obligations
40,150

 
141

 
(1,039
)
 
39,252

Other investment securities
1,100

 

 

 
1,100

Total
$
745,328

 
$
805

 
$
(8,691
)
 
$
737,442

 












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The following tables present the aggregate amount of gross unrealized losses as of March 31, 2019 and December 31, 2018 on available for sale investment securities classified according to the amount of time those securities have been in a continuous unrealized loss position:
 
As of March 31, 2019
 
Less than 12
Months
 
12 Months
or Longer
 
Total
(dollars in thousands)
Fair
Value
 
Unrealized Losses
 
Fair
Value
 
Unrealized Losses
 
Fair
Value
 
Unrealized Losses
Obligations of the U.S. government and agencies
$

 
$

 
$
141,114

 
$
(1,436
)
 
$
141,114

 
$
(1,436
)
Obligations of state and political subdivisions

 

 
3,200

 
(11
)
 
3,200

 
(11
)
Mortgage-backed securities
18,237

 
(183
)
 
193,339

 
(1,879
)
 
211,576

 
(2,062
)
Collateralized mortgage obligations

 

 
25,944

 
(691
)
 
25,944

 
(691
)
Total
$
18,237

 
$
(183
)
 
$
363,597

 
$
(4,017
)
 
$
381,834

 
$
(4,200
)
 
As of December 31, 2018
 
Less than 12
Months
 
12 Months
or Longer
 
Total
(dollars in thousands)
Fair
Value
 
Unrealized Losses
 
Fair
Value
 
Unrealized Losses
 
Fair
Value
 
Unrealized Losses
U.S. Treasury securities
$
199,912

 
$
(13
)
 
$

 
$

 
$
199,912

 
$
(13
)
Obligations of the U.S. government and agencies
12,916

 
(62
)
 
140,506

 
(2,794
)
 
153,422

 
(2,856
)
Obligations of state and political subdivisions

 

 
3,989

 
(43
)
 
3,989

 
(43
)
Mortgage-backed securities
43,276

 
(352
)
 
195,697

 
(4,388
)
 
238,973

 
(4,740
)
Collateralized mortgage obligations
540

 
(1
)
 
27,077

 
(1,038
)
 
27,617

 
(1,039
)
Total
$
256,644

 
$
(428
)
 
$
367,269

 
$
(8,263
)
 
$
623,913

 
$
(8,691
)
 
Management evaluates the Corporation’s investment securities that are in an unrealized loss position in order to determine if the decline in fair value is other than temporary. The investment portfolio includes debt securities issued by U.S. government agencies, U.S. government-sponsored agencies, state and local municipalities and other issuers. All fixed income investment securities in the Corporation’s investment portfolio are rated as investment-grade or higher. Factors considered in the evaluation include the current economic climate, the length of time and the extent to which the fair value has been below cost, interest rates and the bond rating of each security. The unrealized losses presented in the tables above are temporary in nature and are primarily related to market interest rates rather than the underlying credit quality of the issuers or collateral. Management does not believe that these unrealized losses are other-than-temporary. Management does not have the intent to sell these securities prior to their maturity or the recovery of their cost bases and believes that it is more likely than not that it will not have to sell these securities prior to their maturity or the recovery of their cost bases.
 
As of March 31, 2019 and December 31, 2018, securities having a fair value of $120.4 million and $123.5 million, respectively, were specifically pledged as collateral for public funds, trust deposits, the Federal Reserve Board discount window program, Federal Home Loan Bank ("FHLB") borrowings and other purposes. Advances by the FHLB are collateralized by a blanket lien on non-pledged, mortgage-related loans as part of the Corporation’s borrowing agreement with the FHLB as well as certain securities individually pledged by the Corporation.
 
