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Loans Held for Investment (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of components of loans held for investment

The following table sets forth the composition of our loan portfolio in dollar amounts at the dates indicated:



	June 30, 2019			December 31, 2018
	(dollars in thousands)
Business loans
Commercial and industrial	$	1,300,083		$	1,364,423
Franchise	860,299			765,416
Commercial owner occupied ⁽¹⁾	1,667,912			1,679,122
SBA	180,363			193,882
Agribusiness	126,857			138,519
Total business loans	4,135,514			4,141,362
Real estate loans
Commercial non-owner occupied	2,121,312			2,003,174
Multi-family	1,520,135			1,535,289
One-to-four family ⁽²⁾	248,392			356,264
Construction	505,401			523,643
Farmland	169,724			150,502
Land	40,748			46,628
Total real estate loans	4,605,712			4,615,500
Consumer loans
Consumer loans	40,680			89,424
Gross loans held for investment ⁽³⁾	8,781,906			8,846,286
Deferred loan origination (fees)/costs and (discounts)/premiums, net	(9,968		)	(9,468		)
Loans held for investment	8,771,938			8,836,818
Allowance for loan losses	(35,026		)	(36,072		)
Loans held for investment, net	$	8,736,912		$	8,800,746

Loans held for sale, at lower of cost or fair value	$	8,529		$	5,719

______________________________

⁽¹⁾ Secured by real estate.

⁽²⁾ Includes second trust deeds.

⁽³⁾ Total gross loans held for investment for June 30, 2019 and December 31, 2018 are net of the unaccreted fair value net purchase discounts of $52.0 million and $61.0 million, respectively.

Summary of loan portfolio by the Company's internal risk grading system

The following tables stratify the loan portfolio, including loans held for sale, by the Company’s internal risk grading as of the periods indicated:



	Credit Risk Grades
	Pass		Special Mention		Substandard		Doubtful		Total Gross Loans
June 30, 2019	(dollars in thousands)
Business loans
Commercial and industrial	$	1,287,607	$	5,150	$	7,326	$	—	$	1,300,083
Franchise	845,659		13,630		1,010		—		860,299
Commercial owner occupied	1,659,772		953		7,187		—		1,667,912
SBA	179,488		1,131		6,911		—		187,530
Agribusiness	112,796		765		13,296		—		126,857
Real estate loans
Commercial non-owner occupied	2,122,431		—		243		—		2,122,674
Multi-family	1,515,897		4,019		219		—		1,520,135
One-to-four family	247,539		—		853		—		248,392
Construction	505,401		—		—		—		505,401
Farmland	163,687		5,923		114		—		169,724
Land	40,110		—		638		—		40,748
Consumer loans
Consumer loans	40,623		—		57		—		40,680
Totals	$	8,721,010	$	31,571	$	37,854	$	—	$	8,790,435



	Credit Risk Grades
	Pass		Special Mention		Substandard		Doubtful		Total Gross Loans
December 31, 2018	(dollars in thousands)
Business loans
Commercial and industrial	$	1,340,322	$	12,005	$	12,134	$	—	$	1,364,461
Franchise	760,795		4,431		190		—		765,416
Commercial owner occupied	1,660,994		1,580		16,548		—		1,679,122
SBA	189,006		2,289		6,906		—		198,201
Agribusiness	125,355		—		13,164		—		138,519
Real estate loans
Commercial non-owner occupied	1,998,118		731		5,687		—		2,004,536
Multi-family	1,530,567		4,060		662		—		1,535,289
One-to-four family	350,083		728		5,453		—		356,264
Construction	523,643		—		—		—		523,643
Farmland	150,381		—		121		—		150,502
Land	46,008		132		488		—		46,628
Consumer loans
Consumer loans	89,321		—		103		—		89,424
Totals	$	8,764,593	$	25,956	$	61,456	$	—	$	8,852,005

Schedule of delinquencies in the Company's loan portfolio

The following tables set forth delinquencies in the Company’s loan portfolio, including loans held for sale, at the dates indicated:



			Days Past Due
	Current		30-59		60-89		90+		Total Gross Loans		Non-accruing
June 30, 2019	(dollars in thousands)
Business loans
Commercial and industrial	$	1,293,042	$	1,841	$	416	$	4,784	$	1,300,083	$	2,935
Franchise	859,289		—		313		697		860,299		697
Commercial owner occupied	1,666,135		1,054		—		723		1,667,912		564
SBA	184,613		511		72		2,334		187,530		2,338
Agribusiness	126,857		—		—		—		126,857		—
Real estate loans
Commercial non-owner occupied	2,122,431		—		—		243		2,122,674		243
Multi-family	1,520,135		—		—		—		1,520,135		—
One-to-four family	248,392		—		—		—		248,392		380
Construction	505,401		—		—		—		505,401		—
Farmland	169,724		—		—		—		169,724		—
Land	40,268		—		—		480		40,748		480
Consumer loans
Consumer loans	40,670		10		—		—		40,680		—
Totals	$	8,776,957	$	3,416	$	801	$	9,261	$	8,790,435	$	7,637



			Days Past Due
	Current		30-59		60-89		90+		Total Gross Loans		Non-accruing
December 31, 2018	(dollars in thousands)
Business loans
Commercial and industrial	$	1,362,017	$	309	$	1,204	$	931	$	1,364,461	$	931
Franchise	759,546		5,680		—		190		765,416		190
Commercial owner occupied	1,677,967		343		—		812		1,679,122		599
SBA	195,051		524		—		2,626		198,201		2,739
Agribusiness	138,519		—		—		—		138,519		—
Real estate loans
Commercial non-owner occupied	2,004,536		—		—		—		2,004,536		—
Multi-family	1,535,275		14		—		—		1,535,289		—
One-to-four family	356,219		30		9		6		356,264		398
Construction	523,643		—		—		—		523,643		—
Farmland	150,502		—		—		—		150,502		—
Land	46,628		—		—		—		46,628		—
Consumer loans
Consumer loans	89,249		146		29		—		89,424		—
Totals	$	8,839,152	$	7,046	$	1,242	$	4,565	$	8,852,005	$	4,857

