1st Source Earnings 2019-03-31

SRCE 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

10-Q 1 sce-2019331x10q.htm 10-Q SRCE 1ST QUARTER 2019 Wdesk | Document

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-6233

(Exact name of registrant as specified in its charter)



INDIANA		35-1068133
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



100 North Michigan Street
South Bend, IN		46601
(Address of principal executive offices)		(Zip Code)

(574) 235-2000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer x		Accelerated filer o

Non-accelerated filer o		Smaller reporting company o

		Emerging growth company o

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 Section13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

Number of shares of common stock outstanding as of April 12, 2019 — 25,667,953 shares

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		Page

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Financial Condition — March 31, 2019 and December 31, 2018	3
	Consolidated Statements of Income — three months ended March 31, 2019 and 2018	4
	Consolidated Statements of Comprehensive Income — three ended March 31, 2019 and 2018	5
	Consolidated Statements of Shareholders’ Equity — three months ended March 31, 2019 and 2018	5
	Consolidated Statements of Cash Flows — three months ended March 31, 2019 and 2018	6
	Notes to the Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	42

SIGNATURES		43

EXHIBITS
	Exhibit 31.1
	Exhibit 31.2
	Exhibit 32.1
	Exhibit 32.2

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1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited - Dollars in thousands)



	March 31, 2019			December 31, 2018
ASSETS
Cash and due from banks	$	64,619		$	94,907
Federal funds sold and interest bearing deposits with other banks	3,062			4,172
Investment securities available-for-sale	1,002,809			990,129
Other investments	28,404			28,404
Mortgages held for sale	9,210			11,290
Loans and leases, net of unearned discount:
Commercial and agricultural	1,146,031			1,073,205
Auto and light truck	554,078			559,987
Medium and heavy duty truck	285,631			283,544
Aircraft	830,437			803,111
Construction equipment	641,035			645,239
Commercial real estate	818,459			809,886
Residential real estate and home equity	514,719			523,855
Consumer	135,797			136,637
Total loans and leases	4,926,187			4,835,464
Reserve for loan and lease losses	(101,852		)	(100,469		)
Net loans and leases	4,824,335			4,734,995
Equipment owned under operating leases, net	131,594			134,440
Net premises and equipment	51,357			52,139
Goodwill and intangible assets	83,992			83,998
Accrued income and other assets	179,704			159,271
Total assets	$	6,379,086		$	6,293,745

LIABILITIES
Deposits:
Noninterest-bearing demand	$	1,146,647		$	1,217,120
Interest-bearing deposits:
Interest-bearing demand	1,560,840			1,614,959
Savings	851,564			822,477
Time	1,565,040			1,467,766
Total interest-bearing deposits	3,977,444			3,905,202
Total deposits	5,124,091			5,122,322
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase	149,172			113,627
Other short-term borrowings	106,216			85,717
Total short-term borrowings	255,388			199,344
Long-term debt and mandatorily redeemable securities	71,439			71,123
Subordinated notes	58,764			58,764
Accrued expenses and other liabilities	88,303			78,602
Total liabilities	5,597,985			5,530,155

SHAREHOLDERS’ EQUITY
Preferred stock; no par value
Authorized 10,000,000 shares; none issued or outstanding	—			—
Common stock; no par value
Authorized 40,000,000 shares; issued 28,205,674 at March 31, 2019 and December 31, 2018	436,538			436,538
Retained earnings	414,428			398,980
Cost of common stock in treasury (2,537,741 shares at March 31, 2019 and 2,421,946 shares at December 31, 2018)	(69,136		)	(62,760		)
Accumulated other comprehensive loss	(3,408		)	(10,676		)
Total shareholders’ equity	778,422			762,082
Noncontrolling interests	$	2,679		$	1,508
Total equity	$	781,101		$	763,590
Total liabilities and equity	$	6,379,086		$	6,293,745

The accompanying notes are a part of the consolidated financial statements.

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1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited - Dollars in thousands, except per share amounts)



	Three Months Ended March 31,
	2019		2018
Interest income:
Loans and leases	$	62,683	$	53,691
Investment securities, taxable	5,515		4,608
Investment securities, tax-exempt	385		531
Other	438		408
Total interest income	69,021		59,238
Interest expense:
Deposits	11,470		6,562
Short-term borrowings	931		776
Subordinated notes	928		883
Long-term debt and mandatorily redeemable securities	744		485
Total interest expense	14,073		8,706
Net interest income	54,948		50,532
Provision for loan and lease losses	4,918		3,786
Net interest income after provision for loan and lease losses	50,030		46,746
Noninterest income:
Trust and wealth advisory	4,858		5,188
Service charges on deposit accounts	2,498		2,484
Debit card	3,220		3,103
Mortgage banking	936		884
Insurance commissions	2,174		1,958
Equipment rental	7,982		7,755
Losses on investment securities available-for-sale	—		(345		)
Other	2,456		2,780
Total noninterest income	24,124		23,807
Noninterest expense:
Salaries and employee benefits	23,495		22,531
Net occupancy	2,772		2,866
Furniture and equipment	6,024		5,455
Depreciation – leased equipment	6,524		6,428
Professional fees	1,598		2,017
Supplies and communication	1,493		1,553
FDIC and other insurance	645		698
Business development and marketing	949		1,533
Loan and lease collection and repossession	1,361		951
Other	343		1,525
Total noninterest expense	45,204		45,557
Income before income taxes	28,950		24,996
Income tax expense	6,754		5,880
Net income	$	22,196	$	19,116
Net (income) loss attributable to noncontrolling interests	—		—
Net income available to common shareholders	22,196		19,116
Per common share:
Basic net income per common share	$	0.86	$	0.73
Diluted net income per common share	$	0.86	$	0.73
Cash dividends	$	0.27	$	0.22
Basic weighted average common shares outstanding	25,759,186		25,950,386
Diluted weighted average common shares outstanding	25,759,186		25,950,386

The accompanying notes are a part of the consolidated financial statements.

