Loans and Leases

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

Loans and Leases

LOANS AND LEASES

Our loans are carried at the principal amount outstanding, net of deferred fees and costs, and in the case of acquired and purchased loans, net of purchase discounts and premiums. Deferred fees and costs and purchase discounts and premiums on acquired loans are recognized as an adjustment to interest income over the contractual life of the loans primarily using the effective interest method or taken into income when the related loans are paid off or included in the carrying amount of loans that are sold.

Loans and Leases Held for Investment

The following table summarizes the composition of our loans and leases held for investment as of the dates indicated:

	June 30,		December 31,
	2023		2022
	(In thousands)
Real estate mortgage	$	14,312,273	$	15,762,351
Real estate construction and land (1)	2,491,483		4,221,853
Commercial	5,097,714		8,297,182
Consumer	409,822		444,630
Total gross loans and leases held for investment	22,311,292		28,726,016
Deferred fees, net	(53,082)		(116,887)
Total loans and leases held for investment, net of deferred fees	22,258,210		28,609,129
Allowance for loan and lease losses	(219,234)		(200,732)
Total loans and leases held for investment, net (2)	$	22,038,976	$	28,408,397

____________________

(1)    Includes land and acquisition and development loans of $187.6 million and $153.5 million at June 30, 2023 and December 31, 2022.

(2)    Excludes accrued interest receivable of $103.8 million and $124.3 million at June 30, 2023 and December 31, 2022, respectively, which is recorded in "Other assets" on the condensed consolidated balance sheets.

The following tables present an aging analysis of our loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of the dates indicated:

	June 30, 2023
	30 - 89		90 or More
	Days		Days		Total
	Past Due		Past Due		Past Due		Current		Total
	(In thousands)
Real estate mortgage:
Commercial	$	938	$	23,151	$	24,089	$	3,586,231	$	3,610,320
Multi-family	—		—		—		5,304,544		5,304,544
Other residential	52,358		38,209		90,567		5,282,611		5,373,178
Total real estate mortgage	53,296		61,360		114,656		14,173,386		14,288,042
Real estate construction and land:
Commercial	—		—		—		415,997		415,997
Residential	—		—		—		2,049,526		2,049,526
Total real estate construction and land	—		—		—		2,465,523		2,465,523
Commercial:
Asset-based	—		385		385		2,356,713		2,357,098
Venture capital	1,845		—		1,845		1,721,631		1,723,476
Other commercial	262		390		652		1,013,560		1,014,212
Total commercial	2,107		775		2,882		5,091,904		5,094,786
Consumer	2,025		187		2,212		407,647		409,859
Total	$	57,428	$	62,322	$	119,750	$	22,138,460	$	22,258,210

	December 31, 2022
	30 - 89		90 or More
	Days		Days		Total
	Past Due		Past Due		Past Due		Current		Total
	(In thousands)
Real estate mortgage:
Commercial	$	1,721	$	29,269	$	30,990	$	3,815,841	$	3,846,831
Multi-family	—		—		—		5,607,865		5,607,865
Other residential	101,728		39,875		141,603		6,134,025		6,275,628
Total real estate mortgage	103,449		69,144		172,593		15,557,731		15,730,324
Real estate construction and land:
Commercial	—		—		—		898,592		898,592
Residential	—		—		—		3,253,580		3,253,580
Total real estate construction and land	—		—		—		4,152,172		4,152,172
Commercial:
Asset-based	—		434		434		5,139,775		5,140,209
Venture capital	—		—		—		2,033,302		2,033,302
Other commercial	461		1,195		1,656		1,106,795		1,108,451
Total commercial	461		1,629		2,090		8,279,872		8,281,962
Consumer	1,935		149		2,084		442,587		444,671
Total	$	105,845	$	70,922	$	176,767	$	28,432,362	$	28,609,129

It is our policy to discontinue accruing interest when principal or interest payments are past due 90 days or more (unless the loan is both well secured and in the process of collection) or when, in the opinion of management, there is a reasonable doubt as to the collectability of a loan or lease in the normal course of business. Interest income on nonaccrual loans is recognized only to the extent cash is received and the principal balance of the loan is deemed collectable.

The following table presents our nonaccrual and performing loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of the dates indicated:  

	June 30, 2023						December 31, 2022
	Nonaccrual		Performing		Total		Nonaccrual		Performing		Total
	(In thousands)
Real estate mortgage:
Commercial	$	37,191	$	3,573,129	$	3,610,320	$	42,509	$	3,804,322	$	3,846,831
Multi-family	—		5,304,544		5,304,544		—		5,607,865		5,607,865
Other residential	63,626		5,309,552		5,373,178		55,893		6,219,735		6,275,628
Total real estate mortgage	100,817		14,187,225		14,288,042		98,402		15,631,922		15,730,324
Real estate construction and land:
Commercial	—		415,997		415,997		—		898,592		898,592
Residential	—		2,049,526		2,049,526		—		3,253,580		3,253,580
Total real estate construction and land	—		2,465,523		2,465,523		—		4,152,172		4,152,172
Commercial:
Asset-based	385		2,356,713		2,357,098		865		5,139,344		5,140,209
Venture capital	—		1,723,476		1,723,476		—		2,033,302		2,033,302
Other commercial	3,479		1,010,733		1,014,212		4,345		1,104,106		1,108,451
Total commercial	3,864		5,090,922		5,094,786		5,210		8,276,752		8,281,962
Consumer	205		409,654		409,859		166		444,505		444,671
Total	$	104,886	$	22,153,324	$	22,258,210	$	103,778	$	28,505,351	$	28,609,129

