Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Collateral Dependent Loans [Table Text Block]

The following table presents the amortized cost basis of collateral dependent loans at June 30, 2020 (in thousands):



	Amortized Cost		Extent to Which Secured by Collateral
Residential and other consumer	$	3,283	$	3,273
Commercial:
Multi-family	6,011		6,011
Non-owner occupied commercial real estate	30,980		30,980
Construction and land	3,703		3,703
Owner occupied commercial real estate	21,025		21,025
Commercial and industrial	54,232		29,468
Bridge - franchise finance	24,353		21,178
Bridge - equipment finance	1,148		1,078
Total commercial	141,452		113,443
	$	144,735	$	116,716

Schedule of Accounts, Notes, Loans and Financing Receivable



	June 30, 2020					December 31, 2019
	Total			Percent of Total		Total			Percent of Total
Residential and other consumer:
1-4 single family residential	$	4,743,866		19.9	%	$	4,953,936		21.4	%
Government insured residential	826,238			3.5	%	698,644			3.0	%
Other consumer loans	7,703			0.1	%	8,539			0.1	%
	5,577,807			23.5	%	5,661,119			24.5	%
Commercial:
Multi-family	1,893,753			7.9	%	2,217,705			9.6	%
Non-owner occupied commercial real estate	4,940,531			20.7	%	5,030,904			21.7	%
Construction and land	246,609			1.0	%	243,925			1.1	%
Owner occupied commercial real estate	2,041,346			8.6	%	2,062,808			8.9	%
Commercial and industrial	4,691,326			19.7	%	4,655,349			20.1	%
PPP	827,359			3.5	%	—			—	%
Pinnacle	1,242,506			5.1	%	1,202,430			5.2	%
Bridge - franchise finance	623,139			2.6	%	627,482			2.6	%
Bridge - equipment finance	589,785			2.5	%	684,794			3.0	%
Mortgage warehouse lending	1,160,728			4.9	%	768,472			3.3	%
	18,257,082			76.5	%	17,493,869			75.5	%
Total loans	23,834,889			100.0	%	23,154,988			100.0	%
Allowance for credit losses	(266,123		)			(108,671		)
Loans, net	$	23,568,766				$	23,046,317

Premiums, discounts and deferred fees and costs, excluding the non-credit related discount on PCD loans, totaled $25 million and $50 million at June 30, 2020 and December 31, 2019, respectively. The amortized cost basis of residential PCD loans was $134 million and the related amount of non-credit discount was $135 million at June 30, 2020. The ACL related to PCD residential loans was $1.1 million and $1.7 million at June 30, 2020 and January 1, 2020, the date of initial adoption of ASU 2016-13, respectively.

Included in the table above are direct or sales type finance leases totaling $757 million and $733 million at June 30, 2020 and December 31, 2019, respectively. The amount of income recognized from direct or sales type finance leases for the three and six months ended June 30, 2020 and 2019 totaled $5.3 million, $10.7 million, $5.5 million and $10.8 million, respectively and is recorded as interest income on loans in the consolidated statements of income.

During the three and six months ended June 30, 2020 and 2019, the Company purchased 1-4 single family residential loans totaling $582 million, $1.1 billion, $589 million and $894 million, respectively. Purchases for the three and six months ended June 30, 2020 and 2019 included $243 million, $529 million, $151 million and $284 million, respectively, of government insured residential loans.

At June 30, 2020 and December 31, 2019, the Company had pledged loans with a carrying value of approximately $11.0 billion and $10.2 billion, respectively, as security for FHLB advances, Federal Reserve discount window capacity and PPPLF borrowings.

At June 30, 2020 and December 31, 2019, accrued interest receivable on loans totaled $108 million and $83 million, respectively, and is included in other assets in the accompanying consolidated balance sheets. The amount of interest income reversed on non-accrual loans was not material for the three and six months ended June 30, 2020.

