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Loans
 3 Months Ended
Mar. 31, 2021
Receivables [Abstract]  
Portfolio Loans LOANS
The following table presents a summary of loans by category:
 
(in thousands)March 31, 2021December 31, 2020
Commercial and industrial$3,096,319 $3,100,299 
Real estate:  
Commercial - investor owned1,669,215 1,589,419 
Commercial - owner occupied1,517,755 1,498,408 
Construction and land development510,501 546,686 
Residential303,047 319,179 
Total real estate loans4,000,518 3,953,692 
Other212,068 187,083 
Loans, before unearned loan fees7,308,905 7,241,074 
Unearned loan fees, net(20,124)(16,139)
Loans, including unearned loan fees$7,288,781 $7,224,935 

PPP loans totaled $754.4 million at March 31, 2021, or $737.7 million net of deferred fees of $16.7 million. The loan balance at March 31, 2021 also includes a net premium on acquired loans of $17.7 million. At March 31, 2021 loans of $2.7 billion were pledged to FHLB and the Federal Reserve Bank.

PPP loans totaled $709.9 million at December 31, 2020, or $698.6 million net of unearned fees of $11.3 million. The loan balance includes a net premium on acquired loans of $16.1 million at December 31, 2020. At December 31, 2020 loans of $2.5 billion were pledged to FHLB and the Federal Reserve Bank.

The Company has elected to present the accrued interest receivable balance separate from amortized cost basis, to exclude accrued interest receivable balances from the tabular disclosures, and not to estimate an ACL on accrued interest receivable as these amounts are timely written off as a credit loss expense.

Accrued interest receivable totaled $30.7 million at March 31, 2021 and was reported in Other Assets on the consolidated balance sheets.

A summary of the activity in the ACL on loans by category for the three months ended March 31, 2021 is as follows:
(in thousands)Commercial and industrialCRE - investor ownedCRE -
owner occupied		Construction and land developmentResidential real estateOtherTotal
Allowance for credit losses on loans:       
Balance at December 31, 2020$58,812 $32,062 $17,012 $21,413 $4,585 $2,787 $136,671 
Provision for credit losses 541 3,381 3,226 (7,091)(152)598 503 
Charge-offs(3,739)(2,372)(28)— (271)(64)(6,474)
Recoveries327 34 9 235 143 79 827 
Balance at March 31, 2021$55,941 $33,105 $20,219 $14,557 $4,305 $3,400 $131,527 

The ACL on sponsor finance loans, which is included in the categories above, represented $19.7 million and $19.0 million, respectively, as of March 31, 2021 and December 31, 2020.
A summary of the activity in the ACL on loans by category for the three months ended March 31, 2020 is as follows:
(in thousands)Commercial and industrialCRE - investor ownedCRE -
owner occupied		Construction and land developmentResidential real estateOtherTotal
Allowance for credit losses on loans:       
Balance at December 31, 2019$27,455 $5,935 $4,873 $2,611 $1,280 $1,134 $43,288 
CECL adoption6,494 10,726 2,598 5,183 3,470 (84)28,387 
PCD loans immediately charged off— (5)(57)(217)(1,401)— (1,680)
Balance at January 1, 2020$33,949 $16,656 $7,414 $7,577 $3,349 $1,050 $69,995 
Provision for credit losses 11,591 3,224 1,994 2,309 2,011 566 21,695 
Charge-offs(63)(2)— (31)(122)(86)(304)
Recoveries504 14 69 40 157 17 801 
Balance at March 31, 2020$45,981 $19,892 $9,477 $9,895 $5,395 $1,547 $92,187 

The CECL methodology incorporates various economic scenarios. The Company utilizes three forecasts in the model: Moody’s baseline, a stronger near-term growth upside and a moderate recession downside forecast. The Company weights these scenarios at 70%, 5%, and 25%, respectively, which added approximately $5.4 million to the ACL over the baseline model. These forecasts incorporate an accommodative monetary policy and the current and anticipated impact of government stimulus. The Company has also recognized the risk posed by loans that have received multiple deferrals of principal and interest payments, loans in the hospitality sector, and loans with other specific identified risks by allocating additional reserves to those segments. Some of the key risks to the forecasts that could result in future provision for credit losses are additional shutdowns and self-quarantines if another significant wave of COVID hits, the vaccination process stalls, small-business bankruptcies occur at higher levels, or unemployment increases.

The following tables present the recorded investment in nonperforming loans by category: 
March 31, 2021
(in thousands)NonaccrualRestructured, accruingLoans over 90 days past due and still accruing interestTotal nonperforming loansNonaccrual loans with no allowance
Commercial and industrial$18,372 $3,243 $893 $22,508 $8,239 
Real estate:   
    Commercial - investor owned7,379 — — 7,379 455 
    Commercial - owner occupied2,589 — — 2,589 2,331 
    Construction and land development— — — — — 
    Residential3,868 77 — 3,945 2,795 
Other17 — 221 238 — 
       Total$32,225 $3,320 $1,114 $36,659 $13,820 
December 31, 2020
(in thousands)NonaccrualRestructured, accruingLoans over 90 days past due and still accruing interestTotal nonperforming loansNonaccrual loans with no allowance
Commercial and industrial$18,158 $3,482 $130 $21,770 $8,316 
Real estate: 
    Commercial - investor owned9,579 — — 9,579 716 
    Commercial - owner occupied2,940 — — 2,940 6,024 
    Residential4,112 77 — 4,189 — 
Other29 — — 29 3,190 
       Total$34,818 $3,559 $130 $38,507 $18,246 

No interest income was recognized on nonaccrual loans during the three months ended March 31, 2021 or 2020.

