XML 37 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
Loans and Allowance for Loan Losses (Tables)
 9 Months Ended
Sep. 30, 2018
Receivables [Abstract]  
Loan Classification Categorized by Risk Rating Category
The following table outlines the amount of each loan classification categorized into each risk rating category as of September 30, 2018 and December 31, 2017 (in thousands):

 
Commercial real estate - mortgage
Consumer real estate - mortgage
Construction and land development
Commercial and industrial
Consumer
and other
Total
September 30, 2018
 
 
 
 
 
 
Pass
$
7,058,133

$
2,766,126

$
2,046,299

$
4,866,409

$
366,723

$
17,103,690

Special Mention
30,291

10,534

3,002

31,213

724

75,764

Substandard (1)
96,729

13,234

6,313

90,345

66

206,687

Substandard-nonaccrual
29,966

25,266

3,395

18,280

961

77,868

Doubtful-nonaccrual
—

—

—

—

—

—

Total loans
$
7,215,119

$
2,815,160

$
2,059,009

$
5,006,247

$
368,474

$
17,464,009

December 31, 2017
 
 
 
 
 
 
Pass
$
6,487,368

$
2,503,688

$
1,880,704

$
4,014,656

$
351,359

$
15,237,775

Special Mention
94,134

18,356

8,148

46,898

1,177

168,713

Substandard (1)
72,044

21,053

13,468

62,529

79

169,173

Substandard-nonaccrual
16,064

18,117

5,968

17,258

48

57,455

Doubtful-nonaccrual
—

—

—

—

—

—

Total loans
$
6,669,610

$
2,561,214

$
1,908,288

$
4,141,341

$
352,663

$
15,633,116


(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 $202.5 million at September 30, 2018, compared to $164.0 million at December 31, 2017.
Purchase Credit Impaired Loans
Loans acquired with deteriorated credit quality are recorded pursuant to the provisions of ASC 310-30, and are referred to as purchase credit impaired loans. The following table provides a rollforward of purchase credit impaired loans from December 31, 2017 through September 30, 2018 (in thousands):

 
Gross Carrying Value
Accretable
Yield
Nonaccretable
Yield
Net Carrying
Value
December 31, 2017
$
74,324

$
(132
)
$
(31,537
)
$
42,655

Year-to-date settlements
(21,332
)
21

12,262

(9,049
)
September 30, 2018
$
52,992

$
(111
)
$
(19,275
)
$
33,606
Summary of Recorded Investment, Unpaid Principal Balance and Related Allowance and Average Recorded Investment of Impaired Loans
at September 30, 2018 and December 31, 2017 by loan classification (in thousands):

 
At September 30, 2018
 
At December 31, 2017
 
Recorded investment
Unpaid principal balances
Related allowance
 
Recorded investment
Unpaid principal balances
Related allowance
Impaired loans with an allowance:
 
 
 
 
 
 
Commercial real estate – mortgage
$
10,282

$
10,305

$
461

 
$
1,850

$
1,863

$
95

Consumer real estate – mortgage
15,746

15,808

490

 
8,028

8,079

410

Construction and land development
563

564

15

 
2,522

2,528

66

Commercial and industrial
8,908

8,939

1,265

 
12,521

12,644

1,627

Consumer and other
961

980

147

 
—

—

—

Total
$
36,460

$
36,596

$
2,378

 
$
24,921

$
25,114

$
2,198

 
 
 
 
 
 
 
 
Impaired loans without an allowance:
 

 

 
 

 

 

Commercial real estate – mortgage
$
21,457

$
21,481

$
—

 
$
16,364

$
16,514

$
—

Consumer real estate – mortgage
6,382

6,419

—

 
4,144

4,174

—

Construction and land development
2,884

2,883

—

 
2,645

2,650

—

Commercial and industrial
16,678

16,662

—

 
10,905

10,902

—

Consumer and other
—

—

—

 
—

—

—

Total
$
47,401

$
47,445

$
—

 
$
34,058

$
34,240

$
—

 
 
 
 
 
 
 
 
