Company Quick10K Filing
Quick10K
CNB Financial
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$28.20 15 $430
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-06-25 Officers, Other Events, Exhibits
8-K 2019-05-14 Officers
8-K 2019-05-14 Other Events, Exhibits
8-K 2019-04-16 Officers, Amend Bylaw, Shareholder Vote, Exhibits
8-K 2019-04-15 Earnings, Exhibits
8-K 2019-04-15 Regulation FD, Exhibits
8-K 2019-03-25 Regulation FD, Exhibits
8-K 2019-03-01 Officers
8-K 2019-02-22 Regulation FD, Exhibits
8-K 2019-02-13 Other Events, Exhibits
8-K 2019-01-28 Earnings, Exhibits
8-K 2019-01-28 Earnings, Exhibits
8-K 2018-11-13 Other Events, Exhibits
8-K 2018-10-19 Earnings, Exhibits
8-K 2018-10-10 Officers
8-K 2018-09-18 Officers
8-K 2018-08-14 Other Events, Exhibits
8-K 2018-08-08 Regulation FD, Exhibits
8-K 2018-07-20 Earnings, Exhibits
8-K 2018-05-08 Other Events, Exhibits
8-K 2018-04-17 Shareholder Vote, Other Events, Exhibits
8-K 2018-04-16 Earnings, Exhibits
8-K 2018-02-13 Officers
8-K 2018-02-02 Earnings, Exhibits
8-K 2018-01-12 Other Events
FMC FMC 10,490
PDCE PDC Energy 2,450
IDCC Interdigital 2,250
PNNT Pennantpark Investment 454
NETS Netshoes 59
AWIN Altegris Winton Futures Fund 0
HEYU Heyu Biological Technology 0
FXS Invesco Currencyshares Swedish Krona Trust 0
MDFZF Medifocus 0
STQN Strategic Acquisitions 0
CCNE 2019-03-31
Part I.
Part I Financial Information
Item 1. Financial Statements
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Issuer Purchases of Equity Securities
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ccne03312019ex311.htm
EX-31.2 ccne03312019ex312.htm
EX-32.1 ccne03312019ex321.htm
EX-32.2 ccne03312019ex322.htm

CNB Financial Earnings 2019-03-31

CCNE 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 ccne0331201910-q.htm 10-Q Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10–Q
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 000-13396
CNB FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania
 
25-1450605
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
1 South Second Street
P.O. Box 42
Clearfield, Pennsylvania 16830
(Address of principal executive offices)
Registrant’s telephone number, including area code, (814) 765-9621
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.    ý    Yes    ¨    No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    ý    Yes    ¨    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
 
ý
 
 
 
 
Non-accelerated filer
 
¨
  
Smaller reporting company
 
¨
 
 
 
 
 
 
 
 
 
 
 
Emerging growth company
 
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    ý    No
Securities registered pursuant to Section 12(b) of the Act:
 
 
 
 
 
Title of Class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, no par value
 
   CCNE
 
The NASDAQ Stock Market LLC
The number of shares outstanding of the issuer’s common stock as of May 6, 2019
COMMON STOCK NO PAR VALUE PER SHARE: 15,239,371 SHARES



INDEX
PART I.
FINANCIAL INFORMATION
 
 
Page Number
 
 
 
 
 
1

 
 
2

 
 
3

 
 
4

 
 
5

 
 
6

 
 
28

 
 
37

 
 
38

 
PART II.
OTHER INFORMATION
 
 
39

 
 
39

 
 
39

 
 
39

 
 
39

 
 
39

 
 
40

 
 
41




Forward-Looking Statements

The information below includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the financial condition, liquidity, results of operations, and future performance of our business. These forward-looking statements are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that are not historical facts. Forward-looking statements include statements with respect to beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond our control). Forward-looking statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would” and “could.” Such known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, include, but are not limited to, (i) changes in general business, industry or economic conditions or competition; (ii) changes in any applicable law, rule, regulation, policy, guideline or practice governing or affecting financial holding companies and their subsidiaries or with respect to tax or accounting principals or otherwise; (iii) adverse changes or conditions in capital and financial markets; (iv) changes in interest rates; (v) higher than expected costs or other difficulties related to integration of combined or merged businesses; (vi) the inability to realize expected cost savings or achieve other anticipated benefits in connection with business combinations and other acquisitions; (vii) changes in the quality or composition of our loan and investment portfolios; (viii) adequacy of loan loss reserves; (ix) increased competition; (x) loss of certain key officers; (xi) deposit attrition; (xii) rapidly changing technology; (xiii) unanticipated regulatory or judicial proceedings and liabilities and other costs; (xiv) changes in the cost of funds, demand for loan products or demand for financial services; and (xv) other economic, competitive, governmental or technological factors affecting our operations, markets, products, services and prices. Such developments could have an adverse impact on our financial position and our results of operations.

The forward-looking statements contained herein are based upon management’s beliefs and assumptions. Any forward-looking statement made herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.



