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LOANS AND ALLOWANCE FOR CREDIT LOSSES
9 Months Ended
Sep. 30, 2021
LOANS AND ALLOWANCE FOR CREDIT LOSSES  
LOANS AND ALLOWANCE FOR CREDIT LOSSES

4. LOANS AND ALLOWANCE FOR CREDIT LOSSES

The composition of the loan portfolio follows:

(in thousands)

   

September 30, 2021

    

December 31, 2020

 

Traditional Banking:

Residential real estate:

Owner occupied

$

827,898

$

879,800

Nonowner occupied

 

294,818

 

264,780

Commercial real estate

 

1,393,241

 

1,349,085

Construction & land development

 

105,968

 

98,674

Commercial & industrial

 

333,795

 

325,596

Paycheck Protection Program

126,271

392,319

Lease financing receivables

 

9,427

 

10,130

Aircraft

130,398

101,375

Home equity

 

215,282

 

240,640

Consumer:

Credit cards

 

14,781

 

14,196

Overdrafts

 

753

 

587

Automobile loans

 

17,533

 

30,300

Other consumer

 

6,223

 

8,167

Total Traditional Banking

3,476,388

3,715,649

Warehouse lines of credit*

 

750,682

 

962,796

Total Core Banking

4,227,070

4,678,445

Republic Processing Group*:

 

Tax Refund Solutions:

Easy Advances

Other TRS loans

1

Republic Credit Solutions

116,711

 

110,893

Total Republic Processing Group

116,712

110,893

Total loans**

 

4,343,782

 

4,789,338

Allowance for credit losses

 

(63,024)

 

(61,067)

Total loans, net

$

4,280,758

$

4,728,271

*Identifies loans to borrowers located primarily outside of the Bank’s market footprint.

**Total loans are presented inclusive of premiums, discounts and net loan origination fees and costs. See table directly below for expanded detail.

The following table reconciles the contractually receivable and carrying amounts of loans:

(in thousands)

    

September 30, 2021

    

December 31, 2020

 

Contractually receivable

$

4,348,535

$

4,797,297

Unearned income

 

(598)

 

(708)

Unamortized premiums

 

121

 

216

Unaccreted discounts

 

(688)

 

(988)

PPP net unamortized deferred origination fees and costs

(3,986)

(8,564)

Other net unamortized deferred origination fees and costs

 

398

 

2,085

Carrying value of loans

$

4,343,782

$

4,789,338

Paycheck Protection Program

The CARES Act was enacted in March 2020 and provided for the SBA’s PPP, which allowed the Bank to lend to its qualifying small business clients to assist them in their efforts to meet their cash-flow needs during the COVID-19 pandemic. The Economic Aid Act was enacted in December 2020 and provided for a second round of PPP loans. PPP loans are fully backed by the SBA and may be entirely forgiven if the loan client uses loan funds for qualifying reasons. As of September 30, 2021, net PPP loans of $126 million remained on the Traditional Bank’s balance sheet, including $19 million in loan balances originated during 2020, $111 million in loan balances originated during 2021, and $4 million of unaccreted PPP fees reported as a credit offset to these originated balances. Unaccreted PPP fees will generally be recognized into income over the estimated remaining life of the PPP portfolio, with fee recognition accelerated if loans are forgiven or repaid earlier than estimated.

To provide liquidity to banks administering the SBA’s PPP, the FRB created the PPPLF, a lending facility secured by the PPP loans of the participating banks. As of September 30, 2021, the Bank had no outstanding borrowings from the FRB under the PPPLF.

Credit Quality Indicators

The following tables include loans by segment, risk category, and, for non-revolving loans, origination year. Loan segments and risk categories as of September 30, 2021 remain unchanged from those defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Regarding origination year, loan extensions and renewals are generally considered originated in the year extended or renewed unless the loan is classified as a TDR. Loan extensions and renewals classified as TDRs generally receive no change in origination date upon extension or renewal.

Revolving Loans

Revolving Loans

(in thousands)

Term Loans Amortized Cost Basis by Origination Year

Amortized

Converted

As of September 30, 2021

2021

2020

2019

2018

Prior

Cost Basis

to Term

Total

Residential real estate owner occupied:

Risk Rating

Pass or not rated

$

170,594

$

229,444

$

96,923

$

56,318

$

251,929

$

$

$

805,208

Special Mention

304

36

8,509

8,849

Substandard

557

685

1,006

11,593

13,841

Doubtful

Total

$

170,898

$

230,001

$

97,608

$

57,360

$

272,031

$

$

$

827,898

Residential real estate nonowner occupied:

Risk Rating

Pass or not rated

$

75,983

$

71,290

$

50,082

$

32,111

$

61,625

$

$

3,588

$

294,679

Special Mention

40

40

Substandard

99

99

Doubtful

Total

$

75,983

$

71,290

$

50,082

$

32,111

$

61,764

$

$

3,588

$

294,818

Commercial real estate:

Risk Rating

Pass or not rated

$

362,616

$

271,691

$

179,046

$

104,300

$

311,904

$

$

79,005

$

1,308,562

Special Mention

12,103

2,411

29,879

11,535

19,767

75,695

Substandard

2,576

266

3,941

2,201

8,984

Doubtful

Total

$

374,719

$

276,678

$

209,191

$

115,835

$

335,612

$

$

81,206

$

1,393,241

Construction and land development:

Risk Rating

Pass or not rated

$

59,659

$

37,136

$

4,384

$

1,527

$

593

$

$

$

103,299

Special Mention

310

2,359

2,669

Substandard

Doubtful

Total

$

59,659

$

37,446

$

6,743

$

1,527

$

593

$

$

$

105,968

Commercial and industrial:

Risk Rating

Pass or not rated

$

117,127

$

55,354

$

66,818

$

21,262

$

48,361

$

$

4,112

$

313,034

Special Mention

15,398

2,344

800

43

2,095

20,680

Substandard

48

33

81

Doubtful

Total

$

132,525

$

57,746

$

67,618

$

21,305

$

50,489

$

$

4,112

$

333,795

Paycheck Protection Program:

Risk Rating

Pass or not rated

$

107,498

$

18,773

$

$

$

$

$

$

126,271

Special Mention

Substandard

Doubtful

Total

$

107,498

$

18,773

$

$

$

$

$

$

126,271

Lease financing receivables:

Risk Rating

Pass or not rated

$

2,068

$

903

$

2,896

$

1,406

$

2,154

$

$

$

9,427

Special Mention

Substandard

Doubtful

Total

$

2,068

$

903

$

2,896

$

1,406

$

2,154

$

$

$

9,427

Aircraft:

Risk Rating

Pass or not rated

$

47,983

$

46,405

$

24,134

$

10,049

$

1,827

$

$

$

130,398

Special Mention

Substandard

Doubtful

Total

$

47,983

$

46,405

$

24,134

$

10,049

$

1,827

$

$

$

130,398

Home equity:

Risk Rating

Pass or not rated

$

$

$

$

$

$

213,297

$

$

213,297

Special Mention

125

125

Substandard

1,860

1,860

Doubtful

Total

$

$

$

$

$

$

215,282

$

$

215,282

Revolving Loans

Revolving Loans

(in thousands)

Term Loans Amortized Cost Basis by Origination Year (Continued)

Amortized

Converted

As of September 30, 2021

2021

2020

2019

2018

Prior

Cost Basis

to Term

Total

Consumer:

Risk Rating

Pass or not rated

$

844

$

725

$

10,451

$

5,156

$

6,864

$

14,880

$

$

38,920

Special Mention

Substandard

25

47

298

370

Doubtful

Total

$

844

$

725

$

10,476

$

5,203

$

7,162

$

14,880

$

$

39,290

Warehouse:

Risk Rating

Pass or not rated

$

$

$

$

$

$

750,682

$

$

750,682

Special Mention

Substandard

Doubtful

Total

$

$

$

$

$

$

750,682

$

$

750,682

TRS:

Risk Rating

Pass or not rated

$

$

$

$

$

$

1

$

$

1

Special Mention

Substandard

Doubtful

Total

$

$

$

$

$

$

1

$

$

1

RCS:

Risk Rating

Pass or not rated

$

23,112

$

9,275

$

2,387

$

985

$

3,943

$

76,004

$

$

115,706

Special Mention

Substandard

1,005

1,005

Doubtful

Total

$

23,112

$

9,275

$

2,387

$

985

$

3,943

$

77,009

$

$

116,711

Grand Total:

Risk Rating

Pass or not rated

$

967,484

$

740,996

$

437,121

$

233,114

$

689,200

$

1,054,864

$

86,705

$

4,209,484

Special Mention

27,805

5,065

33,038

11,614

30,411

125

108,058

Substandard

3,181

976

1,053

15,964

2,865

2,201

26,240

Doubtful

Grand Total

$

995,289

$

749,242

$

471,135

$

245,781

$

735,575

$

1,057,854

$

88,906

$

4,343,782

Revolving Loans

Revolving Loans

(in thousands)

Term Loans Amortized Cost Basis by Origination Year

Amortized

Converted

As of December 31, 2020

2020

2019

2018

2017

Prior

Cost Basis

to Term

Total

Residential real estate owner occupied:

Risk Rating

Pass or not rated

$

268,313

$

132,018

$

82,754

$

67,430

$

301,366

$

$

$

851,881

Special Mention

364

42

1,610

8,730

10,746

Substandard

394

1,423

1,331

614

13,411

17,173

Doubtful

Total

$

268,707

$

133,805

$

84,127

$

69,654

$

323,507

$

$

$

879,800

Residential real estate nonowner occupied:

Risk Rating

Pass or not rated

$

73,291

$

63,102

$

43,610

$

45,759

$

38,316

$

$

621

$

264,699

Special Mention

Substandard

81

81

Doubtful

Total

$

73,291

$

63,102

$

43,610

$

45,759

$

38,397

$

$

621

$

264,780

Commercial real estate:

Risk Rating

Pass or not rated

$

315,550

$

258,251

$

166,542

$

171,207

$

315,336

$

$

55,949

$

1,282,835

Special Mention

3,397

30,969

236

11,355

9,659

55,616

Substandard

2,596

349

987

3,899

2,803

10,634

Doubtful

Total

$

321,543

$

289,569

$

166,778

$

183,549

$

328,894

$

$

58,752

$

1,349,085

Construction and land development:

Risk Rating

Pass or not rated

$

53,972

$

31,756

$

7,840

$

701

$

1,964

$

$

$

96,233

Special Mention

2,397

2,397

Substandard

44

44

Doubtful

Total

$

53,972

$

34,197

$

7,840

$

701

$

1,964

$

$

$

98,674

Commercial and industrial:

Risk Rating

Pass or not rated

$

105,985

$

84,575

$

33,391

$

32,303

$

46,697

$

$

1,040

$

303,991

Special Mention

18,195

800

2,215

21,210

Substandard

383

12

395

Doubtful

Total

$

124,563

$

85,387

$

33,391

$

32,303

$

48,912

$

$

1,040

$

325,596

Revolving Loans

Revolving Loans

(in thousands)

Term Loans Amortized Cost Basis by Origination Year (Continued)

Amortized

Converted

As of December 31, 2020

2020

2019

2018

2017

Prior

Cost Basis

to Term

Total

Paycheck Protection Program:

Risk Rating

Pass or not rated

$

392,319

$

$

$

$

$

$

$

392,319

Special Mention

Substandard

Doubtful

Total

$

392,319

$

$

$

$

$

$

$

392,319

Lease financing receivables:

Risk Rating

Pass or not rated

$

1,117

$

3,663

$

1,814

$

2,847

$

689

$

$

$

10,130

Special Mention

Substandard

Doubtful

Total

$

1,117

$

3,663

$

1,814

$

2,847

$

689

$

$

$

10,130

Aircraft:

Risk Rating

Pass or not rated

$

55,823

$

30,529

$

13,804

$

1,219

$

$

$

$

101,375

Special Mention

Substandard

Doubtful

Total

$

55,823

$

30,529

$

13,804

$

1,219

$

$

$

$

101,375

Home equity:

Risk Rating

Pass or not rated

$

$

$

$

$

$

237,633

$

$

237,633

Special Mention

127

127

Substandard

2,880

2,880

Doubtful

Total

$

$

$

$

$

$

240,640

$

$

240,640

Consumer:

Risk Rating

Pass or not rated

$

425

$

13,636

$

8,563

$

7,125

$

8,648

$

14,321

$

$

52,718

Special Mention

5

5

Substandard

32

49

229

212

5

527

Doubtful

Total

$

425

$

13,668

$

8,612

$

7,354

$

8,865

$

14,326

$

$

53,250

Warehouse:

Risk Rating

Pass or not rated

$

$

$

$

$

$

962,796

$

$

962,796

Special Mention

Substandard

Doubtful

Total

$

$

$

$

$

$

962,796

$

$

962,796

TRS:

Risk Rating

Pass or not rated

$

$

$

$

$

$

$

$

Special Mention

Substandard

Doubtful

Total

$

$

$

$

$

$

$

$

RCS:

Risk Rating

Pass or not rated

$

27,683

$

5,704

$

2,485

$

1,232

$

19,095

$

54,348

$

$

110,547

Special Mention

Substandard

346

346

Doubtful

Total

$

27,683

$

5,704

$

2,485

$

1,232

$

19,095

$

54,694

$

$

110,893

Grand Total:

Risk Rating

Pass or not rated

$

1,294,478

$

623,234

$

360,803

$

329,823

$

732,111

$

1,269,098

$

57,610

$

4,667,157

Special Mention

21,592

34,530

278

12,965

20,609

127

90,101

Substandard

3,373

1,860

1,380

1,830

17,603

3,231

2,803

32,080

Doubtful

Grand Total

$

1,319,443

$

659,624

$

362,461

$

344,618

$

770,323

$

1,272,456

$

60,413

$

4,789,338

Allowance for Credit Losses on Loans

The following table presents the activity in the ACLL by portfolio class:

ACLL Rollforward

Three Months Ended September 30, 

2021

2020

Beginning

Charge-

Ending

Beginning

Charge-

Ending

(in thousands)

Balance

Provision

offs

Recoveries

Balance

Balance

Provision

offs

Recoveries

Balance

Traditional Banking:

Residential real estate:

Owner occupied

$

8,977

$

(677)

$

$

329

$

8,629

$

9,303

$

330

$

(13)

$

21

$

9,641

Nonowner occupied

2,551

47

2,598

2,274

96

7

2,377

Commercial real estate

23,307

286

3

23,596

16,300

4,663

20,963

Construction & land development

3,299

376

3,675

4,940

(341)

4,599

Commercial & industrial

4,117

(139)

(35)

16

3,959

2,405

654

(255)

80

2,884

Paycheck Protection Program

Lease financing receivables

97

2

99

125

(8)

117

Aircraft

303

23

326

208

11

219

Home equity

4,305

(63)

5

4,247

5,124

(7)

(14)

21

5,124

Consumer:

Credit cards

949

22

(40)

20

951

928

36

(29)

7

942

Overdrafts

717

143

(195)

88

753

488

324

(157)

50

705

Automobile loans

273

(34)

(19)

6

226

473

(67)

406

Other consumer

467

(28)

(25)

14

428

609

92

(41)

20

680

Total Traditional Banking

49,362

(42)

(314)

481

49,487

43,177

5,783

(509)

206

48,657

Warehouse lines of credit

2,100

(223)

1,877

2,575

(3)

2,572

Total Core Banking

51,462

(265)

(314)

481

51,364

45,752

5,780

(509)

206

51,229

Republic Processing Group (includes discontinued operations):

Tax Refund Solutions:

Easy Advances (discontinued operations)

(2,242)

2,242

(4,294)

4,294

Other TRS loans (discontinued operations)

(19)

19

211

(48)

(22)

141

Republic Credit Solutions (continuing operations)

8,829

3,820

(1,064)

75

11,660

9,134

(12)

(684)

83

8,521

Total Republic Processing Group

8,829

1,559

(1,064)

2,336

11,660

9,345

(4,354)

(706)

4,377

8,662

Total

$

60,291

$

1,294

$

(1,378)

$

2,817

$

63,024

$

55,097

$

1,426

$

(1,215)

$

4,583

$

59,891

ACLL Rollforward

Nine Months Ended September 30, 

2021

2020

Beginning

Charge-

Ending

Beginning

ASC 326

Charge-

Ending

(in thousands)

Balance

Provision

offs

Recoveries

Balance

Balance

Adoption

Provision

offs

Recoveries

Balance

Traditional Banking:

Residential real estate:

Owner occupied

$

9,715

$

(1,461)

$

$

375

$

8,629

$

4,729

$

4,199

$

648

$

(40)

