ý | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the quarterly period ended September 30, 2018 or | ||
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the transition period from__________ to __________ |
Delaware | 88-0365922 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
One E. Washington Street Suite 1400, Phoenix, AZ | 85004 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ý | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |||
Emerging growth company | ¨ |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 5. | ||
Item 6. | ||
ENTITIES / DIVISIONS: | |||
ABA | Alliance Bank of Arizona | HOA Services | Homeowner Associations Services |
BON | Bank of Nevada | LVSP | Las Vegas Sunset Properties |
Bridge | Bridge Bank | TPB | Torrey Pines Bank |
Company | Western Alliance Bancorporation and subsidiaries | WA PWI | Western Alliance Public Welfare Investments, LLC |
CSI | CS Insurance Company | WAB or Bank | Western Alliance Bank |
FIB | First Independent Bank | WABT | Western Alliance Business Trust |
HFF | Hotel Franchise Finance | WAL or Parent | Western Alliance Bancorporation |
TERMS: | |||
AFS | Available-for-Sale | GNMA | Government National Mortgage Association |
ALCO | Asset and Liability Management Committee | GSE | Government-Sponsored Enterprise |
AOCI | Accumulated Other Comprehensive Income | HFI | Held for Investment |
ASC | Accounting Standards Codification | HTM | Held-to-Maturity |
ASU | Accounting Standards Update | ICS | Insured Cash Sweep Service |
Basel Committee | Basel Committee on Banking Supervision | IRC | Internal Revenue Code |
Basel III | Banking Supervision's December 2010 final capital framework | ISDA | International Swaps and Derivatives Association |
BOD | Board of Directors | LIBOR | London Interbank Offered Rate |
CDARS | Certificate Deposit Account Registry Service | LIHTC | Low-Income Housing Tax Credit |
CDO | Collateralized Debt Obligation | MBS | Mortgage-Backed Securities |
CEO | Chief Executive Officer | NBL | National Business Lines |
CFO | Chief Financial Officer | NOL | Net Operating Loss |
CRA | Community Reinvestment Act | NPV | Net Present Value |
CRE | Commercial Real Estate | OCC | Office of the Comptroller of the Currency |
Dodd-Frank Act | The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 | OCI | Other Comprehensive Income |
EGRRCPA | The Economic Growth, Regulatory Relief, and Consumer Protection Act | OREO | Other Real Estate Owned |
EPS | Earnings per share | OTTI | Other-than-Temporary Impairment |
EVE | Economic Value of Equity | PCI | Purchased Credit Impaired |
Exchange Act | Securities Exchange Act of 1934, as amended | SBA | Small Business Administration |
FASB | Financial Accounting Standards Board | SBIC | Small Business Investment Company |
FDIC | Federal Deposit Insurance Corporation | SEC | Securities and Exchange Commission |
FHLB | Federal Home Loan Bank | SERP | Supplemental Executive Retirement Plan |
FHLMC | Federal Home Loan Mortgage Corporation | TCJA | Tax Cuts and Jobs Act |
FNMA | Federal National Mortgage Association | TDR | Troubled Debt Restructuring |
FRB | Federal Reserve Bank | TEB | Tax Equivalent Basis |
FVO | Fair Value Option | XBRL | eXtensible Business Reporting Language |
GAAP | U.S. Generally Accepted Accounting Principles |
Item 1. | Financial Statements |
September 30, 2018 | December 31, 2017 | |||||||
(Unaudited) | ||||||||
(in thousands, except shares and per share amounts) | ||||||||
Assets: | ||||||||
Cash and due from banks | $ | 148,545 | $ | 181,191 | ||||
Interest-bearing deposits in other financial institutions | 482,019 | 235,577 | ||||||
Federal funds sold | 70,000 | — | ||||||
Cash, cash equivalents, and restricted cash | 700,564 | 416,768 | ||||||
Money market investments | 5 | — | ||||||
Investment securities - AFS, at fair value; amortized cost of $3,211,440 at September 30, 2018 and $3,515,401 at December 31, 2017 | 3,107,076 | 3,499,519 | ||||||
Investment securities - HTM, at amortized cost; fair value of $279,033 at September 30, 2018 and $256,314 at December 31, 2017 | 288,290 | 255,050 | ||||||
Investment securities - equity | 172,294 | — | ||||||
Investments in restricted stock, at cost | 65,993 | 65,785 | ||||||
Loans - HFI, net of deferred loan fees and costs | 16,732,765 | 15,093,935 | ||||||
Less: allowance for credit losses | (150,011 | ) | (140,050 | ) | ||||
Net loans held for investment | 16,582,754 | 14,953,885 | ||||||
Premises and equipment, net | 119,211 | 118,719 | ||||||
Other assets acquired through foreclosure, net | 20,028 | 28,540 | ||||||
Bank owned life insurance | 169,162 | 167,764 | ||||||
Goodwill | 289,895 | 289,895 | ||||||
Other intangible assets, net | 9,658 | 10,853 | ||||||
Deferred tax assets, net | 43,483 | 5,780 | ||||||
Investments in LIHTC | 295,116 | 267,023 | ||||||
Other assets | 312,618 | 249,504 | ||||||
Total assets | $ | 22,176,147 | $ | 20,329,085 | ||||
Liabilities: | ||||||||
Deposits: | ||||||||
Non-interest-bearing demand | $ | 8,014,715 | $ | 7,433,962 | ||||
Interest-bearing | 10,893,865 | 9,538,570 | ||||||
Total deposits | 18,908,580 | 16,972,532 | ||||||
Customer repurchase agreements | 20,969 | 26,017 | ||||||
Other borrowings | — | 390,000 | ||||||
Qualifying debt | 359,082 | 376,905 | ||||||
Other liabilities | 399,123 | 333,933 | ||||||
Total liabilities | 19,687,754 | 18,099,387 | ||||||
Commitments and contingencies (Note 12) | ||||||||
Stockholders’ equity: | ||||||||
Common stock - par value $0.0001; 200,000,000 authorized; 107,633,006 shares issued at September 30, 2018 and 107,057,520 at December 31, 2017 | 10 | 10 | ||||||
Treasury stock, at cost (1,771,509 shares at September 30, 2018 and 1,570,155 shares at December 31, 2017) | (52,035 | ) | (40,173 | ) | ||||
Additional paid in capital | 1,444,555 | 1,424,540 | ||||||
Accumulated other comprehensive (loss) income | (70,363 | ) | (3,145 | ) | ||||
Retained earnings | 1,166,226 | 848,466 | ||||||
Total stockholders’ equity | 2,488,393 | 2,229,698 | ||||||
Total liabilities and stockholders’ equity | $ | 22,176,147 | $ | 20,329,085 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Interest income: | ||||||||||||||||
Loans, including fees | $ | 234,709 | $ | 191,096 | $ | 662,703 | $ | 547,306 | ||||||||
Investment securities | 26,100 | 22,152 | 77,847 | 58,010 | ||||||||||||
Dividends | 1,831 | 2,005 | 5,506 | 6,154 | ||||||||||||
Other | 2,576 | 2,583 | 5,459 | 5,584 | ||||||||||||
Total interest income | 265,216 | 217,836 | 751,515 | 617,054 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 25,266 | 11,449 | 59,288 | 29,506 | ||||||||||||
Other borrowings | 90 | 84 | 3,352 | 333 | ||||||||||||
Qualifying debt | 5,794 | 4,708 | 16,458 | 13,539 | ||||||||||||
Other | 28 | 12 | 51 | 41 | ||||||||||||
Total interest expense | 31,178 | 16,253 | 79,149 | 43,419 | ||||||||||||
Net interest income | 234,038 | 201,583 | 672,366 | 573,635 | ||||||||||||
Provision for credit losses | 6,000 | 5,000 | 17,000 | 12,250 | ||||||||||||
Net interest income after provision for credit losses | 228,038 | 196,583 | 655,366 | 561,385 | ||||||||||||
Non-interest income: | ||||||||||||||||
Service charges and fees | 5,267 | 5,248 | 16,684 | 15,189 | ||||||||||||
Card income | 2,138 | 1,509 | 6,143 | 4,517 | ||||||||||||
Income from equity investments | 1,440 | 967 | 5,417 | 2,977 | ||||||||||||
Lending related income and gains (losses) on sale of loans, net | 1,422 | 97 | 3,447 | 746 | ||||||||||||
Foreign currency income | 1,092 | 756 | 3,475 | 2,630 | ||||||||||||
Income from bank owned life insurance | 868 | 975 | 2,963 | 2,896 | ||||||||||||
(Loss) gain on sales of investment securities, net | (7,232 | ) | 319 | (7,232 | ) | 907 | ||||||||||
Unrealized (losses) gains on assets measured at fair value, net | (1,212 | ) | — | (2,971 | ) | (1 | ) | |||||||||
Other income | 635 | 585 | 1,579 | 1,795 | ||||||||||||
Total non-interest income | 4,418 | 10,456 | 29,505 | 31,656 | ||||||||||||
Non-interest expense: | ||||||||||||||||
Salaries and employee benefits | 64,762 | 52,747 | 188,680 | 156,640 | ||||||||||||
Legal, professional, and directors' fees | 7,907 | 6,038 | 21,856 | 23,324 | ||||||||||||
Occupancy | 7,406 | 7,507 | 21,671 | 21,328 | ||||||||||||
Data processing | 5,895 | 4,524 | 16,688 | 14,163 | ||||||||||||
Deposit costs | 4,848 | 2,904 | 11,888 | 6,778 | ||||||||||||
Insurance | 3,712 | 3,538 | 11,466 | 10,355 | ||||||||||||
Business development | 1,381 | 1,439 | 4,523 | 4,949 | ||||||||||||
Card expense | 1,282 | 966 | 3,305 | 2,558 | ||||||||||||
Loan and repossessed asset expenses | 1,230 | 1,263 | 2,830 | 3,639 | ||||||||||||
Marketing | 687 | 776 | 2,429 | 2,628 | ||||||||||||
Intangible amortization | 398 | 489 | 1,195 | 1,666 | ||||||||||||
Net (gain) loss on sales / valuations of repossessed and other assets | (67 | ) | 266 | (1,474 | ) | (46 | ) | |||||||||
Other expense | 14,400 | 6,839 | 29,481 | 17,561 | ||||||||||||
Total non-interest expense | 113,841 | 89,296 | 314,538 | 265,543 | ||||||||||||
Income before provision for income taxes | 118,615 | 117,743 | 370,333 | 327,498 | ||||||||||||
Income tax expense | 7,492 | 34,899 | 53,631 | 91,352 | ||||||||||||
Net income | $ | 111,123 | $ | 82,844 | $ | 316,702 | $ | 236,146 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 1.06 | $ | 0.79 | $ | 3.03 | $ | 2.27 | ||||||||
Diluted | 1.05 | 0.79 | 3.00 | 2.25 | ||||||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 104,768 | 104,221 | 104,664 | 104,124 | ||||||||||||
Diluted | 105,448 | 104,942 | 105,398 | 104,941 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Net income | $ | 111,123 | $ | 82,844 | $ | 316,702 | $ | 236,146 | ||||||||
Other comprehensive (loss) income, net: | ||||||||||||||||
Unrealized (loss) gain on AFS securities, net of tax effect of $7,337, $(689), $23,438, and $(9,894), respectively | (22,462 | ) | 1,116 | (71,765 | ) | 15,947 | ||||||||||
Unrealized (loss) gain on SERP, net of tax effect of $4, $(71), $10, and $(93), respectively | (12 | ) | 114 | (35 | ) | 150 | ||||||||||
Unrealized (loss) gain on junior subordinated debt, net of tax effect of $661, $(394), $(61), and $1,649, respectively | (2,028 | ) | 641 | 186 | (2,677 | ) | ||||||||||
Realized loss (gain) on sale of AFS securities included in income, net of tax effect of $(1,778), $122, $(1,778), and $346, respectively | 5,454 | (197 | ) | 5,454 | (561 | ) | ||||||||||
Net other comprehensive (loss) income | (19,048 | ) | 1,674 | (66,160 | ) | 12,859 | ||||||||||
Comprehensive income | $ | 92,075 | $ | 84,518 | $ | 250,542 | $ | 249,005 |
Common Stock | Additional Paid in Capital | Treasury Stock | Accumulated Other Comprehensive (Loss) Income | Retained Earnings | Total Stockholders’ Equity | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Balance, December 31, 2016 | 105,071 | $ | 10 | $ | 1,400,140 | $ | (26,362 | ) | $ | (4,695 | ) | $ | 522,436 | $ | 1,891,529 | |||||||||||
Balance, January 1, 2017 (1) | 105,071 | 10 | 1,400,140 | (26,362 | ) | (4,695 | ) | 522,974 | 1,892,067 | |||||||||||||||||
Net income | — | — | — | — | — | 236,146 | 236,146 | |||||||||||||||||||
Exercise of stock options | 36 | — | 786 | — | — | — | 786 | |||||||||||||||||||
Restricted stock, performance stock units, and other grants, net | 653 | — | 17,909 | — | — | — | 17,909 | |||||||||||||||||||
Restricted stock surrendered (2) | (267 | ) | — | — | (13,642 | ) | — | — | (13,642 | ) | ||||||||||||||||
Other comprehensive income, net | — | — | — | — | 12,859 | — | 12,859 | |||||||||||||||||||
Balance, September 30, 2017 | 105,493 | $ | 10 | $ | 1,418,835 | $ | (40,004 | ) | $ | 8,164 | $ | 759,120 | $ | 2,146,125 | ||||||||||||
Balance, December 31, 2017 | 105,487 | $ | 10 | $ | 1,424,540 | $ | (40,173 | ) | $ | (3,145 | ) | $ | 848,466 | $ | 2,229,698 | |||||||||||
Balance, January 1, 2018 (3) | 105,487 | 10 | 1,424,540 | (40,173 | ) | (4,203 | ) | 849,524 | 2,229,698 | |||||||||||||||||
Net income | — | — | — | — | — | 316,702 | 316,702 | |||||||||||||||||||
Exercise of stock options | 21 | — | 534 | — | — | — | 534 | |||||||||||||||||||
Restricted stock, performance stock unit, and other grants, net | 554 | — | 19,481 | — | — | — | 19,481 | |||||||||||||||||||
Restricted stock surrendered (2) | (201 | ) | — | — | (11,862 | ) | — | — | (11,862 | ) | ||||||||||||||||
Other comprehensive loss, net | — | — | — | — | (66,160 | ) | — | (66,160 | ) | |||||||||||||||||
Balance, September 30, 2018 | 105,861 | $ | 10 | $ | 1,444,555 | $ | (52,035 | ) | $ | (70,363 | ) | $ | 1,166,226 | $ | 2,488,393 |
(1) | As adjusted for adoption of ASU 2017-12. The cumulative effect of adoption of this guidance at January 1, 2017 resulted in an increase to retained earnings of $0.5 million and a corresponding increase to loans for the fair market value adjustment on the swaps. |
(2) | Share amounts represent Treasury Shares, see "Note 1. Summary of Significant Accounting Policies" for further discussion. |
(3) | As adjusted for adoption of ASU 2016-01 and ASU 2018-02. The cumulative effect of adoption of this guidance at January 1, 2018 resulted in an increase to retained earnings of $1.1 million and a corresponding decrease to accumulated other comprehensive income. See "Note 1. Summary of Significant Accounting Policies" for further discussion. |
Nine Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
(in thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 316,702 | $ | 236,146 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Provision for credit losses | 17,000 | 12,250 | ||||||
Depreciation and amortization | 10,460 | 9,956 | ||||||
Stock-based compensation | 19,481 | 17,909 | ||||||
Deferred income taxes | (16,107 | ) | 3,371 | |||||
Amortization of net premiums for investment securities | 10,795 | 14,926 | ||||||
Amortization of tax credit investments | 26,546 | 19,524 | ||||||
Accretion of fair market value adjustments on loans acquired from business combinations | (14,099 | ) | (20,994 | ) | ||||
Accretion and amortization of fair market value adjustments on other assets and liabilities acquired from business combinations | 1,427 | 1,898 | ||||||
Income from bank owned life insurance | (2,963 | ) | (2,896 | ) | ||||
(Gains) / Losses on: | ||||||||
Sales of investment securities | 7,232 | (907 | ) | |||||
Assets measured at fair value, net | 2,971 | 1 | ||||||
Sale of loans | (2,434 | ) | 117 | |||||
Other assets acquired through foreclosure, net | (1,464 | ) | (233 | ) | ||||
Valuation adjustments of other repossessed assets, net | 32 | 120 | ||||||
Sale of premises, equipment, and other assets, net | (42 | ) | 67 | |||||
Changes in: | ||||||||
Other assets | 17,419 | (12,958 | ) | |||||
Other liabilities | 3,324 | (7,214 | ) | |||||
Net cash provided by operating activities | $ | 396,280 | $ | 271,083 | ||||
Cash flows from investing activities: | ||||||||
Investment securities - trading | ||||||||
Proceeds from sales | $ | — | $ | 994 | ||||
Investment securities - AFS | ||||||||
Purchases | (251,413 | ) | (1,361,908 | ) | ||||
Principal pay downs and maturities | 329,958 | 370,231 | ||||||
Proceeds from sales | 44,308 | 87,853 | ||||||
Investment securities - HTM | ||||||||
Purchases | (34,275 | ) | (62,489 | ) | ||||
Principal pay downs and maturities | 754 | — | ||||||
Equity securities | ||||||||
Purchases | (71,727 | ) | — | |||||
Reinvestment of dividends | (426 | ) | — | |||||
Purchase of investment tax credits | (66,456 | ) | (19,916 | ) | ||||
Purchase of SBIC investments | (3,063 | ) | — | |||||
(Purchase) sale of money market investments, net | (5 | ) | (175 | ) | ||||
Proceeds from bank owned life insurance | 1,655 | 607 | ||||||
(Purchase) liquidation of restricted stock, net | (208 | ) | (430 | ) | ||||
Loan fundings and principal collections, net | (1,591,733 | ) | (1,179,494 | ) | ||||
Purchase of premises, equipment, and other assets, net | (8,319 | ) | (7,644 | ) | ||||
Proceeds from sale of other real estate owned and repossessed assets, net | 8,793 | 20,748 | ||||||
Net cash used in investing activities | $ | (1,642,157 | ) | $ | (2,151,623 | ) |
Nine Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
(in thousands) | ||||||||
Cash flows from financing activities: | ||||||||
Net increase (decrease) in deposits | $ | 1,936,048 | $ | 2,354,920 | ||||
Net increase (decrease) in borrowings | (395,047 | ) | (95,661 | ) | ||||
Proceeds from exercise of common stock options | 534 | 786 | ||||||
Cash paid for tax withholding on vested restricted stock | (11,862 | ) | (13,642 | ) | ||||
Net cash provided by financing activities | $ | 1,529,673 | $ | 2,246,403 | ||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 283,796 | 365,863 | ||||||
Cash, cash equivalents, and restricted cash at beginning of period | 416,768 | 284,491 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 700,564 | $ | 650,354 | ||||
Supplemental disclosure: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 81,247 | $ | 47,815 | ||||
Income taxes | 14,658 | 79,522 | ||||||
Non-cash operating, investing, and financing activity: | ||||||||
Transfers to other assets acquired through foreclosure, net | 5,744 | 1,812 | ||||||
Unfunded commitments originated | 65,639 | 103,012 | ||||||
Change in unrealized (loss) gain on AFS securities, net of tax | (66,311 | ) | 15,386 | |||||
Change in unrealized gain (loss) on junior subordinated debt, net of tax | 186 | (2,677 | ) | |||||
Change in unfunded obligations | 82,270 | 140,217 | ||||||
Non-cash charitable contribution | 6,895 | — |
• | Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
• | Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, prepayment speeds, volatilities, etc.) or model-based valuation techniques where all significant assumptions are observable, either directly or indirectly, in the market. |
• | Level 3 - Valuation is generated from model-based techniques where one or more significant inputs are not observable, either directly or indirectly, in the market. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques may include use of matrix pricing, discounted cash flow models, and similar techniques. |
September 30, 2018 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Held-to-maturity debt securities | ||||||||||||||||
Tax-exempt | $ | 288,290 | $ | 773 | $ | (10,030 | ) | $ | 279,033 | |||||||
Available-for-sale debt securities | ||||||||||||||||
CDO | $ | 50 | $ | 19,098 | $ | — | $ | 19,148 | ||||||||
Commercial MBS issued by GSEs | 107,915 | 42 | (7,014 | ) | 100,943 | |||||||||||
Corporate debt securities | 105,033 | 119 | (5,768 | ) | 99,384 | |||||||||||
Private label residential MBS | 887,581 | 42 | (31,681 | ) | 855,942 | |||||||||||
Residential MBS issued by GSEs | 1,515,408 | 167 | (65,516 | ) | 1,450,059 | |||||||||||
Tax-exempt | 511,957 | 4,015 | (11,065 | ) | 504,907 | |||||||||||
Trust preferred securities | 32,000 | — | (3,383 | ) | 28,617 | |||||||||||
U.S. government sponsored agency securities | 49,000 | — | (3,399 | ) | 45,601 | |||||||||||
U.S. treasury securities | 2,496 | — | (21 | ) | 2,475 | |||||||||||
Total AFS debt securities | $ | 3,211,440 | $ | 23,483 | $ | (127,847 | ) | $ | 3,107,076 | |||||||
Equity securities (1) | ||||||||||||||||
CRA investments | $ | 52,058 | $ | — | $ | (1,314 | ) | $ | 50,744 | |||||||
Preferred stock | 122,699 | 880 | (2,029 | ) | 121,550 | |||||||||||
Total equity securities | $ | 174,757 | $ | 880 | $ | (3,343 | ) | $ | 172,294 |
December 31, 2017 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Held-to-maturity debt securities | ||||||||||||||||
Tax-exempt | $ | 255,050 | $ | 4,514 | $ | (3,250 | ) | $ | 256,314 | |||||||
Available-for-sale debt securities | ||||||||||||||||
CDO | $ | 50 | $ | 21,807 | $ | — | $ | 21,857 | ||||||||
Commercial MBS issued by GSEs | 113,069 | 46 | (4,038 | ) | 109,077 | |||||||||||
Corporate debt securities | 105,044 | 261 | (1,822 | ) | 103,483 | |||||||||||
Private label residential MBS | 874,261 | 756 | (6,493 | ) | 868,524 | |||||||||||
Residential MBS issued by GSEs | 1,719,188 | 810 | (30,703 | ) | 1,689,295 | |||||||||||
Tax-exempt | 501,988 | 10,893 | (1,971 | ) | 510,910 | |||||||||||
Trust preferred securities | 32,000 | — | (3,383 | ) | 28,617 | |||||||||||
U.S. government sponsored agency securities | 64,000 | — | (2,538 | ) | 61,462 | |||||||||||
U.S. treasury securities | 2,496 | — | (14 | ) | 2,482 | |||||||||||
Available-for-sale equity securities (1) | ||||||||||||||||
CRA investments | 51,133 | — | (517 | ) | 50,616 | |||||||||||
Preferred stock | 52,172 | 1,160 | (136 | ) | 53,196 | |||||||||||
Total AFS securities | $ | 3,515,401 | $ | 35,733 | $ | (51,615 | ) | $ | 3,499,519 |
(1) | The Company's equity securities consist of CRA investments and preferred stock. Effective January 1, 2018, the Company adopted the amendments within ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which requires that fair value changes in equity securities be recognized as part of non-interest income. Prior to January 1, 2018, equity securities were classified as part of AFS securities. On a prospective basis, equity securities will be reported separately. |
September 30, 2018 | |||||||||||||||||||||||
Less Than Twelve Months | More Than Twelve Months | Total | |||||||||||||||||||||
Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Held-to-maturity debt securities | |||||||||||||||||||||||
Tax-exempt | $ | 10,030 | $ | 215,827 | $ | — | $ | — | $ | 10,030 | $ | 215,827 | |||||||||||
Available-for-sale debt securities | |||||||||||||||||||||||
Commercial MBS issued by GSEs | $ | — | $ | — | $ | 7,014 | $ | 99,134 | $ | 7,014 | $ | 99,134 | |||||||||||
Corporate debt securities | 766 | 19,234 | 5,002 | 74,998 | 5,768 | 94,232 | |||||||||||||||||
Private label residential MBS | 13,004 | 463,026 | 18,677 | 374,504 | 31,681 | 837,530 | |||||||||||||||||
Residential MBS issued by GSEs | 16,624 | 563,642 | 48,892 | 878,925 | 65,516 | 1,442,567 | |||||||||||||||||
Tax-exempt | 6,337 | 227,531 | 4,728 | 66,047 | 11,065 | 293,578 | |||||||||||||||||
Trust preferred securities | — | — | 3,383 | 28,617 | 3,383 | 28,617 | |||||||||||||||||
U.S. government sponsored agency securities | 151 | 4,849 | 3,248 | 40,752 | 3,399 | 45,601 | |||||||||||||||||
U.S. treasury securities | 16 | 978 | 5 | 1,497 | 21 | 2,475 | |||||||||||||||||
Total AFS securities | $ | 36,898 | $ | 1,279,260 | $ | 90,949 | $ | 1,564,474 | $ | 127,847 | $ | 2,843,734 |
December 31, 2017 | |||||||||||||||||||||||
Less Than Twelve Months | More Than Twelve Months | Total | |||||||||||||||||||||
Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Held-to-maturity debt securities | |||||||||||||||||||||||
Tax-exempt | $ | 3,250 | $ | 107,921 | $ | — | $ | — | $ | 3,250 | $ | 107,921 | |||||||||||
Available-for-sale debt securities | |||||||||||||||||||||||
Commercial MBS issued by GSEs | $ | 161 | $ | 13,565 | $ | 3,877 | $ | 93,641 | $ | 4,038 | $ | 107,206 | |||||||||||
Corporate debt securities | 1,398 | 78,602 | 424 | 19,576 | 1,822 | 98,178 | |||||||||||||||||
Private label residential MBS | 3,115 | 480,885 | 3,378 | 188,710 | 6,493 | 669,595 | |||||||||||||||||
Residential MBS issued by GSEs | 13,875 | 999,478 | 16,828 | 523,270 | 30,703 | 1,522,748 | |||||||||||||||||
Tax-exempt | 17 | 6,159 | 1,954 | 69,674 | 1,971 | 75,833 | |||||||||||||||||
Trust preferred securities | — | — | 3,383 | 28,617 | 3,383 | 28,617 | |||||||||||||||||
U.S. government sponsored agency securities | 14 | 4,986 | 2,524 | 56,476 | 2,538 | 61,462 | |||||||||||||||||
U.S. treasury securities | 14 | 2,482 | — | — | 14 | 2,482 | |||||||||||||||||
Available-for-sale equity securities | |||||||||||||||||||||||
CRA investments | — | — | 517 | 50,616 | 517 | 50,616 | |||||||||||||||||
Preferred stock | 136 | 7,357 | — | — | 136 | 7,357 | |||||||||||||||||
Total AFS securities | $ | 18,730 | $ | 1,593,514 | $ | 32,885 | $ | 1,030,580 | $ | 51,615 | $ | 2,624,094 |
Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2018 | |||||||
(in thousands) | ||||||||
Net (losses) gains on equity securities | $ | (1,212 | ) | $ | (2,971 | ) | ||
Less: Net gains (losses) recognized on equity securities sold | — | — | ||||||
Unrealized (losses) gains on equity securities still held at the reporting date | $ | (1,212 | ) | $ | (2,971 | ) |
September 30, 2018 | ||||||||
Amortized Cost | Estimated Fair Value | |||||||
(in thousands) | ||||||||
Held-to-maturity | ||||||||
Due in one year or less | $ | 1,200 | $ | 1,236 | ||||
After one year through five years | 10,100 | 10,122 | ||||||
After five years through ten years | 14,602 | 14,351 | ||||||
After ten years | 262,388 | 253,324 | ||||||
Total HTM securities | $ | 288,290 | $ | 279,033 | ||||
Available-for-sale | ||||||||
Due in one year or less | $ | 4,001 | $ | 3,996 | ||||
After one year through five years | 17,355 | 17,571 | ||||||
After five years through ten years | 223,060 | 215,580 | ||||||
After ten years | 456,120 | 462,985 | ||||||
Mortgage-backed securities | 2,510,904 | 2,406,944 | ||||||
Total AFS securities | $ | 3,211,440 | $ | 3,107,076 |
September 30, 2018 | ||||||||||||||||||||||||||||||||
AAA | Split-rated AAA/AA+ | AA+ to AA- | A+ to A- | BBB+ to BBB- | BB+ and below | Unrated | Totals | |||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
Held-to-maturity debt securities | ||||||||||||||||||||||||||||||||
Tax-exempt | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 288,290 | $ | 288,290 | ||||||||||||||||
Available-for-sale debt securities | ||||||||||||||||||||||||||||||||
CDO | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 19,148 | $ | — | $ | 19,148 | ||||||||||||||||
Commercial MBS issued by GSEs | — | 100,943 | — | — | — | — | — | 100,943 | ||||||||||||||||||||||||
Corporate debt securities | — | — | — | 71,685 | 27,699 | — | — | 99,384 | ||||||||||||||||||||||||
Private label residential MBS | 818,046 | — | 34,957 | 395 | 1,019 | 1,525 | — | 855,942 | ||||||||||||||||||||||||
Residential MBS issued by GSEs | — | 1,450,059 | — | — | — | — | — | 1,450,059 | ||||||||||||||||||||||||
Tax-exempt | 61,443 | 20,636 | 244,696 | 170,409 | — | — | 7,723 | 504,907 | ||||||||||||||||||||||||
Trust preferred securities | — | — | — | — | 28,617 | — | — | 28,617 | ||||||||||||||||||||||||
U.S. government sponsored agency securities | — | 45,601 | — | — | — | — | — | 45,601 | ||||||||||||||||||||||||
U.S. treasury securities | — | 2,475 | — | — | — | — | — | 2,475 | ||||||||||||||||||||||||
Total AFS securities (1) | $ | 879,489 | $ | 1,619,714 | $ | 279,653 | $ | 242,489 | $ | 57,335 | $ | 20,673 | $ | 7,723 | $ | 3,107,076 | ||||||||||||||||
Equity securities | ||||||||||||||||||||||||||||||||
CRA investments | $ | — | $ | 26,291 | $ | — | $ | — | $ | — | $ | — | $ | 24,453 | $ | 50,744 | ||||||||||||||||
Preferred stock | — | — | — | — | 72,991 | 39,032 | 9,527 | 121,550 | ||||||||||||||||||||||||
Total equity securities (1) | $ | — | $ | 26,291 | $ | — | $ | — | $ | 72,991 | $ | 39,032 | $ | 33,980 | $ | 172,294 |
(1) | Where ratings differ, the Company uses an average of the available ratings by major credit agencies. |
December 31, 2017 | ||||||||||||||||||||||||||||||||
AAA | Split-rated AAA/AA+ | AA+ to AA- | A+ to A- | BBB+ to BBB- | BB+ and below | Unrated | Totals | |||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
Held-to-maturity debt securities | ||||||||||||||||||||||||||||||||
Tax-exempt | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 255,050 | $ | 255,050 | ||||||||||||||||
Available-for-sale debt securities | ||||||||||||||||||||||||||||||||
CDO | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 21,857 | $ | — | $ | 21,857 | ||||||||||||||||
Commercial MBS issued by GSEs | — | 109,077 | — | — | — | — | — | 109,077 | ||||||||||||||||||||||||
Corporate debt securities | — | — | — | 74,293 | 29,190 | — | — | 103,483 | ||||||||||||||||||||||||
Private label residential MBS | 809,242 | — | 55,161 | 1,350 | 931 | 1,840 | — | 868,524 | ||||||||||||||||||||||||
Residential MBS issued by GSEs | — | 1,689,295 | — | — | — | — | — | 1,689,295 | ||||||||||||||||||||||||
Tax-exempt | 64,893 | 25,280 | 249,200 | 167,994 | — | — | 3,543 | 510,910 | ||||||||||||||||||||||||
Trust preferred securities | — | — | — | — | 28,617 | — | — | 28,617 | ||||||||||||||||||||||||
U.S. government sponsored agency securities | — | 61,462 | — | — | — | — | — | 61,462 | ||||||||||||||||||||||||
U.S. treasury securities | — | 2,482 | — | — | — | — | — | 2,482 | ||||||||||||||||||||||||
Available-for-sale equity securities | ||||||||||||||||||||||||||||||||
CRA investments | — | 25,349 | — | — | — | — | 25,267 | 50,616 | ||||||||||||||||||||||||
Preferred stock | — | — | — | 10,388 | 23,822 | 4,104 | 14,882 | 53,196 | ||||||||||||||||||||||||
Total AFS securities (1) | $ | 874,135 | $ | 1,912,945 | $ | 304,361 | $ | 254,025 | $ | 82,560 | $ | 27,801 | $ | 43,692 | $ | 3,499,519 |
(1) | Where ratings differ, the Company uses an average of the available ratings by major credit agencies. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Gross gains | $ | — | $ | 468 | $ | — | $ | 1,181 | ||||||||
Gross losses | (7,232 | ) | (149 | ) | (7,232 | ) | (274 | ) | ||||||||
Net (losses) gains on sales of investment securities | $ | (7,232 | ) | $ | 319 | $ | (7,232 | ) | $ | 907 |
September 30, 2018 | December 31, 2017 | |||||||
(in thousands) | ||||||||
Commercial and industrial | $ | 7,487,725 | $ | 6,841,381 | ||||
Commercial real estate - non-owner occupied | 3,952,966 | 3,904,011 | ||||||
Commercial real estate - owner occupied | 2,288,156 | 2,241,613 | ||||||
Construction and land development | 2,107,631 | 1,632,204 | ||||||
Residential real estate | 827,073 | 425,940 | ||||||
Consumer | 69,214 | 48,786 | ||||||
Loans, net of deferred loan fees and costs | 16,732,765 | 15,093,935 | ||||||
Allowance for credit losses | (150,011 | ) | (140,050 | ) | ||||
Total loans HFI | $ | 16,582,754 | $ | 14,953,885 |
September 30, 2018 | ||||||||||||||||||||||||
Current | 30-59 Days Past Due | 60-89 Days Past Due | Over 90 Days Past Due | Total Past Due | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Commercial and industrial | $ | 7,477,017 | $ | 8,870 | $ | 254 | $ | 1,584 | $ | 10,708 | $ | 7,487,725 | ||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Owner occupied | 2,287,826 | — | 330 | — | 330 | 2,288,156 | ||||||||||||||||||
Non-owner occupied | 3,787,571 | — | 531 | — | 531 | 3,788,102 | ||||||||||||||||||
Multi-family | 164,864 | — | — | — | — | 164,864 | ||||||||||||||||||
Construction and land development | ||||||||||||||||||||||||
Construction | 1,412,161 | — | — | — | — | 1,412,161 | ||||||||||||||||||
Land | 695,470 | — | — | — | — | 695,470 | ||||||||||||||||||
Residential real estate | 811,516 | 5,865 | 1,338 | 8,354 | 15,557 | 827,073 | ||||||||||||||||||
Consumer | 68,881 | — | — | 333 | 333 | 69,214 | ||||||||||||||||||
Total loans | $ | 16,705,306 | $ | 14,735 | $ | 2,453 | $ | 10,271 | $ | 27,459 | $ | 16,732,765 |
December 31, 2017 | ||||||||||||||||||||||||
Current | 30-59 Days Past Due | 60-89 Days Past Due | Over 90 days Past Due | Total Past Due | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Commercial and industrial | $ | 6,835,385 | $ | 2,245 | $ | 669 | $ | 3,082 | $ | 5,996 | $ | 6,841,381 | ||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Owner occupied | 2,240,457 | 1,026 | — | 130 | 1,156 | 2,241,613 | ||||||||||||||||||
Non-owner occupied | 3,696,729 | 2,993 | — | 2,847 | 5,840 | 3,702,569 | ||||||||||||||||||
Multi-family | 201,442 | — | — | — | — | 201,442 | ||||||||||||||||||
Construction and land development | ||||||||||||||||||||||||
Construction | 1,090,176 | — | — | — | — | 1,090,176 | ||||||||||||||||||
Land | 536,917 | — | — | 5,111 | 5,111 | 542,028 | ||||||||||||||||||
Residential real estate | 411,857 | 6,874 | 1,487 | 5,722 | 14,083 | 425,940 | ||||||||||||||||||
Consumer | 48,408 | 83 | 213 | 82 | 378 | 48,786 | ||||||||||||||||||
Total loans | $ | 15,061,371 | $ | 13,221 | $ | 2,369 | $ | 16,974 | $ | 32,564 | $ | 15,093,935 |
September 30, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||||
Non-accrual loans | Loans past due 90 days or more and still accruing | Non-accrual loans | Loans past due 90 days or more and still accruing | |||||||||||||||||||||||||||||
Current | Past Due/ Delinquent | Total Non-accrual | Current | Past Due/ Delinquent | Total Non-accrual | |||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
Commercial and industrial | $ | 14,894 | $ | 9,083 | $ | 23,977 | $ | — | $ | 17,913 | $ | 4,113 | $ | 22,026 | $ | 43 | ||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||
Owner occupied | — | — | — | — | 1,089 | 792 | 1,881 | — | ||||||||||||||||||||||||
Non-owner occupied | — | — | — | — | — | 5,840 | 5,840 | — | ||||||||||||||||||||||||
Multi-family | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Construction and land development | ||||||||||||||||||||||||||||||||
Construction | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Land | — | — | — | — | 868 | 5,111 | 5,979 | — | ||||||||||||||||||||||||
Residential real estate | 4,204 | 8,354 | 12,558 | — | 2,039 | 6,078 | 8,117 | — | ||||||||||||||||||||||||
Consumer | — | 333 | 333 | — | — | 82 | 82 | — | ||||||||||||||||||||||||
Total | $ | 19,098 | $ | 17,770 | $ | 36,868 | $ | — | $ | 21,909 | $ | 22,016 | $ | 43,925 | $ | 43 |
September 30, 2018 | ||||||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | Loss | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Commercial and industrial | $ | 7,273,634 | $ | 83,886 | $ | 129,183 | $ | 1,022 | $ | — | $ | 7,487,725 | ||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Owner occupied | 2,214,765 | 18,713 | 54,678 | — | — | 2,288,156 | ||||||||||||||||||
Non-owner occupied | 3,765,340 | 14,666 | 8,096 | — | — | 3,788,102 | ||||||||||||||||||
Multi-family | 164,864 | — | — | — | — | 164,864 | ||||||||||||||||||
Construction and land development | ||||||||||||||||||||||||
Construction | 1,404,619 | 1,233 | 6,309 | — | — | 1,412,161 | ||||||||||||||||||
Land | 694,596 | 266 | 608 | — | — | 695,470 | ||||||||||||||||||
Residential real estate | 808,065 | 5,884 | 13,124 | — | — | 827,073 | ||||||||||||||||||
Consumer | 68,599 | 41 | 574 | — | — | 69,214 | ||||||||||||||||||
Total | $ | 16,394,482 | $ | 124,689 | $ | 212,572 | $ | 1,022 | $ | — | $ | 16,732,765 |
September 30, 2018 | ||||||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | Loss | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Current (up to 29 days past due) | $ | 16,386,286 | $ | 124,056 | $ | 194,118 | $ | 846 | $ | — | $ | 16,705,306 | ||||||||||||
Past due 30 - 59 days | 5,991 | 393 | 8,351 | — | — | 14,735 | ||||||||||||||||||
Past due 60 - 89 days | 1,870 | 240 | 343 | — | — | 2,453 | ||||||||||||||||||
Past due 90 days or more | 335 | — | 9,760 | 176 | — | 10,271 | ||||||||||||||||||
Total | $ | 16,394,482 | $ | 124,689 | $ | 212,572 | $ | 1,022 | $ | — | $ | 16,732,765 |
December 31, 2017 | ||||||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | Loss | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Commercial and industrial | $ | 6,675,574 | $ | 85,781 | $ | 76,328 | $ | 3,698 | $ | — | $ | 6,841,381 | ||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Owner occupied | 2,149,465 | 43,122 | 48,397 | 629 | — | 2,241,613 | ||||||||||||||||||
Non-owner occupied | 3,676,711 | 11,166 | 14,692 | — | — | 3,702,569 | ||||||||||||||||||
Multi-family | 201,442 | — | — | — | — | 201,442 | ||||||||||||||||||
Construction and land development | ||||||||||||||||||||||||
Construction | 1,072,342 | 4,477 | 13,357 | — | — | 1,090,176 | ||||||||||||||||||
Land | 535,412 | 637 | 5,979 | — | — | 542,028 | ||||||||||||||||||
Residential real estate | 408,527 | 8,971 | 8,442 | — | — | 425,940 | ||||||||||||||||||
Consumer | 47,824 | 878 | 84 | — | — | 48,786 | ||||||||||||||||||
Total | $ | 14,767,297 | $ | 155,032 | $ | 167,279 | $ | 4,327 | $ | — | $ | 15,093,935 |
December 31, 2017 | ||||||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | Loss | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Current (up to 29 days past due) | $ | 14,758,149 | $ | 154,295 | $ | 145,934 | $ | 2,993 | $ | — | $ | 15,061,371 | ||||||||||||
Past due 30 - 59 days | 7,966 | 518 | 4,737 | — | — | 13,221 | ||||||||||||||||||
Past due 60 - 89 days | 1,182 | 219 | 968 | — | — | 2,369 | ||||||||||||||||||
Past due 90 days or more | — | — | 15,640 | 1,334 | — | 16,974 | ||||||||||||||||||
Total | $ | 14,767,297 | $ | 155,032 | $ | 167,279 | $ | 4,327 | $ | — | $ | 15,093,935 |
September 30, 2018 | December 31, 2017 | |||||||
(in thousands) | ||||||||
Impaired loans with a specific valuation allowance under ASC 310 (1) | $ | 3,601 | $ | 19,315 | ||||
Impaired loans without a specific valuation allowance under ASC 310 (2) | 121,968 | 79,239 | ||||||
Total impaired loans | $ | 125,569 | $ | 98,554 | ||||
Valuation allowance related to impaired loans (3) | $ | (1,171 | ) | $ | (5,606 | ) |
(1) | Includes TDR loans of $2.6 million and $3.7 million at September 30, 2018 and December 31, 2017, respectively. |
(2) | Includes TDR loans of $49.5 million and $48.8 million at September 30, 2018 and December 31, 2017, respectively. |
(3) | Includes valuation allowance related to TDR loans of $0.7 million and $1.2 million at September 30, 2018 and December 31, 2017, respectively. |
September 30, 2018 | December 31, 2017 | |||||||
(in thousands) | ||||||||
Commercial and industrial | $ | 76,185 | $ | 34,156 | ||||
Commercial real estate | ||||||||
Owner occupied | 6,660 | 10,430 | ||||||
Non-owner occupied | 12,544 | 21,251 | ||||||
Multi-family | — | — | ||||||
Construction and land development | ||||||||
Construction | — | — | ||||||
Land | 9,128 | 15,426 | ||||||
Residential real estate | 20,686 | 17,170 | ||||||
Consumer | 366 | 121 | ||||||
Total | $ | 125,569 | $ | 98,554 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Average balance on impaired loans | $ | 104,652 | $ | 108,033 | $ | 100,712 | $ | 106,456 | ||||||||
Interest income recognized on impaired loans | 1,114 | 1,040 | 3,109 | 3,075 | ||||||||||||
Interest recognized on non-accrual loans, cash basis | 569 | 694 | 1,443 | 1,372 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Commercial and industrial | $ | 55,026 | $ | 40,074 | $ | 47,083 | $ | 33,358 | ||||||||
Commercial real estate | ||||||||||||||||
Owner occupied | 6,698 | 17,779 | 8,053 | 20,136 | ||||||||||||
Non-owner occupied | 12,597 | 20,789 | 16,349 | 22,446 | ||||||||||||
Multi-family | — | — | — | — | ||||||||||||
Construction and land development | ||||||||||||||||
Construction | — | — | — | — | ||||||||||||
Land | 9,218 | 12,503 | 9,701 | 13,297 | ||||||||||||
Residential real estate | 20,746 | 16,692 | 19,217 | 17,011 | ||||||||||||
Consumer | 367 | 196 | 309 | 208 | ||||||||||||
Total | $ | 104,652 | $ | 108,033 | $ | 100,712 | $ | 106,456 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Commercial and industrial | $ | 537 | $ | 307 | $ | 1,276 | $ | 788 | ||||||||
Commercial real estate | ||||||||||||||||
Owner occupied | 118 | 166 | 376 | 530 | ||||||||||||
Non-owner occupied | 218 | 279 | 744 | 798 | ||||||||||||
Multi-family | — | — | — | — | ||||||||||||
Construction and land development | ||||||||||||||||
Construction | — | — | — | — | ||||||||||||
Land | 146 | 163 | 425 | 551 | ||||||||||||
Residential real estate | 95 | 124 | 287 | 406 | ||||||||||||
Consumer | — | 1 | 1 | 2 | ||||||||||||
Total | $ | 1,114 | $ | 1,040 | $ | 3,109 | $ | 3,075 |
September 30, 2018 | December 31, 2017 | |||||||
(in thousands) | ||||||||
Non-accrual loans (1) | $ | 36,868 | $ | 43,925 | ||||
Loans past due 90 days or more on accrual status (2) | — | 43 | ||||||
Accruing troubled debt restructured loans | 42,567 | 42,431 | ||||||
Total nonperforming loans | 79,435 | 86,399 | ||||||
Other assets acquired through foreclosure, net | 20,028 | 28,540 | ||||||
Total nonperforming assets | $ | 99,463 | $ | 114,939 |
(1) | Includes non-accrual TDR loans of $9.6 million and $10.1 million at September 30, 2018 and December 31, 2017, respectively. |
(2) | Includes less than $0.1 million from loans acquired with deteriorated credit quality at December 31, 2017. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Balance, at beginning of period | $ | 4,828 | $ | 14,247 | $ | 9,324 | $ | 15,177 | ||||||||
