XML 39 R25.htm IDEA: XBRL DOCUMENT v3.7.0.1
Loans and Allowance for Loan Losses (Tables)
 3 Months Ended
Mar. 31, 2017
Loans and Allowance for Loan Losses [Abstract]  
Summary of Amount of Each Loan Classification, Categorized into Each Risk Rating Class
The following table outlines the amount of each loan classification categorized into each risk rating category as of March 31, 2017 and December 31, 2016 (in thousands):
 
  
Commercial real estate - mortgage
  
Consumer real estate - mortgage
  
Construction and land development
  
Commercial and industrial
  
Consumer
and other
  
Total
 
March 31, 2017
                  
Accruing loans
                  
        Pass
 
$
3,111,795
  
$
1,171,131
  
$
1,000,453
  
$
2,858,856
  
$
266,341
  
$
8,408,576
 
        Special Mention
  
39,448
   
1,620
   
4,800
   
37,387
   
783
   
84,038
 
        Substandard (1)
  
26,081
   
11,867
   
5,762
   
65,946
   
121
   
109,777
 
        Total
  
3,177,324
   
1,184,618
   
1,011,015
   
2,962,189
   
267,245
   
8,602,391
 
Impaired loans
                        
        Nonaccrual loans(2)
                        
                Substandard-nonaccrual
  
4,050
   
8,809
   
4,112
   
7,255
   
822
   
25,048
 
                Doubtful-nonaccrual
  
-
   
-
   
-
   
2
   
-
   
2
 
        Total nonaccrual loans
  
4,050
   
8,809
   
4,112
   
7,257
   
822
   
25,050
 
        Troubled debt restructurings(3)
                        
                Pass
  
210
   
1,349
   
-
   
720
   
39
   
2,318
 
                Special Mention
  
-
   
233
   
-
   
-
   
-
   
233
 
                Substandard
  
-
   
1,366
   
-
   
10,674
   
-
   
12,040
 
         Total troubled debt restructurings
  
210
   
2,948
   
-
   
11,394
   
39
   
14,591
 
Total impaired loans
  
4,260
   
11,757
   
4,112
   
18,651
   
861
   
39,641
 
Total loans
 
$
3,181,584
  
$
1,196,375
  
$
1,015,127
  
$
2,980,840
  
$
268,106
  
$
8,642,032
 

December 31, 2016
                  
Accruing loans
                  
        Pass
 
$
3,137,239
  
$
1,159,003
  
$
897,549
  
$
2,782,000
  
$
264,682
  
$
8,240,473
 
        Special Mention
  
21,449
   
1,620
   
2,716
   
25,641
   
802
   
52,228
 
        Substandard (1)
  
29,674
   
13,833
   
5,788
   
65,215
   
129
   
114,639
 
        Total
  
3,188,362
   
1,174,456
   
906,053
   
2,872,856
   
265,613
   
8,407,340
 
Impaired loans
                        
        Nonaccrual loans(2)
                        
                Substandard-nonaccrual
  
4,921
   
8,073
   
6,613
   
7,492
   
475
   
27,574
 
                Doubtful-nonaccrual
  
-
   
-
   
-
   
3
   
-
   
3
 
        Total nonaccrual loans
  
4,921
   
8,073
   
6,613
   
7,495
   
475
   
27,577
 
        Troubled debt restructurings(3)
                        