Part I Financial Information
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
Dollars in thousands, except share data
 
(unaudited) March 31, 2019
 
December 31, 2018
ASSETS
Cash and due from banks
$
52,833

 
$
43,327

Interest bearing deposits with other banks
2,449

 
2,236

Total cash and cash equivalents
55,282

 
45,563

Securities available for sale
500,608

 
516,863

Trading securities
8,642

 
7,786

Loans held for sale
2,952

 
367

Loans
2,530,761

 
2,479,348

Less: unearned discount
(4,671
)
 
(4,791
)
Less: allowance for loan losses
(20,346
)
 
(19,704
)
Net loans
2,505,744

 
2,454,853

FHLB, other equity, and restricted equity interests
23,129

 
24,508

Premises and equipment, net
51,331

 
49,920

Operating lease assets
16,222

 
0

Bank owned life insurance
56,805

 
56,443

Mortgage servicing rights
1,498

 
1,495

Goodwill
38,730

 
38,730

Core deposit intangible
562

 
727

Accrued interest receivable and other assets
25,819

 
24,266

Total Assets
$
3,287,324

 
$
3,221,521

LIABILITIES AND SHAREHOLDERS’ EQUITY
Non-interest bearing deposits
$
345,386

 
$
356,797

Interest bearing deposits
2,311,973

 
2,253,989

Total deposits
2,657,359

 
2,610,786

Short-term borrowings
0

 
0

FHLB and other long term borrowings
240,005

 
245,117

Subordinated debentures
70,620

 
70,620

Operating lease liabilities
17,109

 
0

Accrued interest payable and other liabilities
27,272

 
32,168

Total liabilities
3,012,365

 
2,958,691

Common stock, $0 par value; authorized 50,000,000 shares; issued 15,308,378 shares at March 31, 2019 and December 31, 2018
0

 
0

Additional paid in capital
97,139

 
97,602

Retained earnings
178,662

 
171,780

Treasury stock, at cost (69,007 shares at March 31, 2019 and 101,097 shares at December 31, 2018)
(1,702
)
 
(2,556
)
Accumulated other comprehensive income (loss)
860

 
(3,996
)
Total shareholders’ equity
274,959

 
262,830

Total Liabilities and Shareholders’ Equity
$
3,287,324

 
$
3,221,521

 
 
 
 
See Notes to Consolidated Financial Statements

1


CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Dollars in thousands, except per share data
 
 
 
 
 
Three months ended
March 31,
 
2019
 
2018
INTEREST AND DIVIDEND INCOME:
 
 
 
Loans including fees
$
32,824

 
$
26,457

Securities:
 
 
 
Taxable
2,978

 
1,984

Tax-exempt
697

 
694

Dividends
254

 
252

Total interest and dividend income
36,753

 
29,387

INTEREST EXPENSE:
 
 
 
Deposits
6,587

 
2,924

Borrowed funds
1,410

 
1,488

Subordinated debentures (includes $6 and $58 accumulated other comprehensive income reclassification for change in fair value of interest rate swap agreements in 2019 and 2018, respectively)
998

 
875

Total interest expense
8,995

 
5,287

NET INTEREST INCOME
27,758

 
24,100

PROVISION FOR LOAN LOSSES
1,306

 
1,631

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
26,452

 
22,469

NON-INTEREST INCOME:
 
 
 
Service charges on deposit accounts
1,481

 
1,247

Other service charges and fees
646

 
618

Wealth and asset management fees
1,042

 
1,030

Net realized gains on available-for-sale securities (includes $148 and $0 accumulated other comprehensive income reclassifications for net realized gains on available-for-sale securities in 2019 and 2018, respectively)
148

 
0

Net realized and unrealized gains on trading securities
800

 
14

Mortgage banking
239

 
208

Bank owned life insurance
361

 
400

Card processing and interchange income
1,029

 
971

Other
407

 
263

Total non-interest income
6,153

 
4,751

NON-INTEREST EXPENSES:
 
 
 
Salaries and benefits
10,900

 
9,535

Net occupancy expense
2,866

 
2,496

Amortization of core deposit intangible
165

 
248

Data processing
1,185

 
1,074

State and local taxes
768

 
853

Legal, professional, and examination fees
553

 
508

Advertising
411

 
597

FDIC insurance premiums
422

 
298

Card processing and interchange expenses
747

 
734

Other
3,158

 
2,656

Total non-interest expenses
21,175

 
18,999

INCOME BEFORE INCOME TAXES
11,430

 
8,221

INCOME TAX EXPENSE (includes $30 and ($12) income tax expense (benefit) from reclassification items in 2019 and 2018, respectively)
1,957

 
1,124

NET INCOME
$
9,473

 
$
7,097

EARNINGS PER SHARE:
 
 
 
Basic
$
0.62

 
$
0.46

Diluted
$
0.62

 
$
0.46

DIVIDENDS PER SHARE:
 
 
 
Cash dividends per share
$
0.170

 
$
0.165

 
 
 
 
See Notes to Consolidated Financial Statements

2


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Dollars in thousands
 
 
 
 
 
Three Months Ended March 31,
 
2019
 
2018
NET INCOME
$
9,473

 
$
7,097

Other comprehensive income (loss), net of tax:
 
 
 
Net change in fair value of interest rate swap agreements designated as cash flow hedges:
 
 
 
Unrealized gain (loss) on interest rate swaps, net of tax of $26 and ($4), respectively
(100
)
 
16

Reclassification adjustment for losses recognized in earnings, net of tax of ($1) and ($12), respectively
5

 
46

 
(95
)
 
62

Net change in unrealized gains on securities available for sale:
 
 
 
Unrealized holding gains (losses) arising during the period, net of tax of ($1,348) and $1,053, respectively
5,068

 
(3,964
)
Reclassification adjustment for realized gains included in net income, net of tax of $31 and $0, respectively
(117
)
 
0

 
4,951

 
(3,964
)
Other comprehensive income (loss)
4,856

 
(3,902
)
COMPREHENSIVE INCOME
$
14,329

 
$
3,195

 
 
 
 
See Notes to Consolidated Financial Statements

3


CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Dollars in thousands
 
 
 
 
 
Three Months Ended March 31,
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
9,473

 
$
7,097

Adjustments to reconcile net income to net cash provided by operations:
 
 
 
