Loans | NOTE 7: Loans The following table sets forth information concerning the loan portfolio by collateral types as of the dates indicated. September 30, 2019 December 31, 2018 Loans excluding PCI loans Real estate loans Residential $2,480,415 $1,702,114 Commercial 6,213,349 4,454,098 Land, development and construction 1,056,643 635,562 Total real estate 9,750,407 6,791,774 Commercial, industrial & factored receivables 1,768,259 1,183,380 Consumer and other loans 250,088 203,686 Loans before unearned fees and deferred cost 11,768,754 8,178,840 Net unearned fees and costs 4,670 2,693 Total loans excluding PCI loans 11,773,424 8,181,533 PCI loans (note 1) Real estate loans Residential 49,704 58,804 Commercial 84,076 87,336 Land, development and construction 5,058 7,028 Total real estate 138,838 153,168 Commercial and industrial 4,007 5,594 Consumer and other loans 137 209 Total PCI loans 142,982 158,971 Total loans 11,916,406 8,340,504 Allowance for loan losses for loans that are not PCI loans (41,758) (39,579) Allowance for loan losses for PCI loans (233) (191) Total loans, net of allowance for loan losses $11,874,415 $8,300,734 n ote 1: Purchased credit impaired (“PCI”) loans are being accounted for pursuant to ASC Topic 310-30. The table below set forth the activity in the allowance for loan losses for the periods presented. Allowance for loan losses for loans that are not PCI loans Allowance for loan losses on PCI loans Total Three-month ended September 30, 2019 Balance at beginning of period $40,455 $198 $40,653 Loans charged-off (3,961) — (3,961) Recoveries of loans previously charged-off 1,607 — 1,607 Net charge-offs (2,354) — (2,354) Provision for loan losses 3,657 35 3,692 Balance at end of period $41,758 $233 $41,991 Three-month ended September 30, 2018 Balance at beginning of period $37,209 $275 $37,484 Loans charged-off (1,178) — (1,178) Recoveries of loans previously charged-off 555 — 555 Net charge-offs (623) — (623) Provision for loan losses 2,009 (59) 1,950 Balance at end of period $38,595 $216 $38,811 Allowance for loan losses for loans that are not PCI loans Allowance for loan losses on PCI loans Total Nine-month ended September 30, 2019 Balance at beginning of period $39,579 $191 $39,770 Loans charged-off (8,733) — (8,733) Recoveries of loans previously charged-off 3,417 — 3,417 Net charge-offs (5,316) — (5,316) Provision for loan losses 7,495 42 7,537 Balance at end of period $41,758 $233 $41,991 Nine-month ended September 30, 2018 Balance at beginning of period $32,530 $295 $32,825 Loans charged-off (2,170) — (2,170) Recoveries of loans previously charged-off 1,898 75 1,973 Net (charge-offs) recoveries (272) 75 (197) Provision for loan losses 6,337 (154) 6,183 Balance at end of period $38,595 $216 $38,811 The following tables present the activity in the allowance for loan losses by portfolio segment for the periods presented. Real Estate Loans Residential Commercial Land, develop., constr. Comm., industrial & factored receivables Consumer & other Total Allowance for loan losses for loans that are not PCI loans: Three-month ended September 30, 2019 Beginning of the period $5,729 $20,937 $2,490 $7,942 $3,357 $40,455 Charge-offs (2) (136) (11) (3,049) (763) (3,961) Recoveries 87 797 1 577 145 1,607 Provision for loan losses (885) (1,851) 196 5,256 941 3,657 Balance at end of period $4,929 $19,747 $2,676 $10,726 $3,680 $41,758 Three-month ended September 30, 2018 Beginning of the period $5,847 $21,921 $1,629 $5,412 $2,400 $37,209 Charge-offs (283) — (62) (327) (506) (1,178) Recoveries 217 113 2 152 71 555 Provision for loan losses 71 916 21 404 597 2,009 Balance at end of period $5,852 $22,950 $1,590 $5,641 $2,562 $38,595 Real Estate Loans Residential Commercial Land, develop., constr. Comm., industrial & factored receivables Consumer & other Total Allowance for loan losses for loans that are PCI loans: Three-month ended September 30, 2019 Beginning of the period $7 $ — $177 $ — $14 $198 Charge-offs — — — — — — Recoveries — — — — — — Provision for loan losses — — — — 35 35 Balance at end of period $7 $ — $177 $ — $49 $233 Three-month ended September 30, 2018 Beginning of the period $ — $59 $202 $ — $14 $275 Charge-offs — — — — — — Recoveries — — — — — — Provision for loan losses — (59) — — — (59) Balance at end of period $ — $ — $202 $ — $14 $216 Real Estate Loans Residential Commercial Land, develop., constr. Comm., industrial & factored receivables Consumer & other Total Allowance for loan losses for loans that are not PCI loans: Nine-month ended September 30, 2019 Beginning of the period $5,518 $22,978 $1,781 $6,414 $2,888 $39,579 Charge-offs (621) (140) (42) (5,486) (2,444) (8,733) Recoveries 504 1,015 85 1,354 459 3,417 Provision for loan losses (472) (4,106) 852 8,444 2,777 7,495 Balance at end of period $4,929 $19,747 $2,676 $10,726 $3,680 $41,758 Nine-month ended September 30, 2018 Beginning of the period $6,003 $19,304 $1,179 $4,130 $1,914 $32,530 Charge-offs (419) — (62) (555) (1,134) (2,170) Recoveries 855 569 3 214 257 1,898 Provision for loan losses (587) 3,077 470 1,852 1,525 6,337 Balance at end of period $5,852 $22,950 $1,590 $5,641 $2,562 $38,595 Real Estate Loans Residential Commercial Land, develop., constr. Comm., industrial & factored receivables Consumer & other Total Allowance for loan losses for loans that are PCI loans: Nine-month ended September 30, 2019 Beginning of the period $ — $ — $177 $ — $14 $191 Charge-offs — — — — — — Recoveries — — — — — — Provision for loan losses 7 — — — 35 42 Balance at end of period $7 $ — $177 $ — $49 $233 Nine-month ended September 30, 2018 Beginning of the period $ — $59 $222 $ — $14 $295 Charge-offs — — — — — — Recoveries — — — 75 — 75 Provision for loan losses — (59) (20) (75) — (154) Balance at end of period $ — $ — $202 $ — $14 $216 The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2019 and December 31, 2018. Accrued interest receivable and unearned loan fees and costs are not included in the recorded investment because they are not material. Real Estate Loans Residential Commercial Land, develop., constr. Comm., industrial & factored receivables Consumer & other Total As of September 30, 2019 Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $573 $218 $ — $2,508 $ — $3,299 Collectively evaluated for impairment 4,356 19,529 2,676 8,218 3,680 38,459 Purchased credit impaired 7 — 177 — 49 233 Total ending allowance balance $4,936 $19,747 $2,853 $10,726 $3,729 $41,991 Loans: Individually evaluated for impairment $7,028 $12,603 $179 $9,786 $105 $29,701 Collectively evaluated for impairment 2,473,387 6,200,746 1,056,464 1,758,473 249,983 11,739,053 Purchased credit impaired 49,704 84,076 5,058 4,007 137 142,982 Total ending loan balances $2,530,119 $6,297,425 $1,061,701 $1,772,266 $250,225 $11,911,736 Real Estate Loans Residential Commercial Land, develop., constr. Comm. & industrial Consumer & other Total As of December 31, 2018 Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $331 $250 $ — $1,034 $1 $1,616 Collectively evaluated for impairment 5,187 22,728 1,781 5,380 2,887 37,963 Purchased credit impaired — — 177 — 14 191 Total ending allowance balance $5,518 $22,978 $1,958 $6,414 $2,902 $39,770 Loans: Individually evaluated for impairment $6,234 $7,496 $117 $1,708 $145 $15,700 Collectively evaluated for impairment 1,695,880 4,446,602 635,445 1,181,672 203,541 8,163,140 Purchased credit impaired 58,804 87,336 7,028 5,594 209 158,971 Total ending loan balances $1,760,918 $4,541,434 $642,590 $1,188,974 $203,895 $8,337,811 The table below summarizes impaired loan data for the periods presented. September 30, 2019 December 31, 2018 Performing TDRs (these are not included in nonperforming loans ("NPLs")) $8,375 $8,475 Nonperforming TDRs (these are included in NPLs) 5,156 1,002 Total TDRs (these are included in impaired loans) 13,531 9,477 Impaired loans that are not TDRs 16,170 6,223 Total impaired loans $29,701 $15,700 Troubled Debt Restructurings: In certain situations, it is common to restructure or modify the terms of troubled loans (i.e. troubled debt restructure