Summary of Company's investment in impaired loans

The following tables provide a summary of the Company’s investment in impaired loans as of the period indicated:



	Impaired Loans
	Unpaid Principal Balance		Recorded Investment		With Specific Allowance		Without Specific Allowance		Specific Allowance for Impaired Loans
	(dollars in thousands)
June 30, 2019
Business loans
Commercial and industrial	$	3,417	$	2,935	$	—	$	2,935	$	—
Franchise	697		697		—		697		—
Commercial owner occupied	564		564		—		564		—
SBA	9,059		2,338		—		2,338		—
Agribusiness	7,466		7,466		—		7,466		—
Real estate loans
Commercial non-owner occupied	3,654		243		—		243		—
One-to-four family	413		380		—		380		—
Land	480		480		—		480		—
Totals	$	25,750	$	15,103	$	—	$	15,103	$	—



	Impaired Loans
	Unpaid Principal Balance		Recorded Investment		With Specific Allowance		Without Specific Allowance		Specific Allowance for Impaired Loans
	(dollars in thousands)
December 31, 2018
Business loans
Commercial and industrial	$	1,071	$	1,023	$	550	$	473	$	118
Franchise	190		189		—		189		—
Commercial owner occupied	628		599		—		599		—
SBA	7,598		2,739		488		2,251		466
Agribusiness	7,500		7,500		—		7,500		—
Real estate loans
One-to-four family	453		408		—		408		—
Totals	$	17,440	$	12,458	$	1,038	$	11,420	$	584

The following table presents information on impaired loans and leases, disaggregated by class, for the periods indicated:



	Impaired Loans
	Three Months Ended
	June 30, 2019				March 31, 2019				June 30, 2018
	Average Recorded Investment		Interest Income Recognized ⁽¹⁾		Average Recorded Investment		Interest Income Recognized ⁽¹⁾		Average Recorded Investment		Interest Income Recognized ⁽¹⁾
	(dollars in thousands)
Business loans
Commercial and industrial	$	2,614	$	—	$	2,003	$	—	$	1,272	$	—
Franchise	4,047		—		3,976		—		70		—
Commercial owner occupied	564		—		576		—		2,317		—
SBA	3,139		—		3,279		—		1,360		—
Agribusiness	7,489		109		7,500		89		—		—
Real estate loans
Commercial non-owner occupied	162		—		—		—		430		—
Multi-family	—		—		—		—		589		—
One-to-four family	383		—		395		—		1,343		—
Land	160		—		—		—		6		—
Consumer loans
Consumer loans	17		$	—	57		—		15		—
Totals	$	18,575	$	109	$	17,786	$	89	$	7,402	$	—

⁽¹⁾ Interest income recognized represents interest on accruing loans.




	Impaired Loans
	Six Months Ended
	June 30,
	2019				2018
	Average Recorded Investment		Interest Income Recognized ⁽¹⁾		Average Recorded Investment		Interest Income Recognized ⁽¹⁾
	(dollars in thousands)
Business loans:
Commercial and industrial	$	2,309	$	—	$	1,226	$	—
Franchise	4,012		—		35		—
Commercial owner occupied	570		—		2,896		—
SBA	3,209		—		1,300		—
Agribusiness	$	7,494	$	199	—		—
Real estate loans:
Commercial non-owner occupied	81		—		215		—
Multi-family	—		—		705		—
One-to-four family	389		—		1,184		—
Land	80		—		7		—
Consumer loans:
Consumer loans	37		—		55		—
Totals	$	18,181	$	199	$	7,623	$	—

⁽¹⁾Interest income recognized represents interest on accruing loans.

Summary of additional detail on components of impaired loans

The following table provides additional detail on the components of impaired loans at the period end indicated:



	June 30, 2019		December 31, 2018
	(dollars in thousands)
Nonaccrual loans	$	7,637	$	4,857
Accruing loans	7,466		7,601
Total impaired loans	$	15,103	$	12,458

Summary of Company's investment in purchased credit impaired loans

The Company has purchased loans that have experienced deterioration of credit quality between origination and acquisition and for which it was probable, at acquisition, that not all contractually required payments would be collected. The carrying amount of those loans is as follows:



	June 30, 2019		December 31, 2018
	(dollars in thousands)
Business loans
Commercial and industrial	$	—	$	10
Commercial owner occupied	578		632
SBA	1,190		1,265
Real estate loans
Commercial non-owner occupied	—		275
Total purchased credit impaired	$	1,768	$	2,182

Summary of accretable yield on purchased credit impaired

The following table summarizes the accretable yield on the purchased credit impaired loans for the periods indicated.



	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,
	2019			2019			2018			2019			2018
	(dollars in thousands)
Balance at the beginning of period	$	332		$	411		$	1,709		$	411		$	3,019
Additions	—			—			—			—			—
Accretion	(45		)	(79		)	(270		)	(124		)	(506		)
Payoffs	(9		)	—			32			(9		)	(1,818		)
Sales	—			—			—			$	—		$	—
Reclassification from nonaccretable difference	18			—			2			18			778
Balance at the end of period	$	296		$	332		$	1,473		$	296		$	1,473