Company Quick10K Filing
Quick10K
Independent Bank
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$21.57 23 $506
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 2019-05-22 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 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
BBT BB&T 37,910
WIT Wipro 27,030
PKX Posco 16,740
KOF Coca Cola Femsa 13,060
AMH American Homes 4 Rent 7,070
TRCB Two River Bancorp 133
MLAF Aspect Futuresaccess 0
ILAI International Land Alliance 0
PRAN Prana Biotechnology 0
CBAK CBAK Energy Technology 0
IBCP 2019-03-31
Part I - Item 1. 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-10.1 ex10_1.htm
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 2019-03-31

IBCP 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

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 March 31, 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.

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, 23,472,914 as of May 1, 2019.

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

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



INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

INDEX

PART I -
Financial Information
Number(s)
Item 1.
 3
 
4
 
5
 
6
 
7
 
8-56
Item 2.
57-77
Item 3.
78
Item 4.
78
     
PART II -
Other Information
 
Item 1A
79
Item 2.
79
Item 6.
80

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 - Item 1.
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Condition

   
March 31,
2019
   
December 31,
2018
 
   
(unaudited)
 
   
(In thousands, except share
amounts)
 
Assets
 
Cash and due from banks
 
$
33,247
   
$
23,350
 
Interest bearing deposits
   
38,376
     
46,894
 
Cash and Cash Equivalents
   
71,623
     
70,244
 
Interest bearing deposits - time
   
496
     
595
 
Equity securities at fair value
   
-
     
393
 
Securities available for sale
   
461,531
     
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
   
43,098
     
44,753
 
Loans held for sale, carried at lower of cost or fair value
   
-
     
41,471
 
Loans
               
Commercial
   
1,168,404
     
1,144,481
 
Mortgage
   
1,043,745
     
1,042,890
 
Installment
   
406,646
     
395,149
 
Total Loans
   
2,618,795
     
2,582,520
 
Allowance for loan losses
   
(25,254
)
   
(24,888
)
Net Loans
   
2,593,541
     
2,557,632
 
Other real estate and repossessed assets, net
   
1,338
     
1,299
 
Property and equipment, net
   
37,985
     
38,777
 
Bank-owned life insurance
   
55,310
     
55,068
 
Deferred tax assets, net
   
2,866
     
5,779
 
Capitalized mortgage loan servicing rights
   
19,909
     
21,400
 
Other intangibles
   
6,143
     
6,415
 
Goodwill
   
28,300
     
28,300
 
Accrued income and other assets
   
43,107
     
34,870
 
Total Assets
 
$
3,383,606
   
$
3,353,281
 
                 
Liabilities and Shareholders’ Equity
 
Deposits
               
Non-interest bearing
 
$
858,261
   
$
879,549
 
Savings and interest-bearing checking
   
1,207,965
     
1,194,865
 
Reciprocal
   
267,178
     
182,072
 
Time
   
388,729
     
385,981
 
Brokered time
   
212,092
     
270,961
 
Total Deposits
   
2,934,225
     
2,913,428
 
Other borrowings
   
25,714
     
25,700
 
Subordinated debentures
   
39,405
     
39,388
 
Accrued expenses and other liabilities
   
39,536
     
35,771
 
Total Liabilities
   
3,038,880
     
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: 23,560,179 shares at March 31, 2019 and 23,579,725 shares at December 31, 2018
   
374,678
     
377,372
 
Accumulated deficit
   
(23,135
)
   
(28,270
)
Accumulated other comprehensive loss
   
(6,817
)
   
(10,108
)
Total Shareholders’ Equity
   
344,726
     
338,994
 
Total Liabilities and Shareholders’ Equity
 
$
3,383,606
   
$
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
March 31,
 
   
2019
   
2018
 
   
(unaudited)
 
   
(In thousands, except
per share amounts)
 
