| Loans |
Loans
The Board of Directors and management review and approve the Bank’s loan policy and procedures on a regular basis to reflect issues such as regulatory and organizational structure changes, strategic planning revisions, concentrations of credit, loan delinquencies and nonperforming loans, problem loans, and policy adjustments.
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, and Small Business Administration (“SBA”) loans. Consumer loans consist of auto loans, credit cards, 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 portfolio consists of commercial real estate and commercial and industrial loans. The Bank has been diversifying and monitoring commercial real estate loans based on property types, tightening underwriting standards, and portfolio liquidity and management, and has not exceeded certain specified limits set forth in the Bank’s loan policy.
Loans Receivable
Loans receivable consisted of the following as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015 |
|
December 31, 2014 |
|
Non-PCI Loans |
|
PCI Loans |
|
Total |
|
|
(In thousands) |
Real estate loans: |
|
|
|
|
|
|
|
Commercial property (1)
|
|
|
|
|
|
|
|
Retail |
$ |
735,501 |
|
|
$ |
4,849 |
|
|
$ |
740,350 |
|
|
$ |
684,400 |
|
Hotel/motel |
539,345 |
|
|
4,080 |
|
|
543,425 |
|
|
462,718 |
|
Gas station |
319,363 |
|
|
4,292 |
|
|
323,655 |
|
|
370,416 |
|
Other (2)
|
973,243 |
|
|
5,418 |
|
|
978,661 |
|
|
848,906 |
|
Construction |
23,387 |
|
|
— |
|
|
23,387 |
|
|
9,527 |
|
Residential property |
234,879 |
|
|
1,157 |
|
|
236,036 |
|
|
135,462 |
|
Total real estate loans |
2,825,718 |
|
|
19,796 |
|
|
2,845,514 |
|
|
2,511,429 |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
Commercial term |
152,602 |
|
|
171 |
|
|
152,773 |
|
|
116,536 |
|
Commercial lines of credit |
128,224 |
|
|
— |
|
|
128,224 |
|
|
93,970 |
|
International loans |
31,879 |
|
|
— |
|
|
31,879 |
|
|
38,974 |
|
Total commercial and industrial loans |
312,705 |
|
|
171 |
|
|
312,876 |
|
|
249,480 |
|
Consumer loans (3)
|
24,879 |
|
|
47 |
|
|
24,926 |
|
|
27,589 |
|
Total gross loans |
3,163,302 |
|
|
20,014 |
|
|
3,183,316 |
|
|
2,788,498 |
|
Allowance for loans losses |
(37,494 |
) |
|
(5,441 |
) |
|
(42,935 |
) |
|
(52,666 |
) |
Loans receivable, net |
$ |
3,125,808 |
|
|
$ |
14,573 |
|
|
$ |
3,140,381 |
|
|
$ |
2,735,832 |
|
|
|
(1) |
Includes owner-occupied property loans of $1.20 billion and $1.12 billion as of December 31, 2015 and 2014, respectively.
|
|
|
(2) |
Includes, among other property types, mixed-use, apartment, office, industrial, faith-based facilities and warehouse; the remaining real estate categories represents less than one percent of the Bank's total loans. |
|
|
(3) |
Consumer loans include home equity lines of credit |
Accrued interest on loans receivable was $7.9 million and $6.4 million at December 31, 2015 and 2014, respectively. At December 31, 2015 and 2014, loans receivable totaling $557.7 million and $840.0 million, respectively, were pledged to secure advances from the FHLB and the FRB’s discount window.
