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 and purchased 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: June 30, December 31, 2019 2018 (In thousands) Real estate mortgage $ 8,087,586 $ 7,933,859 Real estate construction and land 2,405,073 2,262,710 Commercial 7,593,728 7,428,500 Consumer 446,353 401,296 Total gross loans and leases held for investment 18,532,740 18,026,365 Deferred fees, net (59,888 ) (68,652 ) Total loans and leases held for investment, net of deferred fees 18,472,852 17,957,713 Allowance for loan and lease losses (135,037 ) (132,472 ) Total loans and leases held for investment, net $ 18,337,815 $ 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: June 30, 2019 30 - 89 90 or More Days Days Total Past Due Past Due Past Due Current Total (In thousands) Real estate mortgage: Commercial $ 4,516 $ 6,632 $ 11,148 $ 4,424,126 $ 4,435,274 Income producing and other residential 3,692 422 4,114 3,636,638 3,640,752 Total real estate mortgage 8,208 7,054 15,262 8,060,764 8,076,026 Real estate construction and land: Commercial — — — 972,891 972,891 Residential 4,672 — 4,672 1,398,567 1,403,239 Total real estate construction and land 4,672 — 4,672 2,371,458 2,376,130 Commercial: Asset-based 12,382 1,624 14,006 3,592,001 3,606,007 Venture capital 447 — 447 2,194,296 2,194,743 Other commercial 2,329 928 3,257 1,770,307 1,773,564 Total commercial 15,158 2,552 17,710 7,556,604 7,574,314 Consumer 964 169 1,133 445,249 446,382 Total $ 29,002 $ 9,775 $ 38,777 $ 18,434,075 $ 18,472,852 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: June 30, 2019 December 31, 2018 Nonaccrual Performing Total Nonaccrual Performing Total (In thousands) Real estate mortgage: Commercial $ 17,012 $ 4,418,262 $ 4,435,274 $ 15,321 $ 4,808,977 $ 4,824,298 Income producing and other residential 2,883 3,637,869 3,640,752 2,524 3,091,319 3,093,843 Total real estate mortgage 19,895 8,056,131 8,076,026 17,845 7,900,296 7,918,141 Real estate construction and land: Commercial 390 972,501 972,891 442 912,141 912,583 Residential — 1,403,239 1,403,239 — 1,321,073 1,321,073 Total real estate construction and land 390 2,375,740 2,376,130 442 2,233,214 2,233,656 Commercial: Asset-based 32,236 3,573,771 3,606,007 32,324 3,273,097 3,305,421 Venture capital 22,501 2,172,242 2,194,743 20,299 2,018,449 2,038,748 Other commercial 5,799 1,767,765 1,773,564 7,380 2,053,046 2,060,426 Total commercial 60,536 7,513,778 7,574,314 60,003 7,344,592 7,404,595 Consumer 444 445,938 446,382 1,043 400,278 401,321 Total $ 81,265 $ 18,391,587 $ 18,472,852 $ 79,333 $ 17,878,380 $ 17,957,713 At June 30, 2019 , nonaccrual loans and leases totaled $81.3 million and included $9.8 million of loans and leases 90 or more days past due, $3.3 million of loans and leases 30 to 89 days past due, and $68.2 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 June 30, 2019 , our three largest loan relationships on nonaccrual status had an aggregate carrying value of $45.0 million and represented 55% 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. June 30, 2019 Classified Special Mention Pass Total (In thousands) Real estate mortgage: Commercial $ 32,926 $ 52,477 $ 4,349,871 $ 4,435,274 Income producing and other residential 8,693 355 3,631,704 3,640,752 Total real estate mortgage 41,619 52,832 7,981,575 8,076,026 Real estate construction and land: Commercial 390 — 972,501 972,891 Residential — 5,268 1,397,971 1,403,239 Total real estate construction and land 390 5,268 2,370,472 2,376,130 Commercial: Asset-based 41,151 48,324 