| Loans and Leases |
Loans and Leases
Loans and Leases Receivable
Loans and leases receivable consisted of the following as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
September 30, 2019 |
|
December 31, 2018 |
|
(in thousands) |
Real estate loans: |
|
|
|
Commercial property |
|
|
|
Retail |
$ |
865,050 |
|
|
$ |
906,260 |
|
Hospitality |
850,869 |
|
|
830,679 |
|
Other (1)
|
1,417,062 |
|
|
1,449,270 |
|
Total commercial property loans |
3,132,981 |
|
|
3,186,209 |
|
Construction |
76,770 |
|
|
71,583 |
|
Residential property |
436,576 |
|
|
500,563 |
|
Total real estate loans |
3,646,327 |
|
|
3,758,355 |
|
Commercial and industrial loans: |
|
|
|
Commercial term |
188,090 |
|
|
206,691 |
|
Commercial lines of credit |
219,400 |
|
|
194,032 |
|
International loans |
33,719 |
|
|
29,180 |
|
Total commercial and industrial loans |
441,209 |
|
|
429,903 |
|
Leases receivable |
467,777 |
|
|
398,858 |
|
Consumer loans (2)
|
14,524 |
|
|
13,424 |
|
Loans and leases receivable |
4,569,837 |
|
|
4,600,540 |
|
Allowance for loan and lease losses |
(50,712 |
) |
|
(31,974 |
) |
Loans and leases receivable, net |
$ |
4,519,125 |
|
|
$ |
4,568,566 |
|
|
|
(1) |
Includes, among other types, mixed-use, apartment, office, industrial, gas stations, faith-based facilities and warehouse; all other property types represent less than one percent of total loans and leases receivable. |
|
|
(2) |
Consumer loans include home equity lines of credit of $8.6 million and $10.3 million as of September 30, 2019 and December 31, 2018, respectively.
|
Accrued interest on loans and leases receivable was $10.2 million and $10.9 million at September 30, 2019 and December 31, 2018, respectively. At September 30, 2019 and December 31, 2018, loans and leases receivable of $1.2 billion and $1.1 billion, respectively, were pledged to secure advances from the FHLB.
Loans Held for Sale
The following is the activity for SBA loans held for sale for the three months ended September 30, 2019 and 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SBA Loans Held for Sale |
|
Real Estate |
|
Commercial and Industrial |
|
Total |
|
(in thousands) |
September 30, 2019 |
|
|
|
|
|
Balance at beginning of period |
$ |
2,677 |
|
|
$ |
3,352 |
|
|
$ |
6,029 |
|
Originations |
11,502 |
|
|
13,354 |
|
|
24,856 |
|
Sales |
(11,557 |
) |
|
(12,729 |
) |
|
(24,286 |
) |
Principal paydowns and amortization |
— |
|
|
(1 |
) |
|
(1 |
) |
Balance at end of period |
$ |
2,622 |
|
|
$ |
3,976 |
|
|
$ |
6,598 |
|
|
|
|
|
|
|
September 30, 2018 |
|
|
|
|
|
Balance at beginning of period |
$ |
2,785 |
|
|
$ |
2,564 |
|
|
$ |
5,349 |
|
Originations |
5,408 |
|
|
13,469 |
|
|
18,877 |
|
Sales |
(6,453 |
) |
|
(13,299 |
) |
|
(19,752 |
) |
Principal paydowns and amortization |
(3 |
) |
|
(16 |
) |
|
(19 |
) |
Balance at end of period |
$ |
1,737 |
|
|
$ |
2,718 |
|
|
$ |
4,455 |
|
The following is the activity for SBA loans held for sale for the nine months ended September 30, 2019 and 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SBA Loans Held for Sale |
|
Real Estate |
|
Commercial and Industrial |
|
Total |
|
(in thousands) |
September 30, 2019 |
|
|
|
|
|
Balance at beginning of period |
$ |
5,194 |
|
|
$ |
4,196 |
|
|
$ |
9,390 |
|
Originations |
27,215 |
|
|
25,164 |
|
|
52,379 |
|
Sales |
(29,786 |
) |
|
(25,370 |
) |
|
(55,156 |
) |
Principal paydowns and amortization |
(1 |
) |
|
(14 |
) |
|
(15 |
) |
Balance at end of period |
$ |
2,622 |
|
|
$ |
3,976 |
|
|
$ |
6,598 |
|
|
|
|
|
|
|
September 30, 2018 |
|
|
|
|
|
Balance at beginning of period |
$ |
3,746 |
|
|
$ |
2,648 |
|
|
$ |
6,394 |
|
Originations |
25,996 |
|
|
30,248 |
|
|
56,244 |
|
Sales |
(28,000 |
) |
|
(30,043 |
) |
|
(58,043 |
) |
Principal paydowns and amortization |
(5 |
) |
|
(135 |
) |
|
(140 |
) |
Balance at end of period |
$ |
1,737 |
|
|
$ |
2,718 |
|
|
$ |
4,455 |
|
Allowance for Loan and Lease Losses
Activity in the allowance for loan and lease losses was as follows for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the Three Months Ended
September 30, |
|
As of and for the Nine Months Ended
September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
(in thousands) |
Balance at beginning of period |
$ |
49,386 |
|
|
$ |
31,818 |
|
|
$ |
31,974 |
|
|
$ |
31,043 |
|
Loans and leases charged off |
(916 |
) |
|
(1,246 |
) |
|
(3,549 |
) |
