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Loans and Allowances for Credit Losses
 3 Months Ended
Mar. 31, 2020
Loans and Leases Receivable, Net Amount [Abstract]  
Loans [Text Block]
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. Accrued but not paid interest receivable is included in Receivables in the Consolidated Balance Sheets. 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.

For loans acquired with no evidence of credit deterioration, discounts are accreted on either an individual basis for loans with unique characteristics or on a pool basis for groups of homogeneous loans.  Accretion is discontinued when a loan with an individually attributed discount is placed on nonaccruing status.

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 Consolidated 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. 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):
 
 
March 31, 2020
 
 
Fixed
Rate
 
Variable
Rate
 
Non-accrual
 
Total
Commercial
 
3,205,558

 
11,471,793

 
118,624

 
$
14,795,975

Commercial real estate
 
1,045,825

 
3,395,715

 
8,545

 
4,450,085

Loans to individuals
 
1,878,018

 
1,303,889

 
36,003

 
3,217,910

Total
 
$
6,129,401

 
$
16,171,397

 
$
163,172

 
$
22,463,970




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 March 31, 2020, outstanding commitments totaled $10.0 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 March 31, 2020, outstanding standby letters of credit totaled $684 million. 

Allowances for Credit Losses and Accrual for Off-balance Sheet Credit Risk from Unfunded Loans Commitments

BOK Financial’s accounting policies have changed significantly with the adoption of CECL as of January 1, 2020. Prior periods are not restated. Prior to January 1, 2020, general allowances and nonspecific allowances were based on incurred credit losses in accordance with accounting policies disclosed in Note 1 of the Consolidated Financial Statements included in the 2019 Form 10-K.

The allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments represent the portion of the amortized cost basis of loans that we do not expect to collect over the asset’s contractual life, considering past events, current conditions, and reasonable and supportable forecasts of future economic conditions. The appropriateness of the allowance for credit losses, including industry and product adjustments and nonspecific allowances, is assessed quarterly by a senior management Allowance Committee. This review is based on an on-going evaluation of the estimated expected credit losses in the portfolio and on unused commitments to provide financing. A well-documented methodology has been developed and is applied by an independent Credit Administration department to assure consistency across the Company.

The allowance for loan losses consists of specific allowances attributed to certain individual loans, generally nonaccruing loans, with dissimilar risk characteristics that have not yet been charged down to amounts we expect to recover and general allowances for estimated credit losses on pools of loans that share similar risk characteristics.

When full collection of principal or interest is uncertain, the loan’s risk characteristics have changed, and we exclude the loan from the general allowance pool, typically designating it as nonaccruing. For these loans, a specific allowance reflects the expected credit loss.

We measure specific allowances for loans excluded from the general allowance pool 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. For a non-collateral dependent loan, the specific allowance is the amount by which the loan’s amortized cost basis exceeds its net realizable value. We measure the specific allowance for collateral dependent loans as the amount by which the loan’s amortized costs basis exceeds its fair value. When repayment is expected to be provided substantially through the sale of collateral, we deduct estimated selling costs from the collateral’s fair value. Generally, third party appraisals that conform to Uniform Standards of Professional Appraisal Practice serve as the basis for the fair value of real property held as collateral. These appraised values are on an “as-is” basis and generally are not adjusted by the Company. We obtain updated appraisals at least annually or more frequently if market conditions indicate collateral values may have declined. For energy loans, our internal staff of engineers generally determines collateral value of mineral rights based on projected cash flows from proven oil and gas reserves under existing economic and operating conditions. For real property held as collateral for other loans, third party appraisals that conform to Uniform Standards of Professional Appraisal Practice generally serve as the basis for the fair value. These appraised values are on an “as-is” basis and generally are not adjusted by the Company. We obtain updated appraisals at least annually or more frequently if market conditions indicate collateral values may have declined. Our special assets staff generally determines the value of other collateral based on projected liquidation cash flows under current market conditions. We evaluate collateral values and available cash resources quarterly. Historical statistics may be used to estimate specific allowances in limited situations, such as when a collateral dependent loan is removed from the general allowance pool near the end of a reporting period until an appraisal of collateral value is received or a full assessment of future cash flows is completed.

