XML 82 R23.htm IDEA: XBRL DOCUMENT

Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2020

Schedule of Accounts, Notes, Loans and Financing Receivable

Loans at March 31, 2020 and December 31, 2019 were as follows:


	March 31, 2020		December 31, 2019
Commercial real estate:
Owner occupied	$	2,650,170	$	2,669,766
Non-owner occupied	5,070,572		5,039,452
Consumer real estate – mortgage	3,106,465		3,068,625
Construction and land development	2,520,937		2,430,483
Commercial and industrial	6,752,317		6,290,296
Consumer and other	296,392		289,254
Subtotal	$	20,396,853	$	19,787,876
Allowance for credit losses	(222,465)		(94,777)
Loans, net	$	20,174,388	$	19,693,099

Loan Classification Categorized by Risk Rating Category

The table below presents loan balances classified within each risk rating category by primary loan type and based on year of origination as of March 31, 2020 (in thousands):


March 31, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Commercial real estate- owner occupied
Pass	$	178,512	$	505,153	$	529,837	$	414,639	$	425,788	$	416,602	$	43,273	$	2,513,804
Special Mention	—		1,706		3,383		12,769		678		353		919		19,808
Substandard ⁽¹⁾	1,263		11,357		8,296		12,981		20,660		4,183		46,494		105,234
Substandard-nonaccrual	735		460		1,694		2,319		1,623		4,403		90		11,324
Doubtful-nonaccrual	—		—		—		—		—		—		—		—
Total Commercial real estate - owner occupied	$	180,510	$	518,676	$	543,210	$	442,708	$	448,749	$	425,541	$	90,776	$	2,650,170
Commercial real estate- Non-owner occupied
Pass	$	421,156	$	1,321,669	$	922,005	$	817,345	$	787,630	$	663,636	$	78,264	$	5,011,705
Special Mention	6,828		1,305		1,162		17,027		1,222		1,472		249		29,265
Substandard ⁽¹⁾	—		5,056		2,714		7,502		1,952		3,002		—		20,226
Substandard-nonaccrual	—		2,407		785		149		1,066		4,969		—		9,376
Doubtful-nonaccrual	—		—		—		—		—		—		—		—
Total Commercial real estate - Non-owner occupied	$	427,984	$	1,330,437	$	926,666	$	842,023	$	791,870	$	673,079	$	78,513	$	5,070,572
Consumer real estate – mortgage
Pass	$	134,885	$	643,354	$	455,461	$	216,073	$	172,577	$	431,480	$	1,008,141	$	3,061,970
Special Mention	204		1,173		1,370		70		—		108		8,739		11,664
Substandard ⁽¹⁾	1,382		1,210		—		924		385		2,167		657		6,725
Substandard-nonaccrual	1,117		1,508		1,184		1,595		2,885		12,928		4,889		26,106
Doubtful-nonaccrual	—		—		—		—		—		—		—		—
Total Consumer real estate – mortgage	$	137,588	$	647,245	$	458,015	$	218,662	$	175,847	$	446,683	$	1,022,426	$	3,106,465


March 31, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total


Construction and land development
Pass	$	286,814	$	1,337,729	$	662,700	$	156,448	$	25,691	$	12,131	$	18,134	$	2,499,647
Special Mention	968		243		10,098		—		—		738		—		12,047
Substandard ⁽¹⁾	1,502		829		31		4,083		240		168		—		6,853
Substandard-nonaccrual	88		830		84		92		—		1,296		—		2,390
Doubtful-nonaccrual	—		—		—		—		—		—		—		—
Total Construction and land development	$	289,372	$	1,339,631	$	672,913	$	160,623	$	25,931	$	14,333	$	18,134	$	2,520,937
Commercial and industrial
Pass	$	817,119	$	1,636,441	$	940,772	$	503,490	$	186,801	$	133,277	$	2,347,145	$	6,565,045
Special Mention	701		15,023		8,410		5,108		6,786		986		17,713		54,727
Substandard ⁽¹⁾	4,715		38,853		17,651		5,106		4,077		609		39,819		110,830
Substandard-nonaccrual	1,054		10,606		499		889		267		279		7,828		21,422
Doubtful-nonaccrual	—		294		—		—		—		—		—		294
Total Commercial and industrial	$	823,589	$	1,701,217	$	967,332	$	514,593	$	197,931	$	135,151	$	2,412,504	$	6,752,317
Consumer and other
Pass	$	35,729	$	36,345	$	11,948	$	13,012	$	7,363	$	3,886	$	187,318	$	295,601
Special Mention	—		—		—		—		—		677		9		686
Substandard ⁽¹⁾	—		—		—		—		—		—		47		47
Substandard-nonaccrual	—		—		6		42		6		4		—		58
Doubtful-nonaccrual	—		—		—		—		—		—		—		—
Total Consumer and other	$	35,729	$	36,345	$	11,954	$	13,054	$	7,369	$	4,567	$	187,374	$	296,392
Total Loans
Pass	$	1,874,215	$	5,480,691	$	3,522,723	$	2,121,007	$	1,605,850	$	1,661,012	$	3,682,274	$	19,947,772
Special Mention	8,701		19,450		24,423		34,974		8,686		4,334		27,629		128,197
Substandard ⁽¹⁾	8,862		57,305		28,692		30,596		27,314		10,129		87,017		249,915
Substandard-nonaccrual	2,994		15,811		4,252		5,086		5,847		23,879		12,807		70,676
Doubtful-nonaccrual	—		294		—		—		—		—		—		294
Total Loans	$	1,894,772	$	5,573,551	$	3,580,090	$	2,191,663	$	1,647,697	$	1,699,354	$	3,809,727	$	20,396,853

