Portfolio Loans |
LOANS
The loan portfolio is comprised of loans originated by the Company and loans that were acquired in connection with the Company’s acquisitions. These loans are accounted for using the guidance in the Accounting Standards Codification (ASC) section 310-30 and 310-20. Loans accounted for using ASC 310-30 are sometimes referred to as purchased credit impaired, or PCI, loans. The table below shows the loan portfolio composition including carrying value by segment of loans accounted for under ASC 310-30 (PCI loans) and loans not accounted for under this guidance, which includes our originated loans.
| | | | | | | | | | March 31, 2017 | | December 31, 2016 | Loans not accounted for as ASC 310-30 | $ | 3,802,681 |
| | $ | 3,118,392 |
| Loans accounted for as ASC 310-30 | 88,383 |
| | 39,769 |
| Total loans | $ | 3,891,064 |
| | $ | 3,158,161 |
|
The following tables refer to loans not accounted for as ASC 310-30 loans.
Below is a summary of loans by category at March 31, 2017 and December 31, 2016: | | | | | | | | | (in thousands) | March 31, 2017 | | December 31, 2016 | Commercial and industrial | $ | 1,773,105 |
| | $ | 1,632,714 |
| Real estate: | | | | Commercial - investor owned | 726,413 |
| | 544,808 |
| Commercial - owner occupied | 480,281 |
| | 350,148 |
| Construction and land development | 288,342 |
| | 194,542 |
| Residential | 356,415 |
| | 240,760 |
| Total real estate loans | 1,851,451 |
| | 1,330,258 |
| Consumer and other | 179,100 |
| | 156,182 |
| Loans, before unearned loan fees | 3,803,656 |
| | 3,119,154 |
| Unearned loan fees, net | (975 | ) | | (762 | ) | Loans, including unearned loan fees | $ | 3,802,681 |
| | $ | 3,118,392 |
|
A summary of the activity in the allowance for loan losses and the recorded investment in loans by class and category based on impairment method through March 31, 2017, and at December 31, 2016, is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | (in thousands) | Commercial and industrial | | CRE - investor owned | | CRE - owner occupied | | Construction and land development | | Residential real estate | | Consumer and other | | Total | Allowance for loan losses: | | | | | | | | | | | | | | Balance at December 31, 2016 | $ | 26,996 |
| | $ | 3,420 |
| | $ | 2,890 |
| | $ | 1,304 |
| | $ | 2,023 |
| | $ | 932 |
| | $ | 37,565 |
| Provision (provision reversal) for loan losses | 1,835 |
| | (105 | ) | | (249 | ) | | (11 | ) | | (3 | ) | | 66 |
| | 1,533 |
| Losses charged off | (133 | ) | | — |
| | — |
| | — |
| | (9 | ) | | (29 | ) | | (171 | ) | Recoveries | 80 |
| | 9 |
| | 89 |
| | 9 |
| | 25 |
| | 9 |
| | 221 |
| Balance at March 31, 2017 | $ | 28,778 |
| | $ | 3,324 |
|
| $ | 2,730 |
|
| $ | 1,302 |
|
| $ | 2,036 |
|
| $ | 978 |
|
| $ | 39,148 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | (in thousands) | Commercial and industrial | | CRE - investor owned | | CRE - owner occupied | | Construction and land development | | Residential real estate | | Consumer and other | | Total | Balance March 31, 2017 | | | | | | | | | | | | | | Allowance for loan losses - Ending balance: | | | | | | | | | | | | | Individually evaluated for impairment | $ | 5,047 |
| | $ | — |
| | $ | — |
| | $ | 140 |
| | $ | — |
| | $ | — |
| | $ | 5,187 |
| Collectively evaluated for impairment | 23,731 |
| | 3,324 |
| | 2,730 |
| | 1,162 |
| | 2,036 |
| | 978 |
| | 33,961 |
| Total | $ | 28,778 |
| | $ | 3,324 |
|
| $ | 2,730 |
|
| $ | 1,302 |
|
| $ | 2,036 |
|
| $ | 978 |
|
| $ | 39,148 |
| Loans - Ending balance: | | | | | | | |
| | | | | | | Individually evaluated for impairment | $ | 12,152 |
| | $ | 281 |
| | $ | 1,591 |
| | $ | 1,575 |
| | $ | 61 |
| | $ | — |
| | $ | 15,660 |
| Collectively evaluated for impairment | 1,760,953 |