Allowance for Credit Losses on Financing Receivables

Activity in the allowance for credit losses is summarized below. The balance at December 31, 2019 and amounts presented for the three and six months ended June 30, 2019 represent the allowance for loan and leases losses, estimated using an incurred loss methodology. The ACL at June 30, 2020 and activity for the three and six months then ended were determined using the CECL methodology (in thousands):



	Three Months Ended June 30,
	2020									2019
	Residential and Other Consumer			Commercial			Total			Residential and Other Consumer		Commercial			Total
Beginning balance	$	12,576		$	238,003		$	250,579		$	10,952	$	103,751		$	114,703
Provision (recovery)	(1,924		)	33,508			31,584			131		(2,878		)	(2,747		)
Charge-offs	—			(19,178		)	(19,178		)	—		(1,711		)	(1,711		)
Recoveries	43			3,095			3,138			153		1,743			1,896
Ending balance	$	10,695		$	255,428		$	266,123		$	11,236	$	100,905		$	112,141



	Six Months Ended June 30,
	2020									2019
	Residential and Other Consumer			Commercial			Total			Residential and Other Consumer		Commercial			Total
Beginning balance	$	11,154		$	97,517		$	108,671		$	10,788	$	99,143		$	109,931
Impact of adoption of ASU 2016-13	8,098			19,207			27,305			—		—			—
Provision (recovery)	(8,572		)	162,021			153,449			281		7,253			7,534
Charge-offs	(31		)	(26,953		)	(26,984		)	—		(7,844		)	(7,844		)
Recoveries	46			3,636			3,682			167		2,353			2,520
Ending balance	$	10,695		$	255,428		$	266,123		$	11,236	$	100,905		$	112,141

The following table presents the components of the provision for credit losses for the periods indicated (in thousands):



	Three Months Ended June 30, 2020			Six Months Ended June 30, 2020
Amount related to funded portion of loans	$	31,584		$	153,449
Amount related to off-balance sheet credit exposures	(6,170		)	(2,607		)
Provision for credit losses	$	25,414		$	150,842

Financing Receivable, Past Due



	June 30, 2020										December 31, 2019
	Current		30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total		Current		30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total
1-4 single family residential	$	4,679,984	$	49,275	$	2,833	$	11,774	$	4,743,866	$	4,887,618	$	45,634	$	9,578	$	11,106	$	4,953,936
Government insured residential	51,276		53,017		52,620		669,325		826,238		93,560		45,347		30,426		529,311		698,644
Home equity loans and lines of credit	1,478		69		—		—		1,547		1,320		—		—		—		1,320
Other consumer loans	6,156		—		—		—		6,156		7,219		—		—		—		7,219
Multi-family	1,858,695		29,047		6,011		—		1,893,753		2,217,705		—		—		—		2,217,705
Non-owner occupied commercial real estate	4,859,344		52,937		7,979		20,271		4,940,531		5,015,458		—		928		14,518		5,030,904
Construction and land	246,263		—		—		346		246,609		240,647		2,396		—		882		243,925
Owner occupied commercial real estate	2,020,077		1,081		3,376		16,812		2,041,346		2,041,352		1,336		4,420		15,700		2,062,808
Commercial and industrial	4,593,422		20,855		22,601		54,448		4,691,326		4,595,847		2,313		4,301		52,888		4,655,349
PPP	827,359		—		—		—		827,359		—		—		—		—		—
Pinnacle	1,242,506		—		—		—		1,242,506		1,202,430		—		—		—		1,202,430
Bridge - franchise finance	596,136		—		625		26,378		623,139		610,315		3,840		2,501		10,826		627,482
Bridge - equipment finance	589,785		—		—		—		589,785		677,089		7,705		—		—		684,794
Mortgage warehouse lending	1,160,728		—		—		—		1,160,728		768,472		—		—		—		768,472
	$	22,733,209	$	206,281	$	96,045	$	799,354	$	23,834,889	$	22,359,032	$	108,571	$	52,154	$	635,231	$	23,154,988

