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Loans and Allowance for Loan Losses (Tables)
 3 Months Ended
Mar. 31, 2018
Receivables [Abstract]  
Loan Classification Categorized by Risk Rating Category

The following table outlines the amount of each loan classification categorized into each risk rating category as of March 31, 2018 and December 31, 2017 (in thousands):
 
Commercial real estate - mortgage
Consumer real estate - mortgage
Construction and land development
Commercial and industrial
Consumer
and other
Total
March 31, 2018
 
 
 
 
 
 
Pass
$
6,628,989

$
2,533,268

$
2,081,071

$
4,360,699

$
362,599

$
15,966,626

Special Mention
76,856

11,661

4,149

33,524

746

126,936

Substandard (1)
63,343

17,307

7,037

74,491

75

162,253

Substandard-nonaccrual
25,100

18,530

3,618

22,172

782

70,202

Doubtful-nonaccrual
—

—

—

—

—

—

Total loans
$
6,794,288

$
2,580,766

$
2,095,875

$
4,490,886

$
364,202

$
16,326,017

December 31, 2017
 
 
 
 
 
 
Pass
$
6,487,368

$
2,503,688

$
1,880,704

$
4,014,656

$
351,359

$
15,237,775

Special Mention
94,134

18,356

8,148

46,898

1,177

168,713

Substandard (1)
72,044

21,053

13,468

62,529

79

169,173

Substandard-nonaccrual
16,064

18,117

5,968

17,258

48

57,455

Doubtful-nonaccrual
—

—

—

—

—

—

Total loans
$
6,669,610

$
2,561,214

$
1,908,288

$
4,141,341

$
352,663

$
15,633,116


(1)
Potential problem loans represent those loans with a well-defined weakness and where information about possible credit problems of borrowers has caused management to have doubts about the borrower's ability to comply with present repayment terms. This definition is believed to be substantially consistent with the standards established by Pinnacle Bank's primary regulators for loans classified as substandard, excluding the impact of nonaccrual loans and troubled debt restructurings. Potential problem loans, which are not included in nonaccrual loans, amounted to approximately $158.1 million at March 31, 2018, compared to $164.0 million at December 31, 2017.
Purchase Credit Impaired Loans
Loans acquired with deteriorated credit quality are recorded pursuant to the provisions of ASC 310-30, and are referred to as purchase credit impaired loans. The following table provides a rollforward of purchase credit impaired loans from December 31, 2017 through March 31, 2018 (in thousands):
 
Gross Carrying Value
Accretable
Yield
Nonaccretable
Yield
Net Carrying
Value
December 31, 2017
$
74,324

$
(132
)
$
(31,537
)
$
42,655

Acquisition
—

—

—

—

Year-to-date settlements
(5,298
)
23

1,491

(3,784
)
March 31, 2018
$
69,026

$
(109
)
$
(30,046
)
$
38,871
Summary of Recorded Investment, Unpaid Principal Balance and Related Allowance and Average Recorded Investment of Impaired Loans
The following table details the recorded investment, unpaid principal balance and related allowance of Pinnacle Financial's impaired loans at March 31, 2018 and December 31, 2017 by loan classification (in thousands):
 
At March 31, 2018
 
At December 31, 2017
 
Recorded investment
Unpaid principal balances
Related allowance
 
Recorded investment
Unpaid principal balances
Related allowance
Collateral dependent impaired loans:
 
 
 
 
 
 
Commercial real estate – mortgage
$
36,258

$
43,809

$
778

 
$
33,073

$
40,771

$
38

Consumer real estate – mortgage
5,166

7,233

—

 
6,314

8,560

115

Construction and land development
5,939

11,537

—

 
8,513

14,115

6

Commercial and industrial
8,716

14,374

1,262

 
2,812

8,435

362

Consumer and other
—

—

—

 
—

—

—

Total
$
56,079

$
76,953

$
2,040

 
$
50,712

$
71,881

$
521

 
 
 
 
 
 
 
 
Cash flow dependent impaired loans:
 

 

 
 

 

 

