| Loans and Leases |
Note 3 — Loans and Leases
The Board of Directors and management review and approve the Bank’s loan and lease policy and procedures on a regular basis to reflect matters such as regulatory and organizational structure changes, strategic planning revisions, concentrations of credit, loan and lease delinquencies and nonperforming loans and leases, and problem loans and leases.
Real estate loans are loans secured by liens or interest in real estate, to provide purchase, construction, and refinance on real estate properties. Commercial and industrial loans consist of commercial term loans, commercial lines of credit, Small Business Administration (“SBA”) and international loans. Leases receivable include equipment finance agreements, which are typically secured by the business assets being financed. Consumer loans consist of auto loans, personal loans, and home equity lines of credit. We maintain management loan review and monitoring departments that review and monitor pass graded loans as well as problem loans to prevent further deterioration.
Concentrations of Credit: The majority of the Bank’s loan and lease portfolio consists of commercial real estate loans.
Loans and leases receivable, net
Loans and leases receivable consisted of the following as of the dates indicated:
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
(in thousands)
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
Commercial property
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$
|
869,302
|
|
|
$
|
906,260
|
|
|
Hospitality
|
|
|
922,288
|
|
|
|
830,679
|
|
|
Other (1)
|
|
|
1,358,432
|
|
|
|
1,449,270
|
|
|
Total commercial property loans
|
|
|
3,150,022
|
|
|
|
3,186,209
|
|
|
Construction
|
|
|
76,455
|
|
|
|
71,583
|
|
|
Residential property
|
|
|
402,028
|
|
|
|
500,563
|
|
|
Total real estate loans
|
|
|
3,628,505
|
|
|
|
3,758,355
|
|
|
Commercial and industrial loans:
|
|
|
|
|
|
|
|
|
|
Commercial term
|
|
|
227,652
|
|
|
|
206,691
|
|
|
Commercial lines of credit
|
|
|
228,033
|
|
|
|
194,032
|
|
|
International loans
|
|
|
28,409
|
|
|
|
29,180
|
|
|
Total commercial and industrial loans
|
|
|
484,093
|
|
|
|
429,903
|
|
|
Leases receivable
|
|
|
483,879
|
|
|
|
398,858
|
|
|
Consumer loans (2)
|
|
|
13,670
|
|
|
|
13,424
|
|
|
Loans and leases receivable
|
|
|
4,610,147
|
|
|
|
4,600,540
|
|
|
Allowance for loan and lease losses
|
|
|
(61,408
|
)
|
|
|
(31,974
|
)
|
|
Loans and leases receivable, net
|
|
$
|
4,548,739
|
|
|
$
|
4,568,566
|
|
|
(1)
|
Includes, among other property types, mixed-use, gas station, apartment, office, industrial, faith-based facilities and warehouse; the remaining real estate categories represent less than one percent of the Bank's total loans and leases.
|
|
(2)
|
Consumer loans include home equity lines of credit of $8.2 million and $10.3 million as of December 31, 2019 and 2018, respectively.
|
Accrued interest on loans and leases receivable was $10.0 million and $10.9 million at December 31, 2019 and 2018, respectively. At December 31, 2019 and 2018, $1.35 billion and $1.10 billion of loans and leases receivable, respectively, were pledged to secure advances from the FHLB.