The following table outlines the risk category of loans as of December 31, 2019 (in thousands):


	Commercial real estate - mortgage		Consumer real estate - mortgage		Construction and land development		Commercial and industrial		Consumer and other		Total
December 31, 2019
Pass	$	7,499,725	$	3,019,203	$	2,422,347	$	6,069,757	$	288,361	$	19,299,393
Special Mention	51,147		13,787		2,816		79,819		698		148,267
Substandard ⁽¹⁾	139,518		10,969		3,042		125,035		47		278,611
Substandard-nonaccrual	18,828		24,666		2,278		15,685		148		61,605
Doubtful-nonaccrual	—		—		—		—		—		—
Total loans	$	7,709,218	$	3,068,625	$	2,430,483	$	6,290,296	$	289,254	$	19,787,876

(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 troubled debt restructurings. Potential problem loans, which are not included in nonaccrual loans, amounted to approximately $249.2 million at March 31, 2020, compared to $276.0 million at December 31, 2019.

Past Due Balances by Loan Classification

The table below presents the aging of past due balances by loan segment at March 31, 2020 and December 31, 2019 (in thousands):


March 31, 2020	30-59 days past due		60-89 days past due		90 days or more past due				Total past due		Current		Total loans
Commercial real estate:
Owner-occupied	$	5,892	$	2,157	$	2,463			$	10,512	$	2,639,658	$	2,650,170
Non-owner occupied	1,846		5,917		4,705				12,468		5,058,104		5,070,572
Consumer real estate – mortgage	10,673		3,104		8,034				21,811		3,084,654		3,106,465
Construction and land development	1,975		137		1,527				3,639		2,517,298		2,520,937
Commercial and industrial	6,873		3,968		4,565				15,406		6,736,911		6,752,317
Consumer and other	1,059		118		427				1,604		294,788		296,392
Total	$	28,318	$	15,401	$	21,721	$	21,721	$	65,440	$	20,331,413	$	20,396,853

December 31, 2019
Commercial real estate:
Owner-occupied	$	2,307	$	2,932	$	1,719			$	6,958	$	2,662,808	$	2,669,766
Non-owner occupied	3,156		3,641		3,816				10,613		5,028,839		5,039,452
Consumer real estate – mortgage	11,646		2,157		7,304				21,107		3,047,518		3,068,625
Construction and land development	1,392		711		1,487				3,590		2,426,893		2,430,483
Commercial and industrial	8,474		2,478		6,364				17,316		6,272,980		6,290,296
Consumer and other	1,770		414		570				2,754		286,500		289,254
Total	$	28,745	$	12,333	$	21,260	$	21,260	$	62,338	$	19,725,538	$	19,787,876

Details of Changes in the Allowance for Loan Losses

The following table details the changes in the allowance for credit losses for the three months ended March 31, 2020 and 2019, respectively, by loan classification (in thousands):