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1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited - Dollars in thousands)



	Three Months Ended March 31,
	2019			2018
Net income	$	22,196		$	19,116
Other comprehensive income (loss):
Unrealized appreciation (depreciation) of available-for-sale securities	9,573			(9,414		)
Reclassification adjustment for realized losses included in net income	—			345
Income tax effect	(2,305		)	2,184
Other comprehensive income (loss), net of tax	7,268			(6,885		)
Comprehensive income	29,464			12,231
Comprehensive (income) loss attributable to noncontrolling interests	—			—
Comprehensive income available to common shareholders	$	29,464		$	12,231

The accompanying notes are a part of the consolidated financial statements.

1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited - Dollars in thousands, except per share amounts)



	Preferred Stock		Common Stock		Retained Earnings			Cost of Common Stock in Treasury			Accumulated Other Comprehensive Income (Loss), Net			Total Shareholders' Equity			Noncontrolling Interests		Total Equity
Balance at January 1, 2018	$	—	$	436,538	$	339,959		$	(54,628	)	$	(3,332	)	$	718,537		$	—	$	718,537
Cumulative-effect adjustment	—		—		718			—			(718		)	—			—		—
Balance at January 1, 2018, adjusted	—		436,538		340,677			(54,628		)	(4,050		)	718,537			—		718,537
Net income	—		—		19,116			—			—			19,116			—		19,116
Other comprehensive loss	—		—		—			—			(6,885		)	(6,885		)	—		(6,885		)
Issuance of 34,191 common shares under stock based compensation awards	—		—		535			811			—			1,346			—		1,346
Cost of 15,784 shares of common stock acquired for treasury	—		—		—			(785		)	—			(785		)	—		(785		)
Common stock dividend ($0.22 per share)	—		—		(5,720		)	—			—			(5,720		)	—		(5,720		)
Balance at March 31, 2018	$	—	$	436,538	$	354,608		$	(54,602	)	$	(10,935	)	$	725,609		$	—	725,609

Balance at January 1, 2019	$	—	$	436,538	$	398,980		$	(62,760	)	$	(10,676	)	$	762,082		$	1,508	$	763,590
Cumulative-effect adjustment	—		—		(301		)	—			—			(301		)	—		(301		)
Balance at January 1, 2019, adjusted	—		436,538		398,679			(62,760		)	(10,676		)	761,781			1,508		763,289
Net income	—		—		22,196			—			—			22,196			—		22,196
Other comprehensive income	—		—		—			—			7,268			7,268			—		7,268
Issuance of 38,365 common shares under stock based compensation awards	—		—		533			882			—			1,415			—		1,415
Cost of 154,160 shares of common stock acquired for treasury	—		—		—			(7,258		)	—			(7,258		)	—		(7,258		)
Common stock dividend ($0.27 per share)	—		—		(6,980		)	—			—			(6,980		)	—		(6,980		)
Contributions from noncontrolling interests	—		—		—			—			—			—			1,171		1,171
Balance at March 31, 2019	$	—	$	436,538	$	414,428		$	(69,136	)	$	(3,408	)	$	778,422		$	2,679	$	781,101

The accompanying notes are a part of the consolidated financial statements.

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1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Dollars in thousands)



	Three Months Ended March 31,
	2019			2018
Operating activities:
Net income	$	22,196		$	19,116
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan and lease losses	4,918			3,786
Depreciation of premises and equipment	1,466			1,321
Depreciation of equipment owned and leased to others	6,524			6,428
Stock-based compensation	673			880
Amortization of investment securities premiums and accretion of discounts, net	824			764
Amortization of mortgage servicing rights	233			236
Deferred income taxes	444			(7,531		)
Losses on investment securities available-for-sale	—			345
Originations of loans held for sale, net of principal collected	(19,966		)	(17,032		)
Proceeds from the sales of loans held for sale	22,534			21,960
Net gain on sale of loans held for sale	(488		)	(431		)
Net gain on sale of other real estate and repossessions	(167		)	(6		)
Net (gain) loss on sale of premises and equipment	(1,288		)	2
Change in interest receivable	(2,696		)	(1,806		)
Change in interest payable	2,427			1,120
Change in other assets	1,808			4,825
Change in other liabilities	(7,814		)	323
Other	598			(30		)
Net change in operating activities	32,226			34,270
Investing activities:
Proceeds from sales of investment securities available-for-sale	—			11,739
Proceeds from maturities and paydowns of investment securities available-for-sale	28,840			47,265
Purchases of investment securities available-for-sale	(33,072		)	(107,225		)
Proceeds from liquidation of partnership investment	—			1,868
Net change in other investments	—			(1,312		)
Loans sold or participated to others	2,862			14,310
Net change in loans and leases	(106,059		)	(178,326		)
Net change in equipment owned under operating leases	(3,678		)	(10,976		)
Purchases of premises and equipment	(2,821		)	(1,566		)
Proceeds from disposal of premises and equipment	3,426			17
Proceeds from sales of other real estate and repossessions	4,044			425
Net change in investing activities	(106,458		)	(223,781		)
Financing activities:
Net change in demand deposits and savings accounts	(95,505		)	(81,827		)
Net change in time deposits	97,274			110,422
Net change in short-term borrowings	56,044			141,369
Payments on long-term debt	(1,718		)	(636		)
Acquisition of treasury stock	(7,258		)	(785		)
Contributions from noncontrolling interests	1,171			—
Cash dividends paid on common stock	(7,174		)	(5,913		)
Net change in financing activities	42,834			162,630