At June 30, 2023, nonaccrual loans and leases included $62.3 million of loans and leases 90 or more days past due, $7.6 million of loans and leases 30 to 89 days past due, and $35.0 million of loans and leases current with respect to contractual payments that were placed on nonaccrual status based on management’s judgment regarding their collectability. At December 31, 2022, nonaccrual loans and leases included $70.9 million of loans and leases 90 or more days past due, $6.8 million of loans and leases 30 to 89 days past due, and $26.0 million of current loans and leases that were placed on nonaccrual status based on management’s judgment regarding their collectability.

As of June 30, 2023, our three largest loan relationships on nonaccrual status had an aggregate carrying value of $24.9 million and represented 24% of total nonaccrual loans and leases.

The following tables present the credit risk rating categories for loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of the dates indicated. Classified loans and leases are those with a credit risk rating of either substandard or doubtful.

	June 30, 2023
	Classified		Special Mention		Pass		Total
	(In thousands)
Real estate mortgage:
Commercial	$	39,768	$	121,084	$	3,449,468	$	3,610,320
Multi-family	87,390		30,743		5,186,411		5,304,544
Other residential	72,549		56,042		5,244,587		5,373,178
Total real estate mortgage	199,707		207,869		13,880,466		14,288,042
Real estate construction and land:
Commercial	—		—		415,997		415,997
Residential	—		2,376		2,047,150		2,049,526
Total real estate construction and land	—		2,376		2,463,147		2,465,523
Commercial:
Asset-based	3,650		13,368		2,340,080		2,357,098
Venture capital	2,614		122,482		1,598,380		1,723,476
Other commercial	5,516		12,417		996,279		1,014,212
Total commercial	11,780		148,267		4,934,739		5,094,786
Consumer	447		7,856		401,556		409,859
Total	$	211,934	$	366,368	$	21,679,908	$	22,258,210

	December 31, 2022
	Classified		Special Mention		Pass		Total
	(In thousands)
Real estate mortgage:
Commercial	$	43,737	$	106,493	$	3,696,601	$	3,846,831
Multi-family	3,611		60,330		5,543,924		5,607,865
Other residential	60,557		58,063		6,157,008		6,275,628
Total real estate mortgage	107,905		224,886		15,397,533		15,730,324
Real estate construction and land:
Commercial	—		91,334		807,258		898,592
Residential	—		45,155		3,208,425		3,253,580
Total real estate construction and land	—		136,489		4,015,683		4,152,172
Commercial:
Asset-based	865		56,836		5,082,508		5,140,209
Venture capital	2,753		127,907		1,902,642		2,033,302
Other commercial	6,473		13,233		1,088,745		1,108,451
Total commercial	10,091		197,976		8,073,895		8,281,962
Consumer	275		6,908		437,488		444,671
Total	$	118,271	$	566,259	$	27,924,599	$	28,609,129

The following table presents our nonaccrual loans and leases by loan portfolio segment and class and by with and without an allowance recorded as of the date indicated and interest income recognized on nonaccrual loans and leases for the periods indicated:                 

			Three Months		Six Months				Three Months		Six Months
			Ended		Ended				Ended		Ended
	June 30,		June 30,		June 30,		June 30,		June 30,		June 30,
	2023		2023		2023		2022		2022		2022
	Nonaccrual		Interest		Interest		Nonaccrual		Interest		Interest
	Recorded		Income		Income		Recorded		Income		Income
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
	(In thousands)
With An Allowance Recorded:
Real estate mortgage:
Commercial	$	57	$	—	$	—	$	66	$	—	$	—
Multi-family	—		—		—		—		—		—
Other residential	396		—		—		7,472		—		—
Real estate construction and land:
Commercial	—		—		—		—		—		—
Residential	—		—		—		1,115		—		—
Commercial:
Asset based	—		—		—		748		—		—
Venture capital	—		—		—		3,120		—		—
Other commercial	738		—		—		1,262		—		—
Consumer	205		—		—		223		—		—
With No Related Allowance Recorded:
Real estate mortgage:
Commercial	$	37,134	$	104	$	107	$	28,463	$	14	$	98
Multi-family	—		—		—		—		—		—
Other residential	63,230		—		—		26,995		—		—
Real estate construction and land:
Commercial	—		—		—		5,229		—		—
Residential	—		—		—		—		—		—
Commercial:
Asset based	385		—		—		441		—		—
Venture capital	—		—		—		—		—		—
Other commercial	2,741		—		—		3,393		7		361
Consumer	—		—		—		—		—		—
Total Loans and Leases With and
Without an Allowance Recorded:
Real estate mortgage	$	100,817	$	104	$	107	$	62,996	$	14	$	98
Real estate construction and land	—		—		—		6,344		—		—
Commercial	3,864		—		—		8,964		7		361
Consumer	205		—		—		223		—		—
Total	$	104,886	$	104	$	107	$	78,527	$	21	$	459