	Commercial real estate - Owner occupied		Commercial real estate - Non-owner occupied		Consumer real estate - mortgage		Construction and land development		Commercial and industrial		Consumer and other		Unallocated		Total
Three months ended March 31, 2020:
Balance at December 31, 2019	$	13,406	$	19,963	$	8,054	$	12,662	$	36,112	$	3,595	$	985	$	94,777
Impact of adopting ASC 326	264		(4,740)		21,029		(3,144)		23,040		2,638		(985)		38,102
Charged-off loans	(1,561)		(261)		(930)		—		(7,734)		(1,207)		—		(11,693)
Recovery of previously charged-off loans	145		93		190		43		748		319		—		1,538
Provision for credit losses on loans	11,380		17,059		4,655		29,350		35,894		1,403		—		99,741
Balance at March 31, 2020	$	23,634	$	32,114	$	32,998	$	38,911	$	88,060	$	6,748	$	—	$	222,465


Three months ended March 31, 2019:
Balance at December 31, 2018	$	11,297	$	15,649	$	7,670	$	11,128	$	31,731	$	5,423	$	677	$	83,575
Charged-off loans	(521)		(13)		(350)		—		(3,352)		(1,832)		—		(6,068)
Recovery of previously charged-off loans	60		12		369		122		1,598		342		—		2,503
Provision for credit losses on loans	1,782		1,901		680		(335)		2,722		870		(436)		7,184
Balance at March 31, 2019	$	12,618	$	17,549	$	8,369	$	10,915	$	32,699	$	4,803	$	241	$	87,194

The following table details the allowance for credit losses and recorded investment in loans by loan classification and by impairment evaluation method as of December 31, 2019, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13 (in thousands):


	Commercial real estate - mortgage		Consumer real estate - mortgage		Construction and land development		Commercial and industrial		Consumer and other		Unallocated		Total
December 31, 2019
Allowance for Loan Losses:
Collectively evaluated for impairment	$	32,134	$	6,762	$	12,629	$	35,401	$	3,586			$	90,512
Individually evaluated for impairment	1,235		1,292		33		711		9				3,280
Loans acquired with deteriorated credit quality⁽¹⁾	—		—		—		—		—				—
Total allowance for loan losses	$	33,369	$	8,054	$	12,662	$	36,112	$	3,595	$	985	$	94,777

Loans:
Collectively evaluated for impairment	$	7,681,608	$	3,036,922	$	2,426,901	$	6,274,280	$	289,106			$	19,708,817
Individually evaluated for impairment	18,122		25,018		561		14,295		148				58,144
Loans acquired with deteriorated credit quality	9,488		6,685		3,021		1,721		—				20,915
Total loans	$	7,709,218	$	3,068,625	$	2,430,483	$	6,290,296	$	289,254			$	19,787,876

⁽¹⁾ Prior to the adoption of ASC 326 on January 1, 2020, an allowance for loan losses was recorded on loans acquired with deteriorated credit quality only in the event of additional credit deterioration subsequent to acquisition.

Schedule of Collateral Dependent Loans Individually Evaluated for ACL

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine

expected credit losses:


March 31, 2020	Real Estate		Business Assets		Other		Total
Commercial real estate:
Owner-occupied	14,951		135		—		15,086
Non-owner occupied	11,259		—		—		11,259
Consumer real estate – mortgage	31,247		—		—		31,247
Construction and land development	2,488		—		—		2,488
Commercial and industrial	294		7,768		5,659		13,721
Consumer and other	—		—		49		49
Total	$	60,239	$	7,903	$	5,708	$	73,850

Financing Receivable, Nonaccrual

The table below presents the amortized cost basis of loans on nonaccrual status and loans past due 90 or more days and still accruing interest at March 31, 2020 and December 31, 2019. Also presented is the balance of loans on nonaccrual status at March 31, 2020 for which there was no related allowance for credit losses recorded (in thousands):


	March 31, 2020										December 31, 2019
	Total nonaccrual loans		Nonaccrual loans with no allowance for credit losses		Loans past due 90 or more days and still accruing		Total nonaccrual loans		Loans past due 90 or more days and still accruing
Commercial real estate:
Owner-occupied	$	11,324	$	4,465	$	—	$	11,654	$	—
Non-owner occupied	9,376		6,425		—		7,173		—
Consumer real estate – mortgage	26,106		379		517		24,667		168
Construction and land development	2,390		1,287		—		2,278		—
Commercial and industrial	21,716		15,430		1,089		15,685		946
Consumer and other	58		—		384		148		501
Total	$	70,970	$	27,986	$	1,990	$	61,605	$	1,615

Summary of Recorded Investment, Unpaid Principal Balance and Related Allowance and Average Recorded Investment of Impaired Loans