Provision for loan losses
1,306

 
1,631

Depreciation and amortization of premises and equipment, operating leases assets, core deposit intangible, and mortgage servicing rights
1,509

 
1,236

Amortization and accretion of securities premiums and discounts, deferred loan fees and costs, net yield and credit mark on acquired loans, and unearned income
(409
)
 
(427
)
Net realized gains on sales of available-for-sale securities
(148
)
 
0

Net realized and unrealized gains on trading securities
(800
)
 
(14
)
Proceeds from sale of trading securities
236

 
0

Purchase of trading securities
(144
)
 
(92
)
Gain on sale of loans
(84
)
 
(105
)
Net gains on dispositions of premises and equipment and foreclosed assets
0

 
(4
)
Proceeds from sale of loans
4,569

 
4,270

Origination of loans held for sale
(7,118
)
 
(4,824
)
Income on bank owned life insurance
(361
)
 
(400
)
Stock-based compensation expense
592

 
677

Changes in:
 
 
 
Accrued interest receivable and other assets
(707
)
 
(4,137
)
Accrued interest payable, lease liabilities, and other liabilities
(6,520
)
 
(766
)
NET CASH PROVIDED BY OPERATING ACTIVITIES
1,394

 
4,142

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Proceeds from maturities, prepayments and calls of available-for-sale securities
20,152

 
7,780

Proceeds from sales of available-for-sale securities
11,403

 
0

Purchase of available-for-sale securities
(9,252
)
 
(21,634
)
Loan origination and payments, net
(51,635
)
 
(130,059
)
Redemption (purchase) of FHLB, other equity, and restricted equity interests
1,379

 
(5,047
)
Purchase of premises and equipment
(2,399
)
 
(397
)
Proceeds from the sale of premises and equipment and foreclosed assets
8

 
166

NET CASH USED BY INVESTING ACTIVITIES
(30,344
)
 
(149,191
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Net change in:
 
 
 
Checking, money market and savings accounts
88,105

 
30,391

Certificates of deposit
(41,532
)
 
11,849

Purchase of treasury stock
(201
)
 
(448
)
Cash dividends paid
(2,591
)
 
(2,523
)
Repayment of long-term borrowings
(5,112
)
 
(7,554
)
Proceeds from long-term borrowings
0

 
50,000

Net change in short-term borrowings
0

 
56,593

NET CASH PROVIDED BY FINANCING ACTIVITIES
38,669

 
138,308

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
9,719

 
(6,741
)
CASH AND CASH EQUIVALENTS, Beginning
45,563

 
35,345

CASH AND CASH EQUIVALENTS, Ending
$
55,282

 
$
28,604

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
Cash paid during the period for:
 
 
 
Interest
$
8,942

 
$
5,203

Income taxes
1,250

 
0

SUPPLEMENTAL NONCASH DISCLOSURES:
 
 
 
Transfers to other real estate owned
$
66

 
$
0

Grant of restricted stock awards from treasury stock
$
1,055

 
$
933



 
 
 
See Notes to Consolidated Financial Statements

4


CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)
Dollars in thousands, except share and per share data
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Share-
holders’
Equity
Balance, January 1, 2019
$
97,602

 
$
171,780

 
$
(2,556
)
 
$
(3,996
)
 
$
262,830

Net income
 
 
9,473

 
 
 
 
 
9,473

Other comprehensive income
 
 
 
 
 
 
4,856

 
4,856

Restricted stock award grants (39,790 shares)
(1,055
)
 
 
 
1,055

 
 
 
0

Stock-based compensation expense
592

 
 
 
 
 
 
 
592

Purchase of treasury stock for the purpose of tax withholding related to restricted stock award vesting (7,700 shares)
 
 
 
 
(201
)
 
 
 
(201
)
Cash dividends declared ($0.17 per share)
 
 
(2,591
)
 
 
 
 
 
(2,591
)
Balance, March 31, 2019
$
97,139

 
$
178,662

 
$
(1,702
)
 
$
860

 
$
274,959

 
 
 
 
 
 
 
 
 
 
Balance, January 1, 2018
$
97,042

 
$
148,298

 
$
(1,087
)
 
$
(343
)
 
$
243,910

Net income
 
 
7,097

 
 
 
 
 
7,097

Other comprehensive loss
 
 
 
 
 
 
(3,902
)
 
(3,902
)
Restricted stock award grants (37,708 shares)
(933
)
 
 
 
933

 
 
 
0

Stock-based compensation expense
677

 
 
 
 
 
 
 
677

Purchase of treasury stock (10,769 shares)
 
 
 
 
(286
)
 
 
 
(286
)
Purchase of treasury stock for the purpose of tax withholding related to restricted stock award vesting (6,040 shares)
 
 
 
 
(162
)
 
 
 
(162
)
Cash dividends declared ($0.165 per share)
 
 
(2,523
)
 
 
 
 
 
(2,523
)
Balance, March 31, 2018
96,786

 
152,872

 
(602
)
 
(4,245
)
 
244,811

 
 
 
 
 
 
 
 
 
 
See Notes to Consolidated Financial Statements


5


CNB FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
1.    BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared pursuant to rules and regulations of the SEC and in compliance with accounting principles generally accepted in the United States of America (“GAAP”). Because this report is based on an interim period, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

In the opinion of management of the registrant, the accompanying consolidated financial statements as of March 31, 2019 and for the three month periods ended March 31, 2019 and 2018 include all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the financial condition and the results of operations for the periods presented. The financial performance reported for CNB Financial Corporation (the “Corporation”) for the three month period ended March 31, 2019 is not necessarily indicative of the results to be expected for the full year. This information should be read in conjunction with the Corporation’s Annual Report on Form 10-K for the period ended December 31, 2018 (the “2018 Form 10-K”). All dollar amounts are stated in thousands, except share and per share data and other amounts as indicated. Certain prior period amounts have been reclassified to conform to the current period presentation.