The following tables present our loans held for investment by loan portfolio segment and class, by credit quality indicator (internal risk ratings), and by year of origination (vintage year) as of the dates indicated:

															Revolving
															Converted
Amortized Cost Basis (1)	Term Loans by Origination Year												Revolving		to Term
June 30, 2023	2023		2022		2021		2020		2019		Prior		Loans		Loans		Total
	(In thousands)
Real Estate Mortgage:
Commercial
Internal risk rating:
1-2 High pass	$	—	$	4,822	$	5,168	$	11,574	$	26,399	$	47,435	$	1,305	$	—	$	96,703
3-4 Pass	51,196		535,474		507,068		428,682		235,107		1,491,564		93,911		9,763		3,352,765
5 Special mention	—		2,551		—		27,012		14,062		77,459		—		—		121,084
6-8 Classified	820		—		540		452		2,866		35,090		—		—		39,768
Total	$	52,016	$	542,847	$	512,776	$	467,720	$	278,434	$	1,651,548	$	95,216	$	9,763	$	3,610,320
Current YTD period:
Gross charge-offs	$	—	$	—	$	—	$	—	$	27	$	7,010	$	—	$	—	$	7,037
Real Estate Mortgage:
Multi-family
Internal risk rating:
1-2 High pass	$	—	$	28,248	$	107,068	$	32,176	$	54,875	$	105,088	$	—	$	—	$	327,455
3-4 Pass	9,085		1,861,189		1,052,383		501,131		551,947		826,718		56,503		—		4,858,956
5 Special mention	—		—		—		4,710		5,409		20,624		—		—		30,743
6-8 Classified	—		—		6,000		8,624		22,892		49,874		—		—		87,390
Total	$	9,085	$	1,889,437	$	1,165,451	$	546,641	$	635,123	$	1,002,304	$	56,503	$	—	$	5,304,544
Current YTD period:
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real Estate Mortgage:
Other residential
Internal risk rating:
1-2 High pass	$	—	$	—	$	—	$	—	$	—	$	—	$	1,500	$	—	$	1,500
3-4 Pass	206,352		1,951,356		2,952,687		70,765		—		18,855		42,975		97		5,243,087
5 Special mention	6,803		30,966		17,418		855		—		—		—		—		56,042
6-8 Classified	(1,642)		33,617		33,704		4,324		—		2,405		—		141		72,549
Total	$	211,513	$	2,015,939	$	3,003,809	$	75,944	$	—	$	21,260	$	44,475	$	238	$	5,373,178
Current YTD period:
Gross charge-offs	$	2,586	$	18,680	$	4,771	$	632	$	—	$	4	$	—	$	—	$	26,673

____________________

(1)    Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.

															Revolving
															Converted
Amortized Cost Basis (1)	Term Loans by Origination Year												Revolving		to Term
June 30, 2023	2023		2022		2021		2020		2019		Prior		Loans		Loans		Total
	(In thousands)
Real Estate Construction
and Land: Commercial
Internal risk rating:
1-2 High pass	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
3-4 Pass	15,191		196,205		113,939		58,864		26,048		5,750		—		—		415,997
5 Special mention	—		—		—		—		—		—		—		—		—
6-8 Classified	—		—		—		—		—		—		—		—		—
Total	$	15,191	$	196,205	$	113,939	$	58,864	$	26,048	$	5,750	$	—	$	—	$	415,997
Current YTD period:
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real Estate Construction
and Land: Residential
Internal risk rating:
1-2 High pass	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
3-4 Pass	20,677		779,682		689,815		460,255		—		25,842		70,879		—		2,047,150
5 Special mention	—		—		2,376		—		—		—		—		—		2,376
6-8 Classified	—		—		—		—		—		—		—		—		—
Total	$	20,677	$	779,682	$	692,191	$	460,255	$	—	$	25,842	$	70,879	$	—	$	2,049,526
Current YTD period:
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial: Asset-Based
Internal risk rating:
1-2 High pass	$	5,349	$	263,148	$	227,094	$	58,814	$	159,177	$	301,212	$	81,851	$	—	$	1,096,645
3-4 Pass	86,482		313,380		159,215		24,332		12,379		35,529		609,684		2,434		1,243,435
5 Special mention	—		151		—		—		—		3,265		9,927		25		13,368
6-8 Classified	—		—		—		—		—		385		3,265		—		3,650
Total	$	91,831	$	576,679	$	386,309	$	83,146	$	171,556	$	340,391	$	704,727	$	2,459	$	2,357,098
Current YTD period:
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	150	$	150
Commercial: Venture
Capital
Internal risk rating:
1-2 High pass	$	(171)	$	(10)	$	—	$	2,000	$	—	$	(2)	$	165,678	$	(420)	$	167,075
3-4 Pass	41,981		127,431		130,587		7,309		23,699		1,588		1,025,441		73,269		1,431,305
5 Special mention	—		20,471		48,890		14,478		—		—		38,643		—		122,482
6-8 Classified	—		—		2,614		—		—		—		—		—		2,614
Total	$	41,810	$	147,892	$	182,091	$	23,787	$	23,699	$	1,586	$	1,229,762	$	72,849	$	1,723,476
Current YTD period:
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

____________________

(1)    Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.

