XML 25 R12.htm IDEA: XBRL DOCUMENT v3.20.4
Loans and Leases and the Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2020
Loans And Leases And Allowance For Loan And Lease Losses [Abstract]  
Loans and Leases and the Allowance for Credit Losses

Note 4.  Loans and Leases and the Allowance for Credit Losses

Loans and Leases

The Company’s loan and lease portfolio was comprised of the following as of December 31, 2020, and December 31, 2019:

 

 

 

December 31,

 

(dollars in thousands)

 

2020

 

 

2019

 

Commercial

 

 

 

 

 

 

 

 

Commercial and Industrial

 

$

1,875,293

 

 

$

1,379,152

 

Commercial Mortgage

 

 

2,854,829

 

 

 

2,518,051

 

Construction

 

 

259,798

 

 

 

194,170

 

Lease Financing

 

 

110,766

 

 

 

122,454

 

Total Commercial

 

 

5,100,686

 

 

 

4,213,827

 

Consumer

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

4,130,513

 

 

 

3,891,100

 

Home Equity

 

 

1,604,538

 

 

 

1,676,073

 

Automobile

 

 

708,800

 

 

 

720,286

 

Other 1

 

 

395,483

 

 

 

489,606

 

Total Consumer

 

 

6,839,334

 

 

 

6,777,065

 

Total Loans and Leases

 

$

11,940,020

 

 

$

10,990,892

 

1

Comprised of other revolving credit, installment, and lease financing.

Total loans and leases were reported net of unearned fee of $4.1 million and income of $1.3 million as of December 31, 2020 and December 31, 2019, respectively.

Commercial loans and residential mortgage loans of $805.4 million and $1.0 billion were pledged to secure an undrawn FRB line of credit as of December 31, 2020, and December 31, 2019.

As of December 31, 2020, residential mortgage loans of $3.0 billion and home equity loans of $596.0 million, were pledged under a blanket pledge arrangement to secure FHLB advances.  As of December 31, 2019, $3.1 billion, were pledged under a blanket pledge arrangement to secure FHLB advances.  See Note 10 Other Debt for FHLB advances outstanding as of December 31, 2020, and December 31, 2019.

Net gains related to sales of residential mortgage loans, recorded as a component of mortgage banking income, were $15.4 million, $5.3 million, and $1.5 million for the years ended December 31, 2020, December 31, 2019, and December 31, 2018, respectively.  Net gains on sales of commercial loans were not material for the years ended December 31, 2020, December 31, 2019, and December 31, 2018.

Substantially all of the Company’s lending activity is with customers located in Hawaii.  A substantial portion of the Company’s real estate loans are secured by real estate in Hawaii.

The Company elected to exclude AIR from the amortized cost basis of loans disclosed throughout this footnote.  As of December 31, 2020, and December 31, 2019, accrued interest receivable for loans totaled $35.9 million and $30.7 million, respectively, and is included in the “accrued interest receivable” line item on the Company’s consolidated statements of condition.

As previously mentioned in Note 1 Summary of Significant Accounting Policies, the CARES Act established the PPP, administered directly by the SBA.  The PPP provides loans of up to $10 million to small businesses who were affected by economic conditions as a result of COVID-19 to provide cash-flow assistance to employers who maintain their payroll (including healthcare and certain related expenses), mortgage interest, rent, leases, utilities and interest on existing debt during the COVID-19 pandemic.  PPP loans carry an interest rate of one percent, and a maturity of two or five years.  These loans are fully guaranteed by the SBA and may be eligible for forgiveness by the SBA to the extent that the proceeds are used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of up to 24 weeks after the loan is made as long as certain conditions are met regarding employee retention and compensation levels.  PPP loans deemed eligible for forgiveness by the SBA will be repaid by the SBA to the Company.  The SBA pays the Company fees for processing PPP loans in the following amounts: (1) five percent for loans of not more than $350,000; (2) three percent for loans of more than $350,000 and less than $2,000,000; and (3) one percent for loans of at least $2,000,000. These processing fees are accounted for as loan origination fees and recognized over the contractual loan term as a yield adjustment on the loans.  PPP loans are included in the Commercial and Industrial loan class.  As of December 31, 2020, the Company had 4,435 PPP loans outstanding, with an outstanding principal balance of $528.1 million.

