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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
 
(Mark One)
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended September 30, 2019
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ________ to ________.
 
Commission File Number 001-35750 
First Internet Bancorp
(Exact Name of Registrant as Specified in Its Charter)
Indiana
 
20-3489991
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
11201 USA Parkway
Fishers, IN
 
46037
(Address of Principal Executive Offices)
 
(Zip Code)
 
(317) 532-7900
 
 
(Registrant’s Telephone Number, Including Area Code)
 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbols
 
Name of each exchange on which registered
Common Stock, without par value
 
INBK
 
The Nasdaq Stock Market LLC
6.0% Fixed to Floating Subordinated Notes due 2026
 
INBKL
 
The Nasdaq Stock Market LLC
6.0% Fixed to Floating Subordinated Notes due 2029
 
INBKZ
 
The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 þ
Non-accelerated Filer ¨ 
Smaller Reporting Company þ
Emerging growth company ¨
 





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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ
 
As of November 1, 2019, the registrant had 9,741,800 shares of common stock issued and outstanding.




Cautionary Note Regarding Forward-Looking Statements
  
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the federal securities laws. These statements are not historical facts, but rather statements based on the current expectations of First Internet Bancorp and its consolidated subsidiaries (“we,” “our,” “us” or the “Company”) regarding its business strategies, intended results and future performance. Forward-looking statements are generally preceded by terms such as “anticipate,” “believe,” “can,” “continue,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “should,” “will” and similar expressions. Such statements are subject to certain risks and uncertainties including: general economic conditions, whether national or regional, and conditions in the lending markets in which we participate that may have an adverse effect on the demand for our loans and other products; our credit quality and related levels of nonperforming assets and loan losses, and the value and salability of the real estate that we own or that is the collateral for our loans; failures or breaches of or interruptions in the communication and information systems on which we rely to conduct our business that could reduce our revenues, increase our costs or lead to disruptions in our business; our plans to grow our commercial real estate, commercial and industrial, public finance and healthcare finance loan portfolios which may carry greater risks of non-payment or other unfavorable consequences; our dependence on capital distributions from First Internet Bank of Indiana (the “Bank”); results of examinations of us by our regulators, including the possibility that our regulators may, among other things, require us to increase our allowance for loan losses or to write-down assets; changing bank regulatory conditions, policies or programs, whether arising as new legislation or regulatory initiatives, that could lead to restrictions on activities of banks generally, or the Bank in particular; more restrictive regulatory capital requirements; increased costs, including deposit insurance premiums; regulation or prohibition of certain income producing activities or changes in the secondary market for loans and other products; changes in market rates and prices that may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our balance sheet; our liquidity requirements being adversely affected by changes in our assets and liabilities; the effect of legislative or regulatory developments, including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial services industry; competitive factors among financial services organizations, including product and pricing pressures and our ability to attract, develop and retain qualified banking professionals; execution of future acquisition, reorganization or disposition transactions including without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings and other anticipated benefits from such transactions; changes in applicable tax laws; the growth and profitability of noninterest or fee income being less than expected; the loss of any key members of senior management; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the Securities and Exchange Commission (the “SEC”), the Public Company Accounting Oversight Board and other regulatory agencies; and the effect of fiscal and governmental policies of the United States federal government. Additional factors that may affect our results include those discussed in our most recent Annual Report on Form 10-K under the heading “Risk Factors” and in other reports filed with the SEC. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The factors listed above could affect our financial performance and could cause our actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.
Except as required by law, we do not undertake, and specifically disclaim any obligation, to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.


i



PART I

ITEM 1.
FINANCIAL STATEMENTS 

First Internet Bancorp
Condensed Consolidated Balance Sheets
(Amounts in thousands except share data)
 
 
September 30, 2019
 
December 31, 2018
 
 
(Unaudited)
 
 
Assets
 
 

 
 

Cash and due from banks
 
$
6,283

 
$
7,080

Interest-bearing deposits
 
410,119

 
181,632

Total cash and cash equivalents
 
416,402

 
188,712

Securities available-for-sale, at fair value (amortized cost of $547,034 and $499,893 in 2019 and 2018, respectively)
 
544,742

 
481,345

Securities held-to-maturity, at amortized cost (fair value of $47,555 and $22,418 in 2019 and 2018, respectively)
 
46,807

 
22,750

Loans held-for-sale (includes $41,119 and $18,328 at fair value in 2019 and 2018, respectively)
 
41,119

 
18,328

Loans
 
2,881,272

 
2,716,228

Allowance for loan losses
 
(21,683
)
 
(17,896
)
Net loans
 
2,859,589

 
2,698,332

Accrued interest receivable
 
16,652

 
16,822

Federal Home Loan Bank of Indianapolis stock
 
25,650

 
23,625

Cash surrender value of bank-owned life insurance
 
36,764

 
36,059

Premises and equipment, net
 
14,512

 
10,697

Goodwill
 
4,687

 
4,687

Other real estate owned
 
2,619

 
2,619

Accrued income and other assets
 
85,948

 
37,716

Total assets
 
$
4,095,491

 
$
3,541,692

Liabilities and Shareholders’ Equity
 
 

 
 

Liabilities
 
 

 
 

Noninterest-bearing deposits
 
$
50,560

 
$
43,301

Interest-bearing deposits
 
3,097,682

 
2,628,050

Total deposits
 
3,148,242

 
2,671,351

Advances from Federal Home Loan Bank
 
514,908

 
525,153

Subordinated debt, net of unamortized debt issuance costs of $2,548 and $1,125 in 2019 and 2018, respectively
 
