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Loans and Allowances for Credit Losses
 9 Months Ended
Sep. 30, 2019
Loans and Leases Receivable, Net Amount [Abstract]  
Loans [Text Block] Loans and Allowances for Credit Losses

Loans

Loans are either secured or unsecured based on the type of loan and the financial condition of the borrower. Repayment is generally expected from cash flow or proceeds from the sale of selected assets of the borrower. BOK Financial is exposed to risk of loss on loans due to the borrower’s difficulties, which may arise from any number of factors, including problems within the respective industry or local economic conditions. Access to collateral, in the event of borrower default, is reasonably assured through adherence to applicable lending laws and through sound lending standards and credit review procedures. Accounting policies for all loans, excluding residential mortgage loans guaranteed by U.S. government agencies, are as follows.

Interest is accrued at the applicable interest rate on the principal amount outstanding. Loans are placed on nonaccruing status when, in the opinion of management, full collection of principal or interest is uncertain. Internally risk graded loans are individually evaluated for nonaccruing status quarterly. Non-risk graded loans are generally placed on nonaccruing status when more than 90 days past due or within 60 days of being notified of the borrower's bankruptcy filing. Interest previously accrued but not collected is charged against interest income when the loan is placed on nonaccruing status. Payments on nonaccruing loans are applied to principal or recognized as interest income, according to management’s judgment as to the collectability of principal. Loans may be returned to accruing status when, in the opinion of management, full collection of principal and interest, including principal previously charged off, is probable based on improvements in the borrower’s financial condition or a sustained period of performance.

Loans to borrowers experiencing financial difficulties may be modified in troubled debt restructurings ("TDRs"). Primarily all TDRs are classified as nonaccruing, excluding loans guaranteed by U.S. government agencies. Modifications generally consist of extension of payment terms or interest rate concessions and may result either voluntarily through negotiations with the borrower or involuntarily through court order. Generally, principal and accrued but unpaid interest is not voluntarily forgiven.

Performing loans may be renewed under the current collateral value, debt service ratio and other underwriting standards. Nonaccruing loans may be renewed and will remain classified as nonaccruing. 

Occasionally, loans, other than residential mortgage loans, may be held for sale in order to manage credit concentration. These loans are carried at the lower of cost or fair value with gains or losses recognized in other gains (losses), net in the Statements of Earnings.

All loans are charged off when the loan balance or a portion of the loan balance is no longer supported by the paying capacity of the borrower or when the required cash flow is reduced in a TDR. The charge-off amount is determined through a quarterly evaluation of available cash resources and collateral value and charge-offs are taken in the quarter in which the loss is identified. Non-risk graded loans that are past due between 60 days and 180 days, based on the loan product type, are charged off. Loans to borrowers whose personal obligation has been discharged through Chapter 7 bankruptcy proceedings are charged off within 60 days of notice of the bankruptcy filing, regardless of payment status.

Loan origination and commitment fees and direct loan acquisition and origination costs are deferred and amortized as an adjustment to yield over the life of the loan or over the commitment period, as applicable. Amortization does not anticipate loan prepayments. Net unamortized fees are recognized in full at time of payoff.

Qualifying residential mortgage loans guaranteed by U.S. government agencies have been sold into GNMA pools. Under certain performance conditions specified in government programs, the Company may have the right, but not the obligation to repurchase loans from GNMA pools. These loans no longer qualify for sale accounting and are recognized in the Consolidated Balance Sheets. Guaranteed loans are considered impaired because we do not expect to receive all principal and interest based on the loan's contractual terms. The original principal guarantee remains; however, interest accrues at a curtailed rate as specified in the programs. The carrying value of these loans is reduced based on an estimate of the expected cash flows discounted at the original note rate plus a liquidity spread. Guaranteed loans may be modified in TDRs in accordance with U.S. government agency guidelines. Interest continues to accrue based on the modified rate. Guaranteed loans may either be resold into GNMA pools after a performance period specified by the programs or foreclosed and conveyed to the guarantors.

Loans are disaggregated into portfolio segments and further disaggregated into classes. The portfolio segment is the level at which the Company develops and documents a systematic method for determining its allowance for credit losses. Classes are a further disaggregation of portfolio segments based on the risk characteristics of the loans and the Company’s method for monitoring and assessing credit risk. 

