XML 22 R12.htm IDEA: XBRL DOCUMENT v3.21.2
Loans and Leases and the Allowance for Credit Losses
 9 Months Ended
Sep. 30, 2021
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 September 30, 2021, and December 31, 2020:

 

(dollars in thousands)

 

September 30,

2021

 

 

December 31,

2020

 

Commercial

 

 

 

 

 

 

 

 

Commercial and Industrial

 

$

1,325,446

 

 

$

1,357,610

 

PPP 1

 

 

268,480

 

 

 

517,683

 

Commercial Mortgage

 

 

2,994,520

 

 

 

2,854,829

 

Construction

 

 

296,052

 

 

 

259,798

 

Lease Financing

 

 

107,526

 

 

 

110,766

 

Total Commercial

 

 

4,992,024

 

 

 

5,100,686

 

Consumer

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

4,272,540

 

 

 

4,130,513

 

Home Equity

 

 

1,680,229

 

 

 

1,604,538

 

Automobile

 

 

727,234

 

 

 

708,800

 

Other 2

 

 

400,723

 

 

 

395,483

 

Total Consumer

 

 

7,080,726

 

 

 

6,839,334

 

Total Loans and Leases

 

$

12,072,750

 

 

$

11,940,020

 

 

1

The PPP amounts presented, which are reported net of deferred costs and fees, were previously included as a component of the Commercial and Industrial loan class.

2

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

 

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

Net gains related to sales of residential mortgage loans, recorded as a component of mortgage banking income were $1.2 million and $3.4 million for the three months ended September 30, 2021, and September 30, 2020, respectively, and $5.9 million and $9.0 million for the nine months ended September 30, 2021, and September 30, 2020, respectively.

The Company elected to exclude AIR from the amortized cost basis of loans disclosed throughout this footnote.  As of September 30, 2021, and December 31, 2020, AIR for loans totaled $29.9 million and $35.9 million, respectively, and is included in the “accrued interest receivable” line item on the Company’s consolidated statements of condition.

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was passed by Congress and signed into law on March 27, 2020.  The CARES Act established the PPP, which provides loans 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 eligible costs during the COVID-19 emergency.  PPP loans carry an interest rate of one percent, and a maturity of two or five years.  These loans are fully guaranteed by the Small Business Administration (“SBA”) and may be eligible for forgiveness by the SBA to the extent that the proceeds are used to cover eligible 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. These processing fees are accounted for as loan origination fees and recognized over the contractual loan term as a yield adjustment on the loans.  

Allowance for Credit Losses (the “Allowance”)

The following presents by portfolio segment, the activity in the Allowance for the three and nine months ended September 30, 2021, and September 30, 2020.

 

(dollars in thousands)

 

Commercial

 

 

Consumer

 

 

Total

 

Three Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Credit Losses:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at Beginning of Period

 

$

78,639

 

 

$

101,746

 

 

$

180,385

 

Loans and Leases Charged-Off

 

 

(196

)

 

 

(3,249

)

 

 

(3,445

)

Recoveries on Loans and Leases Previously Charged-Off

 

 

118

 

 

 

2,134

 

 

 

2,252

 

Net Loans and Leases Recovered (Charged-Off)

 

 

(78

)

 

 

(1,115

)

 

 

(1,193

)

Provision for Credit Losses

 

 

(9,894

)

 

 

(1,378

)

 

 

(11,272

)

Balance at End of Period

 

$

68,667

 

 

$

99,253

 

 

$

167,920

 

Nine Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Credit Losses:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at Beginning of Period

 

$

84,847

 

 

$

131,405

 

 

$

216,252

 

Loans and Leases Charged-Off

 

 

(900

)

 

 

(13,145

)

 

 

(14,045

)

Recoveries on Loans and Leases Previously Charged-Off

 

 

374

 

 

 

8,378

 

 

 

8,752

 

Net Loans and Leases Recovered (Charged-Off)

 

 

(526

)

 

 

(4,767

)

 

 

(5,293

)

Provision for Credit Losses

 