|
(3,535 |
) |
Recoveries on loans and leases previously charged off |
640 |
|
|
904 |
|
|
2,869 |
|
|
3,219 |
|
Net (charge-offs) recoveries |
(276 |
) |
|
(342 |
) |
|
(680 |
) |
|
(316 |
) |
Loan and lease loss provision |
1,602 |
|
|
200 |
|
|
19,418 |
|
|
949 |
|
Balance at end of period |
$ |
50,712 |
|
|
$ |
31,676 |
|
|
$ |
50,712 |
|
|
$ |
31,676 |
|
Management believes the allowance for loan and lease losses is appropriate to provide for probable incurred losses inherent in the loan and lease portfolio. However, the allowance is an estimate that is inherently uncertain and depends on the outcome of future events. Management’s estimates are based on: previous loss experience; size, growth and composition of the loan and lease portfolio; the value of collateral; and current economic conditions. Our lending is concentrated generally in real estate loans, commercial loans and leases and SBA loans to small and middle market businesses primarily in California, Texas, Illinois and New York. Further, our regulators, in reviewing our loan and lease portfolio may require us to increase our allowance for loan and lease losses.
The following table details the information on the allowance for loan and lease losses by portfolio segment as of and for the three months ended September 30, 2019 and 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate |
|
Commercial
and Industrial
|
|
Leases
Receivable
|
|
Consumer |
|
Unallocated |
|
Total |
|
(in thousands) |
As of and for the Three Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses on loans and leases: |
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
$ |
34,004 |
|
|
$ |
9,235 |
|
|
6,068 |
|
|
$ |
79 |
|
|
$ |
— |
|
|
$ |
49,386 |
|
Less loans and leases charged off |
(17 |
) |
|
(244 |
) |
|
(653 |
) |
|
(2 |
) |
|
— |
|
|
(916 |
) |
Recoveries on loans and leases previously charged off |
142 |
|
|
381 |
|
|
117 |
|
|
— |
|
|
— |
|
|
640 |
|
Loan and lease loss provision |
2,272 |
|
|
(1,551 |
) |
|
886 |
|
|
(5 |
) |
|
— |
|
|
1,602 |
|
Ending balance |
$ |
36,401 |
|
|
$ |
7,821 |
|
|
$ |
6,418 |
|
|
$ |
72 |
|
|
$ |
— |
|
|
$ |
50,712 |
|
Individually evaluated for impairment |
$ |
14,781 |
|
|
$ |
1,270 |
|
|
$ |
1,049 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
$ |
17,101 |
|
Collectively evaluated for impairment |
$ |
21,620 |
|
|
$ |
6,551 |
|
|
$ |
5,369 |
|
|
$ |
71 |
|
|
$ |
— |
|
|
$ |
33,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases receivable: |
$ |
3,646,327 |
|
|
$ |
441,209 |
|
|
$ |
467,777 |
|
|
$ |
14,524 |
|
|
$ |
— |
|
|
$ |
4,569,837 |
|
Individually evaluated for impairment |
$ |
47,972 |
|
|
$ |
13,692 |
|
|
$ |
4,303 |
|
|
$ |
1,325 |
|
|
$ |
— |
|
|
$ |
67,292 |
|
Collectively evaluated for impairment |
$ |
3,598,355 |
|
|
$ |
427,517 |
|
|
$ |
463,474 |
|
|
$ |
13,199 |
|
|
$ |
— |
|
|
$ |
4,502,545 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate |
|
Commercial
and Industrial
|
|
Leases
Receivable
|
|
Consumer |
|
Unallocated |
|
Total |
|
(in thousands) |
As of and for the Three Months Ended September 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses on loans and leases: |
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
$ |
17,916 |
|
|
$ |
7,120 |
|
|
6,649 |
|
|
$ |
109 |
|
|
$ |
24 |
|
|
$ |
31,818 |
|
Less loans and leases charged off |
(220 |
) |
|
(232 |
) |
|
(794 |
) |
|
— |
|
|
— |
|
|
(1,246 |
) |
Recoveries on loans and leases previously charged off |
577 |
|
|
237 |
|
|
90 |
|
|
— |
|
|
— |
|
|
904 |
|
Loan and lease loss provision |
(184 |
) |
|
(38 |
) |
|
446 |
|
|
— |
|
|
(24 |
) |
|
200 |
|
Ending balance |
$ |
18,089 |
|
|
$ |
7,087 |
|
|
$ |
6,391 |
|
|
$ |
109 |
|
|
$ |
— |
|
|
$ |
31,676 |
|
Individually evaluated for impairment |
$ |
2,428 |
|
|
$ |
631 |
|
|
$ |
1,763 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
4,822 |
|
Collectively evaluated for impairment |
$ |
15,661 |
|
|
$ |
6,456 |
|
|
$ |
4,628 |
|
|
$ |
109 |
|
|
$ |
— |
|
|
$ |
26,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases receivable: |
$ |
3,792,350 |
|
|
$ |
396,383 |
|
|
$ |
379,455 |
|
|
$ |
14,695 |
|
|
$ |
— |
|
|
$ |
4,582,883 |
|
Individually evaluated for impairment |
$ |
20,596 |
|
|
$ |
3,767 |
|
|
$ |
5,093 |
|
|
$ |
881 |
|
|
$ |
— |
|
|
$ |
30,337 |
|
Collectively evaluated for impairment |
$ |
3,771,754 |
|
|
$ |
392,616 |
|
