Loans Receivable and Allowance for Loan Losses | 9 Months Ended |
Sep. 30, 2014 |
Receivables [Abstract] | ' |
Loans Receivable and Allowance for Loan Losses | ' |
NOTE 8 — LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES |
The following table presents loans receivable as of September 30, 2014 and December 31, 2013: |
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| | September 30, | | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2014 | 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | $ | 6,755 | | | $ | 14,627 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate/multi-family | | | 18,366 | | | | 24,258 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 3,520 | | | | 5,814 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | 12,769 | | | | 18,733 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Manufactured housing | | | 3,053 | | | | 3,293 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total loans receivable covered under FDIC loss sharing agreements (1) | | | 44,463 | | | | 66,725 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | 56,603 | | | | 36,901 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate/multi-family | | | 3,153,980 | | | | 1,835,186 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 432,917 | | | | 239,509 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage warehouse | | | 8 | | | | 866 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Manufactured housing | | | 129,798 | | | | 139,471 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | 290,621 | | | | 145,188 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 1,684 | | | | 2,144 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total loans receivable not covered under FDIC loss sharing agreements | | | 4,065,611 | | | | 2,399,265 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans receivable | | | 4,110,074 | | | | 2,465,990 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deferred (fees) costs, net (2) | | | 61 | | | | (912 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | | (31,083 | ) | | | (23,998 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Loans receivable, net | | $ | 4,079,052 | | | $ | 2,441,080 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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-1 | Loans that were acquired in two FDIC-assisted transactions and are covered under loss sharing agreements with the FDIC are referred to as “covered” loans throughout these financial statements. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-2 | Includes $3.5 million and $0.6 million of unamortized premiums on purchased loans at September 30, 2014 and December 31, 2013, respectively. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Non-Covered Loans |
The following tables summarize non-covered loans by class and performance status as of September 30, 2014 and December 31, 2013: |
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| | September 30, 2014 | | | | | | | | | |
| | 30-89 Days | | | 90 Days | | | Total Past | | | Non- | | | Current (2) | | | Purchased- | | | Total | | | | | | | | | |
Past Due (1) | Or More | Due (1) | Accrual | Credit- | Loans (4) | | | | | | | | |
| Past Due(1) | | | Impaired | | | | | | | | | |
| | | | Loans (3) | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 405 | | | $ | 0 | | | $ | 405 | | | $ | 1,956 | | | $ | 429,358 | | | $ | 1,198 | | | $ | 432,917 | | | | | | | | | |
Commercial real estate | | | 146 | | | | 0 | | | | 146 | | | | 5,523 | | | | 3,115,862 | | | | 32,449 | | | | 3,153,980 | | | | | | | | | |
Construction | | | 0 | | | | 0 | | | | 0 | | | | 451 | | | | 55,925 | | | | 227 | | | | 56,603 | | | | | | | | | |
Residential real estate | | | 585 | | | | 0 | | | | 585 | | | | 1,070 | | | | 279,390 | | | | 9,576 | | | | 290,621 | | | | | | | | | |
Consumer | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 1,420 | | | | 264 | | | | 1,684 | | | | | | | | | |
Mortgage warehouse | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 8 | | | | 0 | | | | 8 | | | | | | | | | |
Manufactured housing (5) | | | 6,652 | | | | 4,082 | | | | 10,734 | | | | 895 | | | | 114,055 | | | | 4,114 | | | | 129,798 | | | | | | | | | |
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Total | | $ | 7,788 | | | $ | 4,082 | | | $ | 11,870 | | | $ | 9,895 | | | $ | 3,996,018 | | | $ | 47,828 | | | $ | 4,065,611 | | | | | | | | | |
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| | December 31, 2013 | | | | | | | | | |
| | 30-89 Days | | | 90 Days | | | Total Past | | | Non- | | | Current (2) | | | Purchased- | | | Total | | | | | | | | | |
Past Due (1) | Or More | Due (1) | Accrual | Credit- | Loans (4) | | | | | | | | |
| Past Due(1) | | | Impaired | | | | | | | | | |
| | | | Loans (3) | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 10 | | | $ | 0 | | | $ | 10 | | | $ | 123 | | | $ | 237,453 | | | $ | 1,923 | | | $ | 239,509 | | | | | | | | | |