69,452

 
33,875

Accrued interest payable
 
2,635

 
1,108

Accrued expenses and other liabilities
 
65,114

 
21,470

Total liabilities
 
3,800,351

 
3,252,957

Commitments and Contingencies
 


 


Shareholders’ Equity
 
 

 
 

Preferred stock, no par value; 4,913,779 shares authorized; issued and outstanding - none
 

 

Voting common stock, no par value; 45,000,000 shares authorized; 9,741,800 and 10,170,778 shares issued and outstanding in 2019 and 2018, respectively
 
219,013

 
227,587

Nonvoting common stock, no par value; 86,221 shares authorized; issued and outstanding - none
 

 

Retained earnings
 
93,182

 
77,689

Accumulated other comprehensive loss
 
(17,055
)
 
(16,541
)
Total shareholders’ equity
 
295,140

 
288,735

Total liabilities and shareholders’ equity
 
$
4,095,491

 
$
3,541,692


See Notes to Condensed Consolidated Financial Statements

1



First Internet Bancorp
Condensed Consolidated Statements of Income – Unaudited
(Amounts in thousands except share and per share data)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30, 2019
 
September 30, 2018
 
September 30, 2019
 
September 30, 2018
Interest Income
 
 

 
 

 
 
 
 

Loans
 
$
30,594

 
$
26,019

 
$
90,654

 
$
71,833

Securities – taxable
 
3,468

 
2,659

 
10,332

 
7,703

Securities – non-taxable
 
639

 
698

 
1,991

 
2,109

Other earning assets
 
2,993

 
847

 
6,560

 
1,973

Total interest income
 
37,694

 
30,223

 
109,537

 
83,618

Interest Expense
 
 

 
 

 
 
 
 

Deposits
 
18,363

 
11,650

 
50,896

 
29,146

Other borrowed funds
 
4,087

 
2,603

 
11,048

 
7,626

Total interest expense
 
22,450

 
14,253

 
61,944

 
36,772

Net Interest Income
 
15,244

 
15,970

 
47,593

 
46,846

Provision for Loan Losses
 
2,824

 
888

 
5,498

 
2,405

Net Interest Income After Provision for Loan Losses
 
12,420

 
15,082

 
42,095

 
44,441

Noninterest Income
 
 

 
 

 
 
 
 

Service charges and fees
 
211

 
236

 
672

 
697

Mortgage banking activities
 
4,307

 
1,402

 
8,588

 
4,577

Gain on sale of loans
 
523

 

 
353

 
414

Loss on sale of securities
 

 

 
(458
)
 

Other
 
517

 
356

 
2,229

 
1,025

Total noninterest income
 
5,558

 
1,994


11,384

 
6,713

Noninterest Expense
 
 

 
 

 
 
 
 

Salaries and employee benefits
 
6,883

 
5,704

 
19,846

 
17,436

Marketing, advertising and promotion
 
456

 
601

 
1,391

 
1,925

Consulting and professional services
 
778

 
709

 
2,427

 
2,193

Data processing
 
381

 
368

 
1,026

 
913

Loan expenses
 
247

 
241

 
853

 
738

Premises and equipment
 
1,506

 
1,244

 
4,503

 
3,689

Deposit insurance premium
 

 
441

 
1,302

 
1,386

Other
 
952

 
737

 
2,673

 
2,164

Total noninterest expense
 
11,203

 
10,045


34,021

 
30,444

Income Before Income Taxes
 
6,775

 
7,031

 
19,458

 
20,710

Income Tax Provision
 
449

 
743

 
1,315

 
2,386

Net Income
 
$
6,326

 
$
6,288


$
18,143

 
$
18,324

Income Per Share of Common Stock
 
 

 
 

 
 
 
 

Basic
 
$
0.63

 
$
0.61

 
$
1.79

 
$
1.99

Diluted
 
$
0.63

 
$
0.61

 
$
1.79

 
$
1.98

Weighted-Average Number of Common Shares Outstanding
 
 

 
 

 
 
 
 

Basic
 
9,979,603

 
10,261,967

 
10,114,303

 
9,230,149

Diluted
 
9,980,612

 
10,273,766

 
10,116,507

 
9,250,839

Dividends Declared Per Share
 
$
0.06

 
$
0.06

 
$
0.18

 
$
0.18


See Notes to Condensed Consolidated Financial Statements

2



First Internet Bancorp
Condensed Consolidated Statements of Comprehensive Income – Unaudited
(Amounts in thousands)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Net income
 
$
6,326

 
$
6,288

 
$
18,143

 
$
18,324

Other comprehensive loss
 
 
 
 
 
 
 
 
Net unrealized holding gains (losses) on securities available-for-sale recorded within other comprehensive income before income tax
 
1,266

 
(3,063
)
 
11,843

 
(12,301
)
Reclassification adjustment for losses realized
 

 

 
458

 

Net unrealized holding (losses) gains on cash flow hedging derivatives recorded within other comprehensive (loss) income before tax
 
(3,225
)
 
1,366

 
(12,689
)
 
408

Other comprehensive loss before income tax
 
(1,959
)
 
(1,697
)
 
(388
)
 
(11,893
)
Income tax (benefit) provision
 
(482
)
 
(1,328
)
 
126

 
(3,528
)
Other comprehensive loss
 
(1,477
)
 
(369
)
 
(514
)
 
(8,365
)
Comprehensive income
 
$
4,849

 
$
5,919

 
$
17,629

 
$
9,959

 
 See Notes to Condensed Consolidated Financial Statements

3



First Internet Bancorp
Condensed Consolidated Statements of Changes in Shareholders’ Equity - Unaudited
Three Months Ended September 30, 2019 and 2018
(Amounts in thousands except per share data)
 
