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NOTE 3 - LOANS/LEASES RECEIVABLE | 6 Months Ended
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Jun. 30, 2019
Notes to Financial Statements |
LOANS/LEASES RECEIVABLE | NOTE 3 – LOANS/LEASES RECEIVABLE The composition of the loan/lease portfolio as of June 30, 2019 and December 31, 2018 is presented as follows:
|  | As of June 30, |  | As of December 31,
|  | 2019 |  | 2018
|  | (dollars in thousands)
C&I loans * |  | $ | 1,548,657 |  | $ | 1,429,410
CRE loans |  |  |  |  |  |
Owner-occupied CRE |  |  | 494,638 |  |  | 500,654
Commercial construction, land development, and other land |  |  | 312,578 |  |  | 236,787
Other non owner-occupied CRE |  |  | 1,030,257 |  |  | 1,028,670
|  |  | 1,837,473 |  |  | 1,766,111
Direct financing leases ** |  |  | 101,180 |  |  | 117,969
Residential real estate loans *** |  |  | 293,479 |  |  | 290,759
Installment and other consumer loans |  |  | 120,947 |  |  | 119,381
|  |  | 3,901,736 |  |  | 3,723,630
Plus deferred loan/lease origination costs, net of fees |  |  | 8,783 |  |  | 9,124
|  |  | 3,910,519 |  |  | 3,732,754
Less allowance |  |  | (41,104) |  |  | (39,847)
|  | $ | 3,869,415 |  | $ | 3,692,907
** Direct financing leases: |  |  |  |  |  |
Net minimum lease payments to be received |  | $ | 111,764 |  | $ | 130,371
Estimated unguaranteed residual values of leased assets |  |  | 690 |  |  | 828
Unearned lease/residual income |  |  | (11,274) |  |  | (13,230)
|  |  | 101,180 |  |  | 117,969
Plus deferred lease origination costs, net of fees |  |  | 2,760 |  |  | 3,642
|  |  | 103,940 |  |  | 121,611
Less allowance |  |  | (1,459) |  |  | (1,792)
|  | $ | 102,481 |  | $ | 119,819
* Includes equipment financing agreements outstanding at m2, totaling $122.6 million and $103.4 million as of June 30, 2019 and December 31, 2018, 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. There were no losses related to residual values for the three and six months ended June 30, 2019 and 2018. *** Includes residential real estate loans held for sale totaling $4.2 million and $1.3 million as of June 30, 2019 and December 31, 2018, respectively. Changes in accretable yield for acquired loans were as follows:
|  | 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) |  | $ | (8,830) |  | $ | (9,149) |  | $ | (667) |  | $ | (9,656) |  | $ | (10,323) |
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) |  | $ | (8,018) |  | $ | (8,169) |  | $ | (151) |  | $ | (8,018) |  | $ | (8,169) |
|  | Three months ended June 30, 2018 |  | Six months ended June 30, 2018 |
|  | PCI |  | Performing |  |  |  | PCI |  | Performing |  |  |
|  | Loans |  | Loans |  | Total |  | Loans |  | Loans |  | Total |
|  | (dollars in thousands) |
Balance at the beginning of the period |  | $ | (157) |  | $ | (5,659) |  | $ | (5,816) |  | $ | (191) |  | $ | (6,280) |  | $ | (6,471) |
Accretion recognized |  |  | 15 |  |  | 608 |  |  | 623 |  |  | 49 |  |  | 1,229 |  |  | 1,278 |
Balance at the end of the period |  | $ | (142) |  | $ | (5,051) |  | $ | (5,193) |  | $ | (142) |  | $ | (5,051) |  | $ | (5,193) |
The aging of the loan/lease portfolio by classes of loans/leases as of June 30, 2019 and December 31, 2018 is presented as follows:
|  | As of June 30, 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 |  | $ | 1,540,661 |  | $ | 4,136 |  | $ | 307 |  | $ | — |  | $ | 3,553 |  | $ | 1,548,657 |
