XML 37 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
Loans and Allowance for Loan Losses (Tables)
 6 Months Ended
Jun. 30, 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 June 30, 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
June 30, 2018
 
 
 
 
 
 
Pass
$
6,849,567

$
2,655,282

$
2,119,011

$
4,689,555

$
362,201

$
16,675,616

Special Mention
64,873

10,049

5,594

40,461

735

121,712

Substandard (1)
79,915

13,175

7,013

74,465

70

174,638

Substandard-nonaccrual
30,284

20,893

2,028

16,818

864

70,887

Doubtful-nonaccrual
—

—

—

—

—

—

Total loans
$
7,024,639

$
2,699,399

$
2,133,646

$
4,821,299

$
363,870

$
17,042,853

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 $170.8 million at June 30, 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 June 30, 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
(10,356
)
16

3,346

(6,994
)
June 30, 2018
$
63,968

$
(116
)
$
(28,191
)
$
35,661
Summary of Recorded Investment, Unpaid Principal Balance and Related Allowance and Average Recorded Investment of Impaired Loans
at June 30, 2018 and December 31, 2017 by loan classification (in thousands):
 
At June 30, 2018
 
At December 31, 2017
 
Recorded investment
Unpaid principal balances
Related allowance
 
Recorded investment
Unpaid principal balances
Related allowance
Impaired loans with an allowance:
 
 
 
 
 
 
Commercial real estate – mortgage
$
16,667

$
16,698

$
1,092

 
$
1,850

$
1,863

$
95

Consumer real estate – mortgage
12,577

12,624

433

 
8,028

8,079

410

Construction and land development
1,737

1,738

33

 
2,522

2,528

66

Commercial and industrial
6,032

6,086

588

 
12,521

12,644

1,627

Consumer and other
863

886

182

 
—

—

—

Total
$
37,876

$
38,032

$
2,328

 
$
24,921

$
25,114

$
2,198

 
 
 
 
 
 
 
 
Impaired loans without an allowance:
 

 

 
 

 

 

Commercial real estate – mortgage
$
22,601

$
22,684

$
—

 
$
16,364

$
16,514

$
—

Consumer real estate – mortgage
5,016

5,036

—

 
4,144

4,174

—

Construction and land development
—

—

—

 
2,645

2,650

—

Commercial and industrial
15,339

15,324

—

 
10,905

10,902

—

Consumer and other
—

—

—

 
—

—

—

Total
$
42,956

$
43,044

$
—

 
$
34,058

$
34,240

$
—

 
 
 
 
 
 
 
 
Total impaired loans
$
80,832

$
81,076

$
2,328

 
$
58,979

$
59,354

$
2,198



The following table details the average recorded investment and the amount of interest income recognized on a cash basis for the three and six months ended June 30, 2018 and 2017, respectively, of impaired loans by loan classification (in thousands):
 
For the three months ended
June 30,
 
For the six months ended
June 30,
 
2018
 
2017
 
2018
 
2017
 
Average recorded investment
Interest income recognized
 
Average recorded investment
Interest income recognized
 
Average recorded investment
Interest income recognized
 
Average recorded investment
Interest income recognized
Impaired loans with an allowance:
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate – mortgage
$
12,527

$
—

 
$
395

$
—

 
$
8,968

$
—

 
$
410

$
—

Consumer real estate – mortgage
11,066

—

 
4,437

—

 
10,053

—

 
4,058

—

Construction and land development
1,059

—

 
77

—

 
1,547

—

 
79

—

Commercial and industrial
7,976

—

 
11,778

—

 
9,491

—

 
9,203

—

Consumer and other
822

—

 
677

—

 
548

—

 
628

—

Total
$
33,450

$
—

 
$
17,364

$
—

 
$
30,607

$
—

 
$
14,378

$
—

 
 
 
 
 
 
 
 
 
 
 
 
Impaired loans without an allowance:
 

 

 
 

 

 
 

 

 
 

 

Commercial real estate – mortgage
$
18,493

$
—

 
$
2,599

$
—

 
$
17,783

$
—

 
$
2,502

$
—

Consumer real estate – mortgage
4,805

—

 
5,722

—

 
4,585

—

 
5,695

—

Construction and land development
—

—

 
1,031

16

 
882

—

 
1,730

65

Commercial and industrial
18,401

—

 
6,199

—

 
15,902

—

 
8,892

—

Consumer and other
—

—

 
—

—

 
—

—

 
—

—

Total
$
41,699

$
—

 
$
15,551

$
16

 
$
39,152

$
—

 
$
18,819

$
65

 
 
 
 
 
 
 
 
 
 
 
 
Total impaired loans
$
75,149

$
—

 
$
32,915

$
16

 
$
69,759

$
—

 
$
33,197

$
65
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 and six months ended June 30, 2018 and 2017 (dollars in thousands):
 