General allowances estimate expected credit losses on pools of loans sharing similar risk characteristics that are expected to occur over the loan’s estimated remaining life. The loan’s estimated remaining life represents the contractual term adjusted for amortization, estimates of prepayments, and borrower-owned extension options. Approximately 90 percent of the committed dollars in the loan portfolio is risk graded loans with general allowance model inputs that include probability of default, loss given default, and exposure at default. Probability of default is based on the migration of loans from performing to nonperforming using historical life of loan analysis periods. Loss given default is based on the aggregate losses incurred, net of estimated recoveries. Exposure at default represents an estimate of the outstanding amount of credit exposure at the time a default may occur.

Charge-off migration is used to calculate the general allowance for the majority of non-risk graded loans to individuals. The expected credit loss on less than 10 percent of the committed dollars in the portfolio is calculated using charge-off migration.

The expected credit loss on approximately 1 percent of the committed dollars in the portfolio is calculated using a non-modeled approach. Specifically, the calculation applies a long-term net charge-off rate to the loan balances, adjusted for the weighted average remaining maturity of each portfolio.
    
In estimating the expected credit losses for general allowances on performing risk-graded loans, each portfolio class is assigned relevant economic loss drivers which best explain variations in portfolio net loss rates. The probability of default estimates for each portfolio class are adjusted for current and forecasted economic conditions. The result is applied to the exposure at default and loss given default to calculate the lifetime expected credit loss estimate. Selection of relevant economic loss drivers is re-evaluated periodically and involves statistical analysis as well as management judgment. The unemployment rate factors significantly in the allowance for loan losses calculation, affecting commercial and loans to individuals segments. Other primary factors impacting the commercial portfolio include BBB corporate spreads, real gross domestic product growth rate, and energy commodity prices. The primary commercial real estate variables are vacancy rate and BBB corporate spreads. In addition to the unemployment rate, the forecast for loans to individuals is tied to home price index. The forecasts may include regional economic factors when localized conditions diverge from national conditions.

An Economic Forecast Committee, consisting of senior management with members largely independent of the allowance process develops a twelve-month forward-looking forecast for the relevant economic loss drivers. Management develops these forecasts based on external data as well as a view of future economic conditions, which may include adjustments for regional conditions. The forecast includes three economic scenarios and probability weights for each scenario. The base forecast represents management's view of the most likely outcome, while the downside forecast reflects reasonably possible worsening economic conditions, and the upside forecast projects reasonably possible improving conditions.

At the end of the one-year reasonable and supportable forecast period, we transition from shorter-term expected losses to long-term loss averages for the loan’s estimated remaining life. The difference between short-term loss forecasts and long-term loss averages is run-off over the reversion horizon, up to three years, depending on the forecasted economic scenarios.

General allowances also consider the estimated impact of factors that are not captured in the modeled results or historical experience. These qualitative adjustments, determined by management, may increase or decrease the allowance estimated by modeled results. Factors not captured in modeled results or historical experience may include for example, new lines of business, market conditions that have not been previously encountered, observed changes in credit risk that are not yet reflected in macro-economic factors, or economic conditions that impact loss given default assumptions.

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 that are not unconditionally cancelable by the bank. This accrual is included in other liabilities in the Consolidated Balance Sheets. The appropriateness of the accrual is determined in the same manner as the allowance for loan losses, with the added consideration of commitment usage over the remaining life for those loans that the bank can not unconditionally cancel.

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 March 31, 2020 is summarized as follows (in thousands):
 
 
Commercial
 
Commercial Real Estate
 
Loans to Individuals
 
Nonspecific Allowance
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
118,187

 
$
51,805

 
$
23,572

 
$
17,195

 
$
210,759

Transition adjustment
 
33,681

 
(4,620
)
 
13,943

 
(17,195
)
 
25,809

Beginning balance, adjusted
 
151,868


47,185


37,515


—


236,568

Provision for loan losses
 
77,723

 
5,115

 
13,126

 
—

 
95,964

Loans charged off
 
(16,615
)
 
(886
)
 
(1,416
)
 
—

 
(18,917
)
Recoveries of loans previously charged off
 
462

 
47

 
1,187

 
—

 
1,696

Ending Balance
 
213,438

 
51,461

 
50,412

 
—

 
315,311

Allowance for off-balance sheet credit risk from unfunded loan commitments:
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
1,434

 
107

 
44

 
—

 
1,585

Transition adjustment
 
10,144

 
11,660

 
1,748

 
—

 
23,552

Beginning balance, adjusted
 
11,578


11,767


1,792


—


25,137

Provision for off-balance sheet credit risk
 
2,462

 
808

 
107

 
—

 
3,377

Ending Balance
 
14,040


12,575


1,899


—


28,514

 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in our reasonable and supportable forecasts of macroeconomic variables, primarily due to the impact of the COVID-19 pandemic, oil price declines, and other assumptions, required a provision of $66.2 million during the first quarter of 2020. All other changes totaled $33.1 million, which included $7.5 million related to loan growth, $8.4 million related to changes in impairment, risk grading and other portfolio changes and net charge-offs of $17.2 million.