															Revolving
															Converted
Amortized Cost Basis (1)	Term Loans by Origination Year												Revolving		to Term
June 30, 2023	2023		2022		2021		2020		2019		Prior		Loans		Loans		Total
	(In thousands)
Commercial: Other
Commercial
Internal risk rating:
1-2 High pass	$	643	$	2,221	$	7,216	$	(45)	$	53	$	(39)	$	20,990	$	—	$	31,039
3-4 Pass	2,635		76,083		272,118		49,240		36,181		122,672		403,272		3,039		965,240
5 Special mention	1,749		—		614		697		586		2,258		6,434		79		12,417
6-8 Classified	—		—		—		—		309		2,276		1,550		1,381		5,516
Total	$	5,027	$	78,304	$	279,948	$	49,892	$	37,129	$	127,167	$	432,246	$	4,499	$	1,014,212
Current YTD period:
Gross charge-offs	$	—	$	6,699	$	—	$	—	$	—	$	—	$	304	$	331	$	7,334
Consumer
Internal risk rating:
1-2 High pass	$	—	$	30	$	26	$	6	$	—	$	—	$	1,107	$	—	$	1,169
3-4 Pass	67		59,240		209,923		19,253		42,953		61,576		7,375		—		400,387
5 Special mention	—		1,739		4,075		167		1,734		59		82		—		7,856
6-8 Classified	—		—		232		33		73		90		1		18		447
Total	$	67	$	61,009	$	214,256	$	19,459	$	44,760	$	61,725	$	8,565	$	18	$	409,859
Current YTD period:
Gross charge-offs	$	—	$	221	$	273	$	76	$	144	$	184	$	1	$	12	$	911
Total Loans and Leases
Internal risk rating:
1-2 High pass	$	5,821	$	298,459	$	346,572	$	104,525	$	240,504	$	453,694	$	272,431	$	(420)	$	1,721,586
3-4 Pass	433,666		5,900,040		6,087,735		1,619,831		928,314		2,590,094		2,310,040		88,602		19,958,322
5 Special mention	8,552		55,878		73,373		47,919		21,791		103,665		55,086		104		366,368
6-8 Classified	(822)		33,617		43,090		13,433		26,140		90,120		4,816		1,540		211,934
Total	$	447,217	$	6,287,994	$	6,550,770	$	1,785,708	$	1,216,749	$	3,237,573	$	2,642,373	$	89,826	$	22,258,210
Current YTD period:
Gross charge-offs	$	2,586	$	25,600	$	5,044	$	708	$	171	$	7,198	$	305	$	493	$	42,105

______________________

(1)    Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.

															Revolving
															Converted
Amortized Cost Basis (1)	Term Loans by Origination Year												Revolving		to Term
December 31, 2022	2022		2021		2020		2019		2018		Prior		Loans		Loans		Total
	(In thousands)
Real Estate Mortgage:
Commercial
Internal risk rating:
1-2 High pass	$	4,957	$	3,791	$	7,215	$	26,132	$	4,690	$	35,343	$	1,290	$	—	$	83,418
3-4 Pass	537,931		501,576		467,792		322,448		539,701		1,148,386		85,284		10,065		3,613,183
5 Special mention	—		—		728		16,394		2,294		87,077		—		—		106,493
6-8 Classified	—		559		464		1,310		27,396		14,008		—		—		43,737
Total	$	542,888	$	505,926	$	476,199	$	366,284	$	574,081	$	1,284,814	$	86,574	$	10,065	$	3,846,831
Current YTD period:
Gross charge-offs	$	—	$	67	$	—	$	79	$	2,258	$	326	$	—	$	—	$	2,730
Real Estate Mortgage:
Multi-family
Internal risk rating:
1-2 High pass	$	—	$	89,251	$	19,945	$	58,275	$	66,219	$	69,805	$	—	$	—	$	303,495
3-4 Pass	1,940,337		1,084,467		523,645		676,169		446,987		511,185		57,639		—		5,240,429
5 Special mention	—		—		4,944		16,974		7,003		31,409		—		—		60,330
6-8 Classified	—		—		—		—		2,750		861		—		—		3,611
Total	$	1,940,337	$	1,173,718	$	548,534	$	751,418	$	522,959	$	613,260	$	57,639	$	—	$	5,607,865
Current YTD period:
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real Estate Mortgage:
Other residential
Internal risk rating:
1-2 High pass	$	—	$	—	$	—	$	—	$	—	$	—	$	1,000	$	—	$	1,000
3-4 Pass	2,805,533		3,200,013		83,580		—		237		20,394		46,155		96		6,156,008
5 Special mention	27,272		25,766		4,916		—		109		—		—		—		58,063
6-8 Classified	19,248		33,218		5,333		—		—		2,555		—		203		60,557
Total	$	2,852,053	$	3,258,997	$	93,829	$	—	$	346	$	22,949	$	47,155	$	299	$	6,275,628
Current YTD period:
Gross charge-offs	$	249	$	1,084	$	912	$	—	$	—	$	81	$	—	$	—	$	2,326

____________________

(1)    Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.