Net change in cash and cash equivalents	(31,398		)	(26,881		)
Cash and cash equivalents, beginning of year	99,079			78,033
Cash and cash equivalents, end of period	$	67,681		$	51,152
Supplemental Information:
Non-cash transactions:
Loans transferred to other real estate and repossessed assets	$	8,939		$	259
Common stock matching contribution to Employee Stock Ownership and Profit Sharing Plan	300			583
Right of use assets obtained in exchange for lease obligations	1,058			—

The accompanying notes are a part of the consolidated financial statements.

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1ST SOURCE CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Accounting Policies

1st Source Corporation is a bank holding company headquartered in South Bend, Indiana that provides, through its subsidiaries (collectively referred to as “1st Source” or “the Company”), a broad array of financial products and services.

Basis of Presentation – The accompanying unaudited consolidated financial statements reflect all adjustments (all of which are normal and recurring in nature) which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position, the results of operations, changes in comprehensive income, changes in shareholders’ equity, and cash flows for the periods presented. These unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission (SEC) and, therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been omitted.

The Notes to the Consolidated Financial Statements appearing in 1st Source Corporation’s Annual Report on Form 10-K (2018 Annual Report), which include descriptions of significant accounting policies, should be read in conjunction with these interim financial statements. The Consolidated Statement of Financial Condition at December 31, 2018 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation.

Use of Estimates in the Preparation of Financial Statements – Financial statements prepared in accordance with GAAP require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.

Loans and Leases – Loans are stated at the principal amount outstanding, net of unamortized deferred loan origination fees and costs and net of unearned income. Interest income is accrued as earned based on unpaid principal balances. Origination fees and direct loan and lease origination costs are deferred, and the net amount amortized to interest income over the estimated life of the related loan or lease. Loan commitment fees are deferred and amortized into other income over the commitment period.

Direct financing leases are carried at the aggregate of lease payments plus estimated residual value of the leased property, net of unamortized deferred lease origination fees and costs and unearned income. Interest income on direct financing leases is recognized over the term of the lease to achieve a constant periodic rate of return on the outstanding investment. Effective January 1, 2019, as part of the new leasing standard, only those costs incurred as a direct result of closing a lease transaction can be capitalized. All existing deferrals will continue to be amortized over the estimated life of the lease while all new incremental direct costs will be expensed immediately.

The accrual of interest on loans and leases is discontinued when a loan or lease becomes contractually delinquent for 90 days, or when an individual analysis of a borrower’s credit worthiness indicates a credit should be placed on nonperforming status, except for residential mortgage loans and consumer loans that are well secured and in the process of collection. Residential mortgage loans are placed on nonaccrual at the time the loan is placed in foreclosure. When interest accruals are discontinued, interest credited to income in the current year is reversed and interest accrued in the prior year is charged to the reserve for loan and lease losses. However, in some cases, the Company may elect to continue the accrual of interest when the net realizable value of collateral is sufficient to cover the principal and accrued interest. When a loan or lease is classified as nonaccrual and the future collectability of the recorded loan or lease balance is doubtful, collections on interest and principal are applied as a reduction to principal outstanding. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured, which is typically evidenced by a sustained repayment performance of at least six months.

A loan or lease is considered impaired, based on current information and events, if it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan or lease agreement. Interest on impaired loans and leases, which are not classified as nonaccrual, is recognized on the accrual basis. The Company evaluates loans and leases exceeding $100,000 for impairment and establishes a specific reserve as a component of the reserve for loan and lease losses when it is probable all amounts due will not be collected pursuant to the contractual terms of the loan or lease and the recorded investment in the loan or lease exceeds its fair value.

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Loans and leases that have been modified and economic concessions have been granted to borrowers who have experienced financial difficulties are considered a troubled debt restructuring (TDR) and, by definition, are deemed an impaired loan. These concessions typically result from the Company’s loss mitigation activities and may include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructuring and typically are returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period of at least six months.

When the Company modifies loans and leases in a TDR, it evaluates any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan or lease agreement, or uses the current fair value of the collateral, less selling costs for collateral dependent loans. If the Company determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through a reserve for loan and lease losses estimate or a charge-off to the reserve for loan and lease losses. In periods subsequent to modification, the Company evaluates all TDRs, including those that have payment defaults, for possible impairment and recognizes impairment through the reserve for loan and lease losses.