$

105

$

9,641

Nonowner occupied

2,466

131

1

2,598

1,737

148

481

11

2,377

Commercial real estate

23,606

336

(428)

82

23,596

10,486

273

10,002

(270)

472

20,963

Construction & land development

3,274

401

3,675

2,152

1,447

1,000

4,599

Commercial & industrial

2,797

1,170

(35)

27

3,959

2,882

(1,318)

1,643

(447)

124

2,884

Paycheck Protection Program

Lease financing receivables

106

(7)

99

147

(30)

117

Aircraft

253

73

326

176

43

219

Home equity

4,990

(789)

46

4,247

2,721

1,652

657

(14)

108

5,124

Consumer:

Credit cards

929

108

(130)

44

951

1,020

33

74

(206)

21

942

Overdrafts

587

351

(444)

259

753

1,169

13

(660)

183

705

Automobile loans

399

(178)

(19)

24

226

612

(7)

(220)

(8)

29

406

Other consumer

577

(137)

(56)

44

428

374

307

(81)

(86)

166

680

Total Traditional Banking

49,699

(2)

(1,112)

902

49,487

28,205

6,734

14,230

(1,731)

1,219

48,657

Warehouse lines of credit

2,407

(530)

1,877

1,794

778

2,572

Total Core Banking

52,106

(532)

(1,112)

902

51,364

29,999

6,734

15,008

(1,731)

1,219

51,229

Republic Processing Group (includes discontinued operations):

Tax Refund Solutions:

Easy Advances (discontinued operations)

7,984

(10,256)

2,272

15,239

(19,575)

4,336

Other TRS loans (discontinued operations)

158

(134)

(51)

27

234

(94)

1

141

Republic Credit Solutions (continuing operations)

8,803

5,037

(2,427)

247

11,660

13,118

251

(5,401)

553

8,521

Total Republic Processing Group

8,961

12,887

(12,734)

2,546

11,660

13,352

15,490

(25,070)

4,890

8,662

Total

$

61,067

$

12,355

$

(13,846)

$

3,448

$

63,024

$

43,351

$

6,734

$

30,498

$

(26,801)

$

6,109

$

59,891

The cumulative loss rate used as the basis for the estimate of the Company’s ACLL as of September 30, 2021 was primarily based on a static pool analysis of each of the Company’s loan pools using the Company’s loss experience from 2013 through 2020, supplemented by qualitative factor adjustments for current and forecasted conditions. The Company employs one-year forecasts of unemployment and CRE values within its ACLL model, with reversion to long-term averages following the forecasted period. The cumulative loss rate within the Company’s ACLL also includes estimated losses based on an individual evaluation of loans which are either collateral dependent or which do not share risk characteristics with pooled loans, e.g., TDRs.

For its CRE loan pool, the Company employed a one-year forecast of CRE vacancy rates through March 31, 2021 but discontinued use of this forecast during the second quarter of 2021 in favor of a one-year forecast of general CRE values. This change in forecast method had no material impact on the Company’s ACLL.

Nonperforming Loans and Nonperforming Assets

Detail of nonperforming loans, nonperforming assets, and select credit quality ratios follows:

(dollars in thousands)

    

September 30, 2021

    

December 31, 2020

    

Loans on nonaccrual status*

$

20,252

$

23,548

Loans past due 90-days-or-more and still on accrual**

 

691

 

47

Total nonperforming loans

 

20,943

 

23,595

Other real estate owned

 

1,845

 

2,499

Total nonperforming assets

$

22,788

$

26,094

Credit Quality Ratios - Total Company:

Nonperforming loans to total loans

 

0.48

%  

 

0.49

%

Nonperforming assets to total loans (including OREO)

 

0.52

 

0.54

Nonperforming assets to total assets

 

0.37

 

0.42

Credit Quality Ratios - Core Bank:

Nonperforming loans to total loans

 

0.48

%  

 

0.50

%

Nonperforming assets to total loans (including OREO)

 

0.52

 

0.56

Nonperforming assets to total assets

 

0.39

 

0.45

*

Loans on nonaccrual status include collateral-dependent loans.

**

Loans past due 90-days-or-more and still accruing consist of smaller balance consumer loans.

The following tables present the recorded investment in nonaccrual loans and loans past due 90-days-or-more and still on accrual by class of loans:

Past Due 90-Days-or-More

Nonaccrual

and Still Accruing Interest*

(in thousands)

    

September 30, 2021

    

December 31, 2020

  

  

September 30, 2021

    

December 31, 2020

Traditional Banking:

Residential real estate:

Owner occupied

$

11,708

$

14,328

$

$

Nonowner occupied

 

99

 

81

 

 

Commercial real estate

 

6,607

 

6,762

 

 

Construction & land development

 

 

 

 

Commercial & industrial

 

93

 

55

 

 

Paycheck Protection Program

Lease financing receivables

 

 

 

 

Aircraft

Home equity

 

1,657

 

2,141

 

 

Consumer:

Credit cards

 

 

 

 

5

Overdrafts

 

 

 

 

Automobile loans

 

84

 

170

 

 

Other consumer

 

4

 

11

 

 

Total Traditional Banking

20,252

23,548

5

Warehouse lines of credit

 

 

 

 

Total Core Banking

20,252

23,548

5

Republic Processing Group:

Tax Refund Solutions:

Easy Advances

Other TRS loans

 

 

 

 

Republic Credit Solutions

691

42

Total Republic Processing Group

691

42

Total

$

20,252

$

23,548

$

691

$

47

* Loans past due 90-days-or-more and still accruing consist of smaller balance consumer loans.