CRE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner-Occupied CRE |  |  | 493,877 |  |  | 571 |  |  | — |  |  | — |  |  | 190 |  |  | 494,638 |
Commercial Construction, Land Development, and Other Land |  |  | 312,288 |  |  | 96 |  |  | — |  |  | — |  |  | 194 |  |  | 312,578 |
Other Non Owner-Occupied CRE |  |  | 1,024,769 |  |  | 67 |  |  | 11 |  |  | — |  |  | 5,410 |  |  | 1,030,257 |
Direct Financing Leases |  |  | 98,581 |  |  | 971 |  |  | 80 |  |  | — |  |  | 1,548 |  |  | 101,180 |
Residential Real Estate |  |  | 291,605 |  |  | 190 |  |  | 160 |  |  | 54 |  |  | 1,470 |  |  | 293,479 |
Installment and Other Consumer |  |  | 120,082 |  |  | 78 |  |  | — |  |  | 4 |  |  | 783 |  |  | 120,947 |
|  | $ | 3,881,863 |  | $ | 6,109 |  | $ | 558 |  | $ | 58 |  | $ | 13,148 |  | $ | 3,901,736 |
As a percentage of total loan/lease portfolio |  |  | 99.49 | % |  | 0.16 | % |  | 0.01 | % |  | 0.00 | % |  | 0.34 | % |  | 100.00 | %
|  | As of December 31, 2018 |
|  |  |  |  |  |  |  | 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 |  | $ | 1,423,406 |  | $ | 930 |  | $ | 597 |  | $ | 389 |  | $ | 4,088 |  | $ | 1,429,410 |
CRE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner-Occupied CRE |  |  | 500,138 |  |  | — |  |  | 193 |  |  | 107 |  |  | 216 |  |  | 500,654 |
Commercial Construction, Land Development, and Other Land |  |  | 234,704 |  |  | 1,764 |  |  | — |  |  | — |  |  | 319 |  |  | 236,787 |
Other Non Owner-Occupied CRE |  |  | 1,022,664 |  |  | 484 |  |  | — |  |  | — |  |  | 5,522 |  |  | 1,028,670 |
Direct Financing Leases |  |  | 114,078 |  |  | 1,642 |  |  | 488 |  |  | — |  |  | 1,761 |  |  | 117,969 |
Residential Real Estate |  |  | 284,844 |  |  | 3,877 |  |  | 206 |  |  | 89 |  |  | 1,743 |  |  | 290,759 |
Installment and Other Consumer |  |  | 118,343 |  |  | 356 |  |  | 24 |  |  | 47 |  |  | 611 |  |  | 119,381 |
|  | $ | 3,698,177 |  | $ | 9,053 |  | $ | 1,508 |  | $ | 632 |  | $ | 14,260 |  | $ | 3,723,630 |
As a percentage of total loan/lease portfolio |  |  | 99.32 | % |  | 0.24 | % |  | 0.04 | % |  | 0.02 | % |  | 0.38 | % |  | 100.00 | %
NPLs by classes of loans/leases as of June 30, 2019 and December 31, 2018 are presented as follows:
|  | As of June 30, 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 |  | $ | — |  | $ | 3,553 |  | $ | 1,112 |  | $ | 4,665 |  | 32.13 | %
CRE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner-Occupied CRE |  |  | — |  |  | 190 |  |  | 104 |  |  | 294 |  | 2.02 | %
Commercial Construction, Land Development, and Other Land |  |  | — |  |  | 194 |  |  | — |  |  | 194 |  | 1.34 | %
Other Non Owner-Occupied CRE |  |  | — |  |  | 5,410 |  |  | — |  |  | 5,410 |  | 37.26 | %
Direct Financing Leases |  |  | — |  |  | 1,548 |  |  | 97 |  |  | 1,645 |  | 11.33 | %
Residential Real Estate |  |  | 54 |  |  | 1,470 |  |  | — |  |  | 1,524 |  | 10.50 | %
Installment and Other Consumer |  |  | 4 |  |  | 783 |  |  | — |  |  | 787 |  | 5.42 | %
|  | $ | 58 |  | $ | 13,148 |  | $ | 1,313 |  | $ | 14,519 |  | 100.00 | %
* Nonaccrual loans/leases included $2.8 million of TDRs, including $28 thousand in C&I loans, $2.2 million in CRE loans, $314 thousand in direct financing leases, $286 thousand in residential real estate loans, and $2 thousand in installment loans.
