XML 22 R12.htm IDEA: XBRL DOCUMENT v3.22.2
Loans
 6 Months Ended
Jun. 30, 2022
Receivables [Abstract]  
Portfolio Loans LOANS
The following table presents a summary of loans by category:
 
(in thousands)June 30, 2022December 31, 2021
Commercial and industrial$3,597,225 $3,396,590 
Real estate:  
Commercial - investor owned2,173,640 2,141,143 
Commercial - owner occupied2,120,735 2,035,785 
Construction and land development724,163 734,073 
Residential413,727 454,052 
Total real estate loans5,432,265 5,365,053 
Other246,298 265,137 
Loans, before unearned loan fees9,275,788 9,026,780 
Unearned loan fees, net(6,612)(9,138)
Loans, including unearned loan fees$9,269,176 $9,017,642 

PPP loans totaled $49.7 million at June 30, 2022, or $49.2 million net of deferred fees of $0.5 million. The loan balance at June 30, 2022 includes a net premium on acquired loans of $12.6 million. At June 30, 2022, loans of $2.7 billion were pledged to FHLB and the Federal Reserve Bank.

PPP loans totaled $276.2 million at December 31, 2021, or $272.0 million net of deferred fees of $4.2 million. The loan balance includes a net premium on acquired loans of $11.9 million at December 31, 2021. At December 31, 2021, loans of $2.5 billion were pledged to FHLB and the Federal Reserve Bank.

Accrued interest receivable totaled $30.0 million and $30.6 million at June 30, 2022 and December 31, 2021, respectively, and was reported in “Other Assets” on the consolidated balance sheets.

A summary of the activity in the ACL on loans by category for the three and six months ended June 30, 2022 is as follows:
(in thousands)Commercial and industrialCRE - investor ownedCRE -
owner occupied		Construction and land developmentResidential real estateOtherTotal
Allowance for credit losses on loans:       
Balance at March 31, 2022$60,975 $36,194 $17,038 $12,983 $7,109 $4,913 $139,212 
Provision (benefit) for credit losses4,562 (2,680)(1,066)183 307 (147)1,159 
Charge-offs(97)(200)(25)— (418)(88)(828)
Recoveries206 24 209 14 480 70 1,003 
Balance at June 30, 2022$65,646 $33,338 $16,156 $13,180 $7,478 $4,748 $140,546 

(in thousands)Commercial and industrialCRE - investor ownedCRE -
owner occupied		Construction and land developmentResidential real estateOtherTotal
Allowance for credit losses on loans:       
Balance at December 31, 2021$63,825 $35,877 $17,560 $14,536 $7,927 $5,316 $145,041 
Provision (benefit) for credit losses3,081 (2,559)(1,648)(1,391)(149)(483)(3,149)
Charge-offs(2,256)(200)(205)— (1,305)(174)(4,140)
Recoveries996 220 449 35 1,005 89 2,794 
Balance at June 30, 2022$65,646 $33,338 $16,156 $13,180 $7,478 $4,748 $140,546 
The ACL on sponsor finance loans, which is included in the categories above, represented $20.5 million and $18.2 million, respectively, as of June 30, 2022 and December 31, 2021.

A summary of the activity in the ACL on loans by category for the three and six months ended June 30, 2021 is as follows:
(in thousands)Commercial and industrialCRE - investor ownedCRE -
owner occupied		Construction and land developmentResidential real estateOtherTotal
Allowance for credit losses on loans:       
Balance at March 31, 2021$55,941 $33,105 $20,219 $14,557 $4,305 $3,400 $131,527 
Provision for credit losses(1,839)2,859 (4,449)(2,957)255 3,658 (2,473)
Charge-offs(1,451)— (216)— (44)(121)(1,832)
Recoveries700 39 10 32 161 21 963 
Balance at June 30, 2021$53,351 $36,003 $15,564 $11,632 $4,677 $6,958 $128,185 

(in thousands)Commercial and industrialCRE - investor ownedCRE -
owner occupied		Construction and land developmentResidential real estateOtherTotal
Allowance for credit losses on loans:       
Balance at December 31, 2020$58,812 $32,062 $17,012 $21,413 $4,585 $2,787 $136,671 
Provision for credit losses(1,298)6,240 (1,223)(10,048)103 4,256 (1,970)
Charge-offs(5,190)(2,372)(244)— (315)(185)(8,306)
Recoveries1,027 73 19 267 304 100 1,790 
Balance at June 30, 2021$53,351 $36,003 $15,564 $11,632 $4,677 $6,958 $128,185 

The CECL methodology incorporates various economic scenarios. The Company utilizes three forecasts in the model: Moody’s baseline, a stronger near-term growth upside and a moderate recession downside forecast. The Company weights these scenarios at 40%, 30%, and 30%, respectively, which added approximately $13.6 million to the ACL over the baseline model. These forecasts incorporate an expectation that government stimulus will decline, the Federal Reserve will wind down its treasury and mortgage-backed securities portfolio and continue raising the federal funds rate, that the pandemic will begin to slowly recede, that the Russia-Ukraine military conflict will have a limited disruption on the economy and the risk of a period of stagflation. The Company has also recognized the risk posed by loans that have received multiple deferrals of principal and interest payments, including the hospitality sector, by allocating additional reserves to those segments. Some of the key risks to the forecasts that could result in future provision for credit losses are additional shutdowns and self-quarantines from another significant wave of COVID-19, continued or worsening supply-chain disruptions, labor shortages and declines in job growth, or a tightening of financial market conditions.