 
Voting and
Nonvoting
Common
Stock
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Total
Shareholders’
Equity
Balance, July 1, 2019
 
$
224,244

 
$
87,454

 
$
(15,578
)
 
$
296,120

Net income
 

 
6,326

 

 
6,326

Other comprehensive loss
 

 

 
(1,477
)
 
(1,477
)
Dividends declared ($0.06 per share)
 

 
(598
)
 

 
(598
)
Recognition of the fair value of share-based compensation
 
416

 

 

 
416

Repurchase of common stock
 
(5,651
)
 

 

 
(5,651
)
Deferred stock rights and restricted stock units issued in lieu of cash dividends payable on outstanding deferred stock rights and restricted stock units
 
4

 

 

 
4

Balance, September 30, 2019
 
$
219,013

 
$
93,182

 
$
(17,055
)
 
$
295,140

 
 
 
 
 
 
 
 
 
Balance, July 1, 2018
 
$
227,099

 
$
69,066

 
$
(14,078
)
 
$
282,087

Net income
 

 
6,288

 

 
6,288

Other comprehensive loss
 

 

 
(369
)
 
(369
)
Dividends declared ($0.06 per share)
 

 
(621
)
 

 
(621
)
Recognition of the fair value of share-based compensation
 
345

 

 

 
345

Deferred stock rights and restricted stock units issued in lieu of cash dividends payable on outstanding deferred stock rights and restricted stock units
 
10

 

 

 
10

Balance, September 30, 2018
 
$
227,454

 
$
74,733

 
$
(14,447
)
 
$
287,740


See Notes to Condensed Consolidated Financial Statements

4




First Internet Bancorp
Condensed Consolidated Statements of Changes in Shareholders’ Equity - Unaudited
Nine Months Ended September 30, 2019 and 2018
(Amounts in thousands except per share data)
 
 
Voting and
Nonvoting
Common
Stock
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Total
Shareholders’
Equity
Balance, January 1, 2019
 
$
227,587

 
$
77,689

 
$
(16,541
)
 
$
288,735

Impact of adoption of new accounting standards (1)
 

 
(821
)
 

 
(821
)
Net income
 

 
18,143

 

 
18,143

Other comprehensive loss
 

 

 
(514
)
 
(514
)
Dividends declared ($0.18 per share)
 

 
(1,829
)
 

 
(1,829
)
Recognition of the fair value of share-based compensation
 
1,278

 

 

 
1,278

Repurchase of common stock
 
(9,784
)
 

 

 
(9,784
)
Deferred stock rights and restricted stock units issued in lieu of cash dividends payable on outstanding deferred stock rights and restricted stock units
 
26

 

 

 
26

Common stock redeemed for the net settlement of share-based awards
 
(94
)
 

 

 
(94
)
Balance, September 30, 2019
 
$
219,013

 
$
93,182

 
$
(17,055
)
 
$
295,140

 
 
 
 
 
 
 
 
 
Balance, January 1, 2018
 
$
172,043

 
$
57,103

 
$
(5,019
)
 
$
224,127

Impact of adoption of new accounting standards (2)
 

 
1,063

 
(1,063
)
 

Net income
 

 
18,324

 

 
18,324

Other comprehensive loss
 

 

 
(8,365
)
 
(8,365
)
Dividends declared ($0.18 per share)
 

 
(1,757
)
 

 
(1,757
)
Net cash proceeds from common stock issuance
 
54,334

 

 

 
54,334

Recognition of the fair value of share-based compensation
 
1,257

 

 

 
1,257

Deferred stock rights and restricted stock units issued in lieu of cash dividends payable on outstanding deferred stock rights and restricted stock units
 
30

 

 

 
30

Common stock redeemed for the net settlement of share-based awards
 
(210
)
 

 

 
(210
)
Balance, September 30, 2018
 
$
227,454

 
$
74,733

 
$
(14,447
)
 
$
287,740


(1) Represents the impact of adopting Accounting Standards Update (“ASU”) 2017-08.
(2) Represents the impact of adopting ASU 2018-02 and ASU 2016-01. ASU 2018-02 increased retained earnings and accumulated other comprehensive loss by $1.1 million. ASU 2016-01 decreased retained earnings and accumulated other comprehensive loss by $0.1 million.

See Notes to Condensed Consolidated Financial Statements











5



First Internet Bancorp
Condensed Consolidated Statements of Cash Flows – Unaudited
(Amounts in thousands)
 
 
Nine Months Ended September 30,
 
 
2019
 
2018
Operating Activities
 
 

 
 

Net income
 
$
18,143

 
$
18,324

Adjustments to reconcile net income to net cash (used in) provided by operating activities:
 
 

 
 

Depreciation and amortization
 
5,300

 
4,262

Increase in cash surrender value of bank-owned life insurance
 
(705
)
 
(714
)
Provision for loan losses
 
5,498

 
2,405

Share-based compensation expense
 
1,278

 
1,257

Loss on sale of available-for-sale securities
 
458

 

Loans originated for sale
 
(430,453
)
 
(282,527
)
Proceeds from sale of loans
 
415,171

 
287,556

Gain on loans sold
 
(7,057
)
 
(5,201
)
Gain on sale of other real estate owned
 

 
(105
)
(Increase) decrease in fair value of loans held-for-sale
 
(452
)
 
250

Gain on derivatives
 
(1,295
)
 
(100
)
Amortization of operating lease right-of-use assets
 
531

 

Net change in accrued income and other assets
 
(49,567
)
 
(149
)
Net change in accrued expenses and other liabilities
 
2,297

 
(1,924
)
Net cash (used in) provided by operating activities
 
(40,853
)
 
23,334

Investing Activities
 
 
 