3,516,532 3,606,007 Venture capital 42,105 68,426 2,084,212 2,194,743 Other commercial 65,139 63,591 1,644,834 1,773,564 Total commercial 148,395 180,341 7,245,578 7,574,314 Consumer 575 863 444,944 446,382 Total $ 190,979 $ 239,304 $ 18,042,569 $ 18,472,852 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: June 30, 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 $ 19,895 $ 10,457 $ 30,352 $ 17,845 $ 11,484 $ 29,329 Real estate construction and land 390 4,986 5,376 442 5,420 5,862 Commercial 60,536 931 61,467 60,003 692 60,695 Consumer 444 90 534 1,043 105 1,148 Total $ 81,265 $ 16,464 $ 97,729 $ 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: June 30, 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 $ 493 $ 493 $ 69 $ 1,736 $ 1,648 $ 170 Income producing and other residential 2,066 2,061 191 2,569 2,563 247 Commercial: Asset based — — — — — — Venture capital 22,265 24,353 4,482 11,621 13,255 3,141 Other commercial 618 618 — 473 482 473 With No Related Allowance Recorded: Real estate mortgage: Commercial $ 19,994 $ 34,694 $ 17,783 $ 32,035 Income producing and other residential 7,799 10,234 7,241 9,425 Real estate construction and land: Commercial 5,376 5,419 5,862 5,870 Commercial: Asset-based 32,236 49,853 32,324 38,100 Venture capital 237 26,531 8,678 41,335 Other commercial 6,111 26,562 7,599 25,740 Consumer 534 702 1,148 1,470 Total Loans and Leases With and Without an Allowance Recorded: Real estate mortgage $ 30,352 $ 47,482 $ 260 $ 29,329 $ 45,671 $ 417 Real estate construction and land 5,376 5,419 — 5,862 5,870 — Commercial 61,467 127,917 4,482 60,695 118,912 3,614 Consumer 534 702 — 1,148 1,470 — Total $ 97,729 $ 181,520 $ 4,742 $ 97,034 $ 171,923 $ 4,031 Three Months Ended June 30, 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 $ 493 $ 8 $ 7,786 $ 103 Income producing and other residential 2,066 15 2,419 21 Commercial: Venture capital 19,242 — 18,449 — Other commercial 619 9 688 — With No Related Allowance Recorded: Real estate mortgage: Commercial $ 16,716 $ 54 $ 58,733 $ 725 Income producing and other residential 7,738 57 8,293 44 Real estate construction and land: Commercial 5,376 98 5,549 93 Residential — — 10,450 — Commercial: Asset-based 31,148 — 29,677 — Venture capital 237 — 2,800 — Other commercial 6,111 20 8,508 335 Consumer 511 1 355 2 Total Loans and Leases With and Without an Allowance Recorded: Real estate mortgage $ 27,013 $ 134 $ 77,231 $ 893 Real estate construction and land 5,376 98 15,999 93 Commercial 57,357 29 60,122 335 Consumer 511 1 355 2 Total $ 90,257 $ 262 $ 153,707 $ 1,323 _________________________ (1) For loans and leases reported as impaired at June 30, 2019 and 2018 , amounts were calculated based on the period of time such loans and leases were impaired during the reported period. Six Months Ended June 30, 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 $ 493 $ 16 $ 7,786 $ 204 Income producing and other residential 2,066 29 2,419 42 Commercial: Venture capital 15,359 — 15,715 — Other commercial 619 18 346 — With No Related Allowance Recorded: Real estate mortgage: Commercial $ 16,016 $ 106 $ 55,214 $ 1,378 Income producing and other residential 7,647 110 8,277 88 Real estate construction and land: Commercial 5,376 196 5,549 184 Commercial: Asset-based 30,881 — 29,677 — Venture capital 237 — 2,645 — Other commercial 6,052 51 7,946 1,377 Consumer 485 3 341 4 Total Loans and Leases With and Without an Allowance Recorded: Real estate mortgage $ 26,222 $ 261 $ 73,696 $ 1,712 Real estate construction and land 