2.    STOCK COMPENSATION

The Corporation has a stock incentive plan, which is administered by a committee of the Board of Directors and which permits the Corporation to provide various types of stock-based compensation to its key employees, directors, and/or consultants, including time-based and performance-based shares of restricted stock.  The Corporation previously maintained its 2009 Stock Incentive Plan, which terminated in accordance with its terms on February 10, 2019, and currently maintains its 2019 Stock Incentive Plan, which was approved by the Corporation’s shareholders and became effective on April 16, 2019. 

For key employees, the vesting of time-based restricted stock is one-third, one-fourth, or one-fifth of the granted restricted shares per year, beginning one year after the grant date, with 100% vesting on the third, fourth or fifth anniversary of the grant date, respectively. Prior to 2018, for non-employee directors, the vesting schedule is one-third of the granted restricted shares per year, beginning one year after the grant date, with 100% vested on the third anniversary of the grant date. Beginning in 2018, stock compensation received by non-employee directors vests immediately. At March 31, 2019, there was no unrecognized compensation cost related to stock-based compensation awarded under this plan and, except for the time-based and performance-based restricted stock awards disclosed below and in previous filings, no other stock-based compensation was granted during the three month periods ended March 31, 2019 and 2018.
In addition to the time-based restricted stock disclosed above, the Corporation’s Board of Directors grants performance-based restricted stock awards (“PBRSAs”) to key employees. The number of PBRSAs will depend on certain performance conditions and are also subject to service-based vesting. In 2019, awards with a maximum of 16,681 shares in aggregate were granted to key employees. In 2018, awards with a maximum of 15,657 shares in aggregate were granted to key employees. In 2017, an award with a maximum of 7,109 shares was granted to a key employee.
Compensation expense for the restricted stock awards is recognized over the requisite service period noted above based on the fair value of the shares at the date of grant. Nonvested restricted stock awards are recorded as a reduction of additional paid-in-capital in shareholders’ equity until earned. Compensation expense resulting from these restricted stock awards was $592 and $677 for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019, there was $1,185 of total unrecognized compensation cost related to unvested restricted stock awards.






6


A summary of changes in time-based nonvested restricted stock awards for the three months ended March 31, 2019 follows:
 
Shares
 
Per Share
Weighted Average
Grant Date Fair 
Value
Nonvested at beginning of period
75,889

 
$
23.20

Granted
25,940

 
25.27

Vested
(34,060
)
 
21.58

Nonvested at end of period
67,769

 
$
24.79


The above table excludes 13,850 shares in restricted stock awards that were granted at a weighted average fair value of $25.27 and immediately vested. Compensation expense resulting from the immediately vested shares was $350 for the three months ended March 31, 2019, and is included in the previously disclosed $592 above.
The fair value of shares vested was $1,227 and $1,462 during the three months ended March 31, 2019 and 2018, respectively.

3.    FAIR VALUE
Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy has also been established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following three levels of inputs are used to measure fair value:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair values of most trading securities and securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The Corporation’s derivative instruments are interest rate swaps that are similar to those that trade in liquid markets. As such, significant fair value inputs can generally be verified and do not typically involve significant management judgments (Level 2 inputs).

The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals prepared by third-parties. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Management also adjusts appraised values based on the length of time that has passed since the appraisal date and other factors. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.





7


Assets and liabilities measured at fair value on a recurring basis are as follows at March 31, 2019 and December 31, 2018:
 
 

 
Fair Value Measurements at March 31, 2019 Using:
 
 
 
 
Quoted Prices in
Active Markets 
for
Identical Assets
 
Significant Other
Observable Inputs
 
Significant
Unobservable
Inputs
Description
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets:
 
 
 
 
 
 
 
Securities Available For Sale:
 
 
 
 
 
 
 
U.S. Government sponsored entities
130,375

 
0

 
130,375

 
0

States and political subdivisions
121,090

 
0

 
121,090

 
0

Residential and multi-family mortgage
207,491

 
0

 
207,491

 
0

Corporate notes and bonds
11,904

 
0

 
11,904

 
0

Pooled SBA
28,801

 
0

 
28,801

 
0

Other
947

 
947

 
0

 
0

Total Securities Available For Sale
$
500,608

 
$
947

 
$
499,661

 
$
0

Interest Rate swaps
$
906

 
$
0

 
$
906

 
$
0

Trading Securities:
 
 
 
 
 
 
 
Corporate equity securities
$
6,947

 
$
6,947

 
0

 
0

Mutual funds
871

 
871

 
0

 
0

Certificates of deposit
179

 
179

 
0

 
0

Corporate notes and bonds
594

 
594

 
0

 
0

U.S. Government sponsored entities
51

 
0

 
51

 
0

Total Trading Securities
$
8,642

 
$
8,591

 
$
51

 
$
0

Liabilities:
 
 
 
 
 
 
 
Interest rate swaps
$
(1,227
)
 
$
0

 
$
(1,227
)
 
$
0

 
 
 
 
 
 
 
 
 
 
 
Fair Value Measurements at December 31, 2018 Using:
 
 
 
Quoted Prices in
 
 
 
Significant
 
 
 
Active Markets 
for
 
Significant Other
 
Unobservable
 
 
 
Identical Assets
 
Observable Inputs
 
Inputs
Description
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets:
 
 
 
 
 
 
 
Securities Available For Sale:
 
 
 
 
 
 
 
