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NOTE 3 - LOANS/LEASES RECEIVABLE
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
LOANS/LEASES RECEIVABLE

NOTE 3 – LOANS/LEASES RECEIVABLE

The composition of the loan/lease portfolio as of June 30, 2020 and December 31, 2019 is presented as follows:

    

2020

2019

(dollars in thousands)

C&I loans*

$

1,850,110

$

1,507,825

CRE loans

 

  

 

  

Owner-occupied CRE

 

467,537

 

443,989

Commercial construction, land development, and other land

 

441,364

 

378,797

Other non owner-occupied CRE

 

960,261

 

913,610

 

1,869,162

 

1,736,396

Direct financing leases **

 

79,105

 

87,869

Residential real estate loans ***

 

241,069

 

239,904

Installment and other consumer loans

 

99,150

 

109,352

 

4,138,596

 

3,681,346

Plus deferred loan/lease origination costs, net of fees

 

1,663

 

8,859

 

4,140,259

 

3,690,205

Less allowance

 

(60,827)

 

(36,001)

$

4,079,432

$

3,654,204

** Direct financing leases:

 

  

 

  

Net minimum lease payments to be received

$

87,389

$

97,025

Estimated unguaranteed residual values of leased assets

 

616

 

547

Unearned lease/residual income

 

(8,900)

 

(9,703)

 

79,105

 

87,869

Plus deferred lease origination costs, net of fees

 

1,448

 

1,892

 

80,553

 

89,761

Less allowance

 

(1,639)

 

(1,464)

$

78,914

$

88,297

*     Includes equipment financing agreements outstanding at m2, totaling $153.7 million and $142.0 million as of June 30, 2020 and December 31, 2019, respectively.

**   Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors, which is combined with management's expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The large majority of leases with residual values contain a lease options rider, which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal.

*** Includes residential real estate loans held for sale totaling $8.3 million and $3.7 million as of June 30, 2020 and December 31, 2019, respectively.

Changes in accretable yield for acquired loans were as follows:

Three months ended June 30, 2020

Six months ended June 30, 2020

    

PCI

    

Performing

    

PCI

    

Performing

    

Loans

Loans

Total

    

Loans

    

Loans

    

Total

(dollars in thousands)

Balance at the beginning of the period

$

(59)

$

(5,725)

$

(5,784)

$

(57)

$

(6,378)

$

(6,435)

Reclassification of nonaccretable discount to accretable

(30)

(30)

Accretion recognized

 

1

 

790

 

791

 

29

 

1,443

 

1,472

Balance at the end of the period

$

(58)

$

(4,935)

$

(4,993)

$

(58)

$

(4,935)

$

(4,993)

Three months ended June 30, 2019

Six months ended June 30, 2019

    

PCI

    

Performing

    

PCI

    

Performing

    

Loans

Loans

Total

    

Loans

    

Loans

    

Total

(dollars in thousands)

Balance at the beginning of the period

$

(319)

$

(9,301)

$

(9,620)

$

(667)

$

(10,127)

$

(10,794)

Reclassification of nonaccretable discount to accretable

(159)

(159)

(159)

(159)

Accretion recognized

 

327

 

812

 

1,139

 

675

 

1,638

 

2,313

Balance at the end of the period

$

(151)

$

(8,489)

$

(8,640)

$

(151)

$

(8,489)

$

(8,640)

The aging of the loan/lease portfolio by classes of loans/leases as of June 30, 2020 and December 31, 2019 is presented as follows:

As of June 30, 2020

 

Accruing Past

 

30-59 Days

60-89 Days

Due 90 Days or

Nonaccrual

 

Classes of Loans/Leases

    

Current

    

Past Due

    

Past Due

    

More

    

Loans/Leases

    

Total

 

(dollars in thousands)

C&I

$

1,846,417

$

1,650

$

311

$

62

$

1,670

$

1,850,110

CRE

 

  

 

  

 

  

 

  

 

  

 

  

Owner-Occupied CRE

 

467,032

 

 

185

 

 

320

 

467,537

Commercial Construction, Land Development, and Other Land

 

