Loans and Leases

6 Months Ended

Jun. 30, 2021

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-purchased credit deteriorated (“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. 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, 2021 and December 31, 2020:

(Dollars in thousands)	June 30, 2021		December 31, 2020
Commercial:
Construction and land development	$	1,183,929	$	985,424
Owner occupied commercial mortgage	11,526,070		11,165,012
Non-owner occupied commercial mortgage	3,015,329		2,987,689
Commercial and industrial and leases	5,067,163		5,013,644
SBA-PPP	1,698,416		2,406,291
Total commercial loans	22,490,907		22,558,060
Consumer:
Residential mortgage	5,652,458		5,561,686
Revolving mortgage	1,884,633		2,052,854
Construction and land development	376,492		348,123
Consumer auto	1,287,541		1,255,402
Consumer other	601,115		552,968
Total consumer loans	9,802,239		9,771,033
PCD loans	396,506		462,882
Total loans and leases	$	32,689,652	$	32,791,975

At June 30, 2021 and December 31, 2020, accrued interest receivable on loans was $91.0 million and $107.7 million, respectively, and was excluded from the estimate of credit losses.

Certain residential real estate loans are originated to be sold to investors. BancShares has elected the fair value option on these loans, which are recorded in loans held for sale. In addition, BancShares may change its 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 the lower of cost or market value. Loans held for sale totaled $107.8 million and $124.8 million at June 30, 2021 and December 31, 2020, respectively.

The following table presents selected components of the amortized cost of loans.

(Dollars in thousands)	June 30, 2021		December 31, 2020
Deferred fees, including unearned fees and unamortized costs on non-PCD loans
Net deferred fees related to SBA-PPP loans	$	54,855	$	41,064
Net deferred fees related to other portfolios	14,170		9,153
Total net deferred fees	$	69,025	$	50,217
Net unamortized discount on purchased loans
Non-PCD	$	14,502	$	19,473
PCD	35,806		45,254
Total	$	50,308	$	64,727

The aging of the outstanding loans and leases, by class, at June 30, 2021 and December 31, 2020 is provided in the tables below. Loans and leases past due less than 30 days 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, 2021
(Dollars in thousands)	30-59 days past due		60-89 days past due		90 days or greater		Total past due		Current		Total loans and leases
Commercial:
Construction and land development	$	2,049	$	—	$	2,342	$	4,391	$	1,179,538	$	1,183,929
Owner occupied commercial mortgage	11,258		4,071		10,759		26,088		11,499,982		11,526,070
Non-owner occupied commercial mortgage	5,356		3,659		3,353		12,368		3,002,961		3,015,329
Commercial and industrial and leases	11,809		3,370		7,219		22,398		5,044,765		5,067,163
SBA-PPP	—		—		—		—		1,698,416		1,698,416
Total commercial loans	30,472		11,100		23,673		65,245		22,425,662		22,490,907
Consumer:
Residential mortgage	15,387		5,605		23,988		44,980		5,607,478		5,652,458
Revolving mortgage	7,277		2,157		7,928		17,362		1,867,271		1,884,633
Construction and land development	684		69		127		880		375,612		376,492
Consumer auto	5,410		1,098		1,045		7,553		1,279,988		1,287,541
Consumer other	3,089		1,020		1,142		5,251		595,864		601,115
Total consumer loans	31,847		9,949		34,230		76,026		9,726,213		9,802,239
PCD loans	12,672		4,718		29,113		46,503		350,003		396,506
Total loans and leases	$	74,991	$	25,767	$	87,016	$	187,774	$	32,501,878	$	32,689,652
	December 31, 2020
(Dollars in thousands)	30-59 days past due		60-89 days past due		90 days or greater		Total past due		Current		Total loans and leases
Commercial:
Construction and land development	$	956	$	527	$	1,603	$	3,086	$	982,338	$	985,424
Owner occupied commercial mortgage	8,757		2,232		14,082		25,071		11,139,941		11,165,012
Non-owner occupied commercial mortgage	12,370		—		5,973		18,343		2,969,346		2,987,689
Commercial and industrial and leases	14,532		2,842		3,243		20,617		4,993,027		5,013,644
SBA-PPP	—		—		—		—		2,406,291		2,406,291
Total commercial loans	36,615		5,601		24,901		67,117		22,490,943		22,558,060
Consumer:
Residential mortgage	43,218		8,364		31,690		83,272		5,478,414		5,561,686
Revolving mortgage	11,977		2,626		7,415		22,018		2,030,836		2,052,854
Construction and land development	932		77		330		1,339		346,784		348,123
Consumer auto	6,825		1,835		1,076		9,736		1,245,666		1,255,402
Consumer other	3,610		1,464		1,505		6,579		546,389		552,968
Total consumer loans	66,562		14,366		42,016		122,944		9,648,089		9,771,033
PCD loans	18,322		6,076		31,026		55,424		407,458		462,882
Total loans and leases	$	121,499	$	26,043	$	97,943	$	245,485	$	32,546,490	$	32,791,975