 
Net loan activity, excluding purchases
 
(173,220
)
 
(274,507
)
Proceeds from sale of other real estate owned
 

 
332

Maturities and calls of securities available-for-sale
 
58,106

 
48,938

Proceeds from sale of securities available-for-sale
 
30,137

 

Purchase of securities available-for-sale
 
(136,602
)
 
(65,289
)
Purchase of securities held-to-maturity
 
(24,116
)
 
(1,000
)
Purchase of Federal Home Loan Bank of Indianapolis stock
 
(2,025
)
 
(2,475
)
Purchase of premises and equipment
 
(3,581
)
 
(1,161
)
Loans purchased
 
(208,795
)
 
(132,041
)
Net proceeds from sale of portfolio loans
 
238,016

 
25,717

Other investing activities
 

 
(10,166
)
Net cash used in investing activities
 
(222,080
)
 
(411,652
)
Financing Activities
 
 
 
 
Net increase in deposits
 
476,891

 
361,623

Cash dividends paid
 
(1,808
)
 
(1,620
)
Repayment of subordinated debt
 

 
(3,000
)
Net proceeds from issuance of subordinated debt
 
35,418

 

Repurchase of common stock
 
(9,784
)
 

Proceeds from advances from Federal Home Loan Bank
 
485,000

 
225,000

Repayment of advances from Federal Home Loan Bank
 
(495,000
)
 
(210,000
)
Net proceeds from common stock issuance
 

 
54,334

Other, net
 
(94
)
 
(210
)
Net cash provided by financing activities
 
490,623

 
426,127

Net Increase in Cash and Cash Equivalents
 
227,690

 
37,809

Cash and Cash Equivalents, Beginning of Period
 
188,712

 
47,981

Cash and Cash Equivalents, End of Period
 
$
416,402

 
$
85,790

Supplemental Disclosures
 
 
 
 
Initial recognition of right-of-use asset
 
$
2,096

 
$

Initial recognition of operating lease liabilities
 
2,096

 

Cash paid during the period for interest
 
60,417

 
36,196

Cash paid during the period for taxes
 
4,527

 
360

Loans transferred to other real estate owned
 

 
227

Loans transferred to held-for-sale from portfolio
 
237,942

 

Cash dividends declared, paid in subsequent period
 
585

 
611

Securities purchased during the period, settled in subsequent period
 
3,000

 

Transfer of other equity investments from securities available-for-sale to other assets in accordance with adoption of ASU 2016-01
 

 
2,932

See Notes to Condensed Consolidated Financial Statements

6



First Internet Bancorp
Notes to Condensed Consolidated Financial Statements – Unaudited
(Table amounts in thousands except share and per share data)
  
Note 1:        Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information or footnotes necessary for a complete presentation of financial condition, results of operations, changes in shareholders’ equity, or cash flows in accordance with GAAP. In our opinion, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results expected for the year ending December 31, 2019 or any other period. The September 30, 2019 condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the First Internet Bancorp Annual Report on Form 10-K for the year ended December 31, 2018.
 
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, or assumptions that could have a material effect on the carrying value of certain assets and liabilities. These estimates, judgments, and assumptions affect the amounts reported in the condensed consolidated financial statements and the disclosures provided. The determination of the allowance for loan losses, valuations and impairments of investment securities, and the accounting for income tax expense are highly dependent upon management’s estimates, judgments, and assumptions, and changes in any of these could have a significant impact on the condensed consolidated financial statements.

The condensed consolidated financial statements include the accounts of First Internet Bancorp (the “Company”), its wholly owned subsidiary, First Internet Bank of Indiana (the “Bank”), and the Bank’s three wholly owned subsidiaries, First Internet Public Finance Corp., JKH Realty Services, LLC and SPF15, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.
 
The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations, and cash flows of the Company.
 
Certain reclassifications have been made to the 2018 financial statements to conform to the presentation of the 2019 financial statements. These reclassifications had no effect on net income.



    




7



Note 2:        Earnings Per Share
 
Earnings per share of common stock are based on the weighted-average number of basic shares and dilutive shares outstanding during the period.
 
The following is a reconciliation of the weighted-average common shares for the basic and diluted earnings per share computations for the three and nine months ended September 30, 2019 and 2018
(dollars in thousands, except per share data)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Basic earnings per share
 
 

 
 

 
 
 
 
Net income
 
$
6,326

 
$
6,288

 
$
18,143

 
$
18,324

Weighted-average common shares
 
9,979,603

 
10,261,967

 
10,114,303

 
9,230,149

Basic earnings per common share
 
$
0.63

 
$
0.61

 
$
1.79

 
$
1.99

Diluted earnings per share
 
 

 
 

 
 

 
 

Net income
 
$
6,326

 
$
6,288

 
$
18,143

 
$
18,324

Weighted-average common shares
 
9,979,603

 
10,261,967

 
10,114,303

 
9,230,149

Dilutive effect of equity compensation
 
1,009

 
11,799

 
2,204

 
20,690

     Weighted-average common and incremental shares
 
9,980,612

 
10,273,766

 
10,116,507

 
9,250,839

Diluted earnings per common share (1)
 
$
0.63

 
$
0.61

 
$
1.79

 
$
1.98

(1) Potential dilutive common shares are excluded from the computation of diluted EPS in the periods where the effect would be antidilutive. Excluded from the computation of diluted EPS were weighted-average antidilutive shares totaling 15,256 and 22,209 for the three and nine months ended September 30, 2019, respectively, and 3,002 and 7,083 for the three and nine months ended September 30, 2018, respectively.
  
Note 3:         Securities
 
The following tables summarize securities available-for-sale and securities held-to-maturity as of September 30, 2019 and December 31, 2018.
 