or “TDRs”). In those circumstances, it may be beneficial to restructure the terms of a loan and work with the borrower for the benefit of both parties, versus forcing the property into foreclosure and having to dispose of it in a distressed sale. When the terms of a loan have been modified, usually the monthly payment and/or interest rate is reduced for generally twelve to twenty-four months. The Company has not forgiven any material principal amounts on any loan modifications to date. TDRs as of September 30, 2019 and December 31, 2018 quantified by loan type classified separately as accrual (performing loans) and non-accrual (non-performing loans) are presented in the tables below. Accruing Non-Accrual Total As of September 30, 2019 Real estate loans: Residential $5,160 $926 $6,086 Commercial 1,727 — 1,727 Land, development, construction 179 — 179 Total real estate loans 7,066 926 7,992 Commercial and industrial 1,204 4,230 5,434 Consumer and other 105 — 105 Total TDRs $8,375 $5,156 $13,531 Accruing Non-Accrual Total As of December 31, 2018 Real estate loans: Residential $5,848 $386 $6,234 Commercial 1,837 566 2,403 Land, development, construction 77 41 118 Total real estate loans 7,762 993 8,755 Commercial and industrial 577 — 577 Consumer and other 136 9 145 Total TDRs $8,475 $1,002 $9,477 The Company’s policy is to return non-accrual TDR loans to accrual status when all the principal and interest amounts contractually due, pursuant to its modified terms, are brought current and future payments are reasonably assured. Our policy also considers the payment history of the borrower, but is not dependent upon a specific number of payments. The Company recorded a provision for loan loss expense of $488 and $612 and partial charge offs of $52 and $79 on the TDR loans described above during the three and nine-month periods ending September 30, 2019, respectively. The Company recorded a provision Loans are modified to minimize loan losses when we believe the modification will improve the borrower’s financial condition and ability to repay the loan. We typically do not forgive principal. We generally either reduce interest rates or decrease monthly payments for a temporary period of time and those reductions of cash flows are capitalized into the loan balance. We may also extend maturities, convert balloon loans to longer-term amortizing loans, or vice versa, or change interest rates between variable and fixed rate. Each borrower and situation is unique and we try to accommodate the borrower and minimize the Company’s potential losses. Approximately 62% of our TDRs are current pursuant to their modified terms, and $5,156, or approximately 38% of our total TDRs are not performing pursuant to their modified terms. There does not appear to be any significant difference in success rates with one type of concession versus another. Loans modified as TDRs during the three and nine-month periods ending September 30, 2019 were $715 and $5,948, respectively. Loans modified as TDRs during nine-month period ending September 30, 2019 of $5,948 include $3,429 of previously modified government guaranteed loans that were under loan participation agreements and repurchased by the Company during the current quarter. Loans modified as TDRs during the three and nine-month periods ending September 30, 2018 were $616 and $1,838, respectively. The Company recorded $322 and $582 loan loss provision for loans modified during the three and nine-month periods ending September 30, 2019. The Company recorded $16 and $19 loan loss provision for loans modified during the three and nine-month periods ending September 30, 2018. The following table presents loans by class modified and for which there was a payment default within twelve months following the modification during the periods ending September 30, 2019 and 2018. Period ending Period ending September 30, 2019 September 30, 2018 Number Recorded Number Recorded of loans investment of loans investment Residential — $ — 1 $191 Commercial real estate — — 1 