Impaired Financing Receivables

The following table presents information about loans on non-accrual status at the dates indicated (in thousands):



	June 30, 2020				December 31, 2019
	Amortized Cost		Amortized Cost With No Related Allowance		Amortized Cost
Residential and other consumer	$	13,183	$	2,622	$	18,894
Commercial:
Multi-family	6,011		6,011		6,138
Non-owner occupied commercial real estate	46,545		28,598		40,097
Construction and land	3,703		3,357		3,191
Owner occupied commercial real estate	30,493		8,765		27,141
Commercial and industrial	67,702		7,386		74,757
Bridge - franchise finance	32,857		1,848		13,631
Bridge - equipment finance	1,148		537		20,939
	$	201,642	$	59,124	$	204,788

Financing Receivable Credit Quality Indicators

FICO scores are generally updated at least annually, and were most recently updated in the fourth quarter of 2019. LTVs are typically at origination since we do not routinely update residential appraisals. Substantially all of the government insured residential loans are government insured buyout loans, which the Company buys out of GNMA securitizations upon default. For these loans, traditional measures of credit quality are not particularly relevant considering the guaranteed nature of the loans and the underlying business model. Factors that impact risk inherent in the residential portfolio segment include national and regional economic conditions such as levels of unemployment and wages, as well as residential property values.

1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on delinquency status:



	June 30, 2020
	Amortized Cost By Origination Year
	2020		2019		2018		2017		2016		Prior		Total
Current	$	249,912	$	807,365	$	488,280	$	753,109	$	776,895	$	1,604,423	$	4,679,984
30 - 59 Days Past Due	5,703		11,477		3,372		2,701		7,417		18,605		49,275
60 - 89 Days Past Due	—		720		75		53		103		1,882		2,833
90 Days or More Past Due	—		807		2,293		—		484		8,190		11,774
	$	255,615	$	820,369	$	494,020	$	755,863	$	784,899	$	1,633,100	$	4,743,866



	December 31, 2019
	Amortized Cost By Origination Year
	2019		2018		2017		2016		2015		Prior		Total
Current	$	804,913	$	609,814	$	830,710	$	783,318	$	633,833	$	1,225,030	$	4,887,618
30 - 59 Days Past Due	13,915		3,003		3,751		8,419		4,308		12,238		45,634
60 - 89 Days Past Due	1,785		442		137		486		1,766		4,962		9,578
90 Days or More Past Due	—		1,762		914		—		5,030		3,400		11,106
	$	820,613	$	615,021	$	835,512	$	792,223	$	644,937	$	1,245,630	$	4,953,936

1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on LTV:



	June 30, 2020
	Amortized Cost By Origination Year
LTV	2020		2019		2018		2017		2016		Prior		Total
Less than 61%	$	99,728	$	180,025	$	106,359	$	202,355	$	276,035	$	519,410	$	1,383,912
61% - 70%	62,031		192,880		110,546		136,212		184,600		394,279		1,080,548
71% - 80%	92,387		433,542		245,829		349,993		300,153		689,223		2,111,127
More than 80%	1,469		13,922		31,286		67,303		24,111		30,188		168,279
	$	255,615	$	820,369	$	494,020	$	755,863	$	784,899	$	1,633,100	$	4,743,866



	December 31, 2019
	Amortized Cost By Origination Year
LTV	2019		2018		2017		2016		2015		Prior		Total
Less than 61%	$	171,069	$	134,978	$	183,807	$	228,868	$	197,039	$	372,221	$	1,287,982
61% - 70 %	195,572		128,766		152,502		188,856		154,307		316,031		1,136,034
71% - 80%	442,311		313,779		404,743		338,000		283,202		531,377		2,313,412
More than 80%	11,661		37,498		94,460		36,499		10,389		26,001		216,508
	$	820,613	$	615,021	$	835,512	$	792,223	$	644,937	$	1,245,630	$	4,953,936