Portfolio segments of the loan portfolio are as follows (in thousands):

 
 
September 30, 2019
 
December 31, 2018
 
 
Fixed
Rate
 
Variable
Rate
 
Non-accrual
 
Total
 
Fixed
Rate
 
Variable
Rate
 
Non-accrual
 
Total
Commercial
 
$
3,184,237

 
$
11,128,682

 
$
111,706

 
$
14,424,625

 
$
2,251,188

 
$
11,285,049

 
$
99,841

 
$
13,636,078

Commercial real estate
 
1,070,050

 
3,532,822

 
23,185

 
4,626,057

 
1,477,274

 
3,265,918

 
21,621

 
4,764,813

Residential mortgage
 
1,690,286

 
389,713

 
37,304

 
2,117,303

 
1,830,224

 
358,254

 
41,555

 
2,230,033

Personal
 
191,827

 
925,284

 
271

 
1,117,382

 
190,687

 
834,889

 
230

 
1,025,806

Total
 
$
6,136,400

 
$
15,976,501

 
$
172,466

 
$
22,285,367

 
$
5,749,373

 
$
15,744,110

 
$
163,247

 
$
21,656,730

Accruing loans past due (90 days)1
 
 

 
 

 
 

 
$
1,541

 
 

 
 

 
 

 
$
1,338

1 
Excludes residential mortgage loans guaranteed by agencies of the U.S. government
 
 
 
 
 
 
 
 
 


Credit Commitments
 
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. At September 30, 2019, outstanding commitments totaled $11 billion. Because some commitments are expected to expire before being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. BOK Financial uses the same credit policies in making commitments as it does loans.

The amount of collateral obtained, if deemed necessary, is based upon management’s credit evaluation of the borrower.

Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Because the credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan commitments, BOK Financial uses the same credit policies in evaluating the creditworthiness of the customer. Additionally, BOK Financial uses the same evaluation process in obtaining collateral on standby letters of credit as it does for loan commitments. The term of these standby letters of credit is defined in each commitment and typically corresponds with the underlying loan commitment. At September 30, 2019, outstanding standby letters of credit totaled $713 million. 

Allowances for Credit Losses

BOK Financial maintains an allowance for loan losses and an accrual for off-balance sheet credit risk. The accrual for off-balance sheet credit risk is maintained at a level that is appropriate to cover estimated losses associated with credit instruments that are not currently recognized as assets such as loan commitments, standby letters of credit or guarantees. As discussed in greater detail in Note 6, the Company also has separate accruals for off-balance sheet credit risk related to residential mortgage loans previously sold with full or partial recourse and for residential mortgage loans sold to government sponsored agencies under standard representations and warranties.

The appropriateness of the allowance for loan losses and accrual for off-balance sheet credit losses (collectively "allowance for credit losses") is assessed by management based on an ongoing quarterly evaluation of the probable estimated losses inherent in the portfolio, including probable losses on both outstanding loans and unused commitments.

The allowance for loan losses consists of specific allowances attributed to impaired loans that have not yet been charged down to amounts we expect to recover, general allowances for unimpaired loans based on estimated loss rates by loan class and nonspecific allowances based on general economic conditions, risk concentration and related factors. There have been no material changes in the approach or techniques utilized in developing the allowance for loan losses and the accrual for off-balance sheet credit losses for the three and nine months ended September 30, 2019.

Loans are considered to be impaired when it becomes probable that BOK Financial will be unable to collect all amounts due according to the contractual terms of the loan agreements. Internally risk graded loans are evaluated individually for impairment. Substantially all commercial and commercial real estate loans and certain residential mortgage and consumer loans are risk graded based on evaluation of the borrowers' ability to repay. Certain commercial loans and most residential mortgage and consumer loans are small balance, homogeneous pools of loans that are not risk graded. Non-risk graded loans are identified as impaired based on performance status. Generally, non-risk graded loans 90 days or more past due or modified in a TDR or in bankruptcy are considered to be impaired.

Specific allowances for impaired loans are measured by an evaluation of estimated future cash flows discounted at the loans’ initial effective interest rate or the fair value of collateral for certain collateral dependent loans. Collateral value of real property is generally based on third party appraisals that conform to Uniform Standards of Professional Appraisal Practice, less estimated selling costs. Appraised values are on an "as-is" basis and are generally not adjusted by the Company. Updated appraisals are obtained at least annually or more frequently if market conditions indicate collateral values have declined. Collateral value of mineral rights is generally determined by our internal staff of engineers based on projected cash flows under current market conditions. Collateral values and available cash resources that support impaired loans are evaluated quarterly. Historical statistics may be used as a practical way to estimate impairment in limited situations, such as when a collateral dependent loan is identified as impaired at the end of a reporting period, until an updated appraisal of collateral value is received or a full assessment of future cash flows is completed. Estimates of future cash flows and collateral values require significant judgments and may be volatile.

General allowances for unimpaired loans are based on estimated loss rates by loan class. The gross loss rate for each loan class is determined by the greater of the current gross loss rate based on the most recent twelve months or a long-term gross loss rate. Recoveries are not directly considered in the estimation of loss rates. Recoveries generally do not follow predictable patterns and are not received until well after the charge-off date as a result of protracted legal actions. For risk graded loans, gross loss rates are adjusted for changes in risk grading. For each loan class, the current weighted average risk grade is compared to the long-term average risk grade. This comparison determines whether credit risk in each loan class is increasing or decreasing. Loss rates are adjusted upward or downward in proportion to changes in average risk grading. General allowances for unimpaired loans also consider inherent risks identified for each loan class. Inherent risks consider loss rates that most appropriately represent the current credit cycle and other factors attributable to specific loan classes which have not yet been represented in the gross loss rates or risk grading. These factors include changes in commodity prices or engineering imprecision, which may affect the value of reserves that secure our energy loan portfolio, construction risk that may affect commercial real estate loans, changes in regulations and public policy that may disproportionately impact health care loans and changes in loan products.

