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Loans and Leases
 6 Months Ended
Jun. 30, 2020
Loans and Leases Receivable Disclosure [Abstract]  
Loans and Leases LOANS AND LEASES
BancShares’ accounting methods for loans and leases depends on whether they are originated or purchased, and if purchased, whether or not the loans reflect more than insignificant credit deterioration since origination, which is determined as of the acquisition date. Non-PCD loans consist of loans originated by BancShares and loans purchased from other institutions, that do not reflect more than insignificant credit deterioration at acquisition and are reported by loan segments and classes as defined in Note A - Accounting Polices and Basis of Presentation. Purchased loans which reflect more than insignificant credit deterioration are classified as PCD and reported as a single loan segment or class. At the date of acquisition, all acquired loans are recorded at fair value.
Loans and leases outstanding included the following at June 30, 2020 and December 31, 2019:
(Dollars in thousands)June 30, 2020
Commercial:
Construction and land development$1,012,365  
Owner occupied commercial mortgage10,352,793  
Non-owner occupied commercial mortgage3,056,328  
Commercial and industrial and leases4,650,839  
SBA-PPP3,084,549  
Total commercial loans22,156,874  
Consumer:
Residential mortgage5,404,682  
Revolving mortgage2,233,977  
Construction and land development353,382  
Consumer auto1,195,771  
Consumer other543,088  
Total consumer loans9,730,900  
Total non-PCD loans and leases31,887,774  
PCD loans530,651  
Total loans and leases$32,418,425  
(Dollars in thousands)December 31, 2019
Commercial:
Construction and land development$1,013,454  
Commercial mortgage12,282,635  
Other commercial real estate542,028  
Commercial and industrial and leases4,403,792  
Other310,093  
Total commercial loans18,552,002  
Noncommercial:
Residential mortgage5,293,917  
Revolving mortgage2,339,072  
Construction and land development357,385  
Consumer1,780,404  
Total noncommercial loans9,770,778  
Total non-PCI loans and leases28,322,780  
PCI loans558,716  
Total loans and leases$28,881,496  
Accrued interest receivable on loans at June 30, 2020 was $139.8 million and was excluded from the estimate of credit losses. Management reviewed this policy election during the second quarter of 2020 due to the increase in accrued interest receivable and concluded the policy election remained appropriate.
At June 30, 2020, $11.78 billion in non-PCD loans with a lendable collateral value of $8.52 billion were used to secure $653.7 million in Federal Home Loan Bank (“FHLB”) of Atlanta advances, resulting in additional borrowing capacity of $7.86 billion. At December 31, 2019, $9.41 billion in non-PCD loans with a lendable collateral value of $6.57 billion were used to secure $563.7 million in FHLB of Atlanta advances, resulting in additional borrowing capacity of $6.01 billion. At June 30, 2020, $3.93 billion in non-PCD loans with a lendable collateral value of $3.14 billion were used to secure additional borrowing capacity at the Federal Reserve Bank (“FRB”). At December 31, 2019, $3.68 billion in non-PCD loans with a lendable collateral value of $2.98 billion were used to secure additional borrowing capacity at the FRB.
Certain residential real estate loans are originated to be sold to investors and are recorded in loans held for sale at fair value. In addition, we may change our strategy for certain portfolio loans and decide to sell them in the secondary market. At that time, portfolio loans are transferred to loans held for sale at fair value. Loans held for sale totaled $107.9 million and $67.9 million at June 30, 2020 and December 31, 2019, respectively.
Net deferred fees on non-PCD loans and leases, including unearned and unamortized costs and fees, were $100.7 million and $927 thousand at June 30, 2020 and December 31, 2019, respectively. Of the amount outstanding as of June 30, 2020, $96.6 million relates to net deferred fees and costs on SBA-PPP loans. The net unamortized discount related to purchased non-PCD loans and leases was $25.8 million at June 30, 2020 and $30.9 million at December 31, 2019. The net unamortized discount related to PCD loans and leases was $54.7 million at June 30, 2020 and $88.2 million at December 31, 2019.
The aging of the outstanding loans and leases, by class, at June 30, 2020 and December 31, 2019 is provided in the tables below. Loans and leases past due 30 days or less are considered current as various grace periods allow borrowers to make payments within a stated period after the due date and still remain in compliance with the loan agreement.
