Loans, Allowance for Loan Losses and Allowance for Unfunded Credit Commitments (Tables)

3 Months Ended

Mar. 31, 2020

Receivables [Abstract]

Loans and Allowance for Loan Losses

The composition of loans at amortized cost basis broken out by risk-based segment at March 31, 2020 and December 31, 2019 is presented in the following table:

(Dollars in thousands)	March 31, 2020			December 31, 2019
Private equity/venture capital	$	18,868,875		$	17,696,794
Investor dependent:
Early stage	1,806,011			1,624,221
Mid stage	1,399,209			1,047,398
Later stage	2,031,490			1,663,576
Total investor dependent	5,236,710			4,335,195
Cash flow dependent:
Sponsor led buyout	2,121,007			2,185,497
Other	2,756,295			2,238,741
Total cash flow dependent	4,877,302			4,424,238
Private bank (4)	3,669,295			3,492,269
Balance sheet dependent	1,850,941			1,286,153
Premium wine (4)	1,056,927			1,062,264
Other (4)	408,035			867,723
Total loans (1) (2) (3)	$	35,968,085		$	33,164,636
Allowance for credit losses	(548,963		)	(304,924		)
Net loans	$	35,419,122		$	32,859,712

(1) Total loans at amortized cost is net of unearned income of $169 million and $163 million at March 31, 2020 and December 31, 2019, respectively.

(2) Included within our total loan portfolio are credit card loans of $339 million and $395 million at March 31, 2020 and December 31, 2019, respectively.

(3) Included within our total loan portfolio are construction loans of $174 million and $183 million at March 31, 2020 and December 31, 2019, respectively.

(4)     Our total loans secured by real estate at amortized cost at March 31, 2020 and December 31, 2019 were comprised of the following:

(Dollars in thousands)	March 31, 2020		December 31, 2019
Real estate secured loans:
Private bank:
Loans for personal residence	$	2,644,842	$	2,829,880
Loans to eligible employees	416,287		401,396
Home equity lines of credit	61,749		55,461
Other	26,591		38,880
Total private bank loans secured by real estate	$	3,149,469	$	3,325,617
Premium wine	762,460		820,730
Total real estate secured loans	$	3,911,929	$	4,146,347

Composition of Loans, Net of Unearned Income, Broken Out by Portfolio Segment and Class of Financing Receivable

The following table summarizes the credit quality indicators, broken out by risk-based segment, as of March 31, 2020 and December 31, 2019:

(Dollars in thousands)	Pass		Criticized		Nonperforming (Nonaccrual)		Total
March 31, 2020:
Private equity/venture capital	$	18,868,764	$	111	$	—	$	18,868,875
Investor dependent:
Early stage	1,588,307		199,290		18,414		1,806,011
Mid stage	1,224,481		162,548		12,180		1,399,209
Later stage	1,786,063		230,984		14,443		2,031,490
Total investor dependent	4,598,851		592,822		45,037		5,236,710
Cash flow dependent:
Sponsor led buyout	1,952,061		168,946		—		2,121,007
Other	2,590,162		166,120		13		2,756,295
Total cash flow dependent	4,542,223		335,066		13		4,877,302
Private bank	3,639,776		24,662		4,857		3,669,295
Balance sheet dependent	1,725,273		125,668		—		1,850,941
Premium wine	999,373		56,854		700		1,056,927
Other	407,943		92		—		408,035
Total loans (1)	$	34,782,203	$	1,135,275	$	50,607	$	35,968,085
December 31, 2019:
Private equity/venture capital	$	17,708,550	$	4,247	$	—	$	17,712,797
Investor dependent
Early stage	1,436,022		206,310		11,093		1,653,425
Mid stage	924,002		125,451		17,330		1,066,783
Later stage	1,490,561		201,819		6,296		1,698,676
Total investor dependent	3,850,585		533,580		34,719		4,418,884
Cash flow dependent
Sponsor led buyout	2,039,847		118,588		44,585		2,203,020
Other	2,141,766		93,400		17,681		2,252,847
Total cash flow dependent	4,181,613		211,988		62,266		4,455,867
Private bank	3,472,138		11,601		5,480		3,489,219
Balance sheet dependent	1,231,961		65,343		—		1,297,304
Premium wine	1,026,973		36,335		204		1,063,512
Other	890,059		62		—		890,121
Total loans (1)	$	32,361,879	$	863,156	$	102,669	$	33,327,704