Three Months Ended

Nine Months Ended

As of September 30, 2021

September 30, 2021

September 30, 2021

    

Nonaccrual

    

Nonaccrual

    

Total

Interest Income

    

Interest Income

Loans with

Loans without

Nonaccrual

Recognized

Recognized

(in thousands)

ACLL

ACLL

Loans

on Nonaccrual Loans*

on Nonaccrual Loans*

Residential real estate:

Owner occupied

$

2,041

$

9,667

$

11,708

$

225

$

672

Nonowner occupied

 

33

66

99

2

5

Commercial real estate

 

4,153

2,454

6,607

16

125

Construction & land development

 

Commercial & industrial

 

45

48

93

2

Paycheck Protection Program

Lease financing receivables

 

Aircraft

Home equity

 

63

1,594

1,657

19

121

Consumer

14

74

88

4

8

Total

$

6,349

$

13,903

$

20,252

$

266

$

933

* Includes interest income for loans on nonaccrual as of the beginning of the period that were paid off during the period.

Three Months Ended

Nine Months Ended

As of December 31, 2020

September 30, 2020

September 30, 2020

    

Nonaccrual

    

Nonaccrual

    

Total

Interest Income

    

Interest Income

Loans with

Loans without

Nonaccrual

Recognized

Recognized

(in thousands)

ACLL

ACLL

Loans

on Nonaccrual Loans*

on Nonaccrual Loans*

Residential real estate:

Owner occupied

$

1,995

$

12,333

$

14,328

$

252

$

649

Nonowner occupied

 

8

73

81

2

6

Commercial real estate

 

576

6,186

6,762

17

854

Construction & land development

 

7

7

Commercial & industrial

 

55

55

7

16

Paycheck Protection Program

Lease financing receivables

 

Aircraft

Home equity

 

91

2,050

2,141

29

81

Consumer

69

112

181

3

9

$

2,739

$

20,809

$

23,548

$

317

$

1,622

* Includes interest income for loans on nonaccrual as of the beginning of the period that were paid off during the period.

Nonaccrual loans and loans past due 90-days-or-more and still on accrual include both smaller balance, primarily retail, homogeneous loans. Nonaccrual loans are typically returned to accrual status when all the principal and interest amounts contractually due are brought current and held current for six consecutive months and future contractual payments are reasonably assured. TDRs on nonaccrual status are reviewed for return to accrual status on an individual basis, with additional consideration given to performance under the modified terms.

Delinquent Loans

The following tables present the aging of the recorded investment in loans by class of loans:

    

30 - 59

    

60 - 89

    

90 or More

    

    

    

    

    

    

 

September 30, 2021

Days

Days

Days

Total

Total

 

(dollars in thousands)

Delinquent

Delinquent

Delinquent*

Delinquent**

Current

Total

 

Traditional Banking:

Residential real estate:

Owner occupied

$

896

$

315

$

917

$

2,128

$

825,770

$

827,898

Nonowner occupied

 

 

 

 

 

294,818

 

294,818

Commercial real estate

 

 

 

5,037

 

5,037

 

1,388,204

 

1,393,241

Construction & land development

 

 

 

 

 

105,968

 

105,968

Commercial & industrial

 

8

 

 

58

 

66

 

333,729

 

333,795

Paycheck Protection Program

126,271

126,271

Lease financing receivables

 

 

 

 

 

9,427

 

9,427

Aircraft

130,398

130,398

Home equity

 

50

 

 

209

 

259

 

215,023

 

215,282

Consumer:

Credit cards

 

36

 

9

 

 

45

 

14,736

 

14,781

Overdrafts

 

137

 

6

 

2

 

145

 

608

 

753

Automobile loans

 

 

 

11

 

11

 

17,522

 

17,533

Other consumer

 

1

 

 

 

1

 

6,222

 

6,223

Total Traditional Banking

1,128

330

6,234

7,692

3,468,696

3,476,388

Warehouse lines of credit

 

 

 

 

 

750,682

 

750,682

Total Core Banking

1,128

330

6,234

7,692

4,219,378

4,227,070

Republic Processing Group:

Tax Refund Solutions:

Easy Advances

 

 

 

 

 

Other TRS loans

 

 

 

 

 

1

 

1

Republic Credit Solutions

6,828

 

2,182

 

691

 

9,701

 

107,010

 

116,711

Total Republic Processing Group

6,828

2,182

691

9,701

107,011

116,712

Total

$

7,956

$

2,512

$

6,925

$

17,393

$

4,326,389

$

4,343,782

Delinquency ratio***

 

0.18

%  

 

0.06

%  

 

0.16

%  

 

0.40

%  

*       All loans past due 90-days-or-more, excluding small balance consumer loans, were on nonaccrual status.

**     Delinquent status may be determined by either the number of days past due or number of payments past due.

***   Represents total loans 30-days-or-more past due by aging category divided by total loans.

    

30 - 59

    

60 - 89

    

90 or More

    

    

    

    

    

    

 

December 31, 2020

Days

Days

Days

Total

Total

 

(dollars in thousands)

Delinquent

Delinquent

Delinquent*

Delinquent**

Current

Total

 

Traditional Banking:

Residential real estate:

Owner occupied

$

1,038

$

668

$

1,554

$

3,260

$

876,540

$

879,800

Nonowner occupied

 

 

 

 

 

264,780

 

264,780

Commercial real estate

 

 

348

 

5,109

 

5,457

 

1,343,628

 

1,349,085

Construction & land development

 

 

 

 

 

98,674

 

98,674

Commercial & industrial

 

 

 

12

 

12

 

325,584

 

325,596

Paycheck Protection Program

392,319

392,319

Lease financing receivables

 

 

 

 

 

10,130

 

10,130

Aircraft

 

 

 

101,375

 

101,375

Home equity

 

93

 