Allowance for Credit Losses (the “Allowance”)

As previously mentioned in Note 1 Summary of Significant Accounting Policies, the Company’s January 1, 2020, adoption of ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments,” resulted in a significant change to our methodology for estimating the Allowance since December 31, 2019.  As a result of this adoption, the Company recorded a $1.7 million decrease to the Allowance as a cumulative-effect adjustment on January 1, 2020.

The following presents by portfolio segment, the activity in the Allowance for the years ended December 31, 2020, December 31, 2019, and December 31, 2018.

 

(dollars in thousands)

 

Commercial

 

 

Consumer

 

 

Total

 

For the Year Ended December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Credit Losses:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at Beginning of Period (December 31, 2019)

 

$

73,801

 

 

$

36,226

 

 

$

110,027

 

CECL Adoption (Day 1) Impact

 

 

(18,789

)

 

 

17,052

 

 

 

(1,737

)

Balance at Beginning of Period (January 1, 2020)

 

 

55,012

 

 

 

53,278

 

 

 

108,290

 

Loans and Leases Charged-Off

 

 

(1,697

)

 

 

(19,341

)

 

 

(21,038

)

Recoveries on Loans and Leases Previously Charged-Off

 

 

2,328

 

 

 

11,572

 

 

 

13,900

 

Net Loans and Leases Recovered (Charged-Off)

 

 

631

 

 

 

(7,769

)

 

 

(7,138

)

Provision for Credit Losses

 

 

29,204

 

 

 

85,896

 

 

 

115,100

 

Balance at End of Period

 

$

84,847

 

 

$

131,405

 

 

$

216,252

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Credit Losses:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at Beginning of Period

 

$

66,874

 

 

$

39,819

 

 

$

106,693

 

Loans and Leases Charged-Off

 

 

(2,738

)

 

 

(21,217

)

 

 

(23,955

)

Recoveries on Loans and Leases Previously Charged-Off

 

 

1,513

 

 

 

9,776

 

 

 

11,289

 

Net Loans and Leases Recovered (Charged-Off)

 

 

(1,225

)

 

 

(11,441

)

 

 

(12,666

)

Provision for Credit Losses

 

 

8,152

 

 

 

7,848

 

 

 

16,000

 

Balance at End of Period

 

$

73,801

 

 

$

36,226

 

 

$

110,027

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Credit Losses:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at Beginning of Period

 

$

65,822

 

 

$

41,524

 

 

$

107,346

 

Loans and Leases Charged-Off

 

 

(1,505

)

 

 

(23,059

)

 

 

(24,564

)

Recoveries on Loans and Leases Previously Charged-Off

 

 

2,039

 

 

 

8,447

 

 

 

10,486

 

Net Loans and Leases Recovered (Charged-Off)

 

 

534

 

 

 

(14,612

)

 

 

(14,078

)

Provision for Credit Losses

 

 

518

 

 

 

12,907

 

 

 

13,425

 

Balance at End of Period

 

$

66,874

 

 

$

39,819

 

 

$

106,693

 

 

Credit Quality Indicators

The Company uses several credit quality indicators to manage credit risk in an ongoing manner.  The Company uses an internal credit risk rating system that categorizes loans and leases into pass, special mention, or classified categories.  Credit risk ratings are applied individually to those classes of loans and leases that have significant or unique credit characteristics that benefit from a case-by-case evaluation.  These are typically loans and leases to businesses or individuals in the classes which comprise the commercial portfolio segment.  Groups of loans and leases that are underwritten and structured using standardized criteria and characteristics, such as statistical models (e.g., credit scoring or payment performance), are typically risk-rated and monitored collectively.  These are typically loans and leases to individuals in the classes which comprise the consumer portfolio segment.