Commercial real estate | | | 0 | | | | 0 | | | | 0 | | | | 9,924 | | | | 1,788,144 | | | | 37,118 | | | | 1,835,186 | | | | | | | | | |
Construction | | | 0 | | | | 0 | | | | 0 | | | | 2,049 | | | | 33,922 | | | | 930 | | | | 36,901 | | | | | | | | | |
Residential real estate | | | 555 | | | | 0 | | | | 555 | | | | 969 | | | | 133,158 | | | | 10,506 | | | | 145,188 | | | | | | | | | |
Consumer | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 1,728 | | | | 416 | | | | 2,144 | | | | | | | | | |
Mortgage warehouse | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 866 | | | | 0 | | | | 866 | | | | | | | | | |
Manufactured housing (5) | | | 7,921 | | | | 3,772 | | | | 11,693 | | | | 448 | | | | 122,416 | | | | 4,914 | | | | 139,471 | | | | | | | | | |
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Total | | $ | 8,486 | | | $ | 3,772 | | | $ | 12,258 | | | $ | 13,513 | | | $ | 2,317,687 | | | $ | 55,807 | | | $ | 2,399,265 | | | | | | | | | |
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-1 | Includes past due loans that are accruing interest because collection is considered probable. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-2 | Loans where next payment due is less than 30 days from the report date. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-3 | Purchased-credit-impaired loans aggregated into a pool are accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, and the past due status of the pools, or that of the individual loans within the pools, is not meaningful. Because of the credit impaired nature of the loans, the loans are recorded at a discount reflecting estimated future cash flows and the Bank recognizes interest income on each pool of loans reflecting the estimated yield and passage of time. Such loans are considered to be performing. Purchased-credit-impaired loans that are not in pools accrete interest when the timing and amount of their expected cash flows are reasonably estimable, and are reported as performing loans. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-4 | Amounts exclude deferred costs and fees and the allowance for loan losses. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-5 | Manufactured housing loans purchased in 2010 are subject to cash reserves held at the Bank that are used to fund past-due payments when the loan becomes 90 days or more delinquent. Subsequent purchases are subject to varying provisions in the event of borrowers’ delinquencies. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Covered Loans |
The following tables summarize covered loans by class and performance status as of September 30, 2014 and December 31, 2013: |
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| | September 30, 2014 | | | | | | | | | |
| | 30-89 Days | | | 90 Days | | | Total Past | | | Non- | | | Current (2) | | | Purchased | | | Total | | | | | | | | | |
Past Due (1) | Or More | Due (1) | Accrual | - Credit | Loans (4) | | | | | | | | |
| Past Due (1) | | | Impaired | | | | | | | | | |
| | | | Loans (3) | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 217 | | | $ | 2,961 | | | $ | 342 | | | $ | 3,520 | | | | | | | | | |
Commercial real estate | | | 0 | | | | 0 | | | | 0 | | | | 290 | | | | 11,226 | | | | 6,850 | | | | 18,366 | | | | | | | | | |
Construction | | | 0 | | | | 0 | | | | 0 | | | | 2,411 | | | | 0 | | | | 4,344 | | | | 6,755 | | | | | | | | | |
Residential real estate | | | 0 | | | | 0 | | | | 0 | | | | 1,007 | | | | 10,926 | | | | 836 | | | | 12,769 | | | | | | | | | |
Manufactured housing | | | 17 | | | | 0 | | | | 17 | | | | 135 | | | | 2,758 | | | | 143 | | | | 3,053 | | | | | | | | | |
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Total | | $ | 17 | | | $ | 0 | | | $ | 17 | | | $ | 4,060 | | | $ | 27,871 | | | $ | 12,515 | | | $ | 44,463 | | | | | | | | | |
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| | December 31, 2013 | | | | | | | | | |
| | 30-89 Days | | | 90 Days | | | Total Past | | | Non- | | | Current (2) | | | Purchased- | | | Total | | | | | | | | | |
Past Due (1) | Or More | Due (1) | Accrual | Credit | Loans (4) | | | | | | | | |
| Past Due (1) | | | Impaired | | | | | | | | | |
| | | | Loans (3) | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 295 | | | $ | 0 | | | $ | 295 | | | $ | 2 | | | $ | 3,172 | | | $ | 2,345 | | | $ | 5,814 | | | | | | | | | |
Commercial real estate | | | 245 | | | | 0 | | | | 245 | | | | 1,691 | | | | 13,586 | | | | 8,736 | | | | 24,258 | | | | | | | | | |
Construction | | | 0 | | | | 0 | | | | 0 | | | | 3,382 | | | | 1,967 | | | | 9,278 | | | | 14,627 | | | | | | | | | |
Residential real estate | | | 90 | | | | 0 | | | | 90 | | | | 564 | | | | 14,108 | | | | 3,971 | | | | 18,733 | | | | | | | | | |
Manufactured housing | | | 56 | | | | 0 | | | | 56 | | | | 11 | | | | 3,081 | | | | 145 | | | | 3,293 | | | | | | | | | |
