XML 21 R10.htm IDEA: XBRL DOCUMENT v3.20.2
Loan and Lease Financings
 9 Months Ended
Sep. 30, 2020
Receivables [Abstract]  
Loan and Lease Financings Loan and Lease Financings
The Company evaluates loans and leases for credit quality at least annually but more frequently if certain circumstances occur (such as material new information which becomes available and indicates a potential change in credit risk). The Company uses two methods to assess credit risk: loan or lease credit quality grades and credit risk classifications. The purpose of the loan or lease credit quality grade is to document the degree of risk associated with individual credits as well as inform management of the degree of risk in the portfolio taken as a whole. Credit risk classifications are used to categorize loans by degree of risk and to designate individual or committee approval authorities for higher risk credits at the time of origination. Credit risk classifications include categories for: Acceptable, Marginal, Special Attention, Special Risk, Restricted by Policy, Regulated and Prohibited by Law.
All loans and leases, except residential real estate and home equity loans and consumer loans, are assigned credit quality grades on a scale from 1 to 12 with grade 1 representing superior credit quality. The criteria used to assign grades to extensions of credit that exhibit potential problems or well-defined weaknesses are primarily based upon the degree of risk and the likelihood of orderly repayment, and their effect on the Company’s safety and soundness. Loans or leases graded 7 or weaker are considered “special attention” credits and, as such, relationships in excess of $100,000 are reviewed quarterly as part of management’s evaluation of the appropriateness of the reserve for loan and lease losses. Grade 7 credits are defined as “watch” and contain greater than average credit risk and are monitored to limit the exposure to increased risk; grade 8 credits are “special mention” and, following regulatory guidelines, are defined as having potential weaknesses that deserve management’s close attention. Credits that exhibit well-defined weaknesses and a distinct possibility of loss are considered “classified” and are graded 9 through 12 corresponding to the regulatory definitions of “substandard” (grades 9 and 10) and the more severe “doubtful” (grade 11) and “loss” (grade 12).
The following table shows the credit quality grades of the recorded investment in loans and leases, segregated by class.
 Credit Quality Grades
(Dollars in thousands) 1-67-12Total
September 30, 2020   
Commercial and agricultural$1,617,272 $64,247 $1,681,519 
Auto and light truck470,744 56,838 527,582 
Medium and heavy duty truck269,070 2,178 271,248 
Aircraft782,656 23,506 806,162 
Construction equipment671,254 52,342 723,596 
Commercial real estate932,782 28,768 961,550 
Total$4,743,778 $227,879 $4,971,657 
December 31, 2019   
Commercial and agricultural$1,080,933 $51,858 $1,132,791 
Auto and light truck569,234 19,573 588,807 
Medium and heavy duty truck293,736 1,088 294,824 
Aircraft764,564 19,476 784,040 
Construction equipment668,076 37,375 705,451 
Commercial real estate888,154 20,023 908,177 
Total$4,264,697 $149,393 $4,414,090 
*Paycheck Protection Program (PPP) loans are included in the Commercial and agricultural category in the Grades 1-6 column above.
For residential real estate and home equity and consumer loans, credit quality is based on the aging status of the loan and by payment activity. The following table shows the recorded investment in residential real estate and home equity and consumer loans by performing or nonperforming status. Nonperforming loans are those loans which are on nonaccrual status or are 90 days or more past due.
(Dollars in thousands) PerformingNonperformingTotal
September 30, 2020   
Residential real estate and home equity$518,127 $1,754 $519,881 
Consumer135,074 424 135,498 
Total$653,201 $2,178 $655,379 
December 31, 2019   
Residential real estate and home equity$529,557 $2,446 $532,003 
Consumer138,951 483 139,434 
Total$668,508 $2,929 $671,437 
The following table shows the recorded investment of loans and leases, segregated by class, with delinquency aging and nonaccrual status.
(Dollars in thousands) Current30-59 Days Past Due60-89 Days Past Due90 Days or More Past Due and AccruingTotal
Accruing 
Loans		NonaccrualTotal
Financing
Receivables
September 30, 2020       
Commercial and agricultural
$1,679,388 $49 $574 $— $1,680,011 $1,508 $1,681,519 
Auto and light truck
488,688 682 302 — 489,672 37,910 527,582 
Medium and heavy duty truck270,211 93 — — 270,304 944 271,248 
Aircraft793,451 6,837 3,921 — 804,209 1,953 806,162 
Construction equipment
697,020 1,633 321 — 698,974 24,622 723,596 
Commercial real estate959,816 173 — — 959,989 1,561 961,550 
Residential real estate and home equity517,233 875 19 80 518,207 1,674 519,881 
Consumer134,222 779 73 1 135,075 423 135,498 
Total$5,540,029 $11,121 $5,210 $81 $5,556,441 $70,595 $5,627,036 
December 31, 2019       
Commercial and agricultural
$1,131,704 $118 $— $— $1,131,822 $969 $1,132,791 
Auto and light truck
586,212 1,268 77 — 587,557 1,250 588,807 
Medium and heavy duty truck293,736 14 — — 293,750 1,074 294,824 
Aircraft772,846 7,026 3,293 — 783,165 875 784,040 
Construction equipment
702,671 819 609 — 704,099 1,352 705,451 
Commercial real estate906,468 58 — — 906,526 1,651 908,177 
Residential real estate and home equity528,844 561 152 257 529,814 2,189 532,003 
Consumer138,132 632 187 54 139,005 429 139,434 
Total$5,060,613 $10,496 $4,318 $311 $5,075,738 $9,789 $5,085,527 
The following table shows impaired loans and leases, segregated by class, and the corresponding reserve for impaired loan and lease losses.