| | 726,132 |
| | 478,690 |
| | 286,767 |
| | 356,354 |
| | 178,125 |
| | 3,787,021 |
| Total | $ | 1,773,105 |
| | $ | 726,413 |
|
| $ | 480,281 |
|
| $ | 288,342 |
|
| $ | 356,415 |
|
| $ | 178,125 |
|
| $ | 3,802,681 |
| | | | | | | | | | | | | | | Balance December 31, 2016 | | | | | | | | | | | | | | Allowance for loan losses - Ending balance: | | | | | | | | | | | | | Individually evaluated for impairment | $ | 2,909 |
| | $ | — |
| | $ | — |
| | $ | 155 |
| | $ | — |
| | $ | — |
| | $ | 3,064 |
| Collectively evaluated for impairment | 24,087 |
| | 3,420 |
| | 2,890 |
| | 1,149 |
| | 2,023 |
| | 932 |
| | 34,501 |
| Total | $ | 26,996 |
| | $ | 3,420 |
|
| $ | 2,890 |
|
| $ | 1,304 |
|
| $ | 2,023 |
|
| $ | 932 |
|
| $ | 37,565 |
| Loans - Ending balance: | | | | | | | | | | | | | | Individually evaluated for impairment | $ | 12,523 |
| | $ | 430 |
| | $ | 1,854 |
| | $ | 1,903 |
| | $ | 62 |
| | $ | — |
| | $ | 16,772 |
| Collectively evaluated for impairment | 1,620,191 |
| | 544,378 |
| | 348,294 |
| | 192,639 |
| | 240,698 |
| | 155,420 |
| | 3,101,620 |
| Total | $ | 1,632,714 |
| | $ | 544,808 |
|
| $ | 350,148 |
|
| $ | 194,542 |
|
| $ | 240,760 |
|
| $ | 155,420 |
|
| $ | 3,118,392 |
|
A summary of loans individually evaluated for impairment by category at March 31, 2017 and December 31, 2016, is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2017 | (in thousands) | Unpaid Contractual Principal Balance | | Recorded Investment With No Allowance | | Recorded Investment With Allowance | | Total Recorded Investment | | Related Allowance | | Average Recorded Investment | Commercial and industrial | $ | 11,930 |
| | $ | 40 |
| | $ | 11,963 |
| | $ | 12,003 |
| | $ | 5,047 |
| | $ | 12,017 |
| Real estate: | | | | | | | | | | | | Commercial - investor owned | 281 |
| | 282 |
| | — |
| | 282 |
| | — |
| | 272 |
| Commercial - owner occupied | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Construction and land development | 1,575 |
| | 1,658 |
| | 341 |
| | 1,999 |
| | 140 |
| | 1,813 |
| Residential | 62 |
| | 62 |
| | — |
| | 62 |
| | — |
| | 62 |
| Consumer and other | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Total | $ | 13,848 |
| | $ | 2,042 |
|
| $ | 12,304 |
|
| $ | 14,346 |
|
| $ | 5,187 |
|
| $ | 14,164 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2016 | (in thousands) | Unpaid Contractual Principal Balance | | Recorded Investment With No Allowance | | Recorded Investment With Allowance | | Total Recorded Investment | | Related Allowance | | Average Recorded Investment | Commercial and industrial | $ | 12,341 |
| | $ | 566 |
| | $ | 11,791 |
| | $ | 12,357 |
| | $ | 2,909 |
| | $ | 4,489 |
| Real estate: | | | | | | | | | | | | Commercial - investor owned | 525 |
| | 435 |
| | — |
| | 435 |
| | — |
| | 668 |
| Commercial - owner occupied | 225 |
| | 231 |
| | — |
| | 231 |
| | — |
| | 227 |
| Construction and land development | 1,904 |
| | 1,947 |
| | 359 |
| | 2,306 |
| | 155 |
| | 1,918 |
| Residential | 62 |
| | 62 |
| | — |
| | 62 |
| | — |
| | 64 |
| Consumer and other | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Total | $ | 15,057 |
| | $ | 3,241 |
|
| $ | 12,150 |
|
| $ | 15,391 |
|
| $ | 3,064 |
|
| $ | 7,366 |
|
The following table presents details for past due and impaired loans: | | | | | | | | | | Three months ended March 31, | (in thousands) | 2017 | | 2016 | Total interest income that would have been recognized under original terms | $ | 315 |
| | $ | 148 |
| Total cash received and recognized as interest income on non-accrual loans | 23 |
| | 6 |
| Total interest income recognized on impaired loans | 33 |
| | 6 |
|
There were no loans over 90 days past due and still accruing interest at March 31, 2017 or December 31, 2016.