U.S. Government sponsored entities
$
132,694

 
$
0

 
$
132,694

 
$
0

States and political subdivisions
136,031

 
0

 
136,031

 
0

Residential and multi-family mortgage
206,053

 
0

 
206,053

 
0

Corporate notes and bonds
11,777

 
0

 
11,777

 
0

Pooled SBA
29,374

 
0

 
29,374

 
0

Other
934

 
934

 
0

 
0

Total Securities Available For Sale
$
516,863

 
$
934

 
$
515,929

 
$
0

Interest Rate swaps
$
485

 
$
0

 
$
485

 
$
0

Trading Securities:
 
 
 
 
 
 
 
Corporate equity securities
5,828

 
5,828

 
0

 
0

Mutual funds
1,058

 
1,058

 
0

 
0

Certificates of deposit
268

 
268

 
0

 
0

Corporate notes and bonds
581

 
581

 
0

 
0

U.S. Government sponsored entities
51

 
0

 
51

 
0

Total Trading Securities
$
7,786

 
$
7,735

 
51

 
0

Liabilities:
 
 
 
 
 
 
 
Interest rate swaps
$
(686
)
 
$
0

 
$
(686
)
 
$
0





8


Assets and liabilities measured at fair value on a non-recurring basis are as follows at March 31, 2019 and December 31, 2018:
 
 
 
Fair Value Measurements at March 31, 2019 Using:
 
 
 
Quoted Prices in
Active Markets 
for
Identical Assets
 
Significant Other
Observable Inputs
 
Significant
Unobservable
Inputs
Description
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets:
 
 
 
 
 
 
 
Impaired loans:
 
 
 
 
 
 
 
Commercial, industrial, and agricultural
$
540

 
0

 
0

 
$
540

Commercial mortgages
$
1,166

 
0

 
0

 
$
1,166

 
 
 
 
 
 
 
 
 
 
 
Fair Value Measurements at December 31, 2018 Using
 
 
 
Quoted Prices in
 
 
 
Significant
 
 
 
Active Markets 
for
 
Significant Other
 
Unobservable
 
 
 
Identical Assets
 
Observable Inputs
 
Inputs
Description
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets:
 
 
 
 
 
 
 
Impaired loans:
 
 
 
 
 
 
 
Commercial, industrial, and agricultural
$
2,055

 
0

 
0

 
$
2,055

Commercial mortgages
$
679

 
0

 
0

 
$
679

Impaired loans, measured for impairment using the fair value of collateral for collateral dependent loans, had a recorded investment of $4,244 with a valuation allowance of $2,538 as of March 31, 2019, resulting in a provision for loan losses of $777 for the corresponding three month period. Impaired loans had a recorded investment of $3,918 with a valuation allowance of $1,184 as of December 31, 2018. Impaired loans carried at fair value resulted in a provision for loan losses of $272 for the three months ended March 31, 2018.

The estimated fair values of impaired collateral dependent loans, such as commercial or residential mortgages, are determined primarily through third-party appraisals. When a collateral dependent loan, such as a commercial or residential mortgage loan, becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal, and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral and a further reduction for estimated costs to sell the property is applied, which results in an amount that is considered to be the estimated fair value. If a loan becomes impaired and the appraisal of related loan collateral is outdated, management applies an appropriate adjustment factor based on its experience with current valuations of similar collateral in determining the loan’s estimated fair value and resulting allowance for loan losses. Third-party appraisals are not customarily obtained in respect of unimpaired loans, unless in management’s view changes in circumstances warrant obtaining an updated appraisal.
The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at March 31, 2019:
 
Fair
value
 
Valuation Technique
 
Unobservable Inputs
 
Range
(Weighted Average)
Impaired loans – commercial, industrial, and agricultural
$540
 
Valuation of third party appraisal on underlying collateral
 
Loss severity rates
 
39%-78% (63%)
Impaired loans – commercial mortgages
$1,166
 
Valuation of third party appraisal on underlying collateral
 
Loss severity rates
 
15-90% (37%)





9


The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2018:
 
Fair
value
 
Valuation Technique
 
Unobservable Inputs
 
Range
(Weighted Average)
Impaired loans – commercial, industrial, and agricultural
$2,055
 
Valuation of third party appraisal on underlying collateral
 
Loss severity rates
 
20%-60% (34%)
Impaired loans – commercial mortgages
$679
 
Valuation of third party appraisal on underlying collateral
 
Loss severity rates
 
15%-39% (33%)
Fair Value of Financial Instruments
The following table presents the carrying amount and fair value of financial instruments at March 31, 2019:
 
Carrying
 
Fair Value Measurement Using:
 
Total
 
Amount
 
Level 1
 
Level 2
 
Level 3
 
Fair Value
ASSETS
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
55,282

 
$
55,282

 
$
0

 
$
0

 
$
55,282

Securities available for sale
500,608

 
947

 
499,661

 
0

 
500,608

Trading securities
8,642

 
8,591

 
51

 
0

 
8,642

Loans held for sale
2,952

 
0

 
2,957

 
0

 
2,957

Net loans
2,505,744

 
0

 
0

 
2,483,864

 
2,483,864

FHLB and other restricted interests
23,129

 
n/a

 
n/a

 
n/a

 
n/a

Interest rate swaps
906

 
0

 
906

 
0

 
906

Accrued interest receivable
11,862

 
7

 
3,567

 
8,288

 
11,862

LIABILITIES
 
 
 
 
 
 
 
 
 
Deposits
$
(2,657,359
)
 
$
(2,303,454
)
 
$
(354,791
)
 
$
0

 
$
(2,658,245
)
FHLB and other borrowings
(240,005
)
 
0

 
(240,503
)
 