The following are the definitions of the Company’s credit quality indicators:

 

Pass:

Loans and leases in all classes within the commercial and consumer portfolio segments that are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan or lease agreement.  Management believes that there is a low likelihood of loss related to those loans and leases that are considered Pass.

 

Special Mention:

Loans and leases in all classes within the commercial portfolio segment that have potential weaknesses that deserve management’s close attention.  If not addressed, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease.  Management believes that there is a moderate likelihood of some loss related to those loans and leases that are considered Special Mention.  The Special Mention credit quality indicator is not used for the consumer portfolio segment.

 

Classified:

Loans and leases in the classes within the commercial portfolio segment that are inadequately protected by the sound worth and paying capacity of the borrower or of the collateral pledged, if any.  Classified loans and leases are also those in the classes within the consumer portfolio segment that are past due 90 days or more as to principal or interest.  Residential mortgage loans that are past due 90 days or more as to principal or interest may be considered Pass if the current loan-to-value ratio is 60% or less.  Home equity loans that are past due 90 days or more as to principal or interest may be considered Pass if the first mortgage is with the Company and the current combined loan-to-value ratio is 60% or less.  Residential mortgage and home equity loans may be current as to principal and interest, but may be considered Classified for a period of generally up to six months following a loan modification.  Following a period of demonstrated performance in accordance with the modified contractual terms, the loan may be removed from Classified status.  Management believes that there is a distinct possibility that the Company will sustain some loss if the deficiencies related to Classified loans and leases are not corrected in a timely manner.

 

For Pass rated credits, risk ratings are certified at a minimum annually.  For Special Mention or Classified Credits, risk ratings are reviewed for appropriateness on an ongoing basis, monthly, or at a minimum, quarterly.  The following presents by credit quality indicator, loan class, and year of origination, the amortized cost basis of the Company’s loans and leases as of December 31, 2020.

 

 

 

Term Loans by Origination Year

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

2020

 

 

2019

 

 

2018

 

 

2017

 

 

2016

 

 

Prior

 

 

Revolving

Loans

 

 

Revolving

Loans

Converted

to Term

Loans

 

 

Total Loans

and Leases

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

944,463

 

 

$

149,024

 

 

$

149,468

 

 

$

49,385

 

 

$

52,354

 

 

$

68,269

 

 

$

342,339

 

 

$

847

 

 

$

1,756,149

 

Special Mention

 

 

11,702

 

 

 

42

 

 

 

-

 

 

 

-

 

 

 

110

 

 

 

95

 

 

 

32,319

 

 

 

52

 

 

 

44,320

 

Classified

 

 

32,208

 

 

 

1,734

 

 

 

2,266

 

 

 

777

 

 

 

19

 

 

 

19,166

 

 

 

18,529

 

 

 

125

 

 

 

74,824

 

Total Commercial and

   Industrial

 

$

988,373

 

 

$

150,800

 

 

$

151,734

 

 

$

50,162

 

 

$

52,483

 

 

$

87,530

 

 

$

393,187

 

 

$

1,024

 

 

$

1,875,293

 

Commercial Mortgage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

847,676

 

 

$

458,472

 

 

$

350,363

 

 

$

245,157

 

 

$

267,860

 

 

$

425,157

 

 

$

76,869

 

 

$

-

 

 

$

2,671,554

 

Special Mention

 

 

66,523

 

 

 

28,418

 

 

 

291

 

 

 

7,117

 

 

 

8,665

 

 

 

5,035

 

 

 

-

 

 

 

-

 

 

 

116,049

 

Classified

 

 

49,640

 

 

 

655

 

 

 

2,783

 

 

 

274

 

 

 

4,742

 

 

 

9,132

 

 

 

-

 

 

 

-

 

 

 

67,226

 

Total Commercial

   Mortgage

 

$

963,839

 

 

$

487,545

 

 

$

353,437

 

 

$

252,548

 

 