The following table details the information on the sales and reclassifications of loans receivable to loans held for sale (excluding PCI loans) by portfolio segment for the years ended December 31, 2015 and 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate |
|
Commercial and
Industrial |
|
Total
Non-PCI |
|
(In thousands) |
December 31, 2015 |
|
|
|
|
|
Balance at beginning of period |
$ |
3,323 |
|
|
$ |
2,128 |
|
|
$ |
5,451 |
|
Origination of loans held for sale |
56,247 |
|
|
30,410 |
|
|
86,657 |
|
Reclassification from loans receivable to loans held for sale |
360 |
|
|
— |
|
|
360 |
|
Sales of loans held for sale |
(59,030 |
) |
|
(30,441 |
) |
|
(89,471 |
) |
Principal payoffs and amortization |
(60 |
) |
|
(63 |
) |
|
(123 |
) |
Balance at end of period |
$ |
840 |
|
|
$ |
2,034 |
|
|
$ |
2,874 |
|
December 31, 2014 |
|
|
|
|
|
Balance at beginning of period |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Origination of loans held for sale |
38,379 |
|
|
9,606 |
|
|
47,985 |
|
Sales of loans held for sale |
(34,994 |
) |
|
(7,418 |
) |
|
(42,412 |
) |
Principal payoffs and amortization |
(62 |
) |
|
(60 |
) |
|
(122 |
) |
Balance at end of period |
$ |
3,323 |
|
|
$ |
2,128 |
|
|
$ |
5,451 |
|
For the year ended December 31, 2015, there was $360,000 reclassification of loans receivable as loans held for sale, and loans held for sale of $89.5 million were sold. For the year ended December 31, 2014, there was no reclassification of loans receivable as loans held for sale, and loans held for sale of $42.4 million were sold.
Allowance for Loan Losses and Allowance for Off-Balance Sheet Items
Activity in the allowance for loan losses and allowance for off-balance sheet items was as follows for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the
Year Ended December 31, |
|
2015 |
|
|
|
|
|
Non-PCI Loans |
|
PCI Loans |
|
Total |
|
2014 |
|
2013 |
|
(In thousands) |
Allowance for loan losses: |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
$ |
51,640 |
|
|
$ |
1,026 |
|
|
$ |
52,666 |
|
|
$ |
57,555 |
|
|
$ |
63,305 |
|
Charge-offs |
(3,531 |
) |
|
— |
|
|
(3,531 |
) |
|
(6,992 |
) |
|
(11,862 |
) |
Recoveries on loans previously charged off |
5,423 |
|
|
— |
|
|
5,423 |
|
|
8,361 |
|
|
5,536 |
|
Net loan recoveries (charge-offs) |
1,892 |
|
|
— |
|
|
1,892 |
|
|
1,369 |
|
|
(6,326 |
) |
(Negative provision) provision charged to operating expense |
(16,038 |
) |
|
4,415 |
|
|
(11,623 |
) |
|
(6,258 |
) |
|
576 |
|
Balance at end of period |
$ |
37,494 |
|
|
$ |
5,441 |
|
|
$ |
42,935 |
|
|
$ |
52,666 |
|
|
$ |
57,555 |
|
|
|
|
|
|
|
|
|
|
|
Allowance for off-balance sheet items: |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
$ |
1,366 |
|
|
$ |
— |
|
|
$ |
1,366 |
|
|
$ |
1,248 |
|
|
$ |
1,824 |
|
Provision (negative provision) charged to operating expense |
(380 |
) |
|
— |
|
|
$ |
(380 |
) |
|
118 |
|
|
(576 |
) |
Balance at end of period |
$ |
986 |
|
|
$ |
— |
|
|
$ |
986 |
|
|
$ |
1,366 |
|
|
$ |
1,248 |
|
The allowance for off-balance sheet items is maintained at a level believed to be sufficient to absorb probable losses related to these unfunded credit facilities. The determination of the allowance adequacy is based on periodic evaluations of the unfunded credit facilities including an assessment of the probability of commitment usage, credit risk factors for loans outstanding to these same customers, and the terms and expiration dates of the unfunded credit facilities. As of December 31, 2015 and 2014, the allowance for off-balance sheet items amounted $1.0 million and $1.4 million, respectively. Net adjustments to the allowance for off-balance sheet items are included in other operating expenses.