Loans Held for Sale
The following table details the information on SBA loans held for sale by portfolio segment for the years ended December 31, 2019 and 2018:
|
|
|
Real Estate
|
|
|
Commercial
and Industrial
|
|
|
Total
|
|
|
|
|
(in thousands)
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
5,194
|
|
|
$
|
4,196
|
|
|
$
|
9,390
|
|
|
Originations
|
|
|
43,001
|
|
|
|
33,764
|
|
|
|
76,765
|
|
|
Sales
|
|
|
(45,251
|
)
|
|
|
(34,865
|
)
|
|
|
(80,116
|
)
|
|
Principal paydowns and amortization
|
|
|
(1
|
)
|
|
|
(18
|
)
|
|
|
(19
|
)
|
|
Balance at end of period
|
|
$
|
2,943
|
|
|
$
|
3,077
|
|
|
$
|
6,020
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
3,746
|
|
|
$
|
2,648
|
|
|
$
|
6,394
|
|
|
Originations
|
|
|
39,243
|
|
|
|
39,903
|
|
|
|
79,146
|
|
|
Sales
|
|
|
(37,790
|
)
|
|
|
(38,161
|
)
|
|
|
(75,951
|
)
|
|
Principal paydowns and amortization
|
|
|
(5
|
)
|
|
|
(194
|
)
|
|
|
(199
|
)
|
|
Balance at end of period
|
|
$
|
5,194
|
|
|
$
|
4,196
|
|
|
$
|
9,390
|
|
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 Year Ended December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(in thousands)
|
|
|
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
31,974
|
|
|
$
|
31,043
|
|
|
$
|
32,429
|
|
|
Loans and leases charged off
|
|
|
(4,588
|
)
|
|
|
(7,310
|
)
|
|
|
(5,899
|
)
|
|
Recoveries on loans and leases previously charged off
|
|
|
3,852
|
|
|
|
4,251
|
|
|
|
3,682
|
|
|
Net charge-offs
|
|
|
(736
|
)
|
|
|
(3,059
|
)
|
|
|
(2,217
|
)
|
|
Loan and lease loss provision
|
|
|
30,170
|
|
|
|
3,990
|
|
|
|
831
|
|
|
Balance at end of period
|
|
$
|
61,408
|
|
|
$
|
31,974
|
|
|
$
|
31,043
|
|
The following table details the information on the allowance for loan and lease losses by portfolio segment for the years ended December 31, 2019 and 2018:
|
|
|
Real
Estate
|
|
|
Commercial
and
Industrial
|
|
|
Leases
Receivable
|
|
|
Consumer
|
|
|
Unallocated
|
|
|
Total
|
|
|
|
|
(in thousands)
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
18,384
|
|
|
$
|
7,162
|
|
|
$
|
6,303
|
|
|
$
|
98
|
|
|
$
|
27
|
|
|
$
|
31,974
|
|
|
Less loans and leases charged off
|
|
|
(131
|
)
|
|
|
(1,293
|
)
|
|
|
(3,162
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(4,588
|
)
|
|
Recoveries on loans and leases previously charged off
|
|
|
2,190
|
|
|
|
1,241
|
|
|
|
422
|
|
|
|
0
|
|
|
|
—
|
|
|
|
3,852
|
|
|
Loan and lease loss provision
|
|
|
15,913
|
|
|
|
9,097
|
|
|
|
5,205
|
|
|
|
(17
|
)
|
|
|
(27
|
)
|
|
|
30,170
|
|
|
Ending balance
|
|
$
|
36,355
|
|
|
$
|
16,206
|
|
|
$
|
8,767
|
|
|
$
|
80
|
|
|
$
|
—
|
|
|
$
|
61,408
|
|
|
Individually evaluated for impairment
|
|
$
|
14,028
|
|
|
$
|
8,885
|
|
|
$
|
2,863
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
25,778
|
|
|
Collectively evaluated for impairment
|
|
$
|
22,327
|
|
|
$
|
7,321
|
|
|
$
|
5,904
|
|
|
$
|
79
|
|
|
$
|
—
|
|
|
$
|
35,631
|
|
|
Loans and leases receivable
|
|
$
|
3,628,505
|
|
|
$
|
484,093
|
|
|
$
|
483,879
|
|
|
$
|
13,670
|
|
|
$
|
—
|
|
|
$
|
4,610,147
|
|
|
Individually evaluated for impairment
|
|
$
|
43,867
|
|
|
$
|
13,700
|
|
|
$
|
5,902
|
|
|
$
|
1,297
|
|
|
$
|
—
|
|
|
$
|
64,766
|
|
|
Collectively evaluated for impairment
|
|
$
|
3,584,638
|
|
|
$
|
470,393
|
|
|
$
|
477,977
|
|
|
$
|
12,373
|
|
|
$
|
—
|
|
|
$
|
4,545,382
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