Interest Income
           
Interest and fees on loans
 
$
32,681
   
$
23,353
 
Interest on securities
               
Taxable
   
3,006
     
2,635
 
Tax-exempt
   
374
     
479
 
Other investments
   
575
     
330
 
Total Interest Income
   
36,636
     
26,797
 
Interest Expense
               
Deposits
   
5,681
     
2,287
 
Other borrowings and subordinated debentures
   
712
     
574
 
Total Interest Expense
   
6,393
     
2,861
 
Net Interest Income
   
30,243
     
23,936
 
Provision for loan losses
   
664
     
315
 
Net Interest Income After Provision for Loan Losses
   
29,579
     
23,621
 
Non-interest Income
               
Service charges on deposit accounts
   
2,640
     
2,905
 
Interchange income
   
2,355
     
2,246
 
Net gains (losses) on assets
               
Mortgage loans
   
3,611
     
2,571
 
Securities
   
304
     
(173
)
Mortgage loan servicing, net
   
(1,215
)
   
2,221
 
Other
   
2,264
     
1,943
 
Total Non-interest Income
   
9,959
     
11,713
 
Non-interest Expense
               
Compensation and employee benefits
   
16,351
     
14,468
 
Occupancy, net
   
2,505
     
2,264
 
Data processing
   
2,144
     
1,878
 
Furniture, fixtures and equipment
   
1,029
     
967
 
Communications
   
769
     
680
 
Interchange expense
   
688
     
598
 
Loan and collection
   
634
     
677
 
Advertising
   
672
     
441
 
Legal and professional
   
369
     
378
 
FDIC deposit insurance
   
368
     
230
 
Merger related expenses
   
-
     
174
 
Other
   
2,461
     
1,380
 
Total Non-interest Expense
   
27,990
     
24,135
 
Income Before Income Tax
   
11,548
     
11,199
 
Income tax expense
   
2,167
     
2,038
 
Net Income
 
$
9,381
   
$
9,161
 
Net Income Per Common Share
               
Basic
 
$
0.40
   
$
0.43
 
Diluted
 
$
0.39
   
$
0.42
 

See notes to interim condensed consolidated financial statements (unaudited)

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income

   
Three months ended
March 31,
 
   
2019
   
2018
 
   
(unaudited –
In thousands)
 
             
Net income
 
$
9,381
   
$
9,161
 
Other comprehensive income (loss)
               
Securities available for sale
               
Unrealized gains (losses) arising during period
   
5,364
     
(3,865
)
Change in unrealized gains (losses) for which a portion of other than temporary impairment has been recognized in earnings
   
(2
)
   
(1
)
Reclassification adjustments for (gains) losses included in earnings
   
(137
)
   
19
 
Unrealized gains (losses) recognized in other comprehensive income (loss) on securities available for sale
   
5,225
     
(3,847
)
Income tax expense (benefit)
   
1,097
     
(808
)
Unrealized gains (losses) recognized in other comprehensive income (loss) on securities available for sale, net of tax
   
4,128
     
(3,039
)
Derivative instruments
               
Unrealized gain (loss) arising during period
   
(912
)
   
684
 
Reclassification adjustment for (income) expense recognized in earnings
   
(149
)
   
(6
)
Unrealized gains (losses) recognized in other comprehensive income (loss) on derivative instruments
   
(1,061
)
   
678
 
Income tax expense (benefit)
   
(224
)
   
142
 
Unrealized gains (losses) recognized in other comprehensive income (loss) on derivative instruments, net of tax
   
(837
)
   
536
 
Other comprehensive income (loss)
   
3,291
     
(2,503
)
Comprehensive income
 
$
12,672
   
$
6,658
 

See notes to interim condensed consolidated financial statements (unaudited)
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows

   
Three months ended March 31,
 
   
2019
   
2018
 
   
(unaudited - In thousands)
 
Net Income
 
$
9,381
   
$
9,161
 
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
   
87,496
     
92,607
 
Disbursements for loans held for sale
   
(82,230
)
   
(84,748
)
Provision for loan losses
   
664
     
315
 
Deferred income tax expense
   
2,039
     
2,039
 
Deferred loan fees and costs
   
(111
)
   
(638
)
Net depreciation, amortization of intangible assets and premiums and accretion of discounts on securities,  loans and interest bearing deposits - time
   
1,479
     
1,819
 
Net gains on mortgage loans
   
(3,611
)
   