|  | As of December 31, 2018 |
|  | 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 |  | $ | 389 |  | $ | 4,088 |  | $ | 454 |  | $ | 4,931 |  | 26.58 | %
CRE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner-Occupied CRE |  |  | 107 |  |  | 216 |  |  | — |  |  | 323 |  | 1.74 | %
Commercial Construction, Land Development, and Other Land |  |  | — |  |  | 319 |  |  | — |  |  | 319 |  | 1.72 | %
Other Non Owner-Occupied CRE |  |  | — |  |  | 5,522 |  |  | 2,984 |  |  | 8,506 |  | 45.86 | %
Direct Financing Leases |  |  | — |  |  | 1,761 |  |  | 111 |  |  | 1,872 |  | 10.09 | %
Residential Real Estate |  |  | 89 |  |  | 1,743 |  |  | 100 |  |  | 1,932 |  | 10.41 | %
Installment and Other Consumer |  |  | 47 |  |  | 611 |  |  | 9 |  |  | 667 |  | 3.60 | %
|  | $ | 632 |  | $ | 14,260 |  | $ | 3,658 |  | $ | 18,550 |  | 100.00 | %
* As of December 31, 2018 accruing past due 90 days or more included $496 thousand of TDRs, including $389 thousand in C&I loans and $107 thousand in CRE loans. ** Nonaccrual loans/leases included $2.3 million of TDRs, including $265 thousand in C&I loans, $1.4 million in CRE loans, $321 thousand in direct financing leases, $344 thousand in residential real estate loans, and $3 thousand in installment loans. Changes in the allowance by portfolio segment for the three and six months ended June 30, 2019 and 2018, respectively, are presented as follows:
|  | 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
|  | Three Months Ended June 30, 2018
|  |  |  |  |  | Direct Financing |  | Residential Real |  | Installment and |  |
|  | C&I |  | CRE |  | Leases |  | Estate |  | Other Consumer |  | Total
|  | (dollars in thousands)
Balance, beginning |  | $ | 15,065 |  | $ | 14,938 |  | $ | 2,730 |  | $ | 2,375 |  | $ | 1,424 |  | $ | 36,532
Provisions (credits) charged to expense |  |  | 777 |  |  | 872 |  |  | 688 |  |  | 57 |  |  | (93) |  |  | 2,301
Loans/leases charged off |  |  | (729) |  |  | — |  |  | (794) |  |  | — |  |  | (1) |  |  | (1,524)
Recoveries on loans/leases previously charged off |  |  | 121 |  |  | 9 |  |  | 100 |  |  | 1 |  |  | 5 |  |  | 236
Balance, ending |  | $ | 15,234 |  | $ | 15,819 |  | $ | 2,724 |  | $ | 2,433 |  | $ | 1,335 |  | $ | 37,545
|  | 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 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 |
|  | Six Months Ended June 30, 2018 |
|  |  |  |  |  |  |  | Direct Financing |  | Residential Real |  | Installment and |  |  |  |
|  | C&I |  | CRE |  | Leases |  | Estate |  | Other Consumer |  | Total |
|  | (dollars in thousands) |
Balance, beginning |  | $ | 14,323 |  | $ | 13,963 |  | $ | 2,382 |  | $ | 2,466 |  | $ | 1,222 |  | $ | 34,356 |
Provisions charged to expense |  |  | 1,585 |  |  | 1,837 |  |  | 1,293 |  |  | 18 |  |  | 108 |  |  | 4,841 |
Loans/leases charged off |  |  | (824) |  |  | — |  |  | (1,079) |  |  | (52) |  |  | (6) |  |  | (1,961) |
Recoveries on loans/leases previously charged off |  |  | 150 |  |  | 19 |  |  | 128 |  |  | 1 |  |  | 11 |  |  | 309 |
Balance, ending |  | $ | 15,234 |  | $ | 15,819 |  | $ | 2,724 |  | $ | 2,433 |  | $ | 1,335 |  | $ | 37,545 |