|
$ |
374,362 |
|
|
$ |
13,814 |
|
|
$ |
— |
|
|
$ |
4,552,546 |
|
The following table details the information on the allowance for loan and lease losses by portfolio segment as of and for the nine months ended September 30, 2019 and 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate |
|
Commercial
and Industrial
|
|
Leases
Receivable
|
|
Consumer |
|
Unallocated |
|
Total |
|
(in thousands) |
As of and for the Nine Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses on loans and leases: |
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
$ |
18,384 |
|
|
$ |
7,162 |
|
|
6,303 |
|
|
$ |
98 |
|
|
$ |
27 |
|
|
$ |
31,974 |
|
Less loans and leases charged off |
(131 |
) |
|
(939 |
) |
|
(2,479 |
) |
|
(1 |
) |
|
1 |
|
|
(3,549 |
) |
Recoveries on loans and leases previously charged off |
1,704 |
|
|
853 |
|
|
312 |
|
|
— |
|
|
— |
|
|
2,869 |
|
Loan and lease loss provision |
16,444 |
|
|
745 |
|
|
2,282 |
|
|
(25 |
) |
|
(28 |
) |
|
19,418 |
|
Ending balance |
$ |
36,401 |
|
|
$ |
7,821 |
|
|
$ |
6,418 |
|
|
$ |
72 |
|
|
$ |
— |
|
|
$ |
50,712 |
|
Individually evaluated for impairment |
$ |
14,781 |
|
|
$ |
1,270 |
|
|
$ |
1,049 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
$ |
17,101 |
|
Collectively evaluated for impairment |
$ |
21,620 |
|
|
$ |
6,551 |
|
|
$ |
5,369 |
|
|
$ |
71 |
|
|
$ |
— |
|
|
$ |
33,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases receivable: |
$ |
3,646,327 |
|
|
$ |
441,209 |
|
|
$ |
467,777 |
|
|
$ |
14,524 |
|
|
$ |
— |
|
|
$ |
4,569,837 |
|
Individually evaluated for impairment |
$ |
47,972 |
|
|
$ |
13,692 |
|
|
$ |
4,303 |
|
|
$ |
1,325 |
|
|
$ |
— |
|
|
$ |
67,292 |
|
Collectively evaluated for impairment |
$ |
3,598,355 |
|
|
$ |
427,517 |
|
|
$ |
463,474 |
|
|
$ |
13,199 |
|
|
$ |
— |
|
|
$ |
4,502,545 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate |
|
Commercial
and Industrial
|
|
Leases
Receivable
|
|
Consumer |
|
Unallocated |
|
Total |
|
(in thousands) |
As of and for the Nine Months Ended
September 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses on loans and leases: |
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
$ |
17,012 |
|
|
$ |
7,400 |
|
|
6,279 |
|
|
$ |
122 |
|
|
$ |
230 |
|
|
$ |
31,043 |
|
Less loans and leases charged off |
(1,249 |
) |
|
(597 |
) |
|
(1,689 |
) |
|
— |
|
|
— |
|
|
(3,535 |
) |
Recoveries on loans and leases previously charged off |
1,833 |
|
|
1,170 |
|
|
214 |
|
|
2 |
|
|
— |
|
|
3,219 |
|
Loan and lease loss provision |
493 |
|
|
(886 |
) |
|
1,587 |
|
|
(15 |
) |
|
(230 |
) |
|
949 |
|
Ending balance |
$ |
18,089 |
|
|
$ |
7,087 |
|
|
$ |
6,391 |
|
|
$ |
109 |
|
|
$ |
— |
|
|
$ |
31,676 |
|
Individually evaluated for impairment |
$ |
2,428 |
|
|
$ |
631 |
|
|
$ |
1,763 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
4,822 |
|
Collectively evaluated for impairment |
$ |
15,661 |
|
|
$ |
6,456 |
|
|
$ |
4,628 |
|
|
$ |
109 |
|
|
$ |
— |
|
|
$ |
26,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases receivable: |
$ |
3,792,350 |
|
|
$ |
396,383 |
|
|
$ |
379,455 |
|
|
$ |
14,695 |
|
|
$ |
— |
|
|
$ |
4,582,883 |
|
Individually evaluated for impairment |
$ |
20,596 |
|
|
$ |
3,767 |
|
|
$ |
5,093 |
|
|
$ |
881 |
|
|
$ |
— |
|
|
$ |
30,337 |
|
Collectively evaluated for impairment |
$ |
3,771,754 |
|
|
$ |
392,616 |
|
|
$ |
374,362 |
|
|
$ |
13,814 |
|
|
$ |
— |
|
|
$ |
4,552,546 |
|
Loan Quality Indicators
As part of the on-going monitoring of the quality of our loan and lease portfolio, we utilize an internal loan and lease
grading system to identify credit risk and assign an appropriate grade (from 0 to 8) for each loan or lease in our loan
and lease portfolio. A third-party loan review is required on an annual basis. Additional adjustments are made when determined
to be necessary. The loan and lease grade definitions are as follows:
Pass and Pass-Watch: Pass and Pass-Watch loans and leases, grades (0-4), are in compliance with the Bank’s credit
policy and regulatory requirements, and do not exhibit any potential or defined weaknesses as defined under “Special
Mention,” “Substandard” or “Doubtful.” This category is the strongest level of the Bank’s loan and lease grading system. It
consists of all performing loans and leases with no identified credit weaknesses. It includes cash and stock/security secured
loans or other investment grade loans.