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each measurement method at March 31, 2020 is as follows (in thousands):
 
 
Collectively Measured
for General Allowances
 
Individually Measured
for Specific Allowances
 
Total
 
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related
Allowance
Commercial
 
$
14,677,351

 
$
203,554

 
$
118,624

 
$
9,884

 
$
14,795,975

 
$
213,438

Commercial real estate
 
4,441,540

 
51,461

 
8,545

 
—

 
4,450,085

 
51,461

Loans to individuals
 
3,181,907

 
50,412

 
36,003

 
—

 
3,217,910

 
50,412

Total
 
22,300,798

 
305,427

 
163,172

 
9,884

 
22,463,970

 
315,311

Credit Quality Indicators

The Company utilizes risk grading as primary credit quality indicators as it influences the probability of default which is a key attribute in the expected credit losses calculation. Substantially all commercial as well as commercial real estate loans and certain loans to individuals are risk graded based on a quarterly evaluation of the borrowers’ ability to repay the loans. Certain commercial loans and most loans to individuals are small, homogeneous pools that are not risk-graded. The credit quality of these loans is based on past due days in accordance with regulatory guidelines.

We have included in the credit quality indicator “pass” loans that 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.” This also includes 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 ("Special Mention") 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. Non-graded loans 30 to 59 days past due are categorized as Special Mention.

The risk grading process identified certain loans that have a well-defined weakness (for example, 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 remain on accruing status. Non-graded loans 60 to 89 days past due are categorized as Accruing Substandard.

Nonaccruing loans represent loans for which full collection of principal and interest is uncertain. This includes certain loans considered “substandard” and all loans considered “doubtful” by regulatory guidelines. Non-graded loans 90 or more days past due are categorized as Nonaccrual.

Probability of default is lowest for pass graded loans and increases for each credit quality indicator, Special Mention, and Accruing Substandard.

Vintage represents the year of origination, except for revolving loans which are considered in aggregate. Loans that were once revolving but have converted to term loans without additional underwriting appear in a separate vintage column.

The following table summarizes the Company’s loan portfolio at March 31, 2020 by the risk grade categories and vintage (in thousands): 
 
Origination Year
 
 
 
 
2020
2019
2018
2017
2016
Prior
Revolving Loans
Revolving Loans Converted to Term Loans
Total
Commercial:
 
 
 
 
 
 
 
 
 
Energy
 
 
 
 
 
 
 
 
 
Pass
$
2,285

$
107,434

$
74,946

$
15,377

$
1,506

$
3,484

$
3,505,123

$
—

$
3,710,155

Special Mention
—

—

10,260

—

—

—

118,222

—

128,482

Accruing Substandard
—

—

—

—

58

13,439

163,094

—

176,591

Nonaccrual
—

3,802

—

—

—

28,899

63,747

—

96,448

Total energy
2,285

111,236

85,206

15,377

1,564

45,822

3,850,186

—

4,111,676

Healthcare
 
 
 
 
 
 
 
 
 
Pass
131,002

615,580

623,438

479,985

250,320

806,699

205,384

27

3,112,435

Special Mention
—

—

—

3,782

178

19,133

3,515

—

26,608

Accruing Substandard
—

3,505

7,955

1,001

57

9,465

—

—

21,983

Nonaccrual
29

37

535

—

—

2,935

534

—

4,070

Total healthcare
131,031

619,122

631,928

484,768

250,555

838,232

209,433

27

3,165,096

Services
 
 
 
 
 
 
 
 
 
Pass
65,471

529,831

512,549

441,302

407,067

899,776

987,628

2,594

3,846,218

Special Mention
—

1,125

18,071

13,977

4,219

10,963

10,715

—

59,070

Accruing Substandard
—

10,675

1,782

2,774

8,674

3,709

14,421

—

42,035

Nonaccrual
—

—

—

2,633

1,167

3,931

694

—

8,425

Total services
65,471

541,631

532,402

460,686

421,127

918,379

1,013,458

2,594

3,955,748

General business
 
 
 