Total impaired loans
$
83,861

$
84,041

$
2,378

 
$
58,979

$
59,354

$
2,198




The following table details the average recorded investment and the amount of interest income recognized on a cash basis for the three and nine months ended September 30, 2018 and 2017, respectively, of impaired loans by loan classification (in thousands):
 
For the three months ended
September 30,
 
For the nine months ended
September 30,
 
2018
 
2017
 
2018
 
2017
 
Average recorded investment
Interest income recognized
 
Average recorded investment
Interest income recognized
 
Average recorded investment
Interest income recognized
 
Average recorded investment
Interest income recognized
Impaired loans with an allowance:
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate – mortgage
$
13,474

$
—

 
$
264

$
—

 
$
9,297

$
—

 
$
350

$
—

Consumer real estate – mortgage
14,162

—

 
4,593

—

 
11,476

—

 
4,230

—

Construction and land development
1,150

—

 
81

—

 
1,301

—

 
78

—

Commercial and industrial
7,470

—

 
12,235

—

 
9,345

—

 
10,068

—

Consumer and other
912

—

 
362

—

 
651

—

 
532

—

Total
$
37,168

$
—

 
$
17,535

$
—

 
$
32,070

$
—

 
$
15,258

$
—

 
 
 
 
 
 
 
 
 
 
 
 
Impaired loans without an allowance:
 

 

 
 

 

 
 

 

 
 

 

Commercial real estate – mortgage
$
22,029

$
—

 
$
6,981

$
—

 
$
18,702

$
—

 
$
4,638

$
—

Consumer real estate – mortgage
5,699

—

 
7,003

—

 
5,034

—

 
6,122

—

Construction and land development
1,442

—

 
1,324

—

 
1,382

—

 
1,702

65

Commercial and industrial
16,008

—

 
6,673

—

 
16,096

—

 
8,573

—

Consumer and other
—

—

 
—

—

 
—

—

 
—

—

Total
$
45,178

$
—

 
$
21,981

$
—

 
$
41,214

$
—

 
$
21,035

$
65

 
 
 
 
 
 
 
 
 
 
 
 
Total impaired loans
$
82,346

$
—

 
$
39,516

$
—

 
$
73,284

$
—

 
$
36,293

$
65
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 and nine months ended September 30, 2018 and 2017 (dollars in thousands):
 
Three months ended
September 30,
 
Nine months ended
September 30,
2018
Number
of contracts
 
Pre Modification Outstanding Recorded Investment
 
Post Modification Outstanding Recorded Investment, net of related allowance
 
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
1

 
169

 
169

 
2

 
206

 
206

Construction and land development
1

 
348

 
348

 
1

 
348

 
348

Commercial and industrial
—

 
—

 
—

 
—

 
—

 
—

Consumer and other
—

 
—

 
—

 
—

 
—

 
—

 
2

 
$
517

 
$
517

 
3

 
$
554

 
$
554

 
 
 
 
 
 
 
 
 
 
 
 
2017
 

 
 

 
 

 
 

 
 

 
 

Commercial real estate – mortgage
—

 
$
—

 
$
—

 
—

 
$
—

 
$
—

Consumer real estate – mortgage
—

 
—

 
—

 
1

 
7

 
5

Construction and land development
—

 
—

 
—

 
—

 
—

 
—

Commercial and industrial
1

 
501

 
145

 
3

 
2,472

 
1,773

Consumer and other
—

 
—

 
—

 
—

 
—

 
—

 
1

 
$
501

 
$
145

 
4

 
$
2,479

 
$
1,778
Summary of Loan Portfolio Credit Risk Exposure
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 September 30, 2018 with the comparative exposures for December 31, 2017 (in thousands):

 
September 30, 2018
 
 
 
Outstanding Principal Balances
 
Unfunded Commitments
 
Total exposure
 
Total Exposure at December 31,
2017
Lessors of nonresidential buildings
$
3,146,798

 
$
692,316

 
$
3,839,114

 
$
3,483,597

Lessors of residential buildings
983,084

 
269,344

 
1,252,428

 
1,151,676

Hotels (except Casino Hotels) and Motels
760,355

 
157,315

 
917,670

 
836,320

New Housing For-Sale Builders
459,501

 
567,914

 
1,027,415

 
780,137
Past Due Balances by Loan Classification
The table below presents past due balances by loan classification and segment at September 30, 2018 and December 31, 2017, allocated between accruing and nonaccrual status (in thousands):

