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Loans Held for Investment (Tables)

9 Months Ended

Sep. 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:



	September 30, 2019			December 31, 2018
	(dollars in thousands)
Business loans
Commercial and industrial	$	1,233,938		$	1,364,423
Franchise	894,023			765,416
Commercial owner occupied ⁽¹⁾	1,678,888			1,679,122
SBA	179,965			193,882
Agribusiness	119,633			138,519
Total business loans	4,106,447			4,141,362
Real estate loans
Commercial non-owner occupied	2,053,590			2,003,174
Multi-family	1,611,904			1,535,289
One-to-four family ⁽²⁾	273,182			356,264
Construction	478,961			523,643
Farmland	171,667			150,502
Land	30,717			46,628
Total real estate loans	4,620,021			4,615,500
Consumer loans
Consumer loans	40,548			89,424
Gross loans held for investment ⁽³⁾	8,767,016			8,846,286
Deferred loan origination (fees)/costs and (discounts)/premiums, net	(9,540		)	(9,468		)
Loans held for investment	8,757,476			8,836,818
Allowance for loan losses	(35,000		)	(36,072		)
Loans held for investment, net	$	8,722,476		$	8,800,746

Loans held for sale, at lower of cost or fair value	$	7,092		$	5,719

______________________________

⁽¹⁾ Secured by real estate.

⁽²⁾ Includes second trust deeds.

⁽³⁾ Total gross loans held for investment for September 30, 2019 and December 31, 2018 are net of the unaccreted fair value net purchase discounts of $46.8 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 by the Company’s internal risk grading as of the periods indicated:



	Credit Risk Grades
	Pass		Special Mention		Substandard		Doubtful		Total Gross Loans
September 30, 2019	(dollars in thousands)
Business loans
Commercial and industrial	$	1,219,358	$	4,438	$	10,142	$	—	$	1,233,938
Franchise	880,632		13,375		16		—		894,023
Commercial owner occupied	1,669,152		1,321		8,415		—		1,678,888
SBA	171,393		1,881		6,691		—		179,965
Agribusiness	107,551		—		12,082		—		119,633
Real estate loans
Commercial non-owner occupied	2,052,813		—		777		—		2,053,590
Multi-family	1,611,686		—		218		—		1,611,904
One-to-four family	272,555		—		627		—		273,182
Construction	478,961		—		—		—		478,961
Farmland	171,667		—		—		—		171,667
Land	30,585		—		132		—		30,717
Consumer loans
Consumer loans	40,494		—		54		—		40,548
Totals	$	8,706,847	$	21,015	$	39,154	$	—	$	8,767,016



	Credit Risk Grades
	Pass		Special Mention		Substandard		Doubtful		Total Gross Loans
December 31, 2018	(dollars in thousands)
Business loans
Commercial and industrial	$	1,340,284	$	12,005	$	12,134	$	—	$	1,364,423
Franchise	760,795		4,431		190		—		765,416
Commercial owner occupied	1,660,994		1,580		16,548		—		1,679,122
SBA	184,687		2,289		6,906		—		193,882
Agribusiness	125,355		—		13,164		—		138,519
Real estate loans
Commercial non-owner occupied	1,996,756		731		5,687		—		2,003,174
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	$	8,758,874	$	25,956	$	61,456	$	—	$	8,846,286

Schedule of delinquencies in the Company's loan portfolio

The following tables set forth delinquencies in the Company’s loan portfolio at the dates indicated:



			Days Past Due
	Current		30-59		60-89		90+		Total Gross Loans		Non-accruing
September 30, 2019	(dollars in thousands)
Business loans
Commercial and industrial	$	1,229,223	$	101	$	3,105	$	1,509	$	1,233,938	$	2,950
Franchise	893,999		8		—		16		894,023		16
Commercial owner occupied	1,677,101		382		—		1,405		1,678,888		1,405
SBA	176,541		731		107		2,586		179,965		2,586
Agribusiness	119,633		—		—		—		119,633		—
Real estate loans
Commercial non-owner occupied	2,052,813		—		—		777		2,053,590		777
Multi-family	1,611,904		—		—		—		1,611,904		—
One-to-four family	272,679		503		—		—		273,182		371
Construction	478,961		—		—		—		478,961		—
Farmland	171,667		—		—		—		171,667		—
Land	30,717		—		—		—		30,717		—
Consumer loans
Consumer loans	40,548		—		—		—		40,548		—
Totals	$	8,755,786	$	1,725	$	3,212	$	6,293	$	8,767,016	$	8,105