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, 2021 and December 31, 2020, were as follows:

	June 30, 2021				December 31, 2020
(Dollars in thousands)	Nonaccrual loans and leases		Loans and leases > 90 days and accruing		Nonaccrual loans and leases		Loans and leases > 90 days and accruing
Commercial:
Construction and land development	$	1,574	$	816	$	1,661	$	—
Owner occupied commercial mortgage	24,695		1,226		23,103		3,625
Non-owner occupied commercial mortgage	7,149		—		7,932		147
Commercial and industrial and leases	24,082		466		10,626		540
Total commercial loans	57,500		2,508		43,322		4,312
Consumer:
Residential mortgage	53,443		—		66,345		—
Revolving mortgage	21,143		—		22,236		—
Construction and land development	763		—		652		—
Consumer auto	3,192		—		3,166		—
Consumer other	489		905		823		1,195
Total consumer loans	79,030		905		93,222		1,195
PCD loans	50,934		363		54,939		355
Total loans and leases	$	187,464	$	3,776	$	191,483	$	5,862

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, 2021 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, 2021.

	June 30, 2021
	Commercial Loans Amortized Cost Basis by Origination Year
Classification:	2021		2020		2019		2018		2017		Prior		Revolving		Revolving converted to term loans		Total
(Dollars in thousands)
Construction and land development
Pass	$	222,124	$	441,299	$	281,357	$	165,495	$	47,101	$	13,659	$	4,395	$	—	$	1,175,430
Special Mention	20		218		—		146		72		—		138		—		594
Substandard	—		144		1,056		1,444		5,110		11		140		—		7,905
Total	222,144		441,661		282,413		167,085		52,283		13,670		4,673		—		1,183,929
Owner occupied commercial mortgage
Pass	1,420,375		3,123,179		2,090,297		1,417,269		1,105,141		2,009,482		104,492		116		11,270,351
Special Mention	782		25,052		28,380		33,575		11,938		27,394		3,030		72		130,223
Substandard	9,562		5,902		20,415		10,246		22,560		48,273		8,538		—		125,496
Total	1,430,719		3,154,133		2,139,092		1,461,090		1,139,639		2,085,149		116,060		188		11,526,070
Non-owner occupied commercial mortgage
Pass	312,438		801,110		584,899		300,019		298,984		576,807		32,061		—		2,906,318
Special Mention	783		647		855		10,678		832		2,818		500		—		17,113
Substandard	981		11,897		23,971		10,955		10,696		32,072		1,326		—		91,898
Total	314,202		813,654		609,725		321,652		310,512		611,697		33,887		—		3,015,329
Commercial and industrial and leases
Pass	815,211		1,272,974		798,870		397,616		220,881		392,573		988,180		5,214		4,891,519
Special Mention	2,003		9,274		22,326		5,867		4,587		5,746		7,268		192		57,263
Substandard	6,788		6,220		4,606		4,496		3,155		4,124		20,414		1,351		51,154
Doubtful	—		49		17		—		—		—		1		—		67
Ungraded	—		—		—		—		—		—		67,160		—		67,160
Total	824,002		1,288,517		825,819		407,979		228,623		402,443		1,083,023		6,757		5,067,163
SBA-PPP
Pass	1,157,721		540,695		—		—		—		—		—		—		1,698,416
Total commercial	$	3,948,788	$	6,238,660	$	3,857,049	$	2,357,806	$	1,731,057	$	3,112,959	$	1,237,643	$	6,945	$	22,490,907