(1)

For the quarter ended March 31, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

Credit Quality Indicators, Broken out by Portfolio Segment and Class of Financing Receivables

The following table summarizes the credit quality indicators, broken out by risk-based segments and vintage year, as of March 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
Private equity/venture capital:
Risk rating:
Pass	$	167,852	$	249,214	$	92,652	$	41,912	$	3,990	$	18,241	$	18,294,903	$	—	$	18,868,764
Criticized	35		—		—		—		—		—		76		—		111
Nonperforming	—		—		—		—		—		—		—		—		—
Total private equity/venture capital	$	167,887	$	249,214	$	92,652	$	41,912	$	3,990	$	18,241	$	18,294,979	$	—	$	18,868,875
Investor dependent:
Early stage:
Risk rating:
Pass	$	348,538	$	764,930	$	260,849	$	86,592	$	12,760	$	3,460	$	111,178	$	—	$	1,588,307
Criticized	8,754		83,587		56,641		21,632		5,396		5,868		17,412		—		199,290
Nonperforming	—		4,995		8,875		3,337		—		—		1,207		—		18,414
Total early stage	$	357,292	$	853,512	$	326,365	$	111,561	$	18,156	$	9,328	$	129,797	$	—	$	1,806,011
Mid stage:
Risk rating:
Pass	$	304,548	$	375,482	$	267,047	$	77,566	$	10,772	$	3,278	$	185,788	$	—	$	1,224,481
Criticized	9,107		54,142		45,109		14,991		11,232		5,024		22,943		—		162,548
Nonperforming	—		—		5,586		6,342		—		—		252		—		12,180
Total mid stage	$	313,655	$	429,624	$	317,742	$	98,899	$	22,004	$	8,302	$	208,983	$	—	$	1,399,209
Later stage:
Risk rating:
Pass	$	220,075	$	696,219	$	259,592	$	104,208	$	76	$	13,203	$	492,690	$	—	$	1,786,063
Criticized	20,335		64,324		67,783		24,105		—		1,901		52,536		—		230,984
Nonperforming	—		1,521		5,820		4,153		—		—		2,949		—		14,443
Total later stage	$	240,410	$	762,064	$	333,195	$	132,466	$	76	$	15,104	$	548,175	$	—	$	2,031,490
Total investor dependent	$	911,357	$	2,045,200	$	977,302	$	342,926	$	40,236	$	32,734	$	886,955	$	—	$	5,236,710
Cash flow dependent:
Sponsor led buyout:
Risk rating:
Pass	$	204,305	$	756,752	$	436,654	$	276,232	$	68,412	$	19,703	$	190,003	$	—	$	1,952,061
Criticized	—		29,696		85,125		32,173		11,979		—		9,973		—		168,946
Nonperforming	—		—		—		—		—		—		—		—		—
Total sponsor led buyout	$	204,305	$	786,448	$	521,779	$	308,405	$	80,391	$	19,703	$	199,976	$	—	$	2,121,007
Other
Risk rating:
Pass	$	232,375	$	710,823	$	235,585	$	122,748	$	43,198	$	542	$	1,244,891	$	—	$	2,590,162
Criticized	4		16,649		40,183		5,226		63		—		103,995		—		166,120
Nonperforming	—		—		2		—		—		—		11		—		13
Total other	$	232,379	$	727,472	$	275,770	$	127,974	$	43,261	$	542	$	1,348,897	$	—	$	2,756,295
Total cash flow dependent	$	436,684	$	1,513,920	$	797,549	$	436,379	$	123,652	$	20,245	$	1,548,873	$	—	$	4,877,302
Private bank:
Risk rating:
Pass	$	200,593	$	1,106,485	$	477,055	$	472,672	$	439,552	$	603,906	$	276,109	$	63,404	$	3,639,776
Criticized	—		7,381		—		2,416		2,502		11,756		607		—		24,662
Nonperforming	—		—		—		1,588		—		1,181		2,088		—		4,857
Total private bank	$	200,593	$	1,113,866	$	477,055	$	476,676	$	442,054	$	616,843	$	278,804	$	63,404	$	3,669,295