Equipment Owned Under Operating Leases – As a lessor, the Company finances various types of construction equipment, medium and heavy duty trucks, automobiles and other equipment under leases classified as operating leases. The equipment underlying the operating leases is reported at cost, net of accumulated depreciation, in the Consolidated Statements of Financial Condition. These operating lease arrangements require the lessee to make a fixed monthly rental payment over a specified lease term generally ranging from three to seven years. Revenue consists of the contractual lease payments and is recognized on a straight-line basis over the lease term and reported as noninterest income. Leased assets are being depreciated on a straight-line method over the lease term to the estimate of the equipment’s fair market value at lease termination, also referred to as “residual” value. The depreciation of these operating lease assets is reported as Noninterest Expense on the Consolidated Statements of Income. For automobile leases, fair value is based upon published industry market guides. For other equipment leases, fair value may be based upon observable market prices, third-party valuations, or prices received on sales of similar assets at the end of the lease term. These residual values are reviewed annually to ensure the recorded amount does not exceed the fair market value at the lease termination. At the end of the lease, the operating lease asset is either purchased by the lessee or returned to the Company. The Company is responsible for the payment of personal property taxes which is reported as Other Expense on the Consolidated Statements of Income. The lessee is responsible for reimbursing the Company for personal property taxes which is reported as Other Income on the Consolidated Statements of Income. The Company excludes sales taxes and other similar taxes from being reported as lease revenue with an associated expense.

Lease Commitments – The Company leases certain banking center locations, office space, land and billboards. In determining whether a contract contains a lease, the Company examines the contract to ensure an asset was specifically identified and that the Company has control of use over the asset. To determine whether a lease is classified as operating or finance, the Company performs an economic life test on all building leases with greater than a twenty year term. Further, the Company performs a fair value test to identify any leases that have a present value of future lease payments over the lease term that is greater than 90% of the fair value of the building. The Company only capitalizes leases with an initial lease liability equal to or over $2,000.

At lease inception, the Company determines the lease term by adding together the minimum lease term and all optional renewal periods that it is reasonably certain to renew. The Company determines this on each lease by considering all relevant contract-based, asset-based, market-based, and entity-based economic factors. Generally, the exercise of lease renewal options is at the Company’s sole discretion. The lease term is used to determine whether a lease is operating or finance and is used to calculate straight-line rent expense. Additionally, the depreciable life of leasehold improvements is limited by the expected lease term.

Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the date the Company takes possession of the property. Rent expense and variable lease costs are included in Net Occupancy Expense on the Company’s Consolidated Statements of Income. Included in variable lease costs are leases with rent escalations based on recent financial indices, such as the Consumer Price Index, where the Company estimates future rent increases and records the actual difference to variable costs. Certain leases require the Company to pay common area maintenance, real estate taxes, insurance and other operating expenses associated with the leases premises. These expenses are classified in Net Occupancy Expense, consistent with similar costs for owned locations. There are no residual value guarantees or restrictions or covenants imposed by leases.

The Company accounts for lease and nonlease components together as a single lease component by class of underlying asset. Operating lease obligations with an initial term longer than 12 months are recorded with a right of use asset and a lease liability in the Consolidated Statements of Financial Condition. Operating lease obligations with an initial term of 12 months or less are expensed in the Consolidated Statements of Income on a straight-line basis over the lease term.

The discount rate used in determining the lease liability and related right of use asset is based upon what would be obtained by the Company for similar loans as an incremental rate as of the date of origination or renewal.

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Revenue Recognition – The Company recognizes revenues as they are earned based on contractual terms, as transactions occur, or as services are provided and collectability is reasonably assured. The Company’s principal source of revenue is interest income from loans and leases and investment securities. The Company also earns noninterest income from various banking and financial services offered primarily through 1st Source Bank (Bank) and its subsidiaries.

Interest Income – The largest source of revenue for the Company is interest income which is primarily recognized on an accrual basis according to nondiscretionary formulas in written contracts, such as loan and lease agreements or investment securities contracts.

Noninterest Income – The Company earns noninterest income through a variety of financial and transaction services provided to corporate and consumer clients such as trust and wealth advisory, deposit account, debit card, mortgage banking, insurance, and equipment rental services. Revenue is recorded for noninterest income based on the contractual terms for the service or transaction performed. In certain circumstances, noninterest income is reported net of associated expenses.

Note 2 — Recent Accounting Pronouncements

Leases: In March 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-01 “Leases (Topic 842): Codification Improvements.” These amendments align the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance. The ASU also requires lessors within the scope of Topic 842, Financial Services-Depository Lending, to present all “principal payments received under leases” within investing activities on the Consolidated Statements of Cash Flows. Finally, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early application is permitted. An entity should apply the amendments as of the date that it first applied Topic 842, using the same transition methodology in accordance with paragraph 842-10-65-1(c). The Company adopted Topic 842 on January 1, 2019 and applied the amendments in ASU 2019-01 as of the same date and it did not have a material impact on its accounting and disclosures.

Intangibles - Internal-Use Software: In August 2018, the FASB issued ASU No. 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” These amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contact with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. The guidance is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. The Company is assessing ASU 2018-15 and the impact on its accounting and disclosures.