															Revolving
															Converted
Amortized Cost Basis (1)	Term Loans by Origination Year												Revolving		to Term
December 31, 2022	2022		2021		2020		2019		2018		Prior		Loans		Loans		Total
	(In thousands)
Real Estate Construction
and Land: Commercial
Internal risk rating:
1-2 High pass	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
3-4 Pass	299,538		170,397		74,634		237,294		17,763		7,632		—		—		807,258
5 Special mention	—		—		—		—		91,334		—		—		—		91,334
6-8 Classified	—		—		—		—		—		—		—		—		—
Total	$	299,538	$	170,397	$	74,634	$	237,294	$	109,097	$	7,632	$	—	$	—	$	898,592
Current YTD period:
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real Estate Construction
and Land: Residential
Internal risk rating:
1-2 High pass	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
3-4 Pass	605,683		1,302,061		844,041		282,076		125,805		204		48,555		—		3,208,425
5 Special mention	—		—		—		45,155		—		—		—		—		45,155
6-8 Classified	—		—		—		—		—		—		—		—		—
Total	$	605,683	$	1,302,061	$	844,041	$	327,231	$	125,805	$	204	$	48,555	$	—	$	3,253,580
Current YTD period:
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial: Asset-Based
Internal risk rating:
1-2 High pass	$	225,140	$	209,272	$	57,727	$	202,063	$	121,600	$	208,542	$	850,031	$	—	$	1,874,375
3-4 Pass	547,675		188,269		52,711		35,811		33,426		40,714		2,239,785		69,742		3,208,133
5 Special mention	—		—		—		43,409		—		3,505		9,922		—		56,836
6-8 Classified	—		—		—		—		—		434		—		431		865
Total	$	772,815	$	397,541	$	110,438	$	281,283	$	155,026	$	253,195	$	3,099,738	$	70,173	$	5,140,209
Current YTD period:
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	750	$	—	$	750
Commercial: Venture
Capital
Internal risk rating:
1-2 High pass	$	(40)	$	—	$	2,000	$	—	$	134	$	3	$	216,535	$	503	$	219,135
3-4 Pass	92,015		136,296		18,075		3,705		1,833		910		1,365,101		65,572		1,683,507
5 Special mention	13,970		40,924		4,483		23,202		—		—		40,335		4,993		127,907
6-8 Classified	—		2,753		—		—		—		—		—		—		2,753
Total	$	105,945	$	179,973	$	24,558	$	26,907	$	1,967	$	913	$	1,621,971	$	71,068	$	2,033,302
Current YTD period:
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	940	$	—	$	940

____________________

(1)    Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.

															Revolving
															Converted
Amortized Cost Basis (1)	Term Loans by Origination Year												Revolving		to Term
December 31, 2022	2022		2021		2020		2019		2018		Prior		Loans		Loans		Total
	(In thousands)
Commercial: Other
Commercial
Internal risk rating:
1-2 High pass	$	3,591	$	10,880	$	12	$	161	$	3	$	14	$	20,958	$	—	$	35,619
3-4 Pass	84,930		278,208		54,542		41,908		47,771		87,645		454,438		3,684		1,053,126
5 Special mention	7,038		796		184		695		1,526		2,858		47		89		13,233
6-8 Classified	—		806		—		319		(3)		2,653		1,600		1,098		6,473
Total	$	95,559	$	290,690	$	54,738	$	43,083	$	49,297	$	93,170	$	477,043	$	4,871	$	1,108,451
Current YTD period:
Gross charge-offs	$	—	$	209	$	—	$	1	$	—	$	2,537	$	1,906	$	474	$	5,127
Consumer
Internal risk rating:
1-2 High pass	$	34	$	30	$	7	$	—	$	1	$	—	$	854	$	—	$	926
3-4 Pass	62,868		226,084		20,798		48,542		31,693		37,838		8,739		—		436,562
5 Special mention	1,252		3,490		464		1,126		278		238		60		—		6,908
6-8 Classified	47		—		—		59		79		74		—		16		275
Total	$	64,201	$	229,604	$	21,269	$	49,727	$	32,051	$	38,150	$	9,653	$	16	$	444,671
Current YTD period:
Gross charge-offs	$	309	$	529	$	237	$	728	$	—	$	354	$	—	$	7	$	2,164
Total Loans and Leases
Internal risk rating:
1-2 High pass	$	233,682	$	313,224	$	86,906	$	286,631	$	192,647	$	313,707	$	1,090,668	$	503	$	2,517,968
3-4 Pass	6,976,510		7,087,371		2,139,818		1,647,953		1,245,216		1,854,908		4,305,696		149,159		25,406,631
5 Special mention	49,532		70,976		15,719		146,955		102,544		125,087		50,364		5,082		566,259
6-8 Classified	19,295		37,336		5,797		1,688		30,222		20,585		1,600		1,748		118,271
Total	$	7,279,019	$	7,508,907	$	2,248,240	$	2,083,227	$	1,570,629	$	2,314,287	$	5,448,328	$	156,492	$	28,609,129
Current YTD period:
Gross charge-offs	$	558	$	1,889	$	1,149	$	808	$	2,258	$	3,298	$	3,596	$	481	$	14,037

____________________

(1)    Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.