Three months ended
June 30,
 
Six months ended
June 30,
2018
Number
of contracts
 
Pre Modification Outstanding Recorded Investment
 
Post Modification Outstanding Recorded Investment, net of related allowance
 
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
1

 
38

 
38

 
1

 
38

 
38

Construction and land development
—

 
—

 
—

 
—

 
—

 
—

Commercial and industrial
—

 
—

 
—

 
—

 
—

 
—

Consumer and other
—

 
—

 
—

 
—

 
—

 
—

 
1

 
$
38

 
$
38

 
1

 
$
38

 
$
38

 
 
 
 
 
 
 
 
 
 
 
 
2017
 

 
 

 
 

 
 

 
 

 
 

Commercial real estate – mortgage
—

 
$
—

 
$
—

 
—

 
$
—

 
$
—

Consumer real estate – mortgage
1

 
9

 
6

 
1

 
9

 
6

Construction and land development
—

 
—

 
—

 
—

 
—

 
—

Commercial and industrial
—

 
—

 
—

 
2

 
2,033

 
2,033

Consumer and other
—

 
—

 
—

 
—

 
—

 
—

 
1

 
$
9

 
$
6

 
3

 
$
2,042

 
$
2,039
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 June 30, 2018 with the comparative exposures for December 31, 2017 (in thousands):
 
June 30, 2018
 
 
 
Outstanding Principal Balances
 
Unfunded Commitments
 
Total exposure
 
Total Exposure at December 31,
2017
Lessors of nonresidential buildings
$
3,096,519

 
$
668,891

 
$
3,765,410

 
$
3,483,597

Lessors of residential buildings
981,328

 
283,888

 
1,265,216

 
1,151,676

Hotels (except Casino Hotels) and Motels
723,347

 
167,577

 
890,924

 
836,320

New Housing For-Sale Builders
374,653

 
593,400

 
968,053

 
780,137
Past Due Balances by Loan Classification
The table below presents past due balances by loan classification and segment at June 30, 2018 and December 31, 2017, allocated between accruing and nonaccrual status (in thousands):
 
Accruing
 
Nonaccruing
 
June 30, 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
$
2,132

$
—

$
2,132

$
2,474,296

$
3,424

 
$
22,874

$
2,164

$
2,504,890

All other
7,017

—

7,017

4,495,948

11,539

 
2,274

2,971

4,519,749

Consumer real estate – mortgage
14,093

—

14,093

2,660,129

4,285

 
14,776

6,116

2,699,399

Construction and land development
2,725

—

2,725

2,125,629

3,264

 
662

1,366

2,133,646

Commercial and industrial
5,755

875

6,630

4,797,371

480

 
16,767

51

4,821,299

Consumer and other
5,088

697

5,785

357,221

—

 
863

1

363,870

Total
$
36,810

$
1,572

$
38,382

$
16,910,594

$
22,992

 
$
58,216

$
12,669

$
17,042,853

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 $54.4 million and $45.8 million of nonaccrual loans as of June 30, 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 and six months ended June 30, 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 June 30, 2018:
 
 
 
 
 
 
 
Balance at March 31, 2018
$
22,688

$
5,100

$
10,116

$
26,648

$
5,476

$
176

$
70,204

Charged-off loans
(234
)
(935
)
(10
)
(1,724
)
(3,795
)
—

(6,698
)
Recovery of previously charged-off loans
58

537

1,010

567

590

—

2,762

Provision for loan losses
2,336

1,151

(132
)
2,847

2,901

299

9,402

Balance at June 30, 2018
$
24,848

$
5,853

$
10,984

$
28,338

$
5,172

$
475

$
75,670

 
 
 
 
 
 
 
 
 
Commercial real estate - mortgage
Consumer
 real estate - mortgage
Construction and land development
Commercial and industrial
Consumer
and other
Unallocated
Total
Three months ended June 30, 2017:
 

 

 

 

 

 

 

Balance at March 31, 2017
$
14,168

$
7,219

$
4,441

$
22,912

$
8,477

$
1,133

$
58,350

Charged-off loans
(8
)
(206
)
—

(495
)
(4,448
)
—

(5,157
)
Recovery of previously charged-off loans
9

412

96

560

862

—

1,939

Provision for loan losses
1,833

410

589

1,258

2,658

64

6,812

Balance at June 30, 2017
$
16,002

$
7,835

$
5,126

$
24,235

$
7,549

$
1,197

$
61,944

 
 
 
 
 
 
 
 
Six months ended June 30, 2018:
 
 
 
 
 
 
 
Balance at December 31, 2017
$
21,188

$
5,031

$
8,962

$
24,863

$
5,874

$
1,322

$
67,240

Charged-off loans
(962
)
(1,271
)
(12
)
(4,264
)
(8,858
)
—

(15,367
)
Recovery of previously charged-off loans
1,454

1,203

1,575

1,455

1,777

—

7,464

Provision for loan losses
3,168

890

459

6,284

6,379

(847
)
16,333

Balance at June 30, 2018
$
24,848

$
5,853

$
10,984

$
28,338

$
5,172

$
475

$
75,670

 
 