In addition to the CECL methodology, the Company incorporates qualitative adjustments into the ACL on loans to capture credit risks inherent within the loan portfolio that are not captured in the discounted cash flow (DCF) model. Included in these risks are 1) changes in lending policies and procedures, 2) actual and expected changes in business and economic conditions, 3) changes in the nature and volume of the portfolio, 4) changes in lending management, 5) changes in volume and the severity of past due loans, 6) changes in the quality of the loan review system, 7) changes in the value of underlying collateral, 8) the existence and effect of concentrations of credit and 9) other factors such as the regulatory, legal and competitive environments and events such as natural disasters and pandemics. At June 30, 2022, the ACL on loans included a qualitative adjustment of approximately $40.8 million. Of this amount, approximately $7.3 million was allocated to sponsor finance loans due to their unsecured nature.
The following tables present the recorded investment in nonperforming loans by category: 
June 30, 2022
(in thousands)NonaccrualRestructured, accruingLoans over 90 days past due and still accruing interestTotal nonperforming loansNonaccrual loans with no allowance
Commercial and industrial$16,323 $— $3 $16,326 $2,113 
Real estate:   
    Commercial - investor owned1,150 — — 1,150 1,150 
    Commercial - owner occupied1,212 — — 1,212 1,212 
    Residential776 74 — 850 776 
Other1 — 21 22 — 
       Total$19,462 $74 $24 $19,560 $5,251 

December 31, 2021
(in thousands)NonaccrualRestructured, accruingLoans over 90 days past due and still accruing interestTotal nonperforming loansNonaccrual loans with no allowance
Commercial and industrial$17,052 $2,783 $1,703 $21,538 $5,685 
Real estate: 
    Commercial - investor owned1,575 — — 1,575 168 
    Commercial - owner occupied2,839 — — 2,839 2,550 
    Residential1,971 76 1 2,048 1,348 
Other12 — 12 24 — 
       Total$23,449 $2,859 $1,716 $28,024 $9,751 

The total nonperforming loan balances at June 30, 2022 and December 31, 2021 exclude government guaranteed balances of $6.1 million and $6.5 million, respectively.

No interest income was recognized on nonaccrual loans during the three and six months ended June 30, 2022 or 2021.

The amortized cost basis of collateral-dependent nonperforming loans by class of loan is presented as of the dates indicated:
June 30, 2022
Type of Collateral
(in thousands)Commercial Real EstateResidential Real EstateBlanket Lien
Commercial and industrial$4,271 $37 $5,676 
Real estate:
Commercial - investor owned1,193 1,150 — 
Commercial - owner occupied— 19 — 
Residential— 850 — 
Total$5,464 $2,056 $5,676 
December 31, 2021
Type of Collateral
(in thousands)Commercial Real EstateResidential Real EstateBlanket Lien
Commercial and industrial$4,271 $209 $9,312 
Real estate:
Commercial - investor owned169 1,200 — 
Commercial - owner occupied2,807 32 — 
Residential— 2,048 — 
Total$7,247 $3,489 $9,312 

There were no loans restructured during the three or six months ended June 30, 2022 or 2021.
No troubled debt restructurings subsequently defaulted during the three or six months ended June 30, 2022 or 2021.
The aging of the recorded investment in past due loans by class is presented as of the dates indicated.

June 30, 2022
(in thousands)30-89 Days
 Past Due		90 or More
Days
Past Due		Total
Past Due		CurrentTotal
Commercial and industrial$10,960 $5,227 $16,187 $3,580,514 $3,596,701 
Real estate:     
Commercial - investor owned5,856 — 5,856 2,167,784 2,173,640 
Commercial - owner occupied6,052 199 6,251 2,114,484 2,120,735 
Construction and land development— — — 724,163 724,163 
Residential578 454 1,032 412,695 413,727 
Other22 21 43 240,167 240,210 
Total$23,468 $5,901 $29,369 $9,239,807 $9,269,176 