The allowance by impairment evaluation and by portfolio segment as of June 30, 2019 and December 31, 2018 is presented as follows:
|  | As of June 30, 2019 |
|  |  |  |  |  | Direct Financing |  | Residential Real |  | Installment and |  |  |
|  | C&I |  | CRE |  | Leases |  | Estate |  | Other Consumer |  | Total |
|  | (dollars in thousands) |
Allowance for impaired loans/leases |  | $ | 1,085 |  | $ | 445 |  | $ | 93 |  | $ | 192 |  | $ | 152 |  | $ | 1,967 |
Allowance for nonimpaired loans/leases |  |  | 17,163 |  |  | 16,918 |  |  | 1,366 |  |  | 2,390 |  |  | 1,300 |  |  | 39,137 |
|  | $ | 18,248 |  | $ | 17,363 |  | $ | 1,459 |  | $ | 2,582 |  | $ | 1,452 |  | $ | 41,104 |
Impaired loans/leases |  | $ | 4,520 |  | $ | 7,736 |  | $ | 1,860 |  | $ | 1,628 |  | $ | 1,052 |  | $ | 16,796 |
Nonimpaired loans/leases |  |  | 1,544,137 |  |  | 1,829,737 |  |  | 99,320 |  |  | 291,851 |  |  | 119,895 |  |  | 3,884,940 |
|  | $ | 1,548,657 |  | $ | 1,837,473 |  | $ | 101,180 |  | $ | 293,479 |  | $ | 120,947 |  | $ | 3,901,736 |
Allowance as a percentage of impaired loans/leases |  |  | 24.00 | % |  | 5.75 | % |  | 5.00 | % |  | 11.79 | % |  | 14.45 | % |  | 11.71 | %
Allowance as a percentage of nonimpaired loans/leases |  |  | 1.11 | % |  | 0.92 | % |  | 1.38 | % |  | 0.82 | % |  | 1.08 | % |  | 1.01 | %
Total allowance as a percentage of total loans/leases |  |  | 1.18 | % |  | 0.94 | % |  | 1.44 | % |  | 0.88 | % |  | 1.20 | % |  | 1.05 | %
|  | As of December 31, 2018 |
|  |  |  |  |  | Direct Financing |  | Residential Real |  | Installment and |  |  |
|  | C&I |  | CRE |  | Leases |  | Estate |  | Other Consumer |  | Total |
|  | (dollars in thousands) |
Allowance for impaired loans/leases |  | $ | 973 |  | $ | 2,124 |  | $ | 194 |  | $ | 257 |  | $ | 111 |  | $ | 3,659 |
Allowance for nonimpaired loans/leases |  |  | 15,447 |  |  | 15,595 |  |  | 1,598 |  |  | 2,300 |  |  | 1,248 |  |  | 36,188 |
|  | $ | 16,420 |  | $ | 17,719 |  | $ | 1,792 |  | $ | 2,557 |  | $ | 1,359 |  | $ | 39,847 |
Impaired loans/leases |  | $ | 4,499 |  | $ | 10,447 |  | $ | 2,249 |  | $ | 2,110 |  | $ | 898 |  | $ | 20,203 |
Nonimpaired loans/leases |  |  | 1,424,911 |  |  | 1,755,664 |  |  | 115,720 |  |  | 288,649 |  |  | 118,483 |  |  | 3,703,427 |
|  | $ | 1,429,410 |  | $ | 1,766,111 |  | $ | 117,969 |  | $ | 290,759 |  | $ | 119,381 |  | $ | 3,723,630 |
Allowance as a percentage of impaired loans/leases |  |  | 21.62 | % |  | 20.33 | % |  | 8.63 | % |  | 12.18 | % |  | 12.38 | % |  | 18.11 | %
Allowance as a percentage of nonimpaired loans/leases |  |  | 1.08 | % |  | 0.89 | % |  | 1.38 | % |  | 0.80 | % |  | 1.05 | % |  | 0.98 | %
Total allowance as a percentage of total loans/leases |  |  | 1.15 | % |  | 1.00 | % |  | 1.52 | % |  | 0.88 | % |  | 1.14 | % |  | 1.07 | %
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, 2019 are presented as follows:
|  |  |  |  |  |  |  |  |  |  |  | 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 |  | $ | 2,048 |  | $ | 2,088 |  | $ | — |  | $ | 1,680 |  | $ | 52 |  | $ | 52
CRE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner-Occupied CRE |  |  | 216 |  |  | 232 |  |  | — |  |  | 187 |  |  | 11 |  |  | 11