1-4 Single Family Residential credit exposure, excluding government insured residential loans, based on FICO score:



	June 30, 2020
	Amortized Cost By Origination Year
FICO	2020		2019		2018		2017		2016		Prior		Total
760 or greater	$	168,920	$	482,818	$	298,650	$	521,199	$	573,011	$	1,093,732	$	3,138,330
720 - 759	70,279		224,961		112,407		138,897		131,205		304,460		982,209
719 or less	16,416		112,590		82,963		95,767		80,683		234,908		623,327
	$	255,615	$	820,369	$	494,020	$	755,863	$	784,899	$	1,633,100	$	4,743,866



	December 31, 2019
	Amortized Cost By Origination Year
FICO	2019		2018		2017		2016		2015		Prior		Total
760 or greater	$	470,057	$	340,716	$	534,017	$	533,804	$	430,706	$	763,807	$	3,073,107
720 - 759	242,806		185,939		200,623		178,139		141,748		307,195		1,256,450
719 or less	107,750		88,366		100,872		80,280		72,483		174,628		624,379
	$	820,613	$	615,021	$	835,512	$	792,223	$	644,937	$	1,245,630	$	4,953,936

Credit quality indicators for commercial loans

Factors that impact risk inherent in commercial portfolio segments include but are not limited to levels of economic activity, health of the national and regional economy, industry trends, patterns of and trends in customer behavior that influence demand for our borrowers' products and services, and commercial real estate values. Internal risk ratings are considered the most meaningful indicator of credit quality for commercial loans. Internal risk ratings are generally indicative of the likelihood that a borrower will default, are a key factor influencing the level and nature of ongoing monitoring of loans and may impact the estimation of the ACL. Internal risk ratings are updated on a continuous basis. Generally, relationships with balances in excess of defined thresholds, ranging from $1 million to $3 million, are re-evaluated at least annually and more frequently if circumstances indicate that a change in risk rating may be warranted. During the second quarter of 2020, risk ratings were re-evaluated for a substantial portion of the commercial portfolio, with a focus on portfolio segments we identified for enhanced monitoring and loans for which we granted temporary payment deferrals in light of the COVID-19 pandemic. Loans exhibiting potential credit weaknesses that deserve management’s close attention and that could result in deterioration of repayment prospects at some future date if not checked or corrected are categorized as special mention. Loans with well-defined credit weaknesses, including payment defaults, declining collateral values, frequent overdrafts, operating losses, increasing balance sheet leverage, inadequate cash flow, project cost overruns, unreasonable construction delays, past due real estate taxes or exhausted interest reserves, are assigned an internal risk rating of substandard. A loan with a weakness so severe that collection in full is highly questionable or improbable, but because of certain reasonably specific pending factors has not been charged off, will be assigned an internal risk rating of doubtful.

Commercial credit exposure based on internal risk rating:



	June 30, 2020
	Amortized Cost By Origination Year												Revolving Loans
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Multi-Family
Pass	$	42,877	$	316,733	$	190,227	$	210,681	$	347,973	$	633,791	$	39,607	$	1,781,889
Special mention	—		8,149		15,767		19,512		6,209		7,587		—		57,224
Substandard	—		—		—		2,845		9,801		41,994		—		54,640
Total Multi-Family	$	42,877	$	324,882	$	205,994	$	233,038	$	363,983	$	683,372	$	39,607	$	1,893,753

Non-owner occupied commercial real estate
Pass	$	238,451	$	1,202,138	$	736,973	$	509,446	$	590,992	$	814,514	$	107,772	$	4,200,286
Special mention	—		46,971		96,563		47,930		166,139		112,887		—		470,490
Substandard	4,568		32,746		5,029		437		100,748		126,227		—		269,755
Total non-owner occupied commercial real estate	$	243,019	$	1,281,855	$	838,565	$	557,813	$	857,879	$	1,053,628	$	107,772	$	4,940,531