 

(15,654

)

 

 

(27,385

)

 

 

(43,039

)

Balance at End of Period

 

$

68,667

 

 

$

99,253

 

 

$

167,920

 

Three Months Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Credit Losses:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at Beginning of Period

 

$

72,522

 

 

$

100,917

 

 

$

173,439

 

Loans and Leases Charged-Off

 

 

(171

)

 

 

(2,176

)

 

 

(2,347

)

Recoveries on Loans and Leases Previously Charged-Off

 

 

231

 

 

 

3,573

 

 

 

3,804

 

Net Loans and Leases Recovered (Charged-Off)

 

 

60

 

 

 

1,397

 

 

 

1,457

 

Provision for Credit Losses

 

 

7,685

 

 

 

20,915

 

 

 

28,600

 

Balance at End of Period

 

$

80,267

 

 

$

123,229

 

 

$

203,496

 

Nine Months Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Credit Losses:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at Beginning of Period (December 31, 2020)

 

$

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

 

 

(1,520

)

 

 

(16,287

)

 

 

(17,807

)

Recoveries on Loans and Leases Previously Charged-Off

 

 

2,084

 

 

 

8,329

 

 

 

10,413

 

Net Loans and Leases Recovered (Charged-Off)

 

 

564

 

 

 

(7,958

)

 

 

(7,394

)

Provision for Credit Losses

 

 

24,691

 

 

 

77,909

 

 

 

102,600

 

Balance at End of Period

 

$

80,267

 

 

$

123,229

 

 

$

203,496

 

 

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.  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.  

 

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.  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 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.  

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 September 30, 2021.

 

 

 

Term Loans by Origination Year

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

YTD

September 30,

2021

 

 

2020

 

 

2019

 

 

2018

 

 

2017

 

 

Prior

 

 

Revolving

Loans

 

 

Revolving

Loans

Converted

to Term

Loans

 

 

Total Loans

and Leases

 

September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

335,503

 

 

$

341,306

 

 

$

91,475

 

 

$

80,521

 

 

$

31,948

 

 

$

89,088

 

 

$

257,097

 

 

$

589

 

 

$

1,227,527

 

Special Mention

 

 

2,008

 

 

 

33,200

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

153

 

 

 

25,343

 

 

 

26

 

 

 

60,730

 

Classified

 

 

188

 

 

 

2,024

 

 

 

88

 

 

 

2,055

 

 

 

573

 

 

 

18,409

 

 

 

13,785

 

 

 

67

 

 

 

37,189

 

Total Commercial and

   Industrial

 

$

337,699

 

 

$

376,530

 

 

$

91,563

 

 

$

82,576

 

 

$

32,521

 

 

$

107,650

 

 

$

296,225

 

 

$

682

 

 

$

1,325,446

 

PPP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

196,837

 

 

$

71,643

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

268,480

 

Total PPP

 

$

196,837

 

 

$

71,643

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

268,480

 

Commercial Mortgage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

608,445

 

 

$

774,572

 

 

$

362,497

 

 

$

264,407

 

 

$

196,531

 

 

$

554,832

 

 

$

61,212

 

 

$

-

 

 

$

2,822,496

 

Special Mention

 

 

39,129

 

 

 

69,618

 

 

 

-

 

 

 

30,286

 

 

 

-

 

 

 

6,122

 

 

 

-

 

 

 

-

 

 

 

145,155

 

Classified

 

 

1,589

 

 

 

10,566

 

 

 

644

 

 

 

-

 

 

 

4,784

 

 

 

9,286

 

 

 

-

 

 

 

-

 

 

 

26,869

 

Total Commercial

   Mortgage

 

$

649,163

 

 

$

854,756

 

 

$

363,141

 

 

$

294,693

 

 

$

201,315

 

 

$

570,240

 

 

$

61,212

 

 

$

-

 

 

$

2,994,520

 

Construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

101,403

 

 

$

118,076

 

 

$

61,403

 

 

$

-

 

 

$

894

 

 

$

-

 