Commercial Construction, Land Development, and Other Land |  |  | 546 |  |  | 902 |  |  | — |  |  | 628 |  |  | 13 |  |  | 13
Other Non Owner-Occupied CRE |  |  | 3,417 |  |  | 4,296 |  |  | — |  |  | 4,183 |  |  | 92 |  |  | 92
Direct Financing Leases |  |  | 1,600 |  |  | 1,600 |  |  | — |  |  | 1,901 |  |  | 16 |  |  | 16
Residential Real Estate |  |  | 810 |  |  | 1,001 |  |  | — |  |  | 765 |  |  | 1 |  |  | 1
Installment and Other Consumer |  |  | 875 |  |  | 875 |  |  | — |  |  | 797 |  |  | 7 |  |  | 7
|  | $ | 9,512 |  | $ | 10,994 |  | $ | — |  | $ | 10,141 |  | $ | 192 |  | $ | 192
Impaired Loans/Leases with Specific Allowance Recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I |  | $ | 2,472 |  | $ | 2,478 |  | $ | 1,085 |  | $ | 1,917 |  | $ | 18 |  | $ | 18
CRE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner-Occupied CRE |  |  | 124 |  |  | 124 |  |  | 21 |  |  | 129 |  |  | — |  |  | —
Commercial Construction, Land Development, and Other Land |  |  | 142 |  |  | 142 |  |  | 31 |  |  | 145 |  |  | — |  |  | —
Other Non Owner-Occupied CRE |  |  | 3,291 |  |  | 3,291 |  |  | 393 |  |  | 1,588 |  |  | — |  |  | —
Direct Financing Leases |  |  | 260 |  |  | 260 |  |  | 93 |  |  | 196 |  |  | 1 |  |  | 1
Residential Real Estate |  |  | 818 |  |  | 818 |  |  | 192 |  |  | 829 |  |  | 3 |  |  | 3
Installment and Other Consumer |  |  | 177 |  |  | 177 |  |  | 152 |  |  | 136 |  |  | — |  |  | —
|  | $ | 7,284 |  | $ | 7,290 |  | $ | 1,967 |  | $ | 4,940 |  | $ | 22 |  | $ | 22
Total Impaired Loans/Leases: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I |  | $ | 4,520 |  | $ | 4,566 |  | $ | 1,085 |  | $ | 3,597 |  | $ | 70 |  | $ | 70
CRE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner-Occupied CRE |  |  | 340 |  |  | 356 |  |  | 21 |  |  | 316 |  |  | 11 |  |  | 11
Commercial Construction, Land Development, and Other Land |  |  | 688 |  |  | 1,044 |  |  | 31 |  |  | 773 |  |  | 13 |  |  | 13
Other Non Owner-Occupied CRE |  |  | 6,708 |  |  | 7,587 |  |  | 393 |  |  | 5,771 |  |  | 92 |  |  | 92
Direct Financing Leases |  |  | 1,860 |  |  | 1,860 |  |  | 93 |  |  | 2,097 |  |  | 17 |  |  | 17
Residential Real Estate |  |  | 1,628 |  |  | 1,819 |  |  | 192 |  |  | 1,594 |  |  | 4 |  |  | 4
Installment and Other Consumer |  |  | 1,052 |  |  | 1,052 |  |  | 152 |  |  | 933 |  |  | 7 |  |  | 7
|  | $ | 16,796 |  | $ | 18,284 |  | $ | 1,967 |  | $ | 15,081 |  | $ | 214 |  | $ | 214
Loans/leases, by classes of financing receivable, considered to be impaired as of and for the three months ended June 30, 2019 and 2018, respectively are presented as follows:
|  | Three Months Ended June 30, 2019 |  | Three Months Ended June 30, 2018
|  |  |  |  |  | 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 |  | $ | 1,683 |  | $ | 29 |  | $ | 29 |  | $ | 1,401 |  | $ | 59 |  | $ | 59
CRE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner-Occupied CRE |  |  | 194 |  |  | 7 |  |  | 7 |  |  | 289 |  |  | 6 |  |  | 6
Commercial Construction, Land Development, and Other Land |  |  | 603 |  |  | 6 |  |  | 6 |  |  | — |  |  | — |  |  | —
Other Non Owner-Occupied CRE |  |  | 3,985 |  |  | 22 |  |  | 22 |  |  | 1,105 |  |  | — |  |  | —