 
Accruing
 
Nonaccruing
 
September 30, 2018
30-89 days past due and accruing
90 days or more past due and accruing
Total past due and accruing
Current and accruing
Purchase credit impaired
 
Nonaccrual (1)
Nonaccruing purchase credit impaired
Total loans
Commercial real estate:
 
 
 
 
 
 
 
 
 
Owner-occupied
$
7,756

$
—

$
7,756

$
2,656,228

$
2,769

 
$
19,738

$
1,754

$
2,688,245

All other
2,633

—

2,633

4,504,385

11,382

 
5,591

2,883

4,526,874

Consumer real estate – mortgage
13,358

—

13,358

2,772,801

3,735

 
19,165

6,101

2,815,160

Construction and land development
3,368

—

3,368

2,049,468

2,778

 
2,024

1,371

2,059,009

Commercial and industrial
10,741

1,128

11,869

4,975,290

808

 
18,256

24

5,006,247

Consumer and other
4,361

645

5,006

362,507

—

 
961

—

368,474

Total
$
42,217

$
1,773

$
43,990

$
17,320,679

$
21,472

 
$
65,735

$
12,133

$
17,464,009

 
Accruing
 
Nonaccruing
 
December 31, 2017
30-89 days past due and accruing
90 days or more past due and accruing
Total past due and accruing
Current and accruing
Purchase credit impaired
 
Nonaccrual (1)
Nonaccruing purchase credit impaired
Total loans
Commercial real estate:
 
 
 
 
 
 
 
 
 
Owner-occupied
$
6,772

$
104

$
6,876

$
2,435,819

$
4,820

 
$
11,395

$
1,105

$
2,460,015

All other
16,559

—

16,559

4,177,454

12,018

 
704

2,860

4,209,595

Consumer real estate – mortgage
14,835

1,265

16,100

2,521,748

5,249

 
9,320

8,797

2,561,214

Construction and land development
4,136

146

4,282

1,894,560

3,478

 
2,878

3,090

1,908,288

Commercial and industrial
7,406

1,348

8,754

4,114,127

1,154

 
17,222

84

4,141,341

Consumer and other
6,311

1,276

7,587

345,076

—

 
—

—

352,663

Total
$
56,019

$
4,139

$
60,158

$
15,488,784

$
26,719

 
$
41,519

$
15,936

$
15,633,116


(1)
Approximately $54.6 million and $45.8 million of nonaccrual loans as of September 30, 2018 and December 31, 2017, respectively, were performing pursuant to their contractual terms at those dates.
Details of Changes in the Allowance for Loan Losses
The following table details the changes in the allowance for loan losses for the three and nine months ended September 30, 2018 and 2017, 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 September 30, 2018:
 
 
 
 
 
 
 
Balance at June 30, 2018
$
24,848

$
5,853

$
10,984

$
28,338

$
5,172

$
475

$
75,670

Charged-off loans
(1,968
)
(262
)
(24
)
(3,336
)
(1,359
)
—

(6,949
)
Recovery of previously charged-off loans
63

987

70

1,037

382

—

2,539

Provision for loan losses
3,574

149

(48
)
4,085

618

347

8,725

Balance at September 30, 2018
$
26,517

$
6,727

$
10,982

$
30,124

$
4,813

$
822

$
79,985

 
 
 
 
 
 
 
 
Three months ended September 30, 2017:
 

 

 

 

 

 

 

Balance at June 30, 2017
$
16,002

$
7,835

$
5,126

$
24,235

$
7,549

$
1,197

$
61,944

Charged-off loans
(572
)
(395
)
(99
)
(1,625
)
(3,296
)
—

(5,987
)
Recovery of previously charged-off loans
169

565

716

562

270

—

2,282

Provision for loan losses
5,191

(2,702
)
1,780

235

2,396

20

6,920

Balance at September 30, 2017
$
20,790

$
5,303

$
7,523

$
23,407

$
6,919

$
1,217

$
65,159

 
 