Nonspecific allowances are maintained for risks beyond factors specific to a particular loan or loan class. These factors include trends in the economy of our primary lending areas, concentrations in large balance loans and other relevant factors.

An accrual for off-balance sheet credit losses is included in Other liabilities in the Consolidated Balance Sheets. The appropriateness of this accrual is determined in the same manner as the allowance for loan losses.

A provision for credit losses is charged against or credited to earnings in amounts necessary to maintain an appropriate allowance for credit losses. Recoveries of loans previously charged off are added to the allowance when received.

The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the three months ended September 30, 2019 is summarized as follows (in thousands):
 
 
Commercial
 
Commercial Real Estate
 
Residential Mortgage
 
Personal
 
Nonspecific Allowance
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
106,397

 
$
54,188

 
$
15,724

 
$
9,388

 
$
16,837

 
$
202,534

Provision for loan losses
 
9,861

 
102

 
(253
)
 
1,911

 
918

 
12,539

Loans charged off
 
(9,875
)
 
—

 
(56
)
 
(1,776
)
 
—

 
(11,707
)
Recoveries
 
260

 
60

 
119

 
627

 
—

 
1,066

Ending balance
 
$
106,643

 
$
54,350

 
$
15,534

 
$
10,150

 
$
17,755

 
$
204,432

Allowance for off-balance sheet credit losses:
 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
1,742

 
$
116

 
$
44

 
$
1

 
$
—

 
$
1,903

Provision for off-balance sheet credit losses
 
(536
)
 
(3
)
 
—

 
—

 
—

 
(539
)
Ending balance
 
$
1,206

 
$
113

 
$
44

 
$
1

 
$
—

 
$
1,364

 
 
 
 
 
 
 
 
 
 
 
 
 
Total provision for credit losses
 
$
9,325

 
$
99

 
$
(253
)
 
$
1,911

 
$
918

 
$
12,000



The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the nine months ended September 30, 2019 is summarized as follows (in thousands):
 
 
Commercial
 
Commercial Real Estate
 
Residential Mortgage
 
Personal
 
Nonspecific Allowance
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
102,226

 
$
60,026

 
$
17,964

 
$
9,473

 
$
17,768

 
$
207,457

Provision for loan losses
 
34,740

 
(10,075
)
 
(2,660
)
 
3,434

 
(13
)
 
25,426

Loans charged off
 
(31,728
)
 
(118
)
 
(192
)
 
(4,671
)
 
—

 
(36,709
)
Recoveries
 
1,405

 
4,517

 
422

 
1,914

 
—

 
8,258

Ending balance
 
$
106,643

 
$
54,350

 
$
15,534

 
$
10,150

 
$
17,755

 
$
204,432

Allowance for off-balance sheet credit losses:
 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
1,655

 
$
52

 
$
52

 
$
31

 
$
—

 
$
1,790

Provision for off-balance sheet credit losses
 
(449
)
 
61

 
(8
)
 
(30
)
 
—

 
(426
)
Ending balance
 
$
1,206

 
$
113

 
$
44

 
$
1

 
$
—

 
$
1,364

 
 
 
 
 
 
 
 
 
 
 
 
 
Total provision for credit losses
 
$
34,291

 
$
(10,014
)
 
$
(2,668
)
 
$
3,404

 
$
(13
)
 
$
25,000


The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the three months ended September 30, 2018 is summarized as follows (in thousands):
 
 
Commercial
 
Commercial Real Estate
 
Residential Mortgage
 
Personal
 
Nonspecific Allowance
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
113,722

 
$
58,758

 
$
18,544

 
$
8,646

 
$
15,472

 
$
215,142

Provision for loan losses
 
(1,285
)
 
1,391

 
1

 
883

 
3,418

 
4,408

Loans charged off
 
(9,602
)
 
—

 
(91
)
 
(1,380
)
 
—

 
(11,073
)
Recoveries
 
1,263

 
40

 
229

 
560

 
—

 
2,092

Ending balance
 
$
104,098

 
$
60,189

 
$
18,683

 
$
8,709

 
$
18,890

 
$
210,569

Allowance for off-balance sheet credit losses:
 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
2,361

 
17

 
53

 
2

 
—

 
$
2,433

Provision for off-balance sheet credit losses
 
(424
)
 
19

 
(3
)
 
—

 
—

 
(408
)
Ending balance
 
$
1,937

 
$
36

 
$
50

 
$
2

 
$
—

 
$
2,025

 
 
 
 
 
 
 
 
 
 
 
 
 
Total provision for credit losses
 
$
(1,709
)
 
$
1,410

 
$
(2
)
 
$
883

 
$
3,418

 
$
4,000



The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the nine months ended September 30, 2018 is summarized as follows (in thousands):
 