The following table details the information on the allowance for loan losses by portfolio segment for the years ended December 31, 2015 and 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate |
|
Commercial
and Industrial |
|
Consumer |
|
Unallocated |
|
Total |
|
(In thousands) |
December 31, 2015 |
|
|
|
|
|
|
|
|
|
Allowance for loan losses on Non-PCI loans: |
|
|
|
|
|
|
|
|
|
Beginning balance |
$ |
41,194 |
|
|
$ |
9,142 |
|
|
$ |
220 |
|
|
$ |
1,084 |
|
|
$ |
51,640 |
|
Charge-offs |
(565 |
) |
|
(2,966 |
) |
|
— |
|
|
— |
|
|
(3,531 |
) |
Recoveries on loans previously charged off |
2,080 |
|
|
3,339 |
|
|
4 |
|
|
— |
|
|
5,423 |
|
(Negative provision) provision |
(12,909 |
) |
|
(2,434 |
) |
|
18 |
|
|
(713 |
) |
|
(16,038 |
) |
Ending balance |
$ |
29,800 |
|
|
$ |
7,081 |
|
|
$ |
242 |
|
|
$ |
371 |
|
|
$ |
37,494 |
|
Ending balance: individually evaluated for impairment |
$ |
3,858 |
|
|
$ |
587 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
4,445 |
|
Ending balance: collectively evaluated for impairment |
$ |
25,942 |
|
|
$ |
6,494 |
|
|
$ |
242 |
|
|
$ |
371 |
|
|
$ |
33,049 |
|
Non-PCI loans receivable: |
|
|
|
|
|
|
|
|
|
Ending balance |
$ |
2,825,718 |
|
|
$ |
312,705 |
|
|
$ |
24,879 |
|
|
$ |
— |
|
|
$ |
3,163,302 |
|
Ending balance: individually evaluated for impairment |
$ |
27,341 |
|
|
$ |
6,853 |
|
|
$ |
1,665 |
|
|
$ |
— |
|
|
$ |
35,859 |
|
Ending balance: collectively evaluated for impairment |
$ |
2,798,377 |
|
|
$ |
305,852 |
|
|
$ |
23,214 |
|
|
$ |
— |
|
|
$ |
3,127,443 |
|
Allowance for loan losses on PCI loans: |
|
|
|
|
|
|
|
|
|
Beginning balance |
$ |
895 |
|
|
$ |
131 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,026 |
|
Provision |
4,502 |
|
|
(89 |
) |
|
2 |
|
|
— |
|
|
4,415 |
|
Ending balance: acquired with deteriorated credit quality |
$ |
5,397 |
|
|
$ |
42 |
|
|
$ |
2 |
|
|
$ |
— |
|
|
$ |
5,441 |
|
PCI loans receivable: |
|
|
|
|
|
|
|
|
|
Ending balance: acquired with deteriorated credit quality |
$ |
19,796 |
|
|
$ |
171 |
|
|
$ |
47 |
|
|
$ |
— |
|
|
$ |
20,014 |
|
December 31, 2014 |
|
|
|
|
|
|
|
|
|
Allowance for loan losses on Non-PCI loans: |
|
|
|
|
|
|
|
|
|
Beginning balance |
$ |
43,550 |
|
|
$ |
11,287 |
|
|
$ |
1,427 |
|
|
$ |
1,291 |
|
|
$ |
57,555 |
|
Charge-offs |
(3,009 |
) |
|
(3,881 |
) |
|
(102 |
) |
|
— |
|
|
(6,992 |
) |
Recoveries on loans previously charged off |
4,348 |
|
|
3,801 |
|
|
212 |
|
|
— |
|
|
8,361 |
|
Provision (negative provision) |
(3,695 |
) |
|
(2,065 |
) |
|
(1,317 |
) |
|
(207 |
) |
|
(7,284 |
) |
Ending balance |
$ |
41,194 |
|
|
$ |
9,142 |
|
|
$ |
220 |
|
|
$ |
1,084 |
|
|
$ |
51,640 |
|
Ending balance: individually evaluated for impairment |
$ |
2,517 |
|
|
$ |
2,729 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,246 |
|
Ending balance: collectively evaluated for impairment |
$ |
38,677 |
|
|
$ |
6,413 |
|
|
$ |
220 |
|
|
$ |
1,084 |
|
|
$ |
46,394 |
|
Non-PCI loans receivable: |
|
|
|
|
|
|
|
|
|
Ending balance |
$ |
2,464,386 |
|
|
$ |
248,862 |
|
|
$ |
27,512 |
|
|
$ |
— |
|
|
$ |
2,740,760 |
|
Ending balance: individually evaluated for impairment |
$ |
32,497 |
|
|
$ |
11,626 |
|
|
$ |
1,742 |
|
|
$ |
— |
|
|
$ |
45,865 |
|
Ending balance: collectively evaluated for impairment |
$ |
2,431,889 |
|
|
$ |
237,236 |
|
|
$ |
25,770 |
|
|
$ |
— |
|
|
$ |
2,694,895 |
|
Loan Quality Indicators
As part of the on-going monitoring of the quality of our loan portfolio, we utilize an internal loan grading system to identify credit risk and assign an appropriate grade (from 0 to (8)) for each and every loan in our loan portfolio. A third-party loan review is required 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.