Disclosure Requirements for Fair Value Measurement: In August 2018, the FASB issued ASU No. 2018-13 “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” These amendments modify the disclosure requirements in Topic 820 as follows:

Removals: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements.

Modifications: for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.

Additions: the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

The guidance is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should all be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU No. 2018-13 and delay adoption of the additional disclosures until their effective date. The Company is assessing ASU 2018-13 and the impact on its disclosures.

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Premium Amortization: In March 2017, the FASB issued ASU No. 2017-08 “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities.” These amendments shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments should be applied on a modified retrospective basis, with a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company adopted ASU 2017-08 on January 1, 2019 and recognized a cumulative-effect adjustment to retained earnings of $0.30 million.

Simplifying the Test for Goodwill Impairment: In January 2017, the FASB issued ASU No. 2017-04 “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” These amendments eliminate Step 2 from the goodwill impairment test. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 should be adopted on a prospective basis. The Company has assessed ASU 2017-04 and does not expect it to have a material impact on its accounting and disclosures.

Measurement of Credit Losses on Financial Instruments: In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 were issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 eliminate the probable incurred loss recognition in current GAAP and reflect an entity’s current estimate of all expected credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the financial assets.

For purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (“PCD assets”) that are measured at amortized cost, the initial allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense. Subsequent changes in the allowance for credit losses on PCD assets are recognized through the statement of income as a credit loss expense.

Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security.

ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has a cross-functional team working through an implementation plan which includes assessment and documentation of processes, internal controls and data as well as model development. The Company is also in the process of implementing a third-party software solution to assist in the application of the new standard. The impact of adopting ASU 2016-13 cannot be reasonably estimated at this point.

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Note 3 — Investment Securities Available-For-Sale

The following table shows investment securities available-for-sale.



(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2019
U.S. Treasury and Federal agencies securities	$	537,895	$	737	$	(3,226	)	$	535,406
U.S. States and political subdivisions securities	88,501		518		(263		)	88,756
Mortgage-backed securities — Federal agencies	332,342		1,520		(3,921		)	329,941
Corporate debt securities	47,860		312		(166		)	48,006
Foreign government and other securities	700		—		—			700
Total debt securities available-for-sale	$	1,007,298	$	3,087	$	(7,576	)	$	1,002,809

December 31, 2018
U.S. Treasury and Federal agencies securities	$	537,913	$	196	$	(6,886	)	$	531,223
U.S. States and political subdivisions securities	95,346		172		(936		)	94,582
Mortgage-backed securities — Federal agencies	324,390		718		(6,875		)	318,233
Corporate debt securities	45,843		—		(451		)	45,392
Foreign government and other securities	700		—		(1		)	699
Total debt securities available-for-sale	$	1,004,192	$	1,086	$	(15,149	)	$	990,129

At March 31, 2019 and December 31, 2018, the residential mortgage-backed securities held by the Company consisted primarily of GNMA, FNMA and FHLMC pass-through certificates which are guaranteed by those respective agencies of the United States government (Government Sponsored Enterprise, GSEs).

The following table shows the contractual maturities of investments in debt securities available-for-sale at March 31, 2019. Expected maturities will differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



(Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	141,236	$	140,922
Due after one year through five years	526,676		524,765
Due after five years through ten years	7,044		7,181
Due after ten years	—		—
Mortgage-backed securities	332,342		329,941
Total debt securities available-for-sale	$	1,007,298	$	1,002,809

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The following table summarizes gross unrealized losses and fair value by investment category and age. At March 31, 2019, the Company's available-for-sale securities portfolio consisted of 620 securities, 322 of which were in an unrealized loss position.



	Less than 12 Months					12 months or Longer					Total
(Dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
March 31, 2019
U.S. Treasury and Federal agencies securities	$	—	$	—		$	417,740	$	(3,226	)	$	417,740	$	(3,226	)
U.S. States and political subdivisions securities	1,367		(1		)	32,560		(262		)	33,927		(263		)
Mortgage-backed securities - Federal agencies	26,788		(73		)	192,836		(3,848		)	219,624		(3,921		)
Corporate debt securities	4,962		—			18,007		(166		)	22,969		(166		)
Foreign government and other securities	700		—			—		—			700		—
Total debt securities available-for-sale	$	33,817	$	(74	)	$	661,143	$	(7,502	)	$	694,960	$	(7,576	)

December 31, 2018
U.S. Treasury and Federal agencies securities	$	55,491	$	(177	)	$	424,269	$	(6,709	)	$	479,760	$	(6,886	)
U.S. States and political subdivisions securities	21,059		(61		)	45,365		(875		)	66,424		(936		)
Mortgage-backed securities - Federal agencies	65,554		(511		)	198,221		(6,364		)	263,775		(6,875		)
Corporate debt securities	21,496		(143		)	23,896		(308		)	45,392		(451		)
Foreign government and other securities	699		(1		)	—		—			699		(1		)
Total debt securities available-for-sale	$	164,299	$	(893	)	$	691,751	$	(14,256	)	$	856,050	$	(15,149	)

The initial indication of potential other-than-temporary-impairment (OTTI) for debt securities is a decline in fair value below amortized cost. Quarterly, the impaired securities are analyzed on a qualitative and quantitative basis in determining OTTI. Declines in the fair value of debt securities available-for-sale below their cost that are deemed to be other-than-temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of impairment related to other factors is recognized in other comprehensive income. In estimating OTTI losses, the Company considers among other things, (i) the length of time and the extent to which fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) whether it is more likely than not that the Company will not have to sell any such securities before a recovery of cost.