On January 1, 2023, the Company adopted ASU 2022-02, "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures" ("ASU 2022-02"), which eliminated the accounting guidance for troubled debt restructurings while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty. This guidance was applied on a prospective basis. The following table presents our loan modifications made to borrowers experiencing financial difficulty by type of modification for the period indicated with related amortized cost balances as of the date indicated:

	Three Months Ended June 30, 2023
	Loan Modifications
	Balances (Amortized Cost Basis) at
	June 30, 2023
	Term Extension
			% of Loan
	Balance		Portfolio Class
	(Dollars in thousands)
Real estate mortgage:
Other residential	$	8,993	0.2	%
Commercial:
Other commercial	931		0.1	%
Consumer	15		—	%
Total	$	9,939

	Six Months Ended June 30, 2023
	Loan Modifications
	Balances (Amortized Cost Basis) at
	June 30, 2023
									Combination - Term
									Extension and				Combination - Term
									Interest				Extension and				Total Loan
	Term Extension				Payment Delay				Reduction				Payment Delay				Modifications
			% of				% of				% of				% of				% of
			Loan				Loan				Loan				Loan				Loan
			Portfolio				Portfolio				Portfolio				Portfolio				Portfolio
	Balance		Class		Balance		Class		Balance		Class		Balance		Class		Balance		Class
	(Dollars in thousands)
Real estate mortgage:
Other residential	$	18,522	0.3	%	$	—	—	%	$	—	—	%	$	—	—	%	$	18,522	0.3	%
Commercial:
Venture
Venture capital	—		—	%	—		—	%	—		—	%	612		—	%	612		—	%
Other commercial	2,762		0.3	%	44		—	%	—		—	%	—		—	%	2,806		0.3	%
Consumer	15		—	%	—		—	%	3		—	%	—		—	%	18		—	%
Total	$	21,299			$	44			$	3			$	612			$	21,958

The following tables present the financial effect of our loan modifications made to borrowers experiencing financial difficulty by type of modification for the period indicated:

	Three Months Ended June 30, 2023
	Term Extension - Financial Effect
Real estate mortgage:
Other residential	Extended maturity by a weighted average 12 months.
Commercial:
Other commercial	Extended maturity by a weighted average 23 months.
Consumer	Extended maturity by a weighted average 12 months.

	Six Months Ended June 30, 2023
	Term Extension - Financial Effect
Real estate mortgage:
Other residential	Extended maturity by a weighted average 9 months.
Commercial:
Other commercial	Extended maturity by a weighted average 16 months.
Consumer	Extended maturity by a weighted average 12 months.

	Six Months Ended June 30, 2023
	Payment Delay - Financial Effect
Commercial:
Other commercial	Provided six months of reduced payments to borrowers without extending the loan term.

	Six Months Ended June 30, 2023
	Combination - Term Extension and Interest Rate Reduction - Financial Effect
Consumer	Extended maturity by a weighted average 2.0 years and reduced weighted average contractual interest rate from 9.5% to 2.0%.

	Six Months Ended June 30, 2023
	Combination - Term Extension and Payment Delay - Financial Effect
Commercial:
Venture capital	Extended maturity by a weighted average 11 months and provided 11 months of interest only payments to borrowers.

The following table presents the payment status of our loan modifications made during the past six month with related amortized cost balances as of the date indicated:

	Payment Status (Amortized Cost Basis) at
	June 30, 2023
			30-89 Days		90 or More Days
	Current		Past Due		Past Due		Total
	(In thousands)
Real estate mortgage:
Other residential	$	14,384	$	3,859	$	279	$	18,522
Commercial:
Venture capital	612		—		—		612
Other commercial	2,806		—		—		2,806
Consumer	18		—		—		18
Total	$	17,820	$	3,859	$	279	$	21,958

At June 30, 2023, there were other residential real estate loans with an amortized cost of $4.1 million that had been modified in the form of a term extension during the preceding six-month period and subsequently defaulted during the three and six months ended June 30, 2023.