17,012
|
|
|
$
|
7,400
|
|
|
$
|
6,279
|
|
|
$
|
122
|
|
|
$
|
230
|
|
|
$
|
31,043
|
|
|
Less loans and leases charged off
|
|
|
(3,897
|
)
|
|
|
(815
|
)
|
|
|
(2,598
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(7,310
|
)
|
|
Recoveries on loans and leases previously charged off
|
|
|
2,512
|
|
|
|
1,369
|
|
|
|
368
|
|
|
|
2
|
|
|
|
—
|
|
|
|
4,251
|
|
|
Loan and lease loss provision
|
|
|
2,757
|
|
|
|
(792
|
)
|
|
|
2,254
|
|
|
|
(26
|
)
|
|
|
(203
|
)
|
|
|
3,990
|
|
|
Ending balance
|
|
$
|
18,384
|
|
|
$
|
7,162
|
|
|
$
|
6,303
|
|
|
$
|
98
|
|
|
$
|
27
|
|
|
$
|
31,974
|
|
|
Individually evaluated for impairment
|
|
$
|
1
|
|
|
$
|
428
|
|
|
$
|
1,383
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,812
|
|
|
Collectively evaluated for impairment
|
|
$
|
18,383
|
|
|
$
|
6,734
|
|
|
$
|
4,920
|
|
|
$
|
98
|
|
|
$
|
27
|
|
|
$
|
30,162
|
|
|
Loans and leases receivable
|
|
$
|
3,758,355
|
|
|
$
|
429,903
|
|
|
$
|
398,858
|
|
|
$
|
13,424
|
|
|
$
|
—
|
|
|
$
|
4,600,540
|
|
|
Individually evaluated for impairment
|
|
$
|
14,761
|
|
|
$
|
4,396
|
|
|
$
|
5,129
|
|
|
$
|
839
|
|
|
$
|
—
|
|
|
$
|
25,125
|
|
|
Collectively evaluated for impairment
|
|
$
|
3,743,594
|
|
|
$
|
425,507
|
|
|
$
|
393,729
|
|
|
$
|
12,585
|
|
|
$
|
—
|
|
|
$
|
4,575,415
|
|
Loan and Lease 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 and every 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 uncollectible 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.
As of December 31, 2019 and 2018, the recorded investment in pass/pass-watch, special mention and classified (substandard, doubtful and loss) loans and leases, disaggregated by loan class, were as follows:
|
|
|
Pass/Pass-
Watch
|
|
|
Special
Mention
|
|
|
Classified
|
|
|
Total
|
|
|
|
|
(in thousands)
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$
|
859,739
|
|
|
$
|
2,835
|
|
|
$
|
6,728
|
|
|
$
|
869,302
|
|
|
Hospitality
|
|
|
915,834
|
|
|
|
939
|
|
|
|
5,515
|
|
|
|
922,288
|
|
|
Other
|
|
|
1,329,817
|
|
|
|
7,807
|
|
|
|
20,809
|
|
|
|
1,358,432
|
|
|
Total commercial property loans
|
|
|
3,105,390
|
|
|
|
11,580
|
|
|
|
33,052
|
|
|
|
3,150,022
|
|
|
Construction
|
|
|
36,956
|
|
|
|
1,613
|
|
|
|
37,886
|
|
|
|
76,455
|
|
|
Residential property
|
|
|
398,737
|
|
|
|
2,512
|
|
|
|
779
|
|
|
|
402,028
|
|
|
Total real estate loans
|
|
|
3,541,082
|
|
|
|
15,705
|
|
|
|
71,718
|
|
|
|
3,628,505
|
|
|
Commercial and industrial loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial term
|
|
|
210,026
|
|
|
|
2,139
|
|
|
|
15,487
|
|
|
|
227,652
|
|
|
Commercial lines of credit
|
|
|
222,348
|
|
|
|
5,485
|
|
|
|
200
|
|
|
|
228,033
|
|
|
International loans
|
|
|
25,810
|
|
|
|
2,598
|
|
|
|
—
|
|
|
|
28,409
|
|
|
Total commercial and industrial loans
|
|
|
458,184
|
|
|
|
10,222
|
|
|
|
15,687
|
|
|
|
484,093
|
|
|
Leases receivable
|
|
|
477,977
|
|
|
|
—
|
|
|
|
5,902
|
|
|
|
483,879
|
|
|
Consumer loans
|
|
|
12,247
|
|
|
|
705
|
|
|
|
718
|
|
|
|
13,670
|
|
|
Total loans and leases receivable
|
|
$
|
4,489,491
|
|
|
$
|
26,632
|
|
|
$
|
94,025
|
|
|
$
|
4,610,147
|
|
|
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 recorded investment in 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)
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$
|
6
|
|
|
$
|
132
|
|
|
$
|
111
|
|
|
$
|
249
|
|
|
$
|