At March 31, 2019, the Company does not have the intent to sell any of the debt securities available-for-sale in the table above and believes that it is more likely than not, that it will not have to sell any such securities before an anticipated recovery of cost. Primarily the unrealized losses on debt securities are due to increases in market rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover on all debt securities as they approach their maturity date or re-pricing date or if market yields for such investments decline. The Company does not believe any of the securities are impaired due to reasons of credit quality.

The following table shows the gross realized gains and losses from the available-for-sale debt securities portfolio. Realized gains and losses of all securities are computed using the specific identification cost basis.



	Three Months Ended March 31,
(Dollars in thousands)	2019		2018
Gross realized gains	$	—	$	2
Gross realized losses	—		(347		)
OTTI losses	—		—
Net realized gains (losses)	$	—	$	(345	)

At March 31, 2019 and December 31, 2018, investment securities available-for-sale with carrying values of $257.94 million and $242.31 million, respectively, were pledged as collateral for security repurchase agreements and for other purposes.

Note 4 — Loan and Lease Financings

The loan and lease portfolio includes direct financing leases, which are included in commercial and agricultural, auto and light truck, medium and heavy duty truck, aircraft, and construction equipment on the Consolidated Statements of Financial Condition.

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The following table shows the the components of the investment in direct finance leases at March 31, 2019 and December 31, 2018.



(Dollars in thousands)	March 31, 2019			December 31, 2018
Direct finance leases:
Minimum lease payments	$	249,069		$	257,398
Estimated unguaranteed residual values	41			41
Less: Unearned income	(45,420		)	(46,709		)
Net investment in lease financing	$	203,690		$	210,730

To mitigate this risk of loss, the Company seeks to diversify both the type of equipment leased and the industries in which the lessees participate. In addition, a portion of our leases are terminal rental adjustment clause or “TRAC” leases where the lessee effectively guarantees the full residual value through a rental adjustment at the end of term or those where partial value is guaranteed (“split-TRAC”), which has a limited residual risk. Under a split-TRAC structure, the limited residual risk would be satisfied first by the net sale proceeds of the leased asset. The lessee’s at-risk portion, or top risk, is satisfied last and is subject to repayment as additional rent, if the TRAC amount is not satisfied by the net sale proceeds.

The following table shows direct financing minimum lease payments receivable for the next five years 2019 through 2023 and thereafter.



(Dollars in thousands)
2019	$	39,791
2020	46,697
2021	39,067
2022	36,643
2023	31,450
Thereafter	55,421
Total	$	249,069

Interest income recognized from direct financing lease payments for the three months ended March 31, 2019 and 2018 was $2.78 million and $2.57 million, respectively.

The Company evaluates loans and leases for credit quality at least annually but more frequently if certain circumstances occur (such as material new information which becomes available and indicates a potential change in credit risk). The Company uses two methods to assess credit risk: loan or lease credit quality grades and credit risk classifications. The purpose of the loan or lease credit quality grade is to document the degree of risk associated with individual credits as well as inform management of the degree of risk in the portfolio taken as a whole. Credit risk classifications are used to categorize loans by degree of risk and to designate individual or committee approval authorities for higher risk credits at the time of origination. Credit risk classifications include categories for: Acceptable, Marginal, Special Attention, Special Risk, Restricted by Policy, Regulated and Prohibited by Law.

All loans and leases, except residential real estate and home equity loans and consumer loans, are assigned credit quality grades on a scale from 1 to 12 with grade 1 representing superior credit quality. The criteria used to assign grades to extensions of credit that exhibit potential problems or well-defined weaknesses are primarily based upon the degree of risk and the likelihood of orderly repayment, and their effect on the Company’s safety and soundness. Loans or leases graded 7 or weaker are considered “special attention” credits and, as such, relationships in excess of $100,000 are reviewed quarterly as part of management’s evaluation of the appropriateness of the reserve for loan and lease losses. Grade 7 credits are defined as “watch” and contain greater than average credit risk and are monitored to limit the exposure to increased risk; grade 8 credits are “special mention” and, following regulatory guidelines, are defined as having potential weaknesses that deserve management’s close attention. Credits that exhibit well-defined weaknesses and a distinct possibility of loss are considered “classified” and are graded 9 through 12 corresponding to the regulatory definitions of “substandard” (grades 9 and 10) and the more severe “doubtful” (grade 11) and “loss” (grade 12).

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The following table shows the credit quality grades of the recorded investment in loans and leases, segregated by class.