5,376 196 10,803 184 Commercial 53,148 69 56,329 1,377 Consumer 485 3 341 4 Total $ 85,231 $ 529 $ 141,169 $ 3,277 _________________________ (1) For loans and leases reported as impaired at June 30, 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 June 30, 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: Income producing and other residential 3 $ 456 $ 456 3 $ 1,704 $ 645 Commercial: Asset-based 1 620 620 — — — Venture capital 4 13,971 14,972 4 5,236 5,236 Other commercial 3 107 107 2 31 31 Consumer — — — 1 27 27 Total 11 $ 15,154 $ 16,155 10 $ 6,998 $ 5,939 Six Months Ended June 30, 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 6 1,245 1,245 3 1,704 645 Commercial: Asset-based 1 620 620 — — — Venture capital 10 16,076 16,214 4 5,236 5,236 Other commercial 11 692 692 4 11,814 11,814 Consumer — — — 1 27 27 Total 29 $ 18,670 $ 18,771 12 $ 18,781 $ 17,722 During the three months ended June 30, 2019 , two venture capital loans totaling $447,000 and one other commercial loan of $81,000 were restructured in the preceding 12-month period and subsequently defaulted after being restructured. During the six months ended June 30, 2019 , two venture capital loans totaling $447,000 and three other commercial loans totaling $140,000 were restructured in the preceding 12-month period and subsequently defaulted after being restructured. During the three months ended June 30, 2018 , there were no loans restructured in the preceding 12-month period that subsequently defaulted after being restructured. Due the six months ended June 30, 2018 , one other commercial loan of $2.1 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 operating and direct financing leases. For 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 loan and lease losses. See Note 8. Leases for information regarding operating leases where we are the lessor. The following table provides the components of leases receivable income for the period indicated: Three Months Ended Six Months Ended June 30, 2019 June 30, 2019 (In thousands) Component of leases receivable income: Interest income on net investments in leases $ 2,886 $ 6,026 The following table presents the components of leases receivable as of the date indicated: June 30, 2019 (In thousands) Net investment in direct financing leases: Lease payments receivable $ 180,179 Unguaranteed residual assets 26,238 Deferred fees and other 849 Aggregate net investment in leases $ 207,266 The following table presents maturities of leases receivable as of the date indicated: June 30, 2019 (In thousands) Period Ending December 31, 2019 $ 35,758 2020 71,453 2021 50,719 2022 19,333 2023 11,265 Thereafter 8,763 Total undiscounted cash flows 197,291 Less: Unearned income (17,112 ) Present value of lease payments $ 180,179 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 June 30, 2019 Real Estate Real Estate Construction Mortgage and Land Commercial Consumer Total (In thousands) Allowance for Loan and Lease Losses: Balance, beginning of period $ 45,754 $ 27,208 $ 61,496 $ 1,823 $ 136,281 Charge-offs (534 ) — (16,927 ) (176 ) (17,637 ) Recoveries 240 — 6,080 73 6,393 Net charge-offs (294 ) — (10,847 ) (103 ) (11,244 ) Provision (negative provision) 1,366 (830 ) 8,752 712 10,000 Balance, end of period $ 46,826 $ 26,378 $ 59,401 $ 2,432 $ 135,037 Six Months Ended June 30, 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 (730 ) — (19,930 ) (442 ) (21,102 ) Recoveries 383 — 9,186 98 9,667 Net charge-offs (347 ) — (10,744 ) (344 ) (11,435 ) Provision (negative provision) 