June 30, 2020
(Dollars in thousands)30-59 days
past due		60-89 days
past due		90 days or greaterTotal past
due		CurrentTotal loans
and leases
Commercial:
Construction and land development$1,618  $14  $1,721  $3,353  $1,009,012  $1,012,365  
Owner occupied commercial mortgage14,360  2,518  12,820  29,698  10,323,095  10,352,793  
Non-owner occupied commercial mortgage7,914  982  8,520  17,416  3,038,912  3,056,328  
Commercial and industrial and leases10,464  3,196  4,215  17,875  4,632,964  4,650,839  
SBA-PPP—  —  —  —  3,084,549  3,084,549  
Total commercial loans34,356  6,710  27,276  68,342  22,088,532  22,156,874  
Consumer:
Residential mortgage25,243  7,082  35,044  67,369  5,337,313  5,404,682  
Revolving mortgage8,874  4,615  9,006  22,495  2,211,482  2,233,977  
Construction and land development 1,735  127  57  1,919  351,463  353,382  
Consumer auto3,093  1,124  976  5,193  1,190,578  1,195,771  
Consumer other2,433  1,691  1,835  5,959  537,129  543,088  
Total consumer loans41,378  14,639  46,918  102,935  9,627,965  9,730,900  
PCD loans18,850  4,694  33,483  57,027  473,624  530,651  
Total loans and leases$94,584  $26,043  $107,677  $228,304  $32,190,121  $32,418,425  
December 31, 2019
(Dollars in thousands)30-59 days
past due		60-89 days
past due		90 days or greaterTotal past
due		CurrentTotal loans
and leases
Commercial:
Construction and land development$3,146  $195  $2,702  $6,043  $1,007,411  $1,013,454  
Commercial mortgage20,389  8,774  8,319  37,482  12,245,153  12,282,635  
Other commercial real estate861  331  698  1,890  540,138  542,028  
Commercial and industrial and leases18,269  4,842  5,032  28,143  4,375,649  4,403,792  
Other51  411  126  588  309,505  310,093  
Total commercial loans42,716  14,553  16,877  74,146  18,477,856  18,552,002  
Noncommercial:
Residential mortgage45,839  18,289  24,409  88,537  5,205,380  5,293,917  
Revolving mortgage9,729  3,468  9,865  23,062  2,316,010  2,339,072  
Construction and land development 977  218  1,797  2,992  354,393  357,385  
Consumer10,481  3,746  3,571  17,798  1,762,606  1,780,404  
Total noncommercial loans67,026  25,721  39,642  132,389  9,638,389  9,770,778  
PCI loans26,478  10,784  28,973  66,235  492,481  558,716  
Total loans and leases$136,220  $51,058  $85,492  $272,770  $28,608,726  $28,881,496  
The amortized cost, by class, of loans and leases on nonaccrual status, and loans and leases greater than 90 days past due and still accruing at June 30, 2020 and December 31, 2019, were as follows:
 
January 1, 2020(1)
June 30, 2020
(Dollars in thousands)Nonaccrual
loans and
leases		Nonaccrual
loans and
leases		Loans and
leases > 90
days and
accruing
Commercial:
Construction and land development$4,281  $2,938  $69  
Owner occupied commercial mortgage24,476  28,283  111  
Non-owner occupied commercial mortgage5,965  8,491  615  
Commercial and industrial and leases7,685  7,239  1,399  
Total commercial loans42,407  46,951  2,194  
Consumer:
Residential mortgage44,357  59,352  —  
Revolving mortgage22,411  23,600  —  
Construction and land development2,828  1,699  —  
Consumer auto2,145  2,677  —  
Consumer other798  1,001  1,450  
Total consumer loans72,539  88,329  1,450  
PCD loans53,771  62,511  152  
Total loans and leases$168,717  $197,791  $3,796  
(1)Upon the adoption of ASC 326, BancShares eliminated the pooling of PCI loans and as a result $47.0 million in additional PCD loans were recognized as nonaccrual loans at January 1, 2020. As of June 30, 2020, $35.9 million of these loans remained outstanding.
 December 31, 2019
(Dollars in thousands)Nonaccrual
loans and
leases		Loans and
leases > 90
days and
accruing
Commercial:
Construction and land development$4,281  $—  
Commercial mortgage29,733  —  
Commercial and industrial and leases7,365  1,094  
Other commercial real estate708  —  
Other320  —  
Total commercial loans42,407  1,094  
Noncommercial:
Construction and land development2,828  —  
Residential mortgage44,357  45  
Revolving mortgage22,411  —  
Consumer2,943  2,152  
Total noncommercial loans72,539  2,197  
PCI loans6,743  24,257  
Total loans and leases$121,689  $27,548  
Credit Quality
Loans and leases are monitored for credit quality on a recurring basis. Commercial and consumer loans and leases have different credit quality indicators as a result of the unique characteristics of the loan segments being evaluated. The credit quality indicators for commercial loans and leases are borrower risk classifications developed through a review of individual borrowers on an ongoing basis. Commercial loans are evaluated at least annually, with more frequent evaluations done on criticized loans. Commercial loans are also updated if there is evidence of potential credit deterioration, such as delinquency. Commercial credit cards are included in the Commercial and industrial and leases segment, but are evaluated based primarily upon delinquency status. The risk classifications as of the date presented are based on the most recent assessment performed and are defined below:
Pass – A pass rated asset is not adversely classified because it does not display any of the characteristics for adverse classification.