0

 
(240,503
)
Subordinated debentures
(70,620
)
 
0

 
(65,325
)
 
0

 
(65,325
)
Interest rate swaps
(1,227
)
 
0

 
(1,227
)
 
0

 
(1,227
)
Accrued interest payable
(916
)
 
0

 
(916
)
 
0

 
(916
)
The following table presents the carrying amount and fair value of financial instruments at December 31, 2018:
 
Carrying
 
Fair Value Measurement Using:
 
Total
 
Amount
 
Level 1
 
Level 2
 
Level 3
 
Fair Value
ASSETS
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
45,563

 
$
45,563

 
$
0

 
$
0

 
$
45,563

Securities available for sale
516,863

 
934

 
515,929

 
0

 
516,863

Trading securities
7,786

 
7,735

 
51

 
0

 
7,786

Loans held for sale
367

 
0

 
368

 
0

 
368

Net loans
2,454,853

 
0

 
0

 
2,433,417

 
2,433,417

FHLB and other restricted interests
24,508

 
n/a

 
n/a

 
n/a

 
n/a

Interest rate swaps
485

 
0

 
485

 
0

 
485

Accrued interest receivable
10,843

 
6

 
3,368

 
7,469

 
10,843

LIABILITIES
 
 
 
 
 
 
 
 
 
Deposits
$
(2,610,786
)
 
$
(2,215,349
)
 
$
(397,370
)
 
$
0

 
$
(2,612,719
)
FHLB and other borrowings
(245,117
)
 
0

 
(242,592
)
 
0

 
(242,592
)
Subordinated debentures
(70,620
)
 
0

 
(65,794
)
 
0

 
(65,794
)
Interest rate swaps
(686
)
 
0

 
(686
)
 
0

 
(686
)
Accrued interest payable
(863
)
 
0

 
(863
)
 
0

 
(863
)

In accordance with our adoption of ASU 2016-01 in 2018, the methods utilized to measure the fair value of financial instruments at March 31, 2019 and December 31, 2018 represent an approximation of exit price; however, an actual exit price may differ.


10


While estimates of fair value are based on management’s judgment of the most appropriate factors as of the balance sheet date, there is no assurance that the estimated fair values would have been realized if the assets had been disposed of or the liabilities settled at that date, since market values may differ depending on various circumstances. The estimated fair values would also not apply to subsequent dates. The fair value of other equity interests is based on the net asset values provided by the underlying investment partnership. Accounting Standards Updated ("ASU") 2015-7 removes the requirement to categorize within the fair value hierarchy all investments measured using the net asset value per share practical expedient and related disclosures.In addition, other assets and liabilities that are not financial instruments, such as premises and equipment, are not included in the disclosures.

Also, non-financial assets such as, among other things, the estimated earnings power of core deposits, the earnings potential of trust accounts, the trained workforce, and customer goodwill, which typically are not recognized on the balance sheet, may have value but are not included in the fair value disclosures.

4.    SECURITIES
Securities available for sale at March 31, 2019 and December 31, 2018 are as follows:
 
March 31, 2019
 
December 31, 2018
 
Amortized
 
Unrealized
 
Fair
 
Amortized
 
Unrealized
 
Fair
 
Cost
 
Gains
 
Losses
 
Value
 
Cost
 
Gains
 
Losses
 
Value
U.S. Gov’t sponsored entities
$
129,993

 
$
1,127

 
$
(745
)
 
$
130,375

 
$
134,010

 
$
254

 
$
(1,570
)
 
$
132,694

State & political subdivisions
118,673

 
2,595

 
(178
)
 
121,090

 
134,662

 
1,942

 
(573
)
 
136,031

Residential & multi-family mortgage
207,588

 
1,711

 
(1,808
)
 
207,491

 
209,126

 
500

 
(3,573
)
 
206,053

Corporate notes & bonds
12,354

 
26

 
(476
)
 
11,904

 
12,356

 
22

 
(601
)
 
11,777

Pooled SBA
29,186

 
196

 
(581
)
 
28,801

 
30,163

 
135

 
(924
)
 
29,374

Other
1,020

 
0

 
(73
)
 
947

 
1,020

 
0

 
(86
)
 
934

Total
$
498,814

 
$
5,655

 
$
(3,861
)
 
$
500,608

 
$
521,337

 
$
2,853

 
$
(7,327
)
 
$
516,863


At March 31, 2019 and December 31, 2018, there were no holdings of securities of any one issuer, other than the U.S. Government sponsored entities, in an amount greater than 10% of shareholders’ equity. The Corporation’s residential and multi-family mortgage securities are issued by government sponsored entities.
Trading securities at March 31, 2019 and December 31, 2018 are as follows:
 
March 31, 2019
 
December 31, 2018
Corporate equity securities
$
6,947

 
$
5,828

Mutual funds
871

 
1,058

Certificates of deposit
179

 
268

Corporate notes and bonds
594

 
581

U.S. Government sponsored entities
51

 
51

Total
$
8,642

 
$
7,786









11


Securities with unrealized losses at March 31, 2019 and December 31, 2018, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:
March 31, 2019
 
Less than 12 Months
 
12 Months or More
 
Total
Description of Securities
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
U.S. Gov’t sponsored entities
$
4,963

 
$
(2
)
 
$
69,440

 
$
(743
)
 
$
74,403

 
$
(745
)
State & political subdivisions
994

 
(13
)
 
10,389

 
(165
)
 
11,383

 
(178
)
Residential & multi-family mortgage
3,186

 
(10
)
 
87,606

 
(1,798
)
 
90,792

 
(1,808
)
Corporate notes & bonds
0

 
0

 
9,528

 
(476
)
 
