Loans Held for Investment and Allowance for Loan Losses |
Loans Held for Investment and Allowance for Credit Losses on Loans Loans held for investment are summarized by portfolio segment as follows: | | | | | | | | | | | | (in thousands) | March 31, 2021 | | December 31, 2020 | Commercial | $ | 8,969,224 | | | $ | 8,861,580 | | Energy | 691,806 | | | 766,217 | | Mortgage finance(1) | 9,009,081 | | | 9,079,409 | | | | | | Real estate | 5,810,590 | | | 5,794,624 | | | | | | | | | | Gross loans held for investment(2) | 24,480,701 | | | 24,501,830 | | Unearned income (net of direct origination costs) | (72,446) | | | (70,970) | | Allowance for credit losses on loans | (242,484) | | | (254,615) | | Total loans held for investment, net(2) | $ | 24,165,771 | | | $ | 24,176,245 | |
(1) Balances at March 31, 2021 and December 31, 2020 are stated net of $1.0 billion and $1.2 billion of participations sold, respectively. (2) Excludes accrued interest receivable of $55.9 million and $56.5 million at March 31, 2021 and December 31, 2020, respectively, that is recorded in accrued interest receivable and other assets on the consolidated balance sheets. The following table summarizes our gross loans held for investment by year of origination and internally assigned credit grades: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (in thousands) | | 2021 | | 2020 | | 2019 | | 2018 | | 2017 | | 2016 and prior | | Revolving lines of credit | | Revolving lines of credit converted to term loans | | Total | March 31, 2021 | | | | | | | | | | | | | | | | | | | Commercial | | | | | | | | | | | | | | | | | | | (1-7) Pass | | $ | 341,043 | | | $ | 3,548,075 | | | $ | 602,736 | | | $ | 462,947 | | | $ | 290,409 | | | $ | 318,287 | | | $ | 2,989,607 | | | $ | 44,992 | | | $ | 8,598,096 | | (8) Special mention | | — | | | 4,120 | | | 87,653 | | | 47,936 | | | 19,139 | | | 7,276 | | | 10,194 | | | 12,734 | | | 189,052 | | (9) Substandard - accruing | | 17,850 | | | 1,903 | | | 27,269 | | | 28,182 | | | 10,464 | | | 26,775 | | | 23,804 | | | 7,635 | | | 143,882 | | (9+) Non-accrual | | — | | | 7,135 | | | 3,254 | | | 1,037 | | | 5,971 | | | 12,912 | | | 7,218 | | | 667 | | | 38,194 | | Total commercial | | $ | 358,893 | | | $ | 3,561,233 | | | $ | 720,912 | | | $ | 540,102 | | | $ | 325,983 | | | $ | 365,250 | | | $ | 3,030,823 | | | $ | 66,028 | | | $ | 8,969,224 | | Energy | | | | | | | | | | | | | | | | | | | (1-7) Pass | | $ | 15,515 | | | $ | — | | | $ | — | | | $ | 4,844 | | | $ | 8,893 | | | $ | 29,279 | | | $ | 515,359 | | | $ | — | | | $ | 573,890 | | (8) Special mention | | — | | | — | | | — | | | — | | | — | | | 10,664 | | | 53,299 | | | — | | | 63,963 | | (9) Substandard - accruing | | — | | | — | | | — | | | — | | | — | | | — | | | 24,585 | | | — | | | 24,585 | | (9+) Non-accrual | | 10,036 | | | — | | | 8,153 | | | — | | | — | | | 11,179 | | | — | | | — | | | 29,368 | | Total energy | | $ | 25,551 | | | $ | — | | | $ | 8,153 | | | $ | 4,844 | | | $ | 8,893 | | | $ | 51,122 | | | $ | 593,243 | | | $ | — | | | $ | 691,806 | | Mortgage finance | | | | | | | | | | | | | | | | | | | (1-7) Pass | | $ | 14,962 | | | $ | 716,845 | | | $ | 951,866 | | | $ | 799,447 | | | $ | 455,911 | | | $ | 6,070,050 | | | $ | — | | | $ | — | | | $ | 9,009,081 | | (8) Special mention | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | (9) Substandard - accruing | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | (9+) Non-accrual | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Total mortgage finance | | $ | 14,962 | | | $ | 716,845 | | | $ | 951,866 | | | $ | 799,447 | | | $ | 455,911 | | | $ | 6,070,050 | | | $ | — | | | $ | — | | | $ | 9,009,081 | | Real estate | | | | | | | | | | | | | | | | | | | CRE | | | | | | | | | | | | | | | | | | | (1-7) Pass | | $ | 60,652 | | | $ | 418,403 | | | $ | 935,071 | | | $ | 862,447 | | | $ | 370,347 | | | $ | 554,723 | | | $ | 50,041 | | | $ | 60,805 | | | $ | 3,312,489 | | (8) Special mention | | — | | | 3,475 | | | 15,071 | | | 34,642 | | | 48,234 | | | 59,183 | | | — | | | — | | | 160,605 | | (9) Substandard - accruing | | — | | | — | | | 318 | | | 47,240 | | | 53,504 | | | 92,750 | | | — | | | 15,390 | | | 209,202 | | (9+) Non-accrual | | — | | | — | | | — | | | 458 | | | — | | | 4,991 | | | — | | | 1,247 | | | 6,696 | | RBF | | | | | | | | | | | | | | | | | | | (1-7) Pass | | 54,499 | | | 164,712 | | | 38,505 | | | 28,451 | | | 1,538 | | | 15,351 | | | 592,624 | | | — | | | 895,680 | | (8) Special mention | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | (9) Substandard - accruing | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | (9+) Non-accrual | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Other | | | | | | | | | | | | | | | | | | | (1-7) Pass | | 26,932 | | | 195,760 | | | 149,874 | | | 108,258 | | | 101,509 | | | 183,679 | | | 17,412 | | | 32,983 | | | 816,407 | | (8) Special mention | | — | | | — | | | 6,650 | | | 48 | | | — | | | 8,686 | | | — | | | 1,018 | | | 16,402 | | (9) Substandard - accruing | | — | | | — | | | — | | | 4,228 | | | 14,354 | | | 16,238 | | | — | | | — | | | 34,820 | | (9+) Non-accrual | | — | | | — | | | — | | | — | | | 908 | | | 8,057 | | | — | | | 14,289 | | | 23,254 | | Secured by 1-4 family | | | | | | | | | | | | | | | | | | | (1-7) Pass | | 19,857 | | | 64,953 | | | 61,951 | | | 40,974 | | | 47,903 | | | 89,788 | | | 4,535 | | | — | | | 329,961 | | (8) Special mention | | — | | | — | | | — | | | — | | | — | | | 1,770 | | | — | | | — | | | 1,770 | | (9) Substandard - accruing | | — | | | — | | | — | | | — | | | 818 | | | 2,268 | | | — | | | — | | | 3,086 | | (9+) Non-accrual | | — | | | — | | | — | | | — | | | — | | | 218 | | | — | | | — | | | 218 | | Total real estate | | $ | 161,940 | | | $ | 847,303 | | | $ | 1,207,440 | | | $ | 1,126,746 | | | $ | 639,115 | | | $ | 1,037,702 | | | $ | 664,612 | | | $ | 125,732 | | | $ | 5,810,590 | | Total loans held for investment | | $ | 561,346 | | | $ | 5,125,381 | | | $ | 2,888,371 | | | $ | 2,471,139 | | | $ | 1,429,902 | | | $ | 7,524,124 | | | $ | 4,288,678 | | | $ | 191,760 | | | $ | 24,480,701 | |
The following table details activity in the allowance for credit losses on loans. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories. | | | | | | | | | | | | | | | | | | | | | | (in thousands) | Commercial | Energy | Mortgage Finance | | Real Estate | | | | Total | Three months ended March 31, 2021 | | | | | | | | | | Allowance for credit losses on loans: | | | | | | | | | | Beginning balance | $ | 73,061 | | $ | 84,064 | | $ | 4,699 | | | $ | 92,791 | | | | | $ | 254,615 | | | | | | | | | | | | Provision for credit losses on loans | (1,001) | | (5,852) | | 211 | | | 929 | | | | | (5,713) | | Charge-offs | 2,451 | | 5,732 | | — | | | — | | | | | 8,183 | | Recoveries | 1,050 | | 715 | | — | | | — | | | | | 1,765 | | Net charge-offs (recoveries) | 1,401 | | 5,017 | | — | | | — | | | | | 6,418 | | Ending balance | $ | 70,659 | | $ | 73,195 | | $ | 4,910 | | | $ | 93,720 | | | | | $ | 242,484 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three months ended March 31, 2020 | | | | | | | | | | Allowance for credit losses on loans: | | | | | | | | | | Beginning balance | $ | 102,254 | | $ | 60,253 | | $ | 2,265 | | | $ | 30,275 | | | | | $ | 195,047 | | Impact of Current Expected Credit Loss ("CECL") adoption | (15,740) | | 24,154 | | 2,031 | | | (1,860) | | | | | 8,585 | | Provision for credit losses on loans | 24,902 | | 66,821 | | 35 | | | 3,271 | | | | | 95,029 | | Charge-offs | 20,653 | | 37,730 | | — | | | — | | | | | 58,383 | | Recoveries | 257 | | 423 | | — | | | — | | | | | 680 | | Net charge-offs (recoveries) | 20,396 | | 37,307 | | — | | | — | | | | | 57,703 | | Ending balance | $ | 91,020 | | $ | 113,921 | | $ | 4,331 | | | $ | 31,686 | | | | | $ | 240,958 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