The amortized cost and fair value of available for sale investment and mortgage-related securities available for sale as of March 31, 2019 and December 31, 2018, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

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March 31, 2019
 
December 31, 2018
(dollars in thousands)
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Investment securities:
 
 
 
 
 
 
 
Due in one year or less
$
9,055

 
$
9,041

 
$
209,129

 
$
209,099

Due after one year through five years
166,223

 
165,027

 
180,657

 
177,972

Due after five years through ten years
10,098

 
10,126

 
7,258

 
7,268

Due after ten years
12,547

 
12,390

 
14,058

 
13,961

Subtotal
197,923

 
196,584

 
411,102

 
408,300

Mortgage-related securities(1)
364,605

 
363,399

 
334,226

 
329,142

Total
$
562,528

 
$
559,983

 
$
745,328

 
$
737,442

 
(1) Expected maturities of mortgage-related securities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
The amortized cost and fair value of investment securities held to maturity as of March 31, 2019 and December 31, 2018 are as follows:
 
As of March 31, 2019
(dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
 
Fair Value
Mortgage-backed securities
$
10,457

 
$
10

 
$
(143
)
 
$
10,324

 
As of December 31, 2018
(dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
 
Fair Value
Mortgage-backed securities
$
8,684

 
$

 
$
(246
)
 
$
8,438

 
The following tables present the aggregate amount of gross unrealized losses as of March 31, 2019 and December 31, 2018 on held to maturity securities classified according to the amount of time those securities have been in a continuous unrealized loss position:
 
As of March 31, 2019
 
Less than 12
Months
 
12 Months
or Longer
 
Total
(dollars in thousands)
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Mortgage-backed securities
$
1,814

 
$
(13
)
 
$
7,187

 
$
(130
)
 
$
9,001

 
$
(143
)
 
As of December 31, 2018
 
Less than 12
Months
 
12 Months
or Longer
 
Total
(dollars in thousands)
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Mortgage-backed securities
$
1,315

 
$
(4
)
 
$
7,123

 
$
(242
)
 
$
8,438

 
$
(246
)
 





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The amortized cost and fair value of held to maturity investment securities as of March 31, 2019 and December 31, 2018, by contractual maturity, are shown below:
 
March 31, 2019
 
December 31, 2018
(dollars in thousands)
Amortized
Cost
 
Fair Value
 
Amortized
Cost
 
Fair Value
Mortgage-backed securities(1)
$
10,457

 
$
10,324

 
$
8,684

 
$
8,438

 
(1) Expected maturities of mortgage-related securities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
As of March 31, 2019 and December 31, 2018, the Corporation’s investment securities held in trading accounts totaled $8.2 million and $7.5 million, respectively, and primarily consist of deferred compensation trust accounts which are invested in listed mutual funds whose diversification is at the discretion of the deferred compensation plan participants and a rabbi trust account established to fund certain unqualified pension obligations. Investment securities held in trading accounts are reported at fair value, with adjustments in fair value reported through income.


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Note 5 Loans and Leases
 
The loan and lease portfolio consists of loans and leases originated by the Corporation, as well as loans acquired in prior acquisitions. Certain tables in this footnote are presented with a breakdown between originated and acquired loans and leases.
 
A. The table below details portfolio loans and leases as of the dates indicated:
 
 
March 31, 2019
 
December 31, 2018
(dollars in thousands)
Originated
 
Acquired
 
Total Loans and Leases
 
Originated
 
Acquired
 
Total Loans and Leases
Loans held for sale
$
2,884

 
$

 
$
2,884

 
$
1,749

 
$

 
$
1,749

Real Estate Loans:
 
 
 
 
 
 
 
 
 
 
 