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Total | | $ | 686 | | | $ | 0 | | | $ | 686 | | | $ | 5,650 | | | $ | 35,914 | | | $ | 24,475 | | | $ | 66,725 | | | | | | | | | |
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-1 | Includes past due loans that are accruing interest because collection is considered probable. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-2 | Purchased loans in FDIC assisted transactions with no evidence of credit deterioration since origination. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-3 | Purchased-credit-impaired loans aggregated into a pool are accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, and the past due status of the pools, or that of the individual loans within the pools, is not meaningful. Because of the credit impaired nature of the loans, the loans are recorded at a discount reflecting estimated future cash flows and the Bank recognizes interest income on each pool of loans reflecting the estimated yield and passage of time. Such loans are considered to be performing. Purchased-credit-impaired loans that are not in pools accrete interest when the timing and amount of their expected cash flows are reasonably estimable, and are reported as performing loans. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-4 | Amounts exclude deferred costs and fees and allowance for loan losses. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for Loan Losses and FDIC Loss Sharing Receivable |
Losses incurred on covered loans are eligible for partial reimbursement by the FDIC. Subsequent to the purchase date, the expected cash flows on the covered loans are subject to evaluation. Decreases in the present value of expected cash flows on the covered loans are recognized by increasing the allowance for loan losses with a related charge to the provision for loan losses. At the same time, the FDIC indemnification asset is increased reflecting an estimated future collection from the FDIC, which is recorded as a reduction to the provision for loan losses. If the expected cash flows on the covered loans increase such that a previously recorded impairment can be reversed, the Bancorp records a reduction in the allowance for loan losses (with a related credit to the provision for loan losses) accompanied by a reduction in the FDIC receivable balance and a charge to the provision for loan losses. Increases in expected cash flows of covered loans and decreases in expected cash flows of the FDIC loss sharing receivable, when there are no previously recorded impairments, are considered together and recognized over the remaining life of the loans as interest income. The FDIC loss sharing receivable balance will be reduced through a charge to the provision for loan losses, with no offsetting reduction to the allowance for loan losses, as the FDIC loss sharing arrangements reach their contractual maturities and the estimated losses in the covered loans have not yet emerged or been realized in a final disposition event. The FDIC loss sharing arrangements for non-single family loans expire in third quarter 2015. The loss sharing arrangements for single family loans expire in third quarter 2020. |
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The following table presents changes in the allowance for loan losses and the FDIC loss sharing receivable for the three months ended September 30, 2014 and 2013. |
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| | Allowance for Loan Losses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 28,186 | | | $ | 28,142 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Provision for loan losses (1) | | | 3,222 | | | | 750 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Charge-offs | | | (792 | ) | | | (2,294 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Recoveries | | | 467 | | | | 202 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Ending balance | | $ | 31,083 | | | $ | 26,800 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | FDIC Loss Sharing Receivable | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 8,919 | | | $ | 14,169 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Decreased)/Increased estimated cash flows (2) | | | (1,813 | ) | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other activity, net (a) | | | 741 | | | | (125 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash receipts from FDIC | | | (1,852 | ) | | | (3,006 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Ending balance | | $ | 5,995 | | | $ | 11,038 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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(1) Provision for loan losses | | $ | 3,222 | | | $ | 750 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(2) Effect attributable to FDIC loss share arrangements | | | 1,813 | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Net amount reported as provision for loan losses | | $ | 5,035 | | | $ | 750 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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(a) | Includes external costs, such as legal fees, real estate taxes, and appraisal expenses, which qualify for reimbursement under loss sharing arrangements | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following table presents changes in the allowance for loan losses and the FDIC loss sharing receivable for the nine months ended September 30, 2014 and 2013. |