                Pass
  
213
   
1,358
   
7
   
713
   
41
   
2,332
 
                Special Mention
  
-
   
236
   
-
   
-
   
-
   
236
 
                Substandard
  
-
   
1,794
   
-
   
10,646
   
-
   
12,440
 
         Total troubled debt restructurings
  
213
   
3,388
   
7
   
11,359
   
41
   
15,008
 
Total impaired loans
  
5,134
   
11,461
   
6,620
   
18,854
   
516
   
42,585
 
Total loans
 
$
3,193,496
  
$
1,185,917
  
$
912,673
  
$
2,891,710
  
$
266,129
  
$
8,449,925
 

(1)
Potential problem loans represent those loans with a well-defined weakness and where information about possible credit problems of borrowers has caused management to have doubts about the borrower's ability to comply with present repayment terms. This definition is believed to be substantially consistent with the standards established by Pinnacle Bank's primary regulators for loans classified as substandard, excluding the impact of nonaccrual loans and troubled debt restructurings. Potential problem loans, which are not included in nonaccrual loans, amounted to approximately $109.8 million at March 31, 2017, compared to $114.6 million at December 31, 2016.
(2)
Included in nonaccrual loans at March 31, 2017 and December 31, 2016 are $7.3 million and $8.8 million, respectively, in purchase credit impaired loans acquired with deteriorated credit quality.
(3)
Troubled debt restructurings are presented as an impaired loan; however, they continue to accrue interest at contractual rates.
Summary of Recorded Investment, Unpaid Principal Balance and Related Allowance and Average Recorded Investment of Impaired Loans
The following table details the recorded investment, unpaid principal balance and related allowance of Pinnacle Financial's nonaccrual loans at March 31, 2017 and December 31, 2016 by loan classification (in thousands):

 
 
At March 31, 2017
  
At December 31, 2016
 
 
 
Recorded investment
  
Unpaid principal balances(1)
  
Related allowance(2)
  
Recorded investment
  
Unpaid principal balances (1)
  
Related allowance(2)
 
Collateral dependent nonaccrual loans:
                  
Commercial real estate – mortgage
 
$
2,283
  
$
2,280
  
$
-
  
$
2,308
  
$
2,312
  
$
-
 
Consumer real estate – mortgage
  
2,513
   
2,544
   
-
   
2,880
   
2,915
   
-
 
Construction and land development
  
1,028
   
1,035
   
-
   
3,128
   
3,135
   
-
 
Commercial and industrial
  
6,252
   
6,266
   
-
   
6,373
   
6,407
   
-
 
Consumer and other
  
-
   
-
   
-
   
-
   
-
   
-
 
Total
 
$
12,076
  
$
12,125
  
$
-
  
$
14,689
  
$
14,769
  
$
-
 
 
                        
Cash flow dependent nonaccrual loans:
                        
Commercial real estate – mortgage
 
$
1,767
  
$
2,465
  
$
63
  
$
2,613
  
$
3,349
  
$
59
 
Consumer real estate – mortgage
  
6,296
   
6,883
   
1,085
   
5,193
   
5,775
   
688
 
Construction and land development
  
3,083
   
3,756
   
19
   
3,485
   
4,154
   
20
 
Commercial and industrial
  
1,006
   
2,379
   
220
   
1,122
   
2,714
   
77
 
Consumer and other
  
822
   
942
   
465
   
475
   
851
   
227
 
Total
 
$
12,974
  
$
16,425
  
$
1,852
  
$
12,888
  
$
16,843
  
$
1,071
 
 
                        
Total nonaccrual loans
 
$
25,050
  
$
28,550
  
$
1,852
  
$
27,577
  
$
31,612
  
$
1,071
 

(1)
Unpaid principal balance presented net of fair value adjustments recorded in conjunction with purchase accounting.
(2)
Collateral dependent loans are typically charged-off to their net realizable value and no specific allowance is carried related to those loans.

The following table details the average recorded investment and the amount of interest income recognized on a cash basis for the three months ended March 31, 2017 and 2016, respectively, on Pinnacle Financial's nonaccrual loans that remain on the balance sheets as of such date (in thousands):

 
 
For the three months ended
March 31,
 
 
 
2017
  
2016
 
 
 
Average recorded investment
  
Interest income recognized
  
Average recorded investment
  
Interest income recognized
 
Collateral dependent nonaccrual loans:
            
Commercial real estate – mortgage
 
$
2,100
  
$
-
  
$
3,854
  
$
-
 
Consumer real estate – mortgage
  
2,216
   
-
   
4,462
   
-
 
Construction and land development
  
2,078
   
49
   
7,320
   
31
 
Commercial and industrial
  
6,312
   
-
   
15,451
   
-
 
Consumer and other
  
-
   
-
   
386
   
-
 
Total
 
$
12,706
  
$
49
  
$
31,473
  
$
31
 
 
                
Cash flow dependent nonaccrual loans:
                