9,528

 
(476
)
Pooled SBA
0

 
0

 
19,035

 
(581
)
 
19,035

 
(581
)
Other
0

 
0

 
947

 
(73
)
 
947

 
(73
)
 
$
9,143

 
$
(25
)
 
$
196,945

 
$
(3,836
)
 
$
206,088

 
$
(3,861
)
December 31, 2018
 
Less than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
U.S. Gov’t sponsored entities
$
14,786

 
$
(41
)
 
$
70,676

 
$
(1,529
)
 
$
86,462

 
$
(1,570
)
State & political subdivisions
13,834

 
(62
)
 
21,080

 
(511
)
 
34,914

 
(573
)
Residential & multi-family mortgage
69,015

 
(656
)
 
87,286

 
(2,917
)
 
156,301

 
(3,573
)
Corporate notes & bonds
0

 
0

 
9,759

 
(601
)
 
9,759

 
(601
)
Pooled SBA
760

 
(7
)
 
20,795

 
(917
)
 
21,555

 
(924
)
Other
0

 
0

 
934

 
(86
)
 
934

 
(86
)
 
$
98,395

 
$
(766
)
 
$
210,530

 
$
(6,561
)
 
$
309,925

 
$
(7,327
)
The Corporation evaluates securities for other-than-temporary impairment on a quarterly basis, or more frequently when economic or market conditions warrant such an evaluation.

At March 31, 2019 and December 31, 2018, management performed an assessment for possible other-than-temporary impairment of the Corporation’s debt securities, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. Based on the results of the assessment, management believes impairment of these debt securities at March 31, 2019 and December 31, 2018 to be temporary.
For the securities that comprise corporate notes and bonds and the securities that are issued by state and political subdivisions, management monitors publicly available financial information, such as filings with the Securities and Exchange Commission, in order to evaluate the securities for other-than-temporary impairment. For financial institution issuers, management monitors information from quarterly “call” report filings that are used to generate Uniform Bank Performance Reports. All other securities that were in an unrealized loss position at the balance sheet date were reviewed by management, and issuer-specific documents were reviewed as appropriate given the following considerations. When reviewing securities for other-than-temporary impairment, management considers the financial condition and near-term prospects of the issuer and whether downgrades by bond rating agencies have occurred. Management also considers the length of time and extent to which fair value has been less than cost, and whether management does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery.
As of March 31, 2019 and December 31, 2018, management concluded that the securities described in the previous paragraph were not other-than-temporarily impaired for the following reasons:
 
There is no indication of any significant deterioration of the creditworthiness of the institutions that issued the securities.
All contractual interest payments on the securities have been received as scheduled, and no information has come to management’s attention through the processes previously described which would lead to a conclusion that future contractual payments will not be timely received.
The Corporation does not intend to sell and it is not more likely than not that it will be required to sell the securities in an unrealized loss position before recovery of its amortized cost basis.

12


On March 31, 2019 and December 31, 2018, securities carried at $269,591 and $290,717, respectively, were pledged to secure public deposits and for other purposes as provided by law.
Information pertaining to security sales on available for sale securities is as follows:
 
Proceeds
 
Gross
Gains
 
Gross
Losses
Three months ended March 31, 2019
$
11,403

 
$
152

 
$
4

Three months ended March 31, 2018
$
0

 
$
0

 
$
0

The tax provision related to these net realized gains was $31 and $0, respectively.
The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at March 31, 2019:
 
Amortized
Cost
 
Fair
Value
1 year or less
$
58,770

 
$
58,412

1 year – 5 years
131,226

 
131,749

5 years – 10 years
65,503

 
67,547

After 10 years
5,521

 
5,661

 
261,020

 
263,369

Residential and multi-family mortgage
207,588

 
207,491

Pooled SBA
29,186

 
28,801

Other
1,020

 
947

Total debt securities
$
498,814

 
$
500,608


Mortgage and asset backed securities and pooled SBA securities are not due at a single date; periodic payments are received based on the payment patterns of the underlying collateral.

5.    LOANS
Total net loans at March 31, 2019 and December 31, 2018 are summarized as follows:
 
3/31/2019
 
12/31/2018
Commercial, industrial, and agricultural
$
950,865

 
$
916,297

Commercial mortgages
709,726

 
697,776

Residential real estate
775,599

 
771,309

Consumer
86,780

 
86,035

Credit cards
7,341

 
7,623

Overdrafts
450

 
308

Less: unearned discount
(4,671
)
 
(4,791
)
allowance for loan losses
(20,346
)
 
(19,704
)
Loans, net
$
2,505,744

 
$
2,454,853

At March 31, 2019 and December 31, 2018, net unamortized loan fees of $3,158 and $3,175, respectively, have been included in the carrying value of loans.

The Corporation’s outstanding loans and related unfunded commitments are primarily concentrated within central and northwest Pennsylvania, central and northeast Ohio, and western New York. The Bank attempts to limit concentrations within specific industries by utilizing dollar limitations to single industries or customers, and by entering into participation agreements with third parties. Collateral requirements are established based on management’s assessment of the customer. The Corporation maintains lending policies to control the quality of the loan portfolio. These policies delegate the authority to extend loans under specific guidelines and underwriting standards. These policies are prepared by the Corporation’s management and reviewed and ratified annually by the Corporation’s Board of Directors.