Balance sheet dependent:
Risk rating:
Pass	$	136,803	$	215,264	$	228,831	$	48,144	$	13,280	$	—	$	1,082,951	$	—	$	1,725,273
Criticized	—		14,458		3,107		15,970		—		—		92,133		—		125,668
Nonperforming	—		—		—		—		—		—		—		—		—
Total balance sheet dependent	$	136,803	$	229,722	$	231,938	$	64,114	$	13,280	$	—	$	1,175,084	$	—	$	1,850,941
Premium wine:
Risk rating:
Pass	$	51,487	$	238,792	$	95,464	$	93,055	$	84,186	$	226,031	$	210,358	$	—	$	999,373
Criticized	—		8,437		14,371		361		5,005		6,055		22,625		—		56,854
Nonperforming	—		—		—		—		687		—		13		—		700
Total Premium wine	$	51,487	$	247,229	$	109,835	$	93,416	$	89,878	$	232,086	$	232,996	$	—	$	1,056,927
Other:
Risk rating:
Pass	$	15,595	$	211,972	$	60,016	$	30,963	$	60,151	$	29,246	$	—	$	—	$	407,943
Criticized	13		—		—		—		—		—		79		—		92
Nonperforming	—		—		—		—		—		—		—		—		—
Total other	$	15,608	$	211,972	$	60,016	$	30,963	$	60,151	$	29,246	$	79	$	—	$	408,035
Total loans	$	1,920,419	$	5,611,123	$	2,746,347	$	1,486,386	$	773,241	$	949,395	$	22,417,770	$	63,404	$	35,968,085

Activity in Allowance for Loan Losses Broken out by Portfolio Segment

The following tables summarize the activity relating to our allowance for credit losses for loans for the three months ended March 31, 2020 and 2019, broken out by risk-based segment:

Three months ended March 31, 2020	Beginning Balance December 31, 2019		Impact of adopting ASC 326			Charge-offs			Recoveries		Provision for (Reduction of) Credit Losses			Foreign Currency Translation Adjustments			Ending Balance March 31, 2020
(Dollars in thousands)
Private equity/venture capital	$	107,285	$	(69,888	)	$	—		$	—	$	19,557		$	(180	)	$	56,774
Investor dependent:
Early stage	26,245		39,911			(10,183		)	1,573		70,214			(571		)	127,189
Mid stage	15,936		6,963			(9,332		)	3,337		35,145			(87		)	51,962
Later stage	40,189		24,750			(13,984		)	—		46,038			(443		)	96,550
Total investor dependent	82,370		71,624			(33,499		)	4,910		151,397			(1,101		)	275,701
Cash flow dependent:
Sponsor led buyout	42,939		3,151			(2,624		)	2,845		(4,088		)	(132		)	42,091
Other	25,159		(3,056		)	—			—		17,438			(125		)	39,416
Total cash flow dependent	68,098		95			(2,624		)	2,845		13,350			(257		)	81,507
Private bank	21,551		12,615			(581		)	—		54,490			(280		)	87,795
Balance sheet dependent	12,722		(1,364		)	—			—		11,951			(74		)	23,235
Premium wine	5,296		3,650			(192		)	—		3,663			(40		)	12,377
Other	7,602		8,732			—			—		(5,507		)	747			11,574
Total allowance for credit losses	$	304,924	$	25,464		$	(36,896	)	$	7,755	$	248,901		$	(1,185	)	$	548,963