 

$

14,276

 

 

$

-

 

 

$

296,052

 

Total Construction

 

$

101,403

 

 

$

118,076

 

 

$

61,403

 

 

$

-

 

 

$

894

 

 

$

-

 

 

$

14,276

 

 

$

-

 

 

$

296,052

 

Lease Financing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

18,997

 

 

$

15,935

 

 

$

16,836

 

 

$

10,749

 

 

$

2,586

 

 

$

41,531

 

 

$

-

 

 

$

-

 

 

$

106,634

 

Special Mention

 

 

-

 

 

 

-

 

 

 

-

 

 

 

892

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

892

 

Total Lease

Financing

 

$

18,997

 

 

$

15,935

 

 

$

16,836

 

 

$

11,641

 

 

$

2,586

 

 

$

41,531

 

 

$

-

 

 

$

-

 

 

$

107,526

 

Total Commercial

 

$

1,304,099

 

 

$

1,436,940

 

 

$

532,943

 

 

$

388,910

 

 

$

237,316

 

 

$

719,421

 

 

$

371,713

 

 

$

682

 

 

$

4,992,024

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

1,120,627

 

 

$

1,173,498

 

 

$

403,404

 

 

$

201,297

 

 

$

285,312

 

 

$

1,083,359

 

 

$

-

 

 

$

-

 

 

$

4,267,497

 

Classified

 

 

-

 

 

 

-

 

 

 

294

 

 

 

-

 

 

 

2,281

 

 

 

2,468

 

 

 

-

 

 

 

-

 

 

 

5,043

 

Total Residential

   Mortgage

 

$

1,120,627

 

 

$

1,173,498

 

 

$

403,698

 

 

$

201,297

 

 

$

287,593

 

 

$

1,085,827

 

 

$

-

 

 

$

-

 

 

$

4,272,540

 

Home Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

3,282

 

 

$

1,636,803

 

 

$

34,308

 

 

$

1,674,393

 

Classified

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

113

 

 

 

4,920

 

 

 

803

 

 

 

5,836

 

Total Home Equity

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

3,395

 

 

$

1,641,723

 

 

$

35,111

 

 

$

1,680,229

 

Automobile

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

233,401

 

 

$

166,682

 

 

$

155,905

 

 

$

105,933

 

 

$

40,967

 

 

$

23,952

 

 

$

-

 

 

$

-

 

 

$

726,840

 

Classified

 

 

26

 

 

 

53

 

 

 

87

 

 

 

55

 

 

 

17

 

 

 

156

 

 

 

-

 

 

 

-

 

 

 

394

 

Total Automobile

 

$

233,427

 

 

$

166,735

 

 

$

155,992

 

 

$

105,988

 

 

$

40,984

 

 

$

24,108

 

 

$

-

 

 

$

-

 

 

$

727,234

 

Other1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

127,788

 

 

$

54,794

 

 

$

105,858

 

 

$

55,663

 

 

$

21,442

 

 

$

6,949

 

 

$

26,151

 

 

$

1,485

 

 

$

400,130

 

Classified

 

 

-

 

 

 

93

 

 

 

244

 

 

 

95

 

 

 

78

 

 

 

10

 

 

 

70

 

 

 

3

 

 

 

593

 

Total Other

 

$

127,788

 

 

$

54,887

 

 

$

106,102

 

 

$

55,758

 

 

$

21,520

 

 

$

6,959

 

 

$

26,221

 

 

$

1,488

 

 

$

400,723

 

Total Consumer

 

$

1,481,842

 

 

$

1,395,120

 

 

$

665,792

 

 

$

363,043

 

 

$

350,097

 

 

$

1,120,289

 

 

$

1,667,944

 

 

$

36,599

 

 

$

7,080,726

 

Total Loans and Leases

 

$

2,785,941

 

 

$

2,832,060

 

 

$

1,198,735

 

 

$

751,953

 

 

$

587,413

 

 

$

1,839,710

 

 

$

2,039,657

 

 

$

37,281

 

 

$

12,072,750

 

 

1

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

For the nine months ended September 30, 2021, and September 30, 2020, $2.5 million and $1.3 million revolving loans, respectively, were converted to term loans.