Special mention – A special mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, such potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and do not warrant adverse classification.
Substandard – A substandard asset is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Assets classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These assets are characterized by the distinct possibility of loss if the deficiencies are not corrected.
Doubtful – An asset classified as doubtful has all the weaknesses inherent in an asset classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently existing facts, conditions and values.
Loss – Assets classified as loss are considered uncollectible and of such little value that it is inappropriate to be carried as an asset. This classification is not necessarily equivalent to any potential for recovery or salvage value, but rather that it is not appropriate to defer a full charge-off even though partial recovery may be affected in the future.
Ungraded – Ungraded loans represent loans that are not included in the individual credit grading process due to their relatively small balances or borrower type. The majority of ungraded loans at June 30, 2020 relate to business credit cards. Business credit card loans are subject to automatic charge-off when they become 120 days past due in the same manner as unsecured consumer lines of credit. The remaining balance is comprised of a small amount of commercial mortgage, lease financing and other commercial real estate loans.
The credit quality indicators for consumer and PCD loans are based on delinquency status of the borrower as of the date presented. As the borrower becomes more delinquent, the likelihood of loss increases.
The following tables represent current credit quality indicators by origination year as of June 30, 2020.
Commercial Loans Amortized Cost Basis by Origination Year
Classification:20202019201820172016PriorRevolvingRevolving converted to term loansTotal
(Dollars in thousands)
Construction and land development
Pass$175,302  $404,898  $217,555  $132,753  $31,599  $14,453  $25,141  $—  $1,001,701  
Special Mention88  —  334  5,507  —  93  —  —  6,022  
Substandard1,405  1,221  1,813  29  8  166  —  —  4,642  
Total176,795  406,119  219,702  138,289  31,607  14,712  25,141  —  1,012,365  
Owner occupied commercial mortgage
Pass1,345,296  2,218,595  1,850,128  1,452,273  1,203,335  1,943,057  106,274  137  10,119,095  
Special Mention2,296  11,164  29,941  13,089  17,795  30,315  2,742  —  107,342  
Substandard9,186  12,309  16,886  24,063  14,255  40,331  9,254  72  126,356  
Total1,356,778  2,242,068  1,896,955  1,489,425  1,235,385  2,013,703  118,270  209  10,352,793  
Non-owner occupied commercial mortgage
Pass380,269  685,067  490,693  452,152  360,096  595,139  36,723  —  3,000,139  
Special Mention—  2,048  20,236  872  5,885  7,658  787  —  37,486  
Substandard1,237  1,094  3,653  1,642  6,513  3,085  1,479  —  18,703  
Total381,506  688,209  514,582  454,666  372,494  605,882  38,989  —  3,056,328  
Commercial and industrial and leases
Pass750,806  1,207,639  630,297  401,635  301,561  401,284  805,691  5,565  4,504,478  
Special Mention1,431  3,426  6,387  5,534  3,159  2,518  13,928  243  36,626  
Substandard11,847  3,794  4,323  5,608  2,790  4,941  22,084  696  56,083  
Doubtful—  —  39  —  —  —  2  —  41  
Ungraded—  —  —  —  —  —  53,611  —  53,611  
Total764,084  1,214,859  641,046  412,777  307,510  408,743  895,316  6,504  4,650,839  
SBA-PPP
Pass3,084,549  —  —  —  —  —  —  —  3,084,549  
Total3,084,549  —  —  —  —  —  —  —  3,084,549  
Total commercial$5,763,712  $4,551,255  $3,272,285  $2,495,157  $1,946,996  $3,043,040  $1,077,716  $6,713  $22,156,874  
Consumer and PCD Loans Amortized Cost Basis by Origination Year
Days Past Due:20202019201820172016PriorRevolvingRevolving converted to term loansTotal
(Dollars in thousands)
Residential mortgage
Current$891,796  $1,105,486  $837,530  $755,457  $591,255  $1,132,116  $23,673  $—  $5,337,313  
30-59 days488  2,760  2,985  4,612  2,594  11,685  119  —  25,243  
60-89 days26  158  326  265  1,851  4,456  —  —  7,082  
90 days or greater23  738  5,815  6,054  6,203  13,239  2,972  —  35,044  
Total892,333  1,109,142  846,656  766,388  601,903  1,161,496  26,764  —  5,404,682  
