Loans and Leases | Loans and Leases Summary of Major Loan and Lease Categories (Dollars in thousands) At March 31, 2020 At December 31, 2019 Commercial, financial and agricultural $ 944,189 $ 947,029 Real estate-commercial 2,100,699 2,040,441 Real estate-construction 215,150 232,595 Real estate-residential secured for business purpose 377,644 373,973 Real estate-residential secured for personal purpose 454,998 439,059 Real estate-home equity secured for personal purpose 177,405 174,435 Loans to individuals 29,170 29,883 Lease financings 149,570 149,421 Total loans and leases held for investment, net of deferred income $ 4,448,825 $ 4,386,836 Imputed interest on lease financings, included in the above table $ (16,106) $ (16,340) Net deferred costs, included in the above table 5,754 5,999 Overdraft deposits included in the above table 314 407 Age Analysis of Past Due Loans and Leases The following presents, by class of loans and leases, an aging of past due loans and leases, loans and leases which are current and nonaccrual loans and leases at March 31, 2020: Accruing Loans and Leases (Dollars in thousands) 30-59 60-89 90 Days Total Current Total Accruing Loans and Leases Nonaccrual Loans and Leases Total Loans At March 31, 2020 Commercial, financial and agricultural $ 1,621 $ 709 $ — $ 2,330 $ 937,925 $ 940,255 $ 3,934 $ 944,189 Real estate—commercial real estate and construction: Commercial real estate 23,325 2,091 722 26,138 2,045,734 2,071,872 28,827 2,100,699 Construction 4,076 — — 4,076 211,074 215,150 — 215,150 Real estate—residential and home equity: Residential secured for business purpose 4,479 1,164 400 6,043 370,331 376,374 1,270 377,644 Residential secured for personal purpose 5,258 1,486 426 7,170 446,548 453,718 1,280 454,998 Home equity secured for personal purpose 819 107 — 926 175,659 176,585 820 177,405 Loans to individuals 219 31 63 313 28,857 29,170 — 29,170 Lease financings 709 81 166 956 148,119 149,075 495 149,570 Total $ 40,506 $ 5,669 $ 1,777 $ 47,952 $ 4,364,247 $ 4,412,199 $ 36,626 $ 4,448,825 The following presents, by class of loans and leases, an aging of past due loans and leases, loans and leases which are current, acquired credit impaired loans and nonaccrual loans and leases at December 31, 2019: Accruing Loans and Leases (Dollars in thousands) 30-59 60-89 90 Days Total Current Total Accruing Loans and Leases Acquired Credit Impaired Nonaccrual Loans and Leases Total Loans At December 31, 2019 Commercial, financial and agricultural $ 2,602 $ 150 $ 20 $ 2,772 $ 940,815 $ 943,587 $ — $ 3,442 $ 947,029 Real estate—commercial real estate and construction: Commercial real estate 3,473 266 — 3,739 2,008,568 2,012,307 206 27,928 2,040,441 Construction — — — — 232,338 232,338 — 257 232,595 Real estate—residential and home equity: Residential secured for business purpose 2,078 2,442 — 4,520 366,473 370,993 — 2,980 373,973 Residential secured for personal purpose 2,969 446 — 3,415 433,548 436,963 58 2,038 439,059 Home equity secured for personal purpose 605 297 — 902 172,106 173,008 — 1,427 174,435 Loans to individuals 157 73 74 304 29,579 29,883 — — 29,883 Lease financings 1,409 296 49 1,754 147,161 148,915 — 506 149,421 Total $ 13,293 $ 3,970 $ 143 $ 17,406 $ 4,330,588 $ 4,347,994 $ 264 $ 38,578 $ 4,386,836 Nonperforming Loans and Leases The following presents, by class of loans and leases, nonperforming loans and leases at March 31, 2020 and December 31, 2019. At March 31, 2020 At December 31, 2019 (Dollars in thousands) Nonaccrual Accruing Loans and Total Nonperforming Nonaccrual Accruing Loans and Total Nonperforming Commercial, financial and agricultural $ 3,934 $ — $ — $ 3,934 $ 3,442 $ — $ 20 $ 3,462 Real estate—commercial real estate and construction: Commercial real estate 28,827 — 722 29,549 27,928 — — 27,928 Construction — — — — 257 — — 257 Real estate—residential and home equity: Residential secured for business purpose 1,270 — 400 1,670 2,980 — — 2,980 