$

281,267

 

 

$

439,324

 

 

$

76,869

 

 

$

-

 

 

$

2,854,829

 

Construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

106,508

 

 

$

105,731

 

 

$

11,275

 

 

$

8,133

 

 

$

-

 

 

$

-

 

 

$

28,151

 

 

$

-

 

 

$

259,798

 

Total Construction

 

$

106,508

 

 

$

105,731

 

 

$

11,275

 

 

$

8,133

 

 

$

-

 

 

$

-

 

 

$

28,151

 

 

$

-

 

 

$

259,798

 

Lease Financing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

19,906

 

 

$

20,132

 

 

$

13,785

 

 

$

4,202

 

 

$

9,657

 

 

$

41,755

 

 

$

-

 

 

$

-

 

 

$

109,437

 

Classified

 

 

33

 

 

 

67

 

 

 

1,092

 

 

 

42

 

 

 

95

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,329

 

Total Lease

Financing

 

$

19,939

 

 

$

20,199

 

 

$

14,877

 

 

$

4,244

 

 

$

9,752

 

 

$

41,755

 

 

$

-

 

 

$

-

 

 

$

110,766

 

Total Commercial

 

$

2,078,659

 

 

$

764,275

 

 

$

531,323

 

 

$

315,087

 

 

$

343,502

 

 

$

568,609

 

 

$

498,207

 

 

$

1,024

 

 

$

5,100,686

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

1,300,831

 

 

$

576,452

 

 

$

295,522

 

 

$

454,165

 

 

$

545,798

 

 

$

954,120

 

 

$

-

 

 

$

-

 

 

$

4,126,888

 

Classified

 

 

-

 

 

 

294

 

 

 

-

 

 

 

1,032

 

 

 

-

 

 

 

2,299

 

 

 

-

 

 

 

-

 

 

 

3,625

 

Total Residential

   Mortgage

 

$

1,300,831

 

 

$

576,746

 

 

$

295,522

 

 

$

455,197

 

 

$

545,798

 

 

$

956,419

 

 

$

-

 

 

$

-

 

 

$

4,130,513

 

Home Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

4,449

 

 

$

1,556,671

 

 

$

37,559

 

 

$

1,598,679

 

Classified

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

88

 

 

 

4,693

 

 

 

1,078

 

 

 

5,859

 

Total Home Equity

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

4,537

 

 

$

1,561,364

 

 

$

38,637

 

 

$

1,604,538

 

Automobile

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

219,218

 

 

$

213,914

 

 

$

158,216

 

 

$

68,776

 

 

$

33,899

 

 

$

13,850

 

 

$

-

 

 

$

-

 

 

$

707,873

 

Classified

 

 

101

 

 

 

245

 

 

 

171

 

 

 

113

 

 

 

161

 

 

 

136

 

 

 

-

 

 

 

-

 

 

 

927

 

Total Automobile

 

$

219,319

 

 

$

214,159

 

 

$

158,387

 

 

$

68,889

 

 

$

34,060

 

 

$

13,986

 

 

$

-

 

 

$

-

 

 

$

708,800

 

Other1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

71,042

 

 

$

145,549

 

 

$

92,993

 

 

$

39,770

 

 

$

9,225

 

 

$

2,189

 

 

$

32,070

 

 

$

1,485

 

 

$

394,323

 

Classified

 

 

51

 

 

 

419

 

 

 

375

 

 

 

167

 

 

 

42

 

 

 

21

 

 

 

85

 

 

 

-

 

 

 

1,160

 

Total Other

 

$

71,093

 

 

$

145,968

 

 

$

93,368

 

 

$

39,937

 

 

$

9,267

 

 

$

2,210

 

 

$

32,155

 

 

$

1,485

 

 

$

395,483

 

Total Consumer

 

$

1,591,243

 

 

$

936,873

 

 

$

547,277

 

 

$

564,023

 

 

$

589,125

 

 

$

977,152

 

 

$

1,593,519

 

 

$

40,122

 

 

$

6,839,334

 

Total Loans and Leases

 

$

3,669,902

 

 

$

1,701,148

 

 

$

1,078,600

 

 

$

879,110

 

 

$

932,627

 

 

$

1,545,761

 

 

$

2,091,726

 

 

$

41,146

 

 

$

11,940,020

 

1

Comprised of other revolving credit, installment, and lease financing.

