Loans and Leases | LOANS AND LEASES Our loans are carried at the principal amount outstanding, net of deferred fees and costs, and in the case of acquired loans, net of purchase discounts and premiums. Deferred fees and costs and purchase discounts and premiums on acquired non-impaired loans are recognized as an adjustment to interest income over the contractual life of the loans primarily using the effective interest method or taken into income when the related loans are paid off or included in the carrying amount of loans that are sold. Loans and Leases Held for Investment The following table summarizes the composition of our loans and leases held for investment as of the dates indicated: March 31, December 31, 2019 2018 (In thousands) Real estate mortgage $ 8,172,992 $ 7,933,859 Real estate construction and land 2,379,560 2,262,710 Commercial 7,446,612 7,428,500 Consumer 372,131 401,296 Total gross loans and leases held for investment 18,371,295 18,026,365 Deferred fees, net (63,598 ) (68,652 ) Total loans and leases held for investment, net of deferred fees 18,307,697 17,957,713 Allowance for loan and lease losses (136,281 ) (132,472 ) Total loans and leases held for investment, net $ 18,171,416 $ 17,825,241 The following tables present an aging analysis of our loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of the dates indicated: March 31, 2019 30 - 89 90 or More Days Days Total Past Due Past Due Past Due Current Total (In thousands) Real estate mortgage: Commercial $ 7,266 $ 6,464 $ 13,730 $ 4,626,780 $ 4,640,510 Income producing and other residential 1,853 309 2,162 3,516,786 3,518,948 Total real estate mortgage 9,119 6,773 15,892 8,143,566 8,159,458 Real estate construction and land: Commercial — 430 430 943,166 943,596 Residential 8,949 — 8,949 1,399,179 1,408,128 Total real estate construction and land 8,949 430 9,379 2,342,345 2,351,724 Commercial: Asset-based 3,750 — 3,750 3,418,452 3,422,202 Venture capital 4,500 1,194 5,694 2,021,756 2,027,450 Other commercial 3,655 3,339 6,994 1,967,708 1,974,702 Total commercial 11,905 4,533 16,438 7,407,916 7,424,354 Consumer 614 208 822 371,339 372,161 Total $ 30,587 $ 11,944 $ 42,531 $ 18,265,166 $ 18,307,697 December 31, 2018 30 - 89 90 or More Days Days Total Past Due Past Due Past Due Current Total (In thousands) Real estate mortgage: Commercial $ 3,487 $ 7,541 $ 11,028 $ 4,813,270 $ 4,824,298 Income producing and other residential 1,557 476 2,033 3,091,810 3,093,843 Total real estate mortgage 5,044 8,017 13,061 7,905,080 7,918,141 Real estate construction and land: Commercial — 442 442 912,141 912,583 Residential 1,527 — 1,527 1,319,546 1,321,073 Total real estate construction and land 1,527 442 1,969 2,231,687 2,233,656 Commercial: Asset-based 47 646 693 3,304,728 3,305,421 Venture capital 4,705 — 4,705 2,034,043 2,038,748 Other commercial 5,181 1,285 6,466 2,053,960 2,060,426 Total commercial 9,933 1,931 11,864 7,392,731 7,404,595 Consumer 581 333 914 400,407 401,321 Total $ 17,085 $ 10,723 $ 27,808 $ 17,929,905 $ 17,957,713 It is our policy to discontinue accruing interest when principal or interest payments are past due 90 days or more (unless the loan is both well secured and in the process of collection) or when, in the opinion of management, there is a reasonable doubt as to the collectability of a loan or lease in the normal course of business. Interest income on nonaccrual loans is recognized only to the extent cash is received and the principal balance of the loan is deemed collectable. The following table presents our nonaccrual and performing loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of the dates indicated: March 31, 2019 December 31, 2018 Nonaccrual Performing Total Nonaccrual Performing Total (In thousands) Real estate mortgage: Commercial $ 12,750 $ 4,627,760 $ 4,640,510 $ 15,321 $ 4,808,977 $ 4,824,298 Income producing and other residential 2,444 3,516,504 3,518,948 2,524 3,091,319 3,093,843 Total real estate mortgage 15,194 8,144,264 8,159,458 17,845 7,900,296 7,918,141 Real estate construction and land: Commercial 430 943,166 943,596 442 912,141 912,583 Residential — 1,408,128 1,408,128 — 1,321,073 1,321,073 Total real estate construction and land 430 2,351,294 2,351,724 442 2,233,214 2,233,656 Commercial: Asset-based 43,406 3,378,796 3,422,202 32,324 3,273,097 3,305,421 Venture capital 20,437 2,007,013 2,027,450 20,299 2,018,449 2,038,748 