441,336

 

28

 

 

 

 

441,364

Other Non Owner-Occupied CRE

 

950,993

 

1,776

 

 

 

7,492

 

960,261

Direct Financing Leases

 

77,637

 

277

 

151

 

 

1,040

 

79,105

Residential Real Estate

 

239,729

 

 

404

 

 

936

 

241,069

Installment and Other Consumer

 

98,435

 

11

 

27

 

37

 

640

 

99,150

$

4,121,579

$

3,742

$

1,078

$

99

$

12,099

$

4,138,596

 

  

 

  

 

  

 

  

 

  

 

  

As a percentage of total loan/lease portfolio

 

99.59

%  

 

0.09

%  

 

0.03

%  

 

%  

 

0.29

%  

 

100.00

%

As of December 31, 2019

 

Accruing Past

 

30-59 Days

60-89 Days

Due 90 Days or

Nonaccrual

 

Classes of Loans/Leases

    

Current

    

Past Due

    

Past Due

    

More

    

Loans/Leases

    

Total

 

(dollars in thousands)

C&I

$

1,499,891

$

6,126

$

572

$

$

1,236

$

1,507,825

CRE

 

  

 

  

 

  

 

  

 

  

 

  

Owner-Occupied CRE

 

443,707

 

177

 

71

 

 

34

 

443,989

Commercial Construction, Land Development, and Other Land

 

375,940

 

2,857

 

 

 

 

378,797

Other Non Owner-Occupied CRE

 

909,684

 

73

 

 

 

3,853

 

913,610

Direct Financing Leases

 

85,636

 

463

 

253

 

 

1,517

 

87,869

Residential Real Estate

 

235,845

 

2,939

 

414

 

 

706

 

239,904

Installment and Other Consumer

 

108,750

 

3

 

10

 

33

 

556

 

109,352

$

3,659,453

$

12,638

$

1,320

$

33

$

7,902

$

3,681,346

As a percentage of total loan/lease portfolio

 

99.41

%  

 

0.34

%  

 

0.04

%  

 

0.00

%  

 

0.21

%  

 

100.00

%

NPLs by classes of loans/leases as of June 30, 2020 and December 31, 2019 are presented as follows:

As of June 30, 2020

Accruing Past

 

Due 90 Days or

Nonaccrual

Percentage of

Classes of Loans/Leases

    

More

    

Loans/Leases **

    

Accruing TDRs

    

Total NPLs

    

Total NPLs

 

 

(dollars in thousands)

C&I

$

62

$

1,670

$

652

$

2,384

 

18.17

%

CRE

 

 

 

 

  

 

  

Owner-Occupied CRE

 

 

320

 

 

320

 

2.44

%

Commercial Construction, Land Development, and Other Land

 

 

 

 

 

-

%

Other Non Owner-Occupied CRE

 

 

7,492

 

 

7,492

 

57.12

%

Direct Financing Leases

 

 

1,040

 

268

 

1,308

 

9.97

%

Residential Real Estate

 

 

936

 

 

936

 

7.14

%

Installment and Other Consumer

 

37

 

640

 

 

677

 

5.16

%

$

99

$

12,099

$

920

$

13,118

 

100.00

%

**   Nonaccrual loans/leases included $352 thousand of TDRs, including $129 thousand in commercial and industrial loans, $138 thousand in direct financing leases, $31 thousand in residential real estate loans, and $54 thousand in installment loans.

As of December 31, 2019

 

Accruing Past

 

Due 90 Days or

Nonaccrual

Percentage of

 

Classes of Loans/Leases

    

More

    

Loans/Leases **

    

Accruing TDRs

    

Total NPLs

    

Total NPLs

 

 

(dollars in thousands)

C&I

$

$

1,236

$

646

$

1,882

 

21.12

%

CRE

 

  

 

  

 

  

 

  

 

  

Owner-Occupied CRE

 

 

34

 

 

34

 

0.38

%

Commercial Construction, Land Development, and Other Land

 

 

 

 

 

-

%

Other Non Owner-Occupied CRE

 

 

3,853

 

 

3,853

 

43.22

%

Direct Financing Leases

 

 

1,517

 

333

 

1,850

 

20.75

%

Residential Real Estate

 

 

706

 

 

706

 

7.92

%

Installment and Other Consumer

 

33

 

556

 

 

589

 

6.61

%

$

33

$

7,902

$

979

$

8,914

 

100.00

%

**   Nonaccrual loans/leases included $747 thousand of TDRs, including $98 thousand in C&I loans, $269 thousand in CRE loans, $294 thousand in direct financing leases, $31 thousand in residential real estate loans, and $55 thousand in installment loans.