Prior to the adoption of ASU 2022-02, the Company accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a TDR. TDRs were a result of rate reductions, term extensions, fee concessions, transfers to foreclosed assets, discounted loan payoffs, and debt forgiveness, or a combination thereof. The following table presents our troubled debt restructurings of loans held for investment by loan portfolio segment and class for the periods indicated:

	Three Months Ended June 30, 2022					Six Months Ended June 30, 2022
		Pre-		Post-			Pre-		Post-
		Modification		Modification			Modification		Modification
	Number	Outstanding		Outstanding		Number	Outstanding		Outstanding
	of	Recorded		Recorded		of	Recorded		Recorded
Troubled Debt Restructurings	Loans	Investment		Investment		Loans	Investment		Investment
	(In thousands)
Real estate mortgage:
Commercial	—	$	—	$	—	—	$	—	$	—
Other residential	1	208		208		2	512		207
Commercial:
Venture capital	4	3,330		3,330		4	3,330		3,330
Other commercial	6	57		57		19	1,131		1,131
Consumer	1	18		18		1	18		18
Total	12	$	3,613	$	3,613	26	$	4,991	$	4,686

During the three and six months ended June 30, 2022, there was one other residential real estate mortgage loan for $104,000 and two other commercial loans totaling $110,000 restructured in the preceding 12-month period that subsequently defaulted.

Leases Receivable

We provide equipment financing to our customers primarily with operating and direct financing leases. For direct financing leases, lease receivables are recorded on the balance sheet but the leased equipment is not, although we generally retain legal title to the leased equipment until the end of each lease. Direct financing leases are stated at the net amount of minimum lease payments receivable, plus any unguaranteed residual value, less the amount of unearned income and net acquisition discount at the reporting date. Direct lease origination costs are amortized using the effective interest method over the life of the leases. Direct financing leases are subject to our accounting for allowance for loan and lease losses. See Note 8. Leases for information regarding operating leases where we are the lessor.

The following table provides the components of leases receivable income for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
	(In thousands)
Component of leases receivable income:
Interest income on net investments in leases	$	4,118	$	2,491	$	7,867	$	4,879

The following table presents the components of leases receivable as of the dates indicated:

	June 30, 2023		December 31, 2022
	(In thousands)
Net Investment in Direct Financing Leases:
Lease payments receivable	$	266,039	$	232,909
Unguaranteed residual assets	29,491		23,561
Deferred costs and other	3,018		1,815
Aggregate net investment in leases	$	298,548	$	258,285

The following table presents maturities of leases receivable as of the date indicated:

	June 30, 2023
	(In thousands)
Period ending December 31,
2023	$	37,683
2024	82,239
2025	63,987
2026	45,406
2027	32,274
Thereafter	39,664
Total undiscounted cash flows	301,253
Less: Unearned income	(35,214)
Present value of lease payments	$	266,039

Allowance for Loan and Lease Losses

The following tables present a summary of the activity in the allowance for loan and lease losses on loans and leases held for investment by loan portfolio segment for the periods indicated:

	Three Months Ended June 30, 2023
			Real Estate
	Real Estate		Construction
	Mortgage		and Land		Commercial		Consumer		Total
	(In thousands)
Allowance for Loan and Lease Losses:
Balance, beginning of period	$	109,483	$	55,034	$	37,195	$	8,343	$	210,055
Charge-offs	(23,875)		—		(7,347)		(486)		(31,708)
Recoveries	62		—		742		83		887
Net (charge-offs) recoveries	(23,813)		—		(6,605)		(403)		(30,821)
Provision	47,138		(15,355)		6,631		1,586		40,000
Balance, end of period	$	132,808	$	39,679	$	37,221	$	9,526	$	219,234

	Six Months Ended June 30, 2023
			Real Estate
	Real Estate		Construction
	Mortgage		and Land		Commercial		Consumer		Total
	(In thousands)
Allowance for Loan and Lease Losses:
Balance, beginning of period	$	87,309	$	52,320	$	52,849	$	8,254	$	200,732
Charge-offs	(33,710)		—		(7,484)		(911)		(42,105)
Recoveries	262		—		1,717		128		2,107
Net (charge-offs) recoveries	(33,448)		—		(5,767)		(783)		(39,998)
Provision	78,947		(12,641)		(9,861)		2,055		58,500
Balance, end of period	$	132,808	$	39,679	$	37,221	$	9,526	$	219,234
Ending Allowance by
Evaluation Methodology:
Individually evaluated	$	—	$	—	$	—	$	—	$	—
Collectively evaluated	$	132,808	$	39,679	$	37,221	$	9,526	$	219,234
Ending Loans and Leases by
Evaluation Methodology:
Individually evaluated	$	101,968	$	—	$	3,126	$	—	$	105,094
Collectively evaluated	14,186,074		2,465,523		5,091,660		409,859		22,153,116
Ending balance	$	14,288,042	$	2,465,523	$	5,094,786	$	409,859	$	22,258,210

	Three Months Ended June 30, 2022
			Real Estate
	Real Estate		Construction
	Mortgage		and Land		Commercial		Consumer		Total
	(In thousands)
Allowance for Loan and Lease Losses:
Balance, beginning of period	$	87,228	$	43,648	$	57,056	$	9,466	$	197,398
Charge-offs	(1,545)		—		(911)		(343)		(2,799)
Recoveries	1,305		—		2,790		11		4,106
Net (charge-offs) recoveries	(240)		—		1,879		(332)		1,307
Provision	(1,092)		(2,479)		(4,904)		(1,525)		(10,000)
Balance, end of period	$	85,896	$	41,169	$	54,031	$	7,609	$	188,705