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

 

$

426,780

 

 

$

149,024

 

 

$

149,468

 

 

$

49,385

 

 

$

52,354

 

 

$

68,269

 

 

$

342,339

 

 

$

847

 

 

$

1,238,466

 

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

 

$

470,690

 

 

$

150,800

 

 

$

151,734

 

 

$

50,162

 

 

$

52,483

 

 

$

87,530

 

 

$

393,187

 

 

$

1,024

 

 

$

1,357,610

 

PPP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

517,683

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

517,683

 

Total PPP

 

$

517,683

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

517,683

 

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.

  

 

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 September 30, 2021, and December 31, 2020.

 

(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 September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

$

130

 

 

$

1,887

 

 

$

—

 

 

$

209

 

 

$

2,226

 

 

$

1,323,220

 

 

$

1,325,446

 

 

$

172

 

PPP

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

268,480

 

 

 

268,480

 

 

 

—

 

Commercial Mortgage

 

 

—

 

 

 

—

 

 

 

—

 

 

 

8,309

 

 

 

8,309

 

 

 

2,986,211

 

 

 

2,994,520

 

 

 

8,309

 

Construction

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

296,052

 

 

 

296,052

 

 

 

—

 

Lease Financing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

107,526

 

 

 

107,526

 

 

 

—

 

Total Commercial

 

 

130

 

 

 

1,887

 

 

 

—

 

 

 

8,518

 

 

 

10,535

 

 

 

4,981,489

 

 

 

4,992,024

 

 

 

8,481

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

1,074

 

 

 

3,253

 

 

 

4,776

 

 

 

4,348

 

 

 

13,451

 

 

 

4,259,089

 

 

 

4,272,540

 

 

 

528

 

Home Equity

 

 

2,219

 

 

 

689

 

 

 

2,946

 

 

 

5,422

 

 

 

11,276

 

 

 

1,668,953

 

 

 

1,680,229

 

 

 

1,234

 

Automobile

 

 

6,427

 

 

 

1,110

 

 

 

395

 

 

 

—

 

 

 

7,932

 

 

 

719,302

 

 

 

727,234

 

 

 

—

 

Other 1

 

 

2,067

 

 

 

743

 

 

 

593

 

 

 

—

 

 

 

3,403

 

 

 

397,320

 

 

 

400,723

 

 

 

—

 

Total Consumer

 

 

11,787

 

 

 

5,795

 

 

 

8,710

 

 

 

9,770

 

 

 

36,062

 

 

 

7,044,664

 

 

 

7,080,726

 

 

 

1,762

 

Total

 

$

11,917

 

 

$

7,682

 

 

$

8,710

 

 

$

18,288

 

 

$

46,597

 

 

$

12,026,153

 

 

$

12,072,750

 

 

$

10,243

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

$

191

 

 

$

59

 

 

$

—

 

 

$

441

 

 

$

691

 

 

$

1,356,919

 

 

$

1,357,610

 

 

$

285

 

PPP

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

517,683

 

 

 

517,683

 

 

 

—

 

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

 

 

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 September 30, 2021, and December 31, 2020.

 

 

 

September 30, 2021

 

 

December 31, 2020

 

(dollars in thousands)

 

Non-accrual

loans with a

related ACL

 

 

Non-accrual

loans without

a related ACL

 

 

Total Non-

accrual loans

 

 

Non-accrual

loans with a

related ACL

 

 

Non-accrual

loans without

a related ACL

 

 

Total Non-

accrual loans

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

$

209

 

 

$

—

 

 

$

209

 

 

$

441

 

 

$

—

 

 

$

441

 

Commercial Mortgage

 

 

4,765

 

 

 

3,544

 

 

 

8,309

 

 

 

8,527

 

 

 

—

 

 

 

8,527

 

Total Commercial

 

 

4,974

 

 

 