Other commercial 8,633 1,966,069 1,974,702 7,380 2,053,046 2,060,426 Total commercial 72,476 7,351,878 7,424,354 60,003 7,344,592 7,404,595 Consumer 427 371,734 372,161 1,043 400,278 401,321 Total $ 88,527 $ 18,219,170 $ 18,307,697 $ 79,333 $ 17,878,380 $ 17,957,713 At March 31, 2019 , nonaccrual loans and leases totaled $88.5 million and included $11.9 million of loans and leases 90 or more days past due, $2.4 million of loans and leases 30 to 89 days past due, and $74.2 million of loans and leases current with respect to contractual payments that were placed on nonaccrual status based on management’s judgment regarding their collectability. Nonaccrual loans and leases totaled $79.3 million at December 31, 2018 , including $10.7 million of loans and leases 90 or more days past due, $6.6 million of loans and leases 30 to 89 days past due, and $62.0 million of current loans and leases that were placed on nonaccrual status based on management’s judgment regarding their collectability. As of March 31, 2019 , our three largest loan relationships on nonaccrual status had an aggregate carrying value of $52.4 million and represented 59% of total nonaccrual loans and leases. The following tables present the credit risk rating categories for loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of the dates indicated. Classified loans and leases are those with a credit risk rating of either substandard or doubtful. March 31, 2019 Classified Special Mention Pass Total (In thousands) Real estate mortgage: Commercial $ 24,542 $ 67,115 $ 4,548,853 $ 4,640,510 Income producing and other residential 9,131 452 3,509,365 3,518,948 Total real estate mortgage 33,673 67,567 8,058,218 8,159,458 Real estate construction and land: Commercial 430 — 943,166 943,596 Residential — 2,485 1,405,643 1,408,128 Total real estate construction and land 430 2,485 2,348,809 2,351,724 Commercial: Asset-based 52,586 85,060 3,284,556 3,422,202 Venture capital 43,128 62,514 1,921,808 2,027,450 Other commercial 59,690 74,517 1,840,495 1,974,702 Total commercial 155,404 222,091 7,046,859 7,424,354 Consumer 798 637 370,726 372,161 Total $ 190,305 $ 292,780 $ 17,824,612 $ 18,307,697 December 31, 2018 Classified Special Mention Pass Total (In thousands) Real estate mortgage: Commercial $ 57,734 $ 74,785 $ 4,691,779 $ 4,824,298 Income producing and other residential 10,521 968 3,082,354 3,093,843 Total real estate mortgage 68,255 75,753 7,774,133 7,918,141 Real estate construction and land: Commercial 442 7,041 905,100 912,583 Residential — 1,527 1,319,546 1,321,073 Total real estate construction and land 442 8,568 2,224,646 2,233,656 Commercial: Asset-based 45,957 48,338 3,211,126 3,305,421 Venture capital 28,731 77,588 1,932,429 2,038,748 Other commercial 92,526 50,136 1,917,764 2,060,426 Total commercial 167,214 176,062 7,061,319 7,404,595 Consumer 1,199 1,015 399,107 401,321 Total $ 237,110 $ 261,398 $ 17,459,205 $ 17,957,713 Nonaccrual loans and leases and performing TDRs are considered impaired for reporting purposes. TDRs are a result of rate reductions, term extensions, fee concessions, and debt forgiveness, or a combination thereof. The following table presents the composition of our impaired loans and leases held for investment, net of deferred fees, by loan portfolio segment as of the dates indicated: March 31, 2019 December 31, 2018 Total Total Nonaccrual Impaired Nonaccrual Impaired Loans Loans Loans Loans and Performing and and Performing and Leases TDRs Leases Leases TDRs Leases (In thousands) Real estate mortgage $ 15,194 $ 11,355 $ 26,549 $ 17,845 $ 11,484 $ 29,329 Real estate construction and land 430 5,002 5,432 442 5,420 5,862 Commercial 72,476 573 73,049 60,003 692 60,695 Consumer 427 97 524 1,043 105 1,148 Total $ 88,527 $ 17,027 $ 105,554 $ 79,333 $ 17,701 $ 97,034 The following tables present information regarding our impaired loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of and for the dates indicated: March 31, 2019 December 31, 2018 Unpaid Unpaid Recorded Principal Related Recorded Principal Related Impaired Loans and Leases Investment Balance Allowance Investment Balance Allowance (In thousands) With An Allowance Recorded: Real estate mortgage: Commercial $ 1,139 $ 1,139 $ 68 $ 1,736 $ 1,648 $ 170 Income producing and other residential 2,090 2,084 202 2,569 2,563 247 Commercial: Asset based 10,335 10,335 2,735 — — — Venture capital 19,243 21,029 