Commercial mortgage
$
1,436,611

 
$
310,084

 
$
1,746,695

 
$
1,327,822

 
$
329,614

 
$
1,657,436

Home equity lines and loans
180,075

 
24,716

 
204,791

 
181,506

 
25,845

 
207,351

Residential mortgage
423,638

 
78,741

 
502,379

 
411,022

 
83,333

 
494,355

Construction
157,572

 
2,189

 
159,761

 
174,592

 
6,486

 
181,078

Total real estate loans
$
2,197,896

 
$
415,730

 
$
2,613,626

 
$
2,094,942

 
$
445,278

 
$
2,540,220

Commercial and industrial
651,204

 
54,497

 
705,701

 
624,643

 
70,941

 
695,584

Consumer
45,229

 
2,592

 
47,821

 
44,099

 
2,715

 
46,814

Leases
137,941

 
18,425

 
156,366

 
121,567

 
22,969

 
144,536

Total portfolio loans and leases
$
3,032,270

 
$
491,244

 
$
3,523,514

 
$
2,885,251

 
$
541,903

 
$
3,427,154

Total loans and leases
$
3,035,154

 
$
491,244

 
$
3,526,398

 
$
2,887,000

 
$
541,903

 
$
3,428,903

Loans with fixed rates
$
1,252,613

 
$
288,679

 
$
1,541,292

 
$
1,204,070

 
$
323,604

 
$
1,527,674

Loans with adjustable or floating rates
1,782,541

 
202,565

 
1,985,106

 
1,682,930

 
218,299

 
1,901,229

Total loans and leases
$
3,035,154

 
$
491,244

 
$
3,526,398

 
$
2,887,000

 
$
541,903

 
$
3,428,903

Net deferred loan origination fees included in the above loan table
$
750

 
$

 
$
750

 
$
2,226

 
$

 
$
2,226

 
B. Components of the net investment in leases are detailed as follows:
 
 
March 31, 2019
 
December 31, 2018
(dollars in thousands)
Originated
 
Acquired
 
Total Leases
 
Originated
 
Acquired
 
Total Leases
Minimum lease payments receivable
$
153,559

 
$
20,244

 
$
173,803

 
$
135,313

 
$
25,372

 
$
160,685

Unearned lease income
(21,737
)
 
(2,270
)
 
(24,007
)
 
(19,388
)
 
(3,005
)
 
(22,393
)
Initial direct costs and deferred fees
6,119

 
451

 
6,570

 
5,642

 
602

 
6,244

Total Leases
$
137,941

 
$
18,425

 
$
156,366

 
$
121,567

 
$
22,969

 
$
144,536

 

















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C. Non-Performing Loans and Leases  
 
 
March 31, 2019
 
December 31, 2018
(dollars in thousands)
Originated
 
Acquired
 
Total Loans and Leases
 
Originated
 
Acquired
 
Total Loans and Leases
Commercial mortgage
$
3,458

 
$
2,100

 
$
5,558

 
$
435

 
$
2,133

 
$
2,568

Home equity lines and loans
6,878

 
26

 
6,904

 
3,590

 
26

 
3,616

Residential mortgage
2,293

 
570

 
2,863

 
2,813

 
639

 
3,452

Commercial and industrial
2,657

 
308

 
2,965

 
1,786

 
315

 
2,101

Consumer
36

 
44

 
80

 
45

 
63

 
108

Leases
429

 
484

 
913

 
392

 
583

 
975

Total non-performing loans and leases
$
15,751

 
$
3,532

 
$
19,283

 
$
9,061

 
$
3,759

 
$
12,820

 
D. Purchased Credit-Impaired Loans
 
The outstanding principal balance and related carrying amount of purchased credit-impaired loans, for which the Corporation applies ASC 310-30, Accounting for Purchased Loans with Deteriorated Credit Quality, to account for the interest earned, as of the dates indicated, are as follows:
(dollars in thousands)
March 31,
2019
 
December 31,
2018
Outstanding principal balance
$
15,845

 
$
17,904

Carrying amount
$
11,553

 
$
12,304

 
The following table presents changes in the accretable discount on purchased credit-impaired loans, for which the Corporation applies ASC 310-30, for the three months ended March 31, 2019
(dollars in thousands)
Accretable
Discount
Balance, December 31, 2018
$
2,697

