Company Quick10K Filing
Independent Bank
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 23 $509
10-Q 2019-11-01 Quarter: 2019-09-30
10-Q 2019-08-02 Quarter: 2019-06-30
10-Q 2019-05-03 Quarter: 2019-03-31
10-K 2019-03-07 Annual: 2018-12-31
10-Q 2018-11-02 Quarter: 2018-09-30
10-Q 2018-08-03 Quarter: 2018-06-30
10-Q 2018-05-04 Quarter: 2018-03-31
10-K 2018-03-07 Annual: 2017-12-31
10-Q 2017-11-03 Quarter: 2017-09-30
10-Q 2017-08-04 Quarter: 2017-06-30
10-Q 2017-05-03 Quarter: 2017-03-31
10-K 2017-03-07 Annual: 2016-12-31
10-Q 2016-11-03 Quarter: 2016-09-30
10-Q 2016-08-04 Quarter: 2016-06-30
10-Q 2016-05-04 Quarter: 2016-03-31
10-K 2016-03-07 Annual: 2015-12-31
10-Q 2015-11-04 Quarter: 2015-09-30
10-Q 2015-08-05 Quarter: 2015-06-30
10-Q 2015-05-06 Quarter: 2015-03-31
10-K 2015-03-06 Annual: 2014-12-31
10-Q 2014-11-06 Quarter: 2014-09-30
10-Q 2014-08-05 Quarter: 2014-06-30
10-Q 2014-05-05 Quarter: 2014-03-31
10-K 2014-03-07 Annual: 2013-12-31
10-Q 2013-11-07 Quarter: 2013-09-30
10-Q 2013-08-08 Quarter: 2013-06-30
10-Q 2013-05-08 Quarter: 2013-03-31
10-K 2013-03-13 Annual: 2012-12-31
10-Q 2012-11-09 Quarter: 2012-09-30
10-Q 2012-08-09 Quarter: 2012-06-30
10-Q 2012-05-09 Quarter: 2012-03-31
10-K 2012-03-13 Annual: 2011-12-31
10-Q 2011-11-09 Quarter: 2011-09-30
10-Q 2011-08-09 Quarter: 2011-06-30
10-Q 2011-05-09 Quarter: 2011-03-31
10-K 2011-03-10 Annual: 2010-12-31
10-Q 2010-11-04 Quarter: 2010-09-30
10-Q 2010-08-06 Quarter: 2010-06-30
10-Q 2010-05-11 Quarter: 2010-03-31
10-K 2010-02-26 Annual: 2009-12-31
8-K 2020-01-23 Earnings, Exhibits
8-K 2019-10-31 Other Events, Exhibits
8-K 2019-10-24 Earnings, Exhibits
8-K 2019-10-22 Exhibits
8-K 2019-08-26 Other Events, Exhibits
8-K 2019-07-25 Earnings, Exhibits
8-K 2019-06-27 Officers, Exhibits
8-K 2019-06-19 Other Events, Exhibits
8-K 2019-05-22 Other Events, Exhibits
8-K 2019-04-23 Shareholder Vote
8-K 2019-04-23 Regulation FD, Exhibits
8-K 2019-04-22 Earnings, Exhibits
8-K 2019-01-29 Earnings, Exhibits
8-K 2018-12-18 Other Events, Exhibits
8-K 2018-10-25 Earnings, Exhibits
8-K 2018-07-26 Earnings, Exhibits
8-K 2018-04-24 Regulation FD, Exhibits
8-K 2018-04-24 Exhibits
8-K 2018-04-24 Exhibits
8-K 2018-04-23 Earnings, Exhibits
8-K 2018-02-15 Other Events, Exhibits
8-K 2018-01-30 Earnings, Exhibits
8-K 2018-01-01
IBCP 2019-09-30
Part I - Item1. Independent Bank Corporation and Subsidiaries
Item 2.
Item 3.
Item 4.
Part II
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 ex31_1.htm
EX-31.2 ex31_2.htm
EX-32.1 ex32_1.htm
EX-32.2 ex32_2.htm

Independent Bank Earnings 2019-09-30

IBCP 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
QCRH 548 5,195 4,691 262 0 49 121 460 0% 3.8 1%
MBWM 530 3,576 3,176 0 0 45 84 530 6.3 1%
HTBK 528 3,108 2,720 5 0 49 84 252 0% 3.0 2%
FLIC 527 4,202 3,811 2 0 42 92 818 0% 8.9 1%
FCBC 516 2,212 1,878 0 0 38 54 359 6.6 2%
IBCP 509 3,438 3,107 27 0 42 73 454 0% 6.2 1%
MOFG 495 4,662 4,174 0 0 32 79 748 9.4 1%
THFF 492 3,064 2,586 0 0 45 67 431 6.4 1%
MBIN 485 5,287 4,772 0 0 59 153 86 0.6 1%
AROW 479 3,006 2,721 0 0 36 68 416 6.1 1%

10-Q 1 form10q.htm 10-Q

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2019

Commission file number   0-7818

INDEPENDENT BANK CORPORATION
(Exact name of registrant as specified in its charter)


Michigan

38-2032782
(State or jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification Number)

4200 East Beltline, Grand Rapids, Michigan  49525
(Address of principal executive offices)

(616) 527-5820
(Registrant’s telephone number, including area code)

NONE
Former name, address and fiscal year, if changed since last report.

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

Title of each Class
 
Trading Symbol
 
Name of each exchange which registered
Common stock, no par value
 
IBCP
 
The Nasdaq Stock Market, LLC

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

Indicate by check mark whether the registrant has submitted electronically 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES  ☒   NO  ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, smaller reporting company or an emerging growth company.
Large accelerated filer  ☐  Accelerated filer  ☒  Non-accelerated filer  ☐  Smaller reporting company  ☐  Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act.  Yes ☐  No ☐

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: common stock, no par value, 22,481,485 as of October 31, 2019.



INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

INDEX

 
Number(s)
PART I -
Financial Information  
Item 1.
3
 
4
 
5
 
6
 
7
 
8-68
Item 2.
69-91
Item 3.
92
Item 4.
92

   
PART II
Other Information
 
Item 1A
93
Item 2.
93
Item 6.
94

FORWARD-LOOKING STATEMENTS

Statements in this report that are not statements of historical fact, including statements that include terms such as ‘‘will,’’ ‘‘may,’’ ‘‘should,’’ ‘‘believe,’’ ‘‘expect,’’ ‘‘forecast,’’ ‘‘anticipate,’’ ‘‘estimate,’’ ‘‘project,’’ ‘‘intend,’’ ‘‘likely,’’ ‘‘optimistic’’ and ‘‘plan’’ and statements about future or projected financial and operating results, plans, projections, objectives, expectations, and intentions, are forward-looking statements. Forward-looking statements include, but are not limited to, descriptions of plans and objectives for future operations, products or services; projections of our future revenue, earnings or other measures of economic performance; forecasts of credit losses and other asset quality trends; statements about our business and growth strategies; and expectations about economic and market conditions and trends. These forward-looking statements express our current expectations, forecasts of future events, or long-term goals. They are based on assumptions, estimates, and forecasts that, although believed to be reasonable, may turn out to be incorrect. Actual results could differ materially from those discussed in the forward-looking statements for a variety of reasons, including:


economic, market, operational, liquidity, credit, and interest rate risks associated with our business;

economic conditions generally and in the financial services industry, particularly economic conditions within Michigan and the regional and local real estate markets in which our bank operates;

the failure of assumptions underlying the establishment of, and provisions made to, our allowance for loan losses;

increased competition in the financial services industry, either nationally or regionally;

our ability to achieve loan and deposit growth;

volatility and direction of market interest rates;

the continued services of our management team; and

implementation of new legislation, which may have significant effects on us and the financial services industry.

This list provides examples of factors that could affect the results described by forward-looking statements contained in this report, but the list is not intended to be all-inclusive.  The risk factors disclosed in Part I – Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018, as updated by any new or modified risk factors disclosed in Part II – Item 1A of any subsequently filed Quarterly Report on Form 10-Q, include all known risks our management believes could materially affect the results described by forward-looking statements in this report. However, those risks may not be the only risks we face. Our results of operations, cash flows, financial position, and prospects could also be materially and adversely affected by additional factors that are not presently known to us that we currently consider to be immaterial, or that develop after the date of this report. We cannot assure you that our future results will meet expectations. While we believe the forward-looking statements in this report are reasonable, you should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. We do not undertake, and expressly disclaim, any obligation to update or alter any statements, whether as a result of new information, future events, or otherwise, except as required by applicable law.

Part I - Item1.
 INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
 

Condensed Consolidated Statements of Financial Condition

   
September 30,
2019
   
December 31,
2018
 
   
(unaudited)
 

  
(In thousands, except share amounts)

Assets
 
Cash and due from banks
 
$
38,662
   
$
23,350
 
Interest bearing deposits
   
43,755
     
46,894
 
Cash and Cash Equivalents
   
82,417
     
70,244
 
Interest bearing deposits - time
   
499
     
595
 
Equity securities at fair value
   
-
     
393
 
Securities available for sale
   
439,592
     
427,926
 
Federal Home Loan Bank and Federal Reserve Bank stock, at cost
   
18,359
     
18,359
 
Loans held for sale, carried at fair value
   
87,358
     
44,753
 
Loans held for sale, carried at lower of cost or fair value
   
36,622
     
41,471
 
Loans
               
Commercial
   
1,189,017
     
1,144,481
 
Mortgage
   
1,070,035
     
1,042,890
 
Installment
   
463,394
     
395,149
 
Total Loans
   
2,722,446
     
2,582,520
 
Allowance for loan losses
   
(26,148
)
   
(24,888
)
Net Loans
   
2,696,298
     
2,557,632
 
Other real estate and repossessed assets, net
   
1,789
     
1,299
 
Property and equipment, net
   
37,424
     
38,777
 
Bank-owned life insurance
   
55,412
     
55,068
 
Deferred tax assets, net
   
2,773
     
5,779
 
Capitalized mortgage loan servicing rights, carried at fair value
   
16,906
     
21,400
 
Other intangibles
   
5,598
     
6,415
 
Goodwill
   
28,300
     
28,300
 
Accrued income and other assets
   
41,490
     
34,870
 
Total Assets
 
$
3,550,837
   
$
3,353,281
 
                 
Liabilities and Shareholders’ Equity
 
Deposits
               
Non-interest bearing
 
$
883,138
   
$
879,549
 
Savings and interest-bearing checking
   
1,178,695
     
1,194,865
 
Reciprocal
   
416,200
     
182,072
 
Time
   
374,579
     
385,981
 
Brokered time
   
199,700
     
270,961
 
Total Deposits
   
3,052,312
     
2,913,428
 
Other borrowings
   
63,974
     
25,700
 
Subordinated debentures
   
39,439
     
39,388
 
Accrued expenses and other liabilities
   
54,867
     
35,771
 
Total Liabilities
   
3,210,592
     
3,014,287
 
Commitments and contingent liabilities
               
Shareholders’ Equity
               
Preferred stock, no par value, 200,000 shares authorized;  none issued or outstanding
   
-
     
-
 
Common stock, no par value, 500,000,000 shares authorized; issued and outstanding: 22,480,748 shares at September 30, 2019 and 23,579,725 shares at December 31, 2018
   
351,839
     
377,372
 
Accumulated deficit
   
(8,221
)
   
(28,270
)
Accumulated other comprehensive loss
   
(3,373
)
   
(10,108
)
Total Shareholders’ Equity
   
340,245
     
338,994
 
Total Liabilities and Shareholders’ Equity
 
$
3,550,837
   
$
3,353,281
 

See notes to interim condensed consolidated financial statements (unaudited)