Special Mention: A Special Mention loan or lease, grade (5), has potential weaknesses that deserve management’s close attention. If not corrected, these potential weaknesses may result in deterioration of the repayment of the debt and result in a Substandard classification. Loans and leases that have significant actual, not potential, weaknesses are considered more
severely classified.
Substandard: A Substandard loan or lease, grade (6), has a well-defined weakness that jeopardizes the liquidation of the debt. A loan or lease graded Substandard is not protected by the sound worth and paying capacity of the borrower, or of the
value and type of collateral pledged. With a Substandard loan or lease, there is a distinct possibility that the Bank will sustain
some loss if the weaknesses or deficiencies are not corrected.
Doubtful: A Doubtful loan or lease, grade (7), is one that has critical weaknesses that would make the collection or
liquidation of the full amount due improbable. However, there may be pending events which may work to strengthen the loan
or lease, and therefore the amount or timing of a possible loss cannot be determined at the current time.
Loss: A loan or lease classified as Loss, grade (8), is considered uncollectable and of such little value that their
continuance as active bank assets is not warranted. This classification does not mean that the loan or lease has absolutely no
recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even though partial recovery
may be possible in the future. Loans and leases classified as Loss will be charged off in a timely manner.
Under regulatory guidance, loans and leases graded special mention or worse are considered criticized loans and leases, and loans and leases graded substandard or worse are considered classified loans and leases.
As of September 30, 2019 and December 31, 2018, pass/pass-watch, special mention and classified loans and leases, disaggregated by loan class, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass/Pass-Watch |
|
Special Mention |
|
Classified |
|
Total |
|
(in thousands) |
September 30, 2019 |
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
Retail |
$ |
853,986 |
|
|
$ |
3,509 |
|
|
$ |
7,555 |
|
|
$ |
865,050 |
|
Hospitality |
844,085 |
|
|
2,908 |
|
|
3,876 |
|
|
850,869 |
|
Other |
1,391,226 |
|
|
5,015 |
|
|
20,821 |
|
|
1,417,062 |
|
Total commercial property loans |
3,089,297 |
|
|
11,432 |
|
|
32,252 |
|
|
3,132,981 |
|
Construction |
40,407 |
|
|
8,917 |
|
|
27,446 |
|
|
76,770 |
|
Residential property |
434,980 |
|
|
796 |
|
|
800 |
|
|
436,576 |
|
Total real estate loans |
3,564,684 |
|
|
21,145 |
|
|
60,498 |
|
|
3,646,327 |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
Commercial term |
173,947 |
|
|
293 |
|
|
13,850 |
|
|
188,090 |
|
Commercial lines of credit |
213,958 |
|
|
5,242 |
|
|
200 |
|
|
219,400 |
|
International loans |
32,569 |
|
|
— |
|
|
1,150 |
|
|
33,719 |
|
Total commercial and industrial loans |
420,474 |
|
|
5,535 |
|
|
15,200 |
|
|
441,209 |
|
Leases receivable |
463,474 |
|
|
— |
|
|
4,303 |
|
|
467,777 |
|
Consumer loans |
13,071 |
|
|
720 |
|
|
733 |
|
|
14,524 |
|
Total loans and leases receivable |
$ |
4,461,703 |
|
|
$ |
27,400 |
|
|
$ |
80,734 |
|
|
$ |
4,569,837 |
|
|
|
|
|
|
|
|
|
December 31, 2018 |
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
Retail |
$ |
901,354 |
|
|
$ |
16 |
|
|
$ |
4,890 |
|
|
$ |
906,260 |
|
Hospitality |
821,542 |
|
|
168 |
|
|
8,969 |
|
|
830,679 |
|
Other |
1,441,219 |
|
|
2,723 |
|
|
5,328 |
|
|
1,449,270 |
|
Total commercial property loans |
3,164,115 |
|
|
2,907 |
|
|
19,187 |
|
|
3,186,209 |
|
Construction |
71,583 |
|
|
— |
|
|
— |
|
|
71,583 |
|
Residential property |
500,424 |
|
|
— |
|
|
139 |
|
|
500,563 |
|
Total real estate loans |
3,736,122 |
|
|
2,907 |
|
|
19,326 |
|
|
3,758,355 |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