 
 
 
 
 
 
Six months ended June 30, 2017:
 

 

 

 

 

 

 

Balance at December 31, 2016
$
13,655

$
6,564

$
3,624

$
24,743

$
9,520

$
874

$
58,980

Charged-off loans
(9
)
(268
)
—

(1,653
)
(8,391
)
—

(10,321
)
Recovery of previously charged-off loans
15

582

129

702

1,394

—

2,822

Provision for loan losses
2,341

957

1,373

443

5,026

323

10,463

Balance at June 30, 2017
$
16,002

$
7,835

$
5,126

$
24,235

$
7,549

$
1,197

$
61,944


The following table details the changes in the allowance for loan losses for the three and six months ended June 30, 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 June 30, 2018:
 
 
 
 
 
 
 
Balance at March 31, 2018
$
22,688

$
5,100

$
10,116

$
26,648

$
5,476

$
176

$
70,204

Charged-off loans
(234
)
(935
)
(10
)
(1,724
)
(3,795
)
—

(6,698
)
Recovery of previously charged-off loans
58

537

1,010

567

590

—

2,762

Provision for loan losses
2,336

1,151

(132
)
2,847

2,901

299

9,402

Balance at June 30, 2018
$
24,848

$
5,853

$
10,984

$
28,338

$
5,172

$
475

$
75,670

 
 
 
 
 
 
 
 
 
Commercial real estate - mortgage
Consumer
 real estate - mortgage
Construction and land development
Commercial and industrial
Consumer
and other
Unallocated
Total
Three months ended June 30, 2017:
 

 

 

 

 

 

 

Balance at March 31, 2017
$
14,168

$
7,219

$
4,441

$
22,912

$
8,477

$
1,133

$
58,350

Charged-off loans
(8
)
(206
)
—

(495
)
(4,448
)
—

(5,157
)
Recovery of previously charged-off loans
9

412

96

560

862

—

1,939

Provision for loan losses
1,833

410

589

1,258

2,658

64

6,812

Balance at June 30, 2017
$
16,002

$
7,835

$
5,126

$
24,235

$
7,549

$
1,197

$
61,944

 
 
 
 
 
 
 
 
Six months ended June 30, 2018:
 
 
 
 
 
 
 
Balance at December 31, 2017
$
21,188

$
5,031

$
8,962

$
24,863

$
5,874

$
1,322

$
67,240

Charged-off loans
(962
)
(1,271
)
(12
)
(4,264
)
(8,858
)
—

(15,367
)
Recovery of previously charged-off loans
1,454

1,203

1,575

1,455

1,777

—

7,464

Provision for loan losses
3,168

890

459

6,284

6,379

(847
)
16,333

Balance at June 30, 2018
$
24,848

$
5,853

$
10,984

$
28,338

$
5,172

$
475

$
75,670

 
 
 
 
 
 
 
 
Six months ended June 30, 2017:
 

 

 

 

 

 

 

Balance at December 31, 2016
$
13,655

$
6,564

$
3,624

$
24,743

$
9,520

$
874

$
58,980

Charged-off loans
(9
)
(268
)
—

(1,653
)
(8,391
)
—

(10,321
)
Recovery of previously charged-off loans
15

582

129

702

1,394

—

2,822

Provision for loan losses
2,341

957

1,373

443

5,026

323

10,463

Balance at June 30, 2017
$
16,002

$
7,835

$
5,126

$
24,235

$
7,549

$
1,197

$
61,944



The following table details the allowance for loan losses and recorded investment in loans by loan classification and by impairment evaluation method as of June 30, 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
June 30, 2018
 

 

 

 

 

 

 

Allowance for Loan Losses:
 

 

 

 

 

 

 

Collectively evaluated for impairment
$
23,394

$
5,323

$
10,944

$
27,748

$
4,990



$
72,399

Individually evaluated for impairment
1,092

433

33

588

182



2,328

Loans acquired with deteriorated credit quality (1)
362

97

7

2

—



468

Total allowance for loan losses
$
24,848

$
5,853

$
10,984

$
28,338

$
5,172

$
475

$
75,670

 
 
 
 
 
 
 
 
Loans:
 

 

 

 

 

 

 

Collectively evaluated for impairment
$
6,965,272

$
2,671,404

$
2,127,279

$
4,799,396

$
363,007

 

$
16,926,358

Individually evaluated for impairment
39,268

17,593

1,737

21,371

863

 

80,832

Loans acquired with deteriorated credit quality
20,099

10,402

4,630

532

—

 

35,663

Total loans
$
7,024,639

$
2,699,399

$
2,133,646

$
4,821,299

$
363,870

 

$
17,042,853

 
 
 
 
 
 
 
 
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


(1) Loans acquired with deteriorated credit quality are recorded at fair value at the time of acquisition. An allowance for loan losses is recorded resulting from subsequent credit deterioration.