13


Pursuant to the Corporation’s lending policies, management considers a variety of factors when determining whether to extend credit to a customer, including loan-to-value ratios, FICO scores, quality of the borrower’s financial statements, and the ability to obtain personal guarantees.
Commercial, industrial, and agricultural loans comprised 38% and 37% of the Corporation’s total loan portfolio at March 31, 2019 and December 31, 2018, respectively. Commercial mortgage loans comprised 28% of the Corporation’s total loan portfolio at both March 31, 2019 and December 31, 2018. Management assigns a risk rating to all commercial loans at loan origination. The loan-to-value policy guidelines for commercial, industrial, and agricultural loans are generally a maximum of 80% of the value of business equipment, a maximum of 75% of the value of accounts receivable, and a maximum of 60% of the value of business inventory at loan origination. The loan-to-value policy guideline for commercial mortgage loans is generally a maximum of 85% of the appraised value of the real estate.
Residential real estate loans comprised 31% of the Corporation’s total loan portfolio at both March 31, 2019 and December 31, 2018. The loan-to-value policy guidelines for residential real estate loans vary depending on the collateral position and the specific type of loan. Higher loan-to-value terms may be approved with the appropriate private mortgage insurance coverage. The Corporation also originates and prices loans for sale into the secondary market. Loans so originated are classified as loans held for sale and are excluded from residential real estate loans reported above. The rationale for these sales is to mitigate interest rate risk associated with holding lower rate, long-term residential mortgages in the loan portfolio and to generate fee revenue from sales and servicing the loan. The Corporation also offers a variety of unsecured and secured consumer loan and credit card products which represent less than 4% of the total loan portfolio at both March 31, 2019 and December 31, 2018. Terms and collateral requirements vary depending on the size and nature of the loan.
Transactions in the allowance for loan losses for the three months ended March 31, 2019 were as follows:
 
Commercial,
Industrial, and
Agricultural
 
Commercial
Mortgages
 
Residential
Real
Estate
 
Consumer
 
Credit
Cards
 
Overdrafts
 
Total
Allowance for loan losses, January 1, 2019
$
7,341

 
$
7,490

 
$
2,156

 
$
2,377

 
$
103

 
$
237

 
$
19,704

Charge-offs
0

 
(17
)
 
(98
)
 
(549
)
 
(26
)
 
(128
)
 
(818
)
Recoveries
4

 

 
65

 
46

 
5

 
34

 
154

Provision (benefit) for loan losses
442

 
1,373

 
(740
)
 
166

 
23

 
42

 
1,306

Allowance for loan losses, March 31, 2019
$
7,787

 
$
8,846

 
$
1,383

 
$
2,040

 
$
105

 
$
185

 
$
20,346

Transactions in the allowance for loan losses for the three months ended March 31, 2018 were as follows:
 
Commercial,
Industrial, and
Agricultural
 
Commercial
Mortgages
 
Residential
Real
Estate
 
Consumer
 
Credit
Cards
 
Overdrafts
 
Total
Allowance for loan losses, January 1, 2018
$
6,160

 
$
9,007

 
$
2,033

 
$
2,179

 
$
120

 
$
194

 
$
19,693

Charge-offs
(31
)
 
0

 
0

 
(590
)
 
(19
)
 
(86
)
 
(726
)
Recoveries
68

 
0

 
3

 
49

 
7

 
31

 
158

Provision (benefit) for loan losses
85

 
1,013

 
16

 
427

 
15

 
75

 
1,631

Allowance for loan losses, March 31, 2018
$
6,282

 
$
10,020

 
$
2,052

 
$
2,065

 
$
123

 
$
214

 
$
20,756


14


The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and is based on the Corporation’s impairment method as of March 31, 2019 and December 31, 2018. The recorded investment in loans excludes accrued interest and unearned discounts due to their insignificance.
March 31, 2019
 
Commercial,
Industrial, and
Agricultural
 
Commercial
Mortgages
 
Residential
Real
Estate
 
Consumer
 
Credit
Cards
 
Overdrafts
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending allowance balance attributable to loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
330

 
$
312

 
$
0

 
$
0

 
$
0

 
$
0

 
$
642

Collectively evaluated for impairment
7,350

 
3,775

 
1,383

 
2,040

 
105

 
185

 
14,838

Acquired with deteriorated credit quality
0

 
0

 
0

 
0

 
0

 
0

 
0

Modified in a troubled debt restructuring
107

 
4,759

 
0

 
0

 
0

 
0

 
4,866

Total ending allowance balance
$
7,787

 
$
8,846

 
$
1,383

 
$
2,040

 
$
105

 
$
185

 
$
20,346

Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
1,754

 
$
1,468

 
$
498

 
$
0

 
$
0

 
$
0

 
$
3,720

Collectively evaluated for impairment
945,710

 
698,004

 
775,101

 
86,780

 
7,341

 
450

 
2,513,386

Acquired with deteriorated credit quality
0

 
556

 
0

 
0

 
0

 
0

 
556

Modified in a troubled debt restructuring
3,401

 
9,698

 
0

 
0

 
0

 
0

 
13,099

Total ending loans balance
$
950,865

 
$
709,726

 
$
775,599

 
$
86,780

 
$
7,341

 
$
450

 
$
2,530,761










15


December 31, 2018
 
Commercial,
Industrial, and
Agricultural
 
Commercial
Mortgages
 
Residential
Real
Estate
 
Consumer
 
Credit
Cards
 
Overdrafts
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending allowance balance attributable to loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
54

 
$
4

 
$
100

 
$
0

 
$
0

 
$
10

 
$
168

Collectively evaluated for impairment
7,183

 
3,036

 
2,056

 
2,377

 
103

 
227

 
14,982

Acquired with deteriorated credit quality
0

 
0

 
0

 
0

 
0

 
0

 
0

Modified in a troubled debt restructuring
104

 
4,450

 
0

 
0

 
0

 
0

 
4,554

Total ending allowance balance
$
7,341

 
$
7,490