 
Commercial
 
Commercial Real Estate
 
Residential Mortgage
 
Personal
 
Nonspecific Allowance
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
124,269

 
$
56,621

 
$
18,451

 
$
9,124

 
$
22,217

 
$
230,682

Provision for loan losses
 
2,720

 
248

 
(418
)
 
1,486

 
(3,327
)
 
709

Loans charged off
 
(24,940
)
 
—

 
(326
)
 
(3,802
)
 
—

 
(29,068
)
Recoveries
 
2,049

 
3,320

 
976

 
1,901

 
—

 
8,246

Ending balance
 
$
104,098

 
$
60,189

 
$
18,683

 
$
8,709

 
$
18,890

 
$
210,569

Allowance for off-balance sheet credit losses:
 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
3,644

 
$
45

 
$
43

 
$
2

 
$
—

 
$
3,734

Provision for off-balance sheet credit losses
 
(1,707
)
 
(9
)
 
7

 
—

 
—

 
(1,709
)
Ending balance
 
$
1,937

 
$
36

 
$
50

 
$
2

 
$
—

 
$
2,025

 
 
 
 
 
 
 
 
 
 
 
 
 
Total provision for credit losses
 
$
1,013

 
$
239

 
$
(411
)
 
$
1,486

 
$
(3,327
)
 
$
(1,000
)

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at September 30, 2019 is as follows (in thousands):
 
 
Collectively Measured
for Impairment
 
Individually Measured
for Impairment
 
Total
 
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related
Allowance
Commercial
 
$
14,312,919

 
$
99,110

 
$
111,706

 
$
7,533

 
$
14,424,625

 
$
106,643

Commercial real estate
 
4,602,872

 
54,350

 
23,185

 
—

 
4,626,057

 
54,350

Residential mortgage
 
2,079,999

 
15,534

 
37,304

 
—

 
2,117,303

 
15,534

Personal
 
1,117,111

 
10,150

 
271

 
—

 
1,117,382

 
10,150

Total
 
22,112,901

 
179,144

 
172,466

 
7,533

 
22,285,367

 
186,677

 
 
 
 
 
 
 
 
 
 
 
 
 
Nonspecific allowance
 
—

 
—

 
—

 
—

 
—

 
17,755

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
22,112,901

 
$
179,144

 
$
172,466

 
$
7,533

 
$
22,285,367

 
$
204,432


The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at December 31, 2018 is as follows (in thousands):
 
 
Collectively Measured
for Impairment
 
Individually Measured
for Impairment
 
Total
 
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related
Allowance
Commercial
 
$
13,536,237

 
$
93,494

 
$
99,841

 
$
8,732

 
$
13,636,078

 
$
102,226

Commercial real estate
 
4,743,192

 
60,026

 
21,621

 
—

 
4,764,813

 
60,026

Residential mortgage
 
2,188,478

 
17,964

 
41,555

 
—

 
2,230,033

 
17,964

Personal
 
1,025,576

 
9,473

 
230

 
—

 
1,025,806

 
9,473

Total
 
21,493,483

 
180,957

 
163,247

 
8,732

 
21,656,730

 
189,689

 
 
 
 
 
 
 
 
 
 
 
 
 
Nonspecific allowance
 
—

 
—

 
—

 
—

 
—

 
17,768

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
21,493,483

 
$
180,957

 
$
163,247

 
$
8,732

 
$
21,656,730

 
$
207,457



 
 
 
 
 
 
 
 
 
 
 
 
 

Credit Quality Indicators

The Company utilizes loan class and risk grading as primary credit quality indicators. Substantially all commercial and commercial real estate loans and certain residential mortgage and consumer loans are risk graded based on a quarterly evaluation of the borrowers’ ability to repay the loans. Certain commercial loans and most residential mortgage and consumer loans are small, homogeneous pools that are not risk graded. 

The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at September 30, 2019 is as follows (in thousands):
 
 
Internally Risk Graded
 
Non-Graded
 
Total
 
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related
Allowance
Commercial
 
$
14,396,278

 
$
105,714

 
$
28,347

 
$
929

 
$
14,424,625

 
$
106,643

Commercial real estate
 
4,626,057

 
54,350

 
—

 
—

 
4,626,057

 
54,350

Residential mortgage
 
283,297

 
3,375

 
1,834,006

 
12,159

 
2,117,303

 
15,534

Personal
 
1,032,522

 
7,836

 
84,860

 
2,314

 
1,117,382

 
10,150

Total
 
20,338,154

 
171,275

 
1,947,213

 
15,402

 
22,285,367

 
186,677

 
 
 
 
 
 
 
 
 
 
 
 
 
Nonspecific allowance
 
—

 
—

 
—

 
—

 
—

 
17,755

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
20,338,154

 
$
171,275

 
$
1,947,213

 
$
15,402

 
$
22,285,367

 
$
204,432

 
The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at December 31, 2018 is as follows (in thousands):
 