Three months ended March 31, 2019	Beginning Balance December 31, 2018		Charge-offs			Recoveries		Provision for (Reduction of) Credit Losses			Foreign Currency Translation Adjustments			Ending Balance March 31, 2019
(Dollars in thousands)
Private equity/venture capital	$	93,781	$	—		$	—	$	1,483		$	47		$	95,311
Investor dependent:
Early stage	25,885		(1,668		)	568		1,886			59			26,730
Mid stage	20,999		(6,516		)	3		22,957			720			38,163
Later stage	25,217		—			644		4,171			131			30,163
Total investor dependent	72,101		(8,184		)	1,215		29,014			910			95,056
Cash flow dependent:
Sponsor led buyout	44,274		—			—		(3,239		)	(102		)	40,933
Other	21,754		(716		)	—		(508		)	(16		)	20,514
Total cash flow dependent	66,028		(716		)	—		(3,747		)	(118		)	61,447
Private Bank	20,583		(59		)	210		(746		)	(24		)	19,964
Balance sheet dependent	21,707		—			—		(73		)	(2		)	21,632
Premium wine	3,646		—			—		294			9			3,949
Other	3,057		(41		)	—		(404		)	180			2,792
Total allowance for credit losses	$	280,903	$	(9,000	)	$	1,425	$	25,821		$	1,002		$	300,151

The following table summarizes the activity relating to our allowance for credit losses for unfunded credit commitments for the three months ended March 31, 2020 and 2019:

	Three months ended March 31,
(Dollars in thousands)	2020			2019
Allowance for credit losses: unfunded credit commitments, beginning balance	$	67,656		$	55,183
Impact of adopting ASC 326	22,826			—
(Reduction of) provision for credit losses	(5,477		)	2,730
Foreign currency translation adjustments	(315		)	57
Allowance for credit losses: unfunded credit commitments, ending balance (1)	$	84,690		$	57,970

(1)

The “allowance for credit losses: unfunded credit commitments” is included as a component of “other liabilities” on our unaudited interim consolidated balance sheets. See Note 15 — “Off-Balance Sheet Arrangements, Guarantees and Other Commitments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional disclosures related to our commitments to extend credit.

Financing Receivable, Past Due

The following table summarizes the aging of our loans broken out by risk-based segments as of March 31, 2020 and December 31, 2019:

(Dollars in thousands)	30 - 59   Days Past   Due		60 - 89   Days Past   Due		Equal to or Greater Than 90   Days Past   Due		Total Past   Due		Current		Total		Loans Past Due   90 Days or More Still Accruing Interest
March 31, 2020:
Private equity/venture capital	$	165,904	$	23	$	—	$	165,927	$	18,702,948	$	18,868,875	$	—
Investor dependent:
Early stage	8,750		1,231		3,487		13,468		1,792,543		1,806,011		1,499
Mid stage	5,556		192		1,667		7,415		1,391,794		1,399,209		1,667
Later stage	9,910		5,500		—		15,410		2,016,080		2,031,490		—
Total investor dependent	24,216		6,923		5,154		36,293		5,200,417		5,236,710		3,166
Cash flow dependent:
Sponsor led buyout	165		—		—		165		2,120,842		2,121,007		—
Other	1,186		722		—		1,908		2,754,387		2,756,295		—
Total cash flow dependent	1,351		722		—		2,073		4,875,229		4,877,302		—
Private bank	6,730		—		4,522		11,252		3,658,043		3,669,295		1,752
Balance sheet dependent	3,261		3,087		—		6,348		1,844,593		1,850,941		—
Premium wine	10,438		21,001		—		31,439		1,025,488		1,056,927		—
Other	677		—		—		677		407,358		408,035		—
Total loans (1)	$	212,577	$	31,756	$	9,676	$	254,009	$	35,714,076	$	35,968,085	$	4,918
December 31, 2019:
Private equity/venture capital	$	97,739	$	383	$	3,150	$	101,272	$	17,611,525	17,712,797		$	3,150
Investor dependent:
Early stage	1,307		22,062		723		24,092		1,629,333		1,653,425		—
Mid stage	10,025		6,999		—		17,024		1,049,759		1,066,783		—
Later stage	8,113		500		10,569		19,182		1,679,494		1,698,676		—
Total investor dependent	19,445		29,561		11,292		60,298		4,358,586		4,418,884		—
Cash flow dependent
Sponsor led buyout	—		—		—		—		2,203,020		2,203,020		—
Other	2,426		3,061		2		5,489		2,247,358		2,252,847		—
Total cash flow dependent	2,426		3,061		2		5,489		4,450,378		4,455,867		—
Private bank	6,582		2,049		1,544		10,175		3,479,044		3,489,219		365
Balance sheet dependent	2,731		—		—		2,731		1,294,573		1,297,304		—
Premium wine	8,435		3,170		—		11,605		1,051,907		1,063,512		—
Other	17		—		—		17		890,104		890,121		—
Total loans (1)	$	137,375	$	38,224	$	15,988	$	191,587	$	33,136,117	$	33,327,704	$	3,515