 
September 30, 2019
 
 
Amortized
 
Gross Unrealized
 
Fair
 
 
Cost
 
Gains
 
Losses
 
Value
Securities available-for-sale
 
 

 
 

 
 

 
 

U.S. Government-sponsored agencies
 
$
83,024

 
$
197

 
$
(1,786
)
 
$
81,435

Municipal securities
 
96,076

 
1,872

 
(6
)
 
97,942

Mortgage-backed securities
 
324,296

 
2,096

 
(2,403
)
 
323,989

Asset-backed securities
 
5,000

 

 
(69
)
 
4,931

Corporate securities
 
38,638

 
99

 
(2,292
)
 
36,445

Total available-for-sale
 
$
547,034

 
$
4,264

 
$
(6,556
)
 
$
544,742

 
 
September 30, 2019
 
 
Amortized
 
Gross Unrealized
 
Fair
 
 
Cost
 
Gains
 
Losses
 
Value
Securities held-to-maturity
 
 

 
 

 
 

 
 

Municipal securities
 
$
10,145

 
$
345

 
$

 
$
10,490

Corporate securities
 
36,662

 
454

 
(51
)
 
37,065

Total held-to-maturity
 
$
46,807

 
$
799

 
$
(51
)
 
$
47,555


8



 
 
December 31, 2018
 
 
Amortized
 
Gross Unrealized
 
Fair
 
 
Cost
 
Gains
 
Losses
 
Value
Securities available-for-sale
 
 

 
 

 
 

 
 

U.S. Government-sponsored agencies
 
$
109,631

 
$
20

 
$
(2,066
)
 
$
107,585

Municipal securities
 
97,090

 
90

 
(4,674
)
 
92,506

Mortgage-backed securities
 
251,492

 
162

 
(8,742
)
 
242,912

Asset-backed securities
 
5,002

 

 
(143
)
 
4,859

Corporate securities
 
36,678

 

 
(3,195
)
 
33,483

Total available-for-sale
 
$
499,893

 
$
272

 
$
(18,820
)
 
$
481,345

 
 
December 31, 2018
 
 
Amortized
 
Gross Unrealized
 
Fair
 
 
Cost
 
Gains
 
Losses
 
Value
Securities held-to-maturity
 
 

 
 

 
 

 
 

Municipal securities
 
$
10,157

 
$

 
$
(356
)
 
$
9,801

Corporate securities
 
12,593

 
80

 
(56
)
 
12,617

Total held-to-maturity
 
$
22,750

 
$
80

 
$
(412
)
 
$
22,418


The carrying value of securities at September 30, 2019 is shown below by their contractual maturity date. Actual maturities will differ because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
 
Available-for-Sale
 
 
Amortized
Cost
 
Fair
Value
Within one year
 
$
30

 
$
31

One to five years
 
7,725

 
7,794

Five to ten years
 
73,495

 
72,118

After ten years
 
136,488

 
135,879

 
 
217,738

 
215,822

Mortgage-backed securities
 
324,296

 
323,989

Asset-backed securities
 
5,000

 
4,931

Total
 
$
547,034

 
$
544,742

 
 
Held-to-Maturity
 
 
Amortized
Cost
 
Fair
Value
One to five years
 
$
999

 
$
1,010

Five to ten years
 
35,775

 
36,311

After ten years
 
10,033

 
10,234

Total
 
$
46,807

 
$
47,555


There were no gross gains or losses resulting from sales of available securities during the three months ended September 30, 2019 and $0.5 million of gross losses resulting from sales of available-for-sale securities during the nine months ended September 30, 2019. There were no gross gains or losses resulting from sales of available-for-sale securities during the three and nine months ended September 30, 2018.
 

9



Certain investments in debt securities are reported in the condensed consolidated financial statements at an amount less than their historical cost. The total fair value of these investments at September 30, 2019 and December 31, 2018 was $272.1 million and $469.8 million, which was approximately 46% and 93%, respectively, of the Company’s available-for-sale and held-to-maturity securities portfolios. These declines resulted primarily from fluctuations in market interest rates after purchase. Management believes the declines in fair value for these securities are temporary. Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced, with the resulting loss recognized in net income in the period the other-than-temporary impairment (“OTTI”) is identified.

U. S. Government-Sponsored Agencies, Municipal Securities and Corporate Securities

The unrealized losses on the Company’s investments in securities issued by U.S. Government-sponsored agencies, municipal organizations and corporate entities were caused primarily by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be upon maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2019.
 
Mortgage-Backed Securities
 
The unrealized losses on the Company’s investments in mortgage-backed securities were caused by interest rate changes. The Company expects to recover the amortized cost bases over the term of the securities. Because the Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be upon maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2019.

The following tables show the securities portfolio’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2019 and December 31, 2018.
 