3,544

 

 

 

8,518

 

 

 

8,968

 

 

 

—

 

 

 

8,968

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

3,989

 

 

 

359

 

 

 

4,348

 

 

 

3,096

 

 

 

127

 

 

 

3,223

 

Home Equity

 

 

5,422

 

 

 

—

 

 

 

5,422

 

 

 

3,958

 

 

 

—

 

 

 

3,958

 

Total Consumer

 

 

9,411

 

 

 

359

 

 

 

9,770

 

 

 

7,054

 

 

 

127

 

 

 

7,181

 

Total

 

$

14,385

 

 

$

3,903

 

 

$

18,288

 

 

$

16,022

 

 

$

127

 

 

$

16,149

 

 

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 $72.7 million as of September 30, 2021, and $72.5 million as of December 31, 2020.  There were $0.2 million and $0.5 million commitments to lend additional funds on loans modified in a TDR as of September 30, 2021, and December 31, 2020, respectively.

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 three and nine months ended September 30, 2021, and September 30, 2020.

 

 

 

Loans Modified as a TDR for the

Three Months Ended September 30, 2021

 

 

Loans Modified as a TDR for the

Three Months Ended September 30, 2020

 

 

 

 

 

 

 

Recorded

 

 

Increase in

 

 

 

 

 

 

Recorded

 

 

Increase in

 

Troubled Debt Restructurings

 

 

 

 

 

Investment

 

 

Allowance

 

 

 

 

 

 

Investment

 

 

Allowance

 

(dollars in thousands)

 

Number of Contracts

 

 

(as of period end)1

 

 

(as of period end)

 

 

Number of Contracts

 

 

(as of period end)1

 

 

(as of period end)

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

 

2

 

 

$

153

 

 

$

2

 

 

 

—

 

 

$

—

 

 

$

—

 

Construction

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

92

 

 

 

1

 

Total Commercial

 

 

2

 

 

 

153

 

 

 

2

 

 

 

1

 

 

 

92

 

 

 

1

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

2

 

 

 

796

 

 

 

21

 

 

 

—

 

 

 

—

 

 

 

—

 

Home Equity

 

 

2

 

 

 

779

 

 

 

46

 

 

 

2

 

 

 

134

 

 

 

—

 

Automobile

 

 

71

 

 

 

1,632

 

 

 

22

 

 

 

12

 

 

 

227

 

 

 

4

 

Other 2

 

 

51

 

 

 

439

 

 

 

16

 

 

 

7

 

 

 

93

 

 

 

4

 

Total Consumer

 

 

126

 

 

 

3,646

 

 

 

105

 

 

 

21

 

 

 

454

 

 

 

8

 

Total

 

 

128

 

 

$

3,799

 

 

$

107

 

 

 

22

 

 

$

546

 

 

$

9

 

 

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 as a TDR for the

Nine Months Ended September 30, 2021

 

 

Loans Modified as a TDR for the

Nine Months Ended September 30, 2020

 

 

 

 

 

 

 

Recorded

 

 

Increase in

 

 

 

 

 

 

Recorded

 

 

Increase in

 

Troubled Debt Restructurings

 

 

 

 

 

Investment

 

 

Allowance

 

 

 

 

 

 

Investment

 

 

Allowance

 

(dollars in thousands)

 

Number of Contracts

 

 

(as of period end)1

 

 

(as of period end)

 

 

Number of Contracts

 

 

(as of period end)1

 

 

(as of period end)

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

 

7

 

 

$

258

 

 

$

4

 

 

 

3

 

 

$

188

 

 

$

3

 

Construction

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

1,099

 

 

 

—

 

Total Commercial

 

 

7

 

 

 

258

 

 

 

4

 

 

 

4

 

 

 

1,287

 

 

 

3

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

14

 

 

 

5,785

 

 

 

584

 

 

 

—

 

 

 

—

 

 

 

—

 

Home Equity

 

 

9

 

 

 

1,488

 

 

 

80

 

 

 

2

 

 

 

134

 