869,053
|
|
|
$
|
869,302
|
|
|
Hospitality
|
|
|
907
|
|
|
|
—
|
|
|
|
—
|
|
|
|
907
|
|
|
|
921,381
|
|
|
|
922,288
|
|
|
Other
|
|
|
51
|
|
|
|
—
|
|
|
|
38
|
|
|
|
89
|
|
|
|
1,358,344
|
|
|
|
1,358,432
|
|
|
Total commercial property loans
|
|
|
964
|
|
|
|
132
|
|
|
|
149
|
|
|
|
1,245
|
|
|
|
3,148,778
|
|
|
|
3,150,022
|
|
|
Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
76,455
|
|
|
|
76,455
|
|
|
Residential property
|
|
|
540
|
|
|
|
1,627
|
|
|
|
309
|
|
|
|
2,477
|
|
|
|
399,551
|
|
|
|
402,028
|
|
|
Total real estate loans
|
|
|
1,504
|
|
|
|
1,759
|
|
|
|
458
|
|
|
|
3,721
|
|
|
|
3,624,784
|
|
|
|
3,628,505
|
|
|
Commercial and industrial loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial term
|
|
|
635
|
|
|
|
133
|
|
|
|
143
|
|
|
|
911
|
|
|
|
226,742
|
|
|
|
227,652
|
|
|
Commercial lines of credit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
228,033
|
|
|
|
228,033
|
|
|
International loans
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28,409
|
|
|
|
28,409
|
|
|
Total commercial and industrial loans
|
|
|
635
|
|
|
|
133
|
|
|
|
143
|
|
|
|
911
|
|
|
|
483,183
|
|
|
|
484,093
|
|
|
Leases receivable
|
|
|
5,358
|
|
|
|
2,138
|
|
|
|
3,493
|
|
|
|
10,990
|
|
|
|
472,889
|
|
|
|
483,879
|
|
|
Consumer loans
|
|
|
—
|
|
|
|
30
|
|
|
|
—
|
|
|
|
30
|
|
|
|
13,639
|
|
|
|
13,670
|
|
|
Total loans and leases receivable
|
|
$
|
7,497
|
|
|
$
|
4,060
|
|
|
$
|
4,094
|
|
|
$
|
15,652
|
|
|
$
|
4,594,496
|
|
|
$
|
4,610,147
|
|
|
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
|
|
There were no loans that were 90 days or more past due and accruing interest as of December 31, 2019 and $4,000 of loans that were 90 days or more past due and accruing interest as of December 31, 2018.
Impaired Loans and Leases
Loans and leases are considered impaired when: they are classified as nonaccrual and principal or interest payments have been contractually past due for 90 days or more, unless the loan is both well-collateralized and in the process of collection; they are classified as TDR loans to offer terms not typically granted by the Bank; 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 effective interest rate of the loan or lease, or, as a practical expedient, at the observable market price or the fair value of the collateral if the loan or lease is collateral dependent, less costs to sell. If the measure of the impaired loan or lease is less than the recorded investment, the deficiency will be charged off against the allowance for loan and lease receivable losses or, alternatively, a specific allocation will be established. Additionally, loans or leases that are considered impaired are specifically excluded from the analysis when determining the amount of the general allowance for loan and lease losses required for the period.
The allowance for collateral-dependent loans and leases is determined by calculating the difference between the recorded investment and the value of the collateral as determined by recent appraisals. The allowance for collateral-dependent loans and leases varies from loan to loan based on the collateral coverage of the loan or lease at the time of designation as nonperforming. We continue to monitor the collateral coverage, using recent appraisals, on these loans and leases on a quarterly basis and adjust the allowance accordingly.