As of December 31, 2015 and 2014, pass/pass-watch, special mention and classified (substandard and doubtful) loans (excluding PCI loans), disaggregated by loan class, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass/Pass-Watch |
|
Special Mention |
|
Classified |
|
Total |
|
(In thousands) |
December 31, 2015 |
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
Retail |
$ |
722,483 |
|
|
$ |
9,519 |
|
|
$ |
3,499 |
|
|
$ |
735,501 |
|
Hotel/motel |
517,462 |
|
|
9,604 |
|
|
12,279 |
|
|
539,345 |
|
Gas station |
309,598 |
|
|
5,897 |
|
|
3,868 |
|
|
319,363 |
|
Other |
953,839 |
|
|
8,662 |
|
|
10,742 |
|
|
973,243 |
|
Construction |
23,387 |
|
|
— |
|
|
— |
|
|
23,387 |
|
Residential property |
232,862 |
|
|
58 |
|
|
1,959 |
|
|
234,879 |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
Commercial term |
145,773 |
|
|
2,370 |
|
|
4,459 |
|
|
152,602 |
|
Commercial lines of credit |
127,579 |
|
|
195 |
|
|
450 |
|
|
128,224 |
|
International loans |
29,719 |
|
|
2,160 |
|
|
— |
|
|
31,879 |
|
Consumer loans |
22,707 |
|
|
91 |
|
|
2,081 |
|
|
24,879 |
|
Total Non-PCI loans |
$ |
3,085,409 |
|
|
$ |
38,556 |
|
|
$ |
39,337 |
|
|
$ |
3,163,302 |
|
December 31, 2014 |
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
Retail |
$ |
654,360 |
|
|
$ |
18,013 |
|
|
$ |
2,699 |
|
|
$ |
675,072 |
|
Hotel/motel |
397,437 |
|
|
46,365 |
|
|
10,697 |
|
|
454,499 |
|
Gas station |
345,775 |
|
|
8,899 |
|
|
7,566 |
|
|
362,240 |
|
Other |
822,037 |
|
|
9,543 |
|
|
10,546 |
|
|
842,126 |
|
Construction |
9,517 |
|
|
— |
|
|
— |
|
|
9,517 |
|
Residential property |
118,688 |
|
|
66 |
|
|
2,178 |
|
|
120,932 |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
Commercial term |
106,326 |
|
|
1,225 |
|
|
8,522 |
|
|
116,073 |
|
Commercial lines of credit |
92,312 |
|
|
993 |
|
|
555 |
|
|
93,860 |
|
International loans |
36,121 |
|
|
252 |
|
|
2,556 |
|
|
38,929 |
|
Consumer loans |
25,313 |
|
|
131 |
|
|
2,068 |
|
|
27,512 |
|
Total Non-PCI loans |
$ |
2,607,886 |
|
|
$ |
85,487 |
|
|
$ |
47,387 |
|
|
$ |
2,740,760 |
|
The following is an aging analysis of gross loans (excluding PCI loans), 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 |
|
Accruing 90
Days or More
Past Due
|
|
(In thousands) |
December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
$ |
441 |
|
|
$ |
343 |
|
|
$ |
399 |
|
|
$ |
1,183 |
|
|
$ |
734,318 |
|
|
$ |
735,501 |
|
|
$ |
— |
|
Hotel/motel |
1,250 |
|
|
49 |
|
|
3,840 |
|
|
5,139 |
|
|
534,206 |
|
|
539,345 |
|
|
— |
|
Gas station |
959 |
|
|
406 |
|
|
1,517 |
|
|
2,882 |
|
|
316,481 |
|
|
319,363 |
|
|
— |
|
Other |
1,144 |
|
|
661 |
|
|
1,636 |
|
|
3,441 |
|
|
969,802 |
|
|
973,243 |
|
|
— |
|
Construction |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
23,387 |
|
|
23,387 |
|
|
— |
|
Residential property |
— |
|
|
— |
|
|
396 |
|
|
396 |
|
|
234,483 |
|
|
234,879 |
|
|
— |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial term |
420 |
|
|
253 |
|
|
458 |
|
|
1,131 |
|
|
151,471 |
|
|
152,602 |
|
|
— |
|
Commercial lines of credit |
58 |
|
|
— |
|
|
392 |
|
|
450 |
|
|
127,774 |
|
|
128,224 |
|
|
— |
|
International loans |
— |
|
|
497 |
|
|
— |
|
|
497 |
|
|
31,382 |
|
|
31,879 |
|
|
— |
|
Consumer loans |
250 |
|
|
5 |
|