Revolving mortgage
Current—  —  —  —  —  —  2,054,864  156,618  2,211,482  
30-59 days—  —  —  —  —  —  4,622  4,252  8,874  
60-89 days—  —  —  —  —  —  452  4,163  4,615  
90 days or greater—  —  —  —  —  —  3,150  5,856  9,006  
Total—  —  —  —  —  —  2,063,088  170,889  2,233,977  
Construction and land development
Current88,063  174,326  52,270  16,909  8,123  7,881  3,891  —  351,463  
30-59 days245  1,312  91  —  —  87  —  —  1,735  
60-89 days—  —  —  11  —  116  —  —  127  
90 days or greater—  —  —  —  —  57  —  —  57  
Total88,308  175,638  52,361  16,920  8,123  8,141  3,891  —  353,382  
Consumer auto
Current245,264  421,363  284,557  142,512  74,782  22,100  —  —  1,190,578  
30-59 days172  1,070  654  710  319  168  —  —  3,093  
60-89 days75  432  239  215  132  31  —  —  1,124  
90 days or greater22  312  306  206  76  54  —  —  976  
Total245,533  423,177  285,756  143,643  75,309  22,353  —  —  1,195,771  
Consumer other
Current27,655  40,769  17,093  9,585  10,595  31,275  400,157  —  537,129  
30-59 days78  33  79  31  13  22  2,177  —  2,433  
60-89 days31  67  70  —  5  —  1,518  —  1,691  
90 days or greater1  97  5  —  74  —  1,658  —  1,835  
Total27,765  40,966  17,247  9,616  10,687  31,297  405,510  —  543,088  
Total consumer$1,253,939  $1,748,923  $1,202,020  $936,567  $696,022  $1,223,287  $2,499,253  $170,889  $9,730,900  
PCD loans
Current$21,462  $28,900  $32,863  $39,973  $33,294  $278,266  $14,999  $23,867  $473,624  
30-59 days1,005  546  199  132  808  15,591  182  387  18,850  
60-89 days117  141  37  34  —  3,669  72  624  4,694  
90 days or greater454  3,075  8,152  1,469  1,101  17,135  516  1,581  33,483  
Total$23,038  $32,662  $41,251  $41,608  $35,203  $314,661  $15,769  $26,459  $530,651  
Total loans and leases$7,040,689  $6,332,840  $4,515,556  $3,473,332  $2,678,221  $4,580,988  $3,592,738  $204,061  $32,418,425  
Loans and leases outstanding at December 31, 2019 by credit quality indicator are provided below:
December 31, 2019
Commercial loans and leases
(Dollars in thousands)Construction and land
development		Commercial mortgageOther commercial real estateCommercial and industrial and leasesOtherPCITotal commercial loans and leases
Grade:
Pass$1,004,922  $12,050,799  $536,682  $4,256,456  $308,796  $148,412  $18,157,655  
Special mention2,577  115,164  3,899  44,604  622  44,290  166,866  
Substandard5,955  116,672  1,447  34,148  675  87,970  158,897  
Doubtful—  —  —  3  —  3,657  3  
Ungraded—  —  —  68,581  —  —  68,581  
Total$1,013,454  $12,282,635  $542,028  $4,403,792  $310,093  $284,329  $18,552,002  
December 31, 2019
Noncommercial loans and leases
(Dollars in thousands)Residential mortgageRevolving mortgageConstruction and land development ConsumerPCITotal noncommercial loans and leases
Days past due:
Current$5,205,380  $2,316,010  $354,393  $1,762,606  $240,995  $9,638,389  
30-59 days past due45,839  9,729  977  10,481  13,764  67,026  
60-89 days past due18,289  3,468  218  3,746  5,608  25,721  
90 days or greater past due24,409  9,865  1,797  3,571  14,020  39,642  
Total$5,293,917  $2,339,072  $357,385  $1,780,404  $274,387  $9,770,778  
Purchased loans and leases
The following table summarizes PCD loans acquired in the Community Financial transaction and provides the contractually required payments, less the initial allowance for credit losses and discount to produce the fair value of acquired loans with evidence of more than insignificant credit quality deterioration since origination at the acquisition date:
(Dollars in thousands)Community Financial
Contractually required payments$25,635  
Initial PCD allowance1,193  
Discount1,055  
Fair value at acquisition date$23,387  
The recorded fair values of purchased non-PCD loans acquired in the Community Financial transaction as of the acquisition date are as follows:
(Dollars in thousands)Community Financial
Commercial:
Construction and land development$9,428  
Owner occupied commercial mortgage31,473  
Non-owner occupied commercial mortgage25,143  
Commercial and industrial and leases15,065  
Total commercial loans81,109  
Consumer:
Residential mortgage21,168  
Revolving mortgage2,084  
Construction and land development5,254  
Consumer auto294  
Consumer other693  
Total consumer loans29,493  
Total non-PCD loans$110,602