	Consumer and PCD Loans Amortized Cost Basis by Origination Year
Days Past Due:	2021		2020		2019		2018		2017		Prior		Revolving		Revolving converted to term loans		Total
(Dollars in thousands)
Residential mortgage
Current	$	1,146,230	$	1,727,617	$	779,136	$	477,386	$	440,502	$	1,014,974	$	21,633	$	—	$	5,607,478
30-59 days	1,461		1,343		2,201		1,707		2,098		6,539		38		—		15,387
60-89 days	144		1,025		64		263		451		3,585		73		—		5,605
90 days or greater	—		237		1,694		1,544		3,370		17,143		—		—		23,988
Total	1,147,835		1,730,222		783,095		480,900		446,421		1,042,241		21,744		—		5,652,458
Revolving mortgage
Current	—		—		—		—		—		—		1,736,398		130,873		1,867,271
30-59 days	—		—		—		—		—		—		4,234		3,043		7,277
60-89 days	—		—		—		—		—		—		875		1,282		2,157
90 days or greater	—		—		—		—		—		—		4,245		3,683		7,928
Total	—		—		—		—		—		—		1,745,752		138,881		1,884,633
Construction and land development
Current	100,826		209,612		38,606		13,906		7,060		3,669		1,933		—		375,612
30-59 days	281		—		—		114		—		289		—		—		684
60-89 days	—		—		15		50		4		—		—		—		69
90 days or greater	—		—		—		—		—		127		—		—		127
Total	101,107		209,612		38,621		14,070		7,064		4,085		1,933		—		376,492
Consumer auto
Current	314,523		432,620		262,684		163,836		72,275		34,050		—		—		1,279,988
30-59 days	725		1,516		1,376		925		605		263		—		—		5,410
60-89 days	69		347		367		248		16		51		—		—		1,098
90 days or greater	—		365		415		177		78		10		—		—		1,045
Total	315,317		434,848		264,842		165,186		72,974		34,374		—		—		1,287,541
Consumer other
Current	78,465		38,660		19,115		6,668		5,481		31,966		415,509		—		595,864
30-59 days	12		127		91		25		26		120		2,688		—		3,089
60-89 days	18		22		25		1		—		—		954		—		1,020
90 days or greater	10		37		19		9		—		—		1,067		—		1,142
Total	78,505		38,846		19,250		6,703		5,507		32,086		420,218		—		601,115
Total consumer	$	1,642,764	$	2,413,528	$	1,105,808	$	666,859	$	531,966	$	1,112,786	$	2,189,647	$	138,881	$	9,802,239
PCD loans
Current	$	—	$	24,591	$	22,834	$	21,907	$	23,877	$	227,641	$	11,185	$	17,968	$	350,003
30-59 days	—		632		469		663		536		9,404		513		455		12,672
60-89 days	—		420		66		539		56		3,553		52		32		4,718
90 days or greater	—		732		2,199		3,433		1,637		19,988		81		1,043		29,113
Total PCD	$	—	$	26,375	$	25,568	$	26,542	$	26,106	$	260,586	$	11,831	$	19,498	$	396,506
Total loans and leases	$	5,591,552	$	8,678,563	$	4,988,425	$	3,051,207	$	2,289,129	$	4,486,331	$	3,439,121	$	165,324	$	32,689,652

The following tables represent current credit quality indicators by origination year as of December 31, 2020.

	December 31, 2020
	Commercial Loans Amortized Cost Basis by Origination Year
Classification:	2020		2019		2018		2017		2016		Prior		Revolving		Revolving converted to term loans		Total
(Dollars in thousands)
Construction and land development
Pass	$	342,183	$	341,233	$	190,429	$	50,776	$	23,969	$	11,306	$	10,969	$	—	$	970,865
Special Mention	246		—		6,421		5,342		—		—		153		—		12,162
Substandard	229		629		1,450		—		8		81		—		—		2,397
Total	342,658		341,862		198,300		56,118		23,977		11,387		11,122		—		985,424
Owner occupied commercial mortgage
Pass	3,183,467		2,201,165		1,625,141		1,301,412		1,049,858		1,454,020		101,556		133		10,916,752
Special Mention	6,274		20,702		36,739		12,387		17,699		25,693		5,115		72		124,681
Substandard	10,280		19,052		9,842		20,928		13,736		41,303		8,438		—		123,579
Total	3,200,021		2,240,919		1,671,722		1,334,727		1,081,293		1,521,016		115,109		205		11,165,012
Non-owner occupied commercial mortgage
Pass	865,514		609,975		378,136		331,800		282,810		391,517		32,149		—		2,891,901
Special Mention	569		905		10,794		1,808		5,121		3,279		483		—		22,959
Substandard	2,899		18,546		12,296		8,764		14,087		15,427		810		—		72,829
Total	868,982		629,426		401,226		342,372		302,018		410,223		33,442		—		2,987,689
Commercial and industrial and leases
Pass	1,620,622		983,852		504,463		310,468		234,735		286,996		899,978		5,520		4,846,634
Special Mention	3,146		17,065		7,265		5,393		3,307		4,912		9,152		189		50,429
Substandard	17,811		4,095		4,370		4,257		2,548		3,801		22,384		983		60,249
Ungraded	—		—		—		—		—		—		56,332		—		56,332
Total	1,641,579		1,005,012		516,098		320,118		240,590		295,709		987,846		6,692		5,013,644
SBA-PPP
Pass	2,406,291		—		—		—		—		—		—		—		2,406,291
Total commercial	$	8,459,531	$	4,217,219	$	2,787,346	$	2,053,335	$	1,647,878	$	2,238,335	$	1,147,519	$	6,897	$	22,558,060