14

 

595

 

702

 

239,938

 

240,640

Consumer:

Credit cards

 

33

 

35

 

5

 

73

 

14,123

 

14,196

Overdrafts

 

140

 

5

 

2

 

147

 

440

 

587

Automobile loans

 

42

 

 

14

 

56

 

30,244

 

30,300

Other consumer

 

6

 

 

 

6

 

8,161

 

8,167

Total Traditional Banking

1,352

1,070

7,291

9,713

3,705,936

3,715,649

Warehouse lines of credit

 

 

 

 

 

962,796

 

962,796

Total Core Banking

1,352

1,070

7,291

9,713

4,668,732

4,678,445

Republic Processing Group:

Tax Refund Solutions:

Easy Advances

 

 

 

 

 

Other TRS loans

 

 

 

 

 

 

Republic Credit Solutions

6,572

 

3,620

 

42

 

10,234

 

100,659

 

110,893

Total Republic Processing Group

6,572

3,620

42

10,234

100,659

110,893

Total

$

7,924

$

4,690

$

7,333

$

19,947

$

4,769,391

$

4,789,338

Delinquency ratio***

 

0.17

%  

 

0.10

%  

 

0.15

%  

 

0.42

%  

*       All loans past due 90-days-or-more, excluding smaller balance consumer loans, were on nonaccrual status.

**    Delinquent status may be determined by either the number of days past due or number of payments past due.

***  Represents total loans 30-days-or-more past due by aging category divided by total loans.

Collateral-Dependent Loans

The following table presents the amortized cost basis of collateral-dependent loans by class of loans:

September 30, 2021

December 31, 2020

Secured

    

Secured

Secured

    

Secured

by Real

by Personal

by Real

by Personal

(dollars in thousands)

Estate

Property

Estate

Property

Traditional Banking:

Residential real estate:

Owner occupied

$

13,645

$

$

17,212

$

Nonowner occupied

 

99

 

 

81

 

Commercial real estate

 

8,985

 

 

10,205

 

Construction & land development

 

 

 

 

Commercial & industrial

 

 

47

 

 

12

Paycheck Protection Program

Lease financing receivables

 

 

 

 

Aircraft

 

 

Home equity

 

1,860

 

 

2,899

 

Consumer

 

369

 

237

Total Traditional Banking

$

24,589

$

416

$

30,397

$

249

Collateral-dependent loans are generally secured by real estate or personal property. If there is insufficient collateral value to secure the Company’s recorded investment in these loans, they are charged down to collateral value less estimated selling cost, when selling costs are applicable. Selling costs range from 10%-13%, with those percentages based on annual studies performed by the Company.

Troubled Debt Restructurings

A TDR is a situation where, due to a borrower’s financial difficulties, the Bank grants a concession to the borrower that the Bank would not otherwise have considered. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of their debt in the foreseeable future without the modification. This evaluation is performed in accordance with the Bank’s internal underwriting policy.

The majority of the Bank’s commercial-related and construction TDRs involve a restructuring of financing terms, such as a reduction in the payment amount to require only interest and escrow (if required) and/or extending the maturity date of the debt. The substantial majority of the Bank’s residential real estate TDR concessions involve reducing the client’s loan payment through a rate reduction for a set period based on the borrower’s ability to service the modified loan payment. Retail loans may also be classified as TDRs due to legal modifications, such as bankruptcies.

Nonaccrual loans modified as TDRs typically remain on nonaccrual status and continue to be reported as nonperforming loans for a minimum of six consecutive months. Accruing loans modified as TDRs are evaluated for nonaccrual status based on a current evaluation of the borrower’s financial condition and ability and willingness to service the modified debt. As of September 30, 2021 and December 31, 2020, $6 million and $7 million of TDRs were on nonaccrual status.

Detail of TDRs differentiated by loan type and accrual status follows:

    

Troubled Debt

    

Troubled Debt

    

Total

 

Restructurings on

Restructurings on

Troubled Debt

 

Nonaccrual Status

Accrual Status

Restructurings

 

    

Number of

    

Recorded

    

Number of

    

Recorded

    

Number of

    

Recorded

 

September 30, 2021 (dollars in thousands)

Loans

Investment

Loans

Investment

Loans

Investment

Residential real estate

64

$

3,736

94

$

8,293

158

$

12,029

Commercial real estate

2

2,580

2

1,262

4

 

3,842

Commercial & industrial

1

1

1

 

1

Consumer

1

12

2,306

567

2,307

579

Total troubled debt restructurings

67

$

6,328

2,403

$

10,123

2,470

$

16,451

    

Troubled Debt

    

Troubled Debt

    

Total

 

Restructurings on

Restructurings on

Troubled Debt

 

Nonaccrual Status

Accrual Status

Restructurings

 

    

Number of

    

Recorded

    

Number of

    

Recorded

    

Number of

    

Recorded

 

December 31, 2020 (dollars in thousands)

Loans

Investment

Loans

Investment

Loans

Investment

Residential real estate

61

$

4,189

123

$

11,041

184

$

15,230

Commercial real estate

2

 

2,509

5

 

2,395

7

 

4,904

Construction & land development

 

1

 

44

1

 

44

Commercial & industrial

 

1

 

1

1

 

1

Consumer

1

14

2,194

585

2,195

599

Total troubled debt restructurings

64

$

6,712

2,324

$

14,066

2,388

$

20,778

The Bank considers a TDR to be performing to its modified terms if the loan is in accrual status and not past due 30-days-or-more as of the reporting date. A summary of the categories of TDR loan modifications outstanding and respective performance under modified terms as of September 30, 2021 and December 31, 2020 follows:

    

Troubled Debt

    

Troubled Debt

    