The recorded investment in impaired loans by category at March 31, 2017 and December 31, 2016, is as follows: | | | | | | | | | | | | | | | | | | March 31, 2017 | (in thousands) | Non-accrual | | Restructured | | Loans over 90 days past due and still accruing interest | | Total | Commercial and industrial | $ | 9,692 |
| | $ | 2,311 |
| | $ | — |
| | $ | 12,003 |
| Real estate: | | | | | | | | Commercial - investor owned | 282 |
| | — |
| | — |
| | 282 |
| Commercial - owner occupied | — |
| | — |
| | — |
| | — |
| Construction and land development | 1,979 |
| | 20 |
| | — |
| | 1,999 |
| Residential | 62 |
| | — |
| | — |
| | 62 |
| Consumer and other | — |
| | — |
| | — |
| | — |
| Total | $ | 12,015 |
| | $ | 2,331 |
|
| $ | — |
|
| $ | 14,346 |
|
| | | | | | | | | | | | | | | | | | December 31, 2016 | (in thousands) | Non-accrual | | Restructured | | Loans over 90 days past due and still accruing interest | | Total | Commercial and industrial | $ | 10,046 |
| | $ | 2,311 |
| | $ | — |
| | $ | 12,357 |
| Real estate: | | | | | | | | Commercial - investor owned | 435 |
| | — |
| | — |
| | 435 |
| Commercial - owner occupied | 231 |
| | — |
| | — |
| | 231 |
| Construction and land development | 2,286 |
| | 20 |
| | — |
| | 2,306 |
| Residential | 62 |
| | — |
| | — |
| | 62 |
| Consumer and other | — |
| | — |
| | — |
| | — |
| Total | $ | 13,060 |
| | $ | 2,331 |
| | $ | — |
| | $ | 15,391 |
|
There were no restructured loans during the three months ended March 31, 2017 and 2016.
As of March 31, 2017, the Company had $0.7 million specific reserves allocated to loans that have been restructured. There were no loans restructured that subsequently defaulted during the three months ended March 31, 2017 or 2016.
The aging of the recorded investment in past due loans by portfolio class and category at March 31, 2017 and December 31, 2016 is shown below.
| | | | | | | | | | | | | | | | | | | | | | March 31, 2017 | (in thousands) | 30-89 Days Past Due | | 90 or More Days Past Due | | Total Past Due | | Current | | Total | Commercial and industrial | $ | 10,624 |
| | $ | — |
| | $ | 10,624 |
| | $ | 1,762,481 |
| | $ | 1,773,105 |
| Real estate: | | | | | | | | | | Commercial - investor owned | 708 |
| | — |
| | 708 |
| | 725,705 |
| | 726,413 |
| Commercial - owner occupied | 529 |
| | — |
| | 529 |
| | 479,752 |
| | 480,281 |
| Construction and land development | — |
| | 1,214 |
| | 1,214 |
| | 287,128 |
| | 288,342 |
| Residential | 285 |
| | — |
| | 285 |
| | 356,130 |
| | 356,415 |
| Consumer and other | 2 |
| | — |
| | 2 |
| | 178,123 |
| | 178,125 |
| Total | $ | 12,148 |
| | $ | 1,214 |
|
| $ | 13,362 |
|
| $ | 3,789,319 |
|
| $ | 3,802,681 |
|
| | | | | | | | | | | | | | | | | | | | | | December 31, 2016 | (in thousands) | 30-89 Days Past Due | | 90 or More Days Past Due | | Total Past Due | | Current | | Total | Commercial and industrial | $ | 334 |
| | $ | 171 |
| | $ | 505 |
| | $ | 1,632,209 |
| | $ | 1,632,714 |
| Real estate: | | | | | | | | | | Commercial - investor owned | — |
| | 175 |
| | 175 |
| | 544,633 |
| | 544,808 |
| Commercial - owner occupied | 212 |
| | 225 |
| | 437 |
| | 349,711 |
| | 350,148 |
| Construction and land development | 355 |
| | 1,528 |
| | 1,883 |
| | 192,659 |
| | 194,542 |
| Residential | 91 |
| | — |
| | 91 |
| | 240,669 |
| | 240,760 |
| Consumer and other | 7 |
| | — |
| | 7 |
| | 155,413 |
| | 155,420 |
| Total | $ | 999 |
| | $ | 2,099 |
|
| $ | 3,098 |
|
| $ | 3,115,294 |
|
| $ | 3,118,392 |
|