116 Land, development, construction — — — — Commercial and industrial — — — — Consumer and other — — — — Total — $ — 2 $307 The Company recorded no provision for loan loss expense related to TDRs for three and nine-month periods ending September 30, 2019. The Company recorded no partial charge offs on TDR loans subsequently defaulted during the three and nine-month periods ending September 30, 2019. The Company recorded a provision for loan loss expense of $18 and $24 and partial charge offs of $5 and $10 on TDR loans that subsequently defaulted as described above during the three and nine-month periods ending September 30, 2018. The following tables present loans individually evaluated for impairment by class of loans as of September 30, 2019 and December 31, 2018, excluding purchased credit impaired loans accounted for pursuant to ASC Topic 310-30. The recorded investment is less than the unpaid principal balance due to partial charge-offs. Unpaid principal balance Recorded investment Allowance for loan losses allocated As of September 30, 2019 With no related allowance recorded: Residential real estate $3,565 $3,438 $ — Commercial real estate 12,729 11,826 — Land, development, construction 189 179 — Commercial and industrial 1,929 1,486 — Consumer, other 80 79 — With an allowance recorded: Residential real estate 3,789 3,590 573 Commercial real estate 780 777 218 Land, development, construction — — — Commercial and industrial 8,407 8,300 2,508 Consumer, other 31 26 — Total $31,499 $29,701 $3,299 Unpaid principal balance Recorded investment Allowance for loan losses allocated As of December 31, 2018 With no related allowance recorded: Residential real estate $3,608 $3,485 $ — Commercial real estate 6,447 5,906 — Land, development, construction 144 117 — Commercial and industrial 364 353 — Consumer, other 109 108 — With an allowance recorded: Residential real estate 2,897 2,749 331 Commercial real estate 1,593 1,590 250 Land, development, construction — — — Commercial and industrial 1,378 1,355 1,034 Consumer, other 53 37 1 Total $16,593 $15,700 $1,616 Average of impaired loans Interest income recognized during impairment Cash basis interest income recognized Three-month ended September 30, 2019 Real estate loans: Residential $6,296 $54 $ — Commercial 10,040 23 — Land, development, construction 126 2 — Total real estate loans 16,462 79 — Commercial and industrial 6,871 16 — Consumer and other loans 118 2 — Total $23,451 $97 $ — Average of impaired loans Interest income recognized during impairment Cash basis interest income recognized Nine-month ended September 30, 2019 Real estate loans: Residential $5,951 $175 $ — Commercial 8,543 78 — Land, development, construction 112 5 — Total real estate loans 14,606 258 — Commercial and industrial 4,414 43 — Consumer and other loans 130 6 — Total $19,150 $307 $ — Average of impaired loans Interest income recognized during impairment Cash basis interest income recognized Three-month ended September 30, 2018 Real estate loans: Residential $7,328 $79 $ — Commercial 7,674 25 — Land, development, construction 961 2 — Total real estate loans 15,963 106 — Commercial and industrial 1,596 9 — Consumer and other loans 165 2 — Total $17,724 $117 $ — Average of impaired loans Interest income recognized during impairment Cash basis interest income recognized Nine-month ended September 30, 2018 Real estate loans: Residential $15,306 $308 $ — Commercial 2,586 25 — Land, development, construction 324 2 — Total real estate loans 18,216 335 — Commercial and industrial 538 9 — Consumer and other loans 56 2 — Total $18,810 $346 $ — Nonperforming loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans, excluding purchased credit impaired loans accounted for pursuant to ASC Topic 310-30. All loans greater than 90 days past due are placed on non-accrual status, excluding factored receivables. For CBI’s factored receivables, which are commercial trade credits rather than promissory notes, the Company’s practice, in most cases, is to charge-off unpaid recourse