We recorded a $6.0 million negative provision for credit losses for the first quarter of 2021, compared to a provision of $96.0 million for the first quarter of 2020. The decreased provision for credit losses in the first quarter of 2021 as compared to the first quarter of 2020 resulted primarily from a decrease in charge-offs and improvement in the economic outlook as the economy begins to recover from the impacts of the COVID-19 pandemic. We recorded $6.4 million in net charge-offs during the first quarter of 2021, compared to $57.7 million during the first quarter of 2020. Criticized loans totaled $945.1 million at March 31, 2021, compared to $675.9 million at March 31, 2020. A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table summarizes collateral-dependent gross loans held for investment by collateral type as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | Collateral Type | (in thousands) | | | | Real Property | | | | | | Rolling Stock | | Total | March 31, 2021 | | | | | | | | | | | | | Commercial | | | | $ | — | | | | | | | $ | 774 | | | $ | 774 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Real estate | | | | | | | | | | | | | CRE | | | | 4,619 | | | | | | | — | | | 4,619 | | | | | | | | | | | | | | | Other | | | | 5,984 | | | | | | | — | | | 5,984 | | | | | | | | | | | | | | | Total collateral-dependent loans held for investment | | | | $ | 10,603 | | | | | | | $ | 774 | | | $ | 11,377 | |
The table below provides an age analysis of our loans held for investment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (in thousands) | 30-59 Days Past Due | | 60-89 Days Past Due | | 90 Days or More Past Due(1) | | Total Past Due | | Non-accrual loans as of March 31, 2021 (2) | | Current | | Total | | Non-accrual With No Allowance | March 31, 2021 | | | | | | | | | | | | | | | | Commercial | $ | 15,563 | | | $ | 2,905 | | | $ | 3,885 | | | $ | 22,353 | | | $ | 38,194 | | | $ | 8,908,677 | | | $ | 8,969,224 | | | $ | 15,860 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Energy | — | | | — | | | — | | | — | | | 29,368 | | | 662,438 | | | 691,806 | | | 18,189 | | Mortgage finance loans | — | | | — | | | — | | | — | | | — | | | 9,009,081 | | | 9,009,081 | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Real estate | | | | | | | | | | | | | | | | CRE | 14,939 | | | — | | | 2,238 | | | 17,177 | | | 6,696 | | | 3,665,119 | | | 3,688,992 | | | 1,849 | | RBF | — | | | — | | | — | | | — | | | — | | | 895,680 | | | 895,680 | | | — | | Other | 105 | | | — | | | — | | | 105 | | | 23,254 | | | 867,524 | | | 890,883 | | | 7,864 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Secured by 1-4 family | 55 | | | — | | | 64 | | | 119 | | | 218 | | | 334,698 | | | 335,035 | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total loans held for investment | $ | 30,662 | | | $ | 2,905 | | | $ | 6,187 | | | $ | 39,754 | | | $ | 97,730 | | | $ | 24,343,217 | | | $ | 24,480,701 | | | $ | 43,762 | |
(1)Loans past due 90 days and still accruing includes premium finance loans of $3.1 million. These loans are generally secured by obligations of insurance carriers to refund premiums on canceled insurance policies. The receipt of the refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date. (2)As of March 31, 2021 and December 31, 2020, none of our non-accrual loans were earning interest income on a cash basis. Additionally, no interest income was recognized on non-accrual loans for the three months ended March 31, 2021. Accrued interest of $339,000 was reversed during the three months ended March 31, 2021. As of March 31, 2021 and December 31, 2020, we did not have any loans considered restructured that were not on non-accrual. Of the non-accrual loans at March 31, 2021 and December 31, 2020, $33.7 million and $45.4 million, respectively, met the criteria for restructured. These loans had no unfunded commitments at their respective balance sheet dates. We did not have any loans that were restructured during the three months ended March 31, 2021 or 2020. As of March 31, 2021 and 2020, we did not have any loans that were restructured within the last 12 months that subsequently defaulted.
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