3,196 11,621 13,255 3,141 Other commercial — — — 473 482 473 With No Related Allowance Recorded: Real estate mortgage: Commercial $ 15,727 $ 29,962 $ 17,783 $ 32,035 Income producing and other residential 7,593 9,775 7,241 9,425 Real estate construction and land: Commercial 5,432 5,449 5,862 5,870 Commercial: Asset-based 33,071 38,401 32,324 38,100 Venture capital 1,194 31,632 8,678 41,335 Other commercial 9,206 27,642 7,599 25,740 Consumer 524 693 1,148 1,470 Total Loans and Leases With and Without an Allowance Recorded: Real estate mortgage $ 26,549 $ 42,960 $ 270 $ 29,329 $ 45,671 $ 417 Real estate construction and land 5,432 5,449 — 5,862 5,870 — Commercial 73,049 129,039 5,931 60,695 118,912 3,614 Consumer 524 693 — 1,148 1,470 — Total $ 105,554 $ 178,141 $ 6,201 $ 97,034 $ 171,923 $ 4,031 Three Months Ended March 31, 2019 2018 Weighted Interest Weighted Interest Average Income Average Income Impaired Loans and Leases Balance (1) Recognized Balance (1) Recognized (In thousands) With An Allowance Recorded: Real estate mortgage: Commercial $ 1,139 $ 17 $ 13,884 $ 201 Income producing and other residential 2,090 16 4,295 23 Commercial: Asset-based 3,560 — — — Venture capital 12,906 — 14,598 — Other commercial — — 16,851 15 Consumer — — 295 2 With No Related Allowance Recorded: Real estate mortgage: Commercial $ 15,538 $ 53 $ 46,782 $ 765 Income producing and other residential 7,516 53 8,464 45 Real estate construction and land: Commercial 5,432 101 5,670 89 Commercial: Asset-based 31,979 — 32,838 — Venture capital 1,194 — 4,474 — Other commercial 7,767 17 7,859 1,147 Consumer 524 2 79 — Total Loans and Leases With and Without an Allowance Recorded: Real estate mortgage $ 26,283 $ 139 $ 73,425 $ 1,034 Real estate construction and land 5,432 101 5,670 89 Commercial 57,406 17 76,620 1,162 Consumer 524 2 374 2 Total $ 89,645 $ 259 $ 156,089 $ 2,287 _________________________ (1) For loans and leases reported as impaired at March 31, 2019 and 2018 , amounts were calculated based on the period of time such loans and leases were impaired during the reported period. The following table presents our troubled debt restructurings of loans held for investment by loan portfolio segment and class for the periods indicated: Three Months Ended March 31, 2019 2018 Pre- Post- Pre- Post- Modification Modification Modification Modification Number Outstanding Outstanding Number Outstanding Outstanding of Recorded Recorded of Recorded Recorded Troubled Debt Restructurings Loans Investment Investment Loans Investment Investment (Dollars in thousands) Real estate mortgage: Commercial 1 $ 37 $ — — $ — $ — Income producing and other residential 3 789 789 — — — Commercial: Venture capital 6 2,105 1,242 — — — Other commercial 8 585 585 2 11,783 11,783 Total 18 $ 3,516 $ 2,616 2 $ 11,783 $ 11,783 During the three months ended March 31, 2019 , two other commercial loans totaling $64,000 were restructured in the preceding 12-month period and subsequently defaulted after being restructured. During the three months ended March 31, 2018 , one other commercial loan of $2.3 million was restructured in the preceding 12-month period and subsequently defaulted after being restructured. Leases Receivable We provide equipment financing to our customers primarily with direct financing leases. Lease receivables are recorded on the balance sheet but the leased equipment is not, although we generally retain legal title to the leased equipment until the end of each lease. Direct financing leases are stated at the net amount of minimum lease payments receivable, plus any unguaranteed residual value, less the amount of unearned income and net acquisition discount at the reporting date. Direct lease origination costs are amortized using the effective interest method over the life of the leases. Direct financing leases are subject to our allowance for loans and leases. The following table provides the components of leases receivable income for the period indicated: Three Months Ended March 31, 2019 (In thousands) Component of leases receivable income: Interest income on net investments in leases $ 3,140 The following table presents the components of leases receivable as of the date indicated: March 31, 2019 (Dollars in thousands) Net investment in sales type and direct financing leases: Lease payments receivable $ 195,018 Unguaranteed residual assets 25,895 Deferred fees and other 962 