Residential secured for personal purpose 1,280 — 426 1,706 2,038 — — 2,038 Home equity secured for personal purpose 820 54 — 874 1,427 54 — 1,481 Loans to individuals — — 63 63 — — 74 74 Lease financings 495 — 166 661 506 — 49 555 Total $ 36,626 $ 54 $ 1,777 $ 38,457 $ 38,578 $ 54 $ 143 $ 38,775 * Includes nonaccrual troubled debt restructured loans of $13.7 million and $13.8 million at March 31, 2020 and December 31, 2019, respectively. The following table presents the amortized cost basis of loans and leases on nonaccrual status and loans 90 days or more past due and still accruing as of March 31, 2020. (Dollars in thousands) Nonaccrual With No ACL Nonaccrual With ACL Total Nonaccrual Loans 90 Days or more Past Due and Accruing Interest At March 31, 2020 Commercial, financial and agricultural $ 2,690 $ 1,244 $ 3,934 $ — Real estate-commercial 17,174 11,653 28,827 722 Real estate-residential secured for business purpose 1,010 260 1,270 400 Real estate-residential secured for personal purpose 718 562 1,280 426 Real estate-home equity secured for personal purpose 820 — 820 — Loans to individuals — — — 63 Lease financings — 495 495 166 Total $ 22,412 $ 14,214 $ 36,626 $ 1,777 The following table presents the amortized cost basis of collateral-dependent nonaccrual loans by class of loans as of March 31, 2020. (Dollars in thousands) Real Estate Other (1) None (2) Total At March 31, 2020 Commercial, financial and agricultural $ 2,002 $ 1,351 $ 581 $ 3,934 Real estate-commercial 28,827 — — 28,827 Real estate-residential secured for business purpose 1,270 — — 1,270 Real estate-residential secured for personal purpose 1,280 — — 1,280 Real estate-home equity secured for personal purpose 820 — — 820 Total $ 34,199 $ 1,351 $ 581 $ 36,131 (1) Business assets including accounts receivable and personal property. (2) Loans fully reserved given lack of collateral. Credit Quality Indicators The following tables present by class, the recorded investment in loans and leases held for investment by credit quality indicator at March 31, 2020 and December 31, 2019. The Corporation employs a risk rating system related to the credit quality of commercial loans and real estate loans secured for a business purpose. The following is a description of the internal risk ratings and the likelihood of loss related to each risk rating. Loans with a relationship balance of less than $1 million are reviewed on a performance basis, with the primary monitored metrics being delinquency status. Loans with relationships greater than $1 million are reviewed at least annually. Loan relationships with a higher risk profile or classified as special mention or substandard are reviewed at least quarterly. The Corporation reviews credit quality indicators on at least an annual basis and last completed this review in conjunction with the period ended December 31, 2019. 1. Pass—Loans considered satisfactory with no indications of deterioration 2. Special Mention—Potential weakness that deserves management's close attention 3. Substandard—Well-defined weakness or weaknesses that jeopardize the liquidation of the debt 4. Doubtful—Collection or liquidation in-full, on the basis of current existing facts, conditions and values, highly questionable and improbable Commercial Credit Exposure Credit Risk by Internally Assigned Grades The following tables present by class, the recorded investment in loans and leases held for investment by credit quality indicator at March 31, 2020 under ASC 326. Term Loans Amortized Cost Basis by Origination Year 2020 2019 2018 2017 2016 Prior Revolving Loans Amortized Cost Basis Total At March 31, 2020 Commercial, Financial and Agricultural Risk Rating 1. Pass $ 52,864 $ 146,722 $ 99,263 $ 65,395 $ 34,880 $ 89,984 $ 420,193 $ 909,301 2. Special Mention 3 970 1,979 2,841 1,621 1,685 9,678 18,777 3. Substandard — 1,144 1,356 61 — 628 12,922 16,111 Total $ 52,867 $ 148,836 $ 102,598 $ 68,297 $ 36,501 $ 92,297 $ 442,793 $ 