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations

   
Three months ended
September 30,
   
Nine months ended
September 30,
 
   
2019
   
2018
   
2019
   
2018
 
   
(unaudited)
   
(unaudited)
 
   
(In thousands, except per share amounts)
 
                   
Interest Income
                       
Interest and fees on loans
 
$
34,226
   
$
31,000
   
$
100,743
   
$
84,027
 
Interest on securities
                               
Taxable
   
2,771
     
2,737
     
8,811
     
8,092
 
Tax-exempt
   
319
     
412
     
1,017
     
1,335
 
Other investments
   
495
     
303
     
1,449
     
898
 
Total Interest Income
   
37,811
     
34,452
     
112,020
     
94,352
 
Interest Expense
                               
Deposits
   
6,236
     
3,976
     
17,938
     
9,472
 
Other borrowings and subordinated debentures
   
703
     
779
     
2,211
     
2,267
 
Total Interest Expense
   
6,939
     
4,755
     
20,149
     
11,739
 
Net Interest Income
   
30,872
     
29,697
     
91,871
     
82,613
 
Provision for loan losses
   
(271
)
   
(53
)
   
1,045
     
912
 
Net Interest Income After Provision for Loan Losses
   
31,143
     
29,750
     
90,826
     
81,701
 
Non-interest Income
                               
Service charges on deposit accounts
   
2,883
     
3,166
     
8,323
     
9,166
 
Interchange income
   
2,785
     
2,486
     
7,744
     
7,236
 
Net gains (losses) on assets
                               
Mortgage loans
   
5,677
     
2,745
     
13,590
     
8,571
 
Securities
   
-
     
93
     
304
     
(71
)
Mortgage loan servicing, net
   
(1,562
)
   
1,212
     
(4,684
)
   
4,668
 
Other
   
2,492
     
2,134
     
6,862
     
6,294
 
Total Non-interest Income
   
12,275
     
11,836
     
32,139
     
35,864
 
Non-interest Expense
                               
Compensation and employee benefits
   
16,673
     
16,169
     
48,955
     
46,506
 
Occupancy, net
   
2,161
     
2,233
     
6,797
     
6,667
 
Data processing
   
2,282
     
2,051
     
6,597
     
6,180
 
Furniture, fixtures and equipment
   
1,023
     
1,043
     
3,058
     
3,029
 
Communications
   
733
     
727
     
2,219
     
2,111
 
Interchange expense
   
891
     
715
     
2,332
     
1,974
 
Loan and collection
   
714
     
531
     
1,976
     
1,900
 
Advertising
   
636
     
594
     
1,935
     
1,578
 
Legal and professional
   
541
     
477
     
1,281
     
1,311
 
FDIC deposit insurance
   
13
     
270
     
723
     
750
 
Merger related expenses
   
-
     
98
     
-
     
3,354
 
Other
   
2,181
     
1,832
     
6,557
     
5,276
 
Total Non-interest Expense
   
27,848
     
26,740
     
82,430
     
80,636
 
Income Before Income Tax
   
15,570
     
14,846
     
40,535
     
36,929
 
Income tax expense
   
3,125
     
2,921
     
7,979
     
7,026
 
Net Income
 
$
12,445
   
$
11,925
   
$
32,556
   
$
29,903
 
Net Income Per Common Share
                               
Basic
 
$
0.55
   
$
0.49
   
$
1.41
   
$
1.29
 
Diluted
 
$
0.55
   
$
0.49
   
$
1.40
   
$
1.27
 

See notes to interim condensed consolidated financial statements (unaudited)

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income

   
Three months ended
September 30,
   
Nine months ended
September 30,
 
   
2019
   
2018
   
2019
   
2018
 
   
(unaudited - In thousands)
 
             
Net income
 
$
12,445
   
$
11,925
   
$
32,556
   
$
29,903
 
Other comprehensive income (loss)
                               
Securities available for sale
                               
Unrealized gains (losses) arising during period
   
1,567
     
(1,157
)
   
10,851
     
(6,220
)
Change in unrealized losses for which a portion of other than temporary impairment has been recognized in earnings
   
(53
)
   
(14
)
   
(55
)
   
(17
)
Reclassification adjustments for (gains) losses included in earnings
   
-
     
-
     
(137
)
   
45
 
Unrealized gains (losses) recognized in other comprehensive income (loss) on securities available for sale
   
1,514
     
(1,171
)
   
10,659
     
(6,192
)
Income tax expense (benefit)
   
318
     
(246
)
   
2,238
     
(1,300
)
Unrealized gains (losses) recognized in other comprehensive income (loss) on securities available for sale, net of tax
   
1,196
     
(925
)
   
8,421
     
(4,892
)
Derivative instruments
                               
Unrealized gain (loss) arising during period
   
(72
)
   
389
     
(1,740
)
   
1,400
 
Reclassification adjustment for income recognized in earnings
   
(102
)
   
(73
)
   
(393
)
   
(132
)
Unrealized gains (losses) recognized in other comprehensive income (loss) on derivative instruments
   
(174
)
   
316
     
(2,133
)
   
1,268
 
Income tax expense (benefit)
   
(36
)
   
66
     
(447
)
   
266
 
Unrealized gains (losses) recognized in other comprehensive income (loss) on derivative instruments, net of tax
   
(138
)
   
250
     
(1,686
)
   
1,002
 
Other comprehensive income (loss)
   
1,058
     
(675
)
   
6,735
     
(3,890
)
Comprehensive income
 
$
13,503
   
$
11,250
   
$
39,291
   
$
26,013
 

See notes to interim condensed consolidated financial statements (unaudited)

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows

   
Nine months ended September 30,
 
   
2019
   
2018
 
   
(unaudited - In thousands)
 