(1) For the quarter ended March 31, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

Financing Receivable, Nonaccrual

The following tables summarize our nonaccrual loan activity by risk-based segment for the three months ended March 31, 2020 and 2019:

Three months ended March 31, 2020	Beginning Balance December 31, 2019		Additions		Paydowns and Other Reductions			Charge-offs			Ending Balance March 31, 2020
(Dollars in thousands)
Private equity/venture capital	$	—	$	—	$	—		$	—		$	—
Investor dependent:
Early stage	11,093		12,343		(2,764		)	(2,258		)	18,414
Mid stage	17,330		12,091		(388		)	(16,853		)	12,180
Later stage	6,296		11,224		128			(3,205		)	14,443
Total investor dependent	34,719		35,658		(3,024		)	(22,316		)	45,037
Cash flow dependent:
Sponsor led buyout	44,585		—		(41,961		)	(2,624		)	—
Other	17,681		—		(17,650		)	(18		)	13
Total cash flow dependent	62,266		—		(59,611		)	(2,642		)	13
Private bank	5,480		—		(42		)	(581		)	4,857
Balance sheet dependent	—		—		—			—			—
Premium wine	204		688		—			(192		)	700
Other	—		—		—			—			—
Total nonaccrual loans (1)	$	102,669	$	36,346	$	(62,677	)	$	(25,731	)	$	50,607

(1) For the quarter ended March 31, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

Three months ended March 31, 2019	Beginning Balance December 31, 2018		Additions		Paydowns and Other Reductions			Charge-offs			Ending Balance March 31, 2019
(Dollars in thousands)
Private equity/venture capital	$	3,700	$	2,247	$	—		$	—		$	5,947
Investor dependent:
Early stage	7,616		4,433		(3,212		)	(140		)	8,697
Mid stage	4,751		32,099		(521		)	(4,230		)	32,099
Later stage	11,385		12,063		(308		)	—			23,140
Total investor dependent	23,752		48,595		(4,041		)	(4,370		)	63,936
Cash flow dependent:
Sponsor led buyout	39,534		—		(1,297		)	—			38,237
Other	17,156		—		—			(466		)	16,690
Total cash flow dependent	56,690		—		(1,297		)	(466		)	54,927
Private bank	3,919		15		(66		)	(59		)	3,809
Balance sheet dependent	5,004		—		(268		)	—			4,736
Premium wine	285		—		(17		)	—			268
Other	792		—		(792		)	—			—
Total nonaccrual loans (1)	$	94,142	$	50,857	$	(6,481	)	$	(4,895	)	$	133,623

(1) For the quarter ended March 31, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