(2,571
)
Net (gains) losses on securities
   
(304
)
   
173
 
Share based compensation
   
420
     
407
 
Increase in accrued income and other assets
   
(8,107
)
   
(5,965
)
Increase (decrease) in accrued expenses and other liabilities
   
2,455
     
(5,711
)
Total Adjustments
   
750
     
(2,273
)
Net Cash From Operating Activities
   
10,131
     
6,888
 
Cash Flow Used in Investing Activities
               
Proceeds from the sale of securities available for sale
   
42,236
     
22,277
 
Proceeds from maturities, prepayments and calls of securities available for sale
   
32,533
     
34,067
 
Purchases of securities available for sale
   
(71,693
)
   
(23,637
)
Proceeds from the maturity of interest bearing deposits - time
   
100
     
1,000
 
Net increase in portfolio loans (loans originated, net of principal payments)
   
(65,653
)
   
(68,611
)
Proceeds from the sale of portfolio loans
   
40,630
     
16,460
 
Proceeds from bank-owned life insurance
   
-
     
474
 
Proceeds from the sale of other real estate and repossessed assets
   
167
     
608
 
Capital expenditures
   
(511
)
   
(921
)
Net Cash Used in Investing Activities
   
(22,191
)
   
(18,283
)
Cash Flow From (Used in) Financing Activities
               
Net increase in total deposits
   
20,797
     
29,867
 
Net increase (decrease) in other borrowings
   
2
     
(6,753
)
Proceeds from Federal Home Loan Bank Advances
   
-
     
40,000
 
Payments of Federal Home Loan Bank Advances
   
-
     
(60,000
)
Dividends paid
   
(4,246
)
   
(3,206
)
Proceeds from issuance of common stock
   
282
     
13
 
Repurchase of common stock
   
(2,530
)
   
-
 
Share based compensation withholding obligation
   
(866
)
   
(888
)
Net Cash From (Used in) Financing Activities
   
13,439
     
(967
)
Net Increase (Decrease) in Cash and Cash Equivalents
   
1,379
     
(12,362
)
Cash and Cash Equivalents at Beginning of Period
   
70,244
     
54,738
 
Cash and Cash Equivalents at End of Period
 
$
71,623
   
$
42,376
 
Cash paid during the period for
               
Interest
 
$
6,253
   
$
2,656
 
Income taxes
   
-
     
-
 
Operating leases
    563
      -
 
Transfers to other real estate and repossessed assets
   
325
     
322
 
Purchase of securities available for sale not yet settled
   
1,500
     
3,220
 
Securitization of portfolio loans
   
29,790
     
-
 
Right of use assets obtained in exchange for lease obligations
   
7,703
     
-
 

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 January 1, 2019
 
$
377,372
   
$
(28,270
)
 
$
(10,108
)
 
$
338,994
 
Net income, three months ended March 31, 2019
   
-
     
9,381
     
-
     
9,381
 
Cash dividends declared, $.18 per share
   
-
     
(4,246
)
   
-
     
(4,246
)
Repurchase of 115,787 shares of common stock
   
(2,530
)
   
-
     
-
     
(2,530
)
Issuance of 68,399 shares of common stock
   
282
     
-
     
-
     
282
 
Share based compensation (issuance of 84,128 shares of common stock)
   
420
     
-
     
-
     
420
 
Share based compensation withholding obligation (withholding of 56,286 shares of common stock)
   
(866
)
   
-
     
-
     
(866
)
Other comprehensive income
   
-
     
-
     
3,291
     
3,291
 
Balances at March 31, 2019
 
$
374,678
   
$
(23,135
)
 
$
(6,817
)
 
$
344,726
 
                                 
Balances at January 1, 2018
 
$
324,986
   
$
(54,054
)
 
$
(5,999
)
 
$
264,933
 
Net income, three months ended March 31, 2018
   
-
     
9,161
     
-
     
9,161
 
Cash dividends declared, $.15 per share
   
-
     
(3,206
)
   
-
     
(3,206
)
Issuance of 3,800 shares of common stock
   
13
     
-
     
-
     
13
 
Share based compensation (issuance of 74,475 shares of common stock)
   