(Dollars in thousands) Recorded InvestmentUnpaid Principal BalanceRelated Reserve
September 30, 2020   
With no related reserve recorded:   
Commercial and agricultural$768 $768 $— 
Auto and light truck20,094 20,094 — 
Medium and heavy duty truck830 830 — 
Aircraft1,953 1,953 — 
Construction equipment5,312 5,312 — 
Commercial real estate1,354 1,354 — 
Residential real estate and home equity— — — 
Consumer— — — 
Total with no related reserve recorded30,311 30,311 — 
With a reserve recorded:   
Commercial and agricultural6,647 6,647 1,554 
Auto and light truck16,980 16,980 7,517 
Medium and heavy duty truck114 114 34 
Aircraft— — — 
Construction equipment12,910 12,910 7,966 
Commercial real estate— — — 
Residential real estate and home equity331 333 111 
Consumer— — — 
Total with a reserve recorded36,982 36,984 17,182 
Total impaired loans$67,293 $67,295 $17,182 
December 31, 2019   
With no related reserve recorded:   
Commercial and agricultural$218 $218 $— 
Auto and light truck853 853 — 
Medium and heavy duty truck1,074 1,074 — 
Aircraft875 875 — 
Construction equipment615 615 — 
Commercial real estate1,487 1,487 — 
Residential real estate and home equity— — — 
Consumer— — — 
Total with no related reserve recorded5,122 5,122 — 
With a reserve recorded:   
Commercial and agricultural10,366 10,366 3,003 
Auto and light truck278 278 30 
Medium and heavy duty truck— — — 
Aircraft— — — 
Construction equipment736 736 75 
Commercial real estate— — — 
Residential real estate and home equity337 339 117 
Consumer— — — 
Total with a reserve recorded11,717 11,719 3,225 
Total impaired loans$16,839 $16,841 $3,225 
The following table shows average recorded investment and interest income recognized on impaired loans and leases, segregated by class.
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
(Dollars in thousands) Average
Recorded
Investment		Interest
Income		Average
Recorded
Investment		Interest
Income		Average
Recorded
Investment		Interest
Income		Average
Recorded
Investment		Interest
Income
Commercial and agricultural$8,989 $1 $5,177 $68 $7,393 $139 $4,026 $81 
Auto and light truck
32,369 — 1,793 — 14,632 — 3,196 — 
Medium and heavy duty truck985 — — — 1,011 — 205 — 
Aircraft1,957 — 593 — 2,015 — 2,542 — 
Construction equipment15,543 — 1,838 — 12,541 4 1,728 — 
Commercial real estate1,306 — 1,595 — 1,235 — 1,763 — 
Residential real estate and home equity332 4 340 4 334 11 341 14 
Consumer— — — — — — — — 
Total$61,481 $5 $11,336 $72 $39,161 $154 $13,801 $95 
There were no loan and lease modifications classified as troubled debt restructurings (TDR) during the three months ended September 30, 2020 and two nonperforming loan and lease modifications classified as TDR during the nine months ended September 30, 2020. There was one performing loan and lease modification classified as a TDR during the three months ended September 30, 2019 and two (one performing and one nonperforming) loan and lease modifications classified as TDR during the nine months ended September 30, 2019. The TDRs during 2020 were the result of issues that predated the COVID-19 pandemic. The classification between nonperforming and performing is determined at the time of modification. Modification programs focus on extending maturity dates or modifying payment patterns with most TDRs experiencing a combination of concessions. Modifications do not result in the contractual forgiveness of principal or interest. There were no modifications during the three and nine months ended September 30, 2020 and one modification during the three and nine months ended September 30, 2019 that resulted in an interest rate below market rate. Consequently, the financial impact of the modification was immaterial.
There were no TDRs which had payment defaults within the twelve months following modification during the three months ended September 30, 2020 and 2019, respectively. There were no TDRs which had a payment default within the twelve months following modification during the nine months ended September 30, 2020 and one TDR which had a payment default within the twelve months following modification during the nine months ended September 30, 2019. Default occurs when a loan or lease is 90 days or more past due under the modified terms or transferred to nonaccrual.
The following table shows the recorded investment of loans and leases classified as troubled debt restructurings as of September 30, 2020 and December 31, 2019.
(Dollars in thousands)September 30,
2020		December 31,
2019
Performing TDRs$331 $10,238 
Nonperforming TDRs14,503 486 
Total TDRs$14,834 $10,724