Reclassifications from non-accretable to accretable yield (1) | — | — | 683 | 2,086 | ||||||||||||
Accretion to interest income | (224 | ) | (690 | ) | (801 | ) | (2,374 | ) | ||||||||
Reversal of fair value adjustments upon disposition of loans | (563 | ) | (2,199 | ) | (5,165 | ) | (3,531 | ) | ||||||||
Balance, at end of period | $ | 4,041 | $ | 11,358 | $ | 4,041 | $ | 11,358 |
(1) | The primary drivers of reclassification from non-accretable to accretable yield resulted from changes in estimated cash flows. |
Three Months Ended September 30, | ||||||||||||||||||||||||
Construction and Land Development | Commercial Real Estate | Residential Real Estate | Commercial and Industrial | Consumer | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
2018 | ||||||||||||||||||||||||
Beginning Balance | $ | 22,159 | $ | 31,979 | $ | 6,849 | $ | 85,244 | $ | 852 | $ | 147,083 | ||||||||||||
Charge-offs | — | — | 46 | 4,610 | 109 | 4,765 | ||||||||||||||||||
Recoveries | (24 | ) | (856 | ) | (440 | ) | (362 | ) | (11 | ) | (1,693 | ) | ||||||||||||
Provision | 473 | (1,250 | ) | 832 | 5,652 | 293 | 6,000 | |||||||||||||||||
Ending balance | $ | 22,656 | $ | 31,585 | $ | 8,075 | $ | 86,648 | $ | 1,047 | $ | 150,011 | ||||||||||||
2017 | ||||||||||||||||||||||||
Beginning Balance | $ | 20,852 | $ | 28,593 | $ | 4,838 | $ | 76,734 | $ | 794 | $ | 131,811 | ||||||||||||
Charge-offs | — | 175 | — | 2,921 | 61 | 3,157 | ||||||||||||||||||
Recoveries | (226 | ) | (1,781 | ) | (108 | ) | (619 | ) | (33 | ) | (2,767 | ) | ||||||||||||
Provision | (619 | ) | (1,474 | ) | (141 | ) | 7,192 | 42 | 5,000 | |||||||||||||||
Ending balance | $ | 20,459 | $ | 28,725 | $ | 4,805 | $ | 81,624 | $ | 808 | $ | 136,421 |
Nine Months Ended September 30, | ||||||||||||||||||||||||
Construction and Land Development | Commercial Real Estate | Residential Real Estate | Commercial and Industrial | Consumer | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
2018 | ||||||||||||||||||||||||
Beginning Balance | $ | 19,511 | $ | 31,495 | $ | 5,478 | $ | 82,793 | $ | 773 | $ | 140,050 | ||||||||||||
Charge-offs | 1 | 233 | 1,038 | 10,904 | 114 | 12,290 | ||||||||||||||||||
Recoveries | (1,420 | ) | (1,228 | ) | (831 | ) | (1,737 | ) | (35 | ) | (5,251 | ) | ||||||||||||
Provision | 1,726 | (905 | ) | 2,804 | 13,022 | 353 | 17,000 | |||||||||||||||||
Ending balance | $ | 22,656 | $ | 31,585 | $ | 8,075 | $ | 86,648 | $ | 1,047 | $ | 150,011 | ||||||||||||
2017 | ||||||||||||||||||||||||
Beginning Balance | $ | 21,175 | $ | 25,673 | $ | 3,851 | $ | 73,333 | $ | 672 | $ | 124,704 | ||||||||||||
Charge-offs | — | 1,994 | 447 | 6,166 | 103 | 8,710 | ||||||||||||||||||
Recoveries | (1,011 | ) | (2,719 | ) | (1,659 | ) | (2,705 | ) | (83 | ) | (8,177 | ) | ||||||||||||
Provision | (1,727 | ) | 2,327 | (258 | ) | 11,752 | 156 | 12,250 | ||||||||||||||||
Ending balance | $ | 20,459 | $ | 28,725 | $ | 4,805 | $ | 81,624 | $ | 808 | $ | 136,421 |
Commercial Real Estate-Owner Occupied | Commercial Real Estate-Non-Owner Occupied | Commercial and Industrial | Residential Real Estate | Construction and Land Development | Consumer | Total Loans | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Loans as of September 30, 2018; | ||||||||||||||||||||||||||||
Recorded Investment | ||||||||||||||||||||||||||||
Impaired loans with an allowance recorded | $ | — | $ | — | $ | 3,238 | $ | 363 | $ | — | $ | — | $ | 3,601 | ||||||||||||||
Impaired loans with no allowance recorded | 6,660 | 12,544 | 72,947 | 20,323 | 9,128 | 366 | 121,968 | |||||||||||||||||||||
Total loans individually evaluated for impairment | 6,660 | 12,544 | 76,185 | 20,686 | 9,128 | 366 | 125,569 | |||||||||||||||||||||
Loans collectively evaluated for impairment | 2,276,847 | 3,859,914 | 7,411,540 | 805,800 | 2,098,503 | 68,848 | 16,521,452 | |||||||||||||||||||||
Loans acquired with deteriorated credit quality | 4,649 | 80,508 | — | 587 | — | — | 85,744 | |||||||||||||||||||||
Total recorded investment | $ | 2,288,156 | $ | 3,952,966 | $ | 7,487,725 | $ | 827,073 | $ | 2,107,631 | $ | 69,214 | $ | 16,732,765 | ||||||||||||||
Unpaid Principal Balance | ||||||||||||||||||||||||||||
Impaired loans with an allowance recorded | $ | — | $ | — | $ | 5,520 | $ | 363 | $ | — | $ | — | $ | 5,883 | ||||||||||||||
Impaired loans with no allowance recorded | 13,164 | 18,292 | 108,469 | 29,312 | 25,756 | 10,726 | 205,719 | |||||||||||||||||||||
Total loans individually evaluated for impairment | 13,164 | 18,292 | 113,989 | 29,675 | 25,756 | 10,726 | 211,602 | |||||||||||||||||||||
Loans collectively evaluated for impairment | 2,276,847 | 3,859,914 | 7,411,540 | 805,800 | 2,098,503 | 68,848 | 16,521,452 | |||||||||||||||||||||
Loans acquired with deteriorated credit quality | 6,351 | 96,840 | 4,357 | 706 | — | — | 108,254 | |||||||||||||||||||||
Total unpaid principal balance | $ | 2,296,362 | $ | 3,975,046 | $ | 7,529,886 | $ | 836,181 | $ | 2,124,259 | $ | 79,574 | $ | 16,841,308 | ||||||||||||||
Related Allowance for Credit Losses | ||||||||||||||||||||||||||||
Impaired loans with an allowance recorded | $ | — | $ | — | $ | 1,111 | $ | 60 | $ | — | $ | — | $ | 1,171 | ||||||||||||||
Impaired loans with no allowance recorded | — | — | — | — | — | — | — | |||||||||||||||||||||
Total loans individually evaluated for impairment | — | — | 1,111 | 60 | — | — | 1,171 | |||||||||||||||||||||
Loans collectively evaluated for impairment | 13,946 | 17,497 | 85,528 | 8,015 | 22,656 | 1,047 | 148,689 | |||||||||||||||||||||
Loans acquired with deteriorated credit quality | — | 142 | 9 | — | — | — | 151 | |||||||||||||||||||||
Total allowance for credit losses | $ | 13,946 | $ | 17,639 | $ | 86,648 | $ | 8,075 | $ | 22,656 | $ | 1,047 | $ | 150,011 |
Commercial Real Estate-Owner Occupied | Commercial Real Estate-Non-Owner Occupied | Commercial and Industrial | Residential Real Estate | Construction and Land Development | Consumer | Total Loans | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Loans as of December 31, 2017; | ||||||||||||||||||||||||||||
Recorded Investment | ||||||||||||||||||||||||||||
Impaired loans with an allowance recorded | $ | — | $ | — | $ | 19,315 | $ | — | $ | — | $ | — | $ | 19,315 | ||||||||||||||
Impaired loans with no allowance recorded | 10,430 | 21,250 | 14,842 | 17,170 | 15,426 | 121 | 79,239 | |||||||||||||||||||||
Total loans individually evaluated for impairment | 10,430 | 21,250 | 34,157 | 17,170 | 15,426 | 121 | 98,554 | |||||||||||||||||||||
Loans collectively evaluated for impairment | 2,221,614 | 3,777,219 | 6,807,181 | 408,169 | 1,616,778 | 48,665 | 14,879,626 | |||||||||||||||||||||
Loans acquired with deteriorated credit quality | 9,569 | 105,542 | 43 | 601 | — | — | 115,755 | |||||||||||||||||||||
Total recorded investment | $ | 2,241,613 | $ | 3,904,011 | $ | 6,841,381 | $ | 425,940 | $ | 1,632,204 | $ | 48,786 | $ | 15,093,935 | ||||||||||||||
Unpaid Principal Balance | ||||||||||||||||||||||||||||
Impaired loans with an allowance recorded | $ | — | $ | — | $ | 20,795 | $ | — | $ | — | $ | — | $ | 20,795 | ||||||||||||||
Impaired loans with no allowance recorded | 17,459 | 28,028 | 42,261 | 26,057 | 32,289 | 10,695 | 156,789 | |||||||||||||||||||||
Total loans individually evaluated for impairment | 17,459 | 28,028 | 63,056 | 26,057 | 32,289 | 10,695 | 177,584 | |||||||||||||||||||||
Loans collectively evaluated for impairment | 2,221,614 | 3,777,219 | 6,807,181 | 408,169 | 1,616,778 | 48,665 | 14,879,626 | |||||||||||||||||||||
Loans acquired with deteriorated credit quality | 12,619 | 128,440 | 3,146 | 720 | — | — | 144,925 | |||||||||||||||||||||
Total unpaid principal balance | $ | 2,251,692 | $ | 3,933,687 | $ | 6,873,383 | $ | 434,946 | $ | 1,649,067 | $ | 59,360 | $ | 15,202,135 | ||||||||||||||
Related Allowance for Credit Losses | ||||||||||||||||||||||||||||
Impaired loans with an allowance recorded | $ | — | $ | — | $ | 5,606 | $ | — | $ | — | $ | — | $ | 5,606 | ||||||||||||||
Impaired loans with no allowance recorded | — | — | — | — | — | — | — | |||||||||||||||||||||
Total loans individually evaluated for impairment | — | — | 5,606 | — | — | — | 5,606 | |||||||||||||||||||||
Loans collectively evaluated for impairment | 13,884 | 16,135 | 76,919 | 5,500 | 19,599 | 776 | 132,813 | |||||||||||||||||||||
Loans acquired with deteriorated credit quality | — | 1,629 | 2 | — | — | — | 1,631 | |||||||||||||||||||||
Total allowance for credit losses | $ | 13,884 | $ | 17,764 | $ | 82,527 | $ | 5,500 | $ | 19,599 | $ | 776 | $ | 140,050 |
Three Months Ended September 30, | ||||||||||||
2018 | ||||||||||||
Gross Balance | Valuation Allowance | Net Balance | ||||||||||
(in thousands) | ||||||||||||
Balance, beginning of period | $ | 31,145 | $ | (3,604 | ) | $ | 27,541 | |||||
Proceeds from sale of other real estate owned and repossessed assets, net | (1,093 | ) | 401 | (692 | ) | |||||||
Charitable contribution (1) | (6,895 | ) | — | (6,895 | ) | |||||||
Valuation adjustments, net | — | — | — | |||||||||
Gains (losses), net (2) | 74 | — | 74 | |||||||||
Balance, end of period | $ | 23,231 | $ | (3,203 | ) | $ | 20,028 | |||||
2017 | ||||||||||||
Balance, beginning of period | $ | 35,037 | $ | (4,049 | ) | $ | 30,988 | |||||
Transfers to other assets acquired through foreclosure, net | 430 | — | 430 | |||||||||
Proceeds from sale of other real estate owned and repossessed assets, net | (2,491 | ) | 330 | (2,161 | ) | |||||||
Valuation adjustments, net | — | (343 | ) | (343 | ) | |||||||
Gains (losses), net (2) | 78 | — | 78 | |||||||||
Balance, end of period | $ | 33,054 | $ | (4,062 | ) | $ | 28,992 |
Nine Months Ended September 30, | ||||||||||||
2018 | ||||||||||||
Gross Balance | Valuation Allowance | Net Balance | ||||||||||
(in thousands) | ||||||||||||
Balance, beginning of period | $ | 32,552 | $ | (4,012 | ) | $ | 28,540 | |||||
Transfers to other assets acquired through foreclosure, net | 5,744 | — | 5,744 | |||||||||
Proceeds from sale of other real estate owned and repossessed assets, net | (9,634 | ) | 841 | (8,793 | ) | |||||||
Charitable contribution (1) | (6,895 | ) | — | (6,895 | ) | |||||||
Valuation adjustments, net | — | (32 | ) | (32 | ) | |||||||
Gains (losses), net (3) | 1,464 | — | 1,464 | |||||||||
Balance, end of period | $ | 23,231 | $ | (3,203 | ) | $ | 20,028 | |||||
2017 | ||||||||||||
Balance, beginning of period | $ | 54,138 | $ | (6,323 | ) | $ | 47,815 | |||||
Transfers to other assets acquired through foreclosure, net | 1,812 | — | 1,812 | |||||||||
Proceeds from sale of other real estate owned and repossessed assets, net | (23,129 | ) | 2,381 | (20,748 | ) | |||||||
Valuation adjustments, net | — | (120 | ) | (120 | ) | |||||||
Gains (losses), net (3) | 233 | — | 233 | |||||||||
Balance, end of period | $ | 33,054 | $ | (4,062 | ) | $ | 28,992 |
(1) | Represents a contribution of OREO property to the Company's charitable foundation. See Note 16. Related Party Transactions for further discussion. |
(2) | There were no net gains related to initial transfers to other assets during the three months ended September 30, 2018 and 2017, respectively. |
(3) | There were $1.0 million and $0.1 million in net gains related to initial transfers to other assets during the nine months ended September 30, 2018 and 2017, respectively. |
September 30, 2018 | December 31, 2017 | |||||||
(in thousands) | ||||||||
Short-Term: | ||||||||
FHLB advances | $ | — | $ | 390,000 | ||||
Total short-term borrowings | $ | — | $ | 390,000 |
Three Months Ended September 30, | ||||||||||||||||||||
Unrealized holding (losses) gains on AFS | Unrealized holding gains (losses) on SERP | Unrealized holding gains (losses) on junior subordinated debt | Impairment loss on securities | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Balance, June 30, 2018 | $ | (61,859 | ) | $ | 446 | $ | 9,954 | $ | 144 | $ | (51,315 | ) | ||||||||
Other comprehensive (loss) income before reclassifications | (22,462 | ) | (12 | ) | (2,028 | ) | — | (24,502 | ) | |||||||||||
Amounts reclassified from AOCI | 5,454 | — | — | — | 5,454 | |||||||||||||||
Net current-period other comprehensive (loss) income | (17,008 | ) | (12 | ) | (2,028 | ) | — | (19,048 | ) | |||||||||||
Balance, September 30, 2018 | $ | (78,867 | ) | $ | 434 | $ | 7,926 | $ | 144 | $ | (70,363 | ) | ||||||||
Balance, June 30, 2017 | $ | (449 | ) | $ | 157 | $ | 6,638 | $ | 144 | $ | 6,490 | |||||||||
Other comprehensive income (loss) before reclassifications | 1,116 | 114 | 641 | — | 1,871 | |||||||||||||||
Amounts reclassified from AOCI | (197 | ) | — | — | — | (197 | ) | |||||||||||||
Net current-period other comprehensive income (loss) | 919 | 114 | 641 | — | 1,674 | |||||||||||||||
Balance, September 30, 2017 | $ | 470 | $ | 271 | $ | 7,279 | $ | 144 | $ | 8,164 |
Nine Months Ended September 30, | ||||||||||||||||||||
Unrealized holding (losses) gains on AFS | Unrealized holding gains (losses) on SERP | Unrealized holding gains (losses) on junior subordinated debt | Impairment loss on securities | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Balance, December 31, 2017 | $ | (10,026 | ) | $ | 385 | $ | 6,352 | $ | 144 | $ | (3,145 | ) | ||||||||
Balance, January 1, 2018 (1) | (12,556 | ) | 469 | 7,740 | 144 | (4,203 | ) | |||||||||||||
Other comprehensive (loss) income before reclassifications | (71,765 | ) | (35 | ) | 186 | — | (71,614 | ) | ||||||||||||
Amounts reclassified from AOCI | 5,454 | — | — | — | 5,454 | |||||||||||||||
Net current-period other comprehensive (loss) income | (66,311 | ) | (35 | ) | 186 | — | (66,160 | ) | ||||||||||||
Balance, September 30, 2018 | $ | (78,867 | ) | $ | 434 | $ | 7,926 | $ | 144 | $ | (70,363 | ) | ||||||||
Balance, December 31, 2016 | $ | (14,916 | ) | $ | 121 | $ | 9,956 | $ | 144 | $ | (4,695 | ) | ||||||||
Other comprehensive income (loss) before reclassifications | 15,947 | 150 | (2,677 | ) | — | 13,420 | ||||||||||||||
Amounts reclassified from AOCI | (561 | ) | — | — | — | (561 | ) | |||||||||||||
Net current-period other comprehensive income (loss) | 15,386 | 150 | (2,677 | ) | — | 12,859 | ||||||||||||||
Balance, September 30, 2017 | $ | 470 | $ | 271 | $ | 7,279 | $ | 144 | $ | 8,164 |
(1) | As adjusted for adoption of ASU 2016-01 and ASU 2018-02, see "Note 1. Summary of Significant Accounting Policies" for further discussion. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
Income Statement Classification | 2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | ||||||||||||||||
(Loss) gain on sales of investment securities, net | $ | (7,232 | ) | $ | 319 | $ | (7,232 | ) | $ | 907 | ||||||
Income tax expense (benefit) | 1,778 | (122 | ) | 1,778 | (346 | ) | ||||||||||
Net of tax | $ | (5,454 | ) | $ | 197 | $ | (5,454 | ) | $ | 561 |
September 30, 2018 | December 31, 2017 | |||||||||||||||
Carrying Value of Hedged Assets/(Liabilities) | Cumulative Amount of the Fair Value Hedging Adjustment (1) | Carrying Value of Hedged Assets/(Liabilities) | Cumulative Amount of the Fair Value Hedging Adjustment (1) | |||||||||||||
(in thousands) | ||||||||||||||||
Loans - HFI, net of deferred loan fees and costs | $ | 635,184 | $ | 1,997 | $ | 699,452 | $ | 41,919 | ||||||||
Qualifying debt | (290,801 | ) | 28,160 | (308,608 | ) | 9,959 |
(1) | Included in the carrying value of the hedged assets/(liabilities). |
September 30, 2018 | December 31, 2017 | September 30, 2017 | |||||||||||||||||||||||||||||||||
Fair Value | Fair Value | Fair Value | |||||||||||||||||||||||||||||||||
Notional Amount | Derivative Assets | Derivative Liabilities | Notional Amount | Derivative Assets | Derivative Liabilities | Notional Amount | Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
Fair value hedges | |||||||||||||||||||||||||||||||||||
Interest rate swaps | $ | 971,408 | $ | 7,883 | $ | 38,040 | $ | 993,432 | $ | 1,703 | $ | 53,581 | $ | 1,016,694 | $ | 1,656 | $ | 59,346 | |||||||||||||||||
Total | 971,408 | 7,883 | 38,040 | 993,432 | 1,703 | 53,581 | 1,016,694 | 1,656 | 59,346 | ||||||||||||||||||||||||||
Netting adjustments (1) | — | 6,119 | 6,119 | — | 896 | 896 | — | 1,588 | 1,588 | ||||||||||||||||||||||||||
Net derivatives in the balance sheet | $ | 971,408 | $ | 1,764 | $ | 31,921 | $ | 993,432 | $ | 807 | $ | 52,685 | $ | 1,016,694 | $ | 68 | $ | 57,758 | |||||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
Foreign currency contracts (2) | $ | 47,349 | $ | 1,003 | $ | 841 | $ | 85,335 | $ | 1,232 | $ | 983 | $ | 68,122 | $ | 494 | $ | 291 | |||||||||||||||||
Interest rate swaps | 2,348 | 92 | 92 | 36,969 | 776 | 776 | 35,578 | 641 | 641 | ||||||||||||||||||||||||||
Total | $ | 49,697 | $ | 1,095 | $ | 933 | $ | 122,304 | $ | 2,008 | $ | 1,759 | $ | 103,700 | $ | 1,135 | $ | 932 |
(1) | Netting adjustments represent the amounts recorded to convert the Company's derivative balances from a gross basis to a net basis in accordance with the applicable accounting guidance. |
(2) | Prior period derivative asset / liability netting adjustments have been made to conform to current presentation. |
September 30, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||
(in thousands) | ||||||||||||
Largest gross exposure (derivative asset) to an individual counterparty | $ | 5,802 | $ | 893 | $ | 945 | ||||||
Collateral posted by this counterparty | — | — | — | |||||||||
Derivative liability with this counterparty | 9,567 | 40,340 | 44,053 | |||||||||
Collateral pledged to this counterparty | 22,179 | 60,476 | 65,051 | |||||||||
Net exposure after netting adjustments and collateral | $ | — | $ | — | $ | — |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Weighted average shares - basic | 104,768 | 104,221 | 104,664 | 104,124 | ||||||||||||
Dilutive effect of stock awards | 680 | 721 | 734 | 817 | ||||||||||||
Weighted average shares - diluted | 105,448 | 104,942 | 105,398 | 104,941 | ||||||||||||
Net income | $ | 111,123 | $ | 82,844 | $ | 316,702 | $ | 236,146 | ||||||||
Earnings per share - basic | 1.06 | 0.79 | 3.03 | 2.27 | ||||||||||||
Earnings per share - diluted | 1.05 | 0.79 | 3.00 | 2.25 |
September 30, 2018 | December 31, 2017 | |||||||
(in thousands) | ||||||||
Commitments to extend credit, including unsecured loan commitments of $594,074 at September 30, 2018 and $364,638 at December 31, 2017 | $ | 6,798,062 | $ | 5,851,158 | ||||
Credit card commitments and financial guarantees | 218,993 | 153,752 | ||||||
Standby letters of credit, including unsecured letters of credit of $16,940 at September 30, 2018 and $11,664 at December 31, 2017 | 216,636 | 161,966 | ||||||
Total | $ | 7,233,691 | $ | 6,166,876 |
Changes in Fair Values for Items Measured at Fair Value Pursuant to Election of the Fair Value Option | ||||||||||||||||||||
Unrealized Gain/(Loss) on Assets and Liabilities Measured at Fair Value, Net | Interest Income on Securities | Interest Expense on Junior Subordinated Debt | Total Changes Included in Current-Period Earnings | Changes Included in OCI | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Three Months Ended September 30, 2018 | ||||||||||||||||||||
Junior subordinated debt | $ | (2,689 | ) | $ | — | $ | 1,056 | $ | 1,056 | $ | (2,028 | ) | ||||||||
Nine Months Ended September 30, 2018 | ||||||||||||||||||||
Junior subordinated debt | $ | 247 | $ | — | $ | 2,979 | $ | 2,979 | $ | 186 | ||||||||||
Three Months Ended September 30, 2017 | ||||||||||||||||||||
Junior subordinated debt | $ | 1,035 | $ | — | $ | (835 | ) | $ | (835 | ) | $ | 641 | ||||||||
Nine Months Ended September 30, 2017 | ||||||||||||||||||||
Trading securities | $ | — | $ | 9 | $ | — | $ | 9 | $ | — | ||||||||||
Junior subordinated debt | (4,327 | ) | — | (2,376 | ) | (2,376 | ) | (2,677 | ) | |||||||||||
Total | $ | (4,327 | ) | $ | 9 | $ | (2,376 | ) | $ | (2,367 | ) | $ | (2,677 | ) |
Fair Value Measurements at the End of the Reporting Period Using: | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
September 30, 2018 | ||||||||||||||||
Assets: | ||||||||||||||||
Available-for-sale debt securities | ||||||||||||||||
CDO | $ | — | $ | 19,148 | $ | — | $ | 19,148 | ||||||||
Commercial MBS issued by GSEs | — | 100,943 | — | 100,943 | ||||||||||||
Corporate debt securities | — | 99,384 | — | 99,384 | ||||||||||||
Private label residential MBS | — | 855,942 | — | 855,942 | ||||||||||||
Residential MBS issued by GSEs | — | 1,450,059 | — | 1,450,059 | ||||||||||||
Tax-exempt | — | 504,907 | — | 504,907 | ||||||||||||
Trust preferred securities | — | 28,617 | — | 28,617 | ||||||||||||
U.S. government sponsored agency securities | — | 45,601 | — | 45,601 | ||||||||||||
U.S. treasury securities | — | 2,475 | — | 2,475 | ||||||||||||
Total AFS debt securities | $ | — | $ | 3,107,076 | $ | — | $ | 3,107,076 | ||||||||
Equity securities | ||||||||||||||||
CRA investments | 50,744 | — | — | 50,744 | ||||||||||||
Preferred stock | 121,550 | — | — | 121,550 | ||||||||||||
Total equity securities | $ | 172,294 | $ | — | $ | — | $ | 172,294 | ||||||||
Derivative assets (1) | $ | — | $ | 8,978 | $ | — | $ | 8,978 | ||||||||
Liabilities: | ||||||||||||||||
Junior subordinated debt (2) | $ | — | $ | — | $ | 55,987 | $ | 55,987 | ||||||||
Derivative liabilities (1) | — | 38,973 | — | 38,973 |
(1) | Derivative assets and liabilities relate to interest rate swaps, see "Note 9. Derivatives and Hedging Activities." In addition, the carrying value of loans is decreased by $1,997 and the net carrying value of subordinated debt is increased by $28,160 as of September 30, 2018 for the effective portion of the hedge, which relates to the fair value of the hedges put in place to mitigate against fluctuations in interest rates. |
(2) | Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment. |
Fair Value Measurements at the End of the Reporting Period Using: | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
December 31, 2017 | ||||||||||||||||
Assets: | ||||||||||||||||
Available-for-sale debt securities | ||||||||||||||||
CDO | $ | — | $ | 21,857 | $ | — | $ | 21,857 | ||||||||
Commercial MBS issued by GSEs | — | 109,077 | — | 109,077 | ||||||||||||
Corporate debt securities | — | 103,483 | — | 103,483 | ||||||||||||
Private label residential MBS | — | 868,524 | — | 868,524 | ||||||||||||
Residential MBS issued by GSEs | — | 1,689,295 | — | 1,689,295 | ||||||||||||
Tax-exempt | — | 510,910 | — | 510,910 | ||||||||||||
Trust preferred securities | — | 28,617 | — | 28,617 | ||||||||||||
U.S. government sponsored agency securities | — | 61,462 | — | 61,462 | ||||||||||||
U.S. treasury securities | — | 2,482 | — | 2,482 | ||||||||||||
Available-for-sale equity securities | ||||||||||||||||
CRA investments | 50,616 | — | — | 50,616 | ||||||||||||
Preferred stock | 53,196 | — | — | 53,196 | ||||||||||||
Total AFS securities | $ | 103,812 | $ | 3,395,707 | $ | — | $ | 3,499,519 | ||||||||
Derivative assets (1) | $ | — | $ | 3,711 | $ | — | $ | 3,711 | ||||||||
Liabilities: | ||||||||||||||||
Junior subordinated debt (2) | $ | — | $ | — | $ | 56,234 | $ | 56,234 | ||||||||
Derivative liabilities (1) | — | 55,340 | — | 55,340 |
(1) | Derivative assets and liabilities relate to interest rate swaps, see "Note 9. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by $41,919 and the net carrying value of subordinated debt is decreased by $9,959 as of December 31, 2017 for the effective portion of the hedge, which relates to the fair value of the hedges put in place to mitigate against fluctuations in interest rates. |
(2) | Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment. |
Junior Subordinated Debt | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Beginning balance | $ | (53,298 | ) | $ | (55,772 | ) | $ | (56,234 | ) | $ | (50,410 | ) | ||||
Change in fair value | (2,689 | ) | 1,035 | 247 | (4,327 | ) | ||||||||||
Ending balance | $ | (55,987 | ) | $ | (54,737 | ) | $ | (55,987 | ) | $ | (54,737 | ) |
September 30, 2018 | Valuation Technique | Significant Unobservable Inputs | Input Value | ||||||||
(in thousands) | |||||||||||
Junior subordinated debt | $ | 55,987 | Discounted cash flow | Implied credit rating of the Company | 6.20 | % |
December 31, 2017 | Valuation Technique | Significant Unobservable Inputs | Input Value | ||||||||
(in thousands) | |||||||||||
Junior subordinated debt | $ | 56,234 | Discounted cash flow | Implied credit rating of the Company | 5.61 | % |
Fair Value Measurements at the End of the Reporting Period Using | ||||||||||||||||
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Active Markets for Similar Assets (Level 2) | Unobservable Inputs (Level 3) | |||||||||||||
(in thousands) | ||||||||||||||||
As of September 30, 2018; | ||||||||||||||||
Impaired loans with specific valuation allowance | $ | 2,430 | $ | — | $ | — | $ | 2,430 | ||||||||
Impaired loans without specific valuation allowance (1) | 81,445 | — | — | 81,445 | ||||||||||||
Other assets acquired through foreclosure | 20,028 | — | — | 20,028 | ||||||||||||
As of December 31, 2017: | ||||||||||||||||
Impaired loans with specific valuation allowance | $ | 13,709 | $ | — | $ | — | $ | 13,709 | ||||||||
Impaired loans without specific valuation allowance (1) | 63,607 | — | — | 63,607 | ||||||||||||
Other assets acquired through foreclosure | 28,540 | — | — | 28,540 |
(1) | Net of loan balances with charge-offs of $40.5 million and $15.6 million as of September 30, 2018 and December 31, 2017, respectively. |
September 30, 2018 | Valuation Technique(s) | Significant Unobservable Inputs | Range | ||||||||
(in thousands) | |||||||||||
Impaired loans | $ | 83,875 | Collateral method | Third party appraisal | Costs to sell | 4.0% to 10.0% | |||||
Discounted cash flow method | Discount rate | Contractual loan rate | 4.0% to 7.0% | ||||||||
Scheduled cash collections | Probability of default | 0% to 20.0% | |||||||||
Proceeds from non-real estate collateral | Loss given default | 0% to 70.0% | |||||||||
Other assets acquired through foreclosure | 20,028 | Collateral method | Third party appraisal | Costs to sell | 4.0% to 10.0% |
December 31, 2017 | Valuation Technique(s) | Significant Unobservable Inputs | Range | ||||||||
(in thousands) | |||||||||||
Impaired loans | $ | 77,316 | Collateral method | Third party appraisal | Costs to sell | 4.0% to 10.0% | |||||
Discounted cash flow method | Discount rate | Contractual loan rate | 4.0% to 7.0% | ||||||||
Scheduled cash collections | Probability of default | 0% to 20.0% | |||||||||
Proceeds from non-real estate collateral | Loss given default | 0% to 70.0% | |||||||||
Other assets acquired through foreclosure | 28,540 | Collateral method | Third party appraisal | Costs to sell | 4.0% to 10.0% |
September 30, 2018 | ||||||||||||||||||||
Carrying Amount | Fair Value | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
(in thousands) | ||||||||||||||||||||
Financial assets: | ||||||||||||||||||||
Federal funds sold | $ | 70,000 | $ | — | $ | 70,000 | $ | — | $ | 70,000 | ||||||||||
Investment securities: | ||||||||||||||||||||
HTM | 288,290 | — | 279,033 | — | 279,033 | |||||||||||||||
AFS | 3,107,076 | — | 3,107,076 | — | 3,107,076 | |||||||||||||||
Equity | 172,294 | 172,294 | — | — | 172,294 | |||||||||||||||
Derivative assets | 8,978 | — | 8,978 | — | 8,978 | |||||||||||||||
Loans, net | 16,582,754 | — | 15,964,980 | 83,875 | 16,048,855 | |||||||||||||||
Accrued interest receivable | 88,847 | — | 88,847 | — | 88,847 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | $ | 18,908,580 | $ | — | $ | 18,918,956 | $ | — | $ | 18,918,956 | ||||||||||
Customer repurchase agreements | 20,969 | — | 20,969 | — | 20,969 | |||||||||||||||
Qualifying debt | 359,082 | — | 328,448 | 67,013 | 395,461 | |||||||||||||||
Derivative liabilities | 38,973 | — | 38,973 | — | 38,973 | |||||||||||||||
Accrued interest payable | 14,268 | — | 14,268 | — | 14,268 |
December 31, 2017 | ||||||||||||||||||||
Carrying Amount | Fair Value | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
(in thousands) | ||||||||||||||||||||
Financial assets: | ||||||||||||||||||||
Investment securities: | ||||||||||||||||||||
HTM | $ | 255,050 | $ | — | $ | 256,314 | $ | — | $ | 256,314 | ||||||||||
AFS | 3,499,519 | 103,812 | 3,395,707 | — | 3,499,519 | |||||||||||||||
Derivative assets | 3,711 | — | 3,711 | — | 3,711 | |||||||||||||||
Loans, net | 14,953,885 | — | 14,577,010 | 77,316 | 14,654,326 | |||||||||||||||
Accrued interest receivable | 85,517 | — | 85,517 | — | 85,517 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | $ | 16,972,532 | $ | — | $ | 16,980,066 | $ | — | $ | 16,980,066 | ||||||||||
Customer repurchase agreements | 26,017 | — | 26,017 | — | 26,017 | |||||||||||||||
FHLB advances | 390,000 | — | 390,000 | — | 390,000 | |||||||||||||||
Qualifying debt | 376,905 | — | 336,803 | 67,210 | 404,013 | |||||||||||||||
Derivative liabilities | 55,340 | — | 55,340 | — | 55,340 | |||||||||||||||
Accrued interest payable | 16,366 | — | 16,366 | — | 16,366 |
Regional Segments | ||||||||||||||||||||
Balance Sheet: | Consolidated Company | Arizona | Nevada | Southern California | Northern California | |||||||||||||||
At September 30, 2018 | (in millions) | |||||||||||||||||||
Assets: | ||||||||||||||||||||
Cash, cash equivalents, and investment securities | $ | 4,334.2 | $ | 2.0 | $ | 8.5 | $ | 2.1 | $ | 1.8 | ||||||||||
Loans, net of deferred loan fees and costs | 16,732.8 | 3,593.5 | 1,936.7 | 2,116.3 | 1,332.3 | |||||||||||||||
Less: allowance for credit losses | (150.0 | ) | (33.1 | ) | (18.6 | ) | (20.2 | ) | (11.3 | ) | ||||||||||
Total loans | 16,582.8 | 3,560.4 | 1,918.1 | 2,096.1 | 1,321.0 | |||||||||||||||
Other assets acquired through foreclosure, net | 20.0 | 1.7 | 14.1 | — | — | |||||||||||||||
Goodwill and other intangible assets, net | 299.5 | — | 23.2 | — | 155.8 | |||||||||||||||
Other assets | 939.6 | 46.3 | 58.0 | 15.1 | 18.8 | |||||||||||||||
Total assets | $ | 22,176.1 | $ | 3,610.4 | $ | 2,021.9 | $ | 2,113.3 | $ | 1,497.4 | ||||||||||
Liabilities: | ||||||||||||||||||||
Deposits | $ | 18,908.6 | $ | 5,331.7 | $ | 3,847.3 | $ | 2,550.7 | $ | 1,951.5 | ||||||||||
Borrowings and qualifying debt | 359.1 | — | — | — | — | |||||||||||||||
Other liabilities | 420.0 | 13.5 | 16.3 | 1.9 | 12.3 | |||||||||||||||
Total liabilities | 19,687.7 | 5,345.2 | 3,863.6 | 2,552.6 | 1,963.8 | |||||||||||||||
Allocated equity: | 2,488.4 | 439.8 | 270.7 | 242.4 | 308.7 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 22,176.1 | $ | 5,785.0 | $ | 4,134.3 | $ | 2,795.0 | $ | 2,272.5 | ||||||||||
Excess funds provided (used) | — | 2,174.6 | 2,112.4 | 681.7 | 775.1 |
Income Statement: | ||||||||||||||||||||
Three Months Ended September 30, 2018 | (in thousands) | |||||||||||||||||||
Net interest income | $ | 234,038 | $ | 56,701 | $ | 37,933 | $ | 29,572 | $ | 23,825 | ||||||||||
Provision for (recovery of) credit losses | 6,000 | (297 | ) | (38 | ) | 1,467 | 482 | |||||||||||||
Net interest income after provision for credit losses | 228,038 | 56,998 | 37,971 | 28,105 | 23,343 | |||||||||||||||
Non-interest income | 4,418 | 2,230 | 2,573 | 931 | 2,312 | |||||||||||||||
Non-interest expense | (113,841 | ) | (23,231 | ) | (16,471 | ) | (14,332 | ) | (13,207 | ) | ||||||||||
Income (loss) before income taxes | 118,615 | 35,997 | 24,073 | 14,704 | 12,448 | |||||||||||||||
Income tax expense (benefit) | 7,492 | 8,999 | 5,055 | 4,117 | 3,486 | |||||||||||||||
Net income | $ | 111,123 | $ | 26,998 | $ | 19,018 | $ | 10,587 | $ | 8,962 |
Nine Months Ended September 30, 2018 | (in thousands) | |||||||||||||||||||
Net interest income | $ | 672,366 | $ | 169,233 | $ | 109,898 | $ | 85,038 | $ | 69,081 | ||||||||||
Provision for (recovery of) credit losses | 17,000 | 1,655 | (2,005 | ) | 1,921 | 2,043 | ||||||||||||||
Net interest income after provision for credit losses | 655,366 | 167,578 | 111,903 | 83,117 | 67,038 | |||||||||||||||
Non-interest income | 29,505 | 5,902 | 8,585 | 2,898 | 7,281 | |||||||||||||||
Non-interest expense | (314,538 | ) | (67,154 | ) | (46,486 | ) | (42,470 | ) | (39,139 | ) | ||||||||||
Income (loss) before income taxes | 370,333 | 106,326 | 74,002 | 43,545 | 35,180 | |||||||||||||||
Income tax expense (benefit) | 53,631 | 26,644 | 15,634 | 12,288 | 9,938 | |||||||||||||||
Net income | $ | 316,702 | $ | 79,682 | $ | 58,368 | $ | 31,257 | $ | 25,242 |
National Business Lines | ||||||||||||||||||||||||
Balance Sheet: | HOA Services | Public & Nonprofit Finance | Technology & Innovation | Hotel Franchise Finance | Other NBLs | Corporate & Other | ||||||||||||||||||
At September 30, 2018 | ||||||||||||||||||||||||
Assets: | (in millions) | |||||||||||||||||||||||
Cash, cash equivalents, and investment securities | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 4,319.8 | ||||||||||||
Loans, net of deferred loan fees and costs | 202.1 | 1,520.2 | 1,106.5 | 1,435.4 | 3,483.2 | 6.6 | ||||||||||||||||||
Less: allowance for credit losses | (1.9 | ) | (14.4 | ) | (9.9 | ) | (7.3 | ) | (33.2 | ) | (0.1 | ) | ||||||||||||
Total loans | 200.2 | 1,505.8 | 1,096.6 | 1,428.1 | 3,450.0 | 6.5 | ||||||||||||||||||
Other assets acquired through foreclosure, net | — | — | — | — | — | 4.2 | ||||||||||||||||||
Goodwill and other intangible assets, net | — | — | 120.4 | 0.1 | — | — | ||||||||||||||||||
Other assets | 1.0 | 19.2 | 5.4 | 6.8 | 23.8 | 745.2 | ||||||||||||||||||
Total assets | $ | 201.2 | $ | 1,525.0 | $ | 1,222.4 | $ | 1,435.0 | $ | 3,473.8 | $ | 5,075.7 | ||||||||||||
Liabilities: | ||||||||||||||||||||||||
Deposits | $ | 2,523.9 | $ | — | $ | 2,319.5 | $ | — | $ | — | $ | 384.0 | ||||||||||||
Borrowings and qualifying debt | — | — | — | — | — | 359.1 | ||||||||||||||||||
Other liabilities | 1.7 | 10.1 | 0.1 | (0.1 | ) | 85.4 | 278.8 | |||||||||||||||||
Total liabilities | 2,525.6 | 10.1 | 2,319.6 | (0.1 | ) | 85.4 | 1,021.9 | |||||||||||||||||
Allocated equity: | 68.5 | 121.4 | 256.5 | 119.1 | 286.0 | 375.3 | ||||||||||||||||||
Total liabilities and stockholders' equity | $ | 2,594.1 | $ | 131.5 | $ | 2,576.1 | $ | 119.0 | $ | 371.4 | $ | 1,397.2 | ||||||||||||
Excess funds provided (used) | 2,392.9 | (1,393.5 | ) | 1,353.7 | (1,316.0 | ) | (3,102.4 | ) | (3,678.5 | ) |
Income Statement: | ||||||||||||||||||||||||
Three Months Ended September 30, 2018 | (in thousands) | |||||||||||||||||||||||
Net interest income | $ | 17,930 | $ | 3,683 | $ | 27,233 | $ | 13,557 | $ | 20,329 | $ | 3,275 | ||||||||||||
Provision for (recovery of) credit losses | 103 | (553 | ) | 1,448 | 223 | 3,214 | (49 | ) | ||||||||||||||||
Net interest income after provision for credit losses | 17,827 | 4,236 | 25,785 | 13,334 | 17,115 | 3,324 | ||||||||||||||||||
Non-interest income | 215 | 159 | 2,836 | — | 549 | (7,387 | ) | |||||||||||||||||
Non-interest expense | (8,254 | ) | (2,134 | ) | (9,933 | ) | (3,014 | ) | (7,280 | ) | (15,985 | ) | ||||||||||||
Income (loss) before income taxes | 9,788 | 2,261 | 18,688 | 10,320 | 10,384 | (20,048 | ) | |||||||||||||||||
Income tax expense (benefit) | 2,251 | 521 | 4,298 | 2,374 | 2,388 | (25,997 | ) | |||||||||||||||||
Net income | $ | 7,537 | $ | 1,740 | $ | 14,390 | $ | 7,946 | $ | 7,996 | $ | 5,949 |
Nine Months Ended September 30, 2018 | (in thousands) | |||||||||||||||||||||||
Net interest income | $ | 49,335 | $ | 11,224 | $ | 74,615 | $ | 41,617 | $ | 58,813 | $ | 3,512 | ||||||||||||
Provision for (recovery of) credit losses | 285 | (786 | ) | 5,355 | 2,006 | 6,573 | (47 | ) | ||||||||||||||||
Net interest income after provision for credit losses | 49,050 | 12,010 | 69,260 | 39,611 | 52,240 | 3,559 | ||||||||||||||||||
Non-interest income | 543 | 159 | 9,518 | 12 | 1,182 | (6,575 | ) | |||||||||||||||||
Non-interest expense | (24,090 | ) | (6,386 | ) | (29,666 | ) | (7,419 | ) | (19,193 | ) | (32,535 | ) | ||||||||||||
Income (loss) before income taxes | 25,503 | 5,783 | 49,112 | 32,204 | 34,229 | (35,551 | ) | |||||||||||||||||
Income tax expense (benefit) | 5,866 | 1,329 | 11,296 | 7,407 | 7,873 | (44,644 | ) | |||||||||||||||||
Net income | $ | 19,637 | $ | 4,454 | $ | 37,816 | $ | 24,797 | $ | 26,356 | $ | 9,093 |
Regional Segments | ||||||||||||||||||||
Consolidated Company | Arizona | Nevada | Southern California | Northern California | ||||||||||||||||
At December 31, 2017 | (in millions) | |||||||||||||||||||
Assets: | ||||||||||||||||||||
Cash, cash equivalents, and investment securities | $ | 4,237.1 | $ | 2.1 | $ | 8.2 | $ | 2.1 | $ | 1.7 | ||||||||||
Loans, net of deferred loan fees and costs | 15,093.9 | 3,323.7 | 1,844.8 | 1,934.7 | 1,275.5 | |||||||||||||||
Less: allowance for credit losses | (140.0 | ) | (31.5 | ) | (18.1 | ) | (19.5 | ) | (13.2 | ) | ||||||||||
Total loans | 14,953.9 | 3,292.2 | 1,826.7 | 1,915.2 | 1,262.3 | |||||||||||||||
Other assets acquired through foreclosure, net | 28.5 | 2.3 | 13.3 | — | 0.2 | |||||||||||||||
Goodwill and other intangible assets, net | 300.7 | — | 23.2 | — | 156.5 | |||||||||||||||
Other assets | 808.9 | 46.3 | 58.8 | 14.4 | 15.1 | |||||||||||||||
Total assets | $ | 20,329.1 | $ | 3,342.9 | $ | 1,930.2 | $ | 1,931.7 | $ | 1,435.8 | ||||||||||
Liabilities: | ||||||||||||||||||||
Deposits | $ | 16,972.5 | $ | 4,841.3 | $ | 3,951.4 | $ | 2,461.1 | $ | 1,681.7 | ||||||||||
Borrowings and qualifying debt | 766.9 | — | — | — | — | |||||||||||||||
Other liabilities | 360.0 | 11.6 | 20.9 | 3.2 | 11.9 | |||||||||||||||
Total liabilities | 18,099.4 | 4,852.9 | 3,972.3 | 2,464.3 | 1,693.6 | |||||||||||||||
Allocated equity: | 2,229.7 | 396.5 | 263.7 | 221.8 | 303.1 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 20,329.1 | $ | 5,249.4 | $ | 4,236.0 | $ | 2,686.1 | $ | 1,996.7 | ||||||||||
Excess funds provided (used) | — | 1,906.5 | 2,305.8 | 754.4 | 560.9 |
Income Statement: | ||||||||||||||||||||
Three Months Ended September 30, 2017 | (in thousands) | |||||||||||||||||||
Net interest income (expense) | $ | 201,583 | $ | 52,637 | $ | 36,310 | $ | 26,811 | $ | 21,932 | ||||||||||
Provision for (recovery of) credit losses | 5,000 | (289 | ) | (2,044 | ) | (58 | ) | 3,144 | ||||||||||||
Net interest income (expense) after provision for credit losses | 196,583 | 52,926 | 38,354 | 26,869 | 18,788 | |||||||||||||||
Non-interest income | 10,456 | 1,265 | 2,354 | 971 | 1,796 | |||||||||||||||
Non-interest expense | (89,296 | ) | (18,844 | ) | (14,748 | ) | (12,340 | ) | (11,317 | ) | ||||||||||
Income (loss) before income taxes | 117,743 | 35,347 | 25,960 | 15,500 | 9,267 | |||||||||||||||
Income tax expense (benefit) | 34,899 | 13,857 | 9,086 | 6,517 | 3,897 | |||||||||||||||
Net income | $ | 82,844 | $ | 21,490 | $ | 16,874 | $ | 8,983 | $ | 5,370 |
Nine Months Ended September 30, 2017 | (in thousands) | |||||||||||||||||||
Net interest income (expense) | $ | 573,635 | $ | 145,839 | $ | 108,028 | $ | 81,087 | $ | 63,686 | ||||||||||
Provision for (recovery of) credit losses | 12,250 | 109 | (5,378 | ) | (20 | ) | 4,238 | |||||||||||||
Net interest income (expense) after provision for credit losses | 561,385 | 145,730 | 113,406 | 81,107 | 59,448 | |||||||||||||||
Non-interest income | 31,656 | 3,567 | 6,800 | 2,602 | 5,839 | |||||||||||||||
Non-interest expense | (265,543 | ) | (55,388 | ) | (45,733 | ) | (38,063 | ) | (36,188 | ) | ||||||||||
Income (loss) before income taxes | 327,498 | 93,909 | 74,473 | 45,646 | 29,099 | |||||||||||||||
Income tax expense (benefit) | 91,352 | 36,831 | 26,066 | 19,194 | 12,236 | |||||||||||||||
Net income | $ | 236,146 | $ | 57,078 | $ | 48,407 | $ | 26,452 | $ | 16,863 |
National Business Lines | ||||||||||||||||||||||||
HOA Services | Public & Nonprofit Finance | Technology & Innovation | Hotel Franchise Finance | Other NBLs | Corporate & Other | |||||||||||||||||||
At December 31, 2017 | ||||||||||||||||||||||||
Assets: | (in millions) | |||||||||||||||||||||||
Cash, cash equivalents, and investment securities | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 4,223.0 | ||||||||||||
Loans, net of deferred loan fees and costs | 162.1 | 1,580.4 | 1,097.9 | 1,327.7 | 2,543.0 | 4.1 | ||||||||||||||||||
Less: allowance for credit losses | (1.6 | ) | (15.6 | ) | (11.4 | ) | (4.0 | ) | (25.0 | ) | (0.1 | ) | ||||||||||||
Total loans | 160.5 | 1,564.8 | 1,086.5 | 1,323.7 | 2,518.0 | 4.0 | ||||||||||||||||||
Other assets acquired through foreclosure, net | — | — | — | — | — | 12.7 | ||||||||||||||||||