Direct Financing Leases |  |  | 1,795 |  |  | 7 |  |  | 7 |  |  | 2,199 |  |  | 3 |  |  | 3
Residential Real Estate |  |  | 801 |  |  | — |  |  | — |  |  | 929 |  |  | — |  |  | —
Installment and Other Consumer |  |  | 816 |  |  | 3 |  |  | 3 |  |  | 101 |  |  | — |  |  | —
|  | $ | 9,877 |  | $ | 74 |  | $ | 74 |  | $ | 6,024 |  | $ | 68 |  | $ | 68
Impaired Loans/Leases with Specific Allowance Recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I |  | $ | 2,046 |  | $ | 9 |  | $ | 9 |  | $ | 353 |  | $ | 2 |  | $ | 2
CRE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner-Occupied CRE |  |  | 127 |  |  | — |  |  | — |  |  | 145 |  |  | — |  |  | —
Commercial Construction, Land Development, and Other Land |  |  | 143 |  |  | — |  |  | — |  |  | 5,492 |  |  | — |  |  | —
Other Non Owner-Occupied CRE |  |  | 1,980 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Direct Financing Leases |  |  | 227 |  |  | — |  |  | — |  |  | 566 |  |  | — |  |  | —
Residential Real Estate |  |  | 822 |  |  | 1 |  |  | 1 |  |  | 512 |  |  | 3 |  |  | 3
Installment and Other Consumer |  |  | 150 |  |  | — |  |  | — |  |  | 117 |  |  | — |  |  | —
|  | $ | 5,495 |  | $ | 10 |  | $ | 10 |  | $ | 7,185 |  | $ | 5 |  | $ | 5
Total Impaired Loans/Leases: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I |  | $ | 3,729 |  | $ | 38 |  | $ | 38 |  | $ | 1,754 |  | $ | 61 |  | $ | 61
CRE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner-Occupied CRE |  |  | 321 |  |  | 7 |  |  | 7 |  |  | 434 |  |  | 6 |  |  | 6
Commercial Construction, Land Development, and Other Land |  |  | 746 |  |  | 6 |  |  | 6 |  |  | 5,492 |  |  | — |  |  | —
Other Non Owner-Occupied CRE |  |  | 5,965 |  |  | 22 |  |  | 22 |  |  | 1,105 |  |  | — |  |  | —
Direct Financing Leases |  |  | 2,022 |  |  | 7 |  |  | 7 |  |  | 2,765 |  |  | 3 |  |  | 3
Residential Real Estate |  |  | 1,623 |  |  | 1 |  |  | 1 |  |  | 1,441 |  |  | 3 |  |  | 3
Installment and Other Consumer |  |  | 966 |  |  | 3 |  |  | 3 |  |  | 218 |  |  | — |  |  | —
|  | $ | 15,372 |  | $ | 84 |  | $ | 84 |  | $ | 13,209 |  | $ | 73 |  | $ | 73
Loans/leases, by classes of financing receivable, considered to be impaired as of December 31, 2018 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 |  | $ | 1,846 |  | $ | 4,540 |  | $ | — |
CRE |  |  |  |  |  |  |  |  |  |
Owner-Occupied CRE |  |  | 106 |  |  | 106 |  |  | — |
Commercial Construction, Land Development, and Other Land |  |  | 507 |  |  | 507 |  |  | — |
Other Non Owner-Occupied CRE |  |  | 1,804 |  |  | 1,804 |  |  | — |
Direct Financing Leases |  |  | 1,929 |  |  | 1,929 |  |  | — |
Residential Real Estate |  |  | 984 |  |  | 1,058 |  |  | — |
Installment and Other Consumer |  |  | 762 |  |  | 762 |  |  | — |
|  | $ | 7,938 |  | $ | 10,706 |  | $ | — |
Impaired Loans/Leases with Specific Allowance Recorded: |  |  |  |  |  |  |  |  |  |
C&I |  | $ | 2,653 |  | $ | 2,653 |  | $ | 973 |
CRE |  |  |  |  |  |  |  |  |  |
Owner-Occupied CRE |  |  | 304 |  |  | 660 |  |  | 39 |
Commercial Construction, Land Development, and Other Land |  |  | 149 |  |  | 149 |  |  | 33 |
Other Non Owner-Occupied CRE |  |  | 7,577 |  |  | 7,577 |  |  | 2,052 |