 
 
 
 
 
 
Pass
154,807

525,223

365,108

271,723

165,711

278,923

1,705,114

15,600

3,482,209

Special Mention
—

7,382

3,259

6,530

1,003

5,168

7,387

138

30,867

Accruing Substandard
169

8,715

5,900

4,564

6,195

5,005

10,144

6

40,698

Nonaccrual
—

1,980

4,928

1,100

1,344

161

154

14

9,681

Total general business
154,976

543,300

379,195

283,917

174,253

289,257

1,722,799

15,758

3,563,455

Total commercial
353,763

1,815,289

1,628,731

1,244,748

847,499

2,091,690

6,795,876

18,379

14,795,975

 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
Pass
187,958

1,085,148

1,049,257

599,480

382,196

880,706

231,526

42

4,416,313

Special Mention
—

—

—

12,167

1,640

3,152

—

—

16,959

Accruing Substandard
—

35

1,011

6,722

—

473

27

—

8,268

Nonaccrual
—

—

—

232

7,484

829

—

—

8,545

Total commercial real estate
187,958

1,085,183

1,050,268

618,601

391,320

885,160

231,553

42

4,450,085

 
 
 
 
 
 
 
 
 
 

 
Origination Year
 
 
 
 
2020
2019
2018
2017
2016
Prior
Revolving Loans
Revolving Loans Converted to Term Loans
Total
Loans to individuals:
 
 
 
 
 
 
 
 
 
Residential mortgage
 
 
 
 
 
 
 
 
 
Pass
58,635

216,234

195,224

231,620

220,120

496,676

36,298

352,870

1,807,677

Special Mention
—

—

286

38

205

1,859

246

835

3,469

Accruing Substandard
—

—

—

94

2,155

277

40

122

2,688

Nonaccrual
—

31

491

322

1,039

26,039

658

2,141

30,721

Total residential mortgage
58,635

216,265

196,001

232,074

223,519

524,851

37,242

355,968

1,844,555

Residential mortgage guaranteed by U.S. government agencies
 
 
 
 
 
 
 
 
 
Pass
—

1,459

8,321

13,353

28,986

140,765

—

—

192,884

Nonaccrual
—

—

—

—

—

5,005

—

—

5,005

Total residential mortgage guaranteed by U.S. government agencies
—

1,459

8,321

13,353

28,986

145,770

—

—

197,889

Personal:
 
 
 
 
 
 
 
 
 
Pass
48,145

234,882

88,016

115,576

74,987

103,717

505,951

3,000

1,174,274

Special Mention
—

30

37

50

49

455

2

—

623

Accruing Substandard
—

264

9

—

—

—

19

—

292

Nonaccrual
—

57

53

24

62

50

31

—

277

Total personal
48,145

235,233

88,115

115,650

75,098

104,222

506,003

3,000

1,175,466

Total loans to individuals
106,780

452,957

292,437

361,077

327,603

774,843

543,245

358,968

3,217,910

Total loans
$
648,501

$
3,353,429

$
2,971,436

$
2,224,426

$
1,566,422

$
3,751,693

$
7,570,674

$
377,389

$
22,463,970



Nonaccruing Loans

A summary of nonaccruing loans at March 31, 2020 follows (in thousands): 
 
As of March 31, 2020
 
Total
 
With No
Allowance
 
With Allowance
 
Related Allowance
Commercial:
 
 
 
 
 
 
 
Energy
$
96,448

 
$
40,424

 
$
56,024

 
$
9,375

Healthcare
4,070

 
4,070

 
—

 
—

Services
8,425

 
7,258

 
1,167

 
240

General business
9,681

 
9,412

 
269

 
269

Total commercial
118,624

 
61,164

 
57,460

 
9,884

 
 
 
 
 
 
 
 
Commercial real estate
8,545

 
8,545

 
—

 
—

 
 
 
 
 
 
 
 
Loans to individuals:
 

 
 

 
 

 
 

Residential mortgage
30,721

 
30,721

 
—

 
—

Residential mortgage guaranteed by U.S. government agencies
5,005

 
5,005

 
—

 
—

Personal
277

 
277

 
—

 
—

Total loans to individuals
36,003

 
36,003

 
—

 
—

 
 
 
 
 
 
 
 
Total
$
163,172

 
$
105,712

 
$
57,460

 
$
9,884




Troubled Debt Restructurings

At March 31, 2020 the Company had $149 million in troubled debt restructurings ("TDRs"), of which $92 million were accruing residential mortgage loans guaranteed by U.S. government agencies. Approximately $54 million of TDRs were performing in accordance with the modified terms.