Goodwill and other intangible assets, net | — | — | 120.9 | 0.1 | — | — | ||||||||||||||||||
Other assets | 0.9 | 17.9 | 6.0 | 5.9 | 15.5 | 628.1 | ||||||||||||||||||
Total assets | $ | 161.4 | $ | 1,582.7 | $ | 1,213.4 | $ | 1,329.7 | $ | 2,533.5 | $ | 4,867.8 | ||||||||||||
Liabilities: | ||||||||||||||||||||||||
Deposits | $ | 2,230.4 | $ | — | $ | 1,737.6 | $ | — | $ | — | $ | 69.0 | ||||||||||||
Borrowings and qualifying debt | — | — | — | — | — | 766.9 | ||||||||||||||||||
Other liabilities | 1.2 | 42.4 | 0.8 | 0.4 | 5.5 | 262.1 | ||||||||||||||||||
Total liabilities | 2,231.6 | 42.4 | 1,738.4 | 0.4 | 5.5 | 1,098.0 | ||||||||||||||||||
Allocated equity: | 59.4 | 126.5 | 244.1 | 108.3 | 206.0 | 300.3 | ||||||||||||||||||
Total liabilities and stockholders' equity | $ | 2,291.0 | $ | 168.9 | $ | 1,982.5 | $ | 108.7 | $ | 211.5 | $ | 1,398.3 | ||||||||||||
Excess funds provided (used) | 2,129.6 | (1,413.8 | ) | 769.1 | (1,221.0 | ) | (2,322.0 | ) | (3,469.5 | ) |
Income Statement: | ||||||||||||||||||||||||
Three Months Ended September 30, 2017 | (in thousands) | |||||||||||||||||||||||
Net interest income (expense) | $ | 13,746 | $ | 7,269 | $ | 20,415 | $ | 15,346 | $ | 16,933 | $ | (9,816 | ) | |||||||||||
Provision for (recovery of) credit losses | 40 | 91 | (83 | ) | 1,116 | 4,416 | (1,333 | ) | ||||||||||||||||
Net interest income (expense) after provision for credit losses | 13,706 | 7,178 | 20,498 | 14,230 | 12,517 | (8,483 | ) | |||||||||||||||||
Non-interest income | 136 | 183 | 1,855 | — | 379 | 1,517 | ||||||||||||||||||
Non-interest expense | (7,011 | ) | (2,053 | ) | (8,824 | ) | (1,905 | ) | (5,286 | ) | (6,968 | ) | ||||||||||||
Income (loss) before income taxes | 6,831 | 5,308 | 13,529 | 12,325 | 7,610 | (13,934 | ) | |||||||||||||||||
Income tax expense (benefit) | 2,562 | 1,028 | 5,075 | 4,622 | 2,853 | (14,598 | ) | |||||||||||||||||
Net income | $ | 4,269 | $ | 4,280 | $ | 8,454 | $ | 7,703 | $ | 4,757 | $ | 664 |
Nine Months Ended September 30, 2017 | (in thousands) | |||||||||||||||||||||||
Net interest income (expense) | $ | 40,275 | $ | 21,242 | $ | 59,610 | $ | 42,337 | $ | 46,380 | $ | (34,849 | ) | |||||||||||
Provision for (recovery of) credit losses | 332 | 796 | 816 | 2,924 | 10,265 | (1,832 | ) | |||||||||||||||||
Net interest income (expense) after provision for credit losses | 39,943 | 20,446 | 58,794 | 39,413 | 36,115 | (33,017 | ) | |||||||||||||||||
Non-interest income | 417 | 415 | 5,689 | — | 1,632 | 4,695 | ||||||||||||||||||
Non-interest expense | (21,416 | ) | (6,522 | ) | (26,685 | ) | (7,949 | ) | (14,573 | ) | (13,026 | ) | ||||||||||||
Income (loss) before income taxes | 18,944 | 14,339 | 37,798 | 31,464 | 23,174 | (41,348 | ) | |||||||||||||||||
Income tax expense (benefit) | 7,104 | 4,424 | 14,175 | 11,799 | 8,690 | (49,167 | ) | |||||||||||||||||
Net income | $ | 11,840 | $ | 9,915 | $ | 23,623 | $ | 19,665 | $ | 14,484 | $ | 7,819 |
Regional Segments | ||||||||||||||||||||
Three Months Ended September 30, 2018 | Consolidated Company | Arizona | Nevada | Southern California | Northern California | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenue from contracts with customers: | ||||||||||||||||||||
Service charges and fees | $ | 5,267 | $ | 917 | $ | 1,967 | $ | 634 | $ | 905 | ||||||||||
Debit and credit card interchange (1) | 1,834 | 284 | 381 | 171 | 992 | |||||||||||||||
Success fees (2) | 675 | — | — | — | — | |||||||||||||||
Other income | 84 | 29 | 34 | 7 | 18 | |||||||||||||||
Total revenue from contracts with customers | $ | 7,860 | $ | 1,230 | $ | 2,382 | $ | 812 | $ | 1,915 | ||||||||||
Revenues outside the scope of ASC 606 (3) | (3,442 | ) | 1,000 | 191 | 119 | 397 | ||||||||||||||
Total non-interest income | $ | 4,418 | $ | 2,230 | $ | 2,573 | $ | 931 | $ | 2,312 |
Regional Segments | ||||||||||||||||||||
Nine Months Ended September 30, 2018 | Consolidated Company | Arizona | Nevada | Southern California | Northern California | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenue from contracts with customers: | ||||||||||||||||||||
Service charges and fees | $ | 16,684 | $ | 2,826 | $ | 6,143 | $ | 2,053 | $ | 2,945 | ||||||||||
Debit and credit card interchange (1) | 4,990 | 822 | 995 | 471 | 2,687 | |||||||||||||||
Success fees (2) | 2,370 | — | — | — | 21 | |||||||||||||||
Other income | 497 | 139 | 153 | 51 | 134 | |||||||||||||||
Total revenue from contracts with customers | $ | 24,541 | $ | 3,787 | $ | 7,291 | $ | 2,575 | $ | 5,787 | ||||||||||
Revenues outside the scope of ASC 606 (3) | 4,964 | 2,115 | 1,294 | 323 | 1,494 | |||||||||||||||
Total non-interest income | $ | 29,505 | $ | 5,902 | $ | 8,585 | $ | 2,898 | $ | 7,281 |
National Business Lines | ||||||||||||||||||||||||
Three Months Ended September 30, 2018 | HOA Services | Public & Nonprofit Finance | Technology & Innovation | Hotel Franchise Finance | Other NBLs | Corporate & Other | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Revenue from contracts with customers: | ||||||||||||||||||||||||
Service charges and fees | $ | 208 | $ | — | $ | 643 | $ | — | $ | — | $ | (7 | ) | |||||||||||
Debit and credit card interchange (1) | 6 | — | — | — | — | — | ||||||||||||||||||
Success fees (2) | — | — | 675 | — | — | — | ||||||||||||||||||
Other income | 1 | — | — | — | — | (5 | ) | |||||||||||||||||
Total revenue from contracts with customers | $ | 215 | $ | — | $ | 1,318 | $ | — | $ | — | $ | (12 | ) | |||||||||||
Revenues outside the scope of ASC 606 (3) | — | 159 | 1,518 | — | 549 | (7,375 | ) | |||||||||||||||||
Total non-interest income | $ | 215 | $ | 159 | $ | 2,836 | $ | — | $ | 549 | $ | (7,387 | ) |
National Business Lines | ||||||||||||||||||||||||
Nine Months Ended September 30, 2018 | HOA Services | Public & Nonprofit Finance | Technology & Innovation | Hotel Franchise Finance | Other NBLs | Corporate & Other | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Revenue from contracts with customers: | ||||||||||||||||||||||||
Service charges and fees | $ | 525 | $ | — | $ | 2,197 | $ | — | $ | — | $ | (5 | ) | |||||||||||
Debit and credit card interchange (1) | 15 | — | — | — | — | — | ||||||||||||||||||
Success fees (2) | — | — | 2,349 | — | — | — | ||||||||||||||||||
Other income | 3 | — | — | — | 1 | 16 | ||||||||||||||||||
Total revenue from contracts with customers | $ | 543 | $ | — | $ | 4,546 | $ | — | $ | 1 | $ | 11 | ||||||||||||
Revenues outside the scope of ASC 606 (3) | — | 159 | 4,972 | 12 | 1,181 | (6,586 | ) | |||||||||||||||||
Total non-interest income | $ | 543 | $ | 159 | $ | 9,518 | $ | 12 | $ | 1,182 | $ | (6,575 | ) |
Regional Segments | ||||||||||||||||||||
Three Months Ended September 30, 2017 | Consolidated Company | Arizona | Nevada | Southern California | Northern California | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenue from contracts with customers: | ||||||||||||||||||||
Service charges and fees | $ | 5,248 | $ | 765 | $ | 1,952 | $ | 628 | $ | 1,011 | ||||||||||
Debit and credit card interchange (1) | 1,250 | 232 | 246 | 138 | 634 | |||||||||||||||
Success fees (2) | 701 | — | — | — | 102 | |||||||||||||||
Other income | 127 | 61 | (4 | ) | 32 | 34 | ||||||||||||||
Total revenue from contracts with customers | $ | 7,326 | $ | 1,058 | $ | 2,194 | $ | 798 | $ | 1,781 | ||||||||||
Revenues outside the scope of ASC 606 (3) | 3,130 | 207 | 160 | 173 | 15 | |||||||||||||||
Total non-interest income | $ | 10,456 | $ | 1,265 | $ | 2,354 | $ | 971 | $ | 1,796 |
Regional Segments | ||||||||||||||||||||
Nine Months Ended September 30, 2017 | Consolidated Company | Arizona | Nevada | Southern California | Northern California | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenue from contracts with customers: | ||||||||||||||||||||
Service charges and fees | $ | 15,189 | $ | 2,095 | $ | 5,544 | $ | 1,749 | $ | 3,069 | ||||||||||
Debit and credit card interchange (1) | 3,714 | 661 | 723 | 400 | 1,930 | |||||||||||||||
Success fees (2) | 1,162 | — | — | — | 247 | |||||||||||||||
Other income | 373 | 99 | (4 | ) | 43 | 107 | ||||||||||||||
Total revenue from contracts with customers | $ | 20,438 | $ | 2,855 | $ | 6,263 | $ | 2,192 | $ | 5,353 | ||||||||||
Revenues outside the scope of ASC 606 (3) | 11,218 | 712 | 537 | 410 | 486 | |||||||||||||||
Total non-interest income | $ | 31,656 | $ | 3,567 | $ | 6,800 | $ | 2,602 | $ | 5,839 |
National Business Lines | ||||||||||||||||||||||||
Three Months Ended September 30, 2017 | HOA Services | Public & Nonprofit Finance | Technology & Innovation | Hotel Franchise Finance | Other NBLs | Corporate & Other | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Revenue from contracts with customers: | ||||||||||||||||||||||||
Service charges and fees | $ | 136 | $ | — | $ | 762 | $ | — | $ | — | $ | (6 | ) | |||||||||||
Debit and credit card interchange (1) | — | — | — | — | — | — | ||||||||||||||||||
Success fees (2) | — | — | 599 | — | — | — | ||||||||||||||||||
Other income | — | — | — | — | — | 4 | ||||||||||||||||||
Total revenue from contracts with customers | $ | 136 | $ | — | $ | 1,361 | $ | — | $ | — | $ | (2 | ) | |||||||||||
Revenues outside the scope of ASC 606 (3) | — | 183 | 494 | — | 379 | 1,519 | ||||||||||||||||||
Total non-interest income | $ | 136 | $ | 183 | $ | 1,855 | $ | — | $ | 379 | $ | 1,517 |
National Business Lines | ||||||||||||||||||||||||
Nine Months Ended September 30, 2017 | HOA Services | Public & Nonprofit Finance | Technology & Innovation | Hotel Franchise Finance | Other NBLs | Corporate & Other | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Revenue from contracts with customers: | ||||||||||||||||||||||||
Service charges and fees | $ | 416 | $ | — | $ | 2,319 | $ | — | $ | — | $ | (3 | ) | |||||||||||
Debit and credit card interchange (1) | — | — | — | — | — | — | ||||||||||||||||||
Success fees (2) | — | — | 915 | — | — | — | ||||||||||||||||||
Other income | 1 | — | 3 | — | 113 | 11 | ||||||||||||||||||
Total revenue from contracts with customers | $ | 417 | $ | — | $ | 3,237 | $ | — | $ | 113 | $ | 8 | ||||||||||||
Revenues outside the scope of ASC 606 (3) | — | 415 | 2,452 | — | 1,519 | 4,687 | ||||||||||||||||||
Total non-interest income | $ | 417 | $ | 415 | $ | 5,689 | $ | — | $ | 1,632 | $ | 4,695 |
(1) | Included as part of Card income in the Consolidated Income Statement. |
(2) | Included as part of Income from equity investments in the Consolidated Income Statement. |
(3) | Amounts are accounted for under separate guidance. Refer to discussion of revenue sources not subject to ASC 606 under the Non-interest income section in "Note 1. Summary of Significant Accounting Policies." |
Item 2. | Management's Discussions and Analysis of Financial Condition and Results of Operations. |
• | Net income of $111.1 million, compared to $82.8 million for the third quarter 2017 |
• | Diluted earnings per share of $1.05, compared to $0.79 per share for the third quarter 2017 |
• | Total loans of $16.73 billion, up $0.59 billion from June 30, 2018, and $1.64 billion from December 31, 2017 |
• | Total deposits of $18.91 billion, up $0.82 billion from June 30, 2018, and $1.94 billion from December 31, 2017 |
• | Net interest margin of 4.72%, compared to 4.65% in the third quarter 2017 |
• | Net operating revenue of $246.9 million constituting year-over-year growth of 16.6%, or $35.2 million, and an increase in operating non-interest expenses of 18.0%, or $16.0 million, for the third quarter 20171 |
• | Operating PPNR of $141.9 million, up 15.6% from $122.7 million in the third quarter 20171 |
• | Efficiency ratio of 46.6% in the third quarter 2018, compared to 40.1% in the third quarter 2017 |
• | Operating efficiency ratio of 41.5% in the third quarter 2018, compared to 40.0% in the third quarter 20171 |
• | Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 0.26% of total assets, from 0.42% at September 30, 2017 |
• | Annualized net loan charge-offs to average loans outstanding of 0.08%, compared to 0.01% for the third quarter 2017 |
• | Tangible common equity ratio of 10.0%, compared to 9.4% at September 30, 20171 |
• | Stockholders' equity of $2.49 billion, an increase of $96.7 million from June 30, 2018, and $258.7 million from December 31, 2017 |
• | Book value per common share of $23.51, an increase of 15.6% from $20.34 at September 30, 2017 |
• | Tangible book value per share, net of tax, of $20.70, an increase of 18.1% from $17.53 at September 30, 20171 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Net income | $ | 111,123 | $ | 82,844 | $ | 316,702 | $ | 236,146 | ||||||||
Earnings per share - basic | 1.06 | 0.79 | 3.03 | 2.27 | ||||||||||||
Earnings per share - diluted | 1.05 | 0.79 | 3.00 | 2.25 | ||||||||||||
Return on average assets | 2.07 | % | 1.71 | % | 2.02 | % | 1.70 | % | ||||||||
Return on average tangible common equity (1) | 20.57 | 18.18 | 20.47 | 18.15 | ||||||||||||
Net interest margin | 4.72 | 4.65 | 4.67 | 4.63 |
(1) | See Non-GAAP Financial Measures section beginning on page 68. |
September 30, 2018 | December 31, 2017 | |||||||
(in thousands) | ||||||||
Total assets | $ | 22,176,147 | $ | 20,329,085 | ||||
Total loans, net of deferred loan fees and costs | 16,732,765 | 15,093,935 | ||||||
Total deposits | 18,908,580 | 16,972,532 |
September 30, 2018 | December 31, 2017 | |||||||
(in thousands) | ||||||||
Non-accrual loans | $ | 36,868 | $ | 43,925 | ||||
Non-performing assets | 99,463 | 114,939 | ||||||
Non-accrual loans to gross loans | 0.22 | % | 0.29 | % | ||||
Net charge-offs to average loans outstanding (1) | 0.08 | 0.01 |
(1) | Annualized for the three months ended September 30, 2018. Actual year-to-date for the year ended December 31, 2017. |
Three Months Ended September 30, | Increase | Nine Months Ended September 30, | Increase | |||||||||||||||||||||
2018 | 2017 | (Decrease) | 2018 | 2017 | (Decrease) | |||||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||||||||||
Consolidated Income Statement Data: | ||||||||||||||||||||||||
Interest income | $ | 265,216 | $ | 217,836 | $ | 47,380 | $ | 751,515 | $ | 617,054 | $ | 134,461 | ||||||||||||
Interest expense | 31,178 | 16,253 | 14,925 | 79,149 | 43,419 | 35,730 | ||||||||||||||||||
Net interest income | 234,038 | 201,583 | 32,455 | 672,366 | 573,635 | 98,731 | ||||||||||||||||||
Provision for credit losses | 6,000 | 5,000 | 1,000 | 17,000 | 12,250 | 4,750 | ||||||||||||||||||
Net interest income after provision for credit losses | 228,038 | 196,583 | 31,455 | 655,366 | 561,385 | 93,981 | ||||||||||||||||||
Non-interest income | 4,418 | 10,456 | (6,038 | ) | 29,505 | 31,656 | (2,151 | ) | ||||||||||||||||
Non-interest expense | 113,841 | 89,296 | 24,545 | 314,538 | 265,543 | 48,995 | ||||||||||||||||||
Income before provision for income taxes | 118,615 | 117,743 | 872 | 370,333 | 327,498 | 42,835 | ||||||||||||||||||
Income tax expense | 7,492 | 34,899 | (27,407 | ) | 53,631 | 91,352 | (37,721 | ) | ||||||||||||||||
Net income | $ | 111,123 | $ | 82,844 | $ | 28,279 | $ | 316,702 | $ | 236,146 | $ | 80,556 | ||||||||||||
Earnings per share - basic | $ | 1.06 | $ | 0.79 | $ | 0.27 | $ | 3.03 | $ | 2.27 | $ | 0.76 | ||||||||||||
Earnings per share - diluted | $ | 1.05 | $ | 0.79 | $ | 0.26 | $ | 3.00 | $ | 2.25 | $ | 0.75 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Total non-interest income | $ | 4,418 | $ | 10,456 | $ | 29,505 | $ | 31,656 | ||||||||
Less: | ||||||||||||||||
(Loss) gain on sales of investment securities, net (1) | (7,232 | ) | 319 | (7,232 | ) | 907 | ||||||||||
Unrealized (losses) gains on assets measured at fair value, net (1) | (1,212 | ) | — | (2,971 | ) | (1 | ) | |||||||||
Total operating non-interest income | 12,862 | 10,137 | 39,708 | 30,750 | ||||||||||||
Plus: net interest income | 234,038 | 201,583 | 672,366 | 573,635 | ||||||||||||
Net operating revenue | $ | 246,900 | $ | 211,720 | $ | 712,074 | $ | 604,385 | ||||||||
Total non-interest expense | $ | 113,841 | $ | 89,296 | $ | 314,538 | $ | 265,543 | ||||||||
Less: | ||||||||||||||||
Contribution to charitable foundation (2) | 7,645 | — | 7,645 | — | ||||||||||||
401(k) plan change and other miscellaneous items (2) | 1,218 | — | 1,218 | — | ||||||||||||
Net (gain) loss on sales / valuations of repossessed and other assets (1) | (67 | ) | 266 | (1,474 | ) | (46 | ) | |||||||||
Total operating non-interest expense | $ | 105,045 | $ | 89,030 | $ | 307,149 | $ | 265,589 | ||||||||
Operating pre-provision net revenue | $ | 141,855 | $ | 122,690 | $ | 404,925 | $ | 338,796 | ||||||||
Plus: | ||||||||||||||||
Non-operating revenue adjustments | (8,444 | ) | 319 | (10,203 | ) | 906 | ||||||||||
Less: | ||||||||||||||||
Provision for credit losses | 6,000 | 5,000 | 17,000 | 12,250 | ||||||||||||
Non-operating expense adjustments | 8,796 | 266 | 7,389 | (46 | ) | |||||||||||
Income before provision for income taxes | 118,615 | 117,743 | 370,333 | 327,498 | ||||||||||||
Income tax expense | 7,492 | 34,899 | 53,631 | 91,352 | ||||||||||||
Net income | $ | 111,123 | $ | 82,844 | $ | 316,702 | $ | 236,146 |
(1) | The operating PPNR non-GAAP performance metric is adjusted to exclude the effects of these non-operational items. |
(2) | The operating PPNR non-GAAP performance metric is adjusted to exclude the effects of these non-recurring items. See Note 16. Related Party Transactions for further information regarding the charitable contribution. |
September 30, 2018 | December 31, 2017 | ||||||
(dollars and shares in thousands) | |||||||
Total stockholders' equity | $ | 2,488,393 | $ | 2,229,698 | |||
Less: goodwill and intangible assets | 299,553 | 300,748 | |||||
Total tangible stockholders' equity | 2,188,840 | 1,928,950 | |||||
Plus: deferred tax - attributed to intangible assets | 2,462 | 2,698 | |||||
Total tangible common equity, net of tax | $ | 2,191,302 | $ | 1,931,648 | |||
Total assets | $ | 22,176,147 | $ | 20,329,085 | |||
Less: goodwill and intangible assets, net | 299,553 | 300,748 | |||||
Tangible assets | 21,876,594 | 20,028,337 | |||||
Plus: deferred tax - attributed to intangible assets | 2,462 | 2,698 | |||||
Total tangible assets, net of tax | $ | 21,879,056 | $ | 20,031,035 | |||
Tangible equity ratio | 10.0 | % | 9.6 | % | |||
Tangible common equity ratio | 10.0 | 9.6 | |||||
Common shares outstanding | 105,861 | 105,487 | |||||
Book value per share | $ | 23.51 | $ | 21.14 | |||
Tangible book value per share, net of tax | 20.70 | 18.31 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(dollars in thousands) | |||||||||||||||
Total operating non-interest expense | $ | 105,045 | $ | 89,030 | $ | 307,149 | $ | 265,589 | |||||||
Divided by: | |||||||||||||||
Total net interest income | $ | 234,038 | $ | 201,583 | $ | 672,366 | $ | 573,635 | |||||||
Plus: | |||||||||||||||
Tax equivalent interest adjustment | 6,003 | 10,837 | 17,668 | 30,966 | |||||||||||
Operating non-interest income | 12,862 | 10,137 | 39,708 | 30,750 | |||||||||||
Net operating revenue - TEB | $ | 252,903 | $ | 222,557 | $ | 729,742 | $ | 635,351 | |||||||
Operating efficiency ratio - TEB | 41.5 | % | 40.0 | % | 42.1 | % | 41.8 | % | |||||||
Operating efficiency ratio - TEB adjusted (1) | 41.0 | % | 42.9 | % |
(1) | The prior period operating efficiency ratios were adjusted to include the effects from the TCJA of the lower statutory corporate federal tax rate on the calculation of the tax equivalent adjustment in order to be comparable to the current period. |
September 30, 2018 | December 31, 2017 | ||||||
(dollars in thousands) | |||||||
Common Equity Tier 1: | |||||||
Common Equity | $ | 2,488,393 | $ | 2,229,698 | |||
Less: | |||||||
Non-qualifying goodwill and intangibles | 296,980 | 296,421 | |||||
Disallowed deferred tax asset | 984 | 638 | |||||
AOCI related adjustments | (78,289 | ) | (9,496 | ) | |||
Unrealized gain on changes in fair value liabilities | 11,872 | 7,785 | |||||
Common Equity Tier 1 | $ | 2,256,846 | $ | 1,934,350 | |||
Divided by: Risk-weighted assets | $ | 20,690,767 | $ | 18,569,608 | |||
Common Equity Tier 1 ratio | 10.9 | % | 10.4 | % | |||
Common Equity Tier 1 | $ | 2,256,846 | $ | 1,934,350 | |||
Plus: | |||||||
Trust preferred securities | 81,500 | 81,500 | |||||
Less: | |||||||
Disallowed deferred tax asset | — | 159 | |||||
Unrealized gain on changes in fair value liabilities | — | 1,947 | |||||
Tier 1 capital | $ | 2,338,346 | $ | 2,013,744 | |||
Divided by: Tangible average assets | $ | 21,286,259 | $ | 19,624,517 | |||
Tier 1 leverage ratio | 11.0 | % | 10.3 | % | |||
Total Capital: | |||||||
Tier 1 capital | $ | 2,338,346 | $ | 2,013,744 | |||
Plus: | |||||||
Subordinated debt | 299,151 | 301,020 | |||||
Qualifying allowance for credit losses | 150,011 | 140,050 | |||||
Other | 7,617 | 6,174 | |||||
Less: Tier 2 qualifying capital deductions | — | — | |||||
Tier 2 capital | $ | 456,779 | $ | 447,244 | |||
Total capital | $ | 2,795,125 | $ | 2,460,988 | |||
Total capital ratio | 13.5 | % | 13.3 | % | |||
Classified assets to Tier 1 capital plus allowance for credit losses: | |||||||
Classified assets | $ | 252,770 | $ | 222,004 | |||
Divided by: | |||||||
Tier 1 capital | 2,338,346 | 2,013,744 | |||||
Plus: Allowance for credit losses | 150,011 | 140,050 | |||||
Total Tier 1 capital plus allowance for credit losses | $ | 2,488,357 | $ | 2,153,794 | |||
Classified assets to Tier 1 capital plus allowance | 10.2 | % | 10.3 | % |
Three Months Ended September 30, | ||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||
Average Balance | Interest | Average Yield / Cost | Average Balance | Interest | Average Yield / Cost | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||
Interest earning assets | ||||||||||||||||||||||
Loans: | ||||||||||||||||||||||
Commercial and industrial | $ | 7,171,099 | $ | 100,312 | 5.77 | % | $ | 6,330,760 | $ | 80,638 | 5.48 | % | ||||||||||
CRE - non-owner-occupied | 4,003,943 | 59,383 | 5.95 | 3,609,484 | 54,442 | 6.06 | ||||||||||||||||
CRE - owner-occupied | 2,259,137 | 30,407 | 5.50 | 2,032,664 | 25,238 | 5.24 | ||||||||||||||||
Construction and land development | 2,023,116 | 35,959 | 7.12 | 1,633,378 | 25,898 | 6.36 | ||||||||||||||||
Residential real estate | 656,492 | 7,800 | 4.75 | 351,517 | 4,151 | 4.72 | ||||||||||||||||
Consumer | 57,360 | 848 | 5.91 | 52,168 | 729 | 5.59 | ||||||||||||||||
Total loans (1), (2), (3) | 16,171,147 | 234,709 | 5.90 | 14,009,971 | 191,096 | 5.68 | ||||||||||||||||
Securities: | ||||||||||||||||||||||
Securities - taxable | 2,738,621 | 19,277 | 2.82 | 2,778,404 | 17,399 | 2.50 | ||||||||||||||||
Securities - tax-exempt | 875,207 | 7,962 | 4.55 | 657,064 | 6,185 | 5.61 | ||||||||||||||||
Total securities (1) | 3,613,828 | 27,239 | 3.24 | 3,435,468 | 23,584 | 3.10 | ||||||||||||||||
Other | 549,499 | 3,268 | 2.38 | 845,852 | 3,156 | 1.49 | ||||||||||||||||
Total interest earning assets | 20,334,474 | 265,216 | 5.34 | 18,291,291 | 217,836 | 5.00 | ||||||||||||||||
Non-interest earning assets | ||||||||||||||||||||||
Cash and due from banks | 143,996 | 132,285 | ||||||||||||||||||||
Allowance for credit losses | (148,162 | ) | (133,555 | ) | ||||||||||||||||||
Bank owned life insurance | 168,821 | 166,430 | ||||||||||||||||||||
Other assets | 1,002,468 | 930,752 | ||||||||||||||||||||
Total assets | $ | 21,501,597 | $ | 19,387,203 | ||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||
Interest-bearing transaction accounts | $ | 1,938,180 | $ | 3,256 | 0.67 | % | $ | 1,476,506 | $ | 1,066 | 0.29 | % | ||||||||||
Savings and money market accounts | 6,580,274 | 14,891 | 0.91 | 6,282,405 | 7,135 | 0.45 | ||||||||||||||||
Time certificates of deposit | 1,863,747 | 7,119 | 1.53 | 1,585,690 | 3,248 | 0.82 | ||||||||||||||||
Total interest-bearing deposits | 10,382,201 | 25,266 | 0.97 | 9,344,601 | 11,449 | 0.49 | ||||||||||||||||
Short-term borrowings | 28,471 | 118 | 1.66 | 31,671 | 96 | 1.21 | ||||||||||||||||
Qualifying debt | 359,133 | 5,794 | 6.45 | 375,276 | 4,708 | 5.02 | ||||||||||||||||
Total interest-bearing liabilities | 10,769,805 | 31,178 | 1.16 | 9,751,548 | 16,253 | 0.67 | ||||||||||||||||
Non-interest-bearing liabilities | ||||||||||||||||||||||
Non-interest-bearing demand deposits | 7,910,305 | 7,174,532 | ||||||||||||||||||||
Other liabilities | 360,790 | 336,939 | ||||||||||||||||||||
Stockholders’ equity | 2,460,697 | 2,124,184 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 21,501,597 | $ | 19,387,203 | ||||||||||||||||||
Net interest income and margin (4) | $ | 234,038 | 4.72 | % | $ | 201,583 | 4.65 | % | ||||||||||||||
TCJA adjusted net interest margin (5) | 4.53 | % |
(1) | Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $6.0 million and $10.8 million for the three months ended September 30, 2018 and 2017, respectively. |
(2) | Included in the yield computation are net loan fees of $12.5 million and accretion on acquired loans of $3.3 million for the three months ended September 30, 2018, compared to $9.4 million and $7.5 million for the three months ended September 30, 2017, respectively. |
(3) | Includes non-accrual loans. |
(4) | Net interest margin is computed by dividing net interest income by total average earning assets. |
(5) | Prior period net interest margin is adjusted to include the effects from the TCJA of the lower statutory corporate federal tax rate on the calculation of the taxable-equivalent adjustment, which reduced this adjustment to $5.4 million, in order to be comparable to the current period. |
Nine Months Ended September 30, | ||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||
Average Balance | Interest | Average Yield / Cost | Average Balance | Interest | Average Yield / Cost | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||
Interest earning assets | ||||||||||||||||||||||
Loans: | ||||||||||||||||||||||
Commercial and industrial | $ | 6,887,005 | $ | 280,101 | 5.60 | % | $ | 6,050,380 | $ | 224,985 | 5.35 | % | ||||||||||
CRE - non-owner occupied | 3,963,287 | 175,041 | 5.90 | 3,593,903 | 160,719 | 5.99 | ||||||||||||||||
CRE - owner-occupied | 2,247,891 | 87,656 | 5.31 | 2,016,840 | 75,895 | 5.27 | ||||||||||||||||
Construction and land development | 1,922,353 | 99,146 | 6.89 | 1,583,707 | 72,965 | 6.16 | ||||||||||||||||
Residential real estate | 505,908 | 18,494 | 4.87 | 315,488 | 11,125 | 4.70 | ||||||||||||||||
Consumer | 52,585 | 2,265 | 5.74 | 45,164 | 1,617 | 4.77 | ||||||||||||||||
Total loans (1), (2), (3) | 15,579,029 | 662,703 | 5.77 | 13,605,482 | 547,306 | 5.58 | ||||||||||||||||
Securities: | ||||||||||||||||||||||
Securities - taxable | 2,805,128 | 57,700 | 2.74 | 2,445,846 | 44,684 | 2.44 | ||||||||||||||||
Securities - tax-exempt | 853,748 | 23,605 | 4.61 | 629,968 | 17,643 | 5.55 | ||||||||||||||||
Total securities (1) | 3,658,876 | 81,305 | 3.18 | 3,075,814 | 62,327 | 3.07 | ||||||||||||||||
Other | 453,031 | 7,507 | 2.21 | 745,049 | 7,421 | 1.33 | ||||||||||||||||
Total interest earning assets | 19,690,936 | 751,515 | 5.21 | 17,426,345 | 617,054 | 4.96 | ||||||||||||||||
Non-interest earning assets | ||||||||||||||||||||||
Cash and due from banks | 143,787 | 138,395 | ||||||||||||||||||||
Allowance for credit losses | (144,953 | ) | (129,782 | ) | ||||||||||||||||||
Bank owned life insurance | 168,412 | 165,692 | ||||||||||||||||||||
Other assets | 1,001,369 | 917,089 | ||||||||||||||||||||
Total assets | $ | 20,859,551 | $ | 18,517,739 | ||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||
Interest-bearing transaction accounts | $ | 1,806,921 | $ | 6,996 | 0.52 | % | $ | 1,468,163 | $ | 2,858 | 0.26 | % | ||||||||||
Savings and money market accounts | 6,312,371 | 36,130 | 0.76 | 6,169,860 | 18,277 | 0.39 | ||||||||||||||||
Time certificates of deposit | 1,720,537 | 16,162 | 1.25 | 1,549,212 | 8,371 | 0.72 | ||||||||||||||||
Total interest-bearing deposits | 9,839,829 | 59,288 | 0.80 | 9,187,235 | 29,506 | 0.43 | ||||||||||||||||
Short-term borrowings | 263,249 | 3,403 | 1.72 | 58,749 | 374 | 0.85 | ||||||||||||||||
Qualifying debt | 363,556 | 16,458 | 6.04 | 370,795 | 13,539 | 4.87 | ||||||||||||||||
Total interest-bearing liabilities | 10,466,634 | 79,149 | 1.01 | 9,616,779 | 43,419 | 0.60 | ||||||||||||||||
Non-interest-bearing liabilities | ||||||||||||||||||||||
Non-interest-bearing demand deposits | 7,679,090 | 6,548,351 | ||||||||||||||||||||
Other liabilities | 351,193 | 315,453 | ||||||||||||||||||||
Stockholders’ equity | 2,362,634 | 2,037,156 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 20,859,551 | $ | 18,517,739 | ||||||||||||||||||
Net interest income and margin (4) | $ | 672,366 | 4.67 | % | $ | 573,635 | 4.63 | % | ||||||||||||||
TCJA adjusted net interest margin (5) | 4.51 | % |
(1) | Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $17.7 million and $31.0 million for the nine months ended September 30, 2018 and 2017, respectively. |
(2) | Included in the yield computation are net loan fees of $33.4 million and accretion on acquired loans of $14.1 million for the nine months ended September 30, 2018, compared to $26.0 million and $21.0 million for the nine months ended September 30, 2017, respectively. |
(3) | Includes non-accrual loans. |
(4) | Net interest margin is computed by dividing net interest income by total average earning assets. |
(5) | Prior period net interest margin is adjusted to include the effects from the TCJA of the lower statutory corporate federal tax rate on the calculation of the taxable-equivalent adjustment, which reduced this adjustment to $15.3 million, in order to be comparable to the current period. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2018 versus 2017 | 2018 versus 2017 | |||||||||||||||||||||||
Increase (Decrease) Due to Changes in (1) | Increase (Decrease) Due to Changes in (1) | |||||||||||||||||||||||
Volume | Rate | Total | Volume | Rate | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Interest income: | ||||||||||||||||||||||||
Loans: | ||||||||||||||||||||||||
Commercial and industrial | $ | 11,755 | $ | 7,919 | $ | 19,674 | $ | 34,026 | $ | 21,090 | $ | 55,116 | ||||||||||||
CRE - non-owner occupied | 5,850 | (909 | ) | 4,941 | 16,314 | (1,992 | ) | 14,322 | ||||||||||||||||
CRE - owner-occupied | 3,048 | 2,121 | 5,169 | 9,010 | 2,751 | 11,761 | ||||||||||||||||||
Construction and land development | 6,927 | 3,134 | 10,061 | 17,466 | 8,715 | 26,181 | ||||||||||||||||||
Residential real estate | 3,624 | 25 | 3,649 | 6,961 | 408 | 7,369 | ||||||||||||||||||
Consumer | 77 | 42 | 119 | 320 | 328 | 648 | ||||||||||||||||||
Total loans | 31,281 | 12,332 | 43,613 | 84,097 | 31,300 | 115,397 | ||||||||||||||||||
Securities: | ||||||||||||||||||||||||
Securities - taxable | (280 | ) | 2,158 | 1,878 | 7,390 | 5,626 | 13,016 | |||||||||||||||||
Securities - tax-exempt | 1,985 | (208 | ) | 1,777 | 6,187 | (225 | ) | 5,962 | ||||||||||||||||
Total securities | 1,705 | 1,950 | 3,655 | 13,577 | 5,401 | 18,978 | ||||||||||||||||||
Other | (1,762 | ) | 1,874 | 112 | (4,839 | ) | 4,925 | 86 | ||||||||||||||||
Total interest income | 31,224 | 16,156 | 47,380 | 92,835 | 41,626 | 134,461 | ||||||||||||||||||
Interest expense: | ||||||||||||||||||||||||
Interest bearing transaction accounts | $ | 776 | $ | 1,414 | $ | 2,190 | $ | 1,312 | $ | 2,826 | $ | 4,138 | ||||||||||||
Savings and money market | 674 | 7,082 | 7,756 | 816 | 17,037 | 17,853 | ||||||||||||||||||
Time certificates of deposit | 1,062 | 2,809 | 3,871 | 1,609 | 6,182 | 7,791 | ||||||||||||||||||
Short-term borrowings | (13 | ) | 35 | 22 | 2,644 | 385 | 3,029 | |||||||||||||||||
Qualifying debt | (260 | ) | 1,346 | 1,086 | (328 | ) | 3,247 | 2,919 | ||||||||||||||||
Total interest expense | 2,239 | 12,686 | 14,925 | 6,053 | 29,677 | 35,730 | ||||||||||||||||||
Net increase | $ | 28,985 | $ | 3,470 | $ | 32,455 | $ | 86,782 | $ | 11,949 | $ | 98,731 |
(1) | Changes attributable to both volume and rate are designated as volume changes. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2018 | 2017 | Increase (Decrease) | 2018 | 2017 | Increase (Decrease) | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Service charges and fees | $ | 5,267 | $ | 5,248 | $ | 19 | $ | 16,684 | $ | 15,189 | $ | 1,495 | ||||||||||||
Card income | 2,138 | 1,509 | 629 | 6,143 | 4,517 | 1,626 | ||||||||||||||||||
Income from equity investments | 1,440 | 967 | 473 | 5,417 | 2,977 | 2,440 | ||||||||||||||||||
Lending related income and gains (losses) on sale of loans, net | 1,422 | 97 | 1,325 | 3,447 | 746 | 2,701 | ||||||||||||||||||
Foreign currency income | 1,092 | 756 | 336 | 3,475 | 2,630 | 845 | ||||||||||||||||||
Income from bank owned life insurance | 868 | 975 | (107 | ) | 2,963 | 2,896 | 67 | |||||||||||||||||
(Loss) gain on sales of investment securities, net | (7,232 | ) | 319 | (7,551 | ) | (7,232 | ) | 907 | (8,139 | ) | ||||||||||||||
Unrealized (losses) gains on assets measured at fair value, net | (1,212 | ) | — | (1,212 | ) | (2,971 | ) | (1 | ) | (2,970 | ) | |||||||||||||
Other income | 635 | 585 | 50 | 1,579 | 1,795 | (216 | ) | |||||||||||||||||
Total non-interest income | $ | 4,418 | $ | 10,456 | $ | (6,038 | ) | $ | 29,505 | $ | 31,656 | $ | (2,151 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2018 | 2017 | Increase (Decrease) | 2018 | 2017 | Increase (Decrease) | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Salaries and employee benefits | $ | 64,762 | $ | 52,747 | $ | 12,015 | $ | 188,680 | $ | 156,640 | $ | 32,040 | |||||||||||
Legal, professional, and directors' fees | 7,907 | 6,038 | 1,869 | 21,856 | 23,324 | (1,468 | ) | ||||||||||||||||
Occupancy | 7,406 | 7,507 | (101 | ) | 21,671 | 21,328 | 343 | ||||||||||||||||
Data processing | 5,895 | 4,524 | 1,371 | 16,688 | 14,163 | 2,525 | |||||||||||||||||
Deposit costs | 4,848 | 2,904 | 1,944 | 11,888 | 6,778 | 5,110 | |||||||||||||||||
Insurance | 3,712 | 3,538 | 174 | 11,466 | 10,355 | 1,111 | |||||||||||||||||
Business development | 1,381 | 1,439 | (58 | ) | 4,523 | 4,949 | (426 | ) | |||||||||||||||
Card expense | 1,282 | 966 | 316 | 3,305 | 2,558 | 747 | |||||||||||||||||
Loan and repossessed asset expenses | 1,230 | 1,263 | (33 | ) | 2,830 | 3,639 | (809 | ) | |||||||||||||||
Marketing | 687 | 776 | (89 | ) | 2,429 | 2,628 | (199 | ) | |||||||||||||||
Intangible amortization | 398 | 489 | (91 | ) | 1,195 | 1,666 | (471 | ) | |||||||||||||||
Net (gain) loss on sales / valuations of repossessed and other assets | (67 | ) | 266 | (333 | ) | (1,474 | ) | (46 | ) | (1,428 | ) | ||||||||||||
Other expense | 14,400 | 6,839 | 7,561 | 29,481 | 17,561 | 11,920 | |||||||||||||||||
Total non-interest expense | $ | 113,841 | $ | 89,296 | $ | 24,545 | $ | 314,538 | $ | 265,543 | $ | 48,995 |
Regional Segments | ||||||||||||||||||||
Consolidated Company | Arizona | Nevada | Southern California | Northern California | ||||||||||||||||
At September 30, 2018 | (in millions) | |||||||||||||||||||
Loans, net of deferred loan fees and costs | $ | 16,732.8 | $ | 3,593.5 | $ | 1,936.7 | $ | 2,116.3 | $ | 1,332.3 | ||||||||||
Deposits | 18,908.6 | 5,331.7 | 3,847.3 | 2,550.7 | 1,951.5 | |||||||||||||||
At December 31, 2017 | ||||||||||||||||||||
Loans, net of deferred loan fees and costs | $ | 15,093.9 | $ | 3,323.7 | $ | 1,844.8 | $ | 1,934.7 | $ | 1,275.5 | ||||||||||
Deposits | 16,972.5 | 4,841.3 | 3,951.4 | 2,461.1 | 1,681.7 |
(in thousands) | ||||||||||||||||||||
Three Months Ended September 30, 2018 | ||||||||||||||||||||
Pre-tax income | $ | 118,615 | $ | 35,997 | $ | 24,073 | $ | 14,704 | $ | 12,448 | ||||||||||
Nine Months Ended September 30, 2018 | ||||||||||||||||||||
Pre-tax income | $ | 370,333 | $ | 106,326 | $ | 74,002 | $ | 43,545 | $ | 35,180 | ||||||||||
Three Months Ended September 30, 2017 | ||||||||||||||||||||
Pre-tax income | $ | 117,743 | $ | 35,347 | $ | 25,960 | $ | 15,500 | $ | 9,267 | ||||||||||
Nine Months Ended September 30, 2017 | ||||||||||||||||||||
Pre-tax income | $ | 327,498 | $ | 93,909 | $ | 74,473 | $ | 45,646 | $ | 29,099 |
National Business Lines | ||||||||||||||||||||||||
HOA Services | Public & Nonprofit Finance | Technology & Innovation | Hotel Franchise Finance | Other NBLs | Corporate & Other | |||||||||||||||||||
At September 30, 2018 | (in millions) | |||||||||||||||||||||||
Loans, net of deferred loan fees and costs | $ | 202.1 | $ | 1,520.2 | $ | 1,106.5 | $ | 1,435.4 | $ | 3,483.2 | $ | 6.6 | ||||||||||||
Deposits | 2,523.9 | — | 2,319.5 | — | — | 384.0 | ||||||||||||||||||
At December 31, 2017 | ||||||||||||||||||||||||
Loans, net of deferred loan fees and costs | $ | 162.1 | $ | 1,580.4 | $ | 1,097.9 | $ | 1,327.7 | $ | 2,543.0 | $ | 4.1 | ||||||||||||
Deposits | 2,230.4 | — | 1,737.6 | — | — | 69.0 |
(in thousands) | ||||||||||||||||||||||||
Three Months Ended September 30, 2018 | ||||||||||||||||||||||||
Pre-tax income | $ | 9,788 | $ | 2,261 | $ | 18,688 | $ | 10,320 | $ | 10,384 | $ | (20,048 | ) | |||||||||||
Nine Months Ended September 30, 2018 | ||||||||||||||||||||||||
Pre-tax income | $ | 25,503 | $ | 5,783 | $ | 49,112 | $ | 32,204 | $ | 34,229 | $ | (35,551 | ) | |||||||||||
Three Months Ended September 30, 2017 | ||||||||||||||||||||||||
Pre-tax income | $ | 6,831 | $ | 5,308 | $ | 13,529 | $ | 12,325 | $ | 7,610 | $ | (13,934 | ) | |||||||||||
Nine Months Ended September 30, 2017 | ||||||||||||||||||||||||
Pre-tax income | $ | 18,944 | $ | 14,339 | $ | 37,798 | $ | 31,464 | $ | 23,174 | $ | (41,348 | ) |
September 30, 2018 | December 31, 2017 | |||||||
(in thousands) | ||||||||
Debt securities | ||||||||
CDO | $ | 19,148 | $ | 21,857 | ||||
Commercial MBS issued by GSEs | 100,943 | 109,077 | ||||||
Corporate debt securities | 99,384 | 103,483 | ||||||
Private label residential MBS | 855,942 | 868,524 | ||||||
Residential MBS issued by GSEs | 1,450,059 | 1,689,295 | ||||||
Tax-exempt | 793,197 | 765,960 | ||||||
Trust preferred securities | 28,617 | 28,617 | ||||||
U.S. government sponsored agency securities | 45,601 | 61,462 | ||||||
U.S. treasury securities | 2,475 | 2,482 | ||||||
Total debt securities | 3,395,366 | 3,650,757 | ||||||
Equity securities | ||||||||
CRA investments | 50,744 | 53,196 | ||||||
Preferred stock | 121,550 | 50,616 | ||||||
Total equity securities | 172,294 | 103,812 | ||||||
Total investment securities | $ | 3,567,660 | $ | 3,754,569 |
September 30, 2018 | December 31, 2017 | |||||||
(in thousands) | ||||||||
Commercial and industrial | $ | 7,487,725 | $ | 6,841,381 | ||||
Commercial real estate - non-owner occupied | 3,952,966 | 3,904,011 | ||||||
Commercial real estate - owner occupied | 2,288,156 | 2,241,613 | ||||||
Construction and land development | 2,107,631 | 1,632,204 | ||||||
Residential real estate | 827,073 | 425,940 | ||||||
Consumer | 69,214 | 48,786 | ||||||
Loans, net of deferred loan fees and costs | 16,732,765 | 15,093,935 | ||||||
Allowance for credit losses | (150,011 | ) | (140,050 | ) | ||||
Total loans HFI | $ | 16,582,754 | $ | 14,953,885 |
September 30, 2018 | December 31, 2017 | |||||||
(dollars in thousands) | ||||||||
Total non-accrual loans (1) | $ | 36,868 | $ | 43,925 | ||||
Loans past due 90 days or more on accrual status (2) | — | 43 | ||||||
Accruing troubled debt restructured loans | 42,567 | 42,431 | ||||||
Total nonperforming loans, excluding loans acquired with deteriorated credit quality | 79,435 | 86,399 | ||||||
Other impaired loans | 46,134 | 12,155 | ||||||
Total impaired loans | $ | 125,569 | $ | 98,554 | ||||
Other assets acquired through foreclosure, net | $ | 20,028 | $ | 28,540 | ||||
Non-accrual loans to gross loans held for investment | 0.22 | % | 0.29 | % | ||||
Loans past due 90 days or more on accrual status to gross loans held for investment | — | 0.00 |
(1) | Includes non-accrual TDR loans of $9.6 million and $10.1 million at September 30, 2018 and December 31, 2017, respectively. |
(2) | Includes less than $0.1 million from loans acquired with deteriorated credit quality at December 31, 2017. |
September 30, 2018 | December 31, 2017 | |||||||||||||||||||
Non-accrual Balance | Percent of Non-Accrual Balance | Percent of Total HFI Loans | Non-accrual Balance | Percent of Non-Accrual Balance | Percent of Total HFI Loans | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Commercial and industrial | $ | 23,977 | 65.03 | % | 0.14 | % | $ | 22,026 | 50.14 | % | 0.15 | % | ||||||||
Commercial real estate | — | — | — | 7,721 | 17.58 | 0.05 | ||||||||||||||