 
Internally Risk Graded
 
Non-Graded
 
Total
 
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related
Allowance
Commercial
 
$
13,586,654

 
$
101,303

 
$
49,424

 
$
923

 
$
13,636,078

 
$
102,226

Commercial real estate
 
4,764,813

 
60,026

 
—

 
—

 
4,764,813

 
60,026

Residential mortgage
 
505,046

 
3,310

 
1,724,987

 
14,654

 
2,230,033

 
17,964

Personal
 
948,890

 
6,633

 
76,916

 
2,840

 
1,025,806

 
9,473

Total
 
19,805,403

 
171,272

 
1,851,327

 
18,417

 
21,656,730

 
189,689

 
 
 
 
 
 
 
 
 
 
 
 
 
Nonspecific allowance
 
—

 
—

 
—

 
—

 
—

 
17,768

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
19,805,403

 
$
171,272

 
$
1,851,327

 
$
18,417

 
$
21,656,730

 
$
207,457

 
 
 
 
 
 
 
 
 
 
 
 
 


Loans are considered to be performing if they are in compliance with the original terms of the agreement and currently exhibit no factors that cause management to have doubts about the borrowers' ability to remain in compliance with the original terms of the agreement, which is consistent with the regulatory guideline of “pass.” Performing loans also include past due residential mortgages that are guaranteed by agencies of the U.S. government that continue to accrue interest based on criteria of the guarantors' programs. Other loans especially mentioned are currently performing in compliance with the original terms of the agreement but may have a potential weakness that deserves management’s close attention, consistent with regulatory guidelines. 

The risk grading process identified certain loans that have a well-defined weakness (e.g. inadequate debt service coverage or liquidity or marginal capitalization; repayment may depend on collateral or other risk mitigation) that may jeopardize liquidation of the debt and represent a greater risk due to deterioration in the financial condition of the borrower. This is consistent with the regulatory guideline for “substandard.” Because the borrowers are still performing in accordance with the original terms of the loan agreements, these loans were not placed in nonaccruing status. 

Nonaccruing loans represent loans for which full collection of principal and interest is uncertain. This is substantially the same criteria used to determine whether a loan is impaired and includes certain loans considered “substandard” and all loans considered “doubtful” by regulatory guidelines.

The following table summarizes the Company’s loan portfolio at September 30, 2019 by the risk grade categories (in thousands): 
 
 
Internally Risk Graded
 
Non-Graded
 
 
 
 
Performing
 
 
 
 
 
 
 
 
 
 
Pass
 
Other Loans Especially Mentioned
 
Accruing Substandard
 
Nonaccrual
 
Performing
 
Nonaccrual
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
$
3,927,285

 
$
60,405

 
$
37,685

 
$
88,894

 
$
—

 
$
—

 
$
4,114,269

Services
 
3,185,367

 
38,118

 
36,645

 
6,119

 
—

 
—

 
3,266,249

Wholesale/retail
 
1,829,614

 
9,757

 
7,742

 
1,504

 
—

 
—

 
1,848,617

Manufacturing
 
652,804

 
24,229

 
12,634

 
8,741

 
—

 
—

 
698,408

Healthcare
 
2,984,306

 
25,205

 
17,479

 
5,978

 
—

 
—

 
3,032,968

Public finance
 
744,840

 
—

 
—

 
—

 
—

 
—

 
744,840

Other commercial and industrial
 
671,819

 
2,053

 
16,632

 
423

 
28,300

 
47

 
719,274

Total commercial
 
13,996,035

 
159,767

 
128,817

 
111,659

 
28,300

 
47

 
14,424,625

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 
 
 

 
 

 
 

 
 

 
 

Residential construction and land development
 
135,011

 
—

 
—

 
350

 
—

 
—

 
135,361

Retail
 
765,708

 
12,067

 
1,262

 
20,132

 
—

 
—

 
799,169

Office
 
1,007,136

 
5,203

 
1,081

 
855

 
—

 
—

 
1,014,275

Multifamily
 
1,316,856

 
1,196

 
6,501

 
286

 
—

 
—

 
1,324,839

Industrial
 
872,627

 
—

 
—

 
909

 
—

 
—

 
873,536

Other commercial real estate
 
474,465

 
784

 
2,975

 
653

 
—

 
—

 
478,877

Total commercial real estate
 
4,571,803

 
19,250

 
11,819

 
23,185

 
—

 
—

 
4,626,057

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 
 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
280,243

 
326

 
2,191

 
537

 
763,535

 
19,628

 
1,066,460

Permanent mortgages guaranteed by U.S. government agencies
 
—

 
—

 
—

 
—

 
185,432

 
6,332

 
191,764

Home equity
 
—

 
—

 
—

 
—

 
848,272

 
10,807

 
859,079

Total residential mortgage
 
280,243

 
326

 
2,191

 
537

 
1,797,239

 
36,767

 
2,117,303

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Personal
 
1,032,381

 
46

 
33

 
63

 
84,651

 
208

 
1,117,382

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
19,880,462

 
$
179,389

 
$
142,860

 
$
135,444

 
$
1,910,190

 
$
37,022

 
$
22,285,367



The following table summarizes the Company’s loan portfolio at December 31, 2018 by the risk grade categories (in thousands): 
 