|
— |
|
|
255 |
|
|
24,624 |
|
|
24,879 |
|
|
— |
|
Total Non-PCI loans |
$ |
4,522 |
|
|
$ |
2,214 |
|
|
$ |
8,638 |
|
|
$ |
15,374 |
|
|
$ |
3,147,928 |
|
|
$ |
3,163,302 |
|
|
$ |
— |
|
December 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
$ |
1,554 |
|
|
$ |
281 |
|
|
$ |
1,920 |
|
|
$ |
3,755 |
|
|
$ |
671,317 |
|
|
$ |
675,072 |
|
|
$ |
— |
|
Hotel/motel |
1,531 |
|
|
2,340 |
|
|
433 |
|
|
4,304 |
|
|
450,195 |
|
|
454,499 |
|
|
— |
|
Gas station |
2,991 |
|
|
1,113 |
|
|
353 |
|
|
4,457 |
|
|
357,783 |
|
|
362,240 |
|
|
— |
|
Other |
1,674 |
|
|
2,156 |
|
|
1,142 |
|
|
4,972 |
|
|
837,154 |
|
|
842,126 |
|
|
— |
|
Construction |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9,517 |
|
|
9,517 |
|
|
— |
|
Residential property |
167 |
|
|
— |
|
|
687 |
|
|
854 |
|
|
120,078 |
|
|
120,932 |
|
|
— |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial term |
1,107 |
|
|
490 |
|
|
2,847 |
|
|
4,444 |
|
|
111,629 |
|
|
116,073 |
|
|
— |
|
Commercial lines of credit |
— |
|
|
— |
|
|
227 |
|
|
227 |
|
|
93,633 |
|
|
93,860 |
|
|
— |
|
International loans |
200 |
|
|
— |
|
|
— |
|
|
200 |
|
|
38,729 |
|
|
38,929 |
|
|
— |
|
Consumer loans |
489 |
|
|
349 |
|
|
248 |
|
|
1,086 |
|
|
26,426 |
|
|
27,512 |
|
|
— |
|
Total Non-PCI loans |
$ |
9,713 |
|
|
$ |
6,729 |
|
|
$ |
7,857 |
|
|
$ |
24,299 |
|
|
$ |
2,716,461 |
|
|
$ |
2,740,760 |
|
|
$ |
— |
|
Impaired Loans
Loans are considered impaired when 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; or they are classified as TDR loans to offer terms not typically granted by the Bank; or when current information or events make it unlikely to collect in full according to the contractual terms of the loan agreements; or 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 impairment in accordance with applicable GAAP. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent, less costs to sell. If the measure of the impaired loan is less than the recorded investment in the loan, the deficiency will be charged off against the allowance for loan losses or, alternatively, a specific allocation will be established. Additionally, loans that are considered impaired are specifically excluded from the quarterly migration analysis when determining the amount of the allowance for loan 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 table provides information on impaired loans (excluding PCI loans), 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) |
|
|
|
|
|
|
As of or for The Year Ended December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
$ |
2,597 |
|
|
$ |
2,892 |
|
|
$ |
2,435 |
|
|
$ |
162 |
|
|
$ |
27 |
|
|
$ |
3,878 |
|
|
$ |
277 |
|
Hotel/motel |
7,168 |
|
|
7,538 |
|
|
2,873 |
|
|
4,295 |
|
|
3,068 |
|
|
6,628 |
|
|
572 |
|
Gas station |
5,393 |
|
|
5,815 |
|
|
4,400 |
|
|
993 |
|
|
112 |
|
|
7,116 |
|
|
436 |
|
Other |
9,288 |
|
|
10,810 |
|
|
7,219 |
|
|
2,069 |
|
|
647 |
|
|
10,218 |
|
|
795 |
|
Residential property |
2,895 |
|
|
3,081 |
|
|
2,608 |
|
|
287 |
|
|
4 |
|
|
2,839 |
|
|
120 |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial term |
5,257 |
|
|
5,621 |
|
|
1,858 |
|
|
3,399 |
|
|
457 |
|
|
6,637 |
|
|
368 |
|
Commercial lines of credit |
381 |
|
|
493 |
|
|
280 |
|
|
101 |