	Six Months Ended June 30, 2022
			Real Estate
	Real Estate		Construction
	Mortgage		and Land		Commercial		Consumer		Total
	(In thousands)
Allowance for Loan and Lease Losses:
Balance, beginning of period	$	98,624	$	44,508	$	48,718	$	8,714	$	200,564
Charge-offs	(1,713)		—		(3,744)		(576)		(6,033)
Recoveries	1,468		149		4,525		32		6,174
Net (charge-offs) recoveries	(245)		149		781		(544)		141
Provision	(12,483)		(3,488)		4,532		(561)		(12,000)
Balance, end of period	$	85,896	$	41,169	$	54,031	$	7,609	$	188,705
Ending Allowance by
Evaluation Methodology:
Individually evaluated	$	140	$	—	$	812	$	—	$	952
Collectively evaluated	$	85,756	$	41,169	$	53,219	$	7,609	$	187,753
Ending Loans and Leases by
Evaluation Methodology:
Individually evaluated	$	60,657	$	6,642	$	11,419	$	—	$	78,718
Collectively evaluated	13,993,428		3,479,958		8,465,387		483,646		26,422,419
Ending balance	$	14,054,085	$	3,486,600	$	8,476,806	$	483,646	$	26,501,137

The allowance for loan and lease losses increased by $9.2 million in the second quarter of 2023 to $219.2 million due primarily to a provision for loan and lease losses of $40.0 million driven by the impact of an updated forecast, higher net charge-offs and higher reserves for downgraded loans largely offset by lower reserves needed for lower loan and unfunded commitment balances. For additional information regarding the calculation of the allowance for loan and lease losses using the CECL methodology, including discussion of forecasts used to estimate the allowance, please see Note 1(j). Nature of Operations and Summary of Significant Accounting Policies - Allowance for Credit Losses on Loans and Leases Held for Investment of the Notes to Consolidated Financial Statements contained in "Item 8. Financial Statements and Supplementary Data" of the Form 10-K.

A loan is considered collateral-dependent, and is individually evaluated for reserve purposes, 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 loans held for investment by collateral type as of the following dates:

	June 30, 2023						December 31, 2022
	Real		Business				Real		Business
	Property		Assets		Total		Property		Assets		Total
	(In thousands)
Real estate mortgage	$	103,203	$	—	$	103,203	$	90,485	$	—	$	90,485
Real estate construction and land	—		—		—		1,402		—		1,402
Commercial	—		385		385		—		434		434
Total	$	103,203	$	385	$	103,588	$	91,887	$	434	$	92,321

Allowance for Credit Losses

The allowance for credit losses is the combination of the allowance for loan and lease losses and the reserve for unfunded loan commitments. The reserve for unfunded loan commitments is included within "Accrued interest payable and other liabilities" on the condensed consolidated balance sheets.

The following tables present a summary of the activity in the allowance for loan and lease losses and reserve for unfunded loan commitments for the periods indicated:

	Three Months Ended
	June 30, 2023
	Allowance for		Reserve for		Total
	Loan and		Unfunded Loan		Allowance for
	Lease Losses		Commitments		Credit Losses
	(In thousands)
Balance, beginning of period	$	210,055	$	75,571	$	285,626
Charge-offs	(31,708)		—		(31,708)
Recoveries	887		—		887
Net charge-offs	(30,821)		—		(30,821)
Provision	40,000		(38,000)		2,000
Balance, end of period	$	219,234	$	37,571	$	256,805
	Six Months Ended
	June 30, 2023
	Allowance for		Reserve for		Total
	Loan and		Unfunded Loan		Allowance for
	Lease Losses		Commitments		Credit Losses
	(In thousands)
Balance, beginning of period	$	200,732	$	91,071	$	291,803
Charge-offs	(42,105)		—		(42,105)
Recoveries	2,107		—		2,107
Net charge-offs	(39,998)		—		(39,998)
Provision	58,500		(53,500)		5,000
Balance, end of period	$	219,234	$	37,571	$	256,805

	Three Months Ended
	June 30, 2022
	Allowance for		Reserve for		Total
	Loan and		Unfunded Loan		Allowance for
	Lease Losses		Commitments		Credit Losses
	(In thousands)
Balance, beginning of period	$	197,398	$	75,071	$	272,469
Charge-offs	(2,799)		—		(2,799)
Recoveries	4,106		—		4,106
Net recoveries	1,307		—		1,307
Provision	(10,000)		20,000		10,000
Balance, end of period	$	188,705	$	95,071	$	283,776
	Six Months Ended
	June 30, 2022
	Allowance for		Reserve for		Total
	Loan and		Unfunded Loan		Allowance for
	Lease Losses		Commitments		Credit Losses
	(In thousands)
Balance, beginning of period	$	200,564	$	73,071	$	273,635
Charge-offs	(6,033)		—		(6,033)
Recoveries	6,174		—		6,174
Net recoveries	141		—		141
Provision	(12,000)		22,000		10,000
Balance, end of period	$	188,705	$	95,071	$	283,776