December 31, 2021
(in thousands)30-89 Days
 Past Due		90 or More
Days
Past Due		Total
Past Due		CurrentTotal
Commercial and industrial$24,447 $14,158 $38,605 $3,353,770 $3,392,375 
Real estate:   
Commercial - investor owned3,880 — 3,880 2,137,263 2,141,143 
Commercial - owner occupied10,070 289 10,359 2,025,426 2,035,785 
Construction and land development24 — 24 734,049 734,073 
Residential3,181 1,305 4,486 449,566 454,052 
Other37 11 48 260,166 260,214 
Total$41,639 $15,763 $57,402 $8,960,240 $9,017,642 

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, payment experience, credit documentation, and current economic factors among other factors. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:
•Grades 1, 2, and 3 – Includes loans to borrowers with a continuous record of strong earnings, sound balance sheet condition and capitalization, ample liquidity with solid cash flow, and whose management team has experience and depth within their industry.
•Grade 4 – Includes loans to borrowers with positive trends in profitability, satisfactory capitalization and balance sheet condition, and sufficient liquidity and cash flow.
•Grade 5 – Includes loans to borrowers that may display fluctuating trends in sales, profitability, capitalization, liquidity, and cash flow.
•Grade 6 – Includes loans to borrowers where an adverse change or perceived weakness has occurred, but may be correctable in the near future. Alternatively, this rating category may also include circumstances where the borrower is starting to reverse a negative trend or condition, or has recently been upgraded from a 7, 8, or 9 rating.
•Grade 7 – Watch credits are borrowers that have experienced financial setback of a nature that is not determined to be severe or influence ‘ongoing concern’ expectations. Although possible, no loss is anticipated at this time, due to strong collateral and/or guarantor support.
•Grade 8 – Substandard credits include those borrowers characterized by significant losses and sustained downward trends in balance sheet condition, liquidity, and cash flow. Repayment reliance may have shifted to secondary sources. Collateral exposure may exist and additional reserves may be warranted.
•Grade 9 – Doubtful credits include borrowers that may show deteriorating trends that are unlikely to be corrected. Collateral values may appear insufficient for full recovery, therefore requiring a partial charge-off, or debt renegotiation with the borrower. The borrower may have declared bankruptcy or bankruptcy is likely in the near term. All doubtful rated credits will be on nonaccrual.
The recorded investment by risk category of loans by class and year of origination is presented in the following tables as of the dates indicated:
June 30, 2022
Term Loans by Origination Year
(in thousands)20222021202020192018PriorRevolving Loans Converted to Term LoansRevolving LoansTotal
Commercial and industrial
Pass (1-6)$772,231 $871,166 $365,734 $215,249 $81,055 $116,448 $2,756 $953,568 $3,378,207 
Watch (7)25,384 16,809 18,519 2,121 8,315 10,578 360 76,292 158,378 
Classified (8-9)6,131 12,518 4,440 3,839 1,350 284 121 13,065 41,748 
Total Commercial and industrial$803,746 $900,493 $388,693 $221,209 $90,720 $127,310 $3,237 $1,042,925 $3,578,333 
Commercial real estate-investor owned
Pass (1-6)$329,489 $599,145 $398,097 $283,247 $142,431 $264,598 $595 $49,606 $2,067,208 
Watch (7)18,755 14,058 30,767 10,811 78 14,338 — — 88,807 
Classified (8-9)2,317 — 198 824 333 5,292 50 — 9,014 
Total Commercial real estate-investor owned$350,561 $613,203 $429,062 $294,882 $142,842 $284,228 $645 $49,606 $2,165,029 
Commercial real estate-owner occupied
Pass (1-6)$280,474 $571,629 $399,477 $251,344 $136,528 $307,517 $— $53,056 $2,000,025 
Watch (7)3,272 9,596 14,412 4,590 13,986 9,145 — 800 55,801 
Classified (8-9)977 128 568 10,379 15,975 13,650 — 94 41,771 
Total Commercial real estate-owner occupied$284,723 $581,353 $414,457 $266,313 $166,489 $330,312 $— $53,950 $2,097,597 
Construction real estate
Pass (1-6)$169,592 $310,168 $144,451 $32,339 $23,588 $12,255 $— $8,460 $700,853 
Watch (7)16,431 — 501 — 1,181 2,236 — — 20,349 
Classified (8-9)— — — 12 413 17 — — 442 