|
|
100 |
|
|
1,515 |
|
|
42 |
|
International loans |
1,215 |
|
|
1,215 |
|
|
647 |
|
|
568 |
|
|
30 |
|
|
1,257 |
|
|
— |
|
Consumer loans |
1,665 |
|
|
1,898 |
|
|
1,665 |
|
|
— |
|
|
— |
|
|
1,753 |
|
|
73 |
|
Total Non-PCI loans |
$ |
35,859 |
|
|
$ |
39,363 |
|
|
$ |
23,985 |
|
|
$ |
11,874 |
|
|
$ |
4,445 |
|
|
$ |
41,841 |
|
|
$ |
2,683 |
|
As of or for The Year Ended December 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
$ |
4,436 |
|
|
$ |
4,546 |
|
|
$ |
1,938 |
|
|
$ |
2,498 |
|
|
$ |
220 |
|
|
$ |
5,373 |
|
|
$ |
251 |
|
Hotel/motel |
5,835 |
|
|
6,426 |
|
|
4,581 |
|
|
1,254 |
|
|
1,828 |
|
|
4,583 |
|
|
398 |
|
Gas station |
8,974 |
|
|
9,594 |
|
|
8,526 |
|
|
448 |
|
|
150 |
|
|
11,281 |
|
|
787 |
|
Other |
10,125 |
|
|
11,591 |
|
|
8,890 |
|
|
1,235 |
|
|
319 |
|
|
10,579 |
|
|
885 |
|
Residential property |
3,127 |
|
|
3,268 |
|
|
3,127 |
|
|
— |
|
|
— |
|
|
2,924 |
|
|
115 |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial term |
7,614 |
|
|
8,133 |
|
|
2,999 |
|
|
4,615 |
|
|
2,443 |
|
|
9,458 |
|
|
566 |
|
Commercial lines of credit |
466 |
|
|
575 |
|
|
466 |
|
|
— |
|
|
— |
|
|
1,205 |
|
|
66 |
|
International loans |
3,546 |
|
|
3,546 |
|
|
2,628 |
|
|
918 |
|
|
286 |
|
|
1,736 |
|
|
33 |
|
Consumer loans |
1,742 |
|
|
1,907 |
|
|
1,742 |
|
|
— |
|
|
— |
|
|
1,651 |
|
|
59 |
|
Total Non-PCI loans |
$ |
45,865 |
|
|
$ |
49,586 |
|
|
$ |
34,897 |
|
|
$ |
10,968 |
|
|
$ |
5,246 |
|
|
$ |
48,790 |
|
|
$ |
3,160 |
|
As of or for The Year Ended December 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
$ |
6,244 |
|
|
$ |
6,332 |
|
|
$ |
3,767 |
|
|
$ |
2,477 |
|
|
$ |
305 |
|
|
$ |
4,342 |
|
|
$ |
166 |
|
Hotel/motel |
6,200 |
|
|
6,940 |
|
|
4,668 |
|
|
1,532 |
|
|
1,183 |
|
|
5,125 |
|
|
530 |
|
Gas station |
9,389 |
|
|
9,884 |
|
|
8,592 |
|
|
797 |
|
|
209 |
|
|
8,939 |
|
|
756 |
|
Other |
11,451 |
|
|
12,882 |
|
|
9,555 |
|
|
1,896 |
|
|
351 |
|
|
10,014 |
|
|
1,047 |
|
Residential property |
2,678 |
|
|
2,773 |
|
|
2,678 |
|
|
— |
|
|
— |
|
|
2,941 |
|
|
117 |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial term |
13,834 |
|
|
14,308 |
|
|
2,929 |
|
|
10,905 |
|
|
3,806 |
|
|
13,083 |
|
|
968 |
|
Commercial lines of credit |
614 |
|
|
686 |
|
|
173 |
|
|
441 |
|
|
252 |
|
|
1,008 |
|
|
54 |
|
International loans |
1,087 |
|
|
1,087 |
|
|
286 |
|
|
801 |
|
|
78 |
|
|
1,284 |
|
|
— |
|
Consumer loans |
1,569 |
|
|
1,671 |
|
|
644 |
|
|
925 |
|
|
284 |
|
|
1,612 |
|
|
71 |
|
Total Non-PCI loans |
$ |
53,066 |
|
|
$ |
56,563 |
|
|
$ |
33,292 |
|
|
$ |
19,774 |
|
|
$ |
6,468 |
|
|
$ |
48,348 |
|
|
$ |
3,709 |
|
The following is a summary of interest foregone on impaired loans (excluding PCI loans) for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
2015 |
|
2014 |
|
2013 |
|
(In thousands) |
Interest income that would have been recognized had impaired loans performed in accordance with their original terms |
$ |
4,168 |
|
|
$ |
4,468 |
|
|
$ |
4,451 |
|
Less: Interest income recognized on impaired loans |
(2,683 |
) |
|
(3,160 |
) |
|
(3,708 |
) |
Interest foregone on impaired loans |
$ |
1,485 |
|
|
$ |
1,308 |
|
|
$ |
743 |
|
There were no commitments to lend additional funds to borrowers whose loans are included above.