Net Income
 
$
32,556
   
$
29,903
 
Adjustments to Reconcile Net Income to Net Cash From Operating Activities
               
Proceeds from the sale of equity securities at fair value
   
560
     
-
 
Proceeds from sales of loans held for sale
   
422,557
     
351,486
 
Disbursements for loans held for sale
   
(451,572
)
   
(343,462
)
Provision for loan losses
   
1,045
     
912
 
Deferred income tax expense
   
1,216
     
6,972
 
Deferred loan fees and costs
   
(3,122
)
   
(3,681
)
Net depreciation, amortization of intangible assets and premiums and accretion of discounts on securities, loans and interest bearing deposits - time
   
4,427
     
4,560
 
Net gains on mortgage loans
   
(13,590
)
   
(8,571
)
Net (gains) losses on securities
   
(304
)
   
71
 
Share based compensation
   
1,348
     
1,293
 
Increase in accrued income and other assets
   
(2,149
)
   
(16,925
)
Increase (decrease) in accrued expenses and other liabilities
   
13,088
     
(1,930
)
Total Adjustments
   
(26,496
)
   
(9,275
)
Net Cash From Operating Activities
   
6,060
     
20,628
 
Cash Flow Used in Investing Activities
               
Proceeds from the sale of securities available for sale
   
44,305
     
31,445
 
Proceeds from maturities, prepayments and calls of securities available for sale
   
110,517
     
125,275
 
Purchases of securities available for sale
   
(123,238
)
   
(71,067
)
Proceeds from the sale of interest bearing deposits - time
   
-
     
2,474
 
Proceeds from the maturity of interest bearing deposits - time
   
100
     
3,728
 
Purchase of Federal Reserve Bank Stock
   
-
     
(2,034
)
Net increase in portfolio loans (loans originated, net of principal payments)
   
(213,116
)
   
(272,084
)
Proceeds from the sale of portfolio loans
   
50,516
     
27,577
 
Acquisition of TCSB Bancorp Inc., less cash received
   
-
     
23,516
 
Proceeds from bank-owned life insurance
   
470
     
474
 
Proceeds from the sale of other real estate and repossessed assets
   
1,438
     
1,777
 
Capital expenditures
   
(2,587
)
   
(2,812
)
Net Cash Used in Investing Activities
   
(131,595
)
   
(131,731
)
Cash Flow From Financing Activities
               
Net increase in total deposits
   
138,884
     
110,400
 
Net increase in other borrowings
   
18,355
     
18,903
 
Proceeds from Federal Home Loan Bank Advances
   
57,000
     
1,202,000
 
Payments of Federal Home Loan Bank Advances
   
(37,143
)
   
(1,210,197
)
Dividends paid
   
(12,507
)
   
(10,446
)
Proceeds from issuance of common stock
   
282
     
202
 
Repurchase of common stock
   
(26,284
)
   
-
 
Share based compensation withholding obligation
   
(879
)
   
(1,327
)
Net Cash From Financing Activities
   
137,708
     
109,535
 
Net Increase (Decrease) in Cash and Cash Equivalents
   
12,173
     
(1,568
)
Cash and Cash Equivalents at Beginning of Period
   
70,244
     
54,738
 
Cash and Cash Equivalents at End of Period
 
$
82,417
   
$
53,170
 
Cash paid during the period for
               
Interest
 
$
20,185
   
$
11,168
 
Income taxes
   
5,934
     
120
 
Operating leases
   
1,692
     
-
 
Transfers to other real estate and repossessed assets
   
1,901
     
960
 
Purchase of securities available for sale not yet settled
   
3,075
     
1,000
 
Securitization of portfolio loans
   
29,790
     
-
 
Right of use assets obtained in exchange for lease obligations
   
7,767
     
-
 
Transfer of loans to held for sale
   
36,622
     
27,577
 

See notes to interim condensed consolidated financial statements (unaudited)

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Shareholders’ Equity


    
Common
Stock
         
Accumulated
Deficit
   
Accumulated
Other
Comprehensive
Loss
   
Total
Shareholders’
Equity
 
   
(Dollars in thousands, except per share amounts)
 
Balances at July 1, 2019
 
$
351,894
   
$
(16,617
)
 
$
(4,431
)
 
$
330,846
 
Net income, three months ended September 30, 2019
   
-
     
12,445
     
-
     
12,445
 
Cash dividends declared, $.18 per share
   
-
     
(4,049
)
   
-
     
(4,049
)
Repurchase of 25,000 shares of common stock
   
(502
)
   
-
     
-
     
(502
)
Issuance of 1,900 shares of common stock
   
-
     
-
     
-
     
-
 
Share based compensation (issuance of 5,991 shares of common stock)
   
460
     
-
     
-
     
460
 
Share based compensation withholding obligation (withholding of 919 shares of common stock)
   
(13
)
   
-
     
-
     
(13
)
Other comprehensive income
   
-
     
-
     
1,058
     
1,058
 
Balances at September 30, 2019
 
$
351,839
   
$
(8,221
)
 
$
(3,373
)
 
$
340,245
 
Balances at July 1, 2018
 
$
389,196
   
$
(42,899
)
 
$
(9,214
)
 
$
337,083
 
Net income, three months ended September 30, 2018
   
-
     
11,925
     
-
     
11,925
 
Cash dividends declared, $.15 per share
   
-
     
(3,623
)
   
-
     
(3,623
)
Issuance of 8,340 shares of common stock
   
55
     
-
     
-
     
55
 
Share based compensation (issuance of zero shares of common stock)
   
445
     
-
     
-
     
445
 
Share based compensation withholding obligation (withholding of 382 shares of common stock)
   
(6
)
   
-
     
-
     
(6
)
Other comprehensive loss
   
-
     
-
     
(675
)
   
(675
)
Balances at September 30, 2018
 
$
389,690
   
$
(34,597
)
 
$
(9,889
)
 
