Quarterly report pursuant to Section 13 or 15(d)

Loans

v3.21.1
Loans
3 Months Ended
Mar. 31, 2021
Receivables [Abstract]  
Loans

Note 3 — Loans

Loans Receivable

Loans consisted of the following as of the dates indicated:

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

(in thousands)

 

Real estate loans:

 

 

 

 

 

 

 

 

Commercial property

 

 

 

 

 

 

 

 

Retail

 

$

811,583

 

 

$

824,606

 

Hospitality

 

 

842,014

 

 

 

859,953

 

Other (1)

 

 

1,656,065

 

 

 

1,610,377

 

Total commercial property loans

 

 

3,309,662

 

 

 

3,294,936

 

Construction

 

 

62,626

 

 

 

58,882

 

Residential/consumer loans

 

 

328,228

 

 

 

345,831

 

Total real estate loans

 

 

3,700,516

 

 

 

3,699,649

 

Commercial and industrial loans

 

 

707,073

 

 

 

757,255

 

Leases receivable

 

 

409,562

 

 

 

423,264

 

Loans receivable

 

 

4,817,151

 

 

 

4,880,168

 

Allowance for credit losses

 

 

(88,392

)

 

 

(90,426

)

Loans receivable, net

 

$

4,728,759

 

 

$

4,789,742

 

 

(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 receivable.

 

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act allows financial institutions to assist customers in dealing with financial hardship by (a) providing federal funding so that financial institutions can originate SBA loans to borrowers at a low interest rate under the Paycheck Protection Program (“PPP”) loans with eventual debt forgiveness should the borrower continue to meet certain criteria; and (b) allowing financial institutions to temporarily modify loan terms by deferring loan payments, loan fees, etc. without considering them Troubled Debt Restructurings (“TDRs”).

At March 31, 2021, there were $256.5 million of PPP loans included in commercial and industrial loans in the table above.  In addition, at March 31, 2021, there were $116.4 million of loans modified under Section 4013 of the CARES Act.

Accrued interest on loans was $13.6 million and $15.2 million at March 31, 2021 and December 31, 2020, respectively. Accrued interest at March 31, 2021 and December 31, 2020 included unpaid deferred interest receivable for loans currently or previously modified under the CARES Act of $5.2 million and $7.5 million, net of a $1.2 million and $1.7 million valuation allowance, respectively.

At March 31, 2021 and December 31, 2020, loans of $2.34 billion and $2.17 billion, respectively, were pledged to secure advances from the FHLB.

Loans Held for Sale

The following is the activity for loans held for sale for the three months ended March 31, 2021 and 2020:

 

 

 

Real Estate

 

 

Commercial and

Industrial

 

 

Total

 

 

 

(in thousands)

 

March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

8,042

 

 

$

526

 

 

$

8,568

 

Originations and transfers

 

 

16,283

 

 

 

130,387

 

 

 

146,670

 

Sales

 

 

(13,395

)

 

 

(109,169

)

 

 

(122,564

)

Principal paydowns and amortization

 

 

 

 

 

 

 

 

 

Balance at end of period

 

$

10,930

 

 

$

21,744

 

 

$

32,674

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

2,943

 

 

$

3,077

 

 

$

6,020

 

Originations

 

 

6,494

 

 

 

5,703

 

 

 

12,197

 

Sales

 

 

(9,432

)

 

 

(8,780

)

 

 

(18,212

)

Principal paydowns and amortization

 

 

(5

)

 

 

 

 

 

(5

)

Balance at end of period

 

$

 

 

$

 

 

$

 

 

Loans held for sale was comprised of $10.9 million of the guaranteed portion of SBA 7(a) loans and $21.7 million in second draw PPP loans at March 31, 2021. During the quarter ended March 31, 2021, the Company recognized $2.5 million of gains on the sale of $108.5 million second draw PPP loans.