The following table provides 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
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
|
|
(in thousands)
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$
|
434
|
|
|
$
|
459
|
|
|
$
|
111
|
|
|
$
|
323
|
|
|
$
|
19
|
|
|
$
|
894
|
|
|
$
|
13
|
|
|
Hospitality
|
|
|
244
|
|
|
|
400
|
|
|
|
22
|
|
|
|
223
|
|
|
|
24
|
|
|
|
1,683
|
|
|
|
—
|
|
|
Other
|
|
|
14,864
|
|
|
|
15,151
|
|
|
|
14,696
|
|
|
|
167
|
|
|
|
12
|
|
|
|
10,619
|
|
|
|
168
|
|
|
Total commercial property loans
|
|
|
15,542
|
|
|
|
16,010
|
|
|
|
14,829
|
|
|
|
713
|
|
|
|
55
|
|
|
|
13,196
|
|
|
|
181
|
|
|
Construction
|
|
|
27,201
|
|
|
|
28,000
|
|
|
|
—
|
|
|
|
27,201
|
|
|
|
13,973
|
|
|
|
18,421
|
|
|
|
249
|
|
|
Residential property
|
|
|
1,124
|
|
|
|
1,163
|
|
|
|
1,089
|
|
|
|
35
|
|
|
|
—
|
|
|
|
1,356
|
|
|
|
29
|
|
|
Total real estate loans
|
|
|
43,867
|
|
|
|
45,173
|
|
|
|
15,918
|
|
|
|
27,949
|
|
|
|
14,028
|
|
|
|
32,973
|
|
|
|
459
|
|
|
Commercial and industrial loans
|
|
|
13,700
|
|
|
|
14,090
|
|
|
|
143
|
|
|
|
13,557
|
|
|
|
8,885
|
|
|
|
19,361
|
|
|
|
512
|
|
|
Leases receivable
|
|
|
5,902
|
|
|
|
5,909
|
|
|
|
1,112
|
|
|
|
4,790
|
|
|
|
2,863
|
|
|
|
4,854
|
|
|
|
44
|
|
|
Consumer loans
|
|
|
1,297
|
|
|
|
1,588
|
|
|
|
1,220
|
|
|
|
77
|
|
|
|
1
|
|
|
|
1,489
|
|
|
|
37
|
|
|
Total
|
|
$
|
64,766
|
|
|
$
|
66,760
|
|
|
$
|
18,393
|
|
|
$
|
46,373
|
|
|
$
|
25,778
|
|
|
$
|
58,677
|
|
|
$
|
1,052
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$
|
2,166
|
|
|
$
|
2,207
|
|
|
$
|
1,894
|
|
|
$
|
272
|
|
|
$
|
—
|
|
|
$
|
2,001
|
|
|
$
|
183
|
|
|
Hospitality
|
|
|
4,282
|
|
|
|
5,773
|
|
|
|
4,032
|
|
|
|
250
|
|
|
|
—
|
|
|
|
7,285
|
|
|
|
482
|
|
|
Other
|
|
|
7,525
|
|
|
|
8,016
|
|
|
|
6,253
|
|
|
|
1,272
|
|
|
|
1
|
|
|
|
7,978
|
|
|
|
601
|
|
|
Total commercial property loans
|
|
|
13,973
|
|
|
|
15,996
|
|
|
|
12,179
|
|
|
|
1,794
|
|
|
|
1
|
|
|
|
17,264
|
|
|
|
1,266
|
|
|
Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Residential property
|
|
|
788
|
|
|
|
929
|
|
|
|
788
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,932
|
|
|
|
91
|
|
|
Total real estate loans
|
|
|
14,761
|
|
|
|
16,925
|
|
|
|
12,967
|
|
|
|
1,794
|
|
|
|
1
|
|
|
|
19,196
|
|
|
|
1,357
|
|
|
Commercial and industrial loans
|
|
|
4,396
|
|
|
|
4,601
|
|
|
|
1,644
|
|
|
|
2,752
|
|
|
|
428
|
|
|
|
3,568
|
|
|
|
211
|
|
|
Leases receivable
|
|
|
5,129
|
|
|
|
5,162
|
|
|
|
1,256
|
|
|
|
3,873
|
|
|
|
1,383
|
|
|
|
5,229
|
|
|
|
46
|
|
|
Consumer loans
|
|
|
839
|
|
|
|
1,073
|
|
|
|
746
|
|
|
|
93
|
|
|
|
—
|
|
|
|
1,020
|
|
|
|
60
|
|
|
Total
|
|
$
|
25,125
|
|
|
$
|
27,761
|
|
|
$
|
16,613
|
|
|
$
|
8,512
|
|
|
$
|
1,812
|
|
|
$
|
29,013
|
|
|
$
|
1,674
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$
|
1,403
|
|
|
$
|
1,423
|
|
|
$
|
1,246
|
|
|
$
|
157
|
|
|
$
|
1
|
|
|
$
|
1,528
|
|
|
$
|
106
|
|
|
Hospitality
|
|
|
6,184
|
|
|
|
7,220
|
|
|
|
2,144
|
|
|
|
4,040
|
|
|
|
1,677
|
|
|
|
6,080
|
|
|
|
431
|
|
|
Other
|
|
|
8,513
|
|
|
|
9,330
|
|
|
|
7,569
|
|
|
|
944
|
|
|
|
394
|
|
|
|
9,551
|
|
|
|
842
|
|
|
Total commercial property loans
|
|
|
16,100
|
|
|
|
17,973
|
|
|
|
10,959
|