At December 31, 2019, the Company had $132 million in TDRs, of which $92 million were accruing residential mortgage loans guaranteed by U.S. government agencies. Approximately $57 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 months ended March 31, 2020, $28 million of loans were restructured and $2.0 million of loans designated as TDRs were charged off. During the three months ended March 31, 2019, $18 million of loans were restructured and $8.3 million of loans designated as TDRs were charged off.
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 and past due as of March 31, 2020 is as follows (in thousands):
 
 
 
 
Past Due
 
 
 
Past Due 90 Days or More and Accruing
 
 
Current
 
30 to 59
Days
 
60 to 89 Days
 
90 Days
or More
 
Total
 
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
$
4,058,605

 
$
267

 
$
—

 
$
52,804

 
$
4,111,676

 
$
—

Healthcare
 
3,160,196

 
46

 
111

 
4,743

 
3,165,096

 
714

Services
 
3,941,795

 
7,173

 
198

 
6,582

 
3,955,748

 
74

General business
 
3,553,504

 
2,618

 
4,651

 
2,682

 
3,563,455

 
—

Total commercial
 
14,714,100

 
10,104

 
4,960

 
66,811

 
14,795,975

 
788

 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
 
4,433,887

 
4,523

 
340

 
11,335

 
4,450,085

 
2,796

 
 
 
 
 
 
 
 
 
 
 
 
 
Loans to individuals:
 
 

 
 

 
 
 
 

 
 

 
 
Residential mortgage
 
1,828,421

 
8,759

 
1,717

 
5,658

 
1,844,555

 
119

Residential mortgage guaranteed by U.S. government agencies
 
55,901

 
25,948

 
16,217

 
99,823

 
197,889

 
96,980

Personal
 
1,175,143

 
169

 
77

 
77

 
1,175,466

 
3

Total loans to individuals
 
3,059,465

 
34,876

 
18,011

 
105,558

 
3,217,910

 
97,102

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
22,207,452

 
$
49,503

 
$
23,311

 
$
183,704

 
$
22,463,970

 
$
100,686


Following is disclosure of loans and the combined allowance for loan losses and accrual for off-balance sheet credit losses under the previous incurred loss model.

Portfolio segments of the loan portfolio are as follows (in thousands):
 
 
December 31, 2019
 
 
Fixed
Rate
 
Variable
Rate
 
Non-accrual
 
Total
Commercial
 
$
3,231,485

 
$
10,684,749

 
$
115,416

 
$
14,031,650

Commercial real estate
 
1,056,321

 
3,349,836

 
27,626

 
4,433,783

Residential mortgage
 
1,652,653

 
393,897

 
37,622

 
2,084,172

Personal
 
193,903

 
1,007,192

 
287

 
1,201,382

Total
 
$
6,134,362

 
$
15,435,674

 
$
180,951

 
$
21,750,987

Accruing loans past due (90 days)1
 
 

 
 

 
 

 
$
7,680

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


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 March 31, 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
 
11,108

 
(2,004
)
 
(2,408
)
 
(137
)
 
1,410

 
7,969

Loans charged off
 
(10,468
)
 
—

 
(42
)
 
(1,265
)
 
—

 
(11,775
)
Recoveries
 
711

 
112

 
154

 
712

 
—

 
1,689

Ending balance
 
$
103,577

 
$
58,134

 
$
15,668

 
$
8,783

 
$
19,178

 
$
205,340

Allowance for off-balance sheet credit losses:
 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
1,655

 
52

 
52

 
31

 
—

 
$
1,790

Provision for off-balance sheet credit losses
 
70

 
(4
)
 
(5
)
 
(30
)
 
—

 
31

Ending balance
 
$
1,725

 
$
48

 
$
47

 
$
1

 
$
—

 
$
1,821

 
 
 
 
 
 
 
 
 
 
 
 
 
Total provision for credit losses
 
$
11,178

 
$
(2,008
)
 
$
(2,413
)
 
$
(167
)
 
$
1,410

 
$
8,000

 
 
 
 
 
 
 
 
 
 
 
 