			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	$	1,361,979	$	309	$	1,204	$	931	$	1,364,423	$	931
Franchise	759,546		5,680		—		190		765,416		190
Commercial owner occupied	1,677,967		343		—		812		1,679,122		599
SBA	190,732		524		—		2,626		193,882		2,739
Agribusiness	138,519		—		—		—		138,519		—
Real estate loans
Commercial non-owner occupied	2,003,174		—		—		—		2,003,174		—
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	$	8,833,433	$	7,046	$	1,242	$	4,565	$	8,846,286	$	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)
September 30, 2019
Business loans
Commercial and industrial	$	3,099	$	2,950	$	—	$	2,950	$	—
Franchise	697		16		—		16		—
Commercial owner occupied	1,427		1,406		—		1,406		—
SBA	3,320		2,586		—		2,586		—
Agribusiness	6,903		6,903		—		6,903		—
Real estate loans
Commercial non-owner occupied	1,351		777		—		777		—
One-to-four family	413		371		—		371		—
Totals	$	17,210	$	15,009	$	—	$	15,009	$	—



	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
	September 30, 2019				June 30, 2019				September 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	$	3,078	$	—	$	2,614	$	—	$	1,030	$	—
Franchise	679		—		4,047		—		209		—
Commercial owner occupied	845		—		564		—		—		—
SBA	2,488		—		3,139		—		1,914		—
Agribusiness	7,092		104		7,489		109		—		—
Real estate loans
Commercial non-owner occupied	421		—		162		—		1,290		—
Multi-family	—		—		—		—		589		—
One-to-four family	373		—		383		—		1,406		—
Land	320		—		160		—		5		—
Consumer loans
Consumer loans	—		$	—	17		—		13		—
Totals	$	15,296	$	104	$	18,575	$	109	$	6,456	$	—

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




	Impaired Loans
	Nine Months Ended
	September 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	$	2,565	$	—	$	1,161	$	—
Franchise	2,901		—		93		—
Commercial owner occupied	662		—		1,931		—
SBA	2,969		—		1,505		—
Agribusiness	7,360		303		—		—
Real estate loans:
Commercial non-owner occupied	194		—		573		—
Multi-family	—		—		666		—
One-to-four family	383		—		1,258		—
Land	160		—		6		—
Consumer loans:
Consumer loans	25		—		41		—
Totals	$	17,219	$	303	$	7,234	$	—

⁽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:



	September 30, 2019		December 31, 2018
	(dollars in thousands)
Nonaccrual loans	$	8,105	$	4,857
Accruing loans	6,904		7,601
Total impaired loans	$	15,009	$	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:



	September 30, 2019		December 31, 2018
	(dollars in thousands)
Business loans
Commercial and industrial	$	—	$	10
Commercial owner occupied	577		632
SBA	1,154		1,265
Real estate loans
Commercial non-owner occupied	—		275
Total purchased credit impaired	$	1,731	$	2,182

Summary of accretable yield on purchased credit impaired

The following table summarizes the accretable yield on the PCI loans for the periods indicated.



	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
	2019			2019			2018			2019			2018
	(dollars in thousands)
Balance at the beginning of period	$	296		$	332		$	1,473		$	411		$	3,019
Additions	—			—			483			—			483
Accretion	(46		)	(45		)	(162		)	(170		)	(668		)
Payoffs	—			(9		)	(1		)	(9		)	(1,819		)
Sales	—			—			—			$	—		$	—
Reclassification from nonaccretable difference	(18		)	18			195			—			973
Balance at the end of period	$	232		$	296		$	1,988		$	232		$	1,988