Commercial real estate – mortgage
$
6,808

$
9,106

$
93

 
$
5,944

$
8,237

$
95

Consumer real estate – mortgage
20,200

23,370

296

 
19,904

23,387

411

Construction and land development
1,017

1,883

13

 
3,222

4,184

12

Commercial and industrial
23,451

26,595

152

 
21,852

26,058

1,278

Consumer and other
782

810

210

 
—

—

—

Total
$
52,258

$
61,764

$
764

 
$
50,922

$
61,866

$
1,796

 
 
 
 
 
 
 
 
Total impaired loans
$
108,337

$
138,717

$
2,804

 
$
101,634

$
133,747

$
2,317



The following table details the average recorded investment and the amount of interest income recognized on a cash basis for the three months ended March 31, 2018 and 2017, respectively, on Pinnacle Financial's impaired loans that remain on the balance sheets as of such date (in thousands):
 
 
For the three months ended
March 31,
 
 
2018
2017
 
 
Average recorded investment
Interest income recognized
Average recorded investment
Interest income recognized
Collateral dependent impaired loans:
 
 
 
 
 
Commercial real estate – mortgage
 
$
34,666

$
—

$
2,100

$
—

Consumer real estate – mortgage
 
5,740

—

2,216

—

Construction and land development
 
7,226

—

2,078

49

Commercial and industrial
 
5,764

—

6,312

—

Consumer and other
 
—

—

—

—

Total
 
$
53,396

$
—

$
12,706

$
49

 
 
 
 
 
 
Cash flow dependent impaired loans:
 
 

 

 

 

Commercial real estate – mortgage
 
$
6,376

$
—

$
2,597

$
—

Consumer real estate – mortgage
 
19,941

—

9,393

—

Construction and land development
 
2,120

—

3,288

—

Commercial and industrial
 
22,669

—

12,440

—

Consumer and other
 
487

—

689

—

Total
 
$
51,593

$
—

$
28,407

$
—

 
 
 
 
 
 
Total impaired loans
 
$
104,989

$
—

$
41,113

$
49
Amount of Troubled Debt Restructuring Categorized by Loan Classification
The  following table outlines the amount of each loan category where troubled debt restructurings were made during the three months ended March 31, 2018 and 2017 (dollars in thousands):
 
 
Three months ended
March 31,
2018
 
Number
of contracts
 
Pre Modification Outstanding Recorded Investment
 
Post Modification Outstanding Recorded Investment, net of related allowance
Commercial real estate – mortgage
 
—

 
$
—

 
$
—

Consumer real estate – mortgage
 
—

 
—

 
—

Construction and land development
 
—

 
—

 
—

Commercial and industrial
 
—

 
—

 
—

Consumer and other
 
—

 
—

 
—

 
 
—

 
$
—

 
$
—

 
 
 
 
 
 
 
2017
 
 

 
 

 
 

Commercial real estate – mortgage
 
—

 
$
—

 
$
—

Consumer real estate – mortgage
 
—

 
—

 
—

Construction and land development
 
—

 
—

 
—

Commercial and industrial
 
1

 
3,457

 
3,457

Consumer and other
 
—

 
—

 
—

 
 
1

 
$
3,457

 
$
3,457
Summary of Loan Portfolio Credit Risk Exposure
Pinnacle Financial utilizes broadly accepted industry classification systems in order to classify borrowers into various industry classifications.  Pinnacle Financial has a credit exposure (loans outstanding plus unfunded lines of credit) exceeding 25% of Pinnacle Bank's total risk-based capital to borrowers in the following industries at March 31, 2018 with the comparative exposures for December 31, 2017 (in thousands):
 
March 31, 2018
 
 
 
Outstanding Principal Balances
 
Unfunded Commitments
 
Total exposure
 
Total Exposure at December 31,
2017
Lessors of nonresidential buildings
$
2,879,195

 
$
691,591

 
$
3,570,786

 
$
2,810,951

Lessors of residential buildings
929,097

 
275,564

 
1,204,661

 
884,244

Hotels (except Casino Hotels) and Motels
678,619

 
195,623

 
874,242

 
628,991
Past Due Balances by Loan Classification
The table below presents past due balances by loan classification and segment at March 31, 2018 and December 31, 2017, allocated between accruing and nonaccrual status (in thousands):
 