    

 

Restructurings

Restructurings

Total

 

Performing to

Not Performing to

Troubled Debt

 

Modified Terms

Modified Terms

Restructurings

 

    

Number of

    

Recorded

    

Number of

    

Recorded

    

Number of

    

Recorded

 

September 30, 2021 (dollars in thousands)

Loans

Investment

Loans

Investment

Loans

Investment

Residential real estate loans (including home equity loans):

Rate reduction

88

$

7,964

2

$

123

90

$

8,087

Principal deferral

7

 

605

1

 

160

8

 

765

Legal modification

51

 

2,758

9

 

419

60

 

3,177

Total residential TDRs

146

 

11,327

12

 

702

158

 

12,029

  

Commercial related and construction/land development loans:

Rate reduction

1

 

936

 

1

 

936

Principal deferral

3

 

444

1

 

2,463

4

 

2,907

Total commercial TDRs

4

 

1,380

1

 

2,463

5

 

3,843

Consumer loans:

Principal deferral

2,304

560

 

2,304

 

560

Legal modification

3

19

3

 

19

Total consumer TDRs

2,307

 

579

 

2,307

 

579

Total troubled debt restructurings

2,457

$

13,286

13

$

3,165

2,470

$

16,451

    

Troubled Debt

    

Troubled Debt

    

    

 

Restructurings

Restructurings

Total

 

Performing to

Not Performing to

Troubled Debt

 

Modified Terms

Modified Terms

Restructurings

 

    

Number of

    

Recorded

    

Number of

    

Recorded

    

Number of

    

Recorded

 

December 31, 2020 (dollars in thousands)

Loans

Investment

Loans

Investment

Loans

Investment

Residential real estate loans (including home equity loans):

Interest only payments

1

$

826

$

1

$

826

Rate reduction

101

 

9,526

6

 

370

107

 

9,896

Principal deferral

9

 

858

2

 

166

11

 

1,024

Legal modification

58

 

3,068

7

 

416

65

 

3,484

Total residential TDRs

169

 

14,278

15

 

952

184

 

15,230

  

Commercial related and construction/land development loans:

Interest only payments

1

 

488

 

1

 

488

Rate reduction

2

 

1,046

1

 

45

3

 

1,091

Principal deferral

4

 

906

1

 

2,464

5

 

3,370

Total commercial TDRs

7

 

2,440

2

 

2,509

9

 

4,949

Consumer loans:

Principal deferral

2,193

578

 

2,193

 

578

Legal modification

2

21

2

 

21

Total consumer TDRs

2,195

 

599

 

2,195

 

599

Total troubled debt restructurings

2,371

$

17,317

17

$

3,461

2,388

$

20,778

As of September 30, 2021 and December 31, 2020, 81% and 83% of the Bank’s TDR balances were performing according to their modified terms. The Bank had provided $2 million and $1 million of specific ACLL allocations to clients whose loan terms have been modified in TDRs as of September 30, 2021 and December 31, 2020. The Bank had no commitments to lend any additional material amounts to its existing TDR relationships as of September 30, 2021 or December 31, 2020.

A summary of the categories of TDR loan modifications by respective performance as of September 30, 2021 and 2020 that were modified during the three months ended September 30, 2021 and 2020 follows:

    

Troubled Debt

    

Troubled Debt

    

    

 

Restructurings

Restructurings

Total

 

Performing to

Not Performing to

Troubled Debt

 

Modified Terms

Modified Terms

Restructurings

 

    

Number of

    

Recorded

    

Number of

    

Recorded

    

Number of

    

Recorded

 

September 30, 2021 (dollars in thousands)

Loans

Investment

Loans

Investment

Loans

Investment

Residential real estate loans (including home equity loans):

Legal modification

3

$

142

1

$

14

4

$

156

Total residential TDRs

3

142

1

14

4

156

Consumer loans:

Principal deferral

124

 

13

 

124

 

13

Total consumer TDRs

124

 

13

 

124

 

13

Total troubled debt restructurings

127

$

155

1

$

14

128

$

169

    

Troubled Debt

    

Troubled Debt

    

    

 

Restructurings

Restructurings

Total

 

Performing to

Not Performing to

Troubled Debt

 

Modified Terms

Modified Terms

Restructurings

 

    

Number of

    

Recorded

    

Number of

    

Recorded

    

Number of

    

Recorded

 

September 30, 2020 (dollars in thousands)

Loans

Investment

Loans

Investment

Loans

Investment

Residential real estate loans (including home equity loans):

Principal deferral

2

$

54

1

$

4

3

$

58

Legal modification

4

152

1

20

5

172

Total residential TDRs

6

 

206

2

 

24

8

 

230

  

Consumer loans:

Principal deferral

221

 

29

 

221

29

Legal modification

1

 

15

 

1

15

Total consumer TDRs

222

 

44

 

222

 

44

Total troubled debt restructurings

228

$

250

2

$

24

230

$

274

The tables above are inclusive of loans that were TDRs at the end of previous periods and were re-modified, e.g., a maturity date extension during the current period.

As of September 30, 2021 and 2020, 92% and 91% of the Bank’s TDR balances that occurred during the third quarters of 2021 and 2020 were performing according to their modified terms. The Bank provided approximately $6,000 and $29,000 in specific ACLL allocations to clients whose loan terms were modified in TDRs during the third quarters of 2021 and 2020.

There was no significant change between the pre and post modification loan balances for the three months ending September 30, 2021 and 2020.