 
Internally Risk Graded
 
Non-Graded
 
 
 
 
Performing
 
 
 
 
 
 
 
 
 
 
Pass
 
Other Loans Especially Mentioned
 
Accruing Substandard
 
Nonaccrual
 
Performing
 
Nonaccrual
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
$
3,414,039

 
$
42,176

 
$
86,624

 
$
47,494

 
$
—

 
$
—

 
$
3,590,333

Services
 
3,167,203

 
49,761

 
32,661

 
8,567

 
—

 
—

 
3,258,192

Wholesale/retail
 
1,593,902

 
18,809

 
7,131

 
1,316

 
—

 
—

 
1,621,158

Manufacturing
 
668,438

 
30,934

 
22,230

 
8,919

 
—

 
—

 
730,521

Healthcare
 
2,730,121

 
14,920

 
37,698

 
16,538

 
—

 
—

 
2,799,277

Public finance
 
804,550

 
—

 
—

 
—

 
—

 
—

 
804,550

Other commercial and industrial
 
756,815

 
1,266

 
7,588

 
16,954

 
49,371

 
53

 
832,047

Total commercial
 
13,135,068

 
157,866

 
193,932

 
99,788

 
49,371

 
53

 
13,636,078

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 
 
 

 
 

 
 

 
 

 
 

Residential construction and land development
 
148,234

 
—

 
—

 
350

 
—

 
—

 
148,584

Retail
 
885,588

 
11,926

 
1,289

 
20,279

 
—

 
—

 
919,082

Office
 
1,059,334

 
10,532

 
3,054

 
—

 
—

 
—

 
1,072,920

Multifamily
 
1,287,471

 
281

 
12

 
301

 
—

 
—

 
1,288,065

Industrial
 
776,898

 
—

 
1,208

 
—

 
—

 
—

 
778,106

Other commercial real estate
 
555,301

 
1,188

 
876

 
691

 
—

 
—

 
558,056

Total commercial real estate
 
4,712,826

 
23,927

 
6,439

 
21,621

 
—

 
—

 
4,764,813

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 
 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
269,678

 
52

 
9,730

 
1,991

 
819,199

 
21,960

 
1,122,610

Permanent mortgages guaranteed by U.S. government agencies
 
—

 
—

 
—

 
—

 
183,734

 
7,132

 
190,866

Home equity
 
223,298

 
—

 
296

 
—

 
682,491

 
10,472

 
916,557

Total residential mortgage
 
492,976

 
52

 
10,026

 
1,991

 
1,685,424

 
39,564

 
2,230,033

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Personal
 
944,256

 
115

 
4,443

 
76

 
76,762

 
154

 
1,025,806

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
19,285,126

 
$
181,960

 
$
214,840

 
$
123,476

 
$
1,811,557

 
$
39,771

 
$
21,656,730


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Impaired Loans

Loans are considered to be impaired when it is probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. This generally includes all nonaccruing loans, all loans modified in a TDR and all loans repurchased from GNMA pools.

A summary of impaired loans at September 30, 2019 follows (in thousands):
 
As of
 
For the
 
For the
 
September 30, 2019
 
Three Months Ended
 
Nine Months Ended
 
 
 
Recorded Investment
 
 
 
September 30, 2019
 
September 30, 2019
 
Unpaid
Principal
Balance
 
Total
 
With No
Allowance
 
With Allowance
 
Related Allowance
 
Average Recorded
Investment
 
Interest Income Recognized
 
Average Recorded
Investment
 
Interest Income Recognized
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy
$
139,897

 
$
88,894

 
$
62,981

 
$
25,913

 
$
7,176

 
$
80,263

 
$
—

 
$
67,705

 
$
—

Services
9,390

 
6,119

 
6,093

 
26

 
26

 
8,103

 
—

 
5,172

 
—

Wholesale/retail
1,718

 
1,504

 
1,243

 
261

 
101

 
1,447

 
—

 
1,087

 
—

Manufacturing1
9,153

 
8,741

 
8,511

 
230

 
230

 
8,677

 
—

 
8,448

 
—

Healthcare
17,786

 
5,978

 
5,978

 
—

 
—

 
11,063

 
—

 
8,547

 
—

Public finance
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Other commercial and industrial
8,261

 
470

 
470

 
—

 
—

 
7,998

 
—

 
8,585

 
—

Total commercial
186,205

 
111,706

 
85,276

 
26,430

 
7,533

 
117,551

 
—

 
99,544

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential construction and land development
1,306