944,189 Real Estate-Commercial Risk Rating 1. Pass $ 161,322 $ 613,240 $ 358,038 $ 357,068 $ 194,772 $ 305,101 $ 44,969 $ 2,034,510 2. Special Mention 1,754 12,432 — 1,134 5,092 2,918 582 23,912 3. Substandard — 944 941 11,219 — 26,424 2,749 42,277 Total $ 163,076 $ 626,616 $ 358,979 $ 369,421 $ 199,864 $ 334,443 $ 48,300 $ 2,100,699 Real Estate-Construction Risk Rating 1. Pass $ 22,374 $ 91,509 $ 55,864 $ 10,987 $ 2,950 $ — $ 4,372 $ 188,056 2. Special Mention 20,109 — — — — — — 20,109 3. Substandard — — 6,985 — — — — 6,985 Total $ 42,483 $ 91,509 $ 62,849 $ 10,987 $ 2,950 $ — $ 4,372 $ 215,150 Real Estate-Residential Secured for Business Purpose Risk Rating 1. Pass $ 24,846 $ 87,962 $ 69,936 $ 56,391 $ 48,747 $ 55,682 $ 29,802 $ 373,366 2. Special Mention 1,121 475 — 79 743 480 — 2,898 3. Substandard — 24 — 82 552 654 68 1,380 Total $ 25,967 $ 88,461 $ 69,936 $ 56,552 $ 50,042 $ 56,816 $ 29,870 $ 377,644 The Corporation had no revolving loans which were converted to term loans included within recorded investment in loans and leases held for investment at March 31, 2020. The Corporation had no loans with a risk rating of Doubtful included within recorded investment in loans and leases held for investment at March 31, 2020. The following tables present by class, the recorded investment in loans and leases held for investment by credit quality indicator at December 31, 2019 under ASC 310. (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Total At December 31, 2019 Grade: 1. Pass $ 911,848 $ 1,974,561 $ 201,424 $ 367,122 $ 3,454,955 2. Special Mention 18,843 24,199 20,987 3,769 67,798 3. Substandard 16,338 41,681 10,184 3,082 71,285 Total $ 947,029 $ 2,040,441 $ 232,595 $ 373,973 $ 3,594,038 Credit Exposure—Real Estate—Residential Secured for Personal Purpose, Real Estate—Home Equity Secured for Personal Purpose, Loans to individuals, Lease Financings Credit Risk Profile by Payment Activity The Corporation monitors the credit risk profile by payment activity for the following classifications of loans and leases: residential real estate loans, home equity loans secured for a personal purpose and loans to individuals and lease financings. Loans and leases past due 90 days or more, loans and leases on nonaccrual status and troubled debt restructured loans and lease modifications are considered nonperforming. Nonperforming loans and leases are reviewed monthly. Performing loans and leases have a nominal to moderate risk of loss. Performing loans and leases are reviewed only if the loan becomes 60 days or more past due. The Corporation reviews credit quality indicators on at least an annual basis and last completed this review in conjunction with the period ended December 31, 2019. The following table presents classification of loans at March 31, 2020. Term Loans Amortized Cost Basis by Origination Year 2020 2019 2018 2017 2016 Prior Revolving Loans Amortized Cost Basis Total At March 31, 2020 Real Estate-Residential Secured for Personal Purpose Payment Performance 1. Performing $ 27,745 $ 93,752 $ 87,429 $ 71,235 $ 53,602 $ 117,858 $ 1,671 $ 453,292 2. Nonperforming — 426 57 — — 1,223 — 1,706 Total $ 27,745 $ 94,178 $ 87,486 $ 71,235 $ 53,602 $ 119,081 $ 1,671 $ 454,998 Real Estate-Home Equity Secured for Personal Purpose Payment Performance 1. Performing $ 164 $ 1,104 $ 1,707 $ 1,702 $ 692 $ 3,583 $ 167,579 $ 176,531 2. Nonperforming — — 108 — — 30 736 874 Total $ 164 $ 1,104 $ 1,815 $ 1,702 $ 692 $ 3,613 $ 168,315 $ 177,405 Loans to Individuals Payment Performance 1. Performing $ 630 $ 2,282 $ 1,464 $ 821 $ 481 $ 2,736 $ 20,693 $ 29,107 2. Nonperforming — — — — — 63 — 63 Total $ 630 $ 2,282 $ 1,464 $ 821 $ 481 $ 2,799 $ 20,693 $ 29,170 Lease Financings Payment Performance 1. Performing $ 15,187 $ 58,670 $ 43,587 $ 19,482 $ 9,488 $ 2,495 $ — $ 148,909 2. Nonperforming — 27 129 396 43 66 — 661 Total $ 15,187 $ 58,697 $ 43,716 $ 19,878 $ 9,531 $ 2,561 $ — $ 149,570 The following table presents