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| | Allowance for Loan Losses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 23,998 | | | $ | 25,837 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Provision for loan losses (1) | | | 8,853 | | | | 6,470 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Charge-offs | | | (2,733 | ) | | | (5,950 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Recoveries | | | 965 | | | | 443 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Ending balance | | $ | 31,083 | | | $ | 26,800 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | FDIC Loss Sharing Receivable | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 10,046 | | | $ | 12,343 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Decreased)/Increased estimated cash flows (2) | | | (3,435 | ) | | | 3,722 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other activity, net (a) | | | 2,713 | | | | 1,107 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash receipts from FDIC | | | (3,329 | ) | | | (6,134 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Ending balance | | $ | 5,995 | | | $ | 11,038 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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(1) Provision for loan losses | | $ | 8,853 | | | $ | 6,470 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(2) Effect attributable to FDIC loss share arrangements | | | 3,435 | | | | (3,722 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net amount reported as provision for loan losses | | $ | 12,288 | | | $ | 2,748 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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(a) | Includes external costs, such as legal fees, real estate taxes, and appraisal expenses, which qualify for reimbursement under loss sharing arrangements. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Loans Individually Evaluated for Impairment — Covered and Non-Covered |
The following tables present the recorded investment (net of charge-offs), unpaid principal balance, and related allowance for loans that are individually evaluated for impairment as of September 30, 2014 and December 31, 2013 and the average recorded investment and interest income recognized for the three and nine months ended September 30, 2014 and 2013. Purchased-credit-impaired loans are considered to be performing and are not included in the tables below. |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2014 | | | For the Three Months | | | For the Nine Months | | | | | | | | | |
Ended September 30, 2014 | Ended September 30, 2014 | | | | | | | | |
| | Recorded | | | Unpaid | | | Related | | | Average | | | Interest | | | Average | | | Interest | | | | | | | | | |
Investment | Principal | Allowance | Recorded | Income | Recorded | Income | | | | | | | | |
Net of | Balance | | Investment | Recognized | Investment | Recognized | | | | | | | | |
Charge offs | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 15,765 | | | $ | 16,183 | | | $ | — | | | $ | 15,377 | | | $ | 216 | | | $ | 13,690 | | | $ | 520 | | | | | | | | | |
Commercial real estate | | | 23,993 | | | | 24,138 | | | | — | | | | 20,817 | | | | 288 | | | | 18,978 | | | | 634 | | | | | | | | | |
Construction | | | 2,325 | | | | 3,594 | | | | — | | | | 2,325 | | | | — | | | | 2,438 | | | | — | | | | | | | | | |
Consumer | | | 21 | | | | 21 | | | | — | | | | 52 | | | | — | | | | 27 | | | | — | | | | | | | | | |
Residential real estate | | | 1,913 | | | | 1,913 | | | | — | | | | 1,924 | | | | — | | | | 2,157 | | | | 19 | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 2,120 | | | | 2,120 | | | | 1,066 | | | | 1,888 | | | | 11 | | | | 1,770 | | | | 26 | | | | | | | | | |
Commercial real estate | | | 1,322 | | | | 1,322 | | | | 841 | | | | 2,118 | | | | 3 | | | | 2,234 | | | | 5 | | | | | | | | | |
Construction | | | 1,542 | | | | 1,542 | | | | 722 | | | | 1,548 | | | | — | | | | 1,449 | | | | — | | | | | | | | | |
Consumer | | | 114 | | | | 114 | | | | 32 | | | | 84 | | | | — | | | | 74 | | | | 1 | | | | | | | | | |
Residential real estate | | | 343 | | | | 343 | | | | 235 | | | | 296 | | | | — | | | | 273 | | | | 1 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 49,458 | | | $ | 51,290 | | | $ | 2,896 | | | $ | 46,429 | | | $ | 518 | | | $ | 43,090 | | | $ | 1,206 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2013 | | | For the Three Months | | | For the Nine Months | | | | | | | | | |