The following table summarizes our nonaccrual loans with no allowance for credit loss at March 31, 2020 and December 31, 2019:

	March 31, 2020				December 31, 2019
(Dollars in thousands)	Nonaccrual Loans		Nonaccrual Loans with no Allowance for Credit Loss		Nonaccrual Loans		Nonaccrual Loans with no Allowance for Credit Loss
Private equity/venture capital	$	—	$	—	$	—	$	—
Investor dependent:
Early stage	18,414		1,562		11,093		460
Mid stage	12,180		261		17,330		274
Later stage	14,443		1,807		6,296		—
Total investor dependent	45,037		3,630		34,719		734
Cash flow dependent:
Sponsor led buyout	—		—		44,585		—
Other	13		—		17,681		2,782
Total cash flow dependent	13		—		62,266		2,782
Private bank	4,857		3,269		5,480		3,714
Balance sheet dependent	—		—		—		—
Premium wine	700		—		204		—
Other	—		—		—		—
Total nonaccrual loans (1)	$	50,607	$	6,899	$	102,669	$	7,230

 

(1)

For the quarter ended March 31, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

Summary of Loans Modified in Troubled Debt Restructurings ("TDRs") by Portfolio Segment and Class of Financing Receivables

The following table summarizes our loans modified in TDRs, broken out by risk-based segment, at March 31, 2020 and December 31, 2019:

(Dollars in thousands)	March 31, 2020		December 31, 2019
Loans modified in TDRs:
Private equity/venture capital	$	—	$	—
Investor dependent
Early stage	7,350		9,471
Mid stage	5,955		5,189
Later stage	8,272		23,318
Total investor dependent	21,577		37,978
Cash flow dependent
Sponsor led buyout	10,350		55,443
Other	—		—
Total cash flow dependent	10,350		55,443
Private bank	1,351		2,104
Balance sheet dependent	—		—
Premium wine	8,934		13,457
Other	—		—
Total loans modified in TDRs (1)	$	42,212	$	108,982

 

(1)

For the quarter ended March 31, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

Recorded Investment in Loans Modified in TDRs

The following table summarizes the recorded investment in loans modified in TDRs, broken out by risk-based segment, for modifications made during the three months ended March 31, 2020 and 2019:

	Three months ended March 31,
(Dollars in thousands)	2020		2019
Loans modified in TDRs during the period:
Private equity/venture capital	$	—	$	—
Investor dependent
Early stage	—		677
Mid stage	5,955		—
Later stage	2,769		—
Total investor dependent	8,724		677
Cash flow dependent
Sponsor led buyout	—		—
Other	—		5,000
Total cash flow dependent	—		5,000
Private bank	—		—
Balance sheet dependent	—		—
Premium wine	—		—
Other	—		—
Total loans modified in TDRs during the period (1) (2)	$	8,724	$	5,677

(1) For the quarter ended March 31, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

(2)

There were $12.5 million and $2.2 million of partial charge-offs for the three months ended March 31, 2020 and March 31, 2019, respectively.

Troubled Debt Restructurings On Financing Receivables Subsequently Defaulted Table

The following table summarizes the recorded investment in loans modified in TDRs within the previous 12 months that subsequently defaulted during the three months ended March 31, 2020 and 2019:

	Three months ended March 31,
(Dollars in thousands)	2020		2019
TDRs modified within the previous 12 months that defaulted during the period:
Private equity/venture capital	$	—	$	—
Investor dependent
Early stage	—		—
Mid stage	—		—
Later stage	—		—
Total investor dependent	—		—
Cash flow dependent
Sponsor led buyout	—		—
Other	—		5,000
Total cash flow dependent	—		5,000
Private bank	—		—
Balance sheet dependent	—		—
Premium wine	8,247		—
Other	—		—
Total TDRs modified within the previous 12 months that defaulted in the period (1)	$	8,247	$	5,000

 

(1)

For the quarter ended March 31, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.