407
     
-
     
-
     
407
 
Share based compensation withholding obligation (withholding of 37,328 shares of common stock)
   
(888
)
   
-
     
-
     
(888
)
Other comprehensive loss
   
-
     
-
     
(2,503
)
   
(2,503
)
Balances at March 31, 2018
 
$
324,518
   
$
(48,099
)
 
$
(8,502
)
 
$
267,917
 

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 March 31, 2019 and December 31, 2018, and the results of operations for the three month periods ended March 31, 2019 and 2018.  The results of operations for the three month period ended March 31, 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 will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For securities available for sale, allowances will be recorded rather than reducing the carrying amount as is done under the current other-than-temporary impairment model. This ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. This amended guidance is effective for us on January 1, 2020.  We began evaluating this ASU in 2016 and have formed a committee that includes personnel from various areas of the Bank that meets regularly to discuss the implementation of the ASU. We have completed historical data validation and are currently in the process of reviewing credit loss estimation methodologies and performing test calculations. We have not yet determined what the impact will be on our consolidated operating results or financial condition, which will be impacted by several variables, including the economic environment and forecast at adoption. Though, by the nature of the implementation of an expected loss model compared to an incurred loss approach, we would anticipate our allowance for loan losses (“AFLL”) to increase under this ASU. The Bank expects to begin full parallel runs mid-2019, with a goal of providing an estimated impact range in our 2019 second quarter Form 10-Q.

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

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.

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.

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)
 
March 31, 2019
                       
U.S. agency
 
$
18,143
   
$
57
   
$
71
   
$
18,129
 
U.S. agency residential mortgage-backed
   
141,886
     
1,067
     
915
     
142,038
 
U.S. agency commercial mortgage-backed
   
11,418
     
10
     
115
     
11,313
 
Private label mortgage-backed
   
32,984
     
355
     
247
     
33,092
 
Other asset backed
   
110,372
     
115
     
197
     
110,290
 
Obligations of states and political subdivisions
   
108,749
     
707
     
1,071
     
108,385
 
Corporate
   
34,048
     
444
     
112
     
34,380
 
Trust preferred
   
1,964
     
-
     
81
     
1,883
 
Foreign government
   
2,040
     
-
     
19
     
2,021
 
Total
 
$
461,604
   
$
2,755
   
$
2,828
   
$
461,531
 
                                 
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
 

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)
 
                                     
March 31, 2019
                                   
U.S. agency
 
$
96
   
$
1
   
$
10,904
   
$
70
   
$
11,000
   
$
71
 
U.S. agency residential mortgage-backed
   
5,232
     
10
     
50,813
     
905
     
56,045
     
915
 
U.S. agency commercial mortgage-backed
   
2,215
     
1
     
5,434
     
114
     
7,649
     
115
 
Private label mortgage-backed
   
10,468
     
12
     
14,496
     
235
     
24,964
     
247
 
Other asset backed
   
40,490
     
128
     
10,619
     
69
     
51,109
     
197
 
Obligations of states and political subdivisions
   
2,173
     
2
     
65,191
     
1,069
     
67,364
     
1,071
 
Corporate
   
1,795
     
6
     
8,376
     
106
     
10,171
     
112
 
Trust preferred
   
963
     
37
     
920
     
44
     
1,883
     
81
 
Foreign government
   
-
     
-
     
2,021
     
19
     
2,021
     
19
 
Total
 
$
63,432
   
$
197
   
$
168,774
   
$
2,631
   
$
232,206
   
$
2,828
 
                                                 
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).

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 March 31, 2019, we had 38 U.S. agency, 120 U.S. agency residential mortgage-backed and 15 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 March 31, 2019, we had 31 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 (including two of the three 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 March 31, 2019, we had 85 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 March 31, 2019, we had 212 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. Tax exempt securities have been negatively impacted by lower federal tax rates signed into law in December, 2017. 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 March 31, 2019, we had 13 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.

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

Trust preferred securities — at March 31, 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 $0.96 million as of March 31, 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 March 31, 2019, we had two foreign government securities whose fair value is less than amortized cost. The unrealized losses are primarily due to 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.