Construction and land development | — | — | — | 5,979 | 13.61 | 0.04 | ||||||||||||||
Residential real estate | 12,558 | 34.06 | 0.08 | 8,117 | 18.48 | 0.05 | ||||||||||||||
Consumer | 333 | 0.90 | — | 82 | 0.19 | 0.00 | ||||||||||||||
Total non-accrual loans | $ | 36,868 | 100.00 | % | 0.22 | % | $ | 43,925 | 100.00 | % | 0.29 | % |
September 30, 2018 | December 31, 2017 | |||||||||||||
Nonaccrual Loans | Percent of Segment's Total HFI Loans | Nonaccrual Loans | Percent of Segment's Total HFI Loans | |||||||||||
(dollars in thousands) | ||||||||||||||
Arizona | $ | 11,987 | 0.33 | % | $ | 4,520 | 0.14 | % | ||||||
Nevada | 6,489 | 0.34 | 8,189 | 0.44 | ||||||||||
Southern California | 8,344 | 0.39 | 8,140 | 0.42 | ||||||||||
Northern California | 4,417 | 0.33 | 14,489 | 1.14 | ||||||||||
Technology and Innovation | 5,149 | 0.47 | 7,389 | 0.67 | ||||||||||
Other NBLS | 482 | 0.01 | 51 | 0.00 | ||||||||||
Corporate & Other | — | — | 1,147 | 28.09 | ||||||||||
Total non-accrual loans | $ | 36,868 | 0.22 | % | $ | 43,925 | 0.29 | % |
September 30, 2018 | December 31, 2017 | |||||||
(in thousands) | ||||||||
Arizona | $ | 37,156 | $ | 10,468 | ||||
Nevada | 34,682 | 46,730 | ||||||
Southern California | 8,664 | 8,465 | ||||||
Northern California | 5,088 | 14,489 | ||||||
Technology & Innovation | 39,498 | 16,449 | ||||||
Other NBLs | 481 | 51 | ||||||
Corporate & Other | — | 1,902 | ||||||
Total impaired loans | $ | 125,569 | $ | 98,554 |
September 30, 2018 | ||||||||||||||||||||
Impaired Balance | Percent of Impaired Balance | Percent of Total HFI Loans | Reserve Balance | Percent of Reserve Balance | Percent of Total Allowance | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Commercial and industrial | $ | 76,185 | 60.68 | % | 0.46 | % | $ | 1,111 | 94.88 | % | 0.74 | % | ||||||||
Commercial real estate | 19,204 | 15.29 | 0.11 | — | — | — | ||||||||||||||
Construction and land development | 9,128 | 7.27 | 0.05 | — | — | — | ||||||||||||||
Residential real estate | 20,686 | 16.47 | 0.12 | 60 | 5.12 | 0.04 | ||||||||||||||
Consumer | 366 | 0.29 | — | — | — | — | ||||||||||||||
Total impaired loans | $ | 125,569 | 100.00 | % | 0.75 | % | $ | 1,171 | 100.00 | % | 0.78 | % |
December 31, 2017 | ||||||||||||||||||||
Impaired Balance | Percent of Impaired Balance | Percent of Total HFI Loans | Reserve Balance | Percent of Reserve Balance | Percent of Total Allowance | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Commercial and industrial | $ | 34,156 | 34.66 | % | 0.23 | % | $ | 5,606 | 100.00 | % | 4.00 | % | ||||||||
Commercial real estate | 31,681 | 32.15 | 0.21 | — | — | — | ||||||||||||||
Construction and land development | 15,426 | 15.65 | 0.10 | — | — | — | ||||||||||||||
Residential real estate | 17,170 | 17.42 | 0.11 | — | — | — | ||||||||||||||
Consumer | 121 | 0.12 | 0.00 | — | — | — | ||||||||||||||
Total impaired loans | $ | 98,554 | 100.00 | % | 0.65 | % | $ | 5,606 | 100.00 | % | 4.00 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(dollars in thousands) | |||||||||||||||
Allowance for credit losses: | |||||||||||||||
Balance at beginning of period | $ | 147,083 | $ | 131,811 | $ | 140,050 | $ | 124,704 | |||||||
Provision charged to operating expense: | |||||||||||||||
Commercial and industrial | 5,652 | 7,192 | 13,022 | 11,752 | |||||||||||
Commercial real estate | (1,250 | ) | (1,474 | ) | (905 | ) | 2,327 | ||||||||
Construction and land development | 473 | (619 | ) | 1,726 | (1,727 | ) | |||||||||
Residential real estate | 832 | (141 | ) | 2,804 | (258 | ) | |||||||||
Consumer | 293 | 42 | 353 | 156 | |||||||||||
Total Provision | 6,000 | 5,000 | 17,000 | 12,250 | |||||||||||
Recoveries of loans previously charged-off: | |||||||||||||||
Commercial and industrial | (362 | ) | (619 | ) | (1,737 | ) | (2,705 | ) | |||||||
Commercial real estate | (856 | ) | (1,781 | ) | (1,228 | ) | (2,719 | ) | |||||||
Construction and land development | (24 | ) | (226 | ) | (1,420 | ) | (1,011 | ) | |||||||
Residential real estate | (440 | ) | (108 | ) | (831 | ) | (1,659 | ) | |||||||
Consumer | (11 | ) | (33 | ) | (35 | ) | (83 | ) | |||||||
Total recoveries | (1,693 | ) | (2,767 | ) | (5,251 | ) | (8,177 | ) | |||||||
Loans charged-off: | |||||||||||||||
Commercial and industrial | 4,610 | 2,921 | 10,904 | 6,166 | |||||||||||
Commercial real estate | — | 175 | 233 | 1,994 | |||||||||||
Construction and land development | — | — | 1 | — | |||||||||||
Residential real estate | 46 | — | 1,038 | 447 | |||||||||||
Consumer | 109 | 61 | 114 | 103 | |||||||||||
Total charged-off | 4,765 | 3,157 | 12,290 | 8,710 | |||||||||||
Net charge-offs | 3,072 | 390 | 7,039 | 533 | |||||||||||
Balance at end of period | $ | 150,011 | $ | 136,421 | $ | 150,011 | $ | 136,421 | |||||||
Net charge-offs to average loans outstanding | 0.08 | % | 0.01 | % | 0.06 | % | 0.01 | % | |||||||
Allowance for credit losses to gross loans | 0.90 | 0.94 | |||||||||||||
Allowance for credit losses to gross organic loans | 0.97 | 1.06 |
Commercial and Industrial | Commercial Real Estate | Construction and Land Development | Residential Real Estate | Consumer | Total | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
September 30, 2018 | ||||||||||||||||||||||||
Allowance for credit losses | $ | 86,648 | $ | 31,585 | $ | 22,656 | $ | 8,075 | $ | 1,047 | $ | 150,011 | ||||||||||||
Percent of total allowance for credit losses | 57.8 | % | 21.1 | % | 15.0 | % | 5.4 | % | 0.7 | % | 100.0 | % | ||||||||||||
Percent of loan type to total HFI loans | 44.8 | 37.3 | 12.6 | 4.9 | 0.4 | 100.0 | ||||||||||||||||||
December 31, 2017 | ||||||||||||||||||||||||
Allowance for credit losses | $ | 82,527 | $ | 31,648 | $ | 19,599 | $ | 5,500 | $ | 776 | $ | 140,050 | ||||||||||||
Percent of total allowance for credit losses | 58.9 | % | 22.6 | % | 14.0 | % | 3.9 | % | 0.6 | % | 100.0 | % | ||||||||||||
Percent of loan type to total HFI loans | 45.2 | 40.8 | 10.9 | 2.8 | 0.3 | 100.0 |
September 30, 2018 | |||||||||||||
Number of Loans | Loan Balance | Percent of Loan Balance | Percent of Total HFI Loan Balance | ||||||||||
(dollars in thousands) | |||||||||||||
Commercial and industrial | 135 | $ | 133,555 | 60.86 | % | 0.80 | % | ||||||
Commercial real estate | 44 | 73,415 | 33.46 | 0.44 | |||||||||
Construction and land development | 5 | 7,808 | 3.56 | 0.05 | |||||||||
Residential real estate | 4 | 4,363 | 1.99 | 0.03 | |||||||||
Consumer | 2 | 281 | 0.13 | 0.00 | |||||||||
Total | 190 | $ | 219,422 | 100.00 | % | 1.32 | % |
December 31, 2017 | |||||||||||||
Number of Loans | Loan Balance | Percent of Loan Balance | Percent of Total HFI Loan Balance | ||||||||||
(dollars in thousands) | |||||||||||||
Commercial and industrial | 166 | $ | 127,015 | 51.63 | % | 0.84 | % | ||||||
Commercial real estate | 48 | 90,653 | 36.85 | 0.60 | |||||||||
Construction and land development | 5 | 18,471 | 7.51 | 0.12 | |||||||||
Residential real estate | 3 | 8,971 | 3.65 | 0.06 | |||||||||
Consumer | 10 | 880 | 0.36 | 0.01 | |||||||||
Total | 232 | $ | 245,990 | 100.00 | % | 1.63 | % |
Three Months Ended September 30, | ||||||||||||
2018 | ||||||||||||
Gross Balance | Valuation Allowance | Net Balance | ||||||||||
(in thousands) | ||||||||||||
Balance, beginning of period | $ | 31,145 | $ | (3,604 | ) | $ | 27,541 | |||||
Proceeds from sale of other real estate owned and repossessed assets, net | (1,093 | ) | 401 | (692 | ) | |||||||
Charitable contribution (1) | (6,895 | ) | — | (6,895 | ) | |||||||
Valuation adjustments, net | — | — | — | |||||||||
Gains (losses), net (2) | 74 | — | 74 | |||||||||
Balance, end of period | $ | 23,231 | $ | (3,203 | ) | $ | 20,028 | |||||
2017 | ||||||||||||
Balance, beginning of period | $ | 35,037 | $ | (4,049 | ) | $ | 30,988 | |||||
Transfers to other assets acquired through foreclosure, net | 430 | — | 430 | |||||||||
Proceeds from sale of other real estate owned and repossessed assets, net | (2,491 | ) | 330 | (2,161 | ) | |||||||
Valuation adjustments, net | — | (343 | ) | (343 | ) | |||||||
Gains (losses), net (2) | 78 | — | 78 | |||||||||
Balance, end of period | $ | 33,054 | $ | (4,062 | ) | $ | 28,992 |
Nine Months Ended September 30, | ||||||||||||
2018 | ||||||||||||
Gross Balance | Valuation Allowance | Net Balance | ||||||||||
(in thousands) | ||||||||||||
Balance, beginning of period | $ | 32,552 | $ | (4,012 | ) | $ | 28,540 | |||||
Transfers to other assets acquired through foreclosure, net | 5,744 | — | 5,744 | |||||||||
Proceeds from sale of other real estate owned and repossessed assets, net | (9,634 | ) | 841 | (8,793 | ) | |||||||
Charitable contribution (1) | (6,895 | ) | — | (6,895 | ) | |||||||
Valuation adjustments, net | — | (32 | ) | (32 | ) | |||||||
Gains (losses), net (3) | 1,464 | — | 1,464 | |||||||||
Balance, end of period | $ | 23,231 | $ | (3,203 | ) | $ | 20,028 | |||||
2017 | ||||||||||||
Balance, beginning of period | $ | 54,138 | $ | (6,323 | ) | $ | 47,815 | |||||
Transfers to other assets acquired through foreclosure, net | 1,812 | — | 1,812 | |||||||||
Proceeds from sale of other real estate owned and repossessed assets, net | (23,129 | ) | 2,381 | (20,748 | ) | |||||||
Valuation adjustments, net | — | (120 | ) | (120 | ) | |||||||
Gains (losses), net (3) | 233 | — | 233 | |||||||||
Balance, end of period | $ | 33,054 | $ | (4,062 | ) | $ | 28,992 |
(1) | Represents a contribution of OREO property to the Company's charitable foundation. See Note 16. Related Party Transactions for additional information. |
(2) | There were no gains related to initial transfers to other assets during the three months ended September 30, 2018 and 2017, respectively. |
(3) | There were $1.0 million and $0.1 million in net gains related to initial transfers to other assets during the nine months ended September 30, 2018 and 2017, respectively. |
Three Months Ended September 30, | ||||||||||||||
2018 | 2017 | |||||||||||||
Average Balance | Rate | Average Balance | Rate | |||||||||||
(dollars in thousands) | ||||||||||||||
Interest-bearing transaction accounts | $ | 1,938,180 | 0.67 | % | $ | 1,476,506 | 0.29 | % | ||||||
Savings and money market accounts | 6,580,274 | 0.91 | 6,282,405 | 0.45 | ||||||||||
Time certificates of deposit | 1,863,747 | 1.53 | 1,585,690 | 0.82 | ||||||||||
Total interest-bearing deposits | 10,382,201 | 0.97 | 9,344,601 | 0.49 | ||||||||||
Non-interest-bearing demand deposits | 7,910,305 | — | 7,174,532 | — | ||||||||||
Total deposits | $ | 18,292,506 | 0.55 | % | $ | 16,519,133 | 0.28 | % |
Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | |||||||||||||
Average Balance | Rate | Average Balance | Rate | |||||||||||
(dollars in thousands) | ||||||||||||||
Interest-bearing transaction accounts | $ | 1,806,921 | 0.52 | % | $ | 1,468,163 | 0.26 | % | ||||||
Savings and money market accounts | 6,312,371 | 0.76 | 6,169,860 | 0.39 | ||||||||||
Time certificates of deposit | 1,720,537 | 1.25 | 1,549,212 | 0.72 | ||||||||||
Total interest-bearing deposits | 9,839,829 | 0.80 | 9,187,235 | 0.43 | ||||||||||
Non-interest-bearing demand deposits | 7,679,090 | — | 6,548,351 | — | ||||||||||
Total deposits | $ | 17,518,919 | 0.45 | % | $ | 15,735,586 | 0.25 | % |
Total Capital | Tier 1 Capital | Risk-Weighted Assets | Tangible Average Assets | Total Capital Ratio | Tier 1 Capital Ratio | Tier 1 Leverage Ratio | Common Equity Tier 1 | |||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||
September 30, 2018 | ||||||||||||||||||||||||||||
WAL | $ | 2,795,125 | $ | 2,338,346 | $ | 20,690,767 | $ | 21,286,259 | 13.5 | % | 11.3 | % | 11.0 | % | 10.9 | % | ||||||||||||
WAB | 2,600,646 | 2,293,018 | 20,728,621 | 21,316,035 | 12.5 | 11.1 | 10.8 | 11.1 | ||||||||||||||||||||
Well-capitalized ratios | 10.0 | 8.0 | 5.0 | 6.5 | ||||||||||||||||||||||||
Minimum capital ratios | 8.0 | 6.0 | 4.0 | 4.5 | ||||||||||||||||||||||||
December 31, 2017 | ||||||||||||||||||||||||||||
WAL | $ | 2,460,988 | $ | 2,013,744 | $ | 18,569,608 | $ | 19,624,517 | 13.3 | % | 10.8 | % | 10.3 | % | 10.4 | % | ||||||||||||
WAB | 2,299,919 | 2,003,745 | 18,664,200 | 19,541,990 | 12.3 | 10.7 | 10.3 | 10.7 | ||||||||||||||||||||
Well-capitalized ratios | 10.0 | 8.0 | 5.0 | 6.5 | ||||||||||||||||||||||||
Minimum capital ratios | 8.0 | 6.0 | 4.0 | 4.5 |
September 30, 2018 | ||||||||
Available Balance | Outstanding Balance | |||||||
(in millions) | ||||||||
Unsecured fed funds credit lines at correspondent banks | $ | 261.0 | $ | — | ||||
Other lines with correspondent banks: | ||||||||
Secured other lines with correspondent banks | — | — | ||||||
Unsecured other lines with correspondent banks | 45.0 | — | ||||||
Total other lines with correspondent banks | $ | 306.0 | $ | — |
September 30, 2018 | ||||
(in millions) | ||||
FHLB: | ||||
Borrowing capacity | $ | 2,957.8 | ||
Outstanding borrowings | — | |||
Letters of credit | 120.5 | |||
Total available credit | $ | 2,837.3 | ||
FRB: | ||||
Borrowing capacity | $ | 1,400.6 | ||
Outstanding borrowings | — | |||
Total available credit | $ | 1,400.6 |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk. |
Interest Rate Scenario (change in basis points from Base) | ||||||||||||||||||||||||
Down 100 | Base | Up 100 | Up 200 | Up 300 | Up 400 | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Interest Income | $ | 1,047,762 | $ | 1,151,814 | $ | 1,266,796 | $ | 1,384,087 | $ | 1,502,000 | $ | 1,620,583 | ||||||||||||
Interest Expense | 99,317 | 141,292 | 186,936 | 232,574 | 278,205 | 323,830 | ||||||||||||||||||
Net Interest Income | $ | 948,445 | $ | 1,010,522 | $ | 1,079,860 | $ | 1,151,513 | $ | 1,223,795 | $ | 1,296,753 | ||||||||||||
% Change | (6.1 | )% | 6.9 | % | 14.0 | % | 21.1 | % | 28.3 | % |
Interest Rate Scenario (change in basis points from Base) | ||||||||||||||||||||||||
Down 100 | Base | Up 100 | Up 200 | Up 300 | Up 400 | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Assets | $ | 22,493,485 | $ | 22,024,201 | $ | 21,533,514 | $ | 21,093,827 | $ | 20,687,468 | $ | 20,310,242 | ||||||||||||
Liabilities | 18,040,521 | 17,605,935 | 17,259,400 | 16,961,757 | 16,701,599 | 16,470,932 | ||||||||||||||||||
Net Present Value | $ | 4,452,964 | $ | 4,418,266 | $ | 4,274,114 | $ | 4,132,070 | $ | 3,985,869 | $ | 3,839,310 | ||||||||||||
% Change | 0.8 | % | (3.3 | )% | (6.5 | )% | (9.8 | )% | (13.1 | )% |
September 30, 2018 | December 31, 2017 | |||||||||||||||||||
Notional | Net Value | Weighted Average Term (Years) | Notional | Net Value | Weighted Average Term (Years) | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
$ | 1,021,105 | $ | 29,995 | 16.0 | $ | 1,115,736 | $ | (51,629 | ) | 16.0 |
Item 4. | Controls and Procedures. |
Item 1. | Legal Proceedings. |
Item 1A. | Risk Factors. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
(a) | (b) | ( c) | (d) | ||||||||
Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (2) | ||||||||
7/1/2018 through 7/31/2018 | 16,725 | $ | 57.74 | — | — | ||||||
8/1/2018 through 8/31/2018 | 173 | 57.12 | — | — | |||||||
9/1/2018 through 9/30/2018 | 1,504 | 58.67 | — | — | |||||||
Total | 18,402 | $ | 57.81 | — | — |
(1) | All shares purchased during the period were transferred to the Company from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock awards during the period. |
(2) | The Company has not announced a repurchase plan relating to its common stock. |
Item 5. | Other Information |
Item 6. | Exhibits |
3.1 | ||
3.2 | ||
3.3 | ||
3.4 | ||
3.5 | ||
31.1* | ||
31.2* | ||
32** | ||
101.INS* | XBRL Instance Document. | |
101.SCH* | XBRL Taxonomy Extension Schema Document. | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. |
** | Furnished herewith. |
± | Management contract or compensatory arrangement. |
WESTERN ALLIANCE BANCORPORATION | ||||
October 30, 2018 | By: | /s/ Kenneth A. Vecchione | ||
Kenneth A. Vecchione | ||||
Chief Executive Officer | ||||
October 30, 2018 | By: | /s/ Dale Gibbons | ||
Dale Gibbons | ||||
Executive Vice President and | ||||
Chief Financial Officer | ||||
October 30, 2018 | By: | /s/ J. Kelly Ardrey Jr. | ||
J. Kelly Ardrey Jr. | ||||
Senior Vice President and | ||||
Chief Accounting Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Western Alliance Bancorporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Kenneth A. Vecchione | ||||
Kenneth A. Vecchione | ||||
Chief Executive Officer | ||||
Date: | October 30, 2018 | Western Alliance Bancorporation |
1. | I have reviewed this Quarterly Report on Form 10-Q of Western Alliance Bancorporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Dale Gibbons | ||||
Dale Gibbons | ||||
Chief Financial Officer | ||||
Date: | October 30, 2018 | Western Alliance Bancorporation |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
Date: | October 30, 2018 | /s/ Kenneth A. Vecchione | ||
Chief Executive Officer | ||||
Western Alliance Bancorporation | ||||
Date: | October 30, 2018 | /s/ Dale Gibbons | ||
Chief Financial Officer | ||||
Western Alliance Bancorporation |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Oct. 26, 2018 |
|
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | WAL | |
Entity Registrant Name | WESTERN ALLIANCE BANCORPORATION | |
Entity Central Index Key | 0001212545 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 105,858,808 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Securities, Available-for-sale, Amortized Cost | $ 3,211,440 | $ 3,515,401 |
Amortized cost of investment securities available for sale | 3,515,401 | |
Debt Securities, Held-to-maturity, Fair Value | $ 279,033 | $ 256,314 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 107,633,006 | 107,057,520 |
Common stock, shares outstanding | 105,861,497 | 105,487,365 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Interest income: | ||||
Loans, including fees | $ 234,709 | $ 191,096 | $ 662,703 | $ 547,306 |
Investment securities | 26,100 | 22,152 | 77,847 | 58,010 |
Dividends | 1,831 | 2,005 | 5,506 | 6,154 |
Other | 2,576 | 2,583 | 5,459 | 5,584 |
Total interest income | 265,216 | 217,836 | 751,515 | 617,054 |
Interest expense: | ||||
Deposits | 25,266 | 11,449 | 59,288 | 29,506 |
Qualifying debt | 5,794 | 4,708 | 16,458 | 13,539 |
Other borrowings | 90 | 84 | 3,352 | 333 |
Other | 28 | 12 | 51 | 41 |
Total interest expense | 31,178 | 16,253 | 79,149 | 43,419 |
Net interest income | 234,038 | 201,583 | 672,366 | 573,635 |
Provision for credit losses | 6,000 | 5,000 | 17,000 | 12,250 |
Net interest income after provision for credit losses | 228,038 | 196,583 | 655,366 | 561,385 |
Non-interest income: | ||||
Service charges and fees | 5,267 | 5,248 | 16,684 | 15,189 |
Card Income | 2,138 | 1,509 | 6,143 | 4,517 |
Income from equity investments | 1,440 | 967 | 5,417 | 2,977 |
Lending related income and gains (losses) on sale of loans, net | 1,422 | 97 | 3,447 | 746 |
Foreign currency income | 1,092 | 756 | 3,475 | 2,630 |
Income from bank owned life insurance | 868 | 975 | 2,963 | 2,896 |
Other income | 635 | 585 | 1,579 | 1,795 |
Total non-interest income | 4,418 | 10,456 | 29,505 | 31,656 |
Non-interest expense: | ||||
Salaries and employee benefits | 64,762 | 52,747 | 188,680 | 156,640 |
Legal, professional, and directors' fees | 7,907 | 6,038 | 21,856 | 23,324 |
Occupancy | 7,406 | 7,507 | 21,671 | 21,328 |
Data processing | 5,895 | 4,524 | 16,688 | 14,163 |
Deposit costs | 4,848 | 2,904 | 11,888 | 6,778 |
Insurance | 3,712 | 3,538 | 11,466 | 10,355 |
Business development | 1,381 | 1,439 | 4,523 | 4,949 |
Card expense | 1,282 | 966 | 3,305 | 2,558 |
Loan and repossessed asset expenses | 1,230 | 1,263 | 2,830 | 3,639 |
Marketing | 687 | 776 | 2,429 | 2,628 |
Intangible amortization | 398 | 489 | 1,195 | 1,666 |
Net (gain) loss on sales / valuations of repossessed and other assets | (67) | 266 | (1,474) | (46) |
Other expense | 14,400 | 6,839 | 29,481 | 17,561 |
Total non-interest expense | 113,841 | 89,296 | 314,538 | 265,543 |
Income before provision for income taxes | 118,615 | 117,743 | 370,333 | 327,498 |
Income tax expense | 7,492 | 34,899 | 53,631 | 91,352 |
Net income | $ 111,123 | $ 82,844 | $ 316,702 | $ 236,146 |
Earnings per share: | ||||
Basic | $ 1.06 | $ 0.79 | $ 3.03 | $ 2.27 |
Diluted | $ 1.05 | $ 0.79 | $ 3.00 | $ 2.25 |
Weighted average number of common shares outstanding: | ||||
Basic | 104,768 | 104,221 | 104,664 | 104,124 |
Diluted | 105,448 | 104,942 | 105,398 | 104,941 |
(Gains) / Losses on: | $ (7,232) | $ 319 | $ (7,232) | $ 907 |
Equity Securities, FV-NI, Unrealized Gain (Loss) | $ (1,212) | $ 0 | $ (2,971) | $ (1) |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 111,123 | $ 82,844 | $ 316,702 | $ 236,146 |
Other comprehensive (loss) income, net: | ||||
Unrealized (loss) gain on AFS securities, net of tax effect of $7,337, $(689), $23,438, and $(9,894), respectively | (22,462) | 1,116 | (71,765) | 15,947 |
Unrealized (loss) gain on SERP, net of tax effect of $4, $(71), $10, and $(93), respectively | (12) | 114 | (35) | 150 |
Unrealized (loss) gain on junior subordinated debt, net of tax effect of $661, $(394), $(61), and $1,649, respectively | (2,028) | 641 | 186 | (2,677) |
Realized loss (gain) on sale of AFS securities included in income, net of tax effect of $(1,778), $122, $(1,778), and $346, respectively | 5,454 | (197) | 5,454 | (561) |
Net other comprehensive (loss) income | (19,048) | 1,674 | (66,160) | 12,859 |
Comprehensive income | $ 92,075 | $ 84,518 | $ 250,542 | $ 249,005 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Unrealized gain on securities available-for-sale securities, tax | $ (7,337) | $ 689 | $ (23,438) | $ 9,894 |
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, Tax | 4 | (71) | 10 | (93) |
Unrealized (loss) gain on junior subordinated debt, net of tax effect of $661, $(394), $(61), and $1,649, respectively | 661 | (394) | (61) | 1,649 |
Realized gain on sale of securities, tax | $ (1,778) | $ 122 | $ (1,778) | $ 346 |
Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Summary of Significant Accounting Policies | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of operation WAL is a bank holding company headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware. WAL provides a full spectrum of deposit, lending, treasury management, international banking, and online banking products and services through its wholly-owned banking subsidiary, WAB. WAB operates the following full-service banking divisions: ABA, BON, FIB, Bridge, and TPB. The Company also serves business customers through a national platform of specialized financial services. In addition, the Company has two non-bank subsidiaries, LVSP, which holds and manages certain OREO properties and a captive insurance company formed and licensed under the laws of the State of Arizona, CSI. CSI was established as part of the Company's overall enterprise risk management strategy. Basis of presentation The accounting and reporting policies of the Company are in accordance with GAAP and conform to practices within the financial services industry. The accounts of the Company and its consolidated subsidiaries are included in the Consolidated Financial Statements. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management's estimates and judgments are ongoing and are based on experience, current and expected future conditions, third-party evaluations and various other assumptions that management believes are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities, as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Actual results may differ from those estimates and assumptions used in the Consolidated Financial Statements and related notes. Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for credit losses; estimated cash flows related to PCI loans; fair value determinations related to acquisitions and certain assets and liabilities carried at fair value; and accounting for income taxes. Principles of consolidation As of September 30, 2018, WAL has the following significant wholly-owned subsidiaries: WAB, LVSP, and eight unconsolidated subsidiaries used as business trusts in connection with the issuance of trust-preferred securities. The Bank has the following significant wholly-owned subsidiaries: WABT, which holds certain investment securities, municipal and nonprofit loans, and leases; WA PWI, which holds certain limited partnerships invested primarily in low income housing tax credits and small business investment corporations; and BW Real Estate, Inc., which operates as a real estate investment trust and holds certain of WAB's real estate loans and related securities. The Company does not have any other significant entities that should be considered for consolidation. All significant intercompany balances and transactions have been eliminated in consolidation. Reclassifications Certain amounts reported in prior periods may have been reclassified in the Consolidated Financial Statements to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported. Interim financial information The accompanying Unaudited Consolidated Financial Statements as of and for the three and nine months ended September 30, 2018 and 2017 have been prepared in condensed format and, therefore, do not include all of the information and footnotes required by GAAP for complete financial statements. These statements have been prepared on a basis that is substantially consistent with the accounting principles applied to the Company's audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017. The information furnished in these interim statements reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for each respective period presented. Such adjustments are of a normal, recurring nature. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter or for the full year. The interim financial information should be read in conjunction with the Company's audited Consolidated Financial Statements. Investment securities Investment securities include debt securities and equity securities. Debt securities may be classified as HTM, AFS, or measured at fair value. The appropriate classification is initially decided at the time of purchase. Securities classified as HTM are those debt securities that the Company has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or general economic conditions. These securities are carried at amortized cost. The sale of an HTM security within three months of its maturity date or after the majority of the principal outstanding has been collected is considered a maturity for purposes of classification and disclosure. Securities classified as AFS or trading securities are reported as an asset in the Consolidated Balance Sheet at their estimated fair value. As the fair value of AFS debt securities changes, the changes are reported net of income tax as an element of OCI, except for other-than-temporarily-impaired securities. When AFS debt securities are sold, the unrealized gain or loss is reclassified from OCI to non-interest income. The changes in the fair values of trading securities are reported in non-interest income. Securities classified as AFS are securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as AFS would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, decline in credit quality, and regulatory capital considerations. For periods prior to January 1, 2018, equity securities were classified as AFS and reported at fair value with unrealized gains and losses included as a separate component of AOCI, net of tax. Upon adoption of ASU 2016-01, the fair value changes in equity securities are recognized as part of non-interest income, see "Recently adopted accounting guidance" below for further discussion. Interest income is recognized based on the coupon rate and increased by accretion of discounts earned or decreased by the amortization of premiums paid over the contractual life of the security, adjusted for prepayment estimates, using the interest method. In estimating whether there are any OTTI losses, management considers the 1) length of time and the extent to which the fair value has been less than amortized cost; 2) financial condition and near term prospects of the issuer; 3) impact of changes in market interest rates; and 4) intent and ability of the Company to retain its investment for a period of time sufficient to allow for any anticipated recovery in fair value and whether it is not more likely than not the Company would be required to sell the security. Declines in the fair value of individual AFS securities that are deemed to be other-than-temporary are reflected in earnings when identified. The fair value of the debt security then becomes the new cost basis. For individual debt securities where the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the other-than-temporary decline in fair value of the debt security related to 1) credit loss is recognized in earnings; and 2) interest rate, market, or other factors is recognized in other comprehensive income or loss. For individual debt securities where the Company either intends to sell the security or more likely than not will not recover all of its amortized cost, the OTTI is recognized in earnings equal to the entire difference between the security's cost basis and its fair value at the balance sheet date. For individual debt securities for which a credit loss has been recognized in earnings, interest accruals and amortization and accretion of premiums and discounts are suspended when the credit loss is recognized. Interest received after accruals have been suspended is recognized on a cash basis. Restricted stock WAB is a member of the Federal Reserve System and, as part of its membership, is required to maintain stock in the FRB in a specified ratio to its capital. In addition, WAB is a member of the FHLB system and, accordingly, maintains an investment in capital stock of the FHLB based on the borrowing capacity used. The Bank also maintains an investment in its primary correspondent bank. All of these investments are considered equity securities with no actively traded market. Therefore, the shares are considered restricted investment securities. These investments are carried at cost, which is equal to the value at which they may be redeemed. The dividend income received from the stock is reported in interest income. The Company conducts a periodic review and evaluation of its restricted stock to determine if any impairment exists. No impairment has been recorded to date. Loans, held for investment The Company generally holds loans for investment and has the intent and ability to hold loans until their maturity. Therefore, they are reported at book value. Net loans are stated at the amount of unpaid principal, adjusted for net deferred fees and costs, purchase accounting fair value adjustments, and an allowance for credit losses. In addition, the book values of loans subject to a fair value hedge are adjusted for changes in value attributable to the effective portion of the hedged benchmark interest rate risk. The Company may also acquire loans through a business combination. These acquired loans are recorded at estimated fair value on the date of purchase, which is comprised of unpaid principal adjusted for estimated credit losses and interest rate fair value adjustments. Loans are evaluated individually at the acquisition date to determine if there has been credit deterioration since origination. Such loans may then be aggregated and accounted for as a pool of loans based on common characteristics. When the Company acquires such loans, the yield that may be accreted (accretable yield) is limited to the excess of the Company’s estimate of undiscounted cash flows expected to be collected over the Company’s initial investment in the loan. The excess of contractual cash flows over the cash flows expected to be collected may not be recognized as an adjustment to yield, loss, or a valuation allowance. Subsequent increases in cash flows expected to be collected generally are recognized prospectively through adjustment of the loan’s yield over the remaining life. Subsequent decreases to cash flows expected to be collected are recognized as impairment. The Company may not carry over or create a valuation allowance in the initial accounting for loans acquired under these circumstances. For purchased loans that are not deemed impaired at the acquisition date, fair value adjustments attributable to both credit and interest rates are accreted (or amortized) over the contractual life of the individual loan. For additional information, see "Note 3. Loans, Leases and Allowance for Credit Losses" of these Notes to Unaudited Consolidated Financial Statements. Loan fees collected for the origination of loans less direct loan origination costs (net deferred loan fees) are amortized over the contractual life of the loan through interest income. If a loan has scheduled payments, the amortization of the net deferred loan fee is calculated using the interest method over the contractual life of the loan. If a loan does not have scheduled payments, such as a line of credit, the net deferred loan fee is recognized as interest income on a straight-line basis over the contractual life of the loan commitment. Commitment fees based on a percentage of a customer’s unused line of credit and fees related to standby letters of credit are recognized over the commitment period. When loans are repaid, any remaining unamortized balances of premiums, discounts, or net deferred fees are recognized as interest income. Non-accrual loans: When a borrower discontinues making payments as contractually required by the note, the Company must determine whether it is appropriate to continue to accrue interest. The Company ceases accruing interest income when the loan has become delinquent by more than 90 days or when management determines that the full repayment of principal and collection of interest according to contractual terms is no longer likely. The Company may decide to continue to accrue interest on certain loans more than 90 days delinquent if the loans are well secured by collateral and in the process of collection. For all loan types, when a loan is placed on non-accrual status, all interest accrued but uncollected is reversed against interest income in the period in which the status is changed, and the Company makes a loan-level decision to apply either the cash basis or cost recovery method. The Company recognizes income on a cash basis only for those non-accrual loans for which the collection of the remaining principal balance is not in doubt. Under the cost recovery method, subsequent payments received from the customer are applied to principal and generally no further interest income is recognized until the principal has been paid in full or until circumstances have changed such that payments are again consistently received as contractually required. Impaired loans: A loan is identified as impaired when it is no longer probable that interest and principal will be collected according to the contractual terms of the original loan agreement. Generally, impaired loans are classified as non-accrual. However, in certain instances, impaired loans may continue on an accrual basis, if full repayment of all principal and interest is expected and the loan is both well secured and in the process of collection. Impaired loans are measured for reserve requirements in accordance with ASC 310, Receivables, based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral less applicable disposition costs if the loan is collateral dependent. The amount of an impairment reserve, if any, and any subsequent changes are recorded as a provision for credit losses. Losses are recorded as a charge-off when losses are confirmed. In addition to management's internal loan review process, regulators may from time to time direct the Company to modify loan grades, loan impairment calculations, or loan impairment methodology. Troubled Debt Restructured Loans: A TDR loan is a loan on which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. The loan terms that have been modified or restructured due to a borrower’s financial situation include, but are not limited to, a reduction in the stated interest rate, an extension of the maturity or renewal of the loan at an interest rate below current market, a reduction in the face amount of the debt, a reduction in the accrued interest, or deferral of interest payments. A TDR loan is also considered impaired. A TDR loan may be returned to accrual status when the loan is brought current, has performed in accordance with the contractual restructured terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual restructured principal and interest is no longer in doubt. However, such loans continue to be considered impaired. Consistent with regulatory guidance, a TDR loan that is subsequently modified in another restructuring agreement but has shown sustained performance and classification as a TDR, will be removed from TDR status provided that the modified terms were market-based at the time of modification. Allowance for credit losses Credit risk is inherent in the business of extending loans and leases to borrowers, for which the Company must maintain an adequate allowance for credit losses. The allowance for credit losses is established through a provision for credit losses recorded to expense. Loans are charged against the allowance for credit losses when management believes that the contractual principal or interest will not be collected. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount believed adequate to absorb estimated probable losses on existing loans that may become uncollectable, based on evaluation of the collectability of loans and prior credit loss experience, together with other factors. The Company formally re-evaluates and establishes the appropriate level of the allowance for credit losses on a quarterly basis. The allowance consists of specific and general components. The specific allowance applies to impaired loans. For impaired collateral dependent loans, the reserve is calculated based on the collateral value, net of estimated disposition costs. Generally, the Company obtains independent collateral valuation analysis for each loan every twelve months. Loans not collateral dependent are evaluated based on the expected future cash flows discounted at the original contractual interest rate. The general allowance covers all non-impaired loans and incorporates several quantitative and qualitative factors, which are used for all of the Company's portfolio segments. Quantitative factors include company-specific, ten-year historical net charge-offs stratified by loans with similar characteristics. Qualitative factors include: 1) levels of and trends in delinquencies and impaired loans; 2) levels of and trends in charge-offs and recoveries; 3) trends in volume and terms of loans; 4) changes in underwriting standards or lending policies; 5) experience, ability, depth of lending staff; 6) national and local economic trends and conditions; 7) changes in credit concentrations; 8) out-of-market exposures; 9) changes in quality of loan review system; and 10) changes in the value of underlying collateral. Due to the credit concentration of the Company's loan portfolio in real estate secured loans, the value of collateral is heavily dependent on real estate values in Arizona, Nevada, and California. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic or other conditions. In addition, regulators, as an integral part of their examination processes, periodically review the Bank's allowance for credit losses, and may require the Bank to make additions to the allowance based on their judgment about information available to them at the time of their examination. Management regularly reviews the assumptions and formulae used in determining the allowance and makes adjustments if required to reflect the current risk profile of the portfolio. Goodwill and other intangible assets The Company records as goodwill the excess of the purchase price over the fair value of the identifiable net assets acquired in accordance with applicable guidance. The Company performs its annual goodwill and intangibles impairment tests as of October 1 each year, or more often if events or circumstances indicate that the carrying value may not be recoverable. The Company can first elect to assess, through qualitative factors, whether it is more likely than not that goodwill is impaired. If the qualitative assessment indicates potential impairment, a quantitative impairment test is necessary. If, based on the quantitative test, a reporting unit's carrying amount exceeds its fair value, a goodwill impairment charge for this difference is recorded to current period earnings as non-interest expense. The Company’s intangible assets consist primarily of core deposit intangible assets that are amortized over periods ranging from 5 to 10 years. The Company considers the remaining useful lives of its core deposit intangible assets each reporting period, as required by ASC 350, Intangibles—Goodwill and Other, to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life has changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. The Company has not revised its estimates of the useful lives of its core deposit intangibles during the three and nine months ended September 30, 2018 and 2017. Other assets acquired through foreclosure Other assets acquired through foreclosure consist primarily of properties acquired as a result of, or in-lieu-of, foreclosure. Properties or other assets (primarily repossessed assets formerly leased) are classified as OREO and other repossessed property and are initially reported at fair value of the asset less estimated selling costs. Subsequent adjustments are based on the lower of carrying value or fair value less estimated costs to sell the property. Costs related to the development or improvement of the assets are capitalized and costs related to holding the assets are charged to non-interest expense. Property is evaluated regularly to ensure the recorded amount is supported by its current fair value and valuation allowances. Treasury shares The Company separately presents treasury shares, which represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. Treasury shares are carried at cost. Derivative financial instruments The Company uses interest-rate swaps to mitigate interest-rate risk associated with changes to the fair value of certain fixed-rate financial instruments (fair value hedges). The Company recognizes derivatives as assets or liabilities in the Consolidated Balance Sheet at their fair value in accordance with ASC 815, Derivatives and Hedging. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset or liability attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, along with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk are recorded in current-period earnings. Changes in the fair value of derivatives not considered to be highly effective in hedging the change in fair value of the hedged item are recognized in earnings as non-interest income during the period of the change. The Company documents its hedge relationships, including identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction after the derivative contract is executed. At inception, the Company performs a quantitative assessment to determine whether the derivatives used in hedging transactions are highly effective (as defined in the guidance) in offsetting changes in the fair value of the hedged item. Retroactive effectiveness is assessed, as well as the continued expectation that the hedge will remain effective prospectively. After the initial quantitative assessment is performed, on a quarterly basis, the Company performs a qualitative hedge effectiveness assessment. This assessment takes into consideration any adverse developments related to the counterparty's risk of default and any negative events or circumstances that affect the factors that originally enabled the Company to assess that it could reasonably support, qualitatively, an expectation that the hedging relationship was and will continue to be highly effective. The Company discontinues hedge accounting prospectively when it is determined that a hedge is no longer highly effective. When hedge accounting is discontinued on a fair value hedge that no longer qualifies as an effective hedge, the derivative continues to be reported at fair value in the Consolidated Balance Sheet, but the carrying amount of the hedged item is no longer adjusted for future changes in fair value. The adjustment to the carrying amount of the hedged item that existed at the date hedge accounting is discontinued is amortized over the remaining life of the hedged item into earnings. Derivative instruments that are not designated as hedges, so called free-standing derivatives, are reported in the Consolidated Balance Sheet at fair value and the changes in fair value are recognized in earnings as non-interest income during the period of change. The Company may in the normal course of business purchase a financial instrument or originate a loan that contains an embedded derivative instrument. Upon purchasing the instrument or originating the loan, the Company assesses whether the economic characteristics of the embedded derivative are clearly and closely related to the economic characteristics of the remaining component of the financial instrument (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from the host contract and carried at fair value. However, in cases where the host contract is measured at fair value, with changes in fair value reported in current earnings, or the Company is unable to reliably identify and measure an embedded derivative for separation from its host contract, the entire contract is carried in the Consolidated Balance Sheet at fair value and is not designated as a hedging instrument. Off-balance sheet instruments In the ordinary course of business, the Company has entered into off-balance sheet financial instrument arrangements consisting of commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the Consolidated Financial Statements when they are funded. They involve, to varying degrees, elements of credit risk in excess of amounts recognized in the Consolidated Balance Sheet. Losses would be experienced when the Company is contractually obligated to make a payment under these instruments and must seek repayment from the borrower, which may not be as financially sound in the current period as they were when the commitment was originally made. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company enters into credit arrangements that generally provide for the termination of advances in the event of a covenant violation or other event of default. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the party. The commitments are collateralized by the same types of assets used as loan collateral. As with outstanding loans, the Company applies qualitative factors and utilization rates to its off-balance sheet obligations in determining an estimate of losses inherent in these contractual obligations. The estimate for credit losses on off-balance sheet instruments is included in other liabilities and the charge to income that establishes this liability is included in non-interest expense. The Company also has off-balance sheet arrangements related to its derivative instruments. Derivative instruments are recognized in the Consolidated Financial Statements at fair value and their notional values are carried off-balance sheet. See "Note 9. Derivatives and Hedging Activities" of these Notes to Unaudited Consolidated Financial Statements for further discussion. Business combinations Business combinations are accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method, the acquiring entity in a business combination recognizes all of the acquired assets and assumed liabilities at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including identified intangible assets, exceeds the purchase price, a bargain purchase gain is recognized. Changes to estimated fair values from a business combination are recognized as an adjustment to goodwill during the measurement period and are recognized in the proper reporting period in which the adjustment amounts are determined. Results of operations of an acquired business are included in the Consolidated Income Statement from the date of acquisition. Acquisition-related costs, including conversion and restructuring charges, are expensed as incurred. Fair values of financial instruments The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities. ASC 820, Fair Value Measurement, establishes a framework for measuring fair value and a three-level valuation hierarchy for disclosure of fair value measurement, as well as enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The Company uses various valuation approaches, including market, income, and/or cost approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would consider in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs, as follows:
The availability of observable inputs varies based on the nature of the specific financial instrument. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Fair value is a market-based measure considered from the perspective of a market participant who may purchase the asset or assume the liability rather than an entity-specific measure. When market assumptions are available, ASC 820 requires the Company to make assumptions regarding the assumptions that market participants would use to estimate the fair value of the financial instrument at the measurement date. ASC 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at September 30, 2018 and 2017. The estimated fair value amounts for September 30, 2018 and 2017 have been measured as of period-end, and have not been re-evaluated or updated for purposes of these Consolidated Financial Statements subsequent to those dates. As such, the estimated fair values of these financial instruments subsequent to the reporting date may be different than the amounts reported at period-end. The information in "Note 13. Fair Value Accounting" in these Notes to Unaudited Consolidated Financial Statements should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only required for a limited portion of the Company’s assets and liabilities. Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimate, comparisons between the Company’s disclosures and those of other companies or banks may not be meaningful. The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments: Cash, cash equivalents, and restricted cash The carrying amounts reported in the Consolidated Balance Sheets for cash and due from banks approximate their fair value. Money market investments The carrying amounts reported in the Consolidated Balance Sheets for money market investments approximate their fair value. Investment securities The fair values of CRA investments and exchange-listed preferred stock are based on quoted market prices and are categorized as Level 1 in the fair value hierarchy. The fair values of debt securities were determined based on matrix pricing. Matrix pricing is a mathematical technique that utilizes observable market inputs including, for example, yield curves, credit ratings, and prepayment speeds. Fair values determined using matrix pricing are generally categorized as Level 2 in the fair value hierarchy. Restricted stock WAB is a member of the Federal Reserve System and the FHLB and, accordingly, maintains investments in the capital stock of the FRB and the FHLB. WAB also maintains an investment in its primary correspondent bank. These investments are carried at cost since no ready market exists for them, and they have no quoted market value. The Company conducts a periodic review and evaluation of its restricted stock to determine if any impairment exists. The fair values of these investments have been categorized as Level 2 in the fair value hierarchy. Loans The fair value of loans is estimated based on discounted cash flows using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality and adjustments that the Company believes a market participant would consider in determining fair value based on a third party independent valuation. As a result, the fair value for loans is categorized as Level 2 in the fair value hierarchy, excluding impaired loans which are categorized as Level 3. Accrued interest receivable and payable The carrying amounts reported in the Consolidated Balance Sheets for accrued interest receivable and payable approximate their fair value. Derivative financial instruments All derivatives are recognized in the Consolidated Balance Sheets at their fair value. The fair value for derivatives is determined based on market prices, broker-dealer quotations on similar products, or other related input parameters. As a result, the fair values have been categorized as Level 2 in the fair value hierarchy. Deposits The fair value disclosed for demand and savings deposits is by definition equal to the amount payable on demand at their reporting date (that is, their carrying amount), which the Company believes a market participant would consider in determining fair value. The carrying amount for variable-rate deposit accounts approximates their fair value. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on these deposits. The fair value measurement of the deposit liabilities is categorized as Level 2 in the fair value hierarchy. FHLB advances and customer repurchase agreements The fair values of the Company’s borrowings are estimated using discounted cash flow analyses, based on the market rates for similar types of borrowing arrangements. The FHLB advances and customer repurchase agreements have been categorized as Level 2 in the fair value hierarchy due to their short durations. Subordinated debt The fair value of subordinated debt is based on the market rate for the respective subordinated debt security. Subordinated debt has been categorized as Level 3 in the fair value hierarchy. Junior subordinated debt Junior subordinated debt is valued based on a discounted cash flow model which uses as inputs Treasury Bond rates and the 'BB' rated financial index. Junior subordinated debt has been categorized as Level 3 in the fair value hierarchy. Off-balance sheet instruments The fair value of the Company’s off-balance sheet instruments (lending commitments and standby letters of credit) is based on quoted fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, and the counterparties’ credit standing. Income taxes The Company is subject to income taxes in the United States and files a consolidated federal income tax return with all of its subsidiaries, with the exception of BW Real Estate, Inc. Deferred income taxes are recorded to reflect the effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and their income tax bases using enacted tax rates that are expected to be in effect when the taxes are actually paid or recovered. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Net deferred tax assets are recorded to the extent that these assets will more-likely-than-not be realized. In making these determinations, all available positive and negative evidence is considered, including scheduled reversals of deferred tax liabilities, tax planning strategies, projected future taxable income, and recent operating results. If it is determined that deferred income tax assets to be realized in the future are in excess of their net recorded amount, an adjustment to the valuation allowance will be recorded, which will reduce the Company's provision for income taxes. A tax benefit from an unrecognized tax benefit may be recognized when it is more-likely-than-not that the position will be sustained upon examination, including related appeals or litigation, based on technical merits. Income tax benefits must meet a more-likely-than-not recognition threshold at the effective date to be recognized. Interest and penalties related to unrecognized tax benefits are recognized as part of the provision for income taxes in the Consolidated Income Statement. Accrued interest and penalties are included in the related tax liability line with other liabilities in the Consolidated Balance Sheet. See "Note 11. Income Taxes" of these Notes to Unaudited Consolidated Financial Statements for further discussion on income taxes. Non-interest income Non-interest income includes service charges and fees, income from equity investments, card income, foreign currency income, income from bank owned life insurance, lending related income, net gain or loss on sales of investment securities, net unrealized gains or losses on assets measured at fair value, and other income. Service charges and fees consist of fees earned from performance of account analysis, general account services, and other deposit account services. These fees are recognized as the related services are provided in accordance with ASC 606, Revenue from Contracts with Customers. Income from equity investments includes gains on equity warrant assets, SBIC equity income, and success fees. Card income includes fees earned from customer use of debit and credit cards, interchange income from merchants, and international charges. Card income is generally within the scope of ASC 310, Receivables; however, certain processing transactions for merchants, such as interchange fees, are within the scope of ASC 606. Foreign currency income represents fees earned on the differential between purchases and sales of foreign currency on behalf of the Company’s clients. Income from bank owned life insurance is accounted for in accordance with ASC 325, Investments - Other. Lending related income includes fees earned from gains or losses on the sale of loans, SBA income, and letter of credit fees. Gains and losses on the sale of loans and SBA income are recognized pursuant to ASC 860, Transfers and Servicing. Net unrealized gains or losses on assets measured at fair value represent fair value changes in equity securities and are accounted for in accordance with ASC 321, Investments - Equity Securities. Fees related to standby letters of credit are accounted for in accordance with ASC 440, Commitments. Other income includes operating lease income, which is recognized on a straight-line basis over the lease term in accordance with ASC 840, Leases. Net gain or loss on sales / valuations of repossessed and other assets is presented as a component of non-interest expense, but may also be presented as a component of non-interest income in the event that a net gain is recognized. Net gain or loss on sales of repossessed and other assets are accounted for in accordance with ASC 610, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets. See "Note 15. Revenue from Contracts with Customers" of these Notes to Unaudited Consolidated Financial Statements for further details related to the nature and timing of revenue recognition for non-interest income revenue streams within the scope of the new standard. Recent accounting pronouncements In February 2016, the FASB issued guidance within ASU 2016-02, Leases. The amendments in ASU 2016-02 to Topic 842, Leases, require lessees to recognize the lease assets and lease liabilities arising from operating leases in the statement of financial position, which will result in a gross up of assets and liabilities on the balance sheet. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. In July 2018, the FASB issued guidance within ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842) Targeted Improvements. The amendments within ASU 2018-10 clarify how to apply certain aspects of the new leases standard. The amendments address the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments, among other things. The amendments within ASU 2018-11 give entities another option for transition and provide lessors with a practical expedient. The transition option allows entities to continue to apply the legacy guidance in ASC 840, Leases, to prior periods, including disclosure requirements. Accordingly, under this transition approach, the modified retrospective transition method still applies; however, a cumulative-effect adjustment to the opening balance sheet of retained earnings is recognized in the period of adoption, rather than the earliest period presented. The practical expedient provides lessors with an option to not separate non-lease components from the associated lease components when certain criteria are met and requires them to account for the combined components in accordance with the new revenue standard if the associated non-lease components are the predominant components. The amendments in these ASUs are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management evaluated several lease software solutions and selected a software solution that it believes will be able to effectively facilitate the application of the new accounting requirements. The population of its leases that are within the scope of the new guidance has been finalized and largely relate to real estate leases. All key lease data has been gathered and input into the new application and management is in the process of validating this data. In June 2016, the FASB issued guidance within ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The new standard significantly changes the impairment model for most financial assets that are measured at amortized cost, including off-balance sheet credit exposures, from an incurred loss model to an expected loss model. The amendments in ASU 2016-13 to Topic 326, Financial Instruments - Credit Losses, require that an organization measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU also requires enhanced disclosures, including qualitative and quantitative disclosures that provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on AFS debt securities and purchased financial assets with credit deterioration. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Management has formed a Steering Committee and established an implementation team made up of subject matter experts across different functions within the Company, including Finance, Risk, Credit, and IT, that will facilitate all phases of planning and implementation of the new guidance. Under the direction of the Company's CECL Steering Committee and in partnership with its Enterprise Project Management Office, the implementation team is fully engaged with the implementation of its plan. The Company has identified its portfolio segments and made modeling choices that include both internally-developed models as well as vended solutions, with parallel testing of certain models expected to begin in early 2019. The team is also focused on updating its accounting policies and assessing its control framework to identify risks resulting from new processes, judgments and data. In March 2017, the FASB issued guidance within ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities. The amendments in ASU 2017-08 to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs, shorten the amortization period for certain purchased callable debt securities held at a premium to the earliest call date, which more closely align the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities. Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. The adoption of this guidance is not expected to have a significant impact on the Company's Consolidated Financial Statements. In June 2018, the FASB issued guidance within ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting. The amendments in ASU 2018-07 to Topic 718, Compensation-Stock Compensation, are intended to align the accounting for share-based payment awards issued to employees and nonemployees. Changes to the accounting for nonemployee awards include: 1) equity classified share-based payment awards issued to nonemployees will now be measured on the grant date, instead of the previous requirement to remeasure the awards through the performance completion date; 2) for performance conditions, compensation cost associated with the award will be recognized when achievement of the performance condition is probable, rather than upon achievement of the performance condition; and 3) the current requirement to reassess the classification (equity or liability) for nonemployee awards upon vesting will be eliminated, except for awards in the form of convertible instruments. The new guidance also clarifies that any share-based payment awards issued to customers should be evaluated under ASC 606, Revenue from Contracts with Customers. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company's share-based payment awards to nonemployees consist only of grants made to the Company's BOD as compensation solely related to the individual's role as a Director. As such, in accordance with ASC 718, the Company accounts for these share-based payment awards to its Directors in the same manner as share-based payment awards for its employees. Accordingly, the amendments in this guidance will not have an effect on the accounting for the Company's share-based payment awards to its Directors. In July 2018, the FASB issued guidance within ASU 2018-09, Codification Improvements. The amendments in ASU 2018-09 are intended to clarify or correct unintended guidance in the FASB Codification and affect a wide variety of Topics in the Codification. The topics that are applicable to the Company include: 1) debt modifications and extinguishments; 2) stock compensation; and 3) derivatives and hedging. For debt modifications and extinguishments, the amendment clarifies that, in an early extinguishment of debt for which the fair value option has been elected, the net carrying amount of the extinguished debt is equal to its fair value at the reacquisition date, and upon extinguishment, the cumulative amount of the gain or loss on the extinguished debt that resulted from changes in instrument-specific credit risk should be presented in net income. The Company has junior subordinated debt that is recorded at fair value at each reporting period due to election of the FVO. Accordingly, if in the future, the Company chooses to repay this debt prior to its contractual maturity, this amendment would be applicable. For stock compensation, the amendment clarifies that excess tax benefits or tax deficiencies should be recognized in the period in which the amount of the tax deduction is determined, which is typically when an award is exercised (in the case of share options) or vests (in the case of non-vested stock awards). The Company already records excess tax benefits or tax deficiencies in the periods in which the tax deduction is determined. Therefore, this amendment will not have an effect on the Company's accounting for excess tax benefits or tax deficiencies. For derivatives and hedging, previous guidance permits derivatives to be offset only when all four conditions (including the intent to set off) are met. This amendment clarifies that the intent to set off is not required to offset fair value amounts recognized for derivative instruments that are executed with the same counterparty under a master netting agreement. This amendment will not have an effect on the offsetting of the Company's derivative assets and liabilities. In August 2018, the FASB issued guidance within ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments within ASU 2018-13 remove, modify, and supplement the disclosure requirements for fair value measurements. Disclosure requirements that were removed include: the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. Additional disclosure requirements include: the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. With the exception of the above additional disclosure requirements, which will be applied prospectively, all other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on the Company's Consolidated Financial Statements. In August 2018, the FASB issued guidance within ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments in this Update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments in this Update also require that the capitalized implementation costs of a hosting arrangement that is a service contract be expensed over the term of the hosting arrangement. Presentation requirements include: expense related to the capitalized implementation costs should be presented in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement, payments for capitalized implementation costs in the statement of cash flows should be classified in the same manner as payments made for fees associated with the hosting element, and capitalized implementation costs in the statement of financial position should be presented in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on the Company's Consolidated Financial Statements. Recently adopted accounting guidance In May 2014, the FASB issued guidance within ASU 2014-09, Revenue from Contracts with Customers. The amendments in ASU 2014-09 to ASC 606, Revenue from Contracts with Customers, creates a common revenue standard and clarifies the principles for recognizing revenue that can be applied consistently across various transactions, industries, and capital markets. The amendments in the ASU clarify that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. As part of that principle, the entity should identify the contract(s) with the customer, identify the performance obligation(s) of the contract, determine the transaction price, allocate that transaction price to the performance obligation(s) of the contract, and then recognize revenue when or as the entity satisfies the performance obligation(s). The Company adopted ASU 2014-09 on January 1, 2018 using the modified retrospective method. Substantially all of the Company's revenue is generated from interest income related to loans and investment securities, which are not within the scope of this guidance. The contracts that are within the scope of this guidance include service charges and fees on deposit accounts, certain types of card income, and success fees earned from equity investments. The Company completed its review of contracts and other agreements that are within the scope of this guidance and did not identify any material changes to the timing or amount of revenue recognition. Accordingly, the Company did not recognize an adjustment to retained earnings upon adoption of this guidance. The Company’s accounting policies did not change materially since the principles of revenue recognition in the ASU are largely consistent with current practices applied by the Company. The Company has expanded its qualitative disclosures of performance obligations and disaggregation of significant categories of revenue. See "Note 15. Revenue from Contracts with Customers" for further discussion. In January 2016, the FASB issued guidance within ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in ASU 2016-01 to Subtopic 825-10, Financial Instruments, contain the following elements: 1) requires equity investments to be measured at fair value with changes in fair value recognized in net income; 2) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; 3) eliminates the requirement for public entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; 4) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; 5) requires an entity to present separately in OCI the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; 6) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements; 7) clarifies that the entity should evaluate the need for a valuation allowance on a deferred tax asset related to AFS securities in combination with the entity's other deferred tax assets. Effective on January 1, 2015, the Company adopted the amendment noted in item 5) above as discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. Effective on January 1, 2018, the Company adopted the other amendments in this guidance. The primary impact on the Company's Consolidated Financial Statements results from the amendments discussed in item 1) above as changes in the fair value of the Company's equity investments are now recognized in net income, rather than in AOCI. As of January 1, 2018, the Company recorded a cumulative-effect adjustment of $0.4 million to decrease accumulated other comprehensive income with a corresponding increase to opening retained earnings. During the nine months ended September 30, 2018, the Company recognized a loss of $3.0 million related to fair value changes in equity securities, which was recorded in the Consolidated Income Statement. In August 2016, the FASB issued guidance within ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. The amendments in ASU 2016-15 to Topic 230, Statement of Cash Flows, provide guidance on eight specific cash flow classification issues: 1) debt prepayment or debt extinguishment costs; 2) settlement of zero-coupon debt instruments; 3) contingent consideration payments made after a business combination; 4) proceeds from the settlement of insurance claims; 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; 6) distributions received from equity method investments; 7) beneficial interest in securitization transactions; and 8) separately identifiable cash flows and the application of the predominance principle. The adoption of this guidance did not have a significant impact on the Company's Consolidated Statement of Cash Flows. In January 2017, the FASB issued guidance within ASU 2017-01, Clarifying the Definition of a Business. The amendments in ASU 2017-01 to Topic 805, Business Combinations, clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The adoption of this guidance did not have a significant impact on the Company's Consolidated Financial Statements. In January 2017, the FASB issued guidance within ASU 2017-04, Simplifying the Test for Goodwill Impairment. The amendments in ASU 2017-04 to Topic 350, Intangibles - Goodwill and Other, modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Accordingly, the amendments eliminate Step 2 from the goodwill impairment test because goodwill impairment will no longer be determined by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The adoption of this guidance did not have a significant impact on the Company's Consolidated Financial Statements. In February 2017, the FASB issued guidance within ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The amendments in ASU 2017-05 to Subtopic 610-20, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets, clarify the scope of Subtopic 610-20 and add guidance for partial sales of nonfinancial assets, including partial sales of real estate. Under current GAAP, there are several different accounting models to evaluate whether the transfer of certain assets qualify for sale treatment. The new standard reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. The adoption of this guidance did not have a significant impact on the Company's Consolidated Financial Statements. In May 2017, the FASB issued guidance within ASU 2017-09, Scope of Modification Accounting. The amendments in ASU 2017-09 to Topic 718, Compensation - Stock Compensation, provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of a modification unless all of the following conditions are met: the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The adoption of this guidance did not have a significant impact on the Company's Consolidated Financial Statements. In February 2018, the FASB issued guidance within ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. Under current GAAP, the effect of a change in tax laws or rates on deferred tax liabilities and assets are included in income from continuing operations even in situations in which the related income tax effects of items in AOCI were originally recognized in comprehensive income. Accordingly, as the adjustment of deferred taxes due to the reduction of the historical corporate income tax rate to the newly enacted corporate income tax rate is required to be included in income from continuing operations, the tax effects of items within AOCI do not reflect the current tax rate. The amendments in ASU 2018-02 to Topic 220, Income Statement - Reporting Comprehensive Income, allow a reclassification from AOCI to retained earnings from tax effects resulting from the TCJA. The Company elected to adopt this guidance effective January 1, 2018 and recorded a cumulative-effect adjustment of $0.7 million to decrease accumulated other comprehensive income with a corresponding increase to opening retained earnings. |
Investment Securities |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | The carrying amounts and fair values of investment securities at September 30, 2018 and December 31, 2017 are summarized as follows:
The Company conducts an OTTI analysis on a quarterly basis. The initial indication of OTTI for both debt and equity securities is a decline in the market value below the amount recorded for an investment, and taking into account the severity and duration of the decline. Another potential indication of OTTI is a downgrade below investment grade. In determining whether an impairment is OTTI, the Company considers the length of time and the extent to which the market value has been below cost, recent events specific to the issuer, including investment downgrades by rating agencies and economic conditions of its industry, and the Company’s ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. For marketable equity securities, the Company also considers the issuer’s financial condition, capital strength, and near-term prospects. For debt securities, for the purpose of an OTTI analysis, the Company also considers the cause of the price decline (general level of interest rates, credit spreads, and industry and issuer-specific factors), whether downgrades by bond rating agencies have occurred, the issuer’s financial condition, near-term prospects, and current ability to make future payments in a timely manner, as well as the issuer’s ability to service debt, and any change in agencies’ ratings at the evaluation date from the acquisition date and any likely imminent action. At September 30, 2018 and December 31, 2017, the Company’s unrealized losses relate primarily to market interest rate increases since the securities' original purchase date. The total number of AFS securities in an unrealized loss position at September 30, 2018 is 409, compared to 302 at December 31, 2017. The Company has reviewed securities for which there is an unrealized loss in accordance with its accounting policy for OTTI described above and determined that there are no impairment charges for the three and nine months ended September 30, 2018 and 2017. The Company does not consider any securities to be other-than-temporarily impaired as of September 30, 2018 and December 31, 2017. No assurance can be made that OTTI will not occur in future periods. Information pertaining to securities with gross unrealized losses at September 30, 2018 and December 31, 2017, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:
The portion of unrealized gains and losses related to equity securities still held at the reporting date is calculated as follows:
The amortized cost and fair value of securities as of September 30, 2018, by contractual maturities, are shown below. MBS are shown separately as individual MBS are comprised of pools of loans with varying maturities. Therefore, these securities are listed separately in the maturity summary.
The following tables summarize the carrying amount of the Company’s investment ratings position as of September 30, 2018 and December 31, 2017:
Securities with carrying amounts of approximately $814.1 million and $913.7 million at September 30, 2018 and December 31, 2017, respectively, were pledged for various purposes as required or permitted by law. The following table presents gross gains and losses on sales of investment securities:
During the three months ended September 30, 2018, the Company sold certain available-for-sale securities with a carrying value of $111.9 million and recognized a net loss on sale of these securities of $7.2 million. The sale resulted from management’s review of its investment portfolio, which led to its decision to sell lower yielding securities and reinvest in securities with higher yields and shorter durations. With the exception of these transactions, management does not intend to sell any of its debt securities in an unrealized loss position in the foreseeable future and it is more-likely-than-not that the Company will not be required to sell these securities prior to recovery. |