For the year ended December 31, 2020, $2.9 million revolving loans were converted to term loans.

The following presents by loan class and credit quality indicator, the recorded investment in the Company’s loans and leases as of December 31, 2019.

 

 

 

December 31, 2019

 

(dollars in thousands)

 

Commercial

and

Industrial

 

 

Commercial

Mortgage

 

 

Construction

 

 

Lease

Financing

 

 

Total

Commercial

 

Pass

 

$

1,306,040

 

 

$

2,463,858

 

 

$

188,832

 

 

$

120,933

 

 

$

4,079,663

 

Special Mention

 

 

37,722

 

 

 

16,453

 

 

 

4,148

 

 

 

—

 

 

 

58,323

 

Classified

 

 

35,390

 

 

 

37,740

 

 

 

1,190

 

 

 

1,521

 

 

 

75,841

 

Total

 

$

1,379,152

 

 

$

2,518,051

 

 

$

194,170

 

 

$

122,454

 

 

$

4,213,827

 

 

(dollars in thousands)

 

Residential

Mortgage

 

 

Home

Equity

 

 

Automobile

 

 

Other 1

 

 

Total

Consumer

 

Pass

 

$

3,886,389

 

 

$

1,671,468

 

 

$

719,337

 

 

$

488,113

 

 

$

6,765,307

 

Classified

 

 

4,711

 

 

 

4,605

 

 

 

949

 

 

 

1,493

 

 

 

11,758

 

Total

 

$

3,891,100

 

 

$

1,676,073

 

 

$

720,286

 

 

$

489,606

 

 

$

6,777,065

 

Total Recorded Investment in Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

10,990,892

 

1

Comprised of other revolving credit, installment, and lease financing.

Aging Analysis

Loans and leases are considered to be past due once becoming 30 days delinquent.  For the consumer portfolio, this generally represents two missed monthly payments.  The following presents by class, an aging analysis of the Company’s loan and lease portfolio as of December 31, 2020, and December 31, 2019.

 

(dollars in thousands)

 

30 - 59

Days

Past

Due

 

 

60 - 89

Days

Past

Due

 

 

Past Due

90 Days

or More

 

 

Non-

Accrual

 

 

Total

Past

Due

and

Non-

Accrual

 

 

Current

 

 

Total Loans

and

Leases

 

 

Non-

Accrual

Loans

and

Leases

that

are

Current 2

 

As of December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

$

191

 

 

$

59

 

 

$

—

 

 

$

441

 

 

$

691

 

 

$

1,874,602

 

 

$

1,875,293

 

 

$

285

 

Commercial Mortgage

 

 

—

 

 

 

—

 

 

 

—

 

 

 

8,527

 

 

 

8,527

 

 

 

2,846,302

 

 

 

2,854,829

 

 

 

4,983

 

Construction

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

259,798

 

 

 

259,798

 

 

 

—

 

Lease Financing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

110,766

 

 

 

110,766

 

 

 

—

 

Total Commercial

 

 

191

 

 

 

59

 

 

 

—

 

 

 

8,968

 

 

 

9,218

 

 

 

5,091,468

 

 

 

5,100,686

 

 

 

5,268

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

4,049

 

 

 

2,083

 

 

 

5,274

 

 

 

3,223

 

 

 

14,629

 

 

 

4,115,884

 

 

 

4,130,513

 

 

 

2,100

 

Home Equity

 

 

3,423

 

 

 

3,378

 

 

 

3,187

 

 

 

3,958

 

 

 

13,946

 

 

 

1,590,592

 

 

 

1,604,538

 

 

 

987

 

Automobile

 

 