Commercial term |
197,992 |
|
|
4,977 |
|
|
3,722 |
|
|
206,691 |
|
Commercial lines of credit |
172,338 |
|
|
21,107 |
|
|
587 |
|
|
194,032 |
|
International loans |
29,180 |
|
|
— |
|
|
— |
|
|
29,180 |
|
Total commercial and industrial loans |
399,510 |
|
|
26,084 |
|
|
4,309 |
|
|
429,903 |
|
Leases receivable |
393,729 |
|
|
— |
|
|
5,129 |
|
|
398,858 |
|
Consumer loans |
12,454 |
|
|
191 |
|
|
779 |
|
|
13,424 |
|
Total loans and leases receivable |
$ |
4,541,815 |
|
|
$ |
29,182 |
|
|
$ |
29,543 |
|
|
$ |
4,600,540 |
|
The following is an aging analysis of loans and leases, disaggregated by loan class, as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 Days Past Due |
|
60-89 Days Past Due |
|
90 Days or More Past Due |
|
Total Past Due |
|
Current |
|
Total |
|
(in thousands) |
September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
Retail |
$ |
117 |
|
|
$ |
142 |
|
|
$ |
— |
|
|
$ |
259 |
|
|
$ |
864,791 |
|
|
$ |
865,050 |
|
Hospitality |
— |
|
|
— |
|
|
138 |
|
|
138 |
|
|
850,731 |
|
|
850,869 |
|
Other |
39 |
|
|
(4 |
) |
|
— |
|
|
35 |
|
|
1,417,027 |
|
|
1,417,062 |
|
Total commercial property loans |
156 |
|
|
138 |
|
|
138 |
|
|
432 |
|
|
3,132,549 |
|
|
3,132,981 |
|
Construction |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
76,770 |
|
|
76,770 |
|
Residential property |
2,097 |
|
|
1,290 |
|
|
545 |
|
|
3,932 |
|
|
432,644 |
|
|
436,576 |
|
Total real estate loans |
2,253 |
|
|
1,428 |
|
|
683 |
|
|
4,364 |
|
|
3,641,963 |
|
|
3,646,327 |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
Commercial term |
368 |
|
|
124 |
|
|
121 |
|
|
613 |
|
|
187,477 |
|
|
188,090 |
|
Commercial lines of credit |
— |
|
|
95 |
|
|
— |
|
|
95 |
|
|
219,305 |
|
|
219,400 |
|
International loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
33,719 |
|
|
33,719 |
|
Total commercial and industrial loans |
368 |
|
|
219 |
|
|
121 |
|
|
708 |
|
|
440,501 |
|
|
441,209 |
|
Leases receivable |
4,725 |
|
|
1,279 |
|
|
1,881 |
|
|
7,885 |
|
|
459,892 |
|
|
467,777 |
|
Consumer loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
14,524 |
|
|
14,524 |
|
Total loans and leases receivable |
$ |
7,346 |
|
|
$ |
2,926 |
|
|
$ |
2,685 |
|
|
$ |
12,957 |
|
|
$ |
4,556,880 |
|
|
$ |
4,569,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
Retail |
$ |
221 |
|
|
$ |
— |
|
|
$ |
986 |
|
|
$ |
1,207 |
|
|
$ |
905,053 |
|
|
$ |
906,260 |
|
Hospitality |
65 |
|
|
1,203 |
|
|
1,893 |
|
|
3,161 |
|
|
827,518 |
|
|
830,679 |
|
Other |
816 |
|
|
206 |
|
|
1,205 |
|
|
2,227 |
|
|
1,447,043 |
|
|
1,449,270 |
|
Total commercial property loans |
1,102 |
|
|
1,409 |
|
|
4,084 |
|
|
6,595 |
|
|
3,179,614 |
|
|
3,186,209 |
|
Construction |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
71,583 |
|
|
71,583 |
|
Residential property |
3,947 |
|
|
273 |
|
|
44 |
|
|
4,264 |
|
|
496,299 |
|
|
500,563 |
|
Total real estate loans |
5,049 |
|
|
1,682 |
|
|
4,128 |
|
|
10,859 |
|
|
3,747,496 |
|
|
3,758,355 |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial term |
334 |
|
|
49 |
|
|
1,117 |
|
|
1,500 |
|
|
205,191 |
|
|
206,691 |
|
Commercial lines of credit |
— |
|
|
— |
|
|
587 |
|
|
587 |
|
|
193,445 |
|
|
194,032 |
|
International loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
29,180 |
|
|
29,180 |
|
Total commercial and industrial loans |
334 |
|
|
49 |
|
|
1,704 |
|
|
2,087 |
|
|
427,816 |
|
|
429,903 |
|
Leases receivable |
4,681 |
|
|
845 |
|
|
3,737 |
|
|
9,263 |
|
|
389,595 |
|
|
398,858 |
|
Consumer loans |
146 |
|
|
— |
|
|
— |
|
|
146 |
|
|
13,278 |
|
|
13,424 |
|
Total loans and leases receivable |
$ |
10,210 |
|
|
$ |
2,576 |
|
|
$ |
9,569 |
|
|
$ |
22,355 |
|
|
$ |
4,578,185 |
|
|
$ |
4,600,540 |
|
As of September 30, 2019 and December 31, 2018, there were $544,000 and $4,000, respectively, of loans and leases that were 90 days or more past due and accruing interest.