classifications of loans at December 31, 2019. (Dollars in thousands) Real Estate— Real Estate— Loans to Lease Total At December 31, 2019 Performing $ 437,021 $ 172,954 $ 29,809 $ 148,866 $ 788,650 Nonperforming 2,038 1,481 74 555 4,148 Total $ 439,059 $ 174,435 $ 29,883 $ 149,421 $ 792,798 Reserve for Credit Losses on Loans and Leases and Recorded Investment in Loans and Leases The following presents, by portfolio segment, a summary of the activity in the reserve for credit losses, loans and leases, for the three months ended March 31, 2020 and 2019: (Dollars in thousands) Beginning balance, prior to adoption of ASU No. 2016-13 for CECL Adjustment to initially apply ASU No. 2016-13 for CECL Provision (recovery of provision) for credit losses Charge-offs Recoveries Ending balance Three Months Ended March 31, 2020 Reserve for credit losses, loans and leases: Commercial, Financial and Agricultural $ 8,759 $ 5,284 $ 5,630 $ (481) $ 52 $ 19,244 Real Estate-Commercial 15,750 6,208 12,817 — 35 34,810 Real Estate-Construction 2,446 29 642 — — 3,117 Real Estate-Residential Secured for Business Purpose 2,622 2,502 782 (3) 3 5,906 Real Estate-Residential Secured for Personal Purpose 2,713 (706) 114 — — 2,121 Real Estate-Home Equity Secured for Personal Purpose 1,076 (364) 78 — 5 795 Loans to Individuals 470 104 47 (35) 14 600 Lease Financings 1,311 (135) 376 (152) 73 1,473 Unallocated 184 — (34) N/A N/A 150 Total $ 35,331 $ 12,922 $ 20,452 $ (671) $ 182 $ 68,216 Three Months Ended March 31, 2019 Reserve for credit losses, loans and leases: Commercial, Financial and Agricultural $ 7,983 $ — $ 1,353 $ (468) $ 82 $ 8,950 Real Estate-Commercial and Construction 13,903 — 1,028 (41) 91 14,981 Real Estate-Residential Secured for Business Purpose 2,236 — 62 — 4 2,302 Real Estate-Residential and Home Equity Secured for Personal Purpose 3,199 — 186 (11) 5 3,379 Loans to Individuals 484 — 48 (85) 22 469 Lease Financings 1,288 — 33 (104) 58 1,275 Unallocated 271 — (25) N/A N/A 246 Total $ 29,364 $ — $ 2,685 $ (709) $ 262 $ 31,602 N/A – Not applicable The following presents, by portfolio segment, the balance in the ACL on loans and leases, disaggregated on the basis of whether the loan or lease was measured for credit loss as a pooled loan or lease or if it was individually analyzed for a reserve at March 31, 2020 and 2019: Allowance for credit losses, loans and leases Loans and leases held for investment (Dollars in thousands) Ending balance: individually analyzed Ending balance: pooled Total ending balance Ending balance: individually analyzed Ending balance: pooled Loans measured at fair value Total ending balance At March 31, 2020 Commercial, Financial and Agricultural $ 698 $ 18,546 $ 19,244 $ 3,934 $ 940,255 $ — $ 944,189 Real Estate-Commercial 1,547 33,263 34,810 28,827 2,071,584 288 2,100,699 Real Estate-Construction — 3,117 3,117 — 215,150 — 215,150 Real Estate-Residential Secured for Business Purpose 95 5,811 5,906 1,270 376,374 — 377,644 Real Estate-Residential Secured for Personal Purpose 195 1,926 2,121 1,280 453,718 — 454,998 Real Estate-Home Equity Secured for Personal Purpose — 795 795 820 176,585 — 177,405 Loans to Individuals — 600 600 — 29,170 — 29,170 Lease Financings — 1,473 1,473 — 149,570 — 149,570 Unallocated N/A 150 150 N/A N/A N/A N/A Total $ 2,535 $ 65,681 $ 68,216 $ 36,131 $ 4,412,406 $ 288 $ 4,448,825 At March 31, 2019 Commercial, Financial and Agricultural $ 243 $ 8,707 $ 8,950 $ 3,174 $ 924,464 $ — $ 927,638 Real Estate-Commercial and Construction 925 14,056 14,981 18,467 1,995,954 1,748 2,016,169 Real Estate-Residential Secured for Business Purpose — 2,302 2,302 1,232 359,690 — 360,922 Real Estate-Residential and Home Equity Secured for Personal Purpose 335 3,044 3,379 3,129 586,909 — 590,038 Loans to Individuals — 469 469 — 32,603 — 32,603 Lease Financings — 1,275 1,275 — 140,509 — 140,509 Unallocated N/A 246 246 N/A N/A N/A N/A Total $ 1,503 $ 30,099 $ 31,602 $ 26,002 $ 4,040,129 $ 1,748 $ 4,067,879 N/A – Not applicable Troubled Debt Restructured Loans The following presents, by class of loans, information regarding accruing and nonaccrual loans that were restructured: Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 (Dollars in thousands) Number Pre- Post- Number Pre- Post- Accruing Troubled Debt Restructured Loans: Total — $ — $ — — $ — $ — Nonaccrual Troubled Debt Restructured Loans: Commercial, financial and agricultural* — $ — $ — 2 $ 956 $ 956 Real estate—commercial real estate* — — — 1 1,313 1,313 Total — $ — $ — 3 $ 2,269 $ 2,269 * The three nonaccrual troubled debt restructured loans in the above table totaling $2.3 million were modified via the execution of a forbearance agreement during the three months ended March 31, 2019. These loans relate to one borrower and were on nonaccrual status at the time of modification. As of March 31, 2020, the Corporation modified 46 loans with principal balances totaling $10.7 million via principal and/or interest deferrals. These modifications were done in accordance with Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customer Affected by the Coronavirus . Accordingly, these loans were not categorized as troubled debt restructurings. The following presents, by class of loans, information regarding the types of concessions granted on accruing and nonaccrual loans that were restructured during the three months ended March 31, 2020 and 2019. Amortization Period Extension (Dollars in thousands) No. of Amount Three Months Ended March 31, 2020 Accruing Troubled Debt Restructured Loans: Total — $ — Nonaccrual Troubled Debt Restructured Loans: Total — $ — Three Months Ended March 31, 2019 Accruing Troubled Debt Restructured Loans: Total — $ — Nonaccrual Troubled Debt Restructured Loans: Commercial, financial and agricultural 2 $ 956 Real estate—commercial real estate 1 1,313 Total 3 $ 2,269 There were no accruing or nonaccrual troubled debt restructured loans for which there were payment defaults within twelve months of the restructuring date for the three months ended March 31, 2020 or March 31, 2019. The following presents, by class of loans, information regarding consumer mortgages collateralized by residential real estate property that are in the process of foreclosure at March 31, 2020 and December 31, 2019: (Dollars in thousands) At March 31, 2020 At December 31, 2019 Real estate-residential secured for personal purpose $ 714 $ 714 Real estate-home equity secured for personal purpose 247 1,058 Total $ 961 $ 1,772 The following presents foreclosed residential real estate property included in other real estate owned at March 31, 2020 or December 31, 2019. (Dollars in thousands) At March 31, 2020 At December 31, 2019 Foreclosed residential real estate $ 71 $ 71 Lease Financings The Corporation, through Univest Capital, Inc., an equipment financing business and a subsidiary of the Bank, provides lease financing to customers primarily in the form of sales-type leases with fixed payment terms and $1.00 buyout clauses. A minor number of contracts are classified as either direct financing leases or operating leases. The fair value of the identified assets within sales-type and direct financing leases are equal to the carrying amount such that there is no profit or loss recorded or deferred upon lease commencement. All receivables related to the equipment financing business are recorded within lease financings. The following presents the schedule of minimum lease payments receivable: (Dollars in thousands) At March 31, 2020 At December 31, 2019 2020 (excluding the three months ended March 31, 2020) $ 44,780 $ 57,515 2021 48,877 45,510 2022 35,510 32,233 2023 21,384 18,345 2024 9,172 6,639 Thereafter 2,836 2,259 Total future minimum lease payments receivable 162,559 162,501 Plus: Unguaranteed residual 877 886 Plus: Initial direct costs 2,240 2,374 Less: Imputed interest (16,106) (16,340) Lease financings $ 149,570 $ 149,421 |