 
September 30, 2019
 
 
Less Than 12 Months
 
12 Months or Longer
 
Total
 
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Securities available-for-sale
 
 

 
 

 
 

 
 

 
 

 
 

U.S. Government-sponsored agencies
 
$
5,821

 
$
(53
)
 
$
65,936

 
$
(1,733
)
 
$
71,757

 
$
(1,786
)
Municipal securities
 
2,020

 
(6
)
 

 

 
2,020

 
(6
)
Mortgage-backed securities
 
68,414

 
(364
)
 
90,215

 
(2,039
)
 
158,629

 
(2,403
)
Asset-backed securities
 

 

 
4,931

 
(69
)
 
4,931

 
(69
)
Corporate securities
 

 

 
22,225

 
(2,292
)
 
22,225

 
(2,292
)
Total
 
$
76,255

 
$
(423
)
 
$
183,307

 
$
(6,133
)
 
$
259,562

 
$
(6,556
)
 
 
September 30, 2019
 
 
Less Than 12 Months
 
12 Months or Longer
 
Total
 
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Securities held-to-maturity
 
 

 
 

 
 

 
 

 
 

 
 

Corporate securities
 
$
10,058

 
$
(45
)
 
$
2,514

 
$
(6
)
 
$
12,572

 
$
(51
)
Total
 
$
10,058

 
$
(45
)
 
$
2,514

 
$
(6
)
 
$
12,572

 
$
(51
)

 

10



 
 
December 31, 2018
 
 
Less Than 12 Months
 
12 Months or Longer
 
Total
 
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Securities available-for-sale
 
 

 
 

 
 

 
 

 
 

 
 

U.S. Government-sponsored agencies
 
$
69,798

 
$
(893
)
 
$
33,511

 
$
(1,173
)
 
$
103,309

 
$
(2,066
)
Municipal securities
 
23,747

 
(710
)
 
59,938

 
(3,964
)
 
83,685

 
(4,674
)
Mortgage-backed securities
 
56,177

 
(529
)
 
172,442

 
(8,213
)
 
228,619

 
(8,742
)
Asset-backed securities
 
4,859

 
(143
)
 

 

 
4,859

 
(143
)
Corporate securities
 
14,092

 
(586
)
 
19,391

 
(2,609
)
 
33,483

 
(3,195
)
Total
 
$
168,673

 
$
(2,861
)
 
$
285,282

 
$
(15,959
)
 
$
453,955

 
$
(18,820
)
 
 
December 31, 2018
 
 
Less Than 12 Months
 
12 Months or Longer
 
Total
 
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Securities held-to-maturity
 
 

 
 

 
 

 
 

 
 

 
 

Municipal securities
 
$
9,801

 
$
(356
)
 
$

 
$

 
$
9,801

 
$
(356
)
Corporate securities
 
6,037

 
(56
)
 

 

 
6,037

 
(56
)
Total
 
$
15,838

 
$
(412
)
 
$

 
$

 
$
15,838

 
$
(412
)

There were no amounts reclassified from accumulated other comprehensive loss to the condensed consolidated statements of income during the three and nine months ended September 30, 2018. Amounts reclassified from accumulated other comprehensive loss and the affected line items in the condensed consolidated statements of income during the three and nine months ended September 30, 2019 were as follows:

Details About Accumulated Other Comprehensive Loss Components
 
Amounts Reclassified from
Accumulated Other Comprehensive Loss for the
 
Affected Line Item in the
Statements of Income
 
Three Months Ended September 30, 2019
 
Nine Months Ended September 30, 2019
 
Realized losses on securities available-for-sale
 
 

 
 

 
 
Loss realized in earnings
 
$

 
$
(458
)
 
Loss on sale of securities
Total reclassified amount before tax
 

 
(458
)
 
Income Before Income Taxes
Tax benefit
 

 
(124
)
 
Income Tax Provision
Total reclassifications out of accumulated other comprehensive loss
 
$

 
$
(334
)
 
Net Income

Note 4:        Loans
 
Loans that management intends to hold until maturity are reported at their outstanding principal balance adjusted for unearned income, charge-offs, the allowance for loan losses, any unamortized deferred fees or costs on originated loans, and unamortized premiums or discounts on purchased loans.
 
For loans recorded at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan.
 

11



Categories of loans include:
 
 
September 30, 2019
 
December 31, 2018
Commercial loans
 
 

 
 

Commercial and industrial
 
$
95,078

 
$
114,382

Owner-occupied commercial real estate
 
86,357

 
87,962

Investor commercial real estate
 
11,852

 
5,391

Construction
 
54,131

 
39,916

Single tenant lease financing
 
1,008,247

 
919,440

Public finance
 
686,622

 
706,342

Healthcare finance
 
251,530

 
117,007

Total commercial loans
 
2,193,817

 
1,990,440

Consumer loans
 
 
 
 
Residential mortgage
 
320,451

 
399,898

Home equity
 
25,042

 
28,735

Other consumer
 
296,573

 
279,771

Total consumer loans
 
642,066

 
708,404

Total commercial and consumer loans
 
2,835,883

 
2,698,844

Net deferred loan origination costs and premiums and discounts on purchased loans and other(1)
 
45,389

 
17,384

Total loans
 
2,881,272

 
2,716,228

Allowance for loan losses
 
(21,683
)
 
(17,896
)
Net loans
 
$
2,859,589

 
$
2,698,332


(1) Includes carrying value adjustments of $27.6 million and $5.0 million as of September 30, 2019 and December 31, 2018, respectively, related to interest rate swaps associated with public finance loans. 

The risk characteristics of each loan portfolio segment are as follows:

Commercial and Industrial: Commercial and industrial loans’ sources of repayment are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value. Loans are made for working capital, equipment purchases, or other purposes. Most commercial and industrial loans are secured by the assets being financed and may incorporate a personal guarantee. This portfolio segment is generally concentrated in Central Indiana and adjacent markets and the greater Phoenix, Arizona market.

Owner-Occupied Commercial Real Estate: The primary source of repayment is the cash flow from the ongoing operations and activities conducted by the borrower, or an affiliate of the borrower, who owns the property. This portfolio segment is generally concentrated in the Central Indiana and the adjacent markets and the greater Phoenix, Arizona market, and its loans are often secured by manufacturing and service facilities, as well as office buildings.