Accruing
 
Nonaccruing
 
 
March 31, 2018
30-89 days past due and accruing
 
90 days or more past due and accruing
 
Total past due and accruing
 
Current and accruing
 
Purchase credit impaired
 
Nonaccrual (1)
 
Nonaccruing purchase credit impaired
 
Total loans
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner-occupied
$
3,805

 
$
5

 
$
3,810

 
$
2,398,599

 
$
4,430

 
$
19,935

 
$
1,172

 
$
2,427,946

All other
6,678

 
132

 
6,810

 
4,343,636

 
11,903

 
1,206

 
2,787

 
4,366,342

Consumer real estate – mortgage
13,367

 
19

 
13,386

 
2,544,825

 
4,024

 
11,336

 
7,195

 
2,580,766

Construction and land development
606

 
3

 
609

 
2,088,310

 
3,339

 
381

 
3,236

 
2,095,875

Commercial and industrial
9,262

 
589

 
9,851

 
4,458,161

 
702

 
22,090

 
82

 
4,490,886

Consumer and other
4,816

 
383

 
5,199

 
358,221

 
—

 
781

 
1

 
364,202

Total
$
38,534

 
$
1,131

 
$
39,665

 
$
16,191,752

 
$
24,398

 
$
55,729

 
$
14,473

 
$
16,326,017

December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner-occupied
$
6,772

 
$
104

 
$
6,876

 
$
2,435,819

 
$
4,820

 
$
11,395

 
$
1,105

 
$
2,460,015

All other
16,559

 
—

 
16,559

 
4,177,454

 
12,018

 
704

 
2,860

 
4,209,595

Consumer real estate – mortgage
14,835

 
1,265

 
16,100

 
2,521,748

 
5,249

 
9,320

 
8,797

 
2,561,214

Construction and land development
4,136

 
146

 
4,282

 
1,894,560

 
3,478

 
2,878

 
3,090

 
1,908,288

Commercial and industrial
7,406

 
1,348

 
8,754

 
4,114,127

 
1,154

 
17,222

 
84

 
4,141,341

Consumer and other
6,311

 
1,276

 
7,587

 
345,076

 
—

 
—

 
—

 
352,663

Total
$
56,019

 
$
4,139

 
$
60,158

 
$
15,488,784

 
$
26,719

 
$
41,519

 
$
15,936

 
$
15,633,116


(1)
Approximately $56.3 million and $45.8 million of nonaccrual loans as of March 31, 2018 and December 31, 2017, respectively, were performing pursuant to their contractual terms at those dates.
Details of Changes in the Allowance for Loan Losses

The following table details the changes in the allowance for loan losses for the three months ended March 31, 2018 and 2017, respectively, by loan classification (in thousands):
 
Commercial real estate - mortgage
Consumer
 real estate - mortgage
Construction and land development
Commercial and industrial
Consumer
and other
Unallocated
Total
Three months ended March 31, 2018:
 
 
 
 
 
 
 
Balance at December 31, 2017
$
21,188

$
5,031

$
8,962

$
24,863

$
5,874

$
1,322

$
67,240

Charged-off loans
(728
)
(336
)
(2
)
(2,540
)
(5,063
)
—

(8,669
)
Recovery of previously charged-off loans
1,396

666

565

888

1,187

—

4,702

Provision for loan losses
832

(261
)
591

3,437

3,478

(1,146
)
6,931

Balance at March 31, 2018
$
22,688

$
5,100

$
10,116

$
26,648

$
5,476

$
176

$
70,204

 
 
 
 
 
 
 
 
Three months ended March 31, 2017:
 

 

 

 

 

 

 

Balance at December 31, 2016
$
13,655

$
6,564

$
3,624

$
24,743

$
9,520

$
874

$
58,980

Charged-off loans
—

(61
)
—

(1,158
)
(3,943
)
—

(5,162
)
Recovery of previously charged-off loans
6

170

33

140

532

—

881

Provision for loan losses
507

546

784

(813
)
2,368

259

3,651

Balance at March 31, 2017
$
14,168

$
7,219

$
4,441

$
22,912

$
8,477

$
1,133

$
58,350

 
 