Ended September 30, 2013 | Ended September 30, 2013 | | | | | | | | |
| | Recorded | | | Unpaid | | | Related | | | Average | | | Interest | | | Average | | | Interest | | | | | | | | | |
Investment | Principal | Allowance | Recorded | Income | Recorded | Income | | | | | | | | |
Net of | Balance | | Investment | Recognized | Investment | Recognized | | | | | | | | |
Charge offs | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 13,097 | | | $ | 13,159 | | | $ | — | | | $ | 12,400 | | | $ | 177 | | | $ | 8,202 | | | $ | 453 | | | | | | | | | |
Commercial real estate | | | 14,397 | | | | 15,249 | | | | — | | | | 22,205 | | | | 116 | | | | 24,338 | | | | 537 | | | | | | | | | |
Construction | | | 2,777 | | | | 4,046 | | | | — | | | | 4,220 | | | | 4 | | | | 5,462 | | | | 9 | | | | | | | | | |
Consumer | | | — | | | | — | | | | — | | | | 49 | | | | 6 | | | | 75 | | | | 8 | | | | | | | | | |
Residential real estate | | | 2,831 | | | | 2,831 | | | | — | | | | 2,550 | | | | 10 | | | | 2,588 | | | | 27 | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 2,469 | | | | 3,739 | | | | 829 | | | | 2,755 | | | | 30 | | | | 1,637 | | | | 108 | | | | | | | | | |
Commercial real estate | | | 2,261 | | | | 3,167 | | | | 946 | | | | 5,922 | | | | 152 | | | | 6,768 | | | | 166 | | | | | | | | | |
Construction | | | 1,132 | | | | 1,132 | | | | 351 | | | | 3,255 | | | | 11 | | | | 4,185 | | | | 11 | | | | | | | | | |
Consumer | | | 64 | | | | 64 | | | | 17 | | | | 27 | | | | 3 | | | | 64 | | | | 4 | | | | | | | | | |
Residential real estate | | | 252 | | | | 252 | | | | 199 | | | | 504 | | | | 4 | | | | 939 | | | | 5 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 39,280 | | | $ | 43,639 | | | $ | 2,342 | | | $ | 53,887 | | | $ | 513 | | | $ | 54,258 | | | $ | 1,328 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Troubled Debt Restructurings |
At September 30, 2014 and 2013, there were $5.5 million and $6.9 million, respectively, in loans reported as troubled debt restructurings (“TDRs”). TDRs are reported as impaired loans in the calendar year of their restructuring and are evaluated to determine whether they should be placed on non-accrual status. In subsequent years, a TDR may be returned to accrual status if it satisfies a minimum six-month performance requirement; however, it will remain classified as impaired. Generally, the Bancorp requires sustained performance for nine months before returning a TDR to accrual status. |
Modification of purchased-credit-impaired loans that are accounted for within loan pools in accordance with the accounting standards for purchased-credit-impaired loans do not result in the removal of these loans from the pool even if modifications would otherwise be considered a TDR. Accordingly, as each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, modifications of loans within such pools are not considered TDRs. |
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The following is an analysis of loans modified in a troubled debt restructuring by type of concession for the three and nine months ended September 30, 2014 and 2013. There were no modifications that involved forgiveness of debt. |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | TDRs in | | | TDRs in | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | |
Compliance | Compliance | | | | | | | | | | | | | | | | | | | | | | | | |
with Their | with Their | | | | | | | | | | | | | | | | | | | | | | | | |
Modified | Modified | | | | | | | | | | | | | | | | | | | | | | | | |
Terms and | Terms and | | | | | | | | | | | | | | | | | | | | | | | | |
Accruing | Not | | | | | | | | | | | | | | | | | | | | | | | | |
Interest | Accruing | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest | | | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended September 30, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Extended under forbearance | | $ | 81 | | | $ | 0 | | | $ | 81 | | | | | | | | | | | | | | | | | | | | | | | | | |
Multiple extensions resulting from financial difficulty | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-rate reductions | | | 0 | | | | 168 | | | | 168 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 81 | | | $ | 168 | | | $ | 249 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Extended under forbearance | | $ | 448 | | | $ | 0 | | | $ | 448 | | | | | | | | | | | | | | | | | | | | | | | | | |
Multiple extensions resulting from financial difficulty | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-rate reductions | | | 47 | | | | 471 | | | | 518 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 495 | | | $ | 471 | | | $ | 966 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended September 30, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Extended under forbearance | | $ | 0 | | | $ | 0 | | | $ | 0 | | | | | | | | | | | | | | | | | | | | | | | | | |