Loans, Leases and Allowance for Credit Losses |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans, Leases and Allowance for Credit Losses | The composition of the Company’s held for investment loan portfolio is as follows:
Net deferred loan fees and costs as of September 30, 2018 and December 31, 2017 total $31.0 million and $25.3 million, respectively, which is a reduction in the carrying value of loans. Net unamortized purchase discounts on secondary market loan purchases total $3.3 million and $8.5 million as of September 30, 2018 and December 31, 2017, respectively. Total loans held for investment are also net of interest rate and credit marks on acquired loans, which are a net reduction in the carrying value of loans. Interest rate marks were $8.7 million and $14.1 million as of September 30, 2018 and December 31, 2017, respectively. Credit marks were $17.2 million and $27.0 million as of September 30, 2018 and December 31, 2017, respectively. The following table presents the contractual aging of the recorded investment in past due loans held for investment by class of loans:
The following table presents the recorded investment in non-accrual loans and loans past due ninety days or more and still accruing interest by class of loans:
The reduction in interest income associated with loans on non-accrual status was approximately $0.6 million and $0.7 million for the three months ended September 30, 2018 and 2017, respectively. For each of the nine months ended September 30, 2018 and 2017, the reduction in interest income associated with loans on non-accrual status was approximately $1.8 million. The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Under the Company’s risk rating system, the Company classifies problem and potential problem loans as Special Mention, Substandard, Doubtful, and Loss. Substandard loans include those characterized by well-defined weaknesses and carry the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful, or risk rated nine, have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The final rating of Loss covers loans considered uncollectible and having such little recoverable value that it is not practical to defer writing off the asset. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that warrant management’s close attention, are deemed to be Special Mention. Risk ratings are updated, at a minimum, quarterly. The following tables present gross loans by risk rating:
The table below reflects the recorded investment in loans classified as impaired:
The following table presents impaired loans by class:
A valuation allowance is established for an impaired loan when the fair value of the loan is less than the recorded investment. In certain cases, portions of impaired loans are charged-off to realizable value instead of establishing a valuation allowance and are included, when applicable, in the table above as “Impaired loans without a specific valuation allowance under ASC 310.” However, before concluding that an impaired loan needs no associated valuation allowance, an assessment is made to consider all available and relevant information for the method used to evaluate impairment and the type of loan being assessed. The valuation allowance disclosed above is included in the allowance for credit losses reported in the Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017. The following table presents the average investment in impaired loans and income recognized on impaired loans:
The following table presents the average investment in impaired loans by loan class:
The average investment in TDR loans was $52.2 million and $52.0 million for the three months ended September 30, 2018 and 2017, respectively, and $51.9 million and $56.6 million for the nine months ended September 30, 2018 and 2017, respectively. The following table presents interest income on impaired loans by class:
The Company is not committed to lend significant additional funds on these impaired loans. The following table summarizes nonperforming assets:
Loans Acquired with Deteriorated Credit Quality Changes in the accretable yield for loans acquired with deteriorated credit quality are as follows:
Allowance for Credit Losses The following table summarizes the changes in the allowance for credit losses by portfolio type:
The following table presents impairment method information related to loans and allowance for credit losses by loan portfolio segment:
Troubled Debt Restructurings A TDR loan is a loan on which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. The loan terms that have been modified or restructured due to a borrower’s financial situation include, but are not limited to, a reduction in the stated interest rate, an extension of the maturity or renewal of the loan at an interest rate below current market, a reduction in the face amount of the debt, a reduction in the accrued interest, or deferral of interest payments. The majority of the Company's modifications are extensions in terms or deferral of payments which result in no lost principal or interest followed by reductions in interest rates or accrued interest. A TDR loan is also considered impaired. Consistent with regulatory guidance, a TDR loan that is subsequently modified in another restructuring agreement but has shown sustained performance and classification as a TDR, will be removed from TDR status provided that the modified terms were market-based at the time of modification. During the three months ended September 30, 2018, the Company had four new TDR loans with a recorded investment of $2.8 million and two new TDR loans during the three months ended September 30, 2017 with a recorded investment of $1.9 million. During the nine months ended September 30, 2018, the Company had eleven new TDR loans with a recorded investment of $34.4 million and three new TDR loans with a recorded investment of $6.8 million during the nine months ended September 30, 2017. No principal amounts were forgiven and there were no waived fees or other expenses resulting from these TDRs. During the three and nine months ended September 30, 2018, there were no TDR loans for which there was a payment default. During the three months ended September 30, 2017, there was one CRE, non-owner occupied TDR loan with a recorded investment of $0.1 million for which there was a payment default. During the nine months ended September 30, 2017, there were three TDR loans with a recorded investment of $0.5 million for which there was a payment default. A TDR loan is deemed to have a payment default when it becomes past due 90 days, goes on non-accrual, or is restructured again. Payment defaults, along with other qualitative indicators, are considered by management in the determination of the allowance for credit losses. At September 30, 2018, commitments outstanding on TDR loans totaled $0.3 million. There were no loan commitments outstanding on TDR loans at December 31, 2017. Loan Purchases and Sales For the three months ended September 30, 2018 and 2017, secondary market loan purchases totaled $482.8 million and $216.8 million, respectively. For the nine months ended September 30, 2018 and 2017, secondary market loan purchases totaled $1.01 billion and $666.8 million, respectively. For 2018, these purchased loans consisted of $511.5 million of commercial and industrial loans, $471.7 million of residential real estate loans, and $27.1 million of construction loans. For 2017, these purchased loans consisted of $520.4 million of commercial and industrial loans and $146.4 million of residential real estate loans. During the three months ended September 30, 2018, the Company sold loans which primarily consisted of commercial and industrial loans with a carrying value of $12.4 million and recognized a net gain of $1.0 million. During the three months ended September 30, 2017, the Company sold commercial and industrial loans with a carrying value of $41.3 million and did not recognize a significant net gain or loss on the sales. During the nine months ended September 30, 2018, the Company sold loans which primarily consisted of commercial and industrial loans with a carrying value of $46.5 million and recognized a gain of $2.4 million on the sales. During the nine months ended September 30, 2017, the Company sold loans, which consisted primarily of commercial and industrial loans with a carrying value of $50.5 million and recognized a loss of $0.1 million on the sales. |
Other Assets Acquired Through Foreclosure |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Real Estate, Foreclosed Assets, and Repossessed Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets Acquired Through Foreclosure | The following table represents the changes in other assets acquired through foreclosure:
At September 30, 2018 and 2017, the majority of the Company’s repossessed assets consisted of properties located in Nevada. The Company held 12 properties at September 30, 2018, compared to 19 at December 31, 2017, and 20 at September 30, 2017. |
Other Borrowings |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Borrowings | The following table summarizes the Company’s borrowings as of September 30, 2018 and December 31, 2017:
The Company maintains other lines of credit with correspondent banks totaling $306.0 million. These lines of credit are unsecured, of which $45.0 million have a floating interest rate of one-month LIBOR plus 3.25% and $261.0 million have a rate equivalent to the federal funds effective rate. As of September 30, 2018 and December 31, 2017, there were no outstanding balances on the Company's lines of credit. The Company maintains lines of credit with the FHLB and the FRB. The Company’s borrowing capacity is determined based on collateral pledged, generally consisting of investment securities and loans, at the time of the borrowing. At September 30, 2018, the Company had no short-term FHLB overnight advances. At December 31, 2017, short-term FHLB advances of $390.0 million had an interest rate of 1.41%. Other short-term borrowing sources available to the Company include Federal funds purchased from correspondent banks and customer repurchase agreements. Federal funds purchased have a rate equivalent to the federal funds effective rate plus 0.10% to 0.20% and customer repurchase agreements have an average rate of 0.15%. There were no outstanding balances on Federal funds purchased as of September 30, 2018 and December 31, 2017. At September 30, 2018 and December 31, 2017, customer repurchase agreements totaled $21.0 million and $26.0 million, respectively. As of September 30, 2018 and December 31, 2017, the Company had additional available credit with the FHLB of approximately $2.84 billion and $1.91 billion, respectively, and with the FRB of approximately $1.40 billion and $1.11 billion, respectively. |
Qualifying Debt |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Qualifying Debt Disclosure [Abstract] | |
Qualifying Debt | Subordinated Debt The Parent has $175.0 million of subordinated debentures, which were recorded net of issuance costs of $5.5 million, and mature July 1, 2056. Beginning on or after July 1, 2021, the Company may redeem the debentures, in whole or in part, at their principal amount plus any accrued and unpaid interest. The debentures have a fixed interest rate of 6.25% per annum. WAB has $150.0 million of subordinated debt, which was recorded net of debt issuance costs of $1.8 million, and matures July 15, 2025. The subordinated debt has a fixed interest rate of 5.00% through June 30, 2020 and then converts to a variable rate of 3.20% plus three-month LIBOR through maturity. To hedge the interest rate risk on the Company's subordinated debt issuances, the Company entered into fair value interest rate hedges with receive fixed/pay variable swaps. The carrying value of all subordinated debt issuances, which includes the fair value of the related hedges, totals $290.8 million and $308.6 million at September 30, 2018 and December 31, 2017, respectively. Junior Subordinated Debt The Company has formed or acquired through acquisition eight statutory business trusts, which exist for the exclusive purpose of issuing Cumulative Trust Preferred Securities. With the exception of debt issued by Bridge Capital Trust I and Bridge Capital Trust II, junior subordinated debt is recorded at fair value at each reporting date due to the FVO election made by the Company under ASC 825. The Company did not make the FVO election for the junior subordinated debt acquired as part of the Bridge acquisition. Accordingly, the carrying value of these trusts does not reflect the current fair value of the debt and includes a fair market value adjustment established at acquisition that is being accreted over the remaining life of the trusts. The carrying value of junior subordinated debt was $68.3 million at each of the periods ended September 30, 2018 and December 31, 2017, respectively. The weighted average interest rate of all junior subordinated debt as of September 30, 2018 was 4.74%, which is three-month LIBOR plus the contractual spread of 2.34%, compared to a weighted average interest rate of 4.03% at December 31, 2017. |
Stockholders' Equity |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Stockholder's Equity | Stock-Based Compensation Restricted Stock Awards Restricted stock awards granted to employees generally vest over a three-year period. Stock grants made to non-employee WAL directors in 2018 became fully vested at June 30, 2018. The Company estimates the compensation expense for stock grants based upon the grant date fair value. Stock compensation expense is recognized on a straight-line basis over the requisite service period for the entire award. The aggregate grant date fair value for the restricted stock awards granted during the three and nine months ended September 30, 2018 was $0.7 million and $23.7 million, respectively. Stock compensation expense related to restricted stock awards and stock options granted to employees are included in Salaries and employee benefits in the Consolidated Income Statement. For restricted stock awards granted to WAL directors, the related stock compensation expense is included in Legal, professional, and directors' fees. For the three and nine months ended September 30, 2018, the Company recognized $3.4 million and $12.4 million, respectively, in stock-based compensation expense related to all restricted stock award grants, compared to $2.7 million and $11.3 million for the three and nine months ended September 30, 2017, respectively. In addition, the Company previously granted shares of restricted stock to certain members of executive management that had both performance and service conditions that affect vesting. There were no such grants made during the three and nine months ended September 30, 2018, however expense is still being recognized for the grants made in 2016 and 2017 as they also have a three-year vesting period. For the three and nine months ended September 30, 2018, the Company recognized $0.6 million and $1.9 million, respectively, in stock-based compensation expense related to these performance-based restricted stock grants, compared to $0.8 million and $1.6 million for the three and nine months ended September 30, 2017, respectively. Performance Stock Units The Company grants members of its executive management performance stock units that do not vest unless the Company achieves a specified cumulative EPS target over a three-year performance period. The number of shares issued will vary based on the cumulative EPS target that is achieved. The Company estimates the cost of performance stock units based upon the grant date fair value and expected vesting percentage over the three-year performance period. For the three and nine months ended September 30, 2018, the Company recognized $1.5 million and $4.8 million, respectively, in stock-based compensation expense related to these performance stock units, compared to $1.9 million and $4.5 million for the three and nine months ended September 30, 2017, respectively. The three-year performance period for the 2015 grant ended on December 31, 2017, and the Company's cumulative EPS for the performance period exceeded the level required for a maximum award under the terms of the grant. As a result, executive management members were entitled to the maximum award of 202,074 shares, which was paid out in the first quarter of 2018. Treasury Shares Treasury share purchases represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. During the three and nine months ended September 30, 2018, the Company purchased treasury shares of 18,402 and 201,354, respectively, at a weighted average price of $57.81 and $58.91 per share, respectively. During the three and nine months ended September 30, 2017, the Company purchased treasury shares of 64,705 and 266,883, respectively, at a weighted average price of $51.82 and $51.10 per share, respectively. |
Accumulated Other Comprehensive Income |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income | The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of tax, for the periods indicated:
The following table presents reclassifications out of accumulated other comprehensive income (loss):
|
Derivatives and Hedging |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Hedging Activities | The Company is a party to various derivative instruments. Derivative instruments are contracts between two or more parties that have a notional amount and an underlying variable, require a small or no initial investment, and allow for the net settlement of positions. A derivative’s notional amount serves as the basis for the payment provision of the contract and takes the form of units, such as shares or dollars. A derivative’s underlying variable is a specified interest rate, security price, commodity price, foreign exchange rate, index, or other variable. The interaction between the notional amount and the underlying variable determines the number of units to be exchanged between the parties and influences the fair value of the derivative contract. The primary type of derivatives that the Company uses are interest rate swaps. Generally, these instruments are used to help manage the Company's exposure to interest rate risk and meet client financing and hedging needs. Derivatives are recorded at fair value in the Consolidated Balance Sheets, after taking into account the effects of bilateral collateral and master netting agreements. These agreements allow the Company to settle all derivative contracts held with the same counterparty on a net basis, and to offset net derivative positions with related cash collateral, where applicable. As of September 30, 2018, December 31, 2017, and September 30, 2017, the Company does not have any outstanding cash flow hedges. Derivatives Designated in Hedge Relationships The Company utilizes derivatives that have been designated as part of a hedge relationship in accordance with the applicable accounting guidance to minimize the exposure to changes in benchmark interest rates and volatility of net interest income and EVE to interest rate fluctuations. The primary derivative instruments used to manage interest rate risk are interest rate swaps, which convert the contractual interest rate index of agreed-upon amounts of assets and liabilities (i.e., notional amounts) to another interest rate index. The Company has entered into pay fixed/receive variable interest rate swaps designated as fair value hedges of certain fixed rate loans. As a result, the Company receives variable-rate interest payments in exchange for making fixed-rate payments over the lives of the contracts without exchanging the notional amounts. The Company has also entered into receive fixed/pay variable interest rate swaps, designated as fair value hedges on its fixed rate subordinated debt offerings. As a result, the Company is paying a floating rate of three-month LIBOR plus 3.16% and is receiving semi-annual fixed payments of 5.00% to match the payments on the $150.0 million subordinated debt. For the fair value hedge on the Parent's $175.0 million subordinated debentures issued on June 16, 2016, the Company is paying a floating rate of three-month LIBOR plus 3.25% and is receiving quarterly fixed payments of 6.25% to match the payments on the debt. Derivatives Not Designated in Hedge Relationships Management also enters into certain foreign exchange derivative contracts and back-to-back interest rate swaps which are not designated as accounting hedges. Foreign exchange derivative contracts include spot, forward, and forward window contracts. The purpose of these derivative contracts is to mitigate foreign currency risk on transactions entered into, or on behalf of customers. Contracts with customers, along with the related derivative trades the Company places, are both remeasured at fair value, and are referred to as economic hedges since they economically offset the Company's exposure. The Company's back-to-back interest rate swaps are used to manage long-term interest rate risk. As of each of the periods ended September 30, 2018, December 31, 2017, and September 30, 2017, derivatives not designated as hedging instruments were in a net asset position of $0.2 million. For the three months ended September 30, 2018 and 2017, net changes in the fair value related to these derivative contracts totaled $1.1 million and $0.8 million, respectively, and $3.5 million and $2.6 million for the nine months ended September 30, 2018 and 2017, respectively, and are included as part of Foreign currency income in the Consolidated Income Statements. As of September 30, 2018 and December 31, 2017, the following amounts are reflected in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges:
For the Company's derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings in the same line item as the offsetting loss or gain on the related interest rate swaps. For loans, the gain or loss on the hedged item is included in interest income and for subordinated debt, the gain or loss on the hedged item is included in interest expense. Fair Values, Volume of Activity, and Gain/Loss Information Related to Derivative Instruments The following table summarizes the fair values of the Company's derivative instruments on a gross and net basis as of September 30, 2018, December 31, 2017, and September 30, 2017. The derivative asset and liability balances are presented on a gross basis, prior to the application of bilateral collateral and master netting agreements. Total derivative assets and liabilities are adjusted to take into account the impact of legally enforceable master netting agreements that allow the Company to settle all derivative contracts with the same counterparty on a net basis and to offset the net derivative position with the related collateral. Where master netting agreements are not in effect or are not enforceable under bankruptcy laws, the Company does not adjust those derivative amounts with counterparties. The fair value of derivative contracts, after taking into account the effects of master netting agreements, is included in other assets or other liabilities in the Consolidated Balance Sheets, as indicated in the following table:
Counterparty Credit Risk Like other financial instruments, derivatives contain an element of credit risk. This risk is measured as the expected positive replacement value of the contracts. Management generally enters into bilateral collateral and master netting agreements that provide for the net settlement of all contracts with the same counterparty. Additionally, management monitors counterparty credit risk exposure on each contract to determine appropriate limits on the Company's total credit exposure across all product types. In general, the Company has a zero credit threshold with regard to derivative exposure with counterparties. Management reviews the Company's collateral positions on a daily basis and exchanges collateral with counterparties in accordance with standard ISDA documentation and other related agreements. The Company generally holds collateral in the form of cash deposits or highly rated securities issued by the U.S. Treasury or government-sponsored enterprises, such as GNMA, FNMA, and FHLMC. The total collateral netted against net derivative liabilities totaled $34.7 million at September 30, 2018, $53.6 million at December 31, 2017, and $59.3 million at September 30, 2017. The following table summarizes the Company's largest exposure to an individual counterparty at the dates indicated:
Credit Risk Contingent Features Management has entered into certain derivative contracts that require the Company to post collateral to the counterparties when these contracts are in a net liability position. Conversely, the counterparties may be required to post collateral when these contracts are in a net asset position. The amount of collateral to be posted is based on the amount of the net liability and exposure thresholds. As of September 30, 2018, December 31, 2017, and September 30, 2017 the aggregate fair value of all derivative contracts with credit risk contingent features (i.e., those containing collateral posting provisions) held by the Company that were in a net liability position totaled $31.9 million, $52.7 million, and $57.8 million, respectively. As of September 30, 2018, the Company was in an over-collateralized net position of $17.7 million after considering $52.4 million of collateral held in the form of cash and securities. As of December 31, 2017 and September 30, 2017, the Company was in an over-collateralized position of $25.0 million and $25.1 million, respectively. |
Earnings per Share |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Diluted EPS is based on the weighted average outstanding common shares during each period, including common stock equivalents. Basic EPS is based on the weighted average outstanding common shares during the period. The following table presents the calculation of basic and diluted EPS:
The Company had no anti-dilutive stock options outstanding at each of the periods ended September 30, 2018 and 2017. |
Income Taxes |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The effective tax rate was 6.32% and 29.64% for the three months ended September 30, 2018 and 2017, respectively. For the nine months ended September 30, 2018 and 2017, the Company's effective tax rate was 14.48% and 27.89%, respectively. The decrease in the effective tax rate from the three and nine months ended September 30, 2017 is due primarily to the decrease in the Federal statutory rate effective in 2018 and management's decision during the quarter to carryback its 2017 federal NOLs. These federal NOLs resulted from the acceleration of deductions into and deferral of revenue from 2017. As the federal income tax rate was higher in the years to which the carryback is applicable, a larger tax benefit results from the decision to carryback the 2017 federal NOLs, rather than carryforward these losses to future taxable years. As of September 30, 2018, the net deferred tax asset was $43.5 million, an increase of $37.7 million from December 31, 2017. This overall increase in the net deferred tax asset was primarily the result of the deferral of WAB's dividend from the real estate investment trust from 2017 to 2018 and decreases in the fair market value of AFS securities, which were not fully offset by the utilization of NOL and credit carryovers. Although realization is not assured, the Company believes that the realization of the recognized deferred tax asset of $43.5 million at September 30, 2018 is more-likely-than-not based on expectations as to future taxable income and based on available tax planning strategies that could be implemented if necessary to prevent a carryover from expiring. At September 30, 2018 and December 31, 2017, the Company had no deferred tax valuation allowance. As of September 30, 2018, the Company’s gross federal NOL carryovers, all of which are subject to limitations under Section 382 of the IRC, totaled approximately $49.8 million for which an ending deferred tax asset of $6.3 million has been recorded reflecting the expected benefit of these federal NOL carryovers remaining. The Company also has varying gross amounts of state NOL carryovers, primarily with California and Arizona. The ending gross California and Arizona NOL carryovers totaled approximately $7.3 million and $5.0 million, respectively. A deferred tax asset of $1.1 million has been recorded to reflect the expected benefit of all state NOL carryovers remaining. Investments in LIHTC The Company invests in LIHTC funds that are designed to generate a return primarily through the realization of federal tax credits. Investments in LIHTC total $295.1 million and $267.0 million as of September 30, 2018 and December 31, 2017, respectively. Unfunded LIHTC obligations are included as part of other liabilities in the Consolidated Balance Sheets and total $139.4 million and $151.3 million as of September 30, 2018 and December 31, 2017, respectively. For the three months ended September 30, 2018 and 2017, $9.0 million and $6.8 million, respectively, of amortization related to LIHTC investments was recognized as a component of income tax expense. For the nine months ended September 30, 2018 and 2017, $26.5 million and $19.5 million, respectively, of amortization related to LIHTC investments was recognized as a component of income tax expense. |
Commitments and Contingencies |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Unfunded Commitments and Letters of Credit The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. They involve, to varying degrees, elements of credit risk in excess of amounts recognized in the Consolidated Balance Sheets. Lines of credit are obligations to lend money to a borrower. Credit risk arises when the borrower's current financial condition may indicate less ability to pay than when the commitment was originally made. In the case of standby letters of credit, the risk arises from the potential failure of the customer to perform according to the terms of a contract. In such a situation, the third party might draw on the standby letter of credit to pay for completion of the contract and the Company would look to its customer to repay these funds with interest. To minimize the risk, the Company uses the same credit policies in making commitments and conditional obligations as it would for a loan to that customer. Standby letters of credit and financial guarantees are commitments issued by the Company to guarantee the performance of a customer to a third party in borrowing arrangements. The Company generally has recourse to recover from the customer any amounts paid under the guarantees. Typically, letters of credit issued have expiration dates within one year. A summary of the contractual amounts for unfunded commitments and letters of credit are as follows:
Commitments to extend credit are agreements to lend to a customer provided that there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company enters into credit arrangements that generally provide for the termination of advances in the event of a covenant violation or other event of default. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the party. The commitments are collateralized by the same types of assets used as loan collateral. The Company has exposure to credit losses from unfunded commitments and letters of credit. As funds have not been disbursed on these commitments, they are not reported as loans outstanding. Credit losses related to these commitments are included in other liabilities as a separate loss contingency and are not included in the allowance for credit losses reported in "Note 3. Loans, Leases and Allowance for Credit Losses" of these Unaudited Consolidated Financial Statements. This loss contingency for unfunded loan commitments and letters of credit was $7.6 million and $6.2 million as of September 30, 2018 and December 31, 2017, respectively. Changes to this liability are adjusted through other expense in the Consolidated Income Statement. Concentrations of Lending Activities The Company’s lending activities are driven in large part by the customers served in the market areas where the Company has branch offices in the states of Arizona, Nevada, and California. Despite the geographic concentration of lending activities, the Company does not have a single external customer from which it derives 10% or more of its revenues. The Company monitors concentrations within four broad categories: geography, industry, product, and collateral. The Company's loan portfolio includes significant credit exposure to the CRE market. As of September 30, 2018 and December 31, 2017, CRE related loans accounted for approximately 50% and 52% of total loans, respectively. Substantially all of these loans are secured by first liens with an initial loan to value ratio of generally not more than 75%. Approximately 37% and 36% of these CRE loans, excluding construction and land loans, were owner-occupied at September 30, 2018 and December 31, 2017, respectively. Contingencies The Company is involved in various lawsuits of a routine nature that are being handled and defended in the ordinary course of the Company’s business. Expenses are being incurred in connection with these lawsuits, but in the opinion of management, based in part on consultation with outside legal counsel, the resolution of these lawsuits and associated defense costs will not have a material impact on the Company’s financial position, results of operations, or cash flows. Lease Commitments The Company leases the majority of its office locations and many of these leases contain multiple renewal options and provisions for increased rents. Total rent expense of $2.8 million for each of the three months ended September 30, 2018 and 2017 was included in Occupancy expense in these Unaudited Consolidated Financial Statements. For the nine months ended September 30, 2018 and 2017, total rent expense was $8.1 million and $8.2 million, respectively. |
Fair Value Accounting |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Accounting | The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. ASC 825 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 825 are described in "Note 1. Summary of Significant Accounting Policies" of these Notes to Unaudited Consolidated Financial Statements. In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally-developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amounts presented herein. A more detailed description of the valuation methodologies used for assets and liabilities measured at fair value is set forth below. Transfers between levels in the fair value hierarchy are recognized as of the end of the month following the event or change in circumstances that caused the transfer. Under ASC 825, the Company elected the FVO treatment for junior subordinated debt issued by WAL. This election is irrevocable and results in the recognition of unrealized gains and losses on these items at each reporting date. These unrealized gains and losses are recognized as part of other comprehensive income rather than earnings. The Company did not elect FVO treatment for the junior subordinated debt assumed in the Bridge Capital Holdings acquisition. For the three and nine months ended September 30, 2018 and 2017, gains and losses from fair value changes on junior subordinated debt and trading securities were as follows:
During the year ended December 31, 2017, the Company sold all of its trading securities. No significant gain or loss was recognized upon sale of these securities. Fair value on a recurring basis Financial assets and financial liabilities measured at fair value on a recurring basis include the following: Trading securities: All of the Company’s trading securities, which consisted of MBS, were reported at fair value utilizing Level 2 inputs in the same manner as described above for AFS securities. AFS securities: Securities classified as AFS are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the bond’s terms and conditions, among other things. Equity securities: Preferred stock and CRA investments are reported at fair value utilizing Level 1 inputs. Independent pricing service: The Company's independent pricing service provides pricing information on the majority of the Company's Level 1 and 2 securities. Management independently evaluates the fair value measurements received from the Company's third party pricing service through multiple review steps. First, management reviews what has transpired in the marketplace with respect to interest rates, credit spreads, volatility, and mortgage rates, among other things, and develops an expectation of changes to the securities' valuations from the previous quarter. Then, management obtains market values from additional sources. The pricing service provides management with observable market data including interest rate curves and mortgage prepayment speed grids, as well as dealer quote sheets, new bond offering sheets, and historical trade documentation. Management reviews the assumptions and decides whether they are reasonable. Management may compare interest rates, credit spreads, and prepayments speeds used as part of the assumptions to those that management believes are reasonable. Management may price securities using the provided assumptions to determine whether they can develop similar prices on like securities. Any discrepancies between management’s review and the prices provided by the vendor are discussed with the vendor and the Company’s other valuation advisors. Lastly, management selects a sample of investment securities and compares the values provided by its primary third party pricing service to the market values obtained from secondary sources and evaluates those with notable variances. Interest rate swaps: Interest rate swaps are reported at fair value utilizing Level 2 inputs. The Company obtains dealer quotations to value its interest rate swaps. Junior subordinated debt: The Company estimates the fair value of its junior subordinated debt using a discounted cash flow model which incorporates the effect of the Company’s own credit risk in the fair value of the liabilities (Level 3). The Company’s cash flow assumptions are based on contractual cash flows as the Company anticipates that it will pay the debt according to its contractual terms. As of September 30, 2018, the Company estimates the discount rate at 6.20%, which represents an implied credit spread of 3.80% plus three-month LIBOR (2.40%). As of December 31, 2017, the Company estimated the discount rate at 5.61%, which was a 3.92% credit spread plus three-month LIBOR (1.69%). The fair value of assets and liabilities measured at fair value on a recurring basis was determined using the following inputs as of the periods presented:
For the three and nine months ended September 30, 2018 and 2017, the change in Level 3 liabilities measured at fair value on a recurring basis was as follows:
For Level 3 liabilities measured at fair value on a recurring basis as of September 30, 2018 and December 31, 2017, the significant unobservable inputs used in the fair value measurements were as follows:
The significant unobservable inputs used in the fair value measurement of the Company’s junior subordinated debt as of September 30, 2018 and December 31, 2017 was the implied credit risk for the Company, calculated as the difference between the 20-year 'BB' rated financial index over the corresponding swap index. Fair value on a nonrecurring basis Certain assets are measured at fair value on a nonrecurring basis. That is, the assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table presents such assets carried on the Balance Sheet by caption and by level within the ASC 825 hierarchy:
For Level 3 assets measured at fair value on a nonrecurring basis as of September 30, 2018 and December 31, 2017, the significant unobservable inputs used in the fair value measurements were as follows:
Impaired loans: The specific reserves for collateral dependent impaired loans are based on collateral value, net of estimated disposition costs and other identified quantitative inputs. Collateral value is determined based on independent third-party appraisals or internally-developed discounted cash flow analyses. Appraisals may utilize a single valuation approach or a combination of approaches, including comparable sales and the income approach. Fair value is determined, where possible, using market prices derived from an appraisal or evaluation, which are considered to be Level 2. However, certain assumptions and unobservable inputs are often used by the appraiser, therefore qualifying the assets as Level 3 in the fair value hierarchy. In addition, when adjustments are made to an appraised value to reflect various factors such as the age of the appraisal or known changes in the market or the collateral, such valuation inputs are considered unobservable and the fair value measurement is categorized as a Level 3 measurement. Internal discounted cash flow analyses are also utilized to estimate the fair value of impaired loans, which considers internally-developed, unobservable inputs such as discount rates, default rates, and loss severity. Total Level 3 impaired loans had an estimated fair value of $83.9 million and $77.3 million at September 30, 2018 and December 31, 2017, respectively. Impaired loans with a specific valuation allowance had a gross estimated fair value of $3.6 million and $19.3 million at September 30, 2018 and December 31, 2017, respectively, which was reduced by a specific valuation allowance of $1.2 million and $5.6 million, respectively. Other assets acquired through foreclosure: Other assets acquired through foreclosure consist of properties acquired as a result of, or in-lieu-of, foreclosure. These assets are initially reported at the fair value determined by independent appraisals using appraised value less estimated cost to sell. Such properties are generally re-appraised every twelve months. There is risk for subsequent volatility. Costs relating to the development or improvement of the assets are capitalized and costs relating to holding the assets are charged to expense. Fair value is determined, where possible, using market prices derived from an appraisal or evaluation, which are considered to be Level 2. However, certain assumptions and unobservable inputs are often used by the appraiser, therefore qualifying the assets as Level 3 in the fair value hierarchy. When significant adjustments are based on unobservable inputs, such as when a current appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the resulting fair value measurement has been categorized as a Level 3 measurement. The Company had $20.0 million and $28.5 million of such assets at September 30, 2018 and December 31, 2017, respectively. Credit vs. non-credit losses Under the provisions of ASC 320, Investments-Debt and Equity Securities, OTTI is separated into the amount of total impairment related to the credit loss and the amount of the total impairment related to all other factors. The amount of the total OTTI related to the credit loss is recognized in earnings. The amount of the total impairment related to all other factors is recognized in OCI. For the three and nine months ended September 30, 2018 and 2017, the Company determined that no securities experienced credit losses. There is no OTTI balance recognized in comprehensive income as of September 30, 2018 and 2017. Fair Value of Financial Instruments The estimated fair value of the Company’s financial instruments is as follows:
Interest rate risk The Company assumes interest rate risk (the risk to the Company’s earnings and capital from changes in interest rate levels) as a result of its normal operations. As a result, the fair values of the Company’s financial instruments, as well as its future net interest income will change when interest rate levels change and that change may be either favorable or unfavorable to the Company. Interest rate risk exposure is measured using interest rate sensitivity analysis to determine the Company's change in EVE and net interest income resulting from hypothetical changes in interest rates. If potential changes to EVE and net interest income resulting from hypothetical interest rate changes are not within the limits established by the BOD, the BOD may direct management to adjust the asset and liability mix to bring interest rate risk within BOD-approved limits. WAB has an ALCO charged with managing interest rate risk within the BOD-approved limits. Limits are structured to preclude an interest rate risk profile that does not conform to both management and BOD risk tolerances without ALCO approval. There is also ALCO reporting at the Parent level for reviewing interest rate risk for the Company, which gets reported to the BOD and its Finance and Investment Committee. Fair value of commitments The estimated fair value of standby letters of credit outstanding at September 30, 2018 and December 31, 2017 is insignificant. Loan commitments on which the committed interest rates are less than the current market rate are also insignificant at September 30, 2018 and December 31, 2017. |
Segments |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments | The Company's reportable segments are aggregated based primarily on geographic location, services offered, and markets served. The Company's regional segments, which include Arizona, Nevada, Southern California, and Northern California, provide full service banking and related services to their respective markets. The operations from the regional segments correspond to the following banking divisions: ABA in Arizona, BON and FIB in Nevada, TPB in Southern California, and Bridge in Northern California. The Company's NBL segments provide specialized banking services to niche markets. The Company's NBL reportable segments include HOA Services, Public & Nonprofit Finance, Technology & Innovation, HFF, and Other NBLs. These NBLs are managed centrally and are broader in geographic scope than the Company's other segments, though still predominately located within the Company's core market areas. The Corporate & Other segment consists of corporate-related items, income and expense items not allocated to the Company's other reportable segments, and inter-segment eliminations. The Company's segment reporting process begins with the assignment of all loan and deposit accounts directly to the segments where these products are originated and/or serviced. Equity capital is assigned to each segment based on the risk profile of their assets and liabilities. With the exception of goodwill, which is assigned a 100% weighting, equity capital allocations ranged from 0% to 12% during the year, with a funds credit provided for the use of this equity as a funding source. Any excess or deficient equity not allocated to segments based on risk is assigned to the Corporate & Other segment. Net interest income, provision for credit losses, and non-interest expense amounts are recorded in their respective segment to the extent that the amounts are directly attributable to those segments. Net interest income is recorded in each segment on a TEB with a corresponding increase in income tax expense, which is eliminated in the Corporate & Other segment. Further, net interest income of a reportable segment includes a funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity and maturity characteristics. Using this funds transfer pricing methodology, liquidity is transferred between users and providers. A net user of funds has lending/investing in excess of deposits/borrowings and a net provider of funds has deposits/borrowings in excess of lending/investing. A segment that is a user of funds is charged for the use of funds, while a provider of funds is credited through funds transfer pricing, which is determined based on the average life of the assets or liabilities in the portfolio. The net income amount for each reportable segment is further derived by the use of expense allocations. Certain expenses not directly attributable to a specific segment are allocated across all segments based on key metrics, such as number of employees, average loan balances, and average deposit balances. These types of expenses include information technology, operations, human resources, finance, risk management, credit administration, legal, and marketing. Income taxes are applied to each segment based on the effective tax rate for the geographic location of the segment. Any difference in the corporate tax rate and the aggregate effective tax rates in the segments are adjusted in the Corporate & Other segment. The following is a summary of operating segment information for the periods indicated:
|
Related Party Transactions |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Principal stockholders, directors, and executive officers of the Company, their immediate family members, and companies they control or own more than a 10% interest in, are considered to be related parties. In the ordinary course of business, the Company engages in various related party transactions, including extending credit and bank service transactions. All related party transactions are subject to review and approval pursuant to the Company's Related Party Transactions policy. On April 1, 2017, the Company hired an executive officer who was previously the Managing Partner of an external consulting firm that the Company actively uses for risk management services. Prior to joining the Company, the executive officer sold his interest in this external consulting firm and was paid with a combination of cash and a $1.0 million note, which as of September 30, 2018, was paid in full. Donations and other services to related parties, including sponsorships and expenses to this external consulting firm, totaled $8.7 million and $2.1 million for the nine months ended September 30, 2018 and 2017, respectively. For the nine months ended September 30, 2018, total related party expenses of $8.7 million includes a donation to the Company's charitable foundation of $7.6 million, which consists of a non-cash donation of OREO property of $6.9 million and a cash donation of $0.7 million. |
Summary of Significant Accounting Policies (Policies) |
9 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Nature of Operation | Nature of operation WAL is a bank holding company headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware. WAL provides a full spectrum of deposit, lending, treasury management, international banking, and online banking products and services through its wholly-owned banking subsidiary, WAB. WAB operates the following full-service banking divisions: ABA, BON, FIB, Bridge, and TPB. The Company also serves business customers through a national platform of specialized financial services. In addition, the Company has two non-bank subsidiaries, LVSP, which holds and manages certain OREO properties and a captive insurance company formed and licensed under the laws of the State of Arizona, CSI. CSI was established as part of the Company's overall enterprise risk management strategy. |
||||||||||||
Basis of Presentation | Basis of presentation The accounting and reporting policies of the Company are in accordance with GAAP and conform to practices within the financial services industry. The accounts of the Company and its consolidated subsidiaries are included in the Consolidated Financial Statements. |
||||||||||||
Use of Estimates | Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management's estimates and judgments are ongoing and are based on experience, current and expected future conditions, third-party evaluations and various other assumptions that management believes are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities, as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Actual results may differ from those estimates and assumptions used in the Consolidated Financial Statements and related notes. Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for credit losses; estimated cash flows related to PCI loans; fair value determinations related to acquisitions and certain assets and liabilities carried at fair value; and accounting for income taxes. |
||||||||||||
Principles of Consolidation | Principles of consolidation As of September 30, 2018, WAL has the following significant wholly-owned subsidiaries: WAB, LVSP, and eight unconsolidated subsidiaries used as business trusts in connection with the issuance of trust-preferred securities. The Bank has the following significant wholly-owned subsidiaries: WABT, which holds certain investment securities, municipal and nonprofit loans, and leases; WA PWI, which holds certain limited partnerships invested primarily in low income housing tax credits and small business investment corporations; and BW Real Estate, Inc., which operates as a real estate investment trust and holds certain of WAB's real estate loans and related securities. The Company does not have any other significant entities that should be considered for consolidation. All significant intercompany balances and transactions have been eliminated in consolidation. |
||||||||||||
Reclassifications | Reclassifications Certain amounts reported in prior periods may have been reclassified in the Consolidated Financial Statements to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported. |
||||||||||||
Business Combinations | Business combinations Business combinations are accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method, the acquiring entity in a business combination recognizes all of the acquired assets and assumed liabilities at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including identified intangible assets, exceeds the purchase price, a bargain purchase gain is recognized. Changes to estimated fair values from a business combination are recognized as an adjustment to goodwill during the measurement period and are recognized in the proper reporting period in which the adjustment amounts are determined. Results of operations of an acquired business are included in the Consolidated Income Statement from the date of acquisition. Acquisition-related costs, including conversion and restructuring charges, are expensed as incurred. |
||||||||||||
Investment Securities | Investment securities Investment securities include debt securities and equity securities. Debt securities may be classified as HTM, AFS, or measured at fair value. The appropriate classification is initially decided at the time of purchase. Securities classified as HTM are those debt securities that the Company has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or general economic conditions. These securities are carried at amortized cost. The sale of an HTM security within three months of its maturity date or after the majority of the principal outstanding has been collected is considered a maturity for purposes of classification and disclosure. Securities classified as AFS or trading securities are reported as an asset in the Consolidated Balance Sheet at their estimated fair value. As the fair value of AFS debt securities changes, the changes are reported net of income tax as an element of OCI, except for other-than-temporarily-impaired securities. When AFS debt securities are sold, the unrealized gain or loss is reclassified from OCI to non-interest income. The changes in the fair values of trading securities are reported in non-interest income. Securities classified as AFS are securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as AFS would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, decline in credit quality, and regulatory capital considerations. For periods prior to January 1, 2018, equity securities were classified as AFS and reported at fair value with unrealized gains and losses included as a separate component of AOCI, net of tax. Upon adoption of ASU 2016-01, the fair value changes in equity securities are recognized as part of non-interest income, see "Recently adopted accounting guidance" below for further discussion. Interest income is recognized based on the coupon rate and increased by accretion of discounts earned or decreased by the amortization of premiums paid over the contractual life of the security, adjusted for prepayment estimates, using the interest method. In estimating whether there are any OTTI losses, management considers the 1) length of time and the extent to which the fair value has been less than amortized cost; 2) financial condition and near term prospects of the issuer; 3) impact of changes in market interest rates; and 4) intent and ability of the Company to retain its investment for a period of time sufficient to allow for any anticipated recovery in fair value and whether it is not more likely than not the Company would be required to sell the security. Declines in the fair value of individual AFS securities that are deemed to be other-than-temporary are reflected in earnings when identified. The fair value of the debt security then becomes the new cost basis. For individual debt securities where the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the other-than-temporary decline in fair value of the debt security related to 1) credit loss is recognized in earnings; and 2) interest rate, market, or other factors is recognized in other comprehensive income or loss. For individual debt securities where the Company either intends to sell the security or more likely than not will not recover all of its amortized cost, the OTTI is recognized in earnings equal to the entire difference between the security's cost basis and its fair value at the balance sheet date. For individual debt securities for which a credit loss has been recognized in earnings, interest accruals and amortization and accretion of premiums and discounts are suspended when the credit loss is recognized. Interest received after accruals have been suspended is recognized on a cash basis. |
||||||||||||
Restricted Stock | Restricted stock WAB is a member of the Federal Reserve System and, as part of its membership, is required to maintain stock in the FRB in a specified ratio to its capital. In addition, WAB is a member of the FHLB system and, accordingly, maintains an investment in capital stock of the FHLB based on the borrowing capacity used. The Bank also maintains an investment in its primary correspondent bank. All of these investments are considered equity securities with no actively traded market. Therefore, the shares are considered restricted investment securities. These investments are carried at cost, which is equal to the value at which they may be redeemed. The dividend income received from the stock is reported in interest income. The Company conducts a periodic review and evaluation of its restricted stock to determine if any impairment exists. |
||||||||||||
Loans, Interest and Fees from Loans | Loans, held for investment The Company generally holds loans for investment and has the intent and ability to hold loans until their maturity. Therefore, they are reported at book value. Net loans are stated at the amount of unpaid principal, adjusted for net deferred fees and costs, purchase accounting fair value adjustments, and an allowance for credit losses. In addition, the book values of loans subject to a fair value hedge are adjusted for changes in value attributable to the effective portion of the hedged benchmark interest rate risk. The Company may also acquire loans through a business combination. These acquired loans are recorded at estimated fair value on the date of purchase, which is comprised of unpaid principal adjusted for estimated credit losses and interest rate fair value adjustments. Loans are evaluated individually at the acquisition date to determine if there has been credit deterioration since origination. Such loans may then be aggregated and accounted for as a pool of loans based on common characteristics. When the Company acquires such loans, the yield that may be accreted (accretable yield) is limited to the excess of the Company’s estimate of undiscounted cash flows expected to be collected over the Company’s initial investment in the loan. The excess of contractual cash flows over the cash flows expected to be collected may not be recognized as an adjustment to yield, loss, or a valuation allowance. Subsequent increases in cash flows expected to be collected generally are recognized prospectively through adjustment of the loan’s yield over the remaining life. Subsequent decreases to cash flows expected to be collected are recognized as impairment. The Company may not carry over or create a valuation allowance in the initial accounting for loans acquired under these circumstances. For purchased loans that are not deemed impaired at the acquisition date, fair value adjustments attributable to both credit and interest rates are accreted (or amortized) over the contractual life of the individual loan. For additional information, see "Note 3. Loans, Leases and Allowance for Credit Losses" of these Notes to Unaudited Consolidated Financial Statements. Loan fees collected for the origination of loans less direct loan origination costs (net deferred loan fees) are amortized over the contractual life of the loan through interest income. If a loan has scheduled payments, the amortization of the net deferred loan fee is calculated using the interest method over the contractual life of the loan. If a loan does not have scheduled payments, such as a line of credit, the net deferred loan fee is recognized as interest income on a straight-line basis over the contractual life of the loan commitment. Commitment fees based on a percentage of a customer’s unused line of credit and fees related to standby letters of credit are recognized over the commitment period. When loans are repaid, any remaining unamortized balances of premiums, discounts, or net deferred fees are recognized as interest income. Non-accrual loans: When a borrower discontinues making payments as contractually required by the note, the Company must determine whether it is appropriate to continue to accrue interest. The Company ceases accruing interest income when the loan has become delinquent by more than 90 days or when management determines that the full repayment of principal and collection of interest according to contractual terms is no longer likely. The Company may decide to continue to accrue interest on certain loans more than 90 days delinquent if the loans are well secured by collateral and in the process of collection. For all loan types, when a loan is placed on non-accrual status, all interest accrued but uncollected is reversed against interest income in the period in which the status is changed, and the Company makes a loan-level decision to apply either the cash basis or cost recovery method. The Company recognizes income on a cash basis only for those non-accrual loans for which the collection of the remaining principal balance is not in doubt. Under the cost recovery method, subsequent payments received from the customer are applied to principal and generally no further interest income is recognized until the principal has been paid in full or until circumstances have changed such that payments are again consistently received as contractually required. Impaired loans: A loan is identified as impaired when it is no longer probable that interest and principal will be collected according to the contractual terms of the original loan agreement. Generally, impaired loans are classified as non-accrual. However, in certain instances, impaired loans may continue on an accrual basis, if full repayment of all principal and interest is expected and the loan is both well secured and in the process of collection. Impaired loans are measured for reserve requirements in accordance with ASC 310, Receivables, based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral less applicable disposition costs if the loan is collateral dependent. The amount of an impairment reserve, if any, and any subsequent changes are recorded as a provision for credit losses. Losses are recorded as a charge-off when losses are confirmed. In addition to management's internal loan review process, regulators may from time to time direct the Company to modify loan grades, loan impairment calculations, or loan impairment methodology. Troubled Debt Restructured Loans: A TDR loan is a loan on which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. The loan terms that have been modified or restructured due to a borrower’s financial situation include, but are not limited to, a reduction in the stated interest rate, an extension of the maturity or renewal of the loan at an interest rate below current market, a reduction in the face amount of the debt, a reduction in the accrued interest, or deferral of interest payments. A TDR loan is also considered impaired. A TDR loan may be returned to accrual status when the loan is brought current, has performed in accordance with the contractual restructured terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual restructured principal and interest is no longer in doubt. However, such loans continue to be considered impaired. Consistent with regulatory guidance, a TDR loan that is subsequently modified in another restructuring agreement but has shown sustained performance and classification as a TDR, will be removed from TDR status provided that the modified terms were market-based at the time of modification. |
||||||||||||
Allowance for Credit Losses | Allowance for credit losses Credit risk is inherent in the business of extending loans and leases to borrowers, for which the Company must maintain an adequate allowance for credit losses. The allowance for credit losses is established through a provision for credit losses recorded to expense. Loans are charged against the allowance for credit losses when management believes that the contractual principal or interest will not be collected. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount believed adequate to absorb estimated probable losses on existing loans that may become uncollectable, based on evaluation of the collectability of loans and prior credit loss experience, together with other factors. The Company formally re-evaluates and establishes the appropriate level of the allowance for credit losses on a quarterly basis. The allowance consists of specific and general components. The specific allowance applies to impaired loans. For impaired collateral dependent loans, the reserve is calculated based on the collateral value, net of estimated disposition costs. Generally, the Company obtains independent collateral valuation analysis for each loan every twelve months. Loans not collateral dependent are evaluated based on the expected future cash flows discounted at the original contractual interest rate. The general allowance covers all non-impaired loans and incorporates several quantitative and qualitative factors, which are used for all of the Company's portfolio segments. Quantitative factors include company-specific, ten-year historical net charge-offs stratified by loans with similar characteristics. Qualitative factors include: 1) levels of and trends in delinquencies and impaired loans; 2) levels of and trends in charge-offs and recoveries; 3) trends in volume and terms of loans; 4) changes in underwriting standards or lending policies; 5) experience, ability, depth of lending staff; 6) national and local economic trends and conditions; 7) changes in credit concentrations; 8) out-of-market exposures; 9) changes in quality of loan review system; and 10) changes in the value of underlying collateral. Due to the credit concentration of the Company's loan portfolio in real estate secured loans, the value of collateral is heavily dependent on real estate values in Arizona, Nevada, and California. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic or other conditions. In addition, regulators, as an integral part of their examination processes, periodically review the Bank's allowance for credit losses, and may require the Bank to make additions to the allowance based on their judgment about information available to them at the time of their examination. Management regularly reviews the assumptions and formulae used in determining the allowance and makes adjustments if required to reflect the current risk profile of the portfolio. |
||||||||||||
Goodwill and Other Intangible Assets | Goodwill and other intangible assets The Company records as goodwill the excess of the purchase price over the fair value of the identifiable net assets acquired in accordance with applicable guidance. The Company performs its annual goodwill and intangibles impairment tests as of October 1 each year, or more often if events or circumstances indicate that the carrying value may not be recoverable. The Company can first elect to assess, through qualitative factors, whether it is more likely than not that goodwill is impaired. If the qualitative assessment indicates potential impairment, a quantitative impairment test is necessary. If, based on the quantitative test, a reporting unit's carrying amount exceeds its fair value, a goodwill impairment charge for this difference is recorded to current period earnings as non-interest expense. The Company’s intangible assets consist primarily of core deposit intangible assets that are amortized over periods ranging from 5 to 10 years. The Company considers the remaining useful lives of its core deposit intangible assets each reporting period, as required by ASC 350, Intangibles—Goodwill and Other, to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life has changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. |
||||||||||||
Other Assets Acquired Through Foreclosure | Other assets acquired through foreclosure Other assets acquired through foreclosure consist primarily of properties acquired as a result of, or in-lieu-of, foreclosure. Properties or other assets (primarily repossessed assets formerly leased) are classified as OREO and other repossessed property and are initially reported at fair value of the asset less estimated selling costs. Subsequent adjustments are based on the lower of carrying value or fair value less estimated costs to sell the property. Costs related to the development or improvement of the assets are capitalized and costs related to holding the assets are charged to non-interest expense. Property is evaluated regularly to ensure the recorded amount is supported by its current fair value and valuation allowances. |
||||||||||||
Treasury Shares | Treasury shares The Company separately presents treasury shares, which represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. Treasury shares are carried at cost. |
||||||||||||
Derivative Financial Instruments | Derivative financial instruments The Company uses interest-rate swaps to mitigate interest-rate risk associated with changes to the fair value of certain fixed-rate financial instruments (fair value hedges). The Company recognizes derivatives as assets or liabilities in the Consolidated Balance Sheet at their fair value in accordance with ASC 815, Derivatives and Hedging. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset or liability attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, along with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk are recorded in current-period earnings. Changes in the fair value of derivatives not considered to be highly effective in hedging the change in fair value of the hedged item are recognized in earnings as non-interest income during the period of the change. The Company documents its hedge relationships, including identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction after the derivative contract is executed. At inception, the Company performs a quantitative assessment to determine whether the derivatives used in hedging transactions are highly effective (as defined in the guidance) in offsetting changes in the fair value of the hedged item. Retroactive effectiveness is assessed, as well as the continued expectation that the hedge will remain effective prospectively. After the initial quantitative assessment is performed, on a quarterly basis, the Company performs a qualitative hedge effectiveness assessment. This assessment takes into consideration any adverse developments related to the counterparty's risk of default and any negative events or circumstances that affect the factors that originally enabled the Company to assess that it could reasonably support, qualitatively, an expectation that the hedging relationship was and will continue to be highly effective. The Company discontinues hedge accounting prospectively when it is determined that a hedge is no longer highly effective. When hedge accounting is discontinued on a fair value hedge that no longer qualifies as an effective hedge, the derivative continues to be reported at fair value in the Consolidated Balance Sheet, but the carrying amount of the hedged item is no longer adjusted for future changes in fair value. The adjustment to the carrying amount of the hedged item that existed at the date hedge accounting is discontinued is amortized over the remaining life of the hedged item into earnings. Derivative instruments that are not designated as hedges, so called free-standing derivatives, are reported in the Consolidated Balance Sheet at fair value and the changes in fair value are recognized in earnings as non-interest income during the period of change. The Company may in the normal course of business purchase a financial instrument or originate a loan that contains an embedded derivative instrument. Upon purchasing the instrument or originating the loan, the Company assesses whether the economic characteristics of the embedded derivative are clearly and closely related to the economic characteristics of the remaining component of the financial instrument (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from the host contract and carried at fair value. However, in cases where the host contract is measured at fair value, with changes in fair value reported in current earnings, or the Company is unable to reliably identify and measure an embedded derivative for separation from its host contract, the entire contract is carried in the Consolidated Balance Sheet at fair value and is not designated as a hedging instrument. |
||||||||||||
Income Taxes | Income taxes The Company is subject to income taxes in the United States and files a consolidated federal income tax return with all of its subsidiaries, with the exception of BW Real Estate, Inc. Deferred income taxes are recorded to reflect the effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and their income tax bases using enacted tax rates that are expected to be in effect when the taxes are actually paid or recovered. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Net deferred tax assets are recorded to the extent that these assets will more-likely-than-not be realized. In making these determinations, all available positive and negative evidence is considered, including scheduled reversals of deferred tax liabilities, tax planning strategies, projected future taxable income, and recent operating results. If it is determined that deferred income tax assets to be realized in the future are in excess of their net recorded amount, an adjustment to the valuation allowance will be recorded, which will reduce the Company's provision for income taxes. A tax benefit from an unrecognized tax benefit may be recognized when it is more-likely-than-not that the position will be sustained upon examination, including related appeals or litigation, based on technical merits. Income tax benefits must meet a more-likely-than-not recognition threshold at the effective date to be recognized. Interest and penalties related to unrecognized tax benefits are recognized as part of the provision for income taxes in the Consolidated Income Statement. Accrued interest and penalties are included in the related tax liability line with other liabilities in the Consolidated Balance Sheet. See "Note 11. Income Taxes" of these Notes to Unaudited Consolidated Financial Statements for further discussion on income taxes. |
||||||||||||
Off-Balance Sheet Instruments | Off-balance sheet instruments In the ordinary course of business, the Company has entered into off-balance sheet financial instrument arrangements consisting of commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the Consolidated Financial Statements when they are funded. They involve, to varying degrees, elements of credit risk in excess of amounts recognized in the Consolidated Balance Sheet. Losses would be experienced when the Company is contractually obligated to make a payment under these instruments and must seek repayment from the borrower, which may not be as financially sound in the current period as they were when the commitment was originally made. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company enters into credit arrangements that generally provide for the termination of advances in the event of a covenant violation or other event of default. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the party. The commitments are collateralized by the same types of assets used as loan collateral. As with outstanding loans, the Company applies qualitative factors and utilization rates to its off-balance sheet obligations in determining an estimate of losses inherent in these contractual obligations. The estimate for credit losses on off-balance sheet instruments is included in other liabilities and the charge to income that establishes this liability is included in non-interest expense. The Company also has off-balance sheet arrangements related to its derivative instruments. Derivative instruments are recognized in the Consolidated Financial Statements at fair value and their notional values are carried off-balance sheet. See "Note 9. Derivatives and Hedging Activities" of these Notes to Unaudited Consolidated Financial Statements for further discussion. |
||||||||||||
Fair Values of Financial Instruments | Fair values of financial instruments The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities. ASC 820, Fair Value Measurement, establishes a framework for measuring fair value and a three-level valuation hierarchy for disclosure of fair value measurement, as well as enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The Company uses various valuation approaches, including market, income, and/or cost approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would consider in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs, as follows:
The availability of observable inputs varies based on the nature of the specific financial instrument. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Fair value is a market-based measure considered from the perspective of a market participant who may purchase the asset or assume the liability rather than an entity-specific measure. When market assumptions are available, ASC 820 requires the Company to make assumptions regarding the assumptions that market participants would use to estimate the fair value of the financial instrument at the measurement date. ASC 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at September 30, 2018 and 2017. The estimated fair value amounts for September 30, 2018 and 2017 have been measured as of period-end, and have not been re-evaluated or updated for purposes of these Consolidated Financial Statements subsequent to those dates. As such, the estimated fair values of these financial instruments subsequent to the reporting date may be different than the amounts reported at period-end. The information in "Note 13. Fair Value Accounting" in these Notes to Unaudited Consolidated Financial Statements should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only required for a limited portion of the Company’s assets and liabilities. Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimate, comparisons between the Company’s disclosures and those of other companies or banks may not be meaningful. The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments: Cash, cash equivalents, and restricted cash The carrying amounts reported in the Consolidated Balance Sheets for cash and due from banks approximate their fair value. Money market investments The carrying amounts reported in the Consolidated Balance Sheets for money market investments approximate their fair value. Investment securities The fair values of CRA investments and exchange-listed preferred stock are based on quoted market prices and are categorized as Level 1 in the fair value hierarchy. The fair values of debt securities were determined based on matrix pricing. Matrix pricing is a mathematical technique that utilizes observable market inputs including, for example, yield curves, credit ratings, and prepayment speeds. Fair values determined using matrix pricing are generally categorized as Level 2 in the fair value hierarchy. Restricted stock WAB is a member of the Federal Reserve System and the FHLB and, accordingly, maintains investments in the capital stock of the FRB and the FHLB. WAB also maintains an investment in its primary correspondent bank. These investments are carried at cost since no ready market exists for them, and they have no quoted market value. The Company conducts a periodic review and evaluation of its restricted stock to determine if any impairment exists. The fair values of these investments have been categorized as Level 2 in the fair value hierarchy. Loans The fair value of loans is estimated based on discounted cash flows using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality and adjustments that the Company believes a market participant would consider in determining fair value based on a third party independent valuation. As a result, the fair value for loans is categorized as Level 2 in the fair value hierarchy, excluding impaired loans which are categorized as Level 3. Accrued interest receivable and payable The carrying amounts reported in the Consolidated Balance Sheets for accrued interest receivable and payable approximate their fair value. Derivative financial instruments All derivatives are recognized in the Consolidated Balance Sheets at their fair value. The fair value for derivatives is determined based on market prices, broker-dealer quotations on similar products, or other related input parameters. As a result, the fair values have been categorized as Level 2 in the fair value hierarchy. Deposits The fair value disclosed for demand and savings deposits is by definition equal to the amount payable on demand at their reporting date (that is, their carrying amount), which the Company believes a market participant would consider in determining fair value. The carrying amount for variable-rate deposit accounts approximates their fair value. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on these deposits. The fair value measurement of the deposit liabilities is categorized as Level 2 in the fair value hierarchy. FHLB advances and customer repurchase agreements The fair values of the Company’s borrowings are estimated using discounted cash flow analyses, based on the market rates for similar types of borrowing arrangements. The FHLB advances and customer repurchase agreements have been categorized as Level 2 in the fair value hierarchy due to their short durations. Subordinated debt The fair value of subordinated debt is based on the market rate for the respective subordinated debt security. Subordinated debt has been categorized as Level 3 in the fair value hierarchy. Junior subordinated debt Junior subordinated debt is valued based on a discounted cash flow model which uses as inputs Treasury Bond rates and the 'BB' rated financial index. Junior subordinated debt has been categorized as Level 3 in the fair value hierarchy. Off-balance sheet instruments The fair value of the Company’s off-balance sheet instruments (lending commitments and standby letters of credit) is based on quoted fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, and the counterparties’ credit standing. |
||||||||||||
Recent Accounting Pronouncements | Recent accounting pronouncements In February 2016, the FASB issued guidance within ASU 2016-02, Leases. The amendments in ASU 2016-02 to Topic 842, Leases, require lessees to recognize the lease assets and lease liabilities arising from operating leases in the statement of financial position, which will result in a gross up of assets and liabilities on the balance sheet. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. In July 2018, the FASB issued guidance within ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842) Targeted Improvements. The amendments within ASU 2018-10 clarify how to apply certain aspects of the new leases standard. The amendments address the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments, among other things. The amendments within ASU 2018-11 give entities another option for transition and provide lessors with a practical expedient. The transition option allows entities to continue to apply the legacy guidance in ASC 840, Leases, to prior periods, including disclosure requirements. Accordingly, under this transition approach, the modified retrospective transition method still applies; however, a cumulative-effect adjustment to the opening balance sheet of retained earnings is recognized in the period of adoption, rather than the earliest period presented. The practical expedient provides lessors with an option to not separate non-lease components from the associated lease components when certain criteria are met and requires them to account for the combined components in accordance with the new revenue standard if the associated non-lease components are the predominant components. The amendments in these ASUs are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management evaluated several lease software solutions and selected a software solution that it believes will be able to effectively facilitate the application of the new accounting requirements. The population of its leases that are within the scope of the new guidance has been finalized and largely relate to real estate leases. All key lease data has been gathered and input into the new application and management is in the process of validating this data. In June 2016, the FASB issued guidance within ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The new standard significantly changes the impairment model for most financial assets that are measured at amortized cost, including off-balance sheet credit exposures, from an incurred loss model to an expected loss model. The amendments in ASU 2016-13 to Topic 326, Financial Instruments - Credit Losses, require that an organization measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU also requires enhanced disclosures, including qualitative and quantitative disclosures that provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on AFS debt securities and purchased financial assets with credit deterioration. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Management has formed a Steering Committee and established an implementation team made up of subject matter experts across different functions within the Company, including Finance, Risk, Credit, and IT, that will facilitate all phases of planning and implementation of the new guidance. Under the direction of the Company's CECL Steering Committee and in partnership with its Enterprise Project Management Office, the implementation team is fully engaged with the implementation of its plan. The Company has identified its portfolio segments and made modeling choices that include both internally-developed models as well as vended solutions, with parallel testing of certain models expected to begin in early 2019. The team is also focused on updating its accounting policies and assessing its control framework to identify risks resulting from new processes, judgments and data. In March 2017, the FASB issued guidance within ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities. The amendments in ASU 2017-08 to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs, shorten the amortization period for certain purchased callable debt securities held at a premium to the earliest call date, which more closely align the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities. Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. The adoption of this guidance is not expected to have a significant impact on the Company's Consolidated Financial Statements. In June 2018, the FASB issued guidance within ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting. The amendments in ASU 2018-07 to Topic 718, Compensation-Stock Compensation, are intended to align the accounting for share-based payment awards issued to employees and nonemployees. Changes to the accounting for nonemployee awards include: 1) equity classified share-based payment awards issued to nonemployees will now be measured on the grant date, instead of the previous requirement to remeasure the awards through the performance completion date; 2) for performance conditions, compensation cost associated with the award will be recognized when achievement of the performance condition is probable, rather than upon achievement of the performance condition; and 3) the current requirement to reassess the classification (equity or liability) for nonemployee awards upon vesting will be eliminated, except for awards in the form of convertible instruments. The new guidance also clarifies that any share-based payment awards issued to customers should be evaluated under ASC 606, Revenue from Contracts with Customers. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company's share-based payment awards to nonemployees consist only of grants made to the Company's BOD as compensation solely related to the individual's role as a Director. As such, in accordance with ASC 718, the Company accounts for these share-based payment awards to its Directors in the same manner as share-based payment awards for its employees. Accordingly, the amendments in this guidance will not have an effect on the accounting for the Company's share-based payment awards to its Directors. In July 2018, the FASB issued guidance within ASU 2018-09, Codification Improvements. The amendments in ASU 2018-09 are intended to clarify or correct unintended guidance in the FASB Codification and affect a wide variety of Topics in the Codification. The topics that are applicable to the Company include: 1) debt modifications and extinguishments; 2) stock compensation; and 3) derivatives and hedging. For debt modifications and extinguishments, the amendment clarifies that, in an early extinguishment of debt for which the fair value option has been elected, the net carrying amount of the extinguished debt is equal to its fair value at the reacquisition date, and upon extinguishment, the cumulative amount of the gain or loss on the extinguished debt that resulted from changes in instrument-specific credit risk should be presented in net income. The Company has junior subordinated debt that is recorded at fair value at each reporting period due to election of the FVO. Accordingly, if in the future, the Company chooses to repay this debt prior to its contractual maturity, this amendment would be applicable. For stock compensation, the amendment clarifies that excess tax benefits or tax deficiencies should be recognized in the period in which the amount of the tax deduction is determined, which is typically when an award is exercised (in the case of share options) or vests (in the case of non-vested stock awards). The Company already records excess tax benefits or tax deficiencies in the periods in which the tax deduction is determined. Therefore, this amendment will not have an effect on the Company's accounting for excess tax benefits or tax deficiencies. For derivatives and hedging, previous guidance permits derivatives to be offset only when all four conditions (including the intent to set off) are met. This amendment clarifies that the intent to set off is not required to offset fair value amounts recognized for derivative instruments that are executed with the same counterparty under a master netting agreement. This amendment will not have an effect on the offsetting of the Company's derivative assets and liabilities. In August 2018, the FASB issued guidance within ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments within ASU 2018-13 remove, modify, and supplement the disclosure requirements for fair value measurements. Disclosure requirements that were removed include: the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. Additional disclosure requirements include: the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. With the exception of the above additional disclosure requirements, which will be applied prospectively, all other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on the Company's Consolidated Financial Statements. In August 2018, the FASB issued guidance within ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments in this Update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments in this Update also require that the capitalized implementation costs of a hosting arrangement that is a service contract be expensed over the term of the hosting arrangement. Presentation requirements include: expense related to the capitalized implementation costs should be presented in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement, payments for capitalized implementation costs in the statement of cash flows should be classified in the same manner as payments made for fees associated with the hosting element, and capitalized implementation costs in the statement of financial position should be presented in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on the Company's Consolidated Financial Statements. Recently adopted accounting guidance In May 2014, the FASB issued guidance within ASU 2014-09, Revenue from Contracts with Customers. The amendments in ASU 2014-09 to ASC 606, Revenue from Contracts with Customers, creates a common revenue standard and clarifies the principles for recognizing revenue that can be applied consistently across various transactions, industries, and capital markets. The amendments in the ASU clarify that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. As part of that principle, the entity should identify the contract(s) with the customer, identify the performance obligation(s) of the contract, determine the transaction price, allocate that transaction price to the performance obligation(s) of the contract, and then recognize revenue when or as the entity satisfies the performance obligation(s). The Company adopted ASU 2014-09 on January 1, 2018 using the modified retrospective method. Substantially all of the Company's revenue is generated from interest income related to loans and investment securities, which are not within the scope of this guidance. The contracts that are within the scope of this guidance include service charges and fees on deposit accounts, certain types of card income, and success fees earned from equity investments. The Company completed its review of contracts and other agreements that are within the scope of this guidance and did not identify any material changes to the timing or amount of revenue recognition. Accordingly, the Company did not recognize an adjustment to retained earnings upon adoption of this guidance. The Company’s accounting policies did not change materially since the principles of revenue recognition in the ASU are largely consistent with current practices applied by the Company. The Company has expanded its qualitative disclosures of performance obligations and disaggregation of significant categories of revenue. See "Note 15. Revenue from Contracts with Customers" for further discussion. In January 2016, the FASB issued guidance within ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in ASU 2016-01 to Subtopic 825-10, Financial Instruments, contain the following elements: 1) requires equity investments to be measured at fair value with changes in fair value recognized in net income; 2) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; 3) eliminates the requirement for public entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; 4) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; 5) requires an entity to present separately in OCI the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; 6) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements; 7) clarifies that the entity should evaluate the need for a valuation allowance on a deferred tax asset related to AFS securities in combination with the entity's other deferred tax assets. Effective on January 1, 2015, the Company adopted the amendment noted in item 5) above as discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. Effective on January 1, 2018, the Company adopted the other amendments in this guidance. The primary impact on the Company's Consolidated Financial Statements results from the amendments discussed in item 1) above as changes in the fair value of the Company's equity investments are now recognized in net income, rather than in AOCI. As of January 1, 2018, the Company recorded a cumulative-effect adjustment of $0.4 million to decrease accumulated other comprehensive income with a corresponding increase to opening retained earnings. During the nine months ended September 30, 2018, the Company recognized a loss of $3.0 million related to fair value changes in equity securities, which was recorded in the Consolidated Income Statement. In August 2016, the FASB issued guidance within ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. The amendments in ASU 2016-15 to Topic 230, Statement of Cash Flows, provide guidance on eight specific cash flow classification issues: 1) debt prepayment or debt extinguishment costs; 2) settlement of zero-coupon debt instruments; 3) contingent consideration payments made after a business combination; 4) proceeds from the settlement of insurance claims; 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; 6) distributions received from equity method investments; 7) beneficial interest in securitization transactions; and 8) separately identifiable cash flows and the application of the predominance principle. The adoption of this guidance did not have a significant impact on the Company's Consolidated Statement of Cash Flows. In January 2017, the FASB issued guidance within ASU 2017-01, Clarifying the Definition of a Business. The amendments in ASU 2017-01 to Topic 805, Business Combinations, clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The adoption of this guidance did not have a significant impact on the Company's Consolidated Financial Statements. In January 2017, the FASB issued guidance within ASU 2017-04, Simplifying the Test for Goodwill Impairment. The amendments in ASU 2017-04 to Topic 350, Intangibles - Goodwill and Other, modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Accordingly, the amendments eliminate Step 2 from the goodwill impairment test because goodwill impairment will no longer be determined by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The adoption of this guidance did not have a significant impact on the Company's Consolidated Financial Statements. In February 2017, the FASB issued guidance within ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The amendments in ASU 2017-05 to Subtopic 610-20, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets, clarify the scope of Subtopic 610-20 and add guidance for partial sales of nonfinancial assets, including partial sales of real estate. Under current GAAP, there are several different accounting models to evaluate whether the transfer of certain assets qualify for sale treatment. The new standard reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. The adoption of this guidance did not have a significant impact on the Company's Consolidated Financial Statements. In May 2017, the FASB issued guidance within ASU 2017-09, Scope of Modification Accounting. The amendments in ASU 2017-09 to Topic 718, Compensation - Stock Compensation, provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of a modification unless all of the following conditions are met: the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The adoption of this guidance did not have a significant impact on the Company's Consolidated Financial Statements. In February 2018, the FASB issued guidance within ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. Under current GAAP, the effect of a change in tax laws or rates on deferred tax liabilities and assets are included in income from continuing operations even in situations in which the related income tax effects of items in AOCI were originally recognized in comprehensive income. Accordingly, as the adjustment of deferred taxes due to the reduction of the historical corporate income tax rate to the newly enacted corporate income tax rate is required to be included in income from continuing operations, the tax effects of items within AOCI do not reflect the current tax rate. The amendments in ASU 2018-02 to Topic 220, Income Statement - Reporting Comprehensive Income, allow a reclassification from AOCI to retained earnings from tax effects resulting from the TCJA. The Company elected to adopt this guidance effective January 1, 2018 and recorded a cumulative-effect adjustment of $0.7 million to decrease accumulated other comprehensive income with a corresponding increase to opening retained earnings. |
Investment Securities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amounts and Fair Values of Investment Securities | The carrying amounts and fair values of investment securities at September 30, 2018 and December 31, 2017 are summarized as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Losses and Fair Value of Investment Securities in Continuous Unrealized Loss Position | Information pertaining to securities with gross unrealized losses at September 30, 2018 and December 31, 2017, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost and Fair Value of Investment Securities by Contractual Maturities | The amortized cost and fair value of securities as of September 30, 2018, by contractual maturities, are shown below. MBS are shown separately as individual MBS are comprised of pools of loans with varying maturities. Therefore, these securities are listed separately in the maturity summary.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities by Credit Rating Type | The following tables summarize the carrying amount of the Company’s investment ratings position as of September 30, 2018 and December 31, 2017:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Gains and (Losses) on Sales of Investment Securities | The following table presents gross gains and losses on sales of investment securities:
|
Loans, Leases and Allowance for Credit Losses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Held for Investment Loan Portfolio Composition of Loans, Leases and Allowance for Credit Losses | The composition of the Company’s held for investment loan portfolio is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Aging of Loan Portfolio by Class of Loans Including Loans Held for Sale and Excluding Deferred Fees/Costs | The following table presents the contractual aging of the recorded investment in past due loans held for investment by class of loans:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Recorded Investment in Nonaccrual Loans and Loans Past Due 90 Days Still Accruing Interest by Loan Class | The following table presents the recorded investment in non-accrual loans and loans past due ninety days or more and still accruing interest by class of loans:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans by Risk Rating | The following tables present gross loans by risk rating:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impaired Loans by Loan Class | The following table presents impaired loans by class:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recorded Investment in Loans Classified as Impaired | The following table presents the average investment in impaired loans and income recognized on impaired loans:
The table below reflects the recorded investment in loans classified as impaired:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average Investment in Impaired Loans by Loan Class | The following table presents the average investment in impaired loans by loan class:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Income on Impaired Loans by Loan Class | The following table presents interest income on impaired loans by class:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tabular Disclosure of Nonperforming Assets | The following table summarizes nonperforming assets:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accretable Yield Table | Changes in the accretable yield for loans acquired with deteriorated credit quality are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowances for Credit Losses | The following table presents impairment method information related to loans and allowance for credit losses by loan portfolio segment:
The following table summarizes the changes in the allowance for credit losses by portfolio type:
|
Other Assets Acquired Through Foreclosure (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Real Estate, Foreclosed Assets, and Repossessed Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Other Assets Acquired Through Foreclosure | The following table represents the changes in other assets acquired through foreclosure:
|
Other Borrowings (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company's Borrowings | The following table summarizes the Company’s borrowings as of September 30, 2018 and December 31, 2017:
|
Accumulated Other Comprehensive Income (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Accumulated Other Comprehensive Income | The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of tax, for the periods indicated:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reclassifications Out of Accumulated Other Comprehensive Income | The following table presents reclassifications out of accumulated other comprehensive income (loss):
|
Derivatives and Hedging (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position | The fair value of derivative contracts, after taking into account the effects of master netting agreements, is included in other assets or other liabilities in the Consolidated Balance Sheets, as indicated in the following table:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Largest Exposure To Individual Counterparty | The following table summarizes the Company's largest exposure to an individual counterparty at the dates indicated:
|
Earnings per Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the calculation of basic and diluted EPS:
|
Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Contractual Amounts for Unfunded Commitments and Letters of Credit | A summary of the contractual amounts for unfunded commitments and letters of credit are as follows:
|
Fair Value Accounting (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains and Losses from Fair Value Changes Included in Consolidated Statement of Operations | For the three and nine months ended September 30, 2018 and 2017, gains and losses from fair value changes on junior subordinated debt and trading securities were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Assets and Liabilities | The fair value of assets and liabilities measured at fair value on a recurring basis was determined using the following inputs as of the periods presented:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in Level 3 Liabilities Measured at Fair Value on Recurring Basis | For the three and nine months ended September 30, 2018 and 2017, the change in Level 3 liabilities measured at fair value on a recurring basis was as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Measured at Fair Value on Nonrecurring Basis | The following table presents such assets carried on the Balance Sheet by caption and by level within the ASC 825 hierarchy:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Value of Financial Instruments | The estimated fair value of the Company’s financial instruments is as follows:
|
Segments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Segment Information | The following is a summary of operating segment information for the periods indicated:
|
Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018
USD ($)
Subsidiary
|
Dec. 31, 2017
USD ($)
|
|
Significant Of Accounting Policies [Line Items] | ||
Investment securities - AFS, at fair value; amortized cost of $3,211,440 at September 30, 2018 and $3,515,401 at December 31, 2017 | $ | $ 3,107,076 | $ 3,499,519 |
Number Of Wholly Owned Subsidiaries Non Bank Subsidiaries | Subsidiary | 2 | |
Number Of Unconsolidated Subsidiaries | Subsidiary | 8 | |
Preferred Stock [Member] | ||
Significant Of Accounting Policies [Line Items] | ||
Investment securities - AFS, at fair value; amortized cost of $3,211,440 at September 30, 2018 and $3,515,401 at December 31, 2017 | $ | $ 53,196 |
Investment Securities - Additional Information (Detail) |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018
USD ($)
positions
|
Sep. 30, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
positions
|
|
Investment Identifier [Line Items] | |||
Number Of Securities In Unrealized Position | positions | 409 | 302 | |
Amount of impairment losses reclassified out of accumulated other comprehensive income into earnings | $ 0 | $ 0 | |
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss | 127,847,000 | $ 51,615,000 | |
Securities with carrying amounts were pledged | $ 814,100,000 | $ 913,700,000 |
Investment Securities - Gross Gains and (Losses) on Sales of Investments (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Gross gains | $ 0 | $ 468 | $ 0 | $ 1,181 |
Gross (losses) | (7,232) | (149) | (7,232) | (274) |
Net (losses) gains | $ (7,232) | $ 319 | $ (7,232) | $ 907 |
Loans, Leases and Allowance for Credit Losses - Recorded Investment in Loans Classified as Impaired (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Receivables [Abstract] | ||
Impaired loans with an allowance recorded | $ 3,601 | $ 19,315 |
Impaired loans with no allowance recorded | 121,968 | 79,239 |
Total impaired loans | 125,569 | 98,554 |
Valuation allowance related to impaired loans | $ (1,171) | $ (5,606) |
Loans, Leases and Allowance for Credit Losses - Schedule of Average Investment in Impaired Loans and Income Recognized on Impaired Loans (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Receivables [Abstract] | ||||
Impaired Financing Receivable, Average Recorded Investment | $ 104,652 | $ 108,033 | $ 100,712 | $ 106,456 |
Interest income recognized on impaired loans | 1,114 | 1,040 | 3,109 | 3,075 |
Interest recognized on nonaccrual loans, cash basis | $ 569 | $ 694 | $ 1,443 | $ 1,372 |
Loans, Leases and Allowance for Credit Losses - Tabular Disclosure of Nonperforming Assets (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|---|---|
Financing Receivable, Recorded Investment, Nonaccrual Status | $ 36,868 | $ 43,925 | ||||
Loans past due 90 days or more on accrual status | 0 | 43 | ||||
Troubled debt restructured loans | 42,567 | 42,431 | ||||
Total nonperforming loans | 79,435 | 86,399 | ||||
Other assets acquired through foreclosure, net | 20,028 | $ 27,541 | 28,540 | $ 28,992 | $ 30,988 | $ 47,815 |
Total nonperforming assets | 99,463 | 114,939 | ||||
Troubled Debt Restructured Loans [Member] | ||||||
Financing Receivable, Recorded Investment, Nonaccrual Status | $ 9,600 | 10,100 | ||||
Financial Asset Acquired with Credit Deterioration [Member] | ||||||
Loans past due 90 days or more on accrual status | $ 100 |
Loans, Leases and Allowance for Credit Losses - Changes in Accretable Discount for Loans Purchased with Credit Quality Deterioration (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Balance at beginning of period | $ 9,324 | $ 15,177 | ||
Reclassifications from non-accretable to accretable yield (1) | $ 0 | |||
Accretion to interest income | (224) | $ (690) | ||
Financial Asset Acquired with Credit Deterioration [Member] | ||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Balance at beginning of period | 4,828 | 14,247 | ||
Reclassifications from non-accretable to accretable yield (1) | 0 | 683 | 2,086 | |
Accretion to interest income | (801) | (2,374) | ||
Reversal of fair value adjustments upon disposition of loans | (563) | (2,199) | (5,165) | (3,531) |
Balance at end of period | $ 4,041 | $ 11,358 | $ 4,041 | $ 11,358 |
Loans, Leases and Allowance for Credit Losses - Allowances for Credit Losses (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Valuation Allowance [Line Items] | ||||
Beginning Balance | $ 147,083 | $ 131,811 | $ 140,050 | $ 124,704 |
Charge-offs | 4,765 | 3,157 | 12,290 | 8,710 |
Recoveries | (1,693) | (2,767) | (5,251) | (8,177) |
Provision for credit losses | 6,000 | 5,000 | 17,000 | 12,250 |
Ending balance | 150,011 | 136,421 | 150,011 | 136,421 |
Construction and land development [Member] | ||||
Valuation Allowance [Line Items] | ||||
Beginning Balance | 22,159 | 20,852 | 19,511 | 21,175 |
Charge-offs | 0 | 0 | 1 | 0 |
Recoveries | (24) | (226) | (1,420) | (1,011) |
Provision for credit losses | 473 | (619) | 1,726 | (1,727) |
Ending balance | 22,656 | 20,459 | 22,656 | 20,459 |
Commercial real estate [Member] | ||||
Valuation Allowance [Line Items] | ||||
Beginning Balance | 31,979 | 28,593 | 31,495 | 25,673 |
Charge-offs | 0 | 175 | 233 | 1,994 |
Recoveries | (856) | (1,781) | (1,228) | (2,719) |
Provision for credit losses | (1,250) | (1,474) | (905) | 2,327 |
Ending balance | 31,585 | 28,725 | 31,585 | 28,725 |
Residential real estate [Member] | ||||
Valuation Allowance [Line Items] | ||||
Beginning Balance | 6,849 | 4,838 | 5,478 | 3,851 |
Charge-offs | 46 | 0 | 1,038 | 447 |
Recoveries | (440) | (108) | (831) | (1,659) |
Provision for credit losses | 832 | (141) | 2,804 | (258) |
Ending balance | 8,075 | 4,805 | 8,075 | 4,805 |
Commercial and industrial [Member] | ||||
Valuation Allowance [Line Items] | ||||
Beginning Balance | 85,244 | 76,734 | 82,793 | 73,333 |
Charge-offs | 4,610 | 2,921 | 10,904 | 6,166 |
Recoveries | (362) | (619) | (1,737) | (2,705) |
Provision for credit losses | 5,652 | 7,192 | 13,022 | 11,752 |
Ending balance | 86,648 | 81,624 | 86,648 | 81,624 |
Consumer [Member] | ||||
Valuation Allowance [Line Items] | ||||
Beginning Balance | 852 | 794 | 773 | 672 |
Charge-offs | 109 | 61 | 114 | 103 |
Recoveries | (11) | (33) | (35) | (83) |
Provision for credit losses | 293 | 42 | 353 | 156 |
Ending balance | $ 1,047 | $ 808 | $ 1,047 | $ 808 |
Other Borrowings - Additional Information (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Sep. 30, 2018 |
|
Debt [Line Items] | ||
FHLB advances | $ 390,000,000 | $ 0 |
Short-term Debt | 390,000,000 | 0 |
Revolving line of credit | $ 0 | 0 |
Weighted average interest rate of FHLB and FRB Short-term advances | 1.41% | |
Customer repurchase agreements | $ 26,017,000 | 20,969,000 |
Federal Funds Purchased | 0 | 0 |
FRB [Member] | ||
Debt [Line Items] | ||
Additional available credit with the entity | 1,110,000,000 | 1,400,000,000 |
Unsecured Credit Facility [Member] | ||
Debt [Line Items] | ||
Secured borrowing credit line | 306,000,000 | |
FHLB [Member] | ||
Debt [Line Items] | ||
Additional available credit with the entity | $ 1,910,000,000 | $ 2,840,000,000 |
Qualifying Debt (Details) |
3 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2018
USD ($)
Trust
|
Dec. 31, 2017
USD ($)
|
Jun. 16, 2016
USD ($)
|
Jun. 29, 2015
USD ($)
|
|
Debt Instrument [Line Items] | ||||
Subordinated Debt | $ 290,800,000 | $ 308,600,000 | ||
Number of Statutory Business Trusts Formed or Acquired | Trust | 8 | |||
Junior Subordinated Debenture Owed to Unconsolidated Subsidiary Trust | $ 68,300,000 | |||
Subordinated Debt [Member] | Subordinated Debentures Maturing July 2056 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Face Amount | $ 175,000,000.0 | |||
Debt Issuance Cost | $ 5,500,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 6.25% | |||
Subordinated Debt [Member] | Subordinated Debentures Maturing July 2025 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Face Amount | $ 150,000,000.0 | |||
Debt Issuance Cost | $ 1,800,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 0.00% | |||
Junior Subordinated Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt, Weighted Average Interest Rate, at Point in Time | 4.74% | 4.03% |
Accumulated Other Comprehensive Income - Schedule of Reclassifications Out of Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Amount reclassified from accumulated other comprehensive income | $ 1,778 | $ (122) | $ 1,778 | $ (346) |
Amount reclassified from accumulated other comprehensive income | (5,454) | 197 | (5,454) | 561 |
Reclassification out of Accumulated Other Comprehensive Income [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Realized gains on sales of investment securities | (7,232) | 319 | (7,232) | 907 |
Amount reclassified from accumulated other comprehensive income | (1,778) | 122 | (1,778) | 346 |
Amount reclassified from accumulated other comprehensive income | $ (5,454) | $ 197 | $ (5,454) | $ 561 |
Derivatives and Hedging Largest Exposure to Individual Counterparty (Detail) - Largest individual counterparty [Member] - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|---|
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Largest gross exposure (positive derivative NPV) to an individual counterparty | $ 5,802 | $ 893 | $ 945 |
Collateral posted by this counterparty | 0 | 0 | 0 |
Negative derivative NPV with this counterparty | 9,567 | 40,340 | 44,053 |
Collateral pledged to this counterparty | 22,179 | 60,476 | 65,051 |
Net exposure after netting adjustments and collateral | $ 0 | $ 0 | $ 0 |
Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Basic | 104,768 | 104,221 | 104,664 | 104,124 |
Dilutive Effect Of Stock Options Restricted Stock And Equity Settled Awards | 680 | 721 | 734 | 817 |
Diluted | 105,448 | 104,942 | 105,398 | 104,941 |
Net income available to common shareholders | $ 111,123 | $ 82,844 | $ 316,702 | $ 236,146 |
Earnings (loss) per share - basic | $ 1.06 | $ 0.79 | $ 3.03 | $ 2.27 |
Earnings (loss) per share - diluted | $ 1.05 | $ 0.79 | $ 3.00 | $ 2.25 |
Anti-dilutive stock options outstanding that were not included in computation of diluted earnings per common share | 0 |
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Loss Contingencies [Line Items] | |||||
Letters of credit expiration period | 1 year | ||||
Percentage of first liens initial loan to value ratio | 75.00% | ||||
Percentage Of Commercial Real Estate Loans Occupied By Owners | 37.00% | 37.00% | 36.00% | ||
Operating Leases, Rent Expense, Net | $ 2.8 | $ 2.8 | $ 8.1 | $ 8.2 | |
Commercial Real Estate Portfolio Segment [Member] | Loans Receivable [Member] | Credit Concentration Risk [Member] | |||||
Loss Contingencies [Line Items] | |||||
Percent of commercial real estate related loans | 50.00% | 52.00% | |||
Unfunded Loan Commitment [Member] | |||||
Loss Contingencies [Line Items] | |||||
Loss Contingency Accrual | $ 7.6 | $ 7.6 | $ 6.2 |
Related Party Transactions (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Related Party Transactions [Abstract] | ||||
Accounts Receivable, Net | $ 1,300 | $ 1,300 | $ 1,300 | |
Related Party Transactions | 8,700 | $ 2,100 | ||
Noncash Contribution Expense | $ 6,895 | $ 6,895 | $ 0 |
-]FB)EM$X+ R
M^8B)@P W25"3!!$(5R88YC_WO4--=HA O#+!,!O<9(^:[!&![ : %S5R@V=&"YKZS;(_.8LAQ'ESEF;2=5 &0 'AL+W=O02C ,2C%R"T2'!V&L+
M\V3M%'\R[#@?+L%()#B+0QA%K3T@P<@E&!T2C+VXK%J:VU$A&K0YJU'A(HQ$
MA/,L-L%%& =$&+D(XVD1?HB]"&N- 4F6+Z/A
M5F[FRLU,N6H37+EY0+F9*S<[FLU,FDB;0VKO[K&X4)'$Y2AS#>=>PRF(&6GB
MLIL&*MV)RVYR5+I3/WNV9\EBR'$>7+M3K]T4U*YPV4T#D^O$93