Nonaccrual Loans
Loans 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 loan is adequately collateralized and in the process of collection. However, in certain instances, we may place a particular loan on nonaccrual status earlier, depending upon the individual circumstances surrounding the loan’s delinquency. When a loan 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 may be restored to accrual status when principal and interest payments become current and full repayment is expected.
The following table details nonaccrual loans (excluding PCI loans), disaggregated by loan class, as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
As of December 31, |
|
2015 |
|
2014 |
|
(In thousands) |
Real estate loans: |
|
|
|
Commercial property |
|
|
|
Retail |
$ |
946 |
|
|
$ |
2,160 |
|
Hotel/motel |
5,790 |
|
|
3,835 |
|
Gas station |
2,774 |
|
|
3,478 |
|
Other |
4,068 |
|
|
4,961 |
|
Residential property |
1,386 |
|
|
1,588 |
|
Commercial and industrial loans: |
|
|
|
Commercial term |
2,193 |
|
|
7,052 |
|
Commercial lines of credit |
450 |
|
|
466 |
|
Consumer loans |
1,511 |
|
|
1,742 |
|
Total nonaccrual Non-PCI loans |
$ |
19,118 |
|
|
$ |
25,282 |
|
The following table details nonperforming assets (excluding PCI loans) as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
As of December 31, |
|
2015 |
|
2014 |
|
(In thousands) |
Nonaccrual Non-PCI loans |
$ |
19,118 |
|
|
$ |
25,282 |
|
Loans 90 days or more past due and still accruing |
— |
|
|
— |
|
Total nonperforming Non-PCI loans |
19,118 |
|
|
25,282 |
|
Other real estate owned |
8,511 |
|
|
15,790 |
|
Total nonperforming assets |
$ |
27,629 |
|
|
$ |
41,072 |
|
As of December 31, 2015, OREO consisted of fourteen properties with a combined carrying value of $8.5 million, including a $7.4 million OREO acquired in the CBI acquisition or were obtained as a result of PCI loan collateral foreclosures subsequent to the acquisition date. As of December 31, 2014, OREO consisted of twenty-seven properties with a combined carrying value of $15.8 million, including a $15.3 million OREO acquired in the CBI acquisition or were obtained as a result of PCI loan collateral foreclosures subsequent to the acquisition date.
Troubled Debt Restructuring
In April 2011, the FASB issued ASU 2011-2, “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring,” which clarifies the guidance for evaluating whether a restructuring constitutes a TDR. This guidance is effective for the first interim or annual period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. For the purposes of measuring impairment of loans that are newly considered impaired, the guidance should be applied prospectively for the first interim or annual period beginning on or after June 15, 2011.
As a result of the amendments in ASU 2011-2, we reassessed all restructurings that occurred on or after the beginning of the annual period and identified certain receivables as TDRs. Upon identifying those receivables as TDRs, we considered them impaired and applied the impairment measurement guidance prospectively for those receivables newly identified as impaired.