Direct Financing Leases |  |  | 320 |  |  | 320 |  |  | 194 |
Residential Real Estate |  |  | 1,126 |  |  | 1,126 |  |  | 257 |
Installment and Other Consumer |  |  | 136 |  |  | 136 |  |  | 111 |
|  | $ | 12,265 |  | $ | 12,621 |  | $ | 3,659 |
Total Impaired Loans/Leases: |  |  |  |  |  |  |  |  |  |
C&I |  | $ | 4,499 |  | $ | 7,193 |  | $ | 973 |
CRE |  |  |  |  |  |  |  |  |  |
Owner-Occupied CRE |  |  | 410 |  |  | 766 |  |  | 39 |
Commercial Construction, Land Development, and Other Land |  |  | 656 |  |  | 656 |  |  | 33 |
Other Non Owner-Occupied CRE |  |  | 9,381 |  |  | 9,381 |  |  | 2,052 |
Direct Financing Leases |  |  | 2,249 |  |  | 2,249 |  |  | 194 |
Residential Real Estate |  |  | 2,110 |  |  | 2,184 |  |  | 257 |
Installment and Other Consumer |  |  | 898 |  |  | 898 |  |  | 111 |
|  | $ | 20,203 |  | $ | 23,327 |  | $ | 3,659 |
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, 2019 and December 31, 2018:
|  | As of June 30, 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) |  | $ | 1,398,762 |  | $ | 487,200 |  | $ | 308,269 |  | $ | 1,008,427 |  | $ | 3,202,658 |  | 98.14 | %
Special Mention (Rating 6) |  |  | 9,811 |  |  | 4,236 |  |  | 64 |  |  | 5,802 |  |  | 19,913 |  | 0.61 | %
Substandard (Rating 7) |  |  | 17,460 |  |  | 3,202 |  |  | 4,245 |  |  | 16,028 |  |  | 40,935 |  | 1.25 | %
Doubtful (Rating 8) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  | — | %
|  | $ | 1,426,033 |  | $ | 494,638 |  | $ | 312,578 |  | $ | 1,030,257 |  | $ | 3,263,506 |  | 100.00 | %
|  | As of June 30, 2019 |
|  |  |  | Direct Financing |  | Residential Real |  | Installment and |  |  |  | As a % of |
Delinquency Status * |  | C&I |  | Leases |  | Estate |  | Other Consumer |  | Total |  | Total |
|  | (dollars in thousands) |
Performing |  | $ | 121,836 |  | $ | 99,536 |  | $ | 291,955 |  | $ | 120,160 |  | $ | 633,487 |  | 99.26 | %
Nonperforming |  |  | 788 |  |  | 1,644 |  |  | 1,524 |  |  | 787 |  |  | 4,743 |  | 0.74 | %
|  | $ | 122,624 |  | $ | 101,180 |  | $ | 293,479 |  | $ | 120,947 |  | $ | 638,230 |  | 100.00 | %
|  | As of December 31, 2018 |
|  |  |  |  | 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) |  | $ | 1,294,418 |  | $ | 487,949 |  | $ | 230,473 |  | $ | 1,008,626 |  | $ | 3,021,466 |  | 97.72 | %
Special Mention (Rating 6) |  |  | 23,302 |  |  | 9,599 |  |  | 3,848 |  |  | 5,309 |  |  | 42,058 |  | 1.36 | %
Substandard (Rating 7) |  |  | 8,286 |  |  | 3,106 |  |  | 2,466 |  |  | 14,735 |  |  | 28,593 |  | 0.92 | %
Doubtful (Rating 8) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  | — | %
|  | $ | 1,326,006 |  | $ | 500,654 |  | $ | 236,787 |  | $ | 1,028,670 |  | $ | 3,092,117 |  | 100.00 | %
|  | As of December 31, 2018 |
|  |  |  | Direct Financing |  | Residential Real |  | Installment and |  |  |  | As a % of |
Delinquency Status * |  | C&I |  | Leases |  | Estate |  | Other Consumer |  | Total |  | Total |
|  | (dollars in thousands) |
Performing |  | $ | 102,713 |  | $ | 116,097 |  | $ | 288,827 |  | $ | 118,714 |  | $ | 626,351 |  | 99.18 | %
Nonperforming |  |  | 691 |  |  | 1,872 |  |  | 1,932 |  |  | 667 |  |  | 5,162 |  | 0.82 | %