$
345,204
 
Balances at January 1, 2019
 
$
377,372
   
$
(28,270
)
 
$
(10,108
)
 
$
338,994
 
Net income, nine months ended September 30, 2019
   
-
     
32,556
     
-
     
32,556
 
Cash dividends declared, $.54 per share
   
-
     
(12,507
)
   
-
     
(12,507
)
Repurchase of 1,204,688 shares of common stock
   
(26,284
)
   
-
     
-
     
(26,284
)
Issuance of 70,299 shares of common stock
   
282
     
-
     
-
     
282
 
Share based compensation (issuance of 92,617 shares of common stock)
   
1,348
     
-
     
-
     
1,348
 
Share based compensation withholding obligation (withholding of 57,205 shares of common stock)
   
(879
)
   
-
     
-
     
(879
)
Other comprehensive income
   
-
     
-
     
6,735
     
6,735
 
Balances at September 30, 2019
 
$
351,839
   
$
(8,221
)
 
$
(3,373
)
 
$
340,245
 
Balances at January 1, 2018
 
$
324,986
   
$
(54,054
)
 
$
(5,999
)
 
$
264,933
 
Net income, nine months ended September 30, 2018
   
-
     
29,903
     
-
     
29,903
 
Cash dividends declared, $.45 per share
   
-
     
(10,446
)
   
-
     
(10,446
)
Acquisition of TCSB Bancorp, Inc.
   
64,536
     
-
     
-
     
64,536
 
Issuance of 113,548 shares of common stock
   
202
     
-
     
-
     
202
 
Share based compensation (issuance of 81,919 shares of common stock)
   
1,293
     
-
     
-
     
1,293
 
Share based compensation withholding obligation (withholding of 87,767 shares of common stock)
   
(1,327
)
   
-
     
-
     
(1,327
)
Other comprehensive loss
   
-
     
-
     
(3,890
)
   
(3,890
)
Balances at September 30, 2018
 
$
389,690
   
$
(34,597
)
 
$
(9,889
)
 
$
345,204
 

See notes to interim condensed consolidated financial statements (unaudited)

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.
Preparation of Financial Statements

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading.  The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2018 included in our Annual Report on Form 10-K.

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary to present fairly our consolidated financial condition as of September 30, 2019 and December 31, 2018, and the results of operations for the three and nine-month periods ended September 30, 2019 and 2018.  The results of operations for the three and nine-month periods ended September 30, 2019, are not necessarily indicative of the results to be expected for the full year.  Certain reclassifications have been made in the prior period financial statements to conform to the current period presentation.  Our critical accounting policies include the determination of the allowance for loan losses and the valuation of capitalized mortgage loan servicing rights.  Refer to our 2018 Annual Report on Form 10-K for a disclosure of our accounting policies.

2.
New Accounting Standards

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”.  This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.  This ASU:

Replaces the existing incurred loss impairment guidance and establishes a single allowance framework for financial assets carried at amortized cost, which will reflect our estimate of credit losses over the full remaining expected life of the financial assets and will consider expected future changes in macroeconomic conditions.
Eliminates existing guidance for purchase credit impaired (“PCI”) loans, and requires recognition of the nonaccretable difference as an increase to the allowance for expected credit losses on financial assets purchased with more than insignificant credit deterioration since origination, which will be offset by an increase in the recorded investment of the related loans.
Requires inclusion of expected recoveries, limited to the cumulative amount of prior write-offs, when estimating the allowance for credit losses for in scope financial assets (including collateral dependent assets).
Amends existing impairment guidance for securities available for sale to incorporate an allowance, which will allow for reversals of credit impairments in the event that the credit of an issuer improves. Credit losses on securities available for sale are limited to the amount of the decline in fair value regardless of what the credit loss model would show for impairment.
Generally requires a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption.
Is effective for us on January 1, 2020.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

We began evaluating this ASU in 2016 and established a company-wide, cross-discipline governance structure, which provides implementation oversight. We continue to test and refine our current expected credit loss models that satisfy the requirements of this ASU. Oversight and testing, as well as efforts to meet expanded disclosure requirements, will extend through the remainder of 2019.  We expect that the allowance related to our loans will increase as it will cover credit losses over the full remaining expected life of the portfolio. We currently intend to estimate losses over approximately a two year forecast period using the Federal Open Market Committee median economic projections (which are typically published in March of each year) as well as considering other economic forecast sources, and then revert to longer term historical loss experience to estimate losses over more extended periods. We currently expect the increase in the allowance for loan losses to be in the range of $9.0 million to $11.0 million, primarily driven by the longer contractual maturities of our mortgage and consumer installment loan segments.  This estimated range is based on our September 30, 2019 loan portfolio and currently available economic forecasts. The mid-point of the range utilizes a two year forecast period and a two year reversion period. This estimated range also includes a qualitative adjustment to the allowance for loan losses. In addition, we currently expect this ASU to increase the allowance for losses related to unfunded loan commitments between $0.5 million and $1.5 million.  These estimates are subject to further refinement based on continuing reviews, testing, enhancements and approvals of models, methodologies and judgments. The ultimate impact will depend upon the nature and characteristics of our loan portfolio at the adoption date, the macroeconomic conditions and forecasts at that date, further regulatory or accounting guidance and other management judgments.  We currently do not expect to record any allowance for loss on available for sale securities. The ultimate impact will depend upon the nature and characteristics of our securities available for sale (including issuer specific matters) at the adoption date, the macroeconomic conditions and forecasts at that date, and other management judgments.

