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: September 30, December 31, 2019 2018 (In thousands) Real estate mortgage $ 7,908,097 $ 7,933,859 Real estate construction and land 2,581,317 2,262,710 Commercial 7,898,042 7,428,500 Consumer 408,555 401,296 Total gross loans and leases held for investment 18,796,011 18,026,365 Deferred fees, net (60,468 ) (68,652 ) Total loans and leases held for investment, net of deferred fees 18,735,543 17,957,713 Allowance for loan and lease losses (138,552 ) (132,472 ) Total loans and leases held for investment, net $ 18,596,991 $ 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: September 30, 2019 30 - 89 90 or More Days Days Total Past Due Past Due Past Due Current Total (In thousands) Real estate mortgage: Commercial $ 2,867 $ 7,137 $ 10,004 $ 4,290,562 $ 4,300,566 Income producing and other residential 4,551 469 5,020 3,591,338 3,596,358 Total real estate mortgage 7,418 7,606 15,024 7,881,900 7,896,924 Real estate construction and land: Commercial — — — 1,009,362 1,009,362 Residential 2,622 — 2,622 1,539,490 1,542,112 Total real estate construction and land 2,622 — 2,622 2,548,852 2,551,474 Commercial: Asset-based 48 662 710 3,810,031 3,810,741 Venture capital — — — 2,209,649 2,209,649 Other commercial 6,742 2,241 8,983 1,849,184 1,858,167 Total commercial 6,790 2,903 9,693 7,868,864 7,878,557 Consumer 795 408 1,203 407,385 408,588 Total $ 17,625 $ 10,917 $ 28,542 $ 18,707,001 $ 18,735,543 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: September 30, 2019 December 31, 2018 Nonaccrual Performing Total Nonaccrual Performing Total (In thousands) Real estate mortgage: Commercial $ 19,515 $ 4,281,051 $ 4,300,566 $ 15,321 $ 4,808,977 $ 4,824,298 Income producing and other residential 2,868 3,593,490 3,596,358 2,524 3,091,319 3,093,843 Total real estate mortgage 22,383 7,874,541 7,896,924 17,845 7,900,296 7,918,141 Real estate construction and land: Commercial 377 1,008,985 1,009,362 442 912,141 912,583 Residential — 1,542,112 1,542,112 — 1,321,073 1,321,073 Total real estate construction and land 377 2,551,097 2,551,474 442 2,233,214 2,233,656 Commercial: Asset-based 33,015 3,777,726 3,810,741 32,324 3,273,097 3,305,421 Venture capital 20,131 2,189,518 2,209,649 20,299 2,018,449 2,038,748 Other commercial 22,554 1,835,613 1,858,167 7,380 2,053,046 2,060,426 Total commercial 75,700 7,802,857 7,878,557 60,003 7,344,592 7,404,595 Consumer 653 407,935 408,588 1,043 400,278 401,321 Total $ 99,113 $ 18,636,430 $ 18,735,543 $ 79,333 $ 17,878,380 $ 17,957,713 At September 30, 2019 , nonaccrual loans and leases totaled $99.1 million and included $10.9 million of loans and leases 90 or more days past due, $6.3 million of loans and leases 30 to 89 days past due, and $81.9 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 September 30, 2019 , our three largest loan relationships on nonaccrual status had an aggregate carrying value of $53.4 million and represented 54% 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. September 30, 2019 Classified Special Mention Pass Total (In thousands) Real estate mortgage: Commercial $ 34,952 $ 39,309 $ 4,226,305 $ 4,300,566 Income producing and other residential 8,670 1,005 3,586,683 3,596,358 Total real estate mortgage 43,622 40,314 7,812,988 7,896,924 Real estate construction and land: Commercial 377 — 1,008,985 1,009,362 Residential — 837 1,541,275 1,542,112 Total real estate construction and land 377 837 2,550,260 2,551,474 Commercial: Asset-based 50,634 41,974 3,718,133 3,810,741 Venture capital 34,489 66,255 2,108,905 2,209,649 Other commercial 58,707 117,931 1,681,529 1,858,167 Total commercial 143,830 226,160 7,508,567 7,878,557 Consumer 778 614 407,196 408,588 Total $ 188,607 $ 267,925 $ 18,279,011 $ 18,735,543 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: September 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 $ 22,383 $ 10,292 $ 32,675 $ 17,845 $ 11,484 $ 29,329 Real estate construction and land 377 4,980 5,357 442 5,420 5,862 Commercial 75,700 980 76,680 60,003 692 60,695 Consumer 653 77 730 1,043 105 1,148 Total $ 99,113 $ 16,329 $ 115,442 $ 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: September 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 $ 485 $ 485 $ 71 $ 1,736 $ 1,648 $ 170 Income producing and other residential 2,032 2,030 177 2,569 2,563 247 Commercial: Asset based 500 500 500 — — — Venture capital 12,379 13,570 6,177 11,621 13,255 3,141 Other commercial 16,969 18,044 2,405 473 482 473 With No Related Allowance Recorded: Real estate mortgage: Commercial $ 22,503 $ 37,568 $ 17,783 $ 32,035 Income producing and other residential 