|
|
|
5,141
|
|
|
|
2,072
|
|
|
|
17,159
|
|
|
|
1,379
|
|
|
Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Residential property
|
|
|
2,563
|
|
|
|
2,728
|
|
|
|
824
|
|
|
|
1,739
|
|
|
|
21
|
|
|
|
2,771
|
|
|
|
122
|
|
|
Total real estate loans
|
|
|
18,663
|
|
|
|
20,701
|
|
|
|
11,783
|
|
|
|
6,880
|
|
|
|
2,093
|
|
|
|
19,930
|
|
|
|
1,501
|
|
|
Commercial and industrial loans
|
|
|
3,040
|
|
|
|
3,081
|
|
|
|
1,069
|
|
|
|
1,971
|
|
|
|
441
|
|
|
|
4,214
|
|
|
|
208
|
|
|
Leases receivable
|
|
|
4,452
|
|
|
|
4,626
|
|
|
|
455
|
|
|
|
3,997
|
|
|
|
3,334
|
|
|
|
4,464
|
|
|
|
47
|
|
|
Consumer loans
|
|
|
1,029
|
|
|
|
1,215
|
|
|
|
919
|
|
|
|
110
|
|
|
|
10
|
|
|
|
982
|
|
|
|
33
|
|
|
Total
|
|
$
|
27,184
|
|
|
$
|
29,623
|
|
|
$
|
14,226
|
|
|
$
|
12,958
|
|
|
$
|
5,878
|
|
|
$
|
29,590
|
|
|
$
|
1,789
|
|
The following is a summary of interest foregone on impaired loans and leases for the periods indicated:
|
|
|
Year Ended December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(in thousands)
|
|
|
Interest income that would have been recognized had impaired loans and leases performed in accordance with their original terms
|
|
$
|
3,439
|
|
|
$
|
2,808
|
|
|
$
|
2,575
|
|
|
Less: Interest income recognized on impaired loans and leases
|
|
|
(1,279
|
)
|
|
|
(1,674
|
)
|
|
|
(1,790
|
)
|
|
Interest foregone on impaired loans and leases
|
|
$
|
2,160
|
|
|
$
|
1,134
|
|
|
$
|
785
|
|
There were no commitments to lend additional funds to borrowers whose loans or leases are included above.
Nonaccrual Loans and Leases
The following table details the recorded investment in nonaccrual loans and leases, disaggregated by loan class, as of the dates indicated:
|
|
|
As of December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
(in thousands)
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
Commercial property
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$
|
277
|
|
|
$
|
865
|
|
|
Hospitality
|
|
|
225
|
|
|
|
3,625
|
|
|
Other
|
|
|
14,864
|
|
|
|
1,641
|
|
|
Total commercial property loans
|
|
|
15,366
|
|
|
|
6,131
|
|
|
Construction
|
|
|
27,201
|
|
|
|
—
|
|
|
Residential property
|
|
|
1,124
|
|
|
|
182
|
|
|
Total real estate loans
|
|
|
43,691
|
|
|
|
6,313
|
|
|
Commercial and industrial loans
|
|
|
13,479
|
|
|
|
3,337
|
|
|
Leases receivable
|
|
|
5,902
|
|
|
|
5,129
|
|
|
Consumer loans
|
|
|
689
|
|
|
|
746
|
|
|
Total nonaccrual loans and leases
|
|
$
|
63,761
|
|
|
$
|
15,525
|
|
The following table details the recorded investment in nonperforming assets as of the dates indicated:
|
|
|
As of December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
(in thousands)
|
|
|
Nonaccrual loans and leases
|
|
$
|
63,761
|
|
|
$
|
15,525
|
|
|
Loans and leases 90 days or more past due and still accruing
|
|
|
—
|
|
|
|
4
|
|
|
Total nonperforming loans and leases
|
|
|
63,761
|
|
|
|
15,529
|
|
|
Other real estate owned ("OREO")
|
|
|
63
|
|
|
|
663
|
|
|
Total nonperforming assets
|
|
$
|
63,824
|
|
|
$
|
16,192
|
|
OREO consisted of two properties with a combined carrying value of $63,000 as of December 31, 2019, and seven properties with a combined carrying value of $663,000 as of December 31, 2018.