 
The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at December 31, 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
 
$
13,916,234

 
$
100,773

 
$
115,416

 
$
17,414

 
$
14,031,650

 
$
118,187

Commercial real estate
 
4,406,157

 
51,805

 
27,626

 
—

 
4,433,783

 
51,805

Residential mortgage
 
2,046,550

 
14,400

 
37,622

 
—

 
2,084,172

 
14,400

Personal
 
1,201,095

 
9,172

 
287

 
—

 
1,201,382

 
9,172

Total
 
21,570,036

 
176,150

 
180,951

 
17,414

 
21,750,987

 
193,564

 
 
 
 
 
 
 
 
 
 
 
 
 
Nonspecific allowance
 
—

 
—

 
—

 
—

 
—

 
17,195

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
21,570,036

 
$
176,150

 
$
180,951

 
$
17,414

 
$
21,750,987

 
$
210,759



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, 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
 
$
13,997,538

 
$
117,236

 
$
34,112

 
$
951

 
$
14,031,650

 
$
118,187

Commercial real estate
 
4,433,783

 
51,805

 
—

 
—

 
4,433,783

 
51,805

Residential mortgage
 
279,113

 
3,085

 
1,805,059

 
11,315

 
2,084,172

 
14,400

Personal
 
1,116,297

 
7,003

 
85,085

 
2,169

 
1,201,382

 
9,172

Total
 
19,826,731

 
179,129

 
1,924,256

 
14,435

 
21,750,987

 
193,564

 
 
 
 
 
 
 
 
 
 
 
 
 
Nonspecific allowance
 
—

 
—

 
—

 
—

 
—

 
17,195

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
19,826,731

 
$
179,129

 
$
1,924,256

 
$
14,435

 
$
21,750,987

 
$
210,759


The following table summarizes the Company’s loan portfolio at December 31, 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
 
$
3,700,406

 
$
117,298

 
$
63,951

 
$
91,722

 
$
—

 
$
—

 
$
3,973,377

Services
 
3,050,946

 
29,943

 
33,791

 
7,483

 
—

 
—

 
3,122,163

Wholesale/retail
 
1,749,023

 
5,281

 
5,399

 
1,163

 
—

 
—

 
1,760,866

Manufacturing
 
623,219

 
18,214

 
13,883

 
10,133

 
—

 
—

 
665,449

Healthcare
 
2,995,514

 
13,117

 
20,805

 
4,480

 
—

 
—

 
3,033,916

Public finance
 
709,868

 
—

 
—

 
—

 
—

 
—

 
709,868

Other commercial and industrial
 
709,729

 
4,028

 
17,744

 
398

 
34,075

 
37

 
766,011

Total commercial
 
13,538,705

 
187,881

 
155,573

 
115,379

 
34,075

 
37

 
14,031,650

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 
 
 

 
 

 
 

 
 

 
 

Residential construction and land development
 
150,529

 
—

 
—

 
350

 
—

 
—

 
150,879

Retail
 
743,343

 
12,067

 
1,243

 
18,868

 
—

 
—

 
775,521

Office
 
923,202

 
5,177

 
—

 
—

 
—

 
—

 
928,379

Multifamily
 
1,257,005

 
1,604

 
95

 
6,858

 
—

 
—

 
1,265,562

Industrial
 
852,539

 
1,658

 
1,011

 
909

 
—

 
—

 
856,117

Other commercial real estate
 
455,045

 
1,639

 
—

 
641

 
—

 
—

 
457,325

Total commercial real estate
 
4,381,663

 
22,145

 
2,349

 
27,626

 
—

 
—

 
4,433,783

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 
 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
276,138

 
78

 
2,404

 
493

 
758,260

 
19,948

 
1,057,321

Permanent mortgage guaranteed by U.S. government agencies
 
—

 
—

 
—

 
—

 
191,694

 
6,100

 
197,794

Home equity
 
—

 
—

 
—

 
—

 
817,976

 
11,081

 
829,057

Total residential mortgage
 
276,138

 
78

 
2,404

 
493

 
1,767,930

 
37,129

 
2,084,172

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Personal
 
1,116,196

 
45

 
—

 
56

 
84,853

 
232

 
1,201,382

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
19,312,702

 
$
210,149

 
$
160,326

 
$
143,554

 
$
1,886,858

 
$
37,398

 
$
21,750,987



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.