7,655 10,058 7,241 9,425 Real estate construction and land: Commercial 5,357 5,402 5,862 5,870 Commercial: Asset-based 32,515 50,633 32,324 38,100 Venture capital 7,752 39,440 8,678 41,335 Other commercial 6,565 24,868 7,599 25,740 Consumer 730 896 1,148 1,470 Total Loans and Leases With and Without an Allowance Recorded: Real estate mortgage $ 32,675 $ 50,141 $ 248 $ 29,329 $ 45,671 $ 417 Real estate construction and land 5,357 5,402 — 5,862 5,870 — Commercial 76,680 147,055 9,082 60,695 118,912 3,614 Consumer 730 896 — 1,148 1,470 — Total $ 115,442 $ 203,494 $ 9,330 $ 97,034 $ 171,923 $ 4,031 Three Months Ended September 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 $ 485 $ 8 $ 1,781 $ 18 Income producing and other residential 2,031 15 2,494 21 Commercial: Asset-based 163 — — — Venture capital 12,343 — 28,322 — Other commercial 2,181 9 1,360 — With No Related Allowance Recorded: Real estate mortgage: Commercial $ 19,745 $ 56 $ 34,155 $ 129 Income producing and other residential 7,615 56 7,906 45 Real estate construction and land: Commercial 5,357 98 5,533 95 Residential — — — — Commercial: Asset-based 30,880 — 34,618 — Venture capital 7,752 — 1,421 — Other commercial 6,096 6 8,108 25 Consumer 568 1 383 2 Total Loans and Leases With and Without an Allowance Recorded: Real estate mortgage $ 29,876 $ 135 $ 46,336 $ 213 Real estate construction and land 5,357 98 5,533 95 Commercial 59,415 15 73,829 25 Consumer 568 1 383 2 Total $ 95,216 $ 249 $ 126,081 $ 335 _________________________ (1) For loans and leases reported as impaired at September 30, 2019 and 2018 , amounts were calculated based on the period of time such loans and leases were impaired during the reported period. Nine Months Ended September 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 $ 485 $ 24 $ 1,781 $ 55 Income producing and other residential 2,031 44 2,494 62 Commercial: Asset-based 55 — — — Venture capital 9,201 — 17,459 — Other commercial 1,125 26 688 — With No Related Allowance Recorded: Real estate mortgage: Commercial $ 16,729 $ 162 $ 32,098 $ 376 Income producing and other residential 7,488 163 7,845 132 Real estate construction and land: Commercial 5,357 290 5,533 283 Commercial: Asset-based 29,989 — 34,618 — Venture capital 6,173 — 1,330 — Other commercial 5,606 22 7,417 70 Consumer 493 4 373 6 Total Loans and Leases With and Without an Allowance Recorded: Real estate mortgage $ 26,733 $ 393 $ 44,218 $ 625 Real estate construction and land 5,357 290 5,533 283 Commercial 52,149 48 61,512 70 Consumer 493 4 373 6 Total $ 84,732 $ 735 $ 111,636 $ 984 _________________________ (1) For loans and leases reported as impaired at September 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 September 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 — $ — $ — 4 $ 2,889 $ 712 Income producing and other residential 2 495 495 5 912 912 Commercial: Asset-based — — — 4 28,947 33,947 Venture capital 1 — — 5 23,501 23,501 Other commercial 3 99 99 5 1,487 1,115 Total 6 $ 594 $ 594 23 $ 57,736 $ 60,187 Nine Months Ended September 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 $ — 4 $ 2,889 $ 712 Income producing and other residential 7 1,280 1,280 8 2,616 1,557 Commercial: Asset-based 1 620 620 4 28,947 33,947 Venture capital 11 16,076 16,214 9 28,737 28,737 Other commercial 14 792 792 9 13,301 12,929 Consumer — — — 1 27 27 Total 34 $ 18,805 $ 18,906 35 $ 76,517 $ 77,909 During the three months ended September 30, 2019 , there were three other commercial loans totaling $133,000 and one income producing and other residential loan for $254,000 restructured in the preceding 12-month period that subsequently defaulted. During the nine months ended September 30, 2019 , there were two venture capital loans totaling $441,000 , three other commercial loans totaling $133,000 , and one income producing and other residential loan for $254,000 restructured in the preceding 12-month period that subsequently defaulted. During the three months ended September 30, 2018 , there were no loans restructured in the preceding 12-month period that subsequently defaulted. During the nine months ended September 30, 2018 , there were no loans restructured in the preceding 12-month period that subsequently defaulted. 