The following table details TDRs (excluding PCI loans), disaggregated by concession type and by loan type, as of December 31, 2015, 2014 and 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
344 |
|
|
$ |
344 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,227 |
|
|
$ |
— |
|
|
$ |
1,227 |
|
Hotel/motel |
1,216 |
|
|
28 |
|
|
— |
|
|
— |
|
|
1,244 |
|
|
414 |
|
|
— |
|
|
— |
|
|
— |
|
|
414 |
|
Gas station |
959 |
|
|
— |
|
|
— |
|
|
— |
|
|
959 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Other |
— |
|
|
1,301 |
|
|
216 |
|
|
8 |
|
|
1,525 |
|
|
3,537 |
|
|
— |
|
|
322 |
|
|
1,378 |
|
|
5,237 |
|
Residential property |
689 |
|
|
— |
|
|
— |
|
|
— |
|
|
689 |
|
|
— |
|
|
— |
|
|
— |
|
|
299 |
|
|
299 |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial term |
45 |
|
|
— |
|
|
997 |
|
|
679 |
|
|
1,721 |
|
|
40 |
|
|
214 |
|
|
1,673 |
|
|
945 |
|
|
2,872 |
|
Commercial lines of credit |
222 |
|
|
— |
|
|
— |
|
|
58 |
|
|
280 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
International loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Consumer loans |
— |
|
|
— |
|
|
116 |
|
|
— |
|
|
116 |
|
|
250 |
|
|
— |
|
|
— |
|
|
— |
|
|
250 |
|
Total Non-PCI loans |
$ |
3,131 |
|
|
$ |
1,329 |
|
|
$ |
1,329 |
|
|
$ |
1,089 |
|
|
$ |
6,878 |
|
|
$ |
4,241 |
|
|
$ |
214 |
|
|
$ |
3,222 |
|
|
$ |
2,622 |
|
|
$ |
10,299 |
|
December 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,032 |
|
|
$ |
2,032 |
|
|
$ |
306 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
306 |
|
Hotel/motel |
1,115 |
|
|
(53 |
) |
|
— |
|
|
— |
|
|
1,062 |
|
|
1,807 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,807 |
|
Gas station |
1,075 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,075 |
|
|
2,335 |
|
|
— |
|
|
— |
|
|
— |
|
|
2,335 |
|
Other |
943 |
|
|
1,498 |
|
|
433 |
|
|
24 |
|
|
2,898 |
|
|
2,343 |
|
|
— |
|
|
782 |
|
|
1,372 |
|
|
4,497 |
|
Residential property |
742 |
|
|
— |
|
|
— |
|
|
— |
|
|
742 |
|
|
— |
|
|
— |
|
|
— |
|
|
308 |
|
|
308 |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial term |
14 |
|
|
(1 |
) |
|
2,556 |
|
|
1,481 |
|
|
4,050 |
|
|
57 |
|
|
226 |
|
|
567 |
|
|
1,358 |
|
|
2,208 |
|
Commercial lines of credit |
227 |
|
|
— |
|
|
126 |
|
|
113 |
|
|
466 |
|
|
2,156 |
|
|
— |
|
|
— |
|
|
— |
|
|
2,156 |
|
International loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
200 |
|
|
— |
|
|
200 |
|
Consumer loans |
— |
|
|
— |
|
|
131 |
|
|
— |
|
|
131 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total Non-PCI loans |
$ |
4,116 |
|
|
$ |
1,444 |
|
|
$ |
3,246 |
|
|
$ |
3,650 |
|
|
$ |
12,456 |
|
|
$ |
9,004 |
|
|
$ |
226 |
|
|
$ |
1,549 |
|
|
$ |
3,038 |
|
|
$ |
13,817 |
|
December 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
750 |
|
|
$ |
750 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
474 |
|
|
$ |
474 |
|
Hotel/motel |
1,272 |
|
|
758 |
|
|
— |
|
|
— |
|
|
2,030 |
|
|
1,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,000 |
|
Gas station |
1,291 |
|
|
— |
|
|
729 |
|
|
— |
|
|
2,020 |
|
|
365 |
|
|
— |
|
|
— |
|
|
2,609 |
|
|
2,974 |
|
Other |
403 |
|
|
1,279 |
|
|
555 |
|
|
— |
|
|
2,237 |
|
|
2,956 |
|
|
— |
|
|
1,253 |
|
|
2,027 |
|
|
6,236 |
|
Residential property |
795 |
|
|
— |
|
|
— |
|
|
— |
|
|
795 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Commercial and industrial loans: |
|