6,358

 

 

 

2,215

 

 

 

925

 

 

 

—

 

 

 

9,498

 

 

 

699,302

 

 

 

708,800

 

 

 

—

 

Other 1

 

 

2,556

 

 

 

1,612

 

 

 

1,160

 

 

 

—

 

 

 

5,328

 

 

 

390,155

 

 

 

395,483

 

 

 

—

 

Total Consumer

 

 

16,386

 

 

 

9,288

 

 

 

10,546

 

 

 

7,181

 

 

 

43,401

 

 

 

6,795,933

 

 

 

6,839,334

 

 

 

3,087

 

Total

 

$

16,577

 

 

$

9,347

 

 

$

10,546

 

 

$

16,149

 

 

$

52,619

 

 

$

11,887,401

 

 

$

11,940,020

 

 

$

8,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

$

12,534

 

 

$

148

 

 

$

—

 

 

$

830

 

 

$

13,512

 

 

$

1,365,640

 

 

$

1,379,152

 

 

$

421

 

Commercial Mortgage

 

 

2,998

 

 

 

—

 

 

 

—

 

 

 

9,244

 

 

 

12,242

 

 

 

2,505,809

 

 

 

2,518,051

 

 

 

9,244

 

Construction

 

 

101

 

 

 

51

 

 

 

—

 

 

 

—

 

 

 

152

 

 

 

194,018

 

 

 

194,170

 

 

 

—

 

Lease Financing

 

 

720

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

720

 

 

 

121,734

 

 

 

122,454

 

 

 

—

 

Total Commercial

 

 

16,353

 

 

 

199

 

 

 

—

 

 

 

10,074

 

 

 

26,626

 

 

 

4,187,201

 

 

 

4,213,827

 

 

 

9,665

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

6,097

 

 

 

2,070

 

 

 

1,839

 

 

 

4,125

 

 

 

14,131

 

 

 

3,876,969

 

 

 

3,891,100

 

 

 

1,429

 

Home Equity

 

 

3,949

 

 

 

2,280

 

 

 

4,125

 

 

 

3,181

 

 

 

13,535

 

 

 

1,662,538

 

 

 

1,676,073

 

 

 

412

 

Automobile

 

 

16,067

 

 

 

4,154

 

 

 

949

 

 

 

—

 

 

 

21,170

 

 

 

699,116

 

 

 

720,286

 

 

 

—

 

Other 1

 

 

3,498

 

 

 

2,074

 

 

 

1,493

 

 

 

—

 

 

 

7,065

 

 

 

482,541

 

 

 

489,606

 

 

 

—

 

Total Consumer

 

 

29,611

 

 

 

10,578

 

 

 

8,406

 

 

 

7,306

 

 

 

55,901

 

 

 

6,721,164

 

 

 

6,777,065

 

 

 

1,841

 

Total

 

$

45,964

 

 

$

10,777

 

 

$

8,406

 

 

$

17,380

 

 

$

82,527

 

 

$

10,908,365

 

 

$

10,990,892

 

 

$

11,506

 

1

Comprised of other revolving credit, installment, and lease financing.

2

Represents non-accrual loans that are not past due 30 days or more; however, full payment of principal and interest is still not expected.

 

  

 

Non-Accrual Loans and Leases

 

The following presents the non-accrual loans and leases as of December 31, 2020, and December 31, 2019.

 

 

December 31, 2020

 

 

December 31,

2019

 

(dollars in thousands)

 

Non-accrual loans with a related ACL

 

 

Non-accrual loans without a related ACL

 

 

Total Non-accrual loans

 

 

Total Non-accrual loans

 

Impaired Loans with No Related Allowance Recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

$

441

 

 

$

—

 

 

$

441

 

 

$

830

 

Commercial Mortgage

 

 

8,527

 

 

 

—

 

 

 

8,527

 

 

 

9,244

 

Total Commercial

 

 

8,968

 

 

 

—

 

 

 

8,968

 

 

 

10,074

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

3,096

 

 

 

127

 

 

 

3,223

 

 

 

4,125

 

Home Equity

 

 

3,958

 

 

 

—

 

 

 

3,958

 

 

 

3,181

 

Total Consumer

 

 

7,054

 

 

 

127

 

 

 

7,181

 

 

 

7,306

 

Total

 

$

16,022

 

 

$

127

 

 

$

16,149

 

 

$

17,380

 

 

All payments received while on non-accrual status are applied against the principal balance of the loan or lease. The Company does not recognize interest income while loans or leases are on non-accrual status.