 
350

 
350

 
—

 
—

 
350

 
—

 
350

 
—

Retail
20,516

 
20,132

 
20,132

 
—

 
—

 
20,094

 
—

 
20,206

 
—

Office
855

 
855

 
855

 
—

 
—

 
855

 
—

 
427

 
—

Multifamily
286

 
286

 
286

 
—

 
—

 
281

 
—

 
294

 
—

Industrial
909

 
909

 
909

 
—

 
—

 
454

 
—

 
454

 
—

Other commercial real estate
813

 
653

 
653

 
—

 
—

 
393

 
—

 
672

 
—

Total commercial real estate
24,685

 
23,185

 
23,185

 
—

 
—

 
22,427

 
—

 
22,403

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Permanent mortgage
24,639

 
20,165

 
20,165

 
—

 
—

 
20,984

 
280

 
22,058

 
894

Permanent mortgage guaranteed by U.S. government agencies2
197,847

 
191,764

 
191,764

 
—

 
—

 
196,310

 
2,020

 
194,751

 
5,863

Home equity
12,621

 
10,807

 
10,807

 
—

 
—

 
10,369

 
—

 
10,639

 
—

Total residential mortgage
235,107

 
222,736

 
222,736

 
—

 
—

 
227,663

 
2,300

 
227,448

 
6,757

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Personal
338

 
271

 
271

 
—

 
—

 
254

 
—

 
251

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
$
446,335

 
$
357,898

 
$
331,468

 
$
26,430

 
$
7,533

 
$
367,895

 
$
2,300

 
$
349,646

 
$
6,757

1 
Impaired manufacturing sector loans included $4.7 million of loans from an affiliated entity, with no allowance as the fair value of the collateral exceeded the outstanding principal balance at September 30, 2019.
2 All permanent mortgage loans guaranteed by U.S. government agencies are considered impaired as we do not expect full collection of contractual principal and interest. At September 30, 2019, the majority were accruing based on the guarantee by U.S. government agencies.


Generally, no interest income is recognized on impaired loans until all principal balances, including amounts charged-off, are recovered.

A summary of impaired loans at December 31, 2018 follows (in thousands): 
 
 
 
 
Recorded Investment
 
 
Unpaid
Principal
Balance
 
Total
 
With No
Allowance
 
With Allowance
 
Related Allowance
Commercial:
 
 
 
 
 
 
 
 
 
 
Energy
 
$
79,675

 
$
47,494

 
$
18,639

 
$
28,855

 
$
5,362

Services
 
13,437

 
8,567

 
8,489

 
78

 
74

Wholesale/retail
 
1,722

 
1,316

 
1,015

 
301

 
101

Manufacturing
 
10,055

 
8,919

 
8,673

 
246

 
246

Healthcare
 
24,319

 
16,538

 
10,563

 
5,975

 
2,949

Public finance
 
—

 
—

 
—

 
—

 
—

Other commercial and industrial
 
26,955

 
17,007

 
17,007

 
—

 
—

Total commercial
 
156,163

 
99,841

 
64,386

 
35,455

 
8,732

 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 

 
 

 
 

Residential construction and land development
 
1,306

 
350

 
350

 
—

 
—

Retail
 
27,680

 
20,279

 
20,279

 
—

 
—

Office
 
—

 
—

 
—

 
—

 
—

Multifamily
 
301

 
301

 
301

 
—

 
—

Industrial
 
—

 
—

 
—

 
—

 
—

Other commercial real estate
 
851

 
691

 
691

 
—

 
—

Total commercial real estate
 
30,138

 
21,621

 
21,621

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
28,716

 
23,951

 
23,951

 
—

 
—

Permanent mortgage guaranteed by U.S. government agencies1
 
196,296

 
190,866

 
190,866

 
—

 
—

Home equity
 
12,196

 
10,472

 
10,472

 
—

 
—

Total residential mortgage
 
237,208

 
225,289

 
225,289

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
Personal
 
278

 
230

 
230

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
Total
 
$
423,787

 
$
346,981

 
$
311,526

 
$
35,455

 
$
8,732

1 
All permanent mortgage loans guaranteed by U.S. government agencies are considered impaired as we do not expect full collection of contractual principal and interest. At December 31, 2018, the majority were accruing based on the guarantee by U.S. government agencies.



Troubled Debt Restructurings

At September 30, 2019 the Company had $145 million in troubled debt restructurings (TDRs), of which $93 million were accruing residential mortgage loans guaranteed by U.S. government agencies. Approximately $70 million of TDRs were performing in accordance with the modified terms.

At December 31, 2018, the Company had $166 million in TDRs, of which $86 million were accruing residential mortgage loans guaranteed by U.S. government agencies. Approximately $71 million of TDRs were performing in accordance with the modified terms.

TDRs generally consist of interest rate concessions, payment stream concessions or a combination of concessions to distressed borrowers. During the three and nine months ended September 30, 2019, $6.2 million and $40 million of loans were restructured. During the three and nine months ended September 30, 2018, $31 million and $76 million of loans were restructured.




Nonaccrual & Past Due Loans

Past due status for all loan classes is based on the actual number of days since the last payment was due according to the contractual terms of the loans.