Impaired Loans and Leases
Loans and leases are considered impaired when the Bank will be unable to collect all interest and principal payments per the contractual terms of the loan and lease agreement, unless the loan is well-collateralized and in the process of collection. Loans are classified as Troubled Debt Restructurings (“TDRs”) because, due to the financial difficulties of the borrowers, we have granted concessions to the borrowers we would not otherwise consider; when current information or events make it unlikely to collect in full according to the contractual terms of the loan or lease agreements; there is a deterioration in the
borrower’s financial condition that raises uncertainty as to timely collection of either principal or interest; or full payment of both interest and principal is in doubt according to the original contractual terms.
We evaluate loan and lease impairment in accordance with GAAP. Impaired loans and leases are measured based on the present value of expected future cash flows discounted at the receivable's effective interest rate or, as a practical expedient, at the receivable's observable market price or the fair value of the collateral if the loan or lease is collateral dependent, less estimated costs to sell. If the estimated value of the impaired loan or lease is less than the recorded investment in the loan or lease, the deficiency is either charged off against the allowance for loan and lease losses or we establish a specific reserve in the allowance for loan and lease losses. Additionally, loans and leases that are considered impaired are specifically excluded from the quarterly migration analysis when determining the amount of the allowance for loan and lease losses required for the period.
The allowance for collateral-dependent loans is determined by calculating the difference between the outstanding loan balance and the value of the collateral as determined by recent appraisals. The allowance for collateral-dependent loans varies from loan to loan based on the collateral coverage of the loan at the time of designation as nonperforming. We continue to monitor the collateral coverage, using recent appraisals, on these loans on a quarterly basis and adjust the allowance accordingly.
The following tables provide information on impaired loans and leases, disaggregated by loan class, as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded
Investment |
|
Unpaid
Principal
Balance |
|
With No
Related
Allowance
Recorded |
|
With an
Allowance
Recorded |
|
Related
Allowance |
|
(in thousands) |
September 30, 2019 |
|
|
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
|
|
Retail |
$ |
1,136 |
|
|
$ |
1,217 |
|
|
$ |
705 |
|
|
$ |
431 |
|
|
$ |
32 |
|
Hospitality |
1,404 |
|
|
1,833 |
|
|
1,167 |
|
|
237 |
|
|
27 |
|
Other |
16,536 |
|
|
16,931 |
|
|
16,358 |
|
|
178 |
|
|
13 |
|
Total commercial property loans |
19,076 |
|
|
19,981 |
|
|
18,230 |
|
|
846 |
|
|
72 |
|
Construction |
27,446 |
|
|
28,000 |
|
|
— |
|
|
27,446 |
|
|
14,709 |
|
Residential property |
1,449 |
|
|
1,584 |
|
|
1,412 |
|
|
38 |
|
|
— |
|
Total real estate loans |
47,971 |
|
|
49,565 |
|
|
19,642 |
|
|
28,330 |
|
|
14,781 |
|
Commercial and industrial loans |
13,692 |
|
|
14,071 |
|
|
— |
|
|
13,692 |
|
|
1,270 |
|
Leases receivable |
4,303 |
|
|
4,340 |
|
|
474 |
|
|
3,828 |
|
|
1,049 |
|
Consumer loans |
1,325 |
|
|
1,601 |
|
|
1,245 |
|
|
79 |
|
|
1 |
|
Total |
$ |
67,291 |
|
|
$ |
69,577 |
|
|
$ |
21,361 |
|
|
$ |
45,929 |
|
|
$ |
17,101 |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018 |
|
|
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
|
|
Retail |
$ |
2,166 |
|
|
$ |
2,207 |
|
|
$ |
1,894 |
|
|
$ |
272 |
|
|
$ |
— |
|
Hospitality |
4,282 |
|
|
5,773 |
|
|
4,032 |
|
|
250 |
|
|
— |
|
Other |
7,525 |
|
|
8,016 |
|
|
6,253 |
|
|
1,272 |
|
|
1 |
|
Total commercial property loans |
13,973 |
|
|
15,996 |
|
|
12,179 |
|
|
1,794 |