Investor Commercial Real Estate: These loans are underwritten primarily based on the cash flow expected to be generated from the property and are secondarily supported by the value of the real estate. These loans typically incorporate a personal guarantee from the primary sponsor or sponsors. This portfolio segment generally involves larger loan amounts, with repayment primarily dependent on the successful leasing and operation of the property securing the loan or the business conducted on the property securing the loan. Investor commercial real estate loans may be more adversely affected by changing economic conditions in the real estate markets, industry dynamics, or the overall health of the local economy where the property is located. The properties securing the Company’s investor commercial real estate portfolio tend to be diverse in terms of property type and are typically located in the state of Indiana or markets immediately adjacent to Indiana. Management monitors and evaluates commercial real estate loans based on property financial performance, collateral value, guarantor strength, economic and industry conditions together with other risk grade criteria. The Company generally avoids financing special use projects or properties outside of its designated market areas unless other underwriting factors are present to mitigate these additional risks.


12



Construction: Construction loans are secured by land and related improvements and are made to assist in the construction of new structures, which may include commercial (retail, industrial, office, multi-family) properties or single family residential properties offered for sale by the builder. These loans generally finance a variety of project costs, including land, site preparation, architectural services, construction, closing and soft costs and interim financing needs. The cash flows of builders, while initially predictable, may fluctuate with market conditions, and the value of the collateral securing these loans may be subject to fluctuations based on general economic changes. This portfolio segment is generally concentrated in Central Indiana.
Single Tenant Lease Financing: These loans are made on a nationwide basis to property owners of real estate subject to long-term lease arrangements with single tenant operators. The real estate is typically operated by regionally, nationally or globally branded businesses.  The loans are underwritten based on the financial strength of the borrower, characteristics of the real estate, cash flows generated from the lease arrangements and the financial strength of the tenant.  Similar to the other loan portfolio segments, management monitors and evaluates these loans based on borrower and tenant financial performance, collateral value, industry trends and other risk grade criteria.

Public Finance: These loans are made on a nationwide basis to governmental and not-for-profit entities to provide both tax-exempt and taxable loans for a variety of purposes including: short-term cash-flow needs; debt refinancing; economic development; quality of life projects; infrastructure improvements; and equipment financing. The primary sources of repayment for public finance loans are pledged revenue sources including but not limited to: general obligations; property taxes; income taxes; tax increment revenue; utility revenue; gaming revenue; sales tax; and pledged general revenue. Certain loans may also include an additional collateral pledge of mortgaged property or a security interest in financed equipment.

Healthcare Finance: These loans are made to healthcare providers, primarily dentists, for refinancing or acquiring practices, refinancing or acquiring owner-occupied commercial real estate, and equipment purchases. The sources of repayment for these loans are primarily based on the identified cash flows of the borrower (including ongoing operations and activities conducted by the borrower, or an affiliate of the borrower, who owns the property) and secondarily on the underlying collateral provided by the borrower. This portfolio segment is generally concentrated in the Western and Southwestern regions of the United States with plans to continue expanding nationwide.

Residential Mortgage: With respect to residential loans that are secured by 1 to 4 family residences and are generally owner occupied, the Company typically establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Repayment of these loans is primarily dependent on the financial circumstances of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in residential property values. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers in geographically diverse locations throughout the country.
Home Equity: Home equity loans and lines of credit are typically secured by a subordinate interest in 1 to 4 family residences. The properties securing the Company's home equity portfolio segment are generally geographically diverse, as the Company offers these products on a nationwide basis. Repayment of these loans and lines of credit is primarily dependent on the financial circumstances of the borrowers and may be impacted by changes in unemployment levels and property values on residential properties, among other economic conditions in the market.
Other Consumer: These loans primarily consist of consumer loans and credit cards. Consumer loans may be secured by consumer assets such as horse trailers or recreational vehicles. Some consumer loans are unsecured, such as small installment loans, home improvement loans and certain lines of credit. Repayment of consumer loans is primarily dependent upon the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers in geographically diverse locations throughout the country.

13



Allowance for Loan Losses Methodology
 
Company policy is designed to maintain an adequate allowance for loan losses (“ALLL”). The portfolio is segmented by loan type, and the required ALLL for types of performing homogeneous loans which do not have a specific reserve is determined by applying a factor based on average historical losses, adjusted for current economic factors and portfolio trends. Management believes the historical loss experience methodology is appropriate in the current economic environment, as it captures loss rates that are comparable to the current period being analyzed. Management adds qualitative factors for observable trends, changes in internal practices, changes in delinquencies and impairments, and external factors. Observable factors include changes in the composition and size of portfolios, as well as loan terms or concentration levels. The Company evaluates the impact of internal changes such as management and staff experience levels or modification to loan underwriting processes. Delinquency trends are scrutinized for both volume and severity of past due, nonaccrual, or classified loans, as well as any changes in the value of underlying collateral. Finally, the Company considers the effect of other external factors such as national, regional, and local economic and business conditions, as well as competitive, legal, and regulatory requirements. Loans that are considered to be impaired are evaluated to determine the need for a specific allowance by applying at least one of three methodologies: present value of future cash flows; fair value of collateral less costs to sell; or the loan’s observable market price. All troubled debt restructurings (“TDR”) are considered impaired loans. Loans evaluated for impairment are removed from other pools to prevent double-counting. Accounting Standards Codification (“ASC”) Topic 310, Receivables, requires that impaired loans be measured based on the present value of expected future cash flows discounted at the loans’ effective interest rates or the fair value of the underlying collateral less costs to sell and allows existing methods for recognizing interest income.
 