In August 2018, the FASB issued ASU 2018-13, ‘‘Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement’’. This new ASU amends disclosure requirements in Topic 820 to eliminate, add and modify certain disclosure requirements for fair value measurements as part of its disclosure framework project. The amended guidance eliminates the requirements to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the entity’s policy for the timing of transfers between levels of the fair value hierarchy and the entity’s valuation processes for Level 3 fair value measurements. The amended guidance adds the requirements to disclose the changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements of instruments held at the end of the reporting period and for recurring and nonrecurring Level 3 fair value measurements, the range and weighted average used to develop significant unobservable inputs and how the weighted average was calculated, with certain exceptions. This amended guidance is effective for us on January 1, 2020, and is not expected to have a material impact on our consolidated operating results or financial condition.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”.  This ASU amends existing guidance related to the accounting for leases. These amendments, among other things, require lessees to account for most leases on the balance sheet while recognizing expense on the income statement in a manner similar to existing guidance.  For lessors the guidance modifies the classification criteria and the accounting for sales-type and direct finance leases. This amended guidance was effective for us on January 1, 2019 and did not have a material impact on our consolidated operating results or financial condition.  Based on our operating leases that we currently have in place we do not expect a material change in the recognition, measurement and presentation of lease expense or impact on cash flow.  The primary impact was the recognition of certain operating leases on our Condensed Consolidated Statements of Financial Condition which resulted in the recording of right of use (“ROU”) assets and offsetting lease liabilities each totaling approximately $7.7 million at January 1, 2019.  See note #16.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities”.  This new ASU amends the hedge accounting model in Topic 815 to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. The amendments expand an entity’s ability to hedge nonfinancial and financial risk components and reduce complexity in fair value hedges of interest rate risk. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness.  This amended guidance was effective for us on January 1, 2019, and did not have a material impact on our consolidated operating results or financial condition.

10

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

3.
Securities

Securities available for sale consist of the following:

   
Amortized
   
Unrealized
       
   
Cost
   
Gains
   
Losses
   
Fair Value
 
   
(In thousands)
 
September 30, 2019
                       
U.S. agency
 
$
15,145
   
$
153
   
$
15
   
$
15,283
 
U.S. agency residential mortgage-backed
   
146,128
     
1,806
     
214
     
147,720
 
U.S. agency commercial mortgage-backed
   
11,182
     
155
     
18
     
11,319
 
Private label mortgage-backed
   
31,195
     
686
     
55
     
31,826
 
Other asset backed
   
94,799
     
185
     
199
     
94,785
 
Obligations of states and political subdivisions
   
99,352
     
1,880
     
93
     
101,139
 
Corporate
   
32,444
     
1,237
     
3
     
33,678
 
Trust preferred
   
1,966
     
-
     
146
     
1,820
 
Foreign government
   
2,020
     
4
     
2
     
2,022
 
Total
 
$
434,231
   
$
6,106
   
$
745
   
$
439,592
 
                                 
December 31, 2018
                               
U.S. agency
 
$
20,198
   
$
9
   
$
193
   
$
20,014
 
U.S. agency residential mortgage-backed
   
124,777
     
817
     
1,843
     
123,751
 
U.S. agency commercial mortgage-backed
   
5,909
     
1
     
184
     
5,726
 
Private label mortgage-backed
   
29,735
     
321
     
637
     
29,419
 
Other asset backed
   
83,481
     
86
     
248
     
83,319
 
Obligations of states and political subdivisions
   
130,244
     
257
     
2,946
     
127,555
 
Corporate
   
34,866
     
29
     
586
     
34,309
 
Trust preferred
   
1,964
     
-
     
145
     
1,819
 
Foreign government
   
2,050
     
-
     
36
     
2,014
 
Total
 
$
433,224
   
$
1,520
   
$
6,818
   
$
427,926
 

11

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Our investments’ gross unrealized losses and fair values aggregated by investment type and length of time that individual securities have been at a continuous unrealized loss position follows:

   
Less Than Twelve Months
   
Twelve Months or More
   
Total
 
   
Fair Value
   
Unrealized
Losses
   
Fair Value
   
Unrealized
Losses
   
Fair Value
   
Unrealized
Losses
 
   
(In thousands)
 
                                     
September 30, 2019
                                   
U.S. agency
 
$
2,189
   
$
4
   
$
2,888
   
$
11
   
$
5,077
   
$
15
 
U.S. agency residential mortgage-backed
   
26,084
     
33
     
16,902
     
181
     
42,986
     
214
 
U.S. agency commercial mortgage-backed
   
1,987
     
12
     
882
     
6
     
2,869
     
18
 
Private label mortgage- backed
   
5,636
     
6
     
612
     
49
     
6,248
     
55
 
Other asset backed
   
23,926
     
100
     
11,487
     
99
     
35,413
     
199
 
Obligations of states and political subdivisions
   
14,457
     
37
     
4,362
     
56
     
18,819
     
93
 
Corporate
   
285
     
2
     
999
     
1
     
1,284
     
3
 
Trust preferred
   
900
     
100
     
920
     
46
     
1,820
     
146
 
Foreign government
   
-
     
-
     
1,519
     
2
     
1,519
     
2
 
Total
 
$
75,464
   
$
294
   
$
40,571
   
$
451
   
$
116,035
   
$
745
 
                                                 
December 31, 2018
                                               
U.S. agency
 
$
7,150
   
$
46
   
$
11,945
   
$
147
   
$
19,095
   
$
193
 
U.S. agency residential mortgage-backed
   
18,374
     
180
     
48,184
     
1,663
     
66,558
     
1,843
 
U.S. agency commercial mortgage-backed
   
566
     
3
     
5,094
     
181
     
5,660
     
184
 
Private label mortgage-backed
   
8,273
     
57
     
16,145
     
580
     
24,418
     
637
 
Other asset backed
   
53,043
     
160
     
10,235
     
88
     
63,278
     
248
 
Obligations of states and political subdivisions
   
25,423
     
262
     
80,701
     
2,684
     
106,124
     
2,946
 
Corporate
   
17,758
     
343
     
9,222
     
243
     
26,980
     
586
 
Trust preferred
   
939
     
61
     
880
     
84
     
1,819
     
145
 
Foreign government
   
-
     
-
     
2,014
     
36
     
2,014
     
36
 
Total
 
$
131,526
   
$
1,112
   
$
184,420
   
$
5,706
   
$
315,946
   
$
6,818
 

Our portfolio of securities available for sale is reviewed quarterly for impairment in value. In performing this review management considers (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) the impact of changes in market interest rates on the market value of the security and (4) an assessment of whether we intend to sell, or it is more likely than not that we will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. For securities that do not meet the aforementioned recovery criteria, the amount of impairment recognized in earnings is limited to the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive income (loss).