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, payment experience, credit documentation, and current economic factors among other factors. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings: | | • | Grades 1, 2, and 3 – Includes loans to borrowers with a continuous record of strong earnings, sound balance sheet condition and capitalization, ample liquidity with solid cash flow, and whose management team has experience and depth within their industry. |
| | • | Grade 4 – Includes loans to borrowers with positive trends in profitability, satisfactory capitalization and balance sheet condition, and sufficient liquidity and cash flow. |
| | • | Grade 5 – Includes loans to borrowers that may display fluctuating trends in sales, profitability, capitalization, liquidity, and cash flow. |
| | • | Grade 6 – Includes loans to borrowers where an adverse change or perceived weakness has occurred, but may be correctable in the near future. Alternatively, this rating category may also include circumstances where the borrower is starting to reverse a negative trend or condition, or has recently been upgraded from a 7, 8, or 9 rating. |
| | • | Grade 7 – Watch credits are borrowers that have experienced financial setback of a nature that is not determined to be severe or influence ‘ongoing concern’ expectations. Although possible, no loss is anticipated, due to strong collateral and/or guarantor support. |
| | • | Grade 8 – Substandard credits will include those borrowers characterized by significant losses and sustained downward trends in balance sheet condition, liquidity, and cash flow. Repayment reliance may have shifted to secondary sources. Collateral exposure may exist and additional reserves may be warranted. |
| | • | Grade 9 – Doubtful credits include borrowers that may show deteriorating trends that are unlikely to be corrected. Collateral values may appear insufficient for full recovery, therefore requiring a partial charge-off, or debt renegotiation with the borrower. The borrower may have declared bankruptcy or bankruptcy is likely in the near term. All doubtful rated credits will be on non-accrual. |
The recorded investment by risk category of the loans by portfolio class and category at March 31, 2017, which is based upon the most recent analysis performed, and December 31, 2016 is as follows:
| | | | | | | | | | | | | | | | | | | | | | March 31, 2017 | (in thousands) | Pass (1-6) | | Watch (7) | | Substandard (8) | | Doubtful (9) | | Total | Commercial and industrial | $ | 1,629,105 |
| | $ | 75,946 |
| | $ | 68,054 |
| | $ | — |
| | $ | 1,773,105 |
| Real estate: | | | | | | | | | | Commercial - investor owned | 706,958 |
| | 15,777 |
| | 3,678 |
| | — |
| | 726,413 |
| Commercial - owner occupied | 440,319 |
| | 35,505 |
| | 4,457 |
| | — |
| | 480,281 |
| Construction and land development | 283,410 |
| | 2,841 |
| | 2,091 |
| | — |
| | 288,342 |
| Residential | 347,118 |
| | 5,051 |
| | 4,246 |
| | — |
| | 356,415 |
| Consumer and other | 176,340 |
| | 375 |
| | 1,410 |
| | — |
| | 178,125 |
| Total | $ | 3,583,250 |
| | $ | 135,495 |
| | $ | 83,936 |
| | $ | — |
| | $ | 3,802,681 |
|
| | | | | | | | | | | | | | | | | | | | | | December 31, 2016 | (in thousands) | Pass (1-6) | | Watch (7) | | Substandard (8) | | Doubtful (9) | | Total | Commercial and industrial | $ | 1,499,114 |
| | $ | 57,416 |
| | $ | 76,184 |
| | $ | — |
| | $ | 1,632,714 |
| Real estate: | | | | | | | | | | Commercial - investor owned | 530,494 |
| | 10,449 |
| | 3,865 |
| | — |
| | 544,808 |
| Commercial - owner occupied | 306,658 |
| | 39,249 |
| | 4,241 |
| | — |
| | 350,148 |
| Construction and land development | 185,505 |
| | 6,575 |
| | 2,462 |
| | — |
| | 194,542 |
| Residential | 233,479 |
| | 2,997 |
| | 4,284 |
| | — |
| | 240,760 |
| Consumer and other | 153,984 |
| | — |
| | 1,436 |
| | — |
| | 155,420 |
| Total | $ | 2,909,234 |
| | $ | 116,686 |
|
| $ | 92,472 |
|
| $ | — |
|
| $ | 3,118,392 |
|
|