A summary of the categories of TDR loan modifications by respective performance as of September 30, 2021 and 2020 that were modified during the nine months ended September 30, 2021 and 2020 follows:

    

Troubled Debt

    

Troubled Debt

    

    

 

Restructurings

Restructurings

Total

 

Performing to

Not Performing to

Troubled Debt

 

Modified Terms

Modified Terms

Restructurings

 

    

Number of

    

Recorded

    

Number of

    

Recorded

    

Number of

    

Recorded

 

September 30, 2021 (dollars in thousands)

Loans

Investment

Loans

Investment

Loans

Investment

Residential real estate loans (including home equity loans):

Principal deferral

$

1

$

160

1

$

160

Legal modification

6

378

5

288

11

666

Total residential TDRs

6

 

378

6

 

448

12

 

826

  

Consumer loans:

Principal deferral

556

 

72

 

556

 

72

Legal modification

1

 

3

 

1

 

3

Total consumer TDRs

557

 

75

 

557

 

75

Total troubled debt restructurings

563

$

453

6

$

448

569

$

901

    

Troubled Debt

    

Troubled Debt

    

    

 

Restructurings

Restructurings

Total

 

Performing to

Not Performing to

Troubled Debt

 

Modified Terms

Modified Terms

Restructurings

 

    

Number of

    

Recorded

    

Number of

    

Recorded

    

Number of

    

Recorded

 

September 30, 2020 (dollars in thousands)

Loans

Investment

Loans

Investment

Loans

Investment

Residential real estate loans (including home equity loans):

Rate reduction

2

$

54

1

$

4

3

$

58

Legal modification

11

429

2

128

13

557

Total residential TDRs

13

 

483

3

 

132

16

 

615

Commercial related and construction/land development loans:

Principal deferral

1

 

21

 

1

21

Total commercial TDRs

1

 

21

 

1

 

21

Consumer loans:

Principal deferral

1,492

 

183

 

1,492

183

Legal modification

1

 

15

 

1

15

Total consumer TDRs

1,493

 

198

 

1,493

 

198

Total troubled debt restructurings

1,507

$

702

3

$

132

1,510

$

834

The tables above are inclusive of loans that were TDRs at the end of previous periods and were re-modified, e.g., a maturity date extension during the current period.

As of September 30, 2021 and 2020, 50% and 84% of the Bank’s TDR balances that occurred during the first nine months of 2021 and 2020 were performing according to their modified terms. The Bank provided approximately $38,000 and $121,000 in specific ACLL allocations to clients whose loan terms were modified in TDRs during the first nine months of 2021 and 2020.

There was no significant change between the pre and post modification loan balances for the nine months ending September 30, 2021 and 2020.

The following table presents loans by class modified as troubled debt restructurings within the previous 12 months of September 30, 2021 and 2020 and for which there was a payment default during the three and/or nine months ended September 30, 2021 and 2020.

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

2021

2020

2021

2020

    

    

Recorded

    

Number of

    

Recorded

     

Number of

    

Recorded

     

Number of

    

Recorded

(dollars in thousands)

Loans

Investment

Loans

Investment

 

Loans

Investment

 

Loans

Investment

Residential real estate:

Owner occupied

 

2

$

179

3

$

163

6

$

468

5

$

269

Commercial real estate

 

 

2

 

2,964

1

 

116

2

 

2,964

Home equity

 

1

14

1

 

20

1

 

14

2

 

33

Total

 

3

$

193

6

$

3,147

8

$

598

9

$

3,266

COVID-19 Loan Accommodations

The CARES Act provided several forms of economic relief designed to defray the impact of COVID-19. In April 2020, through its own independent relief efforts and CARES Act provisions, the Company began offering loan accommodations through deferrals and forbearances. These accommodations were generally under three-month terms for commercial clients, with residential and consumer accommodations in line with prevailing regulatory and legal parameters. Loans that received an accommodation were generally not considered troubled debt restructurings by the Company if such loans were not greater than 30 days past due as of December 31, 2019.

As of September 30, 2021, $3 million, or less than 1% of the Company’s Traditional Bank portfolio remained under a COVID-19 hardship accommodation.

Foreclosures

The following table presents the carrying amount of foreclosed properties held as a result of the Bank obtaining physical possession of such properties:

(in thousands)

September 30, 2021

December 31, 2020

 

Residential real estate

 

$

 

$

496

Commercial real estate

1,845

2,003

Total other real estate owned

$

1,845

 

$

2,499

The following table presents the recorded investment in consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process according to requirements of the applicable jurisdiction:

(in thousands)

    

September 30, 2021

    

December 31, 2020

 

Recorded investment in consumer residential real estate mortgage loans in the process of foreclosure

 

$

475

 

$

981

Easy Advances

The Company’s TRS segment offered its EA product during the first two months of 2021 and 2020. During the first quarter of each year, the Company bases its estimated Provision for EAs on the current year’s EA delinquency information and the prior year’s tax refund payment patterns subsequent to the first quarter. Each year, all unpaid EAs are charged off by June 30th, and each quarter thereafter, any credits to the Provision for EAs matches the recovery of previously charged-off accounts.

See additional detail regarding the Bank’s agreement to sell TRS under Footnote 17 “Discontinued Operations” in this section of the filing.

Information regarding EAs follows:

Three Months Ended

Nine Months Ended

    

September 30, 

September 30, 

(dollars in thousands)

    

2021

2020

2021

  

2020

Easy Advances originated

 

$

$

$

250,045

$

387,762

Net (credit) charge to the Provision for Easy Advances

 

(2,242)

(4,294)

7,984

15,239

Provision to total Easy Advances originated

NA

NA

3.19

%  

3.93

%  

Easy Advances net charge-offs (recoveries)

 

$

(2,242)

$

(4,294)

$

7,984

$

15,239

Easy Advances net charge-offs to total Easy Advances originated

NA

NA

3.19

%  

3.93

%