We recorded no credit related OTTI charges in our Condensed Consolidated Statements of Operations related to securities available for sale during the three month periods ended March 31, 2019 and 2018, respectively.

At March 31, 2019, three private label mortgage-backed securities had credit related OTTI and are summarized as follows:

   
Senior
Security
   
Super
Senior
Security
   
Senior
Support
Security
   
Total
 
   
(In thousands)
 
                         
Fair value
 
$
756
   
$
714
   
$
19
   
$
1,489
 
Amortized cost
   
629
     
546
     
-
     
1,175
 
Non-credit unrealized loss
   
-
     
-
     
-
     
-
 
Unrealized gain
   
127
     
168
     
19
     
314
 
Cumulative credit related OTTI
   
757
     
457
     
380
     
1,594
 

Each of these securities is receiving principal and interest payments similar to principal reductions in the underlying collateral. All three of these securities have unrealized gains at March 31, 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.

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
March 31,
 
   
2019
   
2018
 
   
(In thousands)
 
Balance at beginning of period
 
$
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
   
-
     
-
 
Balance at end of period
 
$
1,594
   
$
1,594
 

The amortized cost and fair value of securities available for sale at March 31, 2019, by contractual maturity, follow:

   
Amortized
Cost
   
Fair
Value
 
   
(In thousands)
 
Maturing within one year
 
$
10,674
   
$
10,664
 
Maturing after one year but within five years
   
60,499
     
60,455
 
Maturing after five years but within ten years
   
52,841
     
52,862
 
Maturing after ten years
   
40,930
     
40,817
 
     
164,944
     
164,798
 
U.S. agency residential mortgage-backed
   
141,886
     
142,038
 
U.S. agency commercial mortgage-backed
   
11,418
     
11,313
 
Private label mortgage-backed
   
32,984
     
33,092
 
Other asset backed
   
110,372
     
110,290
 
Total
 
$
461,604
   
$
461,531
 

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 three month periods ending March 31, follows:

         
Realized
 
   
Proceeds
   
Gains
   
Losses
 
   
(In thousands)
 
2019
 
$
42,236
   
$
169
   
$
32
 
2018
   
22,277
     
76
     
95
 

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 three months ended March 31, 2019 and 2018 we recognized gains (losses) on these preferred stocks of $0.167 million and $(0.154) million, respectively, that are included in net gains (losses) on securities in the Condensed Consolidated Statements of Operations.  Zero and $(0.154) million of these gains (losses) during the three months ended March 31, 2019 and 2018, respectively relate to preferred stock still held at each respective period end.

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

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 March 31, 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
   
420
     
573
     
523
     
(852
)
   
664
 
Recoveries credited to the allowance
   
127
     
224
     
217
     
-
     
568
 
Loans charged against the allowance
   
(119
)
   
(363
)
   
(384
)
   
-
     
(866
)
Balance at end of period
 
$
7,518
   
$
8,412
   
$
1,251
   
$
8,073
   
$
25,254
 
                                         
2018
                                       
Balance at beginning of period
 
$
5,595
   
$
8,733
   
$
864
   
$
7,395
   
$
22,587
 
Additions (deductions)
                                       
Provision for loan losses
   
(135
)
   
147
     
69
     
234
     
315
 
Recoveries credited to the allowance
   
606
     
180
     
228
     
-
     
1,014
 
Loans charged against the allowance
   
(40
)
   
(439
)
   
(366
)
   
-
     
(845
)
Balance at end of period
 
$
6,026
   
$
8,621
   
$
795
   
$
7,629
   
$
23,071
 

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)
 
March 31, 2019
                             
Allowance for loan losses:
                             