receivables when they become 90 days past due from the invoice due date and the non-recourse receivables when they become 120 days past due from the statement billing date. Nonperforming loans were as follows: September 30, 2019 December 31, 2018 Non-accrual loans $39,048 $23,567 Loans past due over 90 days and still accruing interest 473 — Total nonperforming loans $39,521 $23,567 The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days still on accrual by class of loans as of September 30, 2019 and December 31, 2018, excluding purchased credit impaired loans: Non-accrual Loans past due over 90 days still accruing As of September 30, 2019 Residential real estate $14,011 $ — Commercial real estate 13,433 — Land, development, construction 737 — Comm., industrial & factored receivables 10,025 473 Consumer, other 842 — Total $39,048 $473 Non-accrual Loans past due over 90 days still accruing As of December 31, 2018 Residential real estate $11,488 $ — Commercial real estate 8,445 — Land, development, construction 795 — Commercial and industrial 2,274 — Consumer, other 565 — Total $23,567 $ — The following table presents the aging of the recorded investment in past due loans as of September 30, 2019 and December 31, 2018, excluding purchased credit impaired loans. The increase in past due loans is primarily due to factored commercial receivables: Accruing Loans As of September 30, 2019 Total 30 - 59 days past due 60 - 89 days past due Greater than 90 days past due Total Past Due Loans Not Past Due Nonaccrual Loans Residential real estate $2,480,415 $5,831 $4,402 $ — $10,233 $2,456,171 $14,011 Commercial real estate 6,213,349 6,911 6,065 — 12,976 6,186,940 13,433 Land, development, construction 1,056,643 7,514 2,486 — 10,000 1,045,906 737 Comm., industrial & factored receivables 1,768,259 20,901 3,125 473 24,499 1,733,735 10,025 Consumer 250,088 2,245 1,338 — 3,583 245,663 842 $11,768,754 $43,402 $17,416 $473 $61,291 $11,668,415 $39,048 Accruing Loans As of December 31, 2018 Total 30 - 59 days past due 60 - 89 days past due Greater than 90 days past due Total Past Due Loans Not Past Due Nonaccrual Loans Residential real estate $1,702,114 $5,730 $5,631 $ — $11,360 $1,679,266 $11,488 Commercial real estate 4,454,098 10,840 4,607 — 15,446 4,430,207 8,445 Land, development, construction 635,562 661 4,022 — 4,683 630,084 795 Comm. & industrial 1,183,380 2,803 878 — 3,681 1,177,425 2,274 Consumer 203,686 1,061 271 — 1,332 201,789 565 $8,178,840 $21,094 $15,408 $ — $36,502 $8,118,771 $23,567 Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as; current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on at least an annual basis. The Company uses the following definitions for risk ratings: Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of September 30, 2019 and December 31, 2018 , and based on the most recent analysis performed, the risk category of loans by class of loans, excluding purchased credit-impaired loans accounted for pursuant to ASC Topic 310-30, is presented below. As of September 30, 2019 Loan Category Pass Special Mention Substandard Doubtful Residential real estate $2,419,733 $32,027 $28,655 $ — Commercial real estate 6,033,588 123,748 56,013 — Land, development, construction 1,045,059 8,283 3,301 — Comm., industrial & factored receivables 1,711,066 40,672 16,521 — Consumer 248,725 175 1,188 — Total $11,458,171 $204,905 $105,678 $ — As of December 31, 2018 Loan Category Pass Special Mention Substandard Doubtful Residential real estate $1,633,810 $41,522 $26,782 $ — Commercial real estate 4,246,687 160,981 46,430 — Land, development, construction 610,631 20,586 4,345 — Comm. & industrial 1,137,272 40,836 5,272 — Consumer 202,701 247 738 — Total $7,831,100 $264,172 $83,568 $ — The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in residential and consumer loans, excluding purchased credit impaired loans, based on payment activity as of September 30, 2019 and December 31, 2018 : As of September 30, 2019 Residential Consumer Performing $2,466,404 $249,246 