Commercial real estate – mortgage
 
$
2,386
  
$
-
  
$
1,548
  
$
-
 
Consumer real estate – mortgage
  
6,225
   
-
   
5,815
   
-
 
Construction and land development
  
3,284
   
-
   
74
   
-
 
Commercial and industrial
  
1,064
   
-
   
1,128
   
-
 
Consumer and other
  
649
   
-
   
3,702
   
-
 
Total
 
$
13,608
  
$
-
  
$
12,267
  
$
-
 
 
                
Total nonaccrual loans
 
$
26,314
  
$
49
  
$
43,740
  
$
31
 
 
Purchase Credit Impaired Loans
Loans acquired with deteriorated credit quality are recorded pursuant to the provisions of ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, and are referred to as purchase credit impaired loans. The following table provides a rollforward of purchase credit impaired loans from December 31, 2016 through March 31, 2017 (in thousands):

  
Gross Contractual Receivable
  
Accretable
Yield
  
Nonaccretable
Yield
  
Carrying
Value
 
             
December 31, 2016
 
$
12,468
  
$
-
  
$
(3,633
)
 
$
8,835
 
Acquisitions
  
-
   
-
   
-
   
-
 
Year-to-date settlements
  
(1,814
)
  
-
   
252
   
(1,562
)
Additional fundings
  
5
   
-
   
-
   
5
 
March 31, 2017
 
$
10,659
  
$
-
  
$
(3,381
)
 
$
7,278
 

These loans have been deemed to be collateral dependent and as such, no accretable yield has been recorded for these loans. The carrying value is adjusted for additional draws, pursuant to contractual arrangements, offset by loan paydowns. Year-to-date settlements include both loans that were charged-off as well as loans that were paid off, typically as a result of refinancings at other institutions.
 
Amount of Troubled Debt Restructuring Categorized by Loan Classification
The following table outlines the amount of each loan category where troubled debt restructurings were made during the three months ended March 31, 2017 and 2016 (dollars in thousands):

  
Three months ended
March 31,
 
2017
 
Number
of contracts
  
Pre Modification Outstanding Recorded Investment
  
Post Modification Outstanding Recorded Investment, net of related allowance
 
Commercial real estate – mortgage
  
-
  
$
-
  
$
-
 
Consumer real estate – mortgage
  
-
   
-
   
-
 
Construction and land development
  
-
   
-
   
-
 
Commercial and industrial
  
1
   
3,457
   
3,457
 
Consumer and other
  
-
   
-
   
-
 
   
1
  
$
3,457
  
$
3,457
 
             
2016
            
Commercial real estate – mortgage
  
-
  
$
-
  
$
-
 
Consumer real estate – mortgage
  
-
   
-
   
-
 
Construction and land development
  
-
   
-
   
-
 
Commercial and industrial
  
1
   
2,333
   
1,536
 
Consumer and other
  
-
   
-
   
-
 
   
1
  
$
2,333
  
$
1,536
 

During the three months ended March 31, 2017 and 2016, Pinnacle Financial did not have any troubled debt restructurings that subsequently defaulted within twelve months of the restructuring.
Past Due Balances by Loan Classification
The table below presents past due balances by loan classification and segment at March 31, 2017 and December 31, 2016, allocated between accruing and nonaccrual status (in thousands):

March 31, 2017
 
30-89 days past due and accruing
  
90 days or more past due and accruing
  
Total past due and accruing
  
Nonaccrual(1)
  
Current and accruing
  
Total Loans
 
Commercial real estate:
                  
    Owner-occupied
 
$
1,056
  
$
-
  
$
1,056
  
$
3,401
  
$
1,395,055
  
$
1,399,512
 
    All other
  
30
   
-
   
30
   
649
   
1,781,393
   
1,782,072
 
Consumer real estate – mortgage
  
1,917
   
49
   
1,966
   
8,809
   
1,185,600
   
1,196,375
 
Construction and land development
  
1,350
   
-
   
1,350
   
4,112
   
1,009,665
   
1,015,127
 
Commercial and industrial
  
3,514
   
-
   
3,514
   
7,258
   
2,970,068
   
2,980,840
 
Consumer and other
  
5,706
   
1,062
   
6,768
   
821
   
260,517
   
268,106
 
  
$
13,573
  
$
1,111
  
$
14,684
  
$
25,050
  
$
8,602,298
  
$
8,642,032
 

December 31, 2016
                  
Commercial real estate:
                  