	Credit Quality Grades
(Dollars in thousands)	1-6		7-12		Total
March 31, 2019
Commercial and agricultural	$	1,117,440	$	28,591	$	1,146,031
Auto and light truck	534,407		19,671		554,078
Medium and heavy duty truck	284,208		1,423		285,631
Aircraft	802,373		28,064		830,437
Construction equipment	623,140		17,895		641,035
Commercial real estate	799,662		18,797		818,459
Total	$	4,161,230	$	114,441	$	4,275,671

December 31, 2018
Commercial and agricultural	$	1,043,019	$	30,186	$	1,073,205
Auto and light truck	528,174		31,813		559,987
Medium and heavy duty truck	281,834		1,710		283,544
Aircraft	768,442		34,669		803,111
Construction equipment	625,579		19,660		645,239
Commercial real estate	787,376		22,510		809,886
Total	$	4,034,424	$	140,548	$	4,174,972

For residential real estate and home equity and consumer loans, credit quality is based on the aging status of the loan and by payment activity. The following table shows the recorded investment in residential real estate and home equity and consumer loans by performing or nonperforming status. Nonperforming loans are those loans which are on nonaccrual status or are 90 days or more past due.



(Dollars in thousands)	Performing		Nonperforming		Total
March 31, 2019
Residential real estate and home equity	$	512,927	$	1,792	$	514,719
Consumer	135,578		219		135,797
Total	$	648,505	$	2,011	$	650,516

December 31, 2018
Residential real estate and home equity	$	521,846	$	2,009	$	523,855
Consumer	136,423		214		136,637
Total	$	658,269	$	2,223	$	660,492

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The following table shows the recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status.



(Dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due and Accruing		Total Accruing Loans		Nonaccrual		Total Financing Receivables
March 31, 2019
Commercial and agricultural	$	1,142,979	$	84	$	—	$	—	$	1,143,063	$	2,968	$	1,146,031
Auto and light truck	548,752		1,024		148		—		549,924		4,154		554,078
Medium and heavy duty truck	285,539		23		—		—		285,562		69		285,631
Aircraft	818,494		9,106		1,585		—		829,185		1,252		830,437
Construction equipment	639,039		580		—		—		639,619		1,416		641,035
Commercial real estate	816,251		277		—		—		816,528		1,931		818,459
Residential real estate and home equity	511,627		819		481		151		513,078		1,641		514,719
Consumer	134,808		629		141		28		135,606		191		135,797
Total	$	4,897,489	$	12,542	$	2,355	$	179	$	4,912,565	$	13,622	$	4,926,187

December 31, 2018
Commercial and agricultural	$	1,070,530	$	22	$	—	$	—	$	1,070,552	$	2,653	$	1,073,205
Auto and light truck	544,022		3,154		1,437		—		548,613		11,374		559,987
Medium and heavy duty truck	283,284		154		—		—		283,438		106		283,544
Aircraft	790,233		4,149		1,168		—		795,550		7,561		803,111
Construction equipment	641,270		1,643		—		—		642,913		2,326		645,239
Commercial real estate	807,793		109		—		—		807,902		1,984		809,886
Residential real estate and home equity	520,124		1,267		455		295		522,141		1,714		523,855
Consumer	135,591		682		150		73		136,496		141		136,637
Total	$	4,792,847	$	11,180	$	3,210	$	368	$	4,807,605	$	27,859	$	4,835,464

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The following table shows impaired loans and leases, segregated by class, and the corresponding reserve for impaired loan and lease losses.



(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Reserve
March 31, 2019
With no related reserve recorded:
Commercial and agricultural	$	2,269	$	2,269	$	—
Auto and light truck	590		590		—
Medium and heavy duty truck	—		—		—
Aircraft	1,251		1,251		—
Construction equipment	471		471		—
Commercial real estate	1,117		1,117		—
Residential real estate and home equity	—		—		—
Consumer	—		—		—
Total with no related reserve recorded	5,698		5,698		—
With a reserve recorded:
Commercial and agricultural	504		504		42
Auto and light truck	3,365		3,365		488
Medium and heavy duty truck	—		—		—
Aircraft	—		—		—
Construction equipment	922		922		149
Commercial real estate	727		727		20
Residential real estate and home equity	342		344		124
Consumer	—		—		—
Total with a reserve recorded	5,860		5,862		823
Total impaired loans	$	11,558	$	11,560	$	823

December 31, 2018
With no related reserve recorded:
Commercial and agricultural	$	2,471	$	2,471	$	—
Auto and light truck	7,504		7,504		—
Medium and heavy duty truck	106		106		—
Aircraft	556		556		—
Construction equipment	905		905		—
Commercial real estate	1,131		1,131		—
Residential real estate and home equity	—		—		—
Consumer	—		—		—
Total with no related reserve recorded	12,673		12,673		—
With a reserve recorded:
Commercial and agricultural	—		—		—
Auto and light truck	3,840		3,840		372
Medium and heavy duty truck	—		—		—
Aircraft	7,004		7,004		1,255
Construction equipment	1,340		1,340		279
Commercial real estate	759		759		51
Residential real estate and home equity	344		346		126
Consumer	—		—		—
Total with a reserve recorded	13,287		13,289		2,083
Total impaired loans	$	25,960	$	25,962	$	2,083

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The following table shows average recorded investment and interest income recognized on impaired loans and leases, segregated by class.