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 accounting for 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 Nine Months Ended September 30, 2019 September 30, 2019 (In thousands) Component of leases receivable income: Interest income on net investments in leases $ 2,648 $ 8,674 The following table presents the components of leases receivable as of the date indicated: September 30, 2019 (In thousands) Net investment in direct financing leases: Lease payments receivable $ 166,692 Unguaranteed residual assets 21,315 Deferred fees and other 747 Aggregate net investment in leases $ 188,754 The following table presents maturities of leases receivable as of the date indicated: September 30, 2019 (In thousands) Period Ending December 31, 2019 $ 17,353 2020 72,465 2021 51,242 2022 19,819 2023 11,735 Thereafter 9,105 Total undiscounted cash flows 181,719 Less: Unearned income (15,027 ) Present value of lease payments $ 166,692 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 September 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 $ 46,826 $ 26,378 $ 59,401 $ 2,432 $ 135,037 Charge-offs (120 ) — (6,021 ) (360 ) (6,501 ) Recoveries 95 — 1,898 23 2,016 Net charge-offs (25 ) — (4,123 ) (337 ) (4,485 ) (Negative provision) provision (1,655 ) 683 8,907 65 8,000 Balance, end of period $ 45,146 $ 27,061 $ 64,185 $ 2,160 $ 138,552 Nine Months Ended September 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 (850 ) — (25,951 ) (802 ) (27,603 ) Recoveries 478 — 11,084 121 11,683 Net charge-offs (372 ) — (14,867 ) (681 ) (15,920 ) (Negative provision) provision (503 ) (1,148 ) 22,692 959 22,000 Balance, end of period $ 45,146 $ 27,061 $ 64,185 $ 2,160 $ 138,552 Ending Allowance by Impairment Methodology: Individually evaluated for impairment $ 248 $ — $ 9,082 $ — $ 9,330 Collectively evaluated for impairment $ 44,898 $ 27,061 $ 55,103 $ 2,160 $ 129,222 Ending Loans and Leases by Impairment Methodology: Individually evaluated for impairment $ 29,808 $ 5,357 $ 75,455 $ — $ 110,620 Collectively evaluated for impairment 7,867,116 2,546,117 7,803,102 408,588 18,624,923 Ending balance $ 7,896,924 $ 2,551,474 $ 7,878,557 $ 408,588 $ 18,735,543 Three Months Ended September 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 $ 45,467 $ 26,210 $ 58,806 $ 1,656 $ 132,139 Charge-offs (726 ) — (2,372 ) (210 ) (3,308 ) Recoveries 222 23 1,303 41 1,589 Net (charge-offs) recoveries (504 ) 23 (1,069 ) (169 ) (1,719 ) Provision (negative provision) 1,394 (47 ) 9,907 246 11,500 Balance, end of period $ 46,357 $ 26,186 $ 67,644 $ 1,733 $ 141,920 Nine Months Ended September 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 (8,071 ) — (25,321 ) (304 ) (33,696 ) Recoveries 1,999 49 7,702 136 9,886 Net (charge-offs) recoveries (6,072 ) 49 (17,619 ) (168 ) (23,810 ) Provision (negative provision) 12,378 13,082 1,241 (427 ) 26,274 Balance, end of period $ 46,357 $ 26,186 $ 67,644 $ 1,733 $ 141,920 Ending Allowance by Impairment Methodology: Individually evaluated for impairment $ 496 $ — $ 20,363 $ — $ 20,859 Collectively evaluated for impairment $ 45,861 $ 26,186 $ 47,281 $ 1,733 $ 121,061 Ending Loans and Leases by Impairment Methodology: Individually evaluated for impairment $ 44,985 $ 5,533 $ 79,493 $ — $ 130,011 Collectively evaluated for impairment 7,633,675 1,995,424 7,072,565 398,471 17,100,135 Ending balance $ 7,678,660 $ 2,000,957 $ 7,152,058 $ 398,471 $ 17,230,146 _______________________________________ (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 nine months ended September 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 September 30, 2019 Allowance for Reserve for Total Loan and Unfunded Loan Allowance for Lease Losses Commitments Credit Losses (In thousands) Balance, beginning of period $ 135,037 $ 34,861 $ 169,898 Charge-offs (6,501 ) — (6,501 ) Recoveries 2,016 — 2,016 Net charge-offs (4,485 ) — (4,485 ) Provision (negative provision) 8,000 (1,000 ) 7,000 Balance, end of period $ 138,552 $ 33,861 $ 172,413 Nine Months Ended September 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 (27,603 ) — (27,603 ) Recoveries 11,683 — 11,683 Net charge-offs (15,920 ) — (15,920 ) Provision (negative provision) 22,000 (3,000 ) 19,000 Balance, end of period $ 138,552 $ 33,861 $ 172,413 Three Months Ended September 30, 2018 Allowance for Reserve for Total Loan and Unfunded Loan Allowance for Lease Losses Commitments Credit Losses (In thousands) Balance, beginning of period $ 132,139 $ 35,361 $ 167,500 Charge-offs (3,308 ) — (3,308 ) Recoveries 1,589 — 1,589 Net charge-offs (1,719 ) — (1,719 ) Provision 11,500 — 11,500 Balance, end of period $ 141,920 $ 35,361 $ 177,281 Nine Months Ended September 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 (33,696 ) — (33,696 ) Recoveries 9,886 — 9,886 Net charge-offs (23,810 ) — (23,810 ) Provision 26,274 6,726 33,000 Balance, end of period $ 141,920 $ 35,361 $ 177,281 _______________________________________ (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 nine months ended September 30, 2018 |