1,152 (1,831 ) 13,785 894 14,000 Balance, end of period $ 46,826 $ 26,378 $ 59,401 $ 2,432 $ 135,037 Ending Allowance by Impairment Methodology: Individually evaluated for impairment $ 260 $ — $ 4,482 $ — $ 4,742 Collectively evaluated for impairment $ 46,566 $ 26,378 $ 54,919 $ 2,432 $ 130,295 Ending Loans and Leases by Impairment Methodology: Individually evaluated for impairment $ 27,594 $ 5,376 $ 60,380 $ — $ 93,350 Collectively evaluated for impairment 8,048,432 2,370,754 7,513,934 446,382 18,379,502 Ending balance $ 8,076,026 $ 2,376,130 $ 7,574,314 $ 446,382 $ 18,472,852 Three Months Ended June 30, 2018 Real Estate Real Estate Construction Mortgage and Land Commercial Consumer Total (In thousands) Allowance for Loan and Lease Losses: Balance, beginning of period $ 40,158 $ 18,190 $ 73,780 $ 2,147 $ 134,275 Charge-offs (4,747 ) — (13,425 ) (63 ) (18,235 ) Recoveries 120 17 912 50 1,099 Net (charge-offs) recoveries (4,627 ) 17 (12,513 ) (13 ) (17,136 ) Provision (negative provision) 9,936 8,003 (2,461 ) (478 ) 15,000 Balance, end of period $ 45,467 $ 26,210 $ 58,806 $ 1,656 $ 132,139 Six Months Ended June 30, 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 (7,345 ) — (22,949 ) (94 ) (30,388 ) Recoveries 1,777 26 6,399 95 8,297 Net (charge-offs) recoveries (5,568 ) 26 (16,550 ) 1 (22,091 ) Provision (negative provision) 10,984 13,129 (8,666 ) (673 ) 14,774 Balance, end of period $ 45,467 $ 26,210 $ 58,806 $ 1,656 $ 132,139 Ending Allowance by Impairment Methodology: Individually evaluated for impairment $ 472 $ — $ 8,480 $ — $ 8,952 Collectively evaluated for impairment $ 44,995 $ 26,210 $ 50,326 $ 1,656 $ 123,187 Ending Loans and Leases by Impairment Methodology: Individually evaluated for impairment $ 83,931 $ 15,998 $ 67,228 $ — $ 167,157 Collectively evaluated for impairment 7,482,443 1,858,028 6,998,884 378,680 16,718,035 Ending balance $ 7,566,374 $ 1,874,026 $ 7,066,112 $ 378,680 $ 16,885,192 _______________________________________ (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 six months ended June 30, 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 June 30, 2019 Allowance for Reserve for Total Loan and Unfunded Loan Allowance for Lease Losses Commitments Credit Losses (In thousands) Balance, beginning of period $ 136,281 $ 36,861 $ 173,142 Charge-offs (17,637 ) — (17,637 ) Recoveries 6,393 — 6,393 Net charge-offs (11,244 ) — (11,244 ) Provision (negative provision) 10,000 (2,000 ) 8,000 Balance, end of period $ 135,037 $ 34,861 $ 169,898 Six Months Ended June 30, 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 (21,102 ) — (21,102 ) Recoveries 9,667 — 9,667 Net charge-offs (11,435 ) — (11,435 ) Provision (negative provision) 14,000 (2,000 ) 12,000 Balance, end of period $ 135,037 $ 34,861 $ 169,898 Three Months Ended June 30, 2018 Allowance for Reserve for Total Loan and Unfunded Loan Allowance for Lease Losses Commitments Credit Losses (In thousands) Balance, beginning of period $ 134,275 $ 32,861 $ 167,136 Charge-offs (18,235 ) — (18,235 ) Recoveries 1,099 — 1,099 Net charge-offs (17,136 ) — (17,136 ) Provision 15,000 2,500 17,500 Balance, end of period $ 132,139 $ 35,361 $ 167,500 Six Months Ended June 30, 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 (30,388 ) — (30,388 ) Recoveries 8,297 — 8,297 Net charge-offs (22,091 ) — (22,091 ) Provision 14,774 6,726 21,500 Balance, end of period $ 132,139 $ 35,361 $ 167,500 _______________________________________ (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 six months ended June 30, 2018 |