	Three Months Ended March 31,
	2019				2018
(Dollars in thousands)	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
Commercial and agricultural	$	2,821	$	—	$	2,843	$	—
Auto and light truck	5,003		—		7,827		—
Medium and heavy duty truck	54		—		347		—
Aircraft	5,445		—		3,069		—
Construction equipment	1,929		—		1,330		—
Commercial real estate	1,859		—		3,696		—
Residential real estate and home equity	343		5		350		4
Consumer	—		—		—		—
Total	$	17,454	$	5	$	19,462	$	4

There were no loan and lease modifications classified as a troubled debt restructuring (TDR) during the three months ended March 31, 2019 and 2018. The classification between nonperforming and performing is determined at the time of modification. Modification programs focus on extending maturity dates or modifying payment patterns with most TDRs experiencing a combination of concessions. Modifications do not result in the contractual forgiveness of principal or interest. There were no modifications during the three months ended March 31, 2019 and 2018 that resulted in an interest rate reduction below market rate. Consequently, the financial impact of the modification was immaterial.

There were no TDRs which had payment defaults within the twelve months following modification during the three months ended March 31, 2019 and 2018. Default occurs when a loan or lease is 90 days or more past due under the modified terms or transferred to nonaccrual.

The following table shows the recorded investment of loans and leases classified as troubled debt restructurings as of March 31, 2019 and December 31, 2018.



(Dollars in thousands)	March 31, 2019		December 31, 2018
Performing TDRs	$	342	$	344
Nonperforming TDRs	229		316
Total TDRs	$	571	$	660

Note 5 — Reserve for Loan and Lease Losses

The reserve for loan and lease loss methodology has been consistently applied for several years, with enhancements instituted periodically. Reserve ratios are reviewed quarterly and revised periodically to reflect recent loss history and to incorporate current risks and trends which may not be recognized in historical data. As the historical charge-off analysis is updated, the Company reviews the look-back periods for each business loan portfolio. Furthermore, a thorough analysis of charge-offs, non-performing asset levels, special attention outstandings and delinquency is performed in order to review portfolio trends and other factors, including specific industry risks and economic conditions, which may have an impact on the reserves and reserve ratios applied to various portfolios. The Company adjusts the calculated historical based ratio as a result of the analysis of environmental factors, principally economic risk and concentration risk. Key economic factors affecting the portfolios are growth in gross domestic product, unemployment rates, housing market trends, commodity prices, inflation and global economic and political issues. Concentration risk is impacted primarily by geographic concentration in Northern Indiana and Southwestern Lower Michigan in the business banking and commercial real estate portfolios and by collateral concentration in the specialty finance portfolios and exposure to foreign markets by geographic risk.

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The reserve for loan and lease losses is maintained at a level believed to be appropriate by the Company to absorb probable losses inherent in the loan and lease portfolio. The determination of the reserve requires significant judgment reflecting the Company’s best estimate of probable loan and lease losses related to specifically identified impaired loans and leases as well as probable losses in the remainder of the various loan and lease portfolios. For purposes of determining the reserve, the Company has segmented loans and leases into classes based on the associated risk within these segments. The Company has determined that eight classes exist within the loan and lease portfolio. The methodology for assessing the appropriateness of the reserve consists of several key elements, which include: specific reserves for impaired loans, formula reserves for each business lending division portfolio including percentage allocations for special attention loans and leases not deemed impaired, and reserves for pooled homogeneous loans and leases. The Company’s evaluation is based upon a continuing review of these portfolios, estimates of customer performance, collateral values and dispositions, and assessments of economic and geopolitical events, all of which are subject to judgment and will change.

The following table shows the changes in the reserve for loan and lease losses, segregated by class, for the three months ended March 31, 2019 and 2018.



(Dollars in thousands)	Commercial and agricultural loans		Auto and light truck		Medium and heavy duty truck		Aircraft		Construction equipment		Commercial real estate			Residential real estate and home equity		Consumer loans		Total
March 31, 2019
Balance, beginning of period	$	17,063	$	14,689	$	4,303	$	33,047	$	10,922	$	15,705		$	3,425	$	1,315	$	100,469
Charge-offs	79		409		—		3,000		195		—			21		250		3,954
Recoveries	34		9		—		185		104		9			3		75		419
Net charge-offs (recoveries)	45		400		—		2,815		91		(9		)

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$46.69	26	$1,200

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	2019-04-18	Earnings, Exhibits
8-K	2019-04-18	Shareholder Vote
8-K	2019-02-14	Regulation FD, Exhibits
8-K	2019-01-24	Earnings, Exhibits
8-K	2019-01-24	Earnings, Exhibits
8-K	2018-10-31	Regulation FD, Exhibits
8-K	2018-08-16	Regulation FD, Exhibits
8-K	2018-05-08	Regulation FD, Exhibits
8-K	2018-04-19	Shareholder Vote, Other Events, Exhibits
8-K	2018-04-03	Officers, Exhibits
8-K	2018-02-07	Regulation FD, Exhibits
8-K	2018-01-29	Other Events, Exhibits
8-K	2018-01-18	Earnings, Exhibits

BBY	Best Buy	19,590
NUE	Nucor	17,740
TECD	Tech Data	4,030
OFC	Corporate Office Properties Trust	3,010
LCII	LCI Industries	2,280
CCNE	CNB Financial	408
BBGI	Beasley Broadcast Group	102
MDSV	Madison Ventures	0
QPAG	Qpagos	0
DTRM	Determine	0

EX-31.1	ex31133119.htm
EX-31.2	ex31233119.htm
EX-32.1	ex32133119.htm
EX-32.2	ex32233119.htm