 

 

Allowance for Credit Losses

 

The following table details the information on the allowance for credit losses by portfolio segment for the periods indicated:

 

 

 

Real Estate

 

 

Commercial and

Industrial

 

 

Leases

Receivable

 

 

Total

 

 

 

(in thousands)

 

March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

51,877

 

 

$

21,410

 

 

$

17,139

 

 

$

90,426

 

Less loans charged off

 

 

1,509

 

 

 

93

 

 

 

1,903

 

 

 

3,505

 

Recoveries on loans receivable previously charged off

 

 

(273

)

 

 

(99

)

 

 

(135

)

 

 

(507

)

Provision for credit losses

 

 

7,121

 

 

 

(5,029

)

 

 

(1,128

)

 

 

964

 

Ending balance

 

$

57,762

 

 

$

16,387

 

 

$

14,243

 

 

$

88,392

 

Individually evaluated

 

$

11

 

 

$

7,584

 

 

$

4,561

 

 

$

12,156

 

Collectively evaluated

 

$

57,751

 

 

$

8,803

 

 

$

9,682

 

 

$

76,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans receivable

 

$

3,700,516

 

 

$

707,073

 

 

$

409,562

 

 

$

4,817,151

 

Individually evaluated

 

$

39,144

 

 

$

14,297

 

 

$

10,025

 

 

$

63,466

 

Collectively evaluated

 

$

3,661,372

 

 

$

692,777

 

 

$

399,537

 

 

$

4,753,686

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

36,435

 

 

$

16,206

 

 

$

8,767

 

 

$

61,408

 

Adjustment related to adoption of ASU 2016-13

 

 

14,028

 

 

 

(2,497

)

 

 

5,902

 

 

 

17,433

 

Adjusted balance as of January 1, 2020

 

 

50,463

 

 

 

13,709

 

 

 

14,669

 

 

 

78,841

 

Less loans charged off

 

 

14,143

 

 

 

12,150

 

 

 

1,181

 

 

 

27,474

 

Recoveries on loans receivable previously charged off

 

 

(58

)

 

 

(84

)

 

 

(74

)

 

 

(216

)

Provision for credit losses

 

 

2,754

 

 

 

9,945

 

 

 

2,218

 

 

 

14,917

 

Ending balance

 

$

39,132

 

 

$

11,588

 

 

$

15,780

 

 

$

66,500

 

Individually evaluated

 

$

81

 

 

$

147

 

 

$

1,671

 

 

$

1,899

 

Collectively evaluated

 

$

39,051

 

 

$

11,441

 

 

$

14,109

 

 

$

64,601

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans receivable

 

$

3,578,395

 

 

$

472,714

 

 

$

492,527

 

 

$

4,543,636

 

Individually evaluated

 

$

35,459

 

 

$

5,444

 

 

$

6,393

 

 

$

47,296

 

Collectively evaluated

 

$

3,542,936

 

 

$

467,270

 

 

$

486,134

 

 

$

4,496,340

 

 

The table below illustrates the allowance for credit losses by loan portfolio segment and each loan portfolio segment as a percentage of total loans.

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Allowance Amount

 

 

Total Loans

 

 

Percentage of Total Loans

 

 

Allowance Amount

 

 

Total Loans

 

 

Percentage of Total Loans

 

 

 

(in thousands)

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

$

3,962

 

 

$

811,583

 

 

 

16.8

%

 

$

4,855

 

 

$

824,606

 

 

 

16.9

%

Hospitality

 

 

38,251

 

 

 

842,014

 

 

 

17.5

%

 

 

28,801

 

 

 

859,953

 

 

 

17.6

%

Other

 

 

11,121

 

 

 

1,656,065

 

 

 

34.4

%

 

 

13,991

 

 

 

1,610,377

 

 

 

32.9

%

Total commercial property loans

 

 

53,334

 

 

 

3,309,662

 

 

 

68.7

%

 

 

47,647

 

 

 

3,294,936

 

 

 

67.4

%

Construction

 