Changes in the allowance by portfolio segment for the three and six months ended June 30, 2020 and 2019, respectively, are presented as follows:

Three Months Ended June 30, 2020

Direct Financing

Residential Real

Installment and

    

C&I

    

CRE

    

Leases

    

Estate

    

Other Consumer

    

Total

 

(dollars in thousands)

Balance, beginning

$

18,151

$

19,269

$

1,303

$

2,313

$

1,197

$

42,233

Provisions charged to expense

 

7,859

 

10,365

 

887

 

697

 

107

 

19,915

Loans/leases charged off

 

(340)

 

(511)

 

(595)

 

 

(4)

 

(1,450)

Recoveries on loans/leases previously charged off

 

78

 

 

44

 

 

7

 

129

Balance, ending

$

25,748

$

29,123

$

1,639

$

3,010

$

1,307

$

60,827

Three Months Ended June 30, 2019

Direct Financing

Residential Real

Installment and

    

C&I

    

CRE

    

Leases

    

Estate

    

Other Consumer

    

Total

(dollars in thousands)

Balance, beginning

$

17,260

$

18,303

$

1,606

$

2,538

$

1,457

$

41,164

Provisions (credits) charged to expense

 

1,116

 

414

 

331

 

86

 

(6)

 

1,941

Loans/leases charged off

 

(193)

 

(1,369)

 

(497)

 

(73)

 

(20)

 

(2,152)

Recoveries on loans/leases previously charged off

 

65

 

15

 

19

 

31

 

21

 

151

Balance, ending

$

18,248

$

17,363

$

1,459

$

2,582

$

1,452

$

41,104

Six Months Ended June 30, 2020

    

    

    

Direct Financing

    

Residential Real

    

Installment and

    

C&I

CRE

Leases

Estate

Other Consumer

Total

 

(dollars in thousands)

Balance, beginning

$

16,072

$

15,379

$

1,464

$

1,948

$

1,138

$

36,001

Provisions charged to expense

 

11,556

 

14,181

 

1,281

 

1,033

 

231

 

28,282

Loans/leases charged off

 

(1,979)

 

(511)

 

(1,195)

 

 

(100)

 

(3,785)

Recoveries on loans/leases previously charged off

 

99

 

74

 

89

 

29

 

38

 

329

Balance, ending

$

25,748

$

29,123

$

1,639

$

3,010

$

1,307

$

60,827

Six Months Ended June 30, 2019

Direct Financing

Residential Real

Installment and

    

C&I

    

CRE

    

Leases

    

Estate

    

Other Consumer

    

Total

(dollars in thousands)

Balance, beginning

$

16,420

$

17,719

$

1,792

$

2,557

$

1,359

$

39,847

Provisions (credits) charged to expense

 

2,123

 

948

 

776

 

68

 

160

 

4,075

Loans/leases charged off

 

(527)

 

(1,369)

 

(1,149)

 

(73)

 

(94)

 

(3,212)

Recoveries on loans/leases previously charged off

 

232

 

65

 

40

 

30

 

27

 

394

Balance, ending

$

18,248

$

17,363

$

1,459

$

2,582

$

1,452

$

41,104

The allowance by impairment evaluation and by portfolio segment as of June 30, 2020 and December 31, 2019 is presented as follows:

As of June 30, 2020

 

Direct Financing

Residential Real

Installment and

 

    

C&I

    

CRE

    

Leases

    

Estate

    

Other Consumer

    

Total

 

(dollars in thousands)