Aggregate net investment in leases $ 221,875 The following table presents maturities of leases receivable as of the date indicated: March 31, 2019 (In thousands) Twelve Months Ending March 31, 2020 $ 77,413 2021 63,321 2022 42,112 2023 15,386 2024 8,998 Thereafter 7,348 Total undiscounted cash flows 214,578 Less: Unearned income (19,560 ) Present value of lease payments $ 195,018 Allowance for Loan and Lease Losses The following tables present a summary of the activity in the allowance for loan and lease losses on loans and leases held for investment by loan portfolio segment for the periods indicated: Three Months Ended March 31, 2019 Real Estate Real Estate Construction Mortgage and Land Commercial Consumer Total (In thousands) Allowance for Loan and Lease Losses: Balance, beginning of period $ 46,021 $ 28,209 $ 56,360 $ 1,882 $ 132,472 Charge-offs (196 ) — (3,003 ) (266 ) (3,465 ) Recoveries 143 — 3,106 25 3,274 Net (charge-offs) recoveries (53 ) — 103 (241 ) (191 ) Provision (negative provision) (214 ) (1,001 ) 5,033 182 4,000 Balance, end of period $ 45,754 $ 27,208 $ 61,496 $ 1,823 $ 136,281 Ending Allowance by Impairment Methodology: Individually evaluated for impairment $ 270 $ — $ 5,931 $ — $ 6,201 Collectively evaluated for impairment $ 45,484 $ 27,208 $ 55,565 $ 1,823 $ 130,080 Ending Loans and Leases by Impairment Methodology: Individually evaluated for impairment $ 23,908 $ 5,432 $ 71,660 $ — $ 101,000 Collectively evaluated for impairment 8,135,550 2,346,292 7,352,694 372,161 18,206,697 Ending balance $ 8,159,458 $ 2,351,724 $ 7,424,354 $ 372,161 $ 18,307,697 Three Months Ended March 31, 2018 Real Estate Real Estate Construction Mortgage and Land Commercial Consumer Total (In thousands) Allowance for Loan and Lease Losses: Balance, beginning of period (1) $ 40,051 $ 13,055 $ 84,022 $ 2,328 $ 139,456 Charge-offs (2,598 ) — (9,524 ) (31 ) (12,153 ) Recoveries 1,657 9 5,487 45 7,198 Net (charge-offs) recoveries (941 ) 9 (4,037 ) 14 (4,955 ) Provision (negative provision) 1,048 5,126 (6,205 ) (195 ) (226 ) Balance, end of period $ 40,158 $ 18,190 $ 73,780 $ 2,147 $ 134,275 Ending Allowance by Impairment Methodology: Individually evaluated for impairment $ 1,088 $ — $ 13,141 $ 16 $ 14,245 Collectively evaluated for impairment $ 39,070 $ 18,190 $ 60,639 $ 2,131 $ 120,030 Ending Loans and Leases by Impairment Methodology: Individually evaluated for impairment $ 74,390 $ 5,670 $ 82,434 $ 324 $ 162,818 Collectively evaluated for impairment 7,479,853 1,671,332 6,743,689 397,593 16,292,467 Ending balance $ 7,554,243 $ 1,677,002 $ 6,826,123 $ 397,917 $ 16,455,285 _______________________________________ (1) The allowance for loan losses related to PCI loans of $6.4 million as of December 31, 2017 is reflected in the beginning balance of the allowance for loan and lease losses for the three months ended March 31, 2018 . Allowance for Credit Losses The allowance for credit losses is the combination of the allowance for loan and lease losses and the reserve for unfunded loan commitments. The reserve for unfunded loan commitments is included within "Accrued interest payable and other liabilities" on the condensed consolidated balance sheets. The following tables present a summary of the activity in the allowance for loan and lease losses and reserve for unfunded loan commitments for the periods indicated: Three Months Ended March 31, 2019 Allowance for Reserve for Total Loan and Unfunded Loan Allowance for Lease Losses Commitments Credit Losses (In thousands) Balance, beginning of period $ 132,472 $ 36,861 $ 169,333 Charge-offs (3,465 ) — (3,465 ) Recoveries 3,274 — 3,274 Net charge-offs (191 ) — (191 ) Provision 4,000 — 4,000 Balance, end of period $ 136,281 $ 36,861 $ 173,142 Three Months Ended March 31, 2018 Allowance for Reserve for Total Loan and Unfunded Loan Allowance for Lease Losses Commitments Credit Losses (In thousands) Balance, beginning of period (1) $ 139,456 $ 28,635 $ 168,091 Charge-offs (12,153 ) — (12,153 ) Recoveries 7,198 — 7,198 Net charge-offs (4,955 ) — (4,955 ) Provision (negative provision) (226 ) 4,226 4,000 Balance, end of period $ 134,275 $ 32,861 $ 167,136 _______________________________________ (1) The allowance for loan losses related to PCI loans of $6.4 million as of December 31, 2017 is reflected in the beginning balance of the allowance for loan and lease losses for the three months ended March 31, 2018 . |