The following table presents impaired loans at December 31, 2019 as determined under ASC 310 prior to the adoption of ASU 2016-13. Impaired loans generally include nonaccrual loans, troubled debt restructurings, and other loans deemed to be impaired but that continue to accrue interest. Presented are the recorded investment, unpaid principal balance and related allowance of impaired loans at December 31, 2019 by loan classification (in thousands):


	At December 31, 2019
	Recorded investment		Unpaid principal balances		Related allowance
Impaired loans with an allowance:
Commercial real estate – mortgage	$	9,998	$	10,983	$	1,235
Consumer real estate – mortgage	20,996		23,105		1,293
Construction and land development	542		654		33
Commercial and industrial	4,074		5,381		711
Consumer and other	148		182		9
Total	$	35,758	$	40,305	$	3,281

Impaired loans without an allowance:
Commercial real estate – mortgage	$	8,124	$	8,891	$	—
Consumer real estate – mortgage	4,022		4,021		—
Construction and land development	19		17		—
Commercial and industrial	10,221		11,322		—
Consumer and other	—		—		—
Total	$	22,386	$	24,251	$	—

Total impaired loans	$	58,144	$	64,556	$	3,281

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, 2019, respectively, of impaired loans by loan classification as determined under ASC 310 prior to the adoption of ASU 2016-13 (in thousands):


	Three months ended March 31, 2019
	Average recorded investment		Interest income recognized
Impaired loans with an allowance:
Commercial real estate – mortgage	$	16,327	$	—
Consumer real estate – mortgage	22,266		—
Construction and land development	724		—
Commercial and industrial	9,027		—
Consumer and other	657		—
Total	$	49,001	$	—

Impaired loans without an allowance:
Commercial real estate – mortgage	$	15,699	$	87
Consumer real estate – mortgage	8,839		—
Construction and land development	893		—
Commercial and industrial	15,143		—
Consumer and other	—		—
Total	$	40,574	$	87

Total impaired loans	$	89,575	$	87

Purchase Credit Impaired Loans

Prior to the adoption of ASU 2016-13, loans acquired with deteriorated credit quality, referred to under ASC 310-30 as purchased credit impaired loans and under ASU 2016-13 as purchased credit deteriorated loans, were assigned a credit related purchase discount and non-credit related purchase discount at acquisition. Upon adoption of ASU 2016-13 on January 1, 2020, the remaining credit related discount was re-classified to a component of the allowance for credit losses. The remaining non-credit discount will continue to be accreted into income over the remaining lives of the related loans. The following table provides a rollforward of purchased credit deteriorated loans from December 31, 2019 through March 31, 2020 (in thousands):


	Gross Carrying Value		Accretable Yield		Nonaccretable Yield		Net Carrying Value
December 31, 2019	$	29,544	$	(4,801)	$	(3,828)	$	20,915

Reclassification of discount to allowance for credit losses	—		—		3,828		3,828
Year-to-date settlements	(1,691)		1,141		—		(550)
March 31, 2020	$	27,853	$	(3,660)	$	—	$	24,193

Troubled Debt Restructurings

The following table outlines the amount of each loan category where troubled debt restructurings were made during the three months ended March 31, 2020 (dollars in thousands):


	Three Months Ended March 31, 2020
	Number of contracts		Pre Modification Outstanding Recorded Investment		Post Modification Outstanding Recorded Investment, net of related allowance
Commercial real estate:
Owner-occupied	$	—	$	—	$	—
Non-owner occupied	—		—		—
Consumer real estate – mortgage	1		807		807
Construction and land development	—		—		—
Commercial and industrial	—		—		—
Consumer and other	—		—		—
	1		$	807	$	807

Summary of Loan Portfolio Credit Risk Exposure

Pinnacle Financial analyzes its commercial loan portfolio to determine if a concentration of credit risk exists to any industries. 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, 2020 with the comparative exposures for December 31, 2019 (in thousands):


	March 31, 2020
	Outstanding Principal Balances		Unfunded Commitments		Total exposure		Total Exposure at December 31, 2019
Lessors of nonresidential buildings	$	3,737,224	$	895,221	$	4,632,445	$	4,578,116
Lessors of residential buildings	939,201		690,788		1,629,989		1,599,837
New Housing For-Sale Builders	534,896		599,323		1,134,219		1,090,603
Hotels (except Casino Hotels) and Motels	825,202		139,190		964,392		967,771