|
|
1 |
|
Residential property |
788 |
|
|
929 |
|
|
788 |
|
|
— |
|
|
— |
|
Total real estate loans |
14,761 |
|
|
16,925 |
|
|
12,967 |
|
|
1,794 |
|
|
1 |
|
Commercial and industrial loans |
4,396 |
|
|
4,601 |
|
|
1,644 |
|
|
2,752 |
|
|
428 |
|
Leases receivable |
5,129 |
|
|
5,162 |
|
|
1,256 |
|
|
3,873 |
|
|
1,383 |
|
Consumer loans |
839 |
|
|
1,073 |
|
|
746 |
|
|
93 |
|
|
— |
|
Total |
$ |
25,125 |
|
|
$ |
27,761 |
|
|
$ |
16,613 |
|
|
$ |
8,512 |
|
|
$ |
1,812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
Average Recorded Investment |
|
Interest
Income
Recognized
|
|
Average Recorded Investment |
|
Interest
Income
Recognized
|
|
(in thousands) |
September 30, 2019 |
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
Retail |
$ |
1,168 |
|
|
$ |
6 |
|
|
$ |
1,041 |
|
|
$ |
11 |
|
Hospitality |
1,499 |
|
|
— |
|
|
2,145 |
|
|
— |
|
Other |
10,208 |
|
|
26 |
|
|
9,194 |
|
|
167 |
|
Total commercial property loans |
12,875 |
|
|
32 |
|
|
12,380 |
|
|
178 |
|
Construction |
27,674 |
|
|
— |
|
|
15,447 |
|
|
249 |
|
Residential property |
1,552 |
|
|
10 |
|
|
1,436 |
|
|
29 |
|
Total real estate loans |
42,101 |
|
|
42 |
|
|
29,263 |
|
|
456 |
|
Commercial and industrial loans |
13,892 |
|
|
15 |
|
|
21,220 |
|
|
506 |
|
Leases receivable |
4,543 |
|
|
14 |
|
|
4,431 |
|
|
27 |
|
Consumer loans |
1,482 |
|
|
9 |
|
|
1,502 |
|
|
29 |
|
Total |
$ |
62,018 |
|
|
$ |
80 |
|
|
$ |
56,416 |
|
|
$ |
1,018 |
|
|
|
|
|
|
|
|
|
September 30, 2018 |
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
Retail |
$ |
2,671 |
|
|
$ |
93 |
|
|
$ |
1,936 |
|
|
$ |
141 |
|
Hospitality |
7,146 |
|
|
104 |
|
|
7,639 |
|
|
376 |
|
Other |
8,659 |
|
|
187 |
|
|
8,021 |
|
|
430 |
|
Total commercial property loans |
18,476 |
|
|
384 |
|
|
17,596 |
|
|
947 |
|
Residential property |
1,966 |
|
|
23 |
|
|
2,269 |
|
|
80 |
|
Total real estate loans |
20,442 |
|
|
407 |
|
|
19,865 |
|
|
1,027 |
|
Commercial and industrial loans |
3,819 |
|
|
40 |
|
|
3,266 |
|
|
119 |
|
Leases receivable |
5,424 |
|
|
11 |
|
|
5,072 |
|
|
33 |
|
Consumer loans |
1,018 |
|
|
17 |
|
|
1,031 |
|
|
45 |
|
Total |
$ |
30,703 |
|
|
$ |
475 |
|
|
$ |
29,234 |
|
|
$ |
1,224 |
|
The following is a summary of interest foregone on impaired loans and leases for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
(in thousands) |
Interest income that would have been recognized had impaired loans and leases performed in accordance with their original terms |
$ |
916 |
|
|
$ |
819 |
|
|
$ |
2,407 |
|
|
$ |
2,150 |
|
Less: Interest income recognized on impaired loans and leases |
(80 |
) |
|
(475 |
) |
|
(1,018 |
) |
|
(1,224 |
) |
Interest foregone on impaired loans and leases |
$ |
836 |
|
|
$ |
344 |
|
|
$ |
1,389 |
|
|
$ |
926 |
|
There were no commitments to lend additional funds to borrowers whose loans are included above.
Nonaccrual Loans and Leases and Nonperforming Assets
Loans and leases are placed on nonaccrual status when, in the opinion of management, the full timely collection of principal or interest is in doubt. Generally, the accrual of interest is discontinued when principal or interest payments become more than 90 days past due, unless management believes the receivable is adequately collateralized and in the process of collection. However, in certain instances, we may place a particular loan or lease receivable on nonaccrual status earlier,
depending upon the individual circumstances surrounding the delinquency. When a receivable is placed on nonaccrual status, previously accrued but unpaid interest is reversed against current income. Subsequent collections of cash are applied as principal reductions when received, except when the ultimate collectability of principal is probable, in which case interest payments are credited to income. Nonaccrual loans and leases may be restored to accrual status when principal and interest payments become current and full repayment is expected.