Provision for Loan Losses
 
A provision for estimated losses on loans is charged to income based upon management’s evaluation of the potential losses. Such an evaluation, which includes a review of all loans for which full repayment may not be reasonably assured, considers, among other matters, the estimated net realizable value of the underlying collateral, as applicable, economic conditions, loan loss experience, and other factors that are particularly susceptible to changes that could result in a material adjustment in the near term. While management attempts to use the best information available in making its evaluations, future allowance adjustments may be necessary if economic conditions change substantially from the assumptions used in making the evaluations.
 
Policy for Charging Off Loans
 
The Company’s policy is to charge off a loan at any point in time when it no longer can be considered a bankable asset, meaning collectible within the parameters of policy. A secured loan is generally charged down to the estimated fair value of the collateral, less costs to sell, no later than when it is 120 days past due as to principal or interest. An unsecured loan generally is charged off no later than when it is 180 days past due as to principal or interest. A home improvement loan generally is charged off no later than when it is 90 days past due as to principal or interest.


14



The following tables present changes in the balance of the ALLL during the three and nine months ended September 30, 2019 and 2018

 
Three Months Ended September 30, 2019
Allowance for loan losses:
Balance, Beginning of Period
 
Provision (Credit) Charged to Expense
 
Losses
Charged Off
 
Recoveries
 
Balance,
End of Period
Commercial and industrial
$
1,924

 
$
516

 
$
(800
)
 
$

 
$
1,640

Owner-occupied commercial real estate
624

 
26

 

 

 
650

Investor commercial real estate
169

 
(65
)
 

 

 
104

Construction
302

 
39

 

 

 
341

Single tenant lease financing
9,661

 
1,633

 

 

 
11,294

Public finance
1,763

 
(198
)
 

 

 
1,565

Healthcare finance
2,293

 
499

 

 

 
2,792

Residential mortgage
662

 
10

 
(1
)
 
1

 
672

Home equity
48

 
(5
)
 

 
2

 
45

Other consumer
2,530

 
369

 
(381
)
 
62

 
2,580

Total
$
19,976

 
$
2,824

 
$
(1,182
)
 
$
65

 
$
21,683



 
Nine Months Ended September 30, 2019
Allowance for loan losses:
Balance, Beginning of Period
 
Provision (Credit) Charged to Expense
 
Losses
Charged Off
 
Recoveries
 
Balance,
End of Period
Commercial and industrial
$
1,479

 
$
1,073

 
$
(912
)
 
$

 
$
1,640

Owner-occupied commercial real estate
891

 
(241
)
 

 

 
650

Investor commercial real estate
61

 
43

 

 

 
104

Construction
251

 
90

 

 

 
341

Single tenant lease financing
8,827

 
2,467

 

 

 
11,294

Public finance
1,670

 
(105
)
 

 

 
1,565

Healthcare finance
1,264

 
1,528

 

 

 
2,792

Residential mortgage
1,079

 
(409
)
 
(1
)
 
3

 
672

Home equity
53

 
(16
)
 

 
8

 
45

Other consumer
2,321

 
1,068

 
(1,035
)
 
226

 
2,580

Total
$
17,896

 
$
5,498

 
$
(1,948
)
 
$
237

 
$
21,683






15



 
Three Months Ended September 30, 2018
Allowance for loan losses:
Balance, Beginning of Period
 
(Credit) Provision Charged to Expense
 
Losses
Charged Off
 
Recoveries
 
Balance,
End of Period
Commercial and industrial
$
1,364

 
$
(51
)
 
$
(6
)
 
$

 
$
1,307

Owner-occupied commercial real estate
889

 
69

 

 

 
958

Investor commercial real estate
67

 
(5
)
 

 

 
62

Construction
295

 
(54
)
 

 

 
241

Single tenant lease financing
8,294

 
186

 

 

 
8,480

Public finance
1,372

 
82

 

 

 
1,454

Healthcare finance
676

 
249

 

 

 
925

Residential mortgage
909

 
68

 

 
1

 
978

Home equity
54

 
(5
)
 

 
5

 
54

Other consumer
2,133

 
349

 
(330
)
 
93

 
2,245

Total
$
16,053

 
$
888

 
$
(336
)
 
$
99

 
$
16,704



 
Nine Months Ended September 30, 2018
Allowance for loan losses:
Balance, Beginning of Period
 
(Credit) Provision Charged to Expense
 
Losses
Charged Off
 
Recoveries
 
Balance,
End of Period
Commercial and industrial
$
1,738

 
$
(428
)
 
$
(6
)
 
$
3

 
$
1,307

Owner-occupied commercial real estate
803

 
155

 

 

 
958

Investor commercial real estate
85

 
(23
)
 

 

 
62

Construction
423

 
(182
)
 

 

 
241

Single tenant lease financing
7,872

 
608

 

 

 
8,480

Public finance
959

 
495

 

 

 
1,454

Healthcare finance
313

 
612

 

 

 
925

Residential mortgage
956

 
27

 
(9
)
 
4

 
978

Home equity
70

 
(28
)
 

 
12

 
54

Other consumer
1,751

 
1,169

 
(881
)
 
206

 
2,245

Total
$
14,970

 
$
2,405

 
$
(896
)
 
$
225

 
$
16,704







16



The following tables present the recorded investment in loans based on portfolio segment and impairment method as of September 30, 2019 and December 31, 2018
 
Loans
 
Allowance for Loan Losses
September 30, 2019
Ending Balance:  
Collectively Evaluated for Impairment
 
Ending Balance:  
Individually Evaluated for Impairment
 
Ending Balance
 
Ending Balance:  
Collectively Evaluated for Impairment
 
Ending Balance:  
Individually Evaluated for Impairment
 
Ending Balance
Commercial and industrial
$
90,842

 
$
4,236

 
$
95,078

 
$
1,381

 
$
259

 
$
1,640

Owner-oc