Allowance for impaired loans/leases

$

341

$

1,692

$

20

$

23

$

78

$

2,154

Allowance for nonimpaired loans/leases

 

25,407

 

27,431

 

1,619

 

2,987

 

1,229

 

58,673

$

25,748

$

29,123

$

1,639

$

3,010

$

1,307

$

60,827

 

  

 

  

 

  

 

  

 

  

 

  

Impaired loans/leases

$

2,547

$

7,815

$

1,419

$

884

$

640

$

13,305

Nonimpaired loans/leases

 

1,847,563

 

1,861,347

 

77,686

 

240,185

 

98,510

 

4,125,291

$

1,850,110

$

1,869,162

$

79,105

$

241,069

$

99,150

$

4,138,596

 

  

 

  

 

  

 

  

 

  

 

  

Allowance as a percentage of impaired loans/leases

 

13.39

%  

 

21.65

%  

 

1.41

%  

 

2.60

%  

 

12.19

%  

 

16.19

%

Allowance as a percentage of nonimpaired loans/leases

 

1.38

%  

 

1.47

%  

 

2.08

%  

 

1.24

%  

 

1.25

%  

 

1.42

%

Total allowance as a percentage of total loans/leases

 

1.39

%  

 

1.56

%  

 

2.07

%  

 

1.25

%  

 

1.32

%  

 

1.47

%

 

As of December 31, 2019

 

Direct Financing

Residential Real

Installment and

 

    

C&I

    

CRE

    

Leases

    

Estate

    

Other Consumer

    

Total

 

 

(dollars in thousands)

Allowance for impaired loans/leases

$

170

$

125

$

270

$

15

$

80

$

660

Allowance for nonimpaired loans/leases

 

15,902

 

15,254

 

1,194

 

1,933

 

1,058

 

35,341

$

16,072

$

15,379

$

1,464

$

1,948

$

1,138

$

36,001

 

  

 

  

 

  

 

  

 

  

 

  

Impaired loans/leases

$

1,846

$

3,585

$

2,025

$

649

$

556

$

8,661

Nonimpaired loans/leases

 

1,505,979

 

1,732,811

 

85,844

 

239,255

 

108,796

 

3,672,685

$

1,507,825

$

1,736,396

$

87,869

$

239,904

$

109,352

$

3,681,346

 

  

 

  

 

  

 

  

 

  

 

  

Allowance as a percentage of impaired loans/leases

 

9.21

%  

 

3.49

%  

 

13.33

%  

 

2.31

%  

 

14.41

%  

 

7.62

%

Allowance as a percentage of nonimpaired loans/leases

 

1.06

%  

 

0.88

%  

 

1.39

%  

 

0.81

%  

 

0.97

%  

 

0.96

%

Total allowance as a percentage of total loans/leases

 

1.07

%  

 

0.89

%  

 

1.67

%  

 

0.81

%  

 

1.04

%  

 

0.98

%

 

Information for impaired loans/leases is presented in the tables below.  The recorded investment represents customer balances net of any partial charge-offs recognized on the loan/lease.  The unpaid principal balance represents the recorded balance outstanding on the loan/lease prior to any partial charge-offs.

Loans/leases, by classes of financing receivable, considered to be impaired as of and for the six months ended June 30, 2020 are presented as follows:

Six Months Ended June 30, 2020

Interest Income

Average

Recognized for

Recorded

Unpaid Principal

Related

Recorded

Interest Income

Cash Payments

Classes of Loans/Leases

    

Investment

    

Balance

    

Allowance

    

Investment

    

Recognized

    

Received

(dollars in thousands)

 

  

 

  

 

  

 

  

 

  

 

  

Impaired Loans/Leases with No Specific Allowance Recorded:

 

  

 

  

 

  

 

  

 

  

 

  

C&I

$

1,978

$

2,051

$

$

1,512

$

25

$

25

CRE

 

  

 

 

  

 

  

 

  

 

  

Owner-Occupied CRE

 

320

 

577

 

 

128

 

 

Commercial Construction, Land Development, and Other Land

 

 

 

 

 

 

Other Non Owner-Occupied CRE

 

965

 