The following table details nonaccrual loans and leases, disaggregated by loan class, as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
September 30, 2019 |
|
December 31, 2018 |
|
(in thousands) |
Real estate loans: |
|
|
|
Commercial property |
|
|
|
Retail |
$ |
986 |
|
|
$ |
865 |
|
Hospitality |
1,404 |
|
|
3,625 |
|
Other |
15,067 |
|
|
1,641 |
|
Total commercial property loans |
17,457 |
|
|
6,131 |
|
Construction |
27,446 |
|
|
— |
|
Residential property |
838 |
|
|
182 |
|
Total real estate loans |
45,741 |
|
|
6,313 |
|
Commercial and industrial loans |
13,447 |
|
|
3,337 |
|
Leases receivable |
4,303 |
|
|
5,129 |
|
Consumer loans |
703 |
|
|
746 |
|
Total nonaccrual loans and leases |
$ |
64,194 |
|
|
$ |
15,525 |
|
The following table details nonperforming assets as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
September 30, 2019 |
|
December 31, 2018 |
|
(in thousands) |
Nonaccrual loans and leases |
$ |
64,194 |
|
|
$ |
15,525 |
|
Loans and leases 90 days or more past due and still accruing |
544 |
|
|
4 |
|
Total nonperforming loans and leases |
64,738 |
|
|
15,529 |
|
Other real estate owned (“OREO”) |
330 |
|
|
663 |
|
Total nonperforming assets |
$ |
65,068 |
|
|
$ |
16,192 |
|
OREO is included in prepaid expenses and other assets in the accompanying Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018.
Troubled Debt Restructurings
The following table details TDRs loans as of September 30, 2019 and December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual TDRs |
|
Accrual TDRs |
|
Deferral
of
Principal |
|
Deferral
of
Principal
and
Interest |
|
Reduction
of
Principal
and
Interest |
|
Extension
of
Maturity |
|
Total |
|
Deferral
of
Principal |
|
Deferral
of
Principal
and
Interest |
|
Reduction
of
Principal
and
Interest |
|
Extension
of
Maturity |
|
Total |
|
(in thousands) |
September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans |
$ |
1,927 |
|
|
$ |
142 |
|
|
$ |
28,141 |
|
|
$ |
13,926 |
|
|
$ |
44,136 |
|
|
$ |
2,081 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,081 |
|
Commercial and industrial loans |
— |
|
|
156 |
|
|
12,527 |
|
|
323 |
|
|
13,006 |
|
|
— |
|
|
36 |
|
|
83 |
|
|
127 |
|
|
246 |
|
Consumer loans |
703 |
|
|
— |
|
|
— |
|
|
— |
|
|
703 |
|
|
542 |
|
|
— |
|
|
79 |
|
|
— |
|
|
621 |
|
Total |
$ |
2,630 |
|
|
$ |
298 |
|
|
$ |
40,668 |
|
|
$ |
14,249 |
|
|
$ |
57,845 |
|
|
$ |
2,623 |
|
|
$ |
36 |
|
|
$ |
162 |
|
|
$ |
127 |
|
|
$ |
2,948 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans |
$ |
462 |
|
|
$ |
1,423 |
|
|
$ |
174 |
|
|
$ |
— |
|
|
$ |
2,059 |
|
|
$ |
3,345 |
|
|
$ |
— |
|
|
$ |
1,148 |
|
|
$ |
741 |
|
|
$ |
5,234 |
|
Commercial and industrial loans |
265 |
|
|
107 |
|
|
669 |
|
|
430 |
|
|
1,471 |
|
|
— |
|
|
166 |
|
|
386 |
|
|
150 |
|
|
702 |
|
Consumer loans |
746 |
|
|
— |
|
|
— |
|
|
— |
|
|
746 |
|
|
— |
|
|
— |
|
|
93 |
|
|
— |
|
|
93 |
|
Total |
$ |
1,473 |
|
|
$ |
1,530 |
|
|
$ |
843 |
|
|
$ |
430 |
|
|
$ |
4,276 |
|
|
$ |
3,345 |
|
|
$ |
166 |
|
|
$ |
1,627 |
|
|
$ |
891 |
|
|
$ |
6,029 |
|
As of September 30, 2019 and December 31, 2018, total TDRs were $60.8 million and $10.3 million, respectively. A debt restructuring is considered a TDR if we grant a concession that we would not have otherwise considered, to the borrower for economic or legal reasons related to the borrower’s financial difficulties. Loans are considered to be TDRs if they were restructured, such as reducing the amount of principal and interest due monthly, and/or allowing for interest only monthly payments for three months or more or other payment structure modifications. All TDRs are impaired and are individually evaluated for specific impairment using one of these three criteria: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price; or (3) the fair value of the collateral if the loan is collateral dependent. The allowance for loan and lease losses included $15.9 million of specific allowances at September 30, 2019 and $313,000 of specific allowances at December 31, 2018 relating to TDR loans.
There were $44.0 million of commercial real estate loans (eight loans), $12.6 million of commercial loans (two loans) and one consumer loan for $0.5 million that were modified during the twelve-month period ended September 30, 2019. None of these loans defaulted nor were charged off subsequent to their restructuring during the twelve-month period ended September 30, 2019. The troubled debt restructurings described above increased the allowance by $15.7 million during the twelve-month period ended September 30, 2019.
For the restructured loans on accrual status, we determined that, based on the financial capabilities of the borrowers at the time of the loan restructuring and the borrowers’ past performance in the payment of debt service under the previous loan terms, performance and collection under the revised terms are probable.
|