	Consumer and PCD Loans Amortized Cost Basis by Origination Year
Days Past Due:	2020		2019		2018		2017		2016		Prior		Revolving		Revolving converted to term loans		Total
(Dollars in thousands)
Residential mortgage
Current	$	1,882,683	$	978,298	$	655,798	$	596,309	$	461,719	$	878,634	$	24,973	$	—	$	5,478,414
30-59 days	2,278		4,573		11,463		3,772		8,613		12,299		220		—		43,218
60-89 days	30		100		1,246		1,449		834		4,705		—		—		8,364
90 days or greater	282		4,831		3,150		4,015		5,689		13,723		—		—		31,690
Total	1,885,273		987,802		671,657		605,545		476,855		909,361		25,193		—		5,561,686
Revolving mortgage
Current	—		—		—		—		—		—		1,879,968		150,868		2,030,836
30-59 days	—		—		—		—		—		—		8,241		3,736		11,977
60-89 days	—		—		—		—		—		—		527		2,099		2,626
90 days or greater	—		—		—		—		—		—		2,301		5,114		7,415
Total	—		—		—		—		—		—		1,891,037		161,817		2,052,854
Construction and land development
Current	215,112		85,707		24,860		10,269		6,093		2,218		2,525		—		346,784
30-59 days	—		420		121		370		—		21		—		—		932
60-89 days	—		—		—		9		—		68		—		—		77
90 days or greater	—		—		—		—		—		330		—		—		330
Total	215,112		86,127		24,981		10,648		6,093		2,637		2,525		—		348,123
Consumer auto
Current	521,719		340,594		219,597		104,280		49,872		9,604		—		—		1,245,666
30-59 days	2,175		1,873		1,257		842		544		134		—		—		6,825
60-89 days	329		689		312		351		109		45		—		—		1,835
90 days or greater	170		527		217		57		102		3		—		—		1,076
Total	524,393		343,683		221,383		105,530		50,627		9,786		—		—		1,255,402
Consumer other
Current	53,842		27,117		10,911		7,159		2,980		29,336		415,044		—		546,389
30-59 days	322		114		77		18		11		7		3,061		—		3,610
60-89 days	102		20		13		18		3		23		1,285		—		1,464
90 days or greater	53		84		8		—		—		—		1,360		—		1,505
Total	54,319		27,335		11,009		7,195		2,994		29,366		420,750		—		552,968
Total consumer	$	2,679,097	$	1,444,947	$	929,030	$	728,918	$	536,569	$	951,150	$	2,339,505	$	161,817	$	9,771,033
PCD loans
Current	$	31,475	$	25,425	$	27,183	$	27,955	$	28,995	$	232,186	$	13,212	$	21,027	$	407,458
30-59 days	999		925		801		718		1,341		12,637		156		745		18,322
60-89 days	447		81		312		695		97		4,098		9		337		6,076
90 days or greater	721		2,325		4,755		1,208		897		19,963		111		1,046		31,026
Total PCD	$	33,642	$	28,756	$	33,051	$	30,576	$	31,330	$	268,884	$	13,488	$	23,155	$	462,882
Total loans and leases	$	11,172,270	$	5,690,922	$	3,749,427	$	2,812,829	$	2,215,777	$	3,458,369	$	3,500,512	$	191,869	$	32,791,975

The following table provides information regarding loans pledged as collateral for borrowing capacity through the FHLB of Atlanta and the Federal Reserve Bank (“FRB”) as of June 30, 2021 and December 31, 2020:

(Dollars in thousands)	June 30, 2021		December 31, 2020
FHLB of Atlanta
Lendable collateral value of pledged non-PCD loans	$	8,900,711	$	8,637,844
Less: Advances	646,667		652,675
Available borrowing capacity	$	8,254,044	$	7,985,169
Pledged non-PCD loans	$	12,498,810	$	12,157,153
FRB
Lendable collateral value of pledged non-PCD loans	$	3,532,492	$	3,321,762
Less: Advances	—		—
Available borrowing capacity	$	3,532,492	$	3,321,762
Pledged non-PCD loans	$	4,380,334	$	4,104,866