Troubled Debt Restructuring
The following table details the recorded investment in TDRs, disaggregated by concession type and by loan type, as of December 31, 2019 and 2018:
|
|
|
Nonaccrual TDRs
|
|
|
Accrual TDRs
|
|
|
|
|
Deferral of
Principal
|
|
|
Deferral of
Principal
and/or
Interest
|
|
|
Reduction of
Principal
and/or Interest
|
|
|
Extension
of
Maturity
|
|
|
Total
|
|
|
Deferral of
Principal
|
|
|
Deferral of
Principal
and/or
Interest
|
|
|
Reduction of
Principal
and/or Interest
|
|
|
Extension of
Maturity
|
|
|
Total
|
|
|
|
|
(in thousands)
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans
|
|
$
|
—
|
|
|
$
|
132
|
|
|
$
|
27,740
|
|
|
$
|
13,926
|
|
|
$
|
41,798
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Commercial and industrial loans
|
|
|
—
|
|
|
|
153
|
|
|
|
12,527
|
|
|
|
312
|
|
|
|
12,991
|
|
|
|
—
|
|
|
|
36
|
|
|
|
71
|
|
|
|
114
|
|
|
|
222
|
|
|
Consumer loans
|
|
|
689
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
689
|
|
|
|
531
|
|
|
|
—
|
|
|
|
77
|
|
|
|
—
|
|
|
|
608
|
|
|
Total loans
|
|
$
|
689
|
|
|
$
|
285
|
|
|
$
|
40,266
|
|
|
$
|
14,238
|
|
|
$
|
55,478
|
|
|
$
|
531
|
|
|
$
|
36
|
|
|
$
|
148
|
|
|
$
|
114
|
|
|
$
|
830
|
|
|
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 loans
|
|
$
|
1,473
|
|
|
$
|
1,530
|
|
|
$
|
843
|
|
|
$
|
430
|
|
|
$
|
4,276
|
|
|
$
|
3,345
|
|
|
$
|
166
|
|
|
$
|
1,627
|
|
|
$
|
891
|
|
|
$
|
6,029
|
|
As of December 31, 2019 and 2018, total TDRs were $56.3 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 through payment structure modifications such as reducing the amount of principal and interest due monthly and/or allowing for interest only monthly payments for six months or less. 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 following table presents the number of loans by class modified as troubled debt restructurings that occurred during the year ending December 31, 2019, 2018, and 2017 with their pre- and post-modification recorded amounts.
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
|
December 31, 2017
|
|
|
|
|
Number
of Loans
|
|
|
Pre-
Modification
Outstanding
Recorded
Investment
|
|
|
Post-
Modification
Outstanding
Recorded
Investment
|
|
|
Number
of Loans
|
|
|
Pre-
Modification
Outstanding
Recorded
Investment
|
|
|
Post-
Modification
Outstanding
Recorded
Investment
|
|
|
Number
of Loans
|
|
|
Pre-
Modification
Outstanding
Recorded
Investment
|
|
|
Post-
Modification
Outstanding
Recorded
Investment
|
|
|
|
|
(in thousands except for number of loans)
|
|
|
Real estate loans
|
|
|
5
|
|
|
$
|
40,743
|
|
|
$
|
41,798
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
2
|
|
|
$
|
182
|
|
|
$
|
184
|
|
|
Commercial and industrial loans
|
|
|
2
|
|
|
|
12,779
|
|
|
|
12,562
|
|
|
|
2
|
|
|
|
684
|
|
|
|
664
|
|
|
|
1
|
|
|
|
123
|
|
|
|
123
|
|
|
Consumer loans
|
|
|
1
|
|
|
|
549
|
|
|
|
531
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
820
|
|
|
|
811
|
|
|
Total loans
|
|
|
8
|
|
|
$
|
54,071
|
|
|
$
|
54,892
|
|
|
|
2
|
|
|
$
|
684
|
|
|
$
|
664
|
|
|
|
4
|
|
|
$
|
1,125
|
|
|
$
|
1,118
|
|
At December 31, 2019 and 2018, TDRs were subjected to specific impairment analysis. We determined impairment allowances of $22.7 million and $300,000, respectively, related to these loans and such allowances were included in the allowance for loan and lease losses.
A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. During the years ended December 31, 2019 and 2018, only one loan in the amount of $132,000, defaulted within the twelve-month period following modification in the year 2019.
In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.
|