12

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

U.S. agency, U.S. agency residential mortgage-backed securities and U.S. agency commercial mortgage backed securities — at September 30, 2019, we had 26 U.S. agency, 98 U.S. agency residential mortgage-backed and eight U.S. agency commercial mortgage-backed securities whose fair market value is less than amortized cost. The unrealized losses are largely attributed to increases in interest rates since acquisition and widening spreads to Treasury bonds. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Private label mortgage backed securities — at September 30, 2019, we had 12 of this type of security whose fair value is less than amortized cost. Unrealized losses are primarily due to credit spread widening and increases in interest rates since their acquisition.

Two private label mortgage-backed securities (discussed further below) were reviewed for other than temporary impairment (‘‘OTTI’’) utilizing a cash flow projection. The cash flow analysis forecasts cash flow from the underlying loans in each transaction and then applies these cash flows to the bonds in the securitization. See further discussion below.

As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no other declines discussed above are deemed to be other than temporary.

Other asset backed — at September 30, 2019, we had 40 other asset backed securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening and increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Obligations of states and political subdivisions — at September 30, 2019, we had 59 municipal securities whose fair value is less than amortized cost. The unrealized losses are primarily due to wider benchmark pricing spreads and increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Corporate — at September 30, 2019, we had two corporate securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening and increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

13

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Trust preferred securities — at September 30, 2019, we had two trust preferred securities whose fair value is less than amortized cost. Both of our trust preferred securities are single issue securities issued by a trust subsidiary of a bank holding company. The pricing of trust preferred securities has suffered from credit spread widening. One of the securities is rated by a major rating agency as investment grade while the other one is non-rated. The non-rated issue is a relatively small bank and was never rated. The issuer of this non-rated trust preferred security, which had a total amortized cost of $1.0 million and total fair value of $0.90 million as of September 30, 2019, continues to have satisfactory credit metrics and make interest payments. As management does not intend to liquidate this security and it is more likely than not that we will not be required to sell this security prior to recovery of the unrealized loss, this decline is not deemed to be other than temporary.
 
Foreign government — at September 30, 2019, we had one foreign government security whose fair value is less than amortized cost. The unrealized loss is primarily due to increases in interest rates since acquisition. As management does not intend to liquidate this security and it is more likely than not that we will not be required to sell this security prior to recovery of this unrealized loss, this decline is not deemed to be other than temporary.

We recorded no credit related OTTI charges in our Condensed Consolidated Statements of Operations related to securities available for sale during the three and nine month periods ended September 30, 2019 and 2018, respectively.

At September 30, 2019, two private label mortgage-backed securities had credit related OTTI and are summarized as follows:

   
Senior
Security
   
Super
Senior
Security
   
Total
 
   
(In thousands)
 
                   
Fair value
 
$
645
   
$
647
   
$
1,292
 
Amortized cost
   
552
     
479
     
1,031
 
Non-credit unrealized loss
   
-
     
-
     
-
 
Unrealized gain
   
93
     
168
     
261
 
Cumulative credit related OTTI
   
757
     
457
     
1,214
 


Both of these securities are receiving principal and interest payments similar to principal reductions in the underlying collateral and have unrealized gains at September 30, 2019. The original amortized cost (current amortized cost excluding cumulative credit related OTTI) for each of these securities has been permanently adjusted downward for previously recorded credit related OTTI. The unrealized loss (based on original amortized cost) for these securities is now less than previously recorded credit related OTTI amounts.

14

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

A roll forward of credit losses recognized in earnings on securities available for sale follows:

   
Three months ended
September 30,
   
Nine months ended
September 30,
 
   
2019
   
2018
   
2019
   
2018
 
   
(In thousands)
   
(In thousands)
 
Balance at beginning of period
 
$
1,594
   
$
1,594
   
$
1,594
   
$
1,594
 
Additions to credit losses on securities for which no previous OTTI was recognized
   
-
     
-
     
-
     
-
 
Increases to credit losses on securities for which OTTI was previously recognized
   
-
     
-
     
-
     
-
 
Reduction(1)
   
(380
)
   
-
     
(380
)
   
-
 
Balance at end of period
 
$
1,214
   
$
1,594
   
$
1,214
   
$
1,594
 

(1)During the third quarter of 2019 one security with previously recorded OTTI was settled and balance is now zero.

The amortized cost and fair value of securities available for sale at September 30, 2019, by contractual maturity, follow:

   
Amortized
Cost
   
Fair
Value
 
   
(In thousands)
 
Maturing within one year
 
$
13,331
   
$
13,347
 
Maturing after one year but within five years
   
53,809
     
54,524
 
Maturing after five years but within ten years
   
47,726
     
49,239
 
Maturing after ten years
   
36,061
     
36,832
 
     
150,927
     
153,942
 
U.S. agency residential mortgage-backed
   
146,128
     
147,720
 
U.S. agency commercial mortgage-backed
   
11,182
     
11,319
 
Private label mortgage-backed
   
31,195
     
31,826
 
Other asset backed
   
94,799
     
94,785
 
Total
 
$
434,231
   
$
439,592
 

The actual maturity may differ from the contractual maturity because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Gains and losses realized on the sale of securities available for sale are determined using the specific identification method and are recognized on a trade-date basis.  A summary of proceeds from the sale of securities available for sale and gains and losses for the nine month periods ending September 30, follows:

         
Realized
 
   
Proceeds
   
Gains (1)
   
Losses
 
   
(In thousands)
 
2019
 
$
44,305
   
$
169
   
$
32
 
2018
 
$
31,445
   
$
81
   
$
126
 


(1)
2018 excludes a $0.144 million gain on the sale of 1,000 VISA class B shares.

