Purchase Credit Impaired (PCI) Loans |
PURCHASE CREDIT IMPAIRED ("PCI") LOANS
Below is a summary of PCI loans by category at December 31, 2014 and 2013: | | | | | | | | | | | | December 31, 2014 | | December 31, 2013 | (in thousands) | Weighted- Average Risk Rating | Recorded Investment PCI Loans | | Weighted- Average Risk Rating | Recorded Investment PCI Loans | Real estate loans: | | | | | | Construction and land development | 6.16 | $ | 7,740 |
| | 6.84 | $ | 14,325 |
| Commercial - Investor Owned | 7.07 | 39,066 |
| | 6.81 | 48,146 |
| Commercial - Owner Occupied | 6.35 | 22,695 |
| | 6.75 | 32,525 |
| Residential real estate | 5.54 | 25,121 |
| | 5.92 | 34,498 |
| Total real estate loans | | 94,622 |
| | | 129,494 |
| Commercial and industrial | 6.57 | 4,012 |
| | 6.87 | 9,271 |
| Consumer and other | 5.39 | 469 |
| | 6.47 | 1,773 |
| Purchase credit impaired loans | | $ | 99,103 |
| | | $ | 140,538 |
|
The aging of the recorded investment in past due PCI loans by portfolio class and category at December 31, 2014 and 2013 is shown below:
| | | | | | | | | | | | | | | | | | | | | | December 31, 2014 | (in thousands) | 30-89 Days Past Due | | 90 or More Days Past Due | | Total Past Due | | Current | | Total | Commercial & Industrial | $ | — |
| | $ | 16 |
| | $ | 16 |
| | $ | 3,996 |
| | $ | 4,012 |
| Real estate: | | | | | | | | | | Commercial - Owner Occupied | — |
| | 2,759 |
| | 2,759 |
| | 19,936 |
| | 22,695 |
| Commercial - Investor Owned | 878 |
| | 6,484 |
| | 7,362 |
| | 31,704 |
| | 39,066 |
| Construction and Land Development | 774 |
| | — |
| | 774 |
| | 6,966 |
| | 7,740 |
| Residential | 2,020 |
| | 1,451 |
| | 3,471 |
| | 21,650 |
| | 25,121 |
| Consumer & Other | — |
| | 12 |
| | 12 |
| | 457 |
| | 469 |
| Total | $ | 3,672 |
| | $ | 10,722 |
| | $ | 14,394 |
| | $ | 84,709 |
| | $ | 99,103 |
|
| | | | | | | | | | | | | | | | | | | | | | December 31, 2013 | (in thousands) | 30-89 Days Past Due | | 90 or More Days Past Due | | Total Past Due | | Current | | Total | Commercial & Industrial | $ | 397 |
| | $ | 573 |
| | $ | 970 |
| | $ | 8,301 |
| | $ | 9,271 |
| Real Estate: | | | | | | | | | | Commercial - Owner Occupied | 255 |
| | 6,595 |
| | 6,850 |
| | 25,675 |
| | 32,525 |
| Commercial - Investor Owned | 5,143 |
| | 3,167 |
| | 8,310 |
| | 39,836 |
| | 48,146 |
| Construction and Land Development | 32 |
| | 4,198 |
| | 4,230 |
| | 10,095 |
| | 14,325 |
| Residential | 639 |
| | 5,276 |
| | 5,915 |
| | 28,583 |
| | 34,498 |
| Consumer & Other | — |
| | — |
| | — |
| | 1,773 |
| | 1,773 |
| Total | $ | 6,466 |
| | $ | 19,809 |
| | $ | 26,275 |
| | $ | 114,263 |
| | $ | 140,538 |
|
The following table is a rollforward of PCI loans, net of the allowance for loan losses, for the twelve months ended December 31, 2014 and 2013.
| | | | | | | | | | | | | | | | | (in thousands) | Contractual Cashflows | | Non-accretable Difference | | Accretable Yield | | Carrying Amount | Balance January 1, 2014 | $ | 266,068 |
| | $ | 87,438 |
| | $ | 53,530 |
| | $ | 125,100 |
| Principal reductions and interest payments | (35,718 | ) | | — |
| | — |
| | (35,718 | ) | Accretion of loan discount | — |
| | — |
| | (15,747 | ) | | 15,747 |
| Changes in contractual and expected cash flows due to remeasurement | (2,170 | ) | | (7,403 | ) | | (3,234 | ) | | 8,467 |
| Reductions due to disposals | (50,035 | ) | | (14,316 | ) | | (5,816 | ) | | (29,903 | ) | Balance December 31, 2014 | $ | 178,145 |
| | $ | 65,719 |
| | $ | 28,733 |
| | $ | 83,693 |
| | | | | | | | | Balance January 1, 2013 | $ | 386,966 |
| | $ | 118,627 |
| | $ | 78,768 |
| | $ | 189,571 |
| Principal reductions and interest payments | (55,736 | ) | | — |
| | — |
| | (55,736 | ) | Accretion of loan discount | — |
| | — |
| | (25,320 | ) | | 25,320 |
| Changes in contractual and expected cash flows due to remeasurement | 20,358 |
| | (2,667 | ) | | 15,538 |
| | 7,487 |
| Reductions due to disposals | (85,520 | ) | | (28,522 | ) | | (15,456 | ) | | (41,542 | ) | Balance December 31, 2013 | $ | 266,068 |
| | $ | 87,438 |
| | $ | 53,530 |
| | $ | 125,100 |
|
The accretable yield is accreted into interest income over the estimated life of the acquired loans using the effective yield method.
A summary of activity in the FDIC loss share receivable for the twelve months ended December 31, 2014 and 2013 is as follows:
| | | | | | | | | (in thousands) | December 31, 2014 | | December 31, 2013 | Balance at beginning of period | $ | 34,319 |
| | $ | 61,475 |
| Adjustments not reflected in income: | | | | Cash received from the FDIC for covered assets | (9,605 | ) | | (10,981 | ) | FDIC reimbursable losses, net | 459 |
| | 1,998 |
| Adjustments reflected in income: | | | | Amortization, net | (6,342 | ) | | (13,931 | ) | Loan impairment | 841 |
| | 3,977 |
| Reductions for payments on covered assets in excess of expected cash flows | (3,806 | ) | | (8,219 | ) | Balance at end of period | $ | 15,866 |
| | $ | 34,319 |
|
Outstanding customer balances on PCI loans were $135.3 million and $201.7 million as of December 31, 2014, and December 31, 2013, respectively.
Due to continued favorable projections in expected cash flows, the Company now anticipates it will be required to pay the FDIC at the end of two of its loss share agreements. Accordingly, a contingent liability of $2.7 million has been recorded as of December 31, 2014 with $1.2 million of expense recorded through Other noninterest expense for the year ended December 31, 2014. See FDIC Loss Share Receivable and Clawback Liability in Note 1 - Summary of Significant Accounting Policies for additional information. |