Nonperforming 14,011 842 Total $2,480,415 $250,088 As of December 31, 2018 Residential Consumer Performing $1,690,626 $203,121 Nonperforming 11,488 565 Total $1,702,114 $203,686 Purchased Credit Impaired (“PCI”) loans: Income is recognized on PCI loans pursuant to ASC Topic 310-30. A portion of the fair value discount has been ascribed as an accretable yield that is accreted into interest income over the estimated remaining life of the loans. The remaining non-accretable difference represents cash flows not expected to be collected. The table below summarizes the total contractually required principal and interest cash payments, management’s estimate of expected total cash payments and carrying value of the loans as of September 30, 2019 and December 31, 2018. Contractually required principal and interest payments have been adjusted for estimated prepayments. September 30, 2019 December 31, 2018 Contractually required principal and interest $260,420 $267,815 Non-accretable difference (48,779) (38,602) Cash flows expected to be collected 211,641 229,213 Accretable yield (68,659) (70,242) Carrying value of acquired loans 142,982 158,971 Allowance for loan losses (233) (191) Carrying value less allowance for loan losses $142,749 $158,780 The Company adjusted its estimates of future expected losses, cash flows and renewal assumptions during the current quarter. These adjustments resulted in an increase in expected cash flows and accretable yield, and a decrease in the non-accretable difference. The Company reclassified $6,019, $4,529, $16,684 and $8,443 from non-accretable difference to accretable yield during the three and nine-month periods ending September 30, 2019 and 2018 to reflect its adjusted estimates of future expected cash flows. The table below summarizes the changes in total contractually required principal and interest cash payments, management’s estimate of expected total cash payments and carrying value of the loans during the three and nine-month periods ending September 30, 2019 and 2018. Activity during the Effect of income all other three-month period ending September 30, 2019 June 30, 2019 acquisitions accretion adjustments September 30, 2019 Contractually required principal and interest $283,501 $ — $ — $(23,081) $260,420 Non-accretable difference (56,084) — — 7,305 (48,779) Cash flows expected to be collected 227,417 — — (15,776) 211,641 Accretable yield (70,114) — 7,651 (6,196) (68,659) Carry value of acquired loans $157,303 $ — $7,651 $(21,972) $142,982 Activity during the Effect of income all other nine-month period ending September 30, 2019 December 31, 2018 acquisitions accretion adjustments September 30, 2019 Contractually required principal and interest $267,815 $51,527 $ — $(58,922) $260,420 Non-accretable difference (38,602) (29,187) — 19,010 (48,779) Cash flows expected to be collected 229,213 22,340 — (39,912) 211,641 Accretable yield (70,242) (3,724) 25,541 (20,234) (68,659) Carry value of acquired loans $158,971 $18,616 $25,541 $(60,146) $142,982 Activity during the Effect of income all other three-month period ending September 30, 2018 June 30, 2018 acquisitions accretion adjustments September 30, 2018 Contractually required principal and interest $285,576 $33,687 $ — $(24,985) $294,278 Non-accretable difference (44,166) (20,763) — 5,496 (59,433) Cash flows expected to be collected 241,410 12,924 — (19,489) 234,845 Accretable yield (67,460) (1,492) 7,682 (5,904) (67,174) Carry value of acquired loans $173,950 $11,432 $7,682 $(25,393) $167,671 Activity during the Effect of income all other nine-month period ending September 30, 2018 December 31, 2017 acquisitions accretion adjustments September 30, 2018 Contractually required principal and interest $248,283 $122,392 $ — $(76,397) $294,278 Non-accretable difference (13,183) (58,927) — 12,677 (59,433) Cash flows expected to be collected 235,100 63,465 — (63,720) 234,845 Accretable yield (70,942) (7,770) 26,496 (14,958) (67,174) Carry value of acquired loans $164,158 $55,695 $26,496 $(78,678) $167,671 |