 

 

—

 

Automobile

 

 

331

 

 

 

6,902

 

 

 

95

 

 

 

81

 

 

 

1,346

 

 

 

22

 

Other 2

 

 

144

 

 

 

1,321

 

 

 

48

 

 

 

42

 

 

 

357

 

 

 

15

 

Total Consumer

 

 

498

 

 

 

15,496

 

 

 

807

 

 

 

125

 

 

 

1,837

 

 

 

37

 

Total

 

 

505

 

 

$

15,754

 

 

$

811

 

 

 

129

 

 

$

3,124

 

 

$

40

 

 

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.

 

The following presents by class, all loans modified in a TDR that defaulted during the three and nine months ended September 30, 2021, and September 30, 2020, 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.

 

 

 

Three Months Ended

September 30, 2021

 

 

Three Months Ended

September 30, 2020

 

TDRs that Defaulted During the Period,

 

 

 

 

 

Recorded

 

 

 

 

 

 

Recorded

 

Within Twelve Months of their Modification Date

 

Number of

 

 

Investment

 

 

Number of

 

 

Investment

 

(dollars in thousands)

 

Contracts

 

 

(as of period end)1

 

 

Contracts

 

 

(as of period end)1

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automobile

 

 

8

 

 

$

157

 

 

 

1

 

 

$

6

 

Other 2

 

 

5

 

 

 

27

 

 

 

0

 

 

 

0

 

Total Consumer

 

 

13

 

 

 

184

 

 

 

1

 

 

 

6

 

Total

 

 

13

 

 

$

184

 

 

 

1

 

 

$

6

 

 

 

 

Nine Months Ended

September 30, 2021

 

 

Nine Months Ended

September 30, 2020

 

TDRs that Defaulted During the Period,

 

 

 

 

 

Recorded

 

 

 

 

 

 

Recorded

 

Within Twelve Months of their Modification Date

 

Number of

 

 

Investment

 

 

Number of

 

 

Investment

 

(dollars in thousands)

 

Contracts

 

 

(as of period end)1

 

 

Contracts

 

 

(as of period end)1

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

1

 

 

$

528

 

 

 

—

 

 

$

—

 

Automobile

 

 

12

 

 

 

213

 

 

 

33

 

 

 

591

 

Other 2

 

 

12

 

 

 

112

 

 

 

6

 

 

 

38

 

Total Consumer

 

 

25

 

 

 

853

 

 

 

39

 

 

 

629

 

Total

 

 

25

 

 

$

853

 

 

 

39

 

 

$

629

 

 

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.

Commercial and consumer 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 initially offered short-term loan modifications to assist borrowers during the COVID-19 national emergency.  These modifications generally involve principal and/or interest payment deferrals for up to six months.  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 deferral 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.  Although our formal assistance programs have ended, the Company continues to work with our customers who are still being impacted by the pandemic.  In addition, the Company evaluates the need to record an allowance for the related AIR.  As of September 30, 2021, and December 31, 2020, the Company recorded an AIR allowance of $0.7 million and $2.7 million, respectively.  The allowance was recorded as a contra-asset against AIR with the offset to provision for credit losses.  In addition, the Company elected to deduct the AIR from the AIR Allowance (rather than reversing interest income) when the AIR is deemed uncollectible, which generally occurs when the related loan is placed on nonaccrual status or is charged-off.

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, and in certain cases paid during the deferral period.  Additional rounds of lease concessions were not material.  

In accordance with Section 4013 of the CARES Act and the joint agency statement issued by banking agencies, these COVID-19 related loan and lease modifications are not accounted for as TDRs.  These loan and lease modifications totaled $130.4 million (23 loans and leases) for the commercial segment and $7.5 million (31 loans and leases) for the consumer segment as of September 30, 2021, and $311.6 million (210 loans and leases) for the commercial segment and $178.1 million (1,920 loans and leases) for the consumer segment as of December 31, 2020.

Foreclosure Proceedings

Consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure totaled $1.5 million as of September 30, 2021.