 
 
 
 
 
 
Nine months ended September 30, 2018:
 
 
 
 
 
 
 
Balance at December 31, 2017
$
21,188

$
5,031

$
8,962

$
24,863

$
5,874

$
1,322

$
67,240

Charged-off loans
(2,930
)
(1,533
)
(36
)
(7,600
)
(10,217
)
—

(22,316
)
Recovery of previously charged-off loans
1,517

2,190

1,645

2,492

2,159

—

10,003

Provision for loan losses
6,742

1,039

411

10,369

6,997

(500
)
25,058

Balance at September 30, 2018
$
26,517

$
6,727

$
10,982

$
30,124

$
4,813

$
822

$
79,985

 
 
 
 
 
 
 
 
Nine months ended September 30, 2017:
 

 

 

 

 

 

 

Balance at December 31, 2016
$
13,655

$
6,564

$
3,624

$
24,743

$
9,520

$
874

$
58,980

Charged-off loans
(581
)
(663
)
(99
)
(3,278
)
(11,687
)
—

(16,308
)
Recovery of previously charged-off loans
184

1,147

845

1,264

1,663

—

5,103

Provision for loan losses
7,532

(1,745
)
3,153

678

7,423

343

17,384

Balance at September 30, 2017
$
20,790

$
5,303

$
7,523

$
23,407

$
6,919

$
1,217

$
65,159

The following table details the allowance for loan losses and recorded investment in loans by loan classification and by impairment evaluation method as of September 30, 2018 and December 31, 2017, respectively (in thousands):

 
Commercial real estate - mortgage
Consumer
real estate - mortgage
Construction and land development
Commercial and industrial
Consumer
and other
Unallocated
Total
September 30, 2018
 

 

 

 

 

 

 

Allowance for Loan Losses:
 

 

 

 

 

 

 

Collectively evaluated for impairment
$
26,047

$
6,235

$
10,967

$
28,859

$
4,666



$
76,774

Individually evaluated for impairment
461

490

15

1,265

147



2,378

Loans acquired with deteriorated credit quality (1)
9

2

—

—

—



11

Total allowance for loan losses
$
26,517

$
6,727

$
10,982

$
30,124

$
4,813

$
822

$
79,985

 
 
 
 
 
 
 
 
Loans:
 

 

 

 

 

 

 

Collectively evaluated for impairment
$
7,164,591

$
2,783,196

$
2,051,413

$
4,979,829

$
367,513

 

$
17,346,542

Individually evaluated for impairment
31,739

22,128

3,447

25,586

961

 

83,861

Loans acquired with deteriorated credit quality
18,789

9,836

4,149

832

—

 

33,606

Total loans
$
7,215,119

$
2,815,160

$
2,059,009

$
5,006,247

$
368,474

 

$
17,464,009

 
 
 
 
 
 
 
 
December 31, 2017
 

 

 

 

 

 

 

Allowance for Loan Losses:
 

 

 

 

 

 

 

Collectively evaluated for impairment
$
20,753

$
4,460

$
8,879

$
23,181

$
5,874



$
63,147

Individually evaluated for impairment
95

410

66

1,627

—



2,198

Loans acquired with deteriorated credit quality(1)
340

161

17

55

—



573

Total allowance for loan losses
$
21,188

$
5,031

$
8,962

$
24,863

$
5,874

$
1,322

$
67,240

 
 
 
 
 
 
 
 
Loans:
 

 

 

 

 

 

 

Collectively evaluated for impairment
$
6,630,593

$
2,534,996

$
1,896,553

$
4,116,677

$
352,663

 

$
15,531,482

Individually evaluated for impairment
18,214

12,172

5,167

23,426

—

 

58,979

Loans acquired with deteriorated credit quality
20,803

14,046

6,568

1,238

—

 

42,655

Total loans
$
6,669,610

$
2,561,214

$
1,908,288

$
4,141,341

$
352,663

 

$
15,633,116


(1) Loans acquired with deteriorated credit quality are recorded at fair value at the time of acquisition. An allowance for loan losses is recorded resulting from subsequent credit deterioration.