Total Construction real estate$186,023 $310,168 $144,952 $32,351 $25,182 $14,508 $— $8,460 $721,644 
Residential real estate
Pass (1-6)$30,367 $89,475 $59,283 $23,991 $11,825 $97,936 $518 $92,605 $406,000 
Watch (7)116 856 — 81 357 1,363 — 24 2,797 
Classified (8-9)159 402 — 56 795 1,425 — 6 2,843 
Total residential real estate$30,642 $90,733 $59,283 $24,128 $12,977 $100,724 $518 $92,635 $411,640 
Other
Pass (1-6)$4,150 $96,456 $63,634 $20,203 $21,965 $19,695 $— $10,978 $237,081 
Watch (7)— — — — 2 2,341 — — 2,343 
Classified (8-9)— — — 7 7 13 — 1 28 
Total Other$4,150 $96,456 $63,634 $20,210 $21,974 $22,049 $— $10,979 $239,452 
Total loans classified by risk category$1,659,845 $2,592,406 $1,500,081 $859,093 $460,184 $879,131 $4,400 $1,258,555 $9,213,695 
Total loans classified by performing status55,481 
Total loans$9,269,176 
December 31, 2021
Term Loans by Origination Year
(in thousands)20212020201920182017PriorRevolving Loans Converted to Term LoansRevolving LoansTotal
Commercial and industrial
Pass (1-6)$1,180,601 $477,374 $317,869 $132,851 $116,738 $82,846 $11,648 $854,102 $3,174,029 
Watch (7)35,005 17,502 9,404 9,880 12,217 10,979 4,037 53,595 152,619 
Classified (8-9)14,917 3,530 3,840 1,689 2,988 813 787 10,996 39,560 
Total Commercial and industrial$1,230,523 $498,406 $331,113 $144,420 $131,943 $94,638 $16,472 $918,693 $3,366,208 
Commercial real estate-investor owned
Pass (1-6)$651,740 $476,946 $346,245 $146,107 $112,043 $217,808 $3,625 $68,236 $2,022,750 
Watch (7)16,871 35,908 32,755 1,003 502 17,478 300 2,062 106,879 
Classified (8-9)1,376 3,135 835 817 1,159 4,141 — 50 11,513 
Total Commercial real estate-investor owned$669,987 $515,989 $379,835 $147,927 $113,704 $239,427 $3,925 $70,348 $2,141,142 
Commercial real estate-owner occupied
Pass (1-6)$604,975 $423,263 $278,830 $164,210 $140,515 $235,973 $250 $48,349 $1,896,365 
Watch (7)12,825 13,585 4,301 16,774 10,274 15,764 — 300 73,823 
Classified (8-9)2,048 556 9,181 17,016 6,432 6,959 — — 42,192 
Total Commercial real estate-owner occupied$619,848 $437,404 $292,312 $198,000 $157,221 $258,696 $250 $48,649 $2,012,380 
Construction real estate
Pass (1-6)$310,140 $229,396 $70,531 $35,936 $14,860 $7,180 $568 $2,992 $671,603 
Watch (7)28,947 15,348 60 1,199 11,068 2,330 — — 58,952 
Classified (8-9)— — 387 419 — 22 — — 828 
Total Construction real estate$339,087 $244,744 $70,978 $37,554 $25,928 $9,532 $568 $2,992 $731,383 
Residential real estate
Pass (1-6)$116,352 $66,481 $21,356 $14,841 $24,778 $103,840 $9,980 $87,146 $444,774 
Watch (7)2,425 2 622 1,157 248 1,305 — 79 5,838 
Classified (8-9)414 169 554 — 12 2,024 — — 3,173 
Total residential real estate$119,191 $66,652 $22,532 $15,998 $25,038 $107,169 $9,980 $87,225 $453,785 
Other
Pass (1-6)$108,209 $68,806 $22,684 $23,145 $6,924 $13,832 $1,500 $9,166 $254,266 
Watch (7)— — — 4 — 2,440 — 1 2,445 
Classified (8-9)— — 10 10 — 16 — 2 38 
Total Other$108,209 $68,806 $22,694 $23,159 $6,924 $16,288 $1,500 $9,169 $256,749 
Total loans classified by risk category$3,086,845 $1,832,001 $1,119,464 $567,058 $460,758 $725,750 $32,695 $1,137,076 $8,961,647 
Total loans classified by performing status55,995 
Total loans$9,017,642 
In the tables above, loan originations in 2022 and 2021 with a classification of watch or classified primarily represent renewals or modifications initially underwritten and originated in prior years.

For certain loans, primarily credit cards, the Company evaluates credit quality based on the aging status.

The following tables present the recorded investment on loans based on payment activity as of the dates indicated:
June 30, 2022
(in thousands)PerformingNon PerformingTotal
Commercial and industrial$18,365 $3 $18,368 
Real estate:
Commercial - investor owned8,611 — 8,611 
Commercial - owner occupied23,138 — 23,138 
Construction and land development2,519 — 2,519 
Residential2,087 — 2,087 
Other737 21 758 
Total$55,457 $24 $55,481 
December 31, 2021
(in thousands)PerformingNon PerformingTotal
Commercial and industrial$26,166 $1 $26,167 
Real estate:
Commercial - investor owned1 — 1 
Commercial - owner occupied23,405 — 23,405 
Construction and land development2,690 — 2,690 
Residential267 — 267 
Other3,453 12 3,465 
Total$55,982 $13 $55,995