 
 
 
 
 
 


The following table details the allowance for loan losses and recorded investment in loans by loan classification and by impairment evaluation method as of March 31, 2018 and December 31, 2017, respectively (in thousands):
 
Commercial real estate - mortgage
Consumer
real estate - mortgage
Construction and land development
Commercial and industrial
Consumer
and other
Unallocated
Total
March 31, 2018
 

 

 

 

 

 

 

Allowance for Loan Losses:
 

 

 

 

 

 

 

Collectively evaluated for impairment
$
21,817

$
4,804

$
10,103

$
25,234

$
5,266



$
67,224

Individually evaluated for impairment
764

269

11

1,412

210



2,666

Loans acquired with deteriorated credit quality (1)
107

27

2

2

—



138

Total allowance for loan losses
$
22,688

$
5,100

$
10,116

$
26,648

$
5,476

$
176

$
70,204

 
 
 
 
 
 
 
 
Loans:
 

 

 

 

 

 

 

Collectively evaluated for impairment
$
6,751,222

$
2,555,400

$
2,088,919

$
4,458,719

$
363,420

 

$
16,217,680

Individually evaluated for impairment
22,773

14,148

381

31,383

781

 

69,466

Loans acquired with deteriorated credit quality
20,293

11,218

6,575

784

1

 

38,871

Total loans
$
6,794,288

$
2,580,766

$
2,095,875

$
4,490,886

$
364,202

 

$
16,326,017

 
 
 
 
 
 
 
 
December 31, 2017
 

 

 

 

 

 

 

Allowance for Loan Losses:
 

 

 

 

 

 

 

Collectively evaluated for impairment
$
20,753

$
4,460

$
8,879

$
23,181

$
5,874



$
63,147

Individually evaluated for impairment
95

410

66

1,627

—



2,198

Loans acquired with deteriorated credit quality(1)
340

161

17

55

—



573

Total allowance for loan losses
$
21,188

$
5,031

$
8,962

$
24,863

$
5,874

$
1,322

$
67,240

 
 
 
 
 
 
 
 
Loans:
 

 

 

 

 

 

 

Collectively evaluated for impairment
$
6,630,593

$
2,534,996

$
1,896,553

$
4,116,677

$
352,663

 

$
15,531,482

Individually evaluated for impairment
18,214

12,172

5,167

23,426

—

 

58,979

Loans acquired with deteriorated credit quality
20,803

14,046

6,568

1,238

—

 

42,655

Total loans
$
6,669,610

$
2,561,214

$
1,908,288

$
4,141,341

$
352,663

 

$
15,633,116

The following table details the changes in the allowance for loan losses for the three months ended March 31, 2018 and 2017, respectively, by loan classification (in thousands):
 
Commercial real estate - mortgage
Consumer
 real estate - mortgage
Construction and land development
Commercial and industrial
Consumer
and other
Unallocated
Total
Three months ended March 31, 2018:
 
 
 
 
 
 
 
Balance at December 31, 2017
$
21,188

$
5,031

$
8,962

$
24,863

$
5,874

$
1,322

$
67,240

Charged-off loans
(728
)
(336
)
(2
)
(2,540
)
(5,063
)
—

(8,669
)
Recovery of previously charged-off loans
1,396

666

565

888

1,187

—

4,702

Provision for loan losses
832

(261
)
591

3,437

3,478

(1,146
)
6,931

Balance at March 31, 2018
$
22,688

$
5,100

$
10,116

$
26,648

$
5,476

$
176

$
70,204

 
 
 
 
 
 
 
 
Three months ended March 31, 2017:
 

 

 

 

 

 

 

Balance at December 31, 2016
$
13,655

$
6,564

$
3,624

$
24,743

$
9,520

$
874

$
58,980

Charged-off loans
—

(61
)
—

(1,158
)
(3,943
)
—

(5,162
)
Recovery of previously charged-off loans
6

170

33

140

532

—

881

Provision for loan losses
507

546

784

(813
)
2,368

259

3,651

Balance at March 31, 2017
$
14,168

$
7,219

$
4,441

$
22,912

$
8,477

$
1,133

$
58,350