965

 

 

742

 

14

 

14

Direct Financing Leases

 

1,364

 

1,364

 

 

1,379

 

11

 

11

Residential Real Estate

 

624

 

652

 

 

474

 

 

Installment and Other Consumer

 

562

 

562

 

 

525

 

 

$

5,813

$

6,171

$

$

4,760

$

50

$

50

 

  

 

  

 

  

 

  

 

  

 

  

Impaired Loans/Leases with Specific Allowance Recorded:

 

  

 

  

 

  

 

  

 

  

 

  

C&I

$

569

$

569

$

341

$

479

$

$

CRE

 

 

 

 

 

 

Owner-Occupied CRE

 

 

 

 

 

 

Commercial Construction, Land Development, and Other Land

 

 

 

 

 

 

Other Non Owner-Occupied CRE

 

6,530

 

6,530

 

1,692

 

5,329

 

 

Direct Financing Leases

 

55

 

55

 

20

 

59

 

 

Residential Real Estate

 

260

 

260

 

23

 

206

 

 

Installment and Other Consumer

 

78

 

78

 

78

 

67

 

 

$

7,492

$

7,492

$

2,154

$

6,140

$

$

 

  

 

  

 

  

 

  

 

  

 

  

Total Impaired Loans/Leases:

 

  

 

  

 

  

 

  

 

  

 

  

C&I

$

2,547

$

2,620

$

341

$

1,991

$

25

$

25

CRE

 

  

 

  

 

  

 

  

 

  

 

  

Owner-Occupied CRE

 

320

 

577

 

 

128

 

 

Commercial Construction, Land Development, and Other Land

 

 

 

 

 

 

Other Non Owner-Occupied CRE

 

7,495

 

7,495

 

1,692

 

6,071

 

14

 

14

Direct Financing Leases

 

1,419

 

1,419

 

20

 

1,438

 

11

 

11

Residential Real Estate

 

884

 

912

 

23

 

680

 

 

Installment and Other Consumer

 

640

 

640

 

78

 

592

 

 

$

13,305

$

13,663

$

2,154

$

10,900

$

50

$

50

Loans/leases, by classes of financing receivable, considered to be impaired as of and for the three months ended June 30, 2020 and 2019 are presented as follows:

Three Months Ended June 30, 2020

Three Months Ended June 30, 2019

    

Interest Income

Interest Income

Average

Recognized for

Average

Recognized for

Recorded

Interest Income

Cash Payments

Recorded

Interest Income

Cash Payments

Classes of Loans/Leases

Investment

    

Recognized

    

Received

Investment

    

Recognized

    

Received

 

(dollars in thousands)

Impaired Loans/Leases with No Specific Allowance Recorded:

 

  

 

  

 

  

  

 

  

 

  

C&I

$

1,742

$

13

$

13

$

1,683

$

29

$

29

CRE

 

  

 

  

 

  

 

 

 

Owner-Occupied CRE

 

174

 

 

 

194

 

7

 

7

Commercial Construction, Land Development, and Other Land

 

 

 

 

603

 

6

 

6

Other Non Owner-Occupied CRE

 

978

 

7

 

7

 

3,985

 

22

 

22

Direct Financing Leases

 

1,411

 

6

 

6

 

1,795

 

7

 

7

Residential Real Estate

 

524

 

 

 

801

 

 

Installment and Other Consumer

 

550

 

 

 

816

 

3

 

3

$

5,379

$

26

$

26

$

9,877

$

74

$

74

 

  

 

  

 

  

 

  

 

  

 

  

Impaired Loans/Leases with Specific Allowance Recorded:

 

  

 

  

 

  

 

  

 

  

 

  

C&I

$

568

$

$

$

2,046

$

9

$

9

CRE

 

 

  

 

  

 

 

 

Owner-Occupied CRE

 

 

 

 

127

 

 

Commercial Construction, Land Development, and Other Land

 

 

 

 

143

 

 

Other Non Owner-Occupied CRE

 

6,560

 

 

 

1,980

 

 

Direct Financing Leases

 

57

 

 

 

227

 

 