Construction and Land
Pass	$	7,208	$	125,429	$	13,619	$	50,020	$	27,336	$	917	$	243	$	224,772
Special mention	—		1,393		2,965		8,604		4,284		—		—		17,246
Substandard	—		—		888		—		3,357		346		—		4,591
Total Construction and Land	$	7,208	$	126,822	$	17,472	$	58,624	$	34,977	$	1,263	$	243	$	246,609

Owner occupied commercial real estate
Pass	$	128,795	$	303,522	$	276,367	$	267,267	$	311,485	$	466,194	$	39,586	$	1,793,216
Special mention	2,635		26,410		15,528		57,102		41,321		34,201		2,108		179,305
Substandard	—		8,691		17,520		12,203		2,863		18,327		9,221		68,825
Total owner occupied commercial real estate	$	131,430	$	338,623	$	309,415	$	336,572	$	355,669	$	518,722	$	50,915	$	2,041,346

Commercial and industrial
Pass	$	356,049	$	940,865	$	344,774	$	295,769	$	204,049	$	64,485	$	1,989,034	$	4,195,025
Special mention	611		81,305		33,987		2,252		28,507		6,818		89,918		243,398
Substandard	600		46,973		43,472		33,272		18,949		53,470		56,167		252,903
Total commercial and industrial	$	357,260	$	1,069,143	$	422,233	$	331,293	$	251,505	$	124,773	$	2,135,119	$	4,691,326

PPP
Pass	$	827,359	$	—	$	—	$	—	$	—	$	—	$	—	$	827,359
PPP	$	827,359	$	—	$	—	$	—	$	—	$	—	$	—	$	827,359

Pinnacle
Pass	$	125,882	$	134,838	$	92,537	$	232,269	$	227,317	$	429,663	$	—	$	1,242,506
Total Pinnacle	$	125,882	$	134,838	$	92,537	$	232,269	$	227,317	$	429,663	$	—	$	1,242,506

Bridge - Franchise Finance
Pass	$	42,004	$	97,036	$	27,760	$	12,666	$	14,456	$	12,357	$	—	$	206,279
Special mention	42,611		154,808		73,602		37,731		11,255		7,368		—		327,375
Substandard	549		15,494		45,185		5,173		17,778		4,357		—		88,536
Doubtful	—		—		—		—		949		—		—		949
Total Bridge - Franchise Finance	$	85,164	$	267,338	$	146,547	$	55,570	$	44,438	$	24,082	$	—	$	623,139

Bridge - Equipment Finance
Pass	$	24,349	$	193,227	$	103,434	$	94,667	$	54,544	$	67,486	$	—	$	537,707
Special mention	—		6,634		9,510		27,050		—		—		—		43,194
Substandard	—		3,608		4,128		—		1,005		143		—		8,884
Total Bridge - Equipment Finance	$	24,349	$	203,469	$	117,072	$	121,717	$	55,549	$	67,629	$	—	$	589,785

Mortgage Warehouse Lending
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	1,160,728	$	1,160,728
Total Mortgage Warehouse Lending	$	—	$	—	$	—	$	—	$	—	$	—	$	1,160,728	$	1,160,728

At June 30, 2020, the balance of revolving loans converted to term loans was immaterial.