The following table presents the amortized cost basis of collateral-dependent nonperforming loans by class of loan at March 31, 2021:
Type of Collateral
(in thousands)Commercial Real EstateResidential Real EstateBlanket LienOther
Commercial and industrial$10,737 $— $3,064 $— 
Real estate:
Commercial - investor owned7,155 — — — 
Commercial - owner occupied2,387 — — — 
Residential— 3,891 — — 
Other— — — 215 
Total$20,279 $3,891 $3,064 $215 

There were no loans restructured during the three months ended March 31, 2021. The recorded investment by category for troubled debt restructurings that occurred during the three months ended March 31, 2020 are as follows:
March 31, 2020
(in thousands, except for number of loans)Number of loansPre-Modification Outstanding Recorded BalancePost-Modification Outstanding Recorded Balance
Commercial and industrial1 $3,731 $3,731 
Real estate:
Residential2 155 155 
Total3 $3,886 $3,886 

No troubled debt restructurings subsequently defaulted during the three months ended March 31, 2021 or 2020.

In response to the COVID-19 pandemic, the Company has implemented short-term deferral programs allowing customers to primarily defer payments for up to 90 days. Deferrals under the CARES Act or interagency guidance are not included above as troubled debt restructurings. As of March 31, 2021, $21.1 million loans remain in a deferral status. Interest of $4.2 million has been deferred and will be collected upon final maturity.
The aging of the recorded investment in past due loans by class at March 31, 2021 is shown below.
March 31, 2021
(in thousands)30-89 Days
 Past Due		90 or More
Days
Past Due		Total
Past Due		CurrentTotal
Commercial and industrial$25,976 $17,091 $43,067 $3,036,576 $3,079,643 
Real estate:     
Commercial - investor owned768 6,700 7,468 1,661,747 1,669,215 
Commercial - owner occupied312 3,987 4,299 1,513,456 1,517,755 
Construction and land development400 — 400 510,101 510,501 
Residential2,371 1,090 3,461 299,586 303,047 
Other486 237 723 207,897 208,620 
Total$30,313 $29,105 $59,418 $7,229,363 $7,288,781 
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 at this time, due to strong collateral and/or guarantor support.
•Grade 8 – Substandard credits 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 nonaccrual.
The recorded investment by risk category of the loans by class at March 31, 2021, which is based upon the most recent analysis performed is as follows:
Term Loans by Origination Year
(in thousands)20212020201920182017PriorRevolving Loans Converted to Term LoansRevolving LoansTotal
Commercial and industrial
Pass (1-6)$510,640 $1,044,599 $403,420 $196,752 $121,210 $65,492 $8,432 $515,327 $2,865,872 
Watch (7)20,506 34,164 8,303 15,706 4,378 15,002 191 57,994 156,244 
Classified (8-9)3,731 6,220 9,270 2,823 354 1,761 407 19,277 43,843 
Total Commercial and industrial$534,877 $1,084,983 $420,993 $215,281 $125,942 $82,255 $9,030 $592,598 $3,065,959 
Commercial real estate-investor owned
Pass (1-6)$125,834 $471,216 $351,386 $195,605 $129,903 $252,747 $3,712 $38,880 $1,569,283 
Watch (7)2,782 32,554 13,017 6,588 — 24,282 — — 79,223 
Classified (8-9)— 6,012 5,300 6,651 — 2,746 — — 20,709 
Total Commercial real estate-investor owned$128,616 $509,782 $369,703 $208,844 $129,903 $279,775 $3,712 $38,880 $1,669,215 
Commercial real estate-owner occupied
Pass (1-6)$88,848 $422,455 $253,188 $205,203 $161,983 $258,470 $— $42,003 $1,432,150 
Watch (7)2,111 8,967 5,212 17,006 6,130 9,732 — 1,752 50,910 
Classified (8-9)383 1,794 7,595 5,976 7,726 11,158 — 63 34,695 
Total Commercial real estate-owner occupied$91,342 $433,216 $265,995 $228,185 $175,839 $279,360 $— $43,818 $1,517,755 
Construction real estate
Pass (1-6)$76,142 $180,898 $120,004 $30,559 $7,843 $15,954 $— $24,405 $455,805 
Watch (7)16,333 62 85 20,748 11,287 2,468 — — 50,983 
Classified (8-9)— 55 3,030 499 — 29 — 100 3,713 
Total Construction real estate$92,475 $181,015 $123,119 $51,806 $19,130 $18,451 $— $24,505 $510,501 
Residential real estate
Pass (1-6)$15,166 $56,188 $23,567 $15,421 $14,844 $109,575 $112 $57,997 $292,870 
Watch (7)— 313 801 513 — 1,725 — 379 3,731 
Classified (8-9)220 887 717 77 14 3,543 — 72 5,530 
Total residential real estate$15,386 $57,388 $25,085 $16,011 $14,858 $114,843 $112 $58,448 $302,131 
Other
Pass (1-6)$33,630 $56,052 $21,753 $27,503 $9,290 $25,300 $— $31,640 $205,168 
Watch (7)— — 1 7 — 2,588 — 5 2,601 
Classified (8-9)— — 16 18 1 23 — 1 59 
Total Other$33,630 $56,052 $21,770 $27,528 $9,291 $27,911 $— $31,646 $207,828 
In the table above, loan originations in 2021 and 2020 with a classification of watch or classified primarily represent renewals or modifications initially underwritten and originated in prior years.
For certain loans, primarily credit cards, the Company evaluates credit quality based on the aging status.
The following table presents the recorded investment on loans based on payment activity:
March 31, 2021
(in thousands)PerformingNon PerformingTotal
Commercial and industrial$13,682 $2 $13,684 
Real estate:
Residential916 — 916 
Other771 21 792 
Total$15,369 $23 $15,392