Residential Real Estate

 

220

 

 

 

822

 

1

 

1

Installment and Other Consumer

 

70

 

 

 

150

 

 

$

7,475

$

$

$

5,495

$

10

$

10

 

  

 

  

 

  

 

  

 

  

 

  

Total Impaired Loans/Leases:

 

  

 

  

 

  

 

  

 

  

 

  

C&I

$

2,310

$

13

$

13

$

3,729

$

38

$

38

CRE

 

  

 

  

 

  

 

  

 

  

 

  

Owner-Occupied CRE

 

174

 

 

 

321

 

7

 

7

Commercial Construction, Land Development, and Other Land

 

 

 

 

746

 

6

 

6

Other Non Owner-Occupied CRE

 

7,538

 

7

 

7

 

5,965

 

22

 

22

Direct Financing Leases

 

1,468

 

6

 

6

 

2,022

 

7

 

7

Residential Real Estate

 

744

 

 

 

1,623

 

1

 

1

Installment and Other Consumer

 

620

 

 

 

966

 

3

 

3

$

12,854

$

26

$

26

$

15,372

$

84

$

84

Loans/leases, by classes of financing receivable, considered to be impaired as of December 31, 2019 are presented as

follows:

Unpaid 

Recorded

Principal

Related

Classes of Loans/Leases

    

Investment

    

Balance

    

Allowance

 

(dollars in thousands)

Impaired Loans/Leases with No Specific Allowance Recorded:

 

  

 

  

 

  

C&I

$

1,607

$

1,647

$

CRE

 

  

 

  

 

  

Owner-Occupied CRE

 

34

 

50

 

Commercial Construction, Land Development, and Other Land

 

 

 

Other Non Owner-Occupied CRE

 

684

 

686

 

Direct Financing Leases

 

1,642

 

1,642

 

Residential Real Estate

 

469

 

614

 

Installment and Other Consumer

 

476

 

476

 

$

4,912

$

5,115

$

 

  

 

  

 

  

Impaired Loans/Leases with Specific Allowance Recorded:

 

  

 

  

 

  

C&I

$

239

$

239

$

170

CRE

 

  

 

  

 

  

Owner-Occupied CRE

 

 

 

Commercial Construction, Land Development, and Other Land

 

 

 

Other Non Owner-Occupied CRE

 

2,867

 

2,867

 

125

Direct Financing Leases

 

383

 

383

 

270

Residential Real Estate

 

180

 

180

 

15

Installment and Other Consumer

 

80

 

80

 

80

$

3,749

$

3,749

$

660

 

  

 

  

 

  

Total Impaired Loans/Leases:

 

  

 

  

 

C&I

$

1,846

$

1,886

$

170

CRE

 

 

 

Owner-Occupied CRE

 

34

 

50

 

Commercial Construction, Land Development, and Other Land

 

 

 

Other Non Owner-Occupied CRE

 

3,551

 

3,553

 

125

Direct Financing Leases

 

2,025

 

2,025

 

270

Residential Real Estate

 

649

 

794

 

15

Installment and Other Consumer

 

556

 

556

 

80

$

8,661

$

8,864

$

660

Impaired loans/leases for which no allowance has been provided have adequate collateral, based on management’s current estimates.

For C&I and CRE loans, the Company’s credit quality indicator consists of internally assigned risk ratings.  Each commercial loan is assigned a risk rating upon origination. The risk rating is reviewed every 15 months, at a minimum, and on an as-needed basis depending on the specific circumstances of the loan.

For certain C&I loans (equipment financing agreements), direct financing leases, residential real estate loans, and installment and other consumer loans, the Company’s credit quality indicator is performance determined by delinquency status.  Delinquency status is updated daily by the Company’s loan system.