Modifications

A modification of a loan constitutes a troubled debt restructuring (“TDR”) when the Company for economic or legal reasons related to a borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider.  Loans modified in a TDR were $72.5 million and $69.1 million as of December 31, 2020, and December 31, 2019, respectively.  As of December 31, 2020, there were $0.5 million commitments to lend additional funds on loans modified in a TDR.  As of December 31, 2019, there were $0.3 million commitments to lend additional funds on loans modified in a TDR.

The Company offers various types of concessions when modifying a loan or lease.  Commercial and industrial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans.  Additional collateral, a co-borrower, or a guarantor is often requested. Commercial mortgage and construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a co-borrower or guarantor.  Construction loans modified in a TDR may also involve extending the interest-only payment period.  Residential mortgage loans modified in a TDR generally include a lower interest rate and the loan being fully amortized for up to 40 years from the modification effective date.  In some cases, the Company may forbear a portion of the unpaid principal balance with a balloon payment due upon maturity or pay-off of the loan.  Land loans are also included in the class of residential mortgage loans.  Land loans are typically structured as interest-only monthly payments with a balloon payment due at maturity.  Land loan modifications usually involve extending the interest-only payments up to an additional five years with a balloon payment due at maturity, or re-amortizing the remaining balance over a period up to 360 months.  Interest rates are not changed for land loan modifications.  Home equity modifications are made infrequently and uniquely designed to meet the specific needs of each borrower.  Automobile loans modified in a TDR are primarily comprised of loans where the Company has lowered monthly payments by extending the term.

Loans modified in a TDR are typically already on non-accrual status and partial charge-offs have in some cases already been taken against the outstanding loan balance.  As a result, loans modified in a TDR may have the financial effect of increasing the specific Allowance associated with the loan.  An Allowance for impaired commercial and consumer loans that have been modified in a TDR is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent.  Management exercises significant judgment in developing these estimates.

The following presents by class, information related to loans modified in a TDR during the years ended December 31, 2020, and December 31, 2019.

 

 

 

Loans Modified as a TDR for the

Year Ended December 31, 2020

 

 

Loans Modified as a TDR for the

Year Ended December 31, 2019

 

Troubled Debt Restructurings

(dollars in thousands)

 

Number of

Contracts

 

 

Recorded

Investment

(as of period end) 1

 

 

Increase in

Allowance

(as of period end)

 

 

Number of

Contracts

 

 

Recorded

Investment

(as of period end) 1

 

 

Increase in

Allowance

(as of period end)

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

 

5

 

 

$

203

 

 

$

5

 

 

 

8

 

 

$

17,585

 

 

$

2,465

 

Commercial Mortgage

 

 

1

 

 

 

1,046

 

 

 

60

 

 

 

1

 

 

 

3,623

 

 

 

—

 

Total Commercial

 

 

6

 

 

 

1,249

 

 

 

65

 

 

 

9

 

 

 

21,208

 

 

 

2,465

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

57

 

 

 

—

 

Home Equity

 

 

10

 

 

 

1,246

 

 

 

8

 

 

 

4

 

 

 

368

 

 

 

9

 

Automobile

 

 

352

 

 

 

7,541

 

 

 

112

 

 

 

332

 

 

 

5,911

 

 

 

73

 

Other 2

 

 

180

 

 

 

1,850

 

 

 

77

 

 

 

95

 

 

 

572

 

 

 

17

 

Total Consumer

 

 

542

 

 

 

10,637

 

 

 

197

 

 

 

432

 

 

 

6,908

 

 

 

99

 

Total

 

 

548

 

 

$

11,886

 

 

$

262

 

 

 

441

 

 

$

28,116

 

 

$

2,564

 

1

The period end balances reflect all partial paydowns and charge-offs since the modification date.  TDRs fully paid off, charged off, or foreclosed upon by period end are not included.