15

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Certain preferred stocks which were all sold during the first quarter of 2019 had been classified as equity securities at fair value in our Condensed Consolidated Statement of Financial Condition.  During the nine months ended September 30, 2019 and 2018 we recognized gains (losses) on these preferred stocks of $0.167 million and $(0.170) million, respectively, that are included in net gains (losses) on securities in the Condensed Consolidated Statements of Operations.  Zero and $(0.170) million of these gains (losses) during the nine months ended September 30, 2019 and 2018, respectively relate to preferred stock still held at each respective period end.

4.
Loans

Our assessment of the allowance for loan losses is based on an evaluation of the loan portfolio, recent and historical loss experience, current economic conditions and other pertinent factors.

An analysis of the allowance for loan losses by portfolio segment for the three months ended September 30, follows:

   
Commercial
   
Mortgage
   
Installment
   
Subjective
Allocation
   
Total
 
   
(In thousands)
 
2019
                             
Balance at beginning of period
 
$
8,121
   
$
8,062
   
$
1,293
   
$
8,427
   
$
25,903
 
Additions (deductions)
                                       
Provision for loan losses
   
(810
)
   
83
     
289
     
167
     
(271
)
Recoveries credited to the allowance
   
1,215
     
235
     
202
     
-
     
1,652
 
Loans charged against the allowance
   
(303
)
   
(397
)
   
(436
)
   
-
     
(1,136
)
Balance at end of period
 
$
8,223
   
$
7,983
   
$
1,348
   
$
8,594
   
$
26,148
 
                                         
2018
                                       
Balance at beginning of period
 
$
6,073
   
$
8,296
   
$
848
   
$
8,287
   
$
23,504
 
Additions (deductions)
                                       
Provision for loan losses
   
(907
)
   
415
     
(25
)
   
464
     
(53
)
Recoveries credited to the allowance
   
1,418
     
192
     
298
     
-
     
1,908
 
Loans charged against the allowance
   
(225
)
   
(448
)
   
(285
)
   
-
     
(958
)
Balance at end of period
 
$
6,359
   
$
8,455
   
$
836
   
$
8,751
   
$
24,401
 

16

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

An analysis of the allowance for loan losses by portfolio segment for the nine months ended September 30, follows:

   
Commercial
   
Mortgage
   
Installment
   
Subjective Allocation
   
Total
 
   
(In thousands)
 
2019
                             
Balance at beginning of period
 
$
7,090
   
$
7,978
   
$
895
   
$
8,925
   
$
24,888
 
Additions (deductions)
                                       
Provision for loan losses
   
85
     
270
     
1,021
     
(331
)
   
1,045
 
Recoveries credited to the allowance
   
1,720
     
786
     
603
     
-
     
3,109
 
Loans charged against the allowance
   
(672
)
   
(1,051
)
   
(1,171
)
   
-
     
(2,894
)
Balance at end of period
 
$
8,223
   
$
7,983
   
$
1,348
   
$
8,594
   
$
26,148
 
                                         
2018
                                       
Balance at beginning of period
 
$
5,595
   
$
8,733
   
$
864
   
$
7,395
   
$
22,587
 
Additions (deductions)
                                       
Provision for loan losses
   
(1,404
)
   
778
     
182
     
1,356
     
912
 
Recoveries credited to the allowance
   
2,458
     
549
     
761
     
-
     
3,768
 
Loans charged against the allowance
   
(290
)
   
(1,605
)
   
(971
)
   
-
     
(2,866
)
Balance at end of period
 
$
6,359
   
$
8,455
   
$
836
   
$
8,751
   
$
24,401
 

17

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Allowance for loan losses and recorded investment in loans by portfolio segment follows:

   
Commercial
   
Mortgage
   
Installment
   
Subjective
Allocation
   
Total
 
   
(In thousands)
 
September 30, 2019
                             
Allowance for loan losses:
                             
Individually evaluated for impairment
 
$
871
   
$
4,610
   
$
297
   
$
-
   
$
5,778
 
Collectively evaluated for impairment
   
7,352
     
3,373
     
1,051
     
8,594
     
20,370
 
Loans acquired with deteriorated credit quality
   
-
     
-
     
-
     
-
     
-
 
Total ending allowance for loan losses balance
 
$
8,223
   
$
7,983
   
$
1,348
   
$
8,594
   
$
26,148
 
                                         
Loans
                                       
Individually evaluated for impairment
 
$
7,776
   
$
42,590
   
$
3,223
           
$
53,589
 
Collectively evaluated for impairment
   
1,182,825
     
1,031,163
     
460,973
             
2,674,961
 
Loans acquired with deteriorated credit quality
   
1,421
     
582
     
329
             
2,332
 
Total loans recorded investment
   
1,192,022
     
1,074,335
     
464,525
             
2,730,882
 
Accrued interest included in recorded investment
   
3,005
     
4,300
     
1,131
             
8,436
 
Total loans
 
$
1,189,017
   
$
1,070,035
   
$
463,394
           
$
2,722,446
 
                                         
December 31, 2018
                                       
Allowance for loan losses:
                                       
Individually evaluated for impairment
 
$
1,305
   
$
4,799
   
$
206
   
$
-
   
$
6,310
 
Collectively evaluated for impairment
   
5,785
     
3,179
     
689
     
8,925
     
18,578
 
Loans acquired with deteriorated credit quality
   
-
     
-
     
-
     
-
     
-
 
Total ending allowance for loan losses balance
 
$
7,090
   
$
7,978
   
$
895
   
$
8,925
   
$