For each class of financing receivable, the following presents the recorded investment by credit quality indicator as of June 30, 2020 and December 31, 2019:

As of June 30, 2020

 

CRE

Non-Owner Occupied

Commercial

 

Construction,

 

Land

 

Owner-Occupied

Development,

As a % of

 

Internally Assigned Risk Rating

    

C&I

    

CRE

    

and Other Land

    

Other CRE

    

Total

    

Total

 

 

(dollars in thousands)

Pass (Ratings 1 through 5)

$

1,643,654

$

463,570

$

430,206

$

883,724

$

3,421,154

 

95.95

%

Special Mention (Rating 6)

 

29,046

 

857

 

11,158

 

63,547

 

104,608

 

2.93

%

Substandard (Rating 7)

 

23,755

 

3,110

 

 

12,990

 

39,855

 

1.12

%

Doubtful (Rating 8)

 

 

 

 

 

 

%

$

1,696,455

$

467,537

$

441,364

$

960,261

$

3,565,617

 

100.00

%

As of June 30, 2020

 

Direct Financing

Residential Real

Installment and

As a % of

 

Delinquency Status *

    

C&I

    

Leases

    

Estate

    

Other Consumer

    

Total

    

Total

 

(dollars in thousands)

Performing

$

151,242

$

77,797

$

240,133

$

98,472

$

567,644

 

99.07

%

Nonperforming

 

2,413

 

1,308

 

936

 

678

 

5,335

 

0.93

%

$

153,655

$

79,105

$

241,069

$

99,150

$

572,979

 

100.00

%

As of December 31, 2019

 

CRE

Non-Owner Occupied

Commercial

 

Construction,

 

Land

 

Owner-Occupied

Development,

As a % of

 

Internally Assigned Risk Rating

    

C&I

    

CRE

    

and Other Land

    

Other CRE

    

Total

    

Total

 

 

(dollars in thousands)

Pass (Ratings 1 through 5)

$

1,334,446

$

439,418

$

378,572

$

896,206

$

3,048,642

 

98.28

%

Special Mention (Rating 6)

 

12,962

 

3,044

 

41

 

3,905

 

19,952

 

0.65

%

Substandard (Rating 7)

 

18,439

 

1,527

 

184

 

13,499

 

33,649

 

1.09

%

Doubtful (Rating 8)

 

 

 

 

 

 

0.01

%

$

1,365,847

$

443,989

$

378,797

$

913,610

$

3,102,243

 

100.00

%

As of December 31, 2019

 

Direct Financing

Residential Real

Installment and

As a % of

 

Delinquency Status *

    

C&I

    

Leases

    

Estate

    

Other Consumer

    

Total

    

Total

 

(dollars in thousands)

Performing

$

140,992

$

86,019

$

239,198

$

108,763

$

574,972

 

99.29

%

Nonperforming

 

986

 

1,850

 

706

 

589

 

4,131

 

0.71

%

$

141,978

$

87,869

$

239,904

$

109,352

$

579,103

 

100.00

%

*     Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual, accruing loans/leases that are greater than or equal to 90 days past due, and accruing TDRs.

As of June 30, 2020 and December 31, 2019, TDRs totaled $1.3 million and $1.7 million, respectively.

For each class of financing receivable, the following presents the number and recorded investment of TDRs, by type of concession, that were restructured during the three and six months ended June 30, 2020 and 2019. The difference between the pre-modification recorded investment and the post-modification recorded investment would be any partial charge-offs at the time of the restructuring.

For the three months ended June 30, 2020

For the three months ended June 30, 2019

   

   

Pre-

    

Post-

    

    

    

Pre-

    

Post-

    

Modification

Modification

Modification

Modification

Number of

Recorded

Recorded

Specific

Number of

Recorded

Recorded

Specific

Classes of Loans/Leases

Loans / Leases

Investment

Investment

Allowance

Loans / Leases

Investment

Investment

Allowance

(dollars in thousands)

CONCESSION - Significant Payment Delay

 

  

 

  

 

  

 

  

  

 

  

 

  

 

  

C&I

$

$

$

1

$

52

$

52

$

Direct Financing Leases

 

2

78

78

 

2

$

78

$

78

$

1

$

52

$

52

$

 

  

 

  

 

  

 

  

  

 

  

 

  

 

  

CONCESSION - Forgiveness of Principal

 

  

 

  

 

  

 

  

  

 

  

 

  

 

  

C&I

 