|  | $ | 103,404 |  | $ | 117,969 |  | $ | 290,759 |  | $ | 119,381 |  | $ | 631,513 |  | 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, 2019 and December 31, 2018, TDRs totaled $4.1 million and $6.5 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, 2019 and 2018. 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, 2019 |  | For the three months ended June 30, 2018 |
|  |  |  | 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 |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
|  | 1 |  | $ | 52 |  | $ | 52 |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
CONCESSION - Foregiveness of Principal |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I |  | 1 |  | $ | 587 |  | $ | 537 |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
|  | 1 |  | $ | 587 |  | $ | 537 |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
TOTAL |  | 2 |  | $ | 639 |  | $ | 589 |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
|  | For the six months ended June 30, 2019 |  | For the six months ended June 30, 2018 |
|  |  |  | 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 |  | $ | 71 |  | $ | 71 |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
Residential Real Estate |  | — |  |  | — |  |  | — |  |  | — |  | 1 |  |  | 46 |  |  | 46 |  |  | — |
Direct Financing Leases |  | 3 |  |  | 103 |  |  | 103 |  |  | 5 |  | 2 |  |  | 48 |  |  | 48 |  |  | — |
|  | 5 |  | $ | 174 |  | $ | 174 |  | $ | 5 |  | 3 |  | $ | 94 |  | $ | 94 |  | $ | — |
CONCESSION - Forgiveness of Principal |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I |  | 1 |  | $ | 587 |  | $ | 537 |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
|  | 1 |  | $ | 587 |  | $ | 537 |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
TOTAL |  | 6 |  | $ | 761 |  | $ | 711 |  | $ | 5 |  | 3 |  | $ | 94 |  | $ | 94 |  | $ | — |
Of the loans restructured during the six months ended June 30, 2019, two with post-modification recorded balances of $65 thousand were on nonaccrual. Of the loans restructured during the six months ended June 30, 2018, one with a post-modification recorded balance of $46 thousand was on nonaccrual. 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. For the three and six months ended June 30, 2018, seven 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. Three of these TDRs were related to one customer whose loans were restructured in the second quarter of 2017 with pre-modification balances totaling $78 thousand and the other TDRs related to other customers whose loans were restructured in the second and third quarters of 2017 with pre-modification balances totaling $378 thousand. Not included in the table above, the Company had three TDRs that were restructured and charged off for the six months ended June 30, 2019, totaling $161 thousand. The Company had eight TDRs that were restructured and charged off for the six months ended June 30, 2018, totaling $577 thousand.

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- Definition The entire disclosure for financing receivable. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2196772 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2196816 + Details
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