2

Comprised of other revolving credit and installment financing.

The following presents by class, loans modified in a TDR that defaulted during the year ended December 31, 2020, and December 31, 2019, and within twelve months of their modification date.  A TDR is considered to be in default once it becomes 60 days or more past due following a modification.

 

 

 

Year Ended December 31,

2020

 

 

Year Ended December 31,

2019

 

TDRs that Defaulted During the Period,

    Within Twelve Months of their Modification Date

(dollars in thousands)

 

Number of

Contracts

 

 

Recorded

Investment

(as of period end) 1

 

 

Number of

Contracts

 

 

Recorded

Investment

(as of period end) 1

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

 

1

 

 

$

27

 

 

 

—

 

 

$

—

 

Total Commercial

 

 

1

 

 

 

27

 

 

 

—

 

 

 

—

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

—

 

 

 

—

 

 

 

1

 

 

 

132

 

Home Equity

 

 

—

 

 

 

—

 

 

 

1

 

 

 

192

 

Automobile

 

 

43

 

 

 

723

 

 

 

40

 

 

 

607

 

Other 2

 

 

10

 

 

 

81

 

 

 

22

 

 

 

129

 

Total Consumer

 

 

53

 

 

 

804

 

 

 

64

 

 

 

1,060

 

Total

 

 

54

 

 

$

831

 

 

 

64

 

 

$

1,060

 

1

The period end balances reflect all paydowns and charge-offs since the modification date.  TDRs fully paid off, charged off, or foreclosed upon by period end are not included.

2

Comprised of other revolving credit and installment financing.

Loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default.  If loans modified in a TDR subsequently default, the Company evaluates the loan for possible further impairment.  The specific Allowance associated with the loan may be increased, adjustments may be made in the allocation of the Allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.

Modifications in response to COVID-19

The Company began offering short-term loan modifications to assist borrowers during the COVID-19 pandemic.  These modifications generally involve principal and/or interest payment deferrals for up to six months.  As the COVID-19 pandemic persists in negatively impacting the economy, the Company continues to offer additional loan modifications to borrowers struggling as a result of COVID-19.  Similar to the initial modifications granted, the additional round of loan modifications generally involve principal and/or interest payment deferrals for up to an additional six months for commercial and consumer loans, and principal-only deferrals for up to an additional 12 months for selected commercial loans.  The Company generally continues to accrue and recognize interest income during the forbearance period.  The Company offers several repayment options such as immediate repayment, repayment over a designated time period or as a balloon payment at maturity, or by extending the loan term.  These modifications generally do not involve forgiveness or interest rate reductions.  The CARES Act, along with a joint agency statement issued by banking agencies, provide that modifications made in response to COVID-19 to borrowers who qualify are not required to be accounted for as a TDR.  Accordingly, the Company does not account for such qualifying as TDRs.  See Note 1 Summary of Significant Accounting Policies for more information.

The Company, as lessor, also granted short-term lease concessions on some of its sales-type finance leases for equipment and automobiles.  The concessions primarily consists of six-month extension programs whereby lease payments currently due are deferred and shifted to the end of the lease term.  Interest income continues to accrue during the deferral period.  Additional round of lease concessions were not material.  See Note 1 Summary of Significant Accounting Policies for more information.

As of December 31, 2020, these COVID-19 related loan and lease modifications totaled $311.6 million (210 loans and leases) for the commercial segment and $178.1 million (1,920 loans and leases) for the consumer segment.

Foreclosure Proceedings

Consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure totaled $1.0 million as of December 31, 2020.