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, 2019 follows (in thousands): 
 
 
 
 
Recorded Investment
 
 
Unpaid
Principal
Balance
 
Total
 
With No
Allowance
 
With Allowance
 
Related Allowance
Commercial:
 
 
 
 
 
 
 
 
 
 
Energy
 
$
149,441

 
$
91,722

 
$
44,244

 
$
47,478

 
$
16,854

Services
 
10,923

 
7,483

 
6,301

 
1,182

 
240

Wholesale/retail
 
1,980

 
1,163

 
902

 
261

 
101

Manufacturing
 
10,848

 
10,133

 
9,914

 
219

 
219

Healthcare
 
13,774

 
4,480

 
4,480

 
—

 
—

Public finance
 
—

 
—

 
—

 
—

 
—

Other commercial and industrial
 
8,227

 
435

 
435

 
—

 
—

Total commercial
 
195,193

 
115,416

 
66,276

 
49,140

 
17,414

 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 

 
 

 
 

Residential construction and land development
 
1,306

 
350

 
350

 
—

 
—

Retail
 
20,265

 
18,868

 
18,868

 
—

 
—

Office
 
—

 
—

 
—

 
—

 
—

Multifamily
 
6,858

 
6,858

 
6,858

 
—

 
—

Industrial
 
909

 
909

 
909

 
—

 
—

Other commercial real estate
 
801

 
641

 
641

 
—

 
—

Total commercial real estate
 
30,139

 
27,626

 
27,626

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
24,868

 
20,441

 
20,441

 
—

 
—

Permanent mortgage guaranteed by U.S. government agencies1
 
204,187

 
197,794

 
197,794

 
—

 
—

Home equity
 
12,967

 
11,081

 
11,081

 
—

 
—

Total residential mortgage
 
242,022

 
229,316

 
229,316

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
Personal
 
360

 
287

 
287

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
Total
 
$
467,714

 
$
372,645

 
$
323,505

 
$
49,140

 
$
17,414

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, 2019, the majority were accruing based on the guarantee by U.S. government agencies.
A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of December 31, 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
 
$
3,881,244

 
$
401

 
$
10

 
$
—

 
91,722

 
$
3,973,377

Services
 
3,105,621

 
1,737

 
523

 
6,799

 
7,483

 
3,122,163

Wholesale
 
1,758,878

 
712

 
113

 
—

 
1,163

 
1,760,866

Manufacturing
 
654,329

 
410

 
190

 
387

 
10,133

 
665,449

Healthcare
 
3,027,329

 
2,039

 
—

 
68

 
4,480

 
3,033,916

Public finance
 
707,638

 
2,230

 
—

 
—

 
—

 
709,868

Other commercial and industrial
 
764,390

 
414

 
772

 
—

 
435

 
766,011

Total commercial
 
13,899,429

 
7,943

 
1,608

 
7,254

 
115,416

 
14,031,650

 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
Residential construction and land development
 
147,379

 
3,093

 
—

 
57

 
350

 
150,879

Retail
 
756,653

 
—

 
—

 
—

 
18,868

 
775,521

Office
 
928,379

 
—

 
—

 
—

 
—

 
928,379

Multifamily
 
1,258,704

 
—

 
—

 
—

 
6,858

 
1,265,562

Industrial
 
855,208

 
—

 
—

 
—

 
909

 
856,117

Other commercial real estate
 
454,253

 
1,827

 
250

 
354

 
641

 
457,325

Total commercial real estate
 
4,400,576

 
4,920

 
250

 
411

 
27,626

 
4,433,783

 
 
 
 
 
 
 
 
 
 
 
 


Residential Mortgage:
 
 
 
 
 
 
 
 
 
 
 
 
Permanent mortgage
 
1,034,716

 
2,011

 
153

 
—

 
20,441

 
1,057,321

Permanent mortgage guaranteed by U.S. government agencies
 
46,898

 
24,203

 
18,187

 
102,406

 
6,100

 
197,794

Home equity
 
814,325

 
3,343

 
308

 
—

 
11,081

 
829,057

Total residential mortgage
 
1,895,939

 
29,557

 
18,648

 
102,406

 
37,622

 
2,084,172

 
 
 
 
 
 
 
 
 
 
 
 
 
Personal
 
1,196,362

 
4,664

 
54

 
15

 
287

 
1,201,382

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
21,392,306

 
$
47,084

 
$
20,560

 
$
110,086

 
$
180,951

 
$
21,750,987