    Owner-occupied
 
$
3,505
  
$
-
  
$
3,505
  
$
4,254
  
$
1,347,134
  
$
1,354,893
 
    All other
  
-
   
-
   
-
   
667
   
1,837,936
   
1,838,603
 
Consumer real estate – mortgage
  
3,838
   
53
   
3,891
   
8,073
   
1,173,953
   
1,185,917
 
Construction and land development
  
2,210
   
-
   
2,210
   
6,613
   
903,850
   
912,673
 
Commercial and industrial
  
4,475
   
-
   
4,475
   
7,495
   
2,879,740
   
2,891,710
 
Consumer and other
  
7,168
   
1,081
   
8,249
   
475
   
257,405
   
266,129
 
  
$
21,196
  
$
1,134
  
$
22,330
  
$
27,577
  
$
8,400,018
  
$
8,449,925
 

(1) 
Approximately $15.0 million and $16.7 million of nonaccrual loans as of March 31, 2017 and December 31, 2016, respectively, were performing pursuant to their contractual terms at those dates.
 
Details of Changes in the Allowance for Loan Losses
The following table shows the allowance allocation by loan classification and accrual status at March 31, 2017 and December 31, 2016 (in thousands):

     
Impaired Loans
    
  
Accruing Loans
  
Nonaccrual Loans
  
Troubled Debt Restructurings(1)
  
Total Allowance
for Loan Losses
 
  
March 31, 2017
  
December 31, 2016
  
March 31, 2017
  
December 31, 2016
  
March 31, 2017
  
December 31, 2016
  
March 31, 2017
  
December 31, 2016
 
Commercial real estate –mortgage
 
$
14,105
  
$
13,595
  
$
63
  
$
59
  
$
-
  
$
1
  
$
14,168
  
$
13,655
 
Consumer real estate – mortgage
  
6,132
   
5,874
   
1,085
   
688
   
2
   
2
   
7,219
   
6,564
 
Construction and land development
  
4,422
   
3,604
   
19
   
20
   
-
   
-
   
4,441
   
3,624
 
Commercial and industrial
  
22,650
   
24,648
   
220
   
77
   
42
   
18
   
22,912
   
24,743
 
Consumer and other
  
8,012
   
9,293
   
465
   
227
   
-
   
-
   
8,477
   
9,520
 
Unallocated
  
-
   
-
   
-
   
-
   
-
   
-
   
1,133
   
874
 
  
$
55,321
  
$
57,014
  
$
1,852
  
$
1,071
  
$
44
  
$
21
  
$
58,350
  
$
58,980
 

(1) 
Troubled debt restructurings of $14.6 million and $15.0 million as of both March 31, 2017 and December 31, 2016, respectively, are classified as impaired loans pursuant to U.S. GAAP; however, these loans continue to accrue interest at contractual rates.
The following table details the changes in the allowance for loan losses for the three months ended March 31, 2017 and 2016, respectively, by loan classification (in thousands):

  
Commercial real estate - mortgage
 
Consumer real estate - mortgage
 
Construction and land development
 
Commercial and industrial
 
Consumer and other
 
Unallocated
 
Total
 
Three months ended March 31, 2017:
               
 Balance at December 31, 2016
 
$
13,655
 
$
6,564
 
$
3,624
 
$
24,743
 
$
9,520
 
$
874
 
$
58,980
 
    Charged-off loans
  
-
  
(61
)
 
-
  
(1,158
)
 
(3,943
)
 
-
  
(5,162
)
    Recovery of previously charged-off loans
  
6
  
170
  
33
  
140
  
532
  
-
  
881
 
    Provision for loan losses
  
507
  
546
  
784
  
(813
)
 
2,368
  
259
  
3,651
 
Balance at March 31, 2017
 
$
14,168
 
$
7,219
 
$
4,441
 
$
22,912
 
$
8,477
 
$
1,133
 
$
58,350
 
                       
Three months ended March 31, 2016:
                      