 

3,670

 

 

 

62,626

 

 

 

1.3

%

 

 

2,876

 

 

 

58,882

 

 

 

1.2

%

Residential/consumer loans

 

 

758

 

 

 

328,228

 

 

 

6.8

%

 

 

1,353

 

 

 

345,831

 

 

 

7.1

%

Total real estate loans

 

 

57,762

 

 

 

3,700,516

 

 

 

76.8

%

 

 

51,876

 

 

 

3,699,649

 

 

 

75.8

%

Commercial and industrial loans

 

 

16,387

 

 

 

707,073

 

 

 

14.7

%

 

 

21,410

 

 

 

757,255

 

 

 

15.5

%

Leases receivable

 

 

14,243

 

 

 

409,562

 

 

 

8.5

%

 

 

17,140

 

 

 

423,264

 

 

 

8.7

%

Total

 

$

88,392

 

 

$

4,817,151

 

 

 

100.0

%

 

$

90,426

 

 

$

4,880,168

 

 

 

100.0

%

 

 

The following table represents the amortized cost basis of collateral-dependent loans by class of loans as of March 31, 2021 and December 31, 2020, for which repayment is expected to be obtained through the sale of the underlying collateral.

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Amortized Cost

 

 

Amortized Cost

 

 

 

(in thousands)

 

Real estate loans:

 

 

 

 

 

 

 

 

Commercial property

 

 

 

 

 

 

 

 

Retail

 

$

6,270

 

 

$

6,330

 

Hospitality

 

 

8,941

 

 

 

20,612

 

Other (1)

 

 

8,137

 

 

 

8,410

 

Total commercial property loans

 

 

23,348

 

 

 

35,352

 

Construction

 

 

11,046

 

 

 

24,854

 

Residential/consumer loans

 

 

2,832

 

 

 

2,867

 

Total real estate loans

 

 

37,226

 

 

 

63,073

 

Commercial and industrial loans

 

 

 

 

 

41

 

Total

 

$

37,226

 

 

$

63,114

 

 

(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 receivable.

 

Loan Quality Indicators

As part of the on-going monitoring of the quality of our loans portfolio, we utilize an internal loan grading system to identify credit risk and assign an appropriate grade (from 0 to 8) for each loan in our portfolio. A third-party loan review is performed at least on an annual basis. Additional adjustments are made when determined to be necessary. The loan grade definitions are as follows:

Pass and Pass-Watch: Pass and Pass-Watch loans, 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 grading system. It consists of all performing loans with no identified credit weaknesses. It includes cash and stock/security secured loans or other investment grade loans.

Special Mention: A Special Mention loan, 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 that have significant actual, not potential, weaknesses are considered more severely classified.

Substandard: A Substandard loan, grade (6), has a well-defined weakness that jeopardizes the liquidation of the debt. A loan 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, there is a distinct possibility that the Bank will sustain some loss if the weaknesses or deficiencies are not corrected.

Doubtful: A Doubtful loan, 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, and therefore the amount or timing of a possible loss cannot be determined at the current time.

Loss: A loan classified as Loss, grade (8), is considered uncollectible and of such little value that their continuance as active bank assets is not warranted. This classification does not mean that the loan 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 classified as Loss will be charged off in a timely manner.

Under regulatory guidance, loans graded special mention or worse are considered criticized loans, and loans graded substandard or worse are considered classified loans.