The following tables summarize the Company's commercial credit exposure based on internal risk rating, in aggregate, at the dates indicated (in thousands):



	June 30, 2020
	Multi-Family		Non-Owner Occupied Commercial Real Estate		Construction and Land		Owner Occupied Commercial Real Estate		Commercial and Industrial		PPP		Pinnacle		Bridge - Franchise Finance		Bridge - Equipment Finance		Mortgage Warehouse Lending		Total
Pass	$	1,781,889	$	4,200,286	$	224,772	$	1,793,216	$	4,195,025	$	827,359	$	1,242,506	$	206,279	$	537,707	$	1,160,728	$	16,169,767
Special mention	57,224		470,490		17,246		179,305		243,398		—		—		327,375		43,194		—		1,338,232
Substandard⁽¹⁾	54,640		269,755		4,591		68,825		252,903		—		—		88,536		8,884		—		748,134
Doubtful	—		—		—		—		—		—		—		949		—		—		949
	$	1,893,753	$	4,940,531	$	246,609	$	2,041,346	$	4,691,326	$	827,359	$	1,242,506	$	623,139	$	589,785	$	1,160,728	$	18,257,082


(1)	Includes $561 million of substandard accruing loans at June 30, 2020.



	December 31, 2019
	Multi-Family		Non-Owner Occupied Commercial Real Estate		Construction and Land		Owner Occupied Commercial Real Estate		Commercial and Industrial		Pinnacle		Bridge - Franchise Finance		Bridge - Equipment Finance		Mortgage Warehouse Lending		Total
Pass	$	2,184,771	$	4,932,279	$	240,734	$	1,991,556	$	4,508,563	$	1,202,430	$	562,042	$	663,855	$	768,472	$	17,054,702
Special mention	—		5,831		—		27,870		28,498		—		10,682		—		—		72,881
Substandard⁽¹⁾	32,934		92,794		3,191		43,382		118,288		—		54,758		20,939		—		366,286
	$	2,217,705	$	5,030,904	$	243,925	$	2,062,808	$	4,655,349	$	1,202,430	$	627,482	$	684,794	$	768,472	$	17,493,869


(1)	Includes $180 million of substandard accruing loans at December 31, 2019.

Financing Receivable, Troubled Debt Restructuring

Troubled debt restructurings

The following table summarizes loans that were modified in TDRs during the periods indicated, as well as loans modified during the twelve months preceding June 30, 2020 and 2019 that experienced payment defaults during the periods indicated (dollars in thousands):



	Three Months Ended June 30,
	2020						2019
	Loans Modified in TDRs During the Period			TDRs Experiencing Payment Defaults During the Period			Loans Modified in TDRs During the Period			TDRs Experiencing Payment Defaults During the Period
	Number of TDRs	Amortized Cost		Number of TDRs	Amortized Cost		Number of TDRs	Amortized Cost		Number of TDRs	Amortized Cost
Government insured residential	52	$	7,291	121	$	19,512	34	$	5,164	31	$	4,355
Non-owner occupied commercial real estate	—	—		1	4,249		1	12,085		1	2,772
Owner occupied commercial real estate	—	—		—	—		—	—		3	1,878
Commercial and industrial	2	1,348		—	—		4	7,354		1	1,233
Bridge - franchise finance	1	919		5	18,718		1	2,073		—	—
	55	$	9,558	127	$	42,479	40	$	26,676	36	$	10,238



	Six Months Ended June 30,
	2020						2019
	Loans Modified in TDRs During the Period			TDRs Experiencing Payment Defaults During the Period			Loans Modified in TDRs During the Period			TDRs Experiencing Payment Defaults During the Period
	Number of TDRs	Amortized Cost		Number of TDRs	Amortized Cost		Number of TDRs	Amortized Cost		Number of TDRs	Amortized Cost
1-4 single family residential	1	$	203	—	$	—	2	$	563	—	$	—
Government insured residential	86	12,183		150	23,994		46	6,782		32	4,517
Non-owner occupied commercial real estate	1	4,249		1	4,249		1	12,085		1	2,772
Owner occupied commercial real estate	—	—		—	—		1	849		3	1,878
Commercial and industrial	2	1,348		3	5,448		6	17,994		1	1,233
Bridge - franchise finance	9	14,666		8	23,358		3	3,238		—	—
Bridge - equipment finance	—	—		—	—		1	847		—	—
	99	$	32,649	162	$	57,049	60	$	42,358	37	$	10,400