A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of September 30, 2019 is as follows (in thousands):
 
 
 
 
Past Due
 
 
 
 
 
 
Current
 
30 to 59
Days
 
60 to 89 Days
 
90 Days
or More
 
Nonaccrual
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
$
4,025,375

 
$
—

 
$
—

 
$
—

 
$
88,894

 
$
4,114,269

Services
 
3,249,994

 
7,305

 
2,096

 
735

 
6,119

 
3,266,249

Wholesale/retail
 
1,844,203

 
2,910

 
—

 
—

 
1,504

 
1,848,617

Manufacturing
 
687,358

 
2,309

 
—

 
—

 
8,741

 
698,408

Healthcare
 
3,026,838

 
94

 
2

 
56

 
5,978

 
3,032,968

Public finance
 
744,840

 
—

 
—

 
—

 
—

 
744,840

Other commercial and industrial
 
718,419

 
337

 
48

 
—

 
470

 
719,274

Total commercial
 
14,297,027

 
12,955

 
2,146

 
791

 
111,706

 
14,424,625

 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 
 
 

 
 

 
 

Residential construction and land development
 
134,947

 
—

 
—

 
64

 
350

 
135,361

Retail
 
779,037

 
—

 
—

 
—

 
20,132

 
799,169

Office
 
1,013,420

 
—

 
—

 
—

 
855

 
1,014,275

Multifamily
 
1,318,148

 
6,405

 
—

 
—

 
286

 
1,324,839

Industrial
 
872,627

 
—

 
—

 
—

 
909

 
873,536

Other commercial real estate
 
477,126

 
335

 
106

 
657

 
653

 
478,877

Total commercial real estate
 
4,595,305

 
6,740

 
106

 
721

 
23,185

 
4,626,057

 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 
 
 

 
 

 
 

Permanent mortgage
 
1,036,793

 
6,097

 
3,405

 
—

 
20,165

 
1,066,460

Permanent mortgages guaranteed by U.S. government agencies
 
47,207

 
23,412

 
21,676

 
93,137

 
6,332

 
191,764

Home equity
 
845,616

 
2,282

 
374

 
—

 
10,807

 
859,079

Total residential mortgage
 
1,929,616

 
31,791

 
25,455

 
93,137

 
37,304

 
2,117,303

 
 
 
 
 
 
 
 
 
 
 
 
 
Personal
 
1,116,888

 
100

 
94

 
29

 
271

 
1,117,382

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
21,938,836

 
$
51,586

 
$
27,801

 
$
94,678

 
$
172,466

 
$
22,285,367


A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of December 31, 2018 is as follows (in thousands):

 
 
 
 
Past Due
 
 
 
 
 
 
Current
 
30 to 59
Days
 
60 to 89 Days
 
90 Days
or More
 
Nonaccrual
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
$
3,542,839

 
$
—

 
$
—

 
$
—

 
$
47,494

 
$
3,590,333

Services
 
3,237,578

 
6,009

 
6,038

 
—

 
8,567

 
3,258,192

Wholesale/retail
 
1,619,290

 
515

 
37

 
—

 
1,316

 
1,621,158

Manufacturing
 
721,204

 
392

 
6

 
—

 
8,919

 
730,521

Healthcare
 
2,781,944

 
241

 
—

 
554

 
16,538

 
2,799,277

Public finance
 
804,550

 
—

 
—

 
—

 
—

 
804,550

Other commercial and industrial
 
814,489

 
518

 
25

 
8

 
17,007

 
832,047

Total commercial
 
13,521,894

 
7,675

 
6,106

 
562

 
99,841

 
13,636,078

 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 
 
 

 
 

 
 

Residential construction and land development
 
147,705

 
249

 
280

 
—

 
350

 
148,584

Retail
 
884,424

 
14,379

 
—

 
—

 
20,279

 
919,082

Office
 
1,072,920

 
—

 
—

 
—

 
—

 
1,072,920

Multifamily
 
1,287,483

 
281

 
—

 
—

 
301

 
1,288,065

Industrial
 
776,898

 
1,208

 
—

 
—

 
—

 
778,106

Other commercial real estate
 
556,239

 
412

 
—

 
714

 
691

 
558,056

Total commercial real estate
 
4,725,669

 
16,529

 
280

 
714

 
21,621

 
4,764,813

 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 
 
 

 
 

 
 

Permanent mortgage
 
1,095,097

 
3,196

 
366

 
—

 
23,951

 
1,122,610

Permanent mortgages guaranteed by U.S. government agencies
 
37,459

 
24,369

 
16,345

 
105,561

 
7,132

 
190,866

Home equity
 
904,572

 
1,102

 
352

 
59

 
10,472

 
916,557

Total residential mortgage
 
2,037,128

 
28,667

 
17,063

 
105,620

 
41,555

 
2,230,033

 
 
 
 
 
 
 
 
 
 
 
 
 
Personal
 
1,024,298

 
479

 
796

 
3

 
230

 
1,025,806

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
21,308,989

 
$
53,350

 
$
24,245

 
$
106,899

 
$
163,247

 
$
21,656,730