Loans by Vintage Year and Risk Rating

 

 

 

Term Loans

 

 

 

 

 

 

 

 

 

 

 

Amortized Cost Basis by Origination Year (1)

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

2019

 

 

2018

 

 

2017

 

 

Prior

 

 

Revolving

Loans

Amortized

Cost Basis

 

 

Total

 

 

 

(in thousands)

 

March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass / Pass-Watch

 

$

248,282

 

 

$

824,943

 

 

$

499,488

 

 

$

457,893

 

 

$

333,986

 

 

$

757,814

 

 

$

40,720

 

 

$

3,163,126

 

Special Mention

 

 

 

 

 

6,390

 

 

 

18,559

 

 

 

11,023

 

 

 

1,660

 

 

 

38,335

 

 

 

260

 

 

 

76,227

 

Classified

 

 

 

 

 

 

 

 

5,510

 

 

 

12,572

 

 

 

4,665

 

 

 

47,562

 

 

 

 

 

 

70,309

 

Total commercial property

 

 

248,282

 

 

 

831,333

 

 

 

523,557

 

 

 

481,488

 

 

 

340,311

 

 

 

843,711

 

 

 

40,980

 

 

 

3,309,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass / Pass Watch

 

 

11,659

 

 

 

27,263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38,922

 

Special Mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23,704

 

 

 

 

 

 

23,704

 

Total construction

 

 

11,659

 

 

 

27,263

 

 

 

 

 

 

 

 

 

 

 

 

23,704

 

 

 

 

 

 

62,626

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential/consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass / Pass-Watch

 

 

12,640

 

 

 

26,795

 

 

 

947

 

 

 

33,026

 

 

 

117,121

 

 

 

121,431

 

 

 

7,093

 

 

 

319,053

 

Special Mention

 

 

 

 

 

 

 

 

 

 

 

930

 

 

 

378

 

 

 

5,299

 

 

 

 

 

 

6,607

 

Classified

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,245

 

 

 

323

 

 

 

 

 

 

2,568

 

Total residential/consumer loans

 

 

12,640

 

 

 

26,795

 

 

 

947

 

 

 

33,956

 

 

 

119,744

 

 

 

127,053

 

 

 

7,093

 

 

 

328,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass / Pass-Watch

 

 

272,581

 

 

 

879,001

 

 

 

500,435

 

 

 

490,919

 

 

 

451,107

 

 

 

879,245

 

 

 

47,813

 

 

 

3,521,101

 

Special Mention

 

 

 

 

 

6,390

 

 

 

18,559

 

 

 

11,953

 

 

 

2,038

 

 

 

43,634

 

 

 

260

 

 

 

82,834

 

Classified

 

 

 

 

 

 

 

 

5,510

 

 

 

12,572

 

 

 

6,910

 

 

 

71,589

 

 

 

 

 

 

96,581

 

Total real estate loans

 

 

272,581

 

 

 

885,391

 

 

 

524,504

 

 

 

515,444

 

 

 

460,055

 

 

 

994,468

 

 

 

48,073

 

 

 

3,700,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass / Pass-Watch

 

 

75,769

 

 

 

327,677

 

 

 

54,566

 

 

 

50,755

 

 

 

16,844

 

 

 

12,987

 

 

 

114,431

 

 

 

653,029

 

Special Mention

 

 

 

 

 

3,446

 

 

 

4,690

 

 

 

4,429

 

 

 

75

 

 

 

68

 

 

 

515

 

 

 

13,223

 

Classified

 

 

456

 

 

 

 

 

 

15,272

 

 

 

5,070

 

 

 

9,247

 

 

 

6,587

 

 

 

4,189

 

 

 

40,821

 

Total commercial and industrial loans

 

 

76,225

 

 

 

331,123

 

 

 

74,528

 

 

 

60,254

 

 

 

26,166

 

 

 

19,642

 

 

 

119,135

 

 

 

707,073

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leases receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass / Pass-Watch

 

 

34,174

 

 

 

107,408

 

 

 

148,514

 

 

 

79,816

 

 

 

24,719

 

 

 

4,906

 

 

 

 

 

 

399,537

 

Special Mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified

 

 

 

 

 

488

 

 

 

5,826

 

 

 

2,267

 

 

 

595

 

 

 

849

 

 

 

 

 

 

10,025

 

Total leases receivable

 

 

34,174

 

 

 

107,896

 

 

 

154,340

 

 

 

82,083