Individually evaluated for impairment
 
$
1,204
   
$
5,159
   
$
323
   
$
-
   
$
6,686
 
Collectively evaluated for impairment
   
6,314
     
3,253
     
928
     
8,073
     
18,568
 
Loans acquired with deteriorated credit quality
   
-
     
-
     
-
     
-
     
-
 
Total ending allowance for loan losses balance
 
$
7,518
   
$
8,412
   
$
1,251
   
$
8,073
   
$
25,254
 
                                         
Loans
                                       
Individually evaluated for impairment
 
$
7,928
   
$
46,315
   
$
3,523
           
$
57,766
 
Collectively evaluated for impairment
   
1,162,376
     
1,001,146
     
403,881
             
2,567,403
 
Loans acquired with deteriorated credit quality
   
1,537
     
546
     
326
             
2,409
 
Total loans recorded investment
   
1,171,841
     
1,048,007
     
407,730
             
2,627,578
 
Accrued interest included in recorded investment
   
3,437
     
4,262
     
1,084
             
8,783
 
Total loans
 
$
1,168,404
   
$
1,043,745
   
$
406,646
           
$
2,618,795
 
                                         
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
   
$
24,888
 
                                         
Loans
                                       
Individually evaluated for impairment
 
$
8,697
   
$
46,394
   
$
3,370
           
$
58,461
 
Collectively evaluated for impairment
   
1,137,586
     
1,000,038
     
392,460
             
2,530,084
 
Loans acquired with deteriorated credit quality
   
1,609
     
555
     
349
             
2,513
 
Total loans recorded investment
   
1,147,892
     
1,046,987
     
396,179
             
2,591,058
 
Accrued interest included in recorded investment
   
3,411
     
4,097
     
1,030
             
8,538
 
Total loans
 
$
1,144,481
   
$
1,042,890
   
$
395,149
           
$
2,582,520
 

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

Loans on non-accrual status and past due more than 90 days (“Non-performing Loans”) follow:

   
90+ and
Still
Accruing
   
Non-
Accrual
   
Total Non-
Performing
Loans
 
   
(In thousands)
 
March 31, 2019
                 
Commercial
                 
Income producing - real estate
 
$
-
   
$
-
   
$
-
 
Land, land development and construction - real estate
   
-
     
-
     
-
 
Commercial and industrial
   
-
     
1,705
     
1,705
 
Mortgage
                       
1-4 family
   
-
     
4,878
     
4,878
 
Resort lending
   
-
     
508
     
508
 
Home equity - 1st lien
   
-
     
157
     
157
 
Home equity - 2nd lien
   
-
     
573
     
573
 
Installment
                       
Home equity - 1st lien
   
-
     
219
     
219
 
Home equity - 2nd lien
   
-
     
234
     
234
 
Boat lending
   
-
     
359
     
359
 
Recreational vehicle lending
   
-
     
6
     
6
 
Other
   
-
     
210
     
210
 
Total recorded investment
 
$
-
   
$
8,849
   
$
8,849
 
Accrued interest included in recorded investment
 
$
-
   
$
-
   
$
-
 
December 31, 2018
                       
Commercial
                       
Income producing - real estate
 
$
-
   
$
-
   
$
-
 
Land, land development and construction - real estate
   
-
     
-
     
-
 
Commercial and industrial
   
-
     
2,220
     
2,220
 
Mortgage
                       
1-4 family
   
5
     
4,695
     
4,700
 
Resort lending
   
-
     
755
     
755
 
Home equity - 1st lien
   
-
     
159
     
159
 
Home equity - 2nd lien
   
-
     
419
     
419
 
Installment
                       
Home equity - 1st lien
   
-
     
178
     
178
 
Home equity - 2nd lien
   
-
     
226
     
226
 
Boat lending
   
-
     
166
     
166
 
Recreational vehicle lending
   
-
     
7
     
7
 
Other
   
-
     
204
     
204
 
Total recorded investment
 
$
5
   
$
9,029
   
$
9,034
 
Accrued interest included in recorded investment
 
$
-
   
$
-
   
$
-
 

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

An aging analysis of loans by class follows:


 
Loans Past Due
   
Loans not
   
Total
 
   
30-59 days
   
60-89 days
   
90+ days
   
Total
   
Past Due
   
Loans
 
   
(In thousands)
 
March 31, 2019
                                   
Commercial
                                   
Income producing - real estate
 
$
-
   
$
-
   
$
-
   
$
-
   
$
398,191
   
$