Accretion
(247
)
Reclassifications from nonaccretable difference
76

Additions/adjustments

Disposals
(108
)
Balance, March 31, 2019
$
2,418

 
E. Age Analysis of Past Due Loans and Leases
 
The following tables present an aging of all portfolio loans and leases as of the dates indicated:
 
Accruing Loans and Leases
 
 
 
 
As of March 31, 2019
30 – 59
Days
Past Due
 
60 – 89
Days
Past Due
 
Over 89
Days
Past Due
 
Total Past
Due
 
Current
 
Total Accruing
Loans and Leases
 
Nonaccrual
Loans and Leases
 
Total
Loans and Leases
(dollars in thousands)
 
 
 
 
 
 
 
Commercial mortgage
$
1,106

 
$

 
$

 
$
1,106

 
$
1,740,031

 
$
1,741,137

 
$
5,558

 
$
1,746,695

Home equity lines and loans
376

 
144

 

 
520

 
197,367

 
197,887

 
6,904

 
204,791

Residential mortgage
2,357

 
320

 

 
2,677

 
496,839

 
499,516

 
2,863

 
502,379

Construction

 

 

 

 
159,761

 
159,761

 

 
159,761

Commercial and industrial
749

 
15

 

 
764

 
701,972

 
702,736

 
2,965

 
705,701

Consumer
64

 
64

 

 
128

 
47,613

 
47,741

 
80

 
47,821

Leases
971

 
265

 

 
1,236

 
154,217

 
155,453

 
913

 
156,366

Total portfolio loans and leases
$
5,623

 
$
808

 
$

 
$
6,431

 
$
3,497,800

 
$
3,504,231

 
$
19,283

 
$
3,523,514

  

Page 19

Table of Contents

 
Accruing Loans and Leases
 
 
 
 
As of December 31, 2018
30 – 59
Days
Past Due
 
60 – 89
Days
Past Due
 
Over 89
Days
Past Due
 
Total Past
Due
 
Current(1)
 
Total Accruing
Loans and Leases
 
Nonaccrual
Loans and Leases
 
Total
Loans and Leases
(dollars in thousands)
 
 
 
 
 
 
 
Commercial mortgage
$
821

 
$
251

 
$

 
$
1,072

 
$
1,653,796

 
$
1,654,868

 
$
2,568

 
$
1,657,436

Home equity lines and loans
92

 

 

 
92

 
203,643

 
203,735

 
3,616

 
207,351

Residential mortgage
2,330

 
218

 

 
2,548

 
488,355

 
490,903

 
3,452

 
494,355

Construction

 

 

 

 
181,078

 
181,078

 

 
181,078

Commercial and industrial
280

 
332

 

 
612

 
692,871

 
693,483

 
2,101

 
695,584

Consumer
35

 
5

 

 
40

 
46,666

 
46,706

 
108

 
46,814

Leases
641

 
460

 

 
1,101

 
142,460

 
143,561

 
975

 
144,536

Total portfolio loans and leases
$
4,199

 
$
1,266

 
$

 
$
5,465

 
$
3,408,869

 
$
3,414,334

 
$
12,820

 
$
3,427,154

 
(1) Included as “current” are $3.2 million of loans and leases as of December 31, 2018 which were classified as administratively delinquent. An administratively delinquent loan is one which has been approved for a renewal or extension but has not had all the required documents fully executed as of the reporting date. Management does not consider these loans to be delinquent.

The following tables present an aging of originated portfolio loans and leases as of the dates indicated:
 
Accruing Loans and Leases
 
 
 
 
As of March 31, 2019
30 – 59
Days
Past Due
 
60 – 89
Days
Past Due
 
Over 89
Days
Past Due
 
Total Past
Due
 
Current
 
Total Accruing
Loans and Leases
 
Nonaccrual
Loans and Leases
 
Total
Loans and Leases
(dollars in thousands)
 
 
 
 
 
 
 
Commercial mortgage
$
1,106