 Balance at December 31, 2015
 
$
15,513
 
$
7,220
 
$
2,903
 
$
23,643
 
$
15,616
 
$
537
 
$
65,432
 
    Charged-off loans
  
-
  
(199
)
 
-
  
(1,624
)
 
(7,404
)
 
-
  
(9,227
)
    Recovery of previously charged-off loans
  
58
  
85
  
25
  
1,433
  
540
  
-
  
2,141
 
    Provision for loan losses
  
(2,020
)
 
63
  
1,014
  
692
  
3,106
  
1,038
  
3,893
 
Balance at March 31, 2016
 
$
13,551
 
$
7,169
 
$
3,942
 
$
24,144
 
$
11,858
 
$
1,575
 
$
62,239
 

The following table details the allowance for loan losses and recorded investment in loans by loan classification and by impairment evaluation method as of March 31, 2017 and December 31, 2016, respectively (in thousands):

 
Commercial real estate - mortgage
Consumer real estate - mortgage
Construction and land development
Commercial and industrial
Consumer and other
Unallocated
Total
 
March 31, 2017
        
Allowance for Loan Losses:
        
Collectively evaluated for impairment
$
14,105
$
6,132
$
4,422
$
22,650
$
8,012
$
1,133
$
56,454
 
Individually evaluated for impairment
 
63
 
1,087
 
19
 
262
 
465
 
-
 
1,896
 
Loans acquired with deteriorated credit quality
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
Total allowance for loan losses
$
14,168
$
7,219
$
4,441
$
22,912
$
8,477
$
1,133
$
58,350
 
                
Loans:
               
Collectively evaluated for impairment
$
3,177,324
$
1,184,618
$
1,011,015
$
2,962,189
$
267,245
  
$
8,602,391
 
Individually evaluated for impairment
 
2,714
 
9,276
 
1,094
 
18,418
 
861
   
32,363
 
Loans acquired with deteriorated credit quality
 
1,546
 
2,481
 
3,018
 
233
 
-
   
7,278
 
Total loans
$
3,181,584
$
1,196,375
$
1,015,127
$
2,980,840
$
268,106
  
$
8,642,032
 
                
December 31, 2016
               
Allowance for Loan Losses:
               
Collectively evaluated for impairment
$
13,595
$
5,874
$
3,604
$
24,648
$
9,293
$
874
$
57,888
 
Individually evaluated for impairment
 
60
 
690
 
20
 
95
 
227
 
-
 
1,092
 
Loans acquired with deteriorated credit quality
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
Total allowance for loan losses
$
13,655
$
6,564
$
3,624
$
24,743
$
9,520
$
874
$
58,980
 
                
Loans:
               
Collectively evaluated for impairment
$
3,188,362
$
1,174,456
$
906,053
$
2,872,856
$
265,613
  
$
8,407,340
 
Individually evaluated for impairment
 
2,750
 
8,941
 
3,212
 
18,331
 
516
   
33,750
 
Loans acquired with deteriorated credit quality
 
2,384
 
2,520
 
3,408
 
523
 
-
   
8,835
 
Total loans
$
3,193,496
$
1,185,917
$
912,673
$
2,891,710
$
266,129
  
$
8,449,925
 
Summary of Loan Portfolio Credit Risk Exposure

To monitor concentration risk, Pinnacle Financial utilizes broadly accepted industry classification systems in order to classify borrowers into various industry classifications.  Pinnacle Financial has a credit exposure (loans outstanding plus unfunded lines of credit) exceeding 25% of Pinnacle Bank's total risk-based capital to borrowers in the following industries at March 31, 2017 with the comparative exposures for December 31, 2016 (in thousands):

 
March 31, 2017
   
 
Outstanding Principal Balances
 
Unfunded Commitments
 
Total exposure
 
Total Exposure at December 31, 2016
 
             
Lessors of nonresidential buildings
 
$
1,302,962
  
$
359,869
  
$
1,662,831
  
$
1,701,853
 
Lessors of residential buildings
  
487,960
   
291,045
   
779,005
   
874,234