$

$

$

1

$

587

$

537

$

$

$

$

1

$

587

$

537

$

TOTAL

 

2

$

78

$

78

$

2

$

639

$

589

$

 

  

 

  

 

  

 

  

  

 

  

 

  

 

  

For the six months ended June 30, 2020

For the six months ended June 30, 2019

   

   

Pre-

    

Post-

    

    

    

Pre-

    

Post-

    

Modification

Modification

Modification

Modification

Number of

Recorded

Recorded

Specific

Number of

Recorded

Recorded

Specific

Classes of Loans/Leases

Loans / Leases

Investment

Investment

Allowance

Loans / Leases

Investment

Investment

Allowance

(dollars in thousands)

CONCESSION - Significant Payment Delay

 

  

 

  

 

  

 

  

  

 

  

 

  

 

  

C & I

2

$

111

$

111

$

2

$

71

$

71

$

Direct Financing Leases

 

3

145

145

3

103

103

5

 

5

$

256

$

256

$

5

$

174

$

174

$

5

CONCESSION - Forgiveness of Principal

 

  

 

  

 

  

 

  

  

 

  

 

  

 

  

C & I

 

$

$

$

1

587

537

TOTAL

 

5

 

$

256

$

256

$

6

$

761

$

711

$

5

Of the loans restructured during the six months ended June 30, 2020, none were on nonaccrual.  Of the loans restructured during the six months ended June 30, 2019, two with post-modification recorded balances of $65 thousand were on nonaccrual.

For the three months ended June 30, 2020, two of the Company's TDRs redefaulted within 12 months subsequent to restructure, where default is defined as delinquency of 90 days or more and/or placement on nonaccrual status. These TDRs were related to one equipment financing agreement customer whose loans were restructured in fourth quarter of 2019 with pre-modification balances totaling $93 thousand.  For the six months ended June 30, 2020, three of the Company's TDRs redefaulted within 12 months subsequent to restructure, where default is defined as delinquency of 90 days or more and/or placement on nonaccrual status. These TDRs included the two that defaulted in the current quarter as well as a lease that was restructured in the fourth quarter of 2019 with pre-modification balances totaling $55 thousand.

For the three and six months ended June 30, 2019, three of the Company's TDRs redefaulted within 12 months subsequent to restructure, where default is defined as delinquency of 90 days or more and/or placement on nonaccrual status.  Two of these TDRs were related to one customer whose leases were restructured in the first quarter of 2019 with pre-modification balances totaling $66 thousand.  The other TDR related to a customer whose loan was restructured in the third quarter of 2018 with an original pre-modification balance of $2.9 million and a current pre-modification balance of $1.5 million and a partial charge off of $879 thousand in the second quarter of 2019.

Not included in the table above, the Company had seven TDRs that were restructured and charged off for the six months ended June 30, 2020, totaling $354 thousand. The Company had three TDRs that were restructured and charged off for the six months ended June 30, 2019, totaling $161 thousand.

On March 22, 2020, federal banking regulators issued an interagency statement that included guidance on their approach for the accounting of loan modifications in light of the economic impact of the COVID-19 pandemic. The guidance interprets current accounting standards and indicates that a lender can conclude that a borrower is not experiencing financial difficulty if short-term modifications are made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms or other delays in payment that are insignificant related to the loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification program is implemented. The agencies confirmed in working with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs.

In addition, the CARES Act provides financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19. To be eligible, the modification must be related to COVID-19, existing loan could not be more than 30 days past due as of December 31, 2019 and modification executed between March 1, 2020 and earlier of 60 days after the termination of the National Emergency or December 31, 2020. If a modification does not meet the criteria of the CARES act, a deferral can still be excluded from TDR treatment as long as the modifications meet the FASB criteria discussed in the preceding paragraph.

The Company implemented its LRP offering to extend qualifying customers’ payments for 90 days.  As of June 30, 2020, the program has provided 1,466 Bank modifications of loans to commercial and consumer clients totaling $491 million and 935 m2 modifications of loans and leases totaling $53 million, representing 11.86% and 1.2% of the total loan and lease portfolio, respectively.