Multiple extensions resulting from financial difficulty | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-rate reductions | | | 0 | | | | 12 | | | | 12 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 0 | | | $ | 12 | | | $ | 12 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Extended under forbearance | | $ | 0 | | | $ | 0 | | | $ | 0 | | | | | | | | | | | | | | | | | | | | | | | | | |
Multiple extensions resulting from financial difficulty | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-rate reductions | | | 93 | | | | 1,179 | | | | 1,272 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 93 | | | $ | 1,179 | | | $ | 1,272 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following table provides, by class, the number of loans modified in troubled debt restructurings and the related recorded investment during the three and nine months ended September 30, 2014 and 2013. |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | TDRs in Compliance with Their | | | TDRs in | | | | | | | | | | | | | | | | | | | | | |
Modified Terms and Accruing | Compliance | | | | | | | | | | | | | | | | | | | | |
Interest | with Their | | | | | | | | | | | | | | | | | | | | |
| Modified | | | | | | | | | | | | | | | | | | | | |
| Terms and Not | | | | | | | | | | | | | | | | | | | | |
| Accruing Interest | | | | | | | | | | | | | | | | | | | | |
| | Number | | | Recorded | | | Number | | | Recorded | | | | | | | | | | | | | | | | | | | | | |
of Loans | Investment | of Loans | Investment | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended September 30, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 0 | | | $ | 0 | | | | 0 | | | $ | 0 | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Construction | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Manufactured housing | | | 0 | | | | 0 | | | | 2 | | | | 168 | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 2 | | | | 81 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 2 | | | $ | 81 | | | | 2 | | | $ | 168 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 0 | | | $ | 0 | | | | 0 | | | $ | 0 | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Construction | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Manufactured housing | | | 1 | | | | 47 | | | | 7 | | | | 471 | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 9 | | | | 448 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 10 | | | $ | 495 | | | | 7 | | | $ | 471 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended September 30, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 0 | | | $ | 0 | | | | 0 | | | $ | 0 | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Construction | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Manufactured housing | | | 0 | | | | 0 | | | | 1 | | | | 12 | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 0 | | | $ | 0 | | | | 1 | | | $ | 12 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 0 | | | $ | 0 | | | | 0 | | | $ | 0 | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Construction | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Manufactured housing | | | 2 | | | | 60 | | | | 11 | | | | 1,179 | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 1 | | | | 33 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 3 | | | $ | 93 | | | | 11 | | | $ | 1,179 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At September 30, 2014 and 2013, there were no commitments to lend additional funds to debtors whose terms have been modified in troubled debt restructuring. |
For the three and nine months ended September 30, 2014 and 2013, the recorded investment of loans determined to be TDRs was $0.2 million, $1.0 million, $12 thousand and $1.3 million, respectively, both before and after restructuring. During the three month period ended September 30, 2014, two manufactured housing TDR loans defaulted with a recorded investment of $0.2 million. During the nine month period ended September 30, 2014, seven manufactured housing TDR loans defaulted with a recorded investment of $0.5 million. There were no TDRs that defaulted in the three and nine month periods ended September 30, 2013. |
Loans modified in troubled debt restructurings are evaluated for impairment. The nature and extent of impairment of TDRs, including those which have experienced a subsequent default, is considered in the determination of an appropriate level of allowance for credit losses. There were no specific allowances resulting from TDR modifications during the three and nine months ended September 30, 2014 and 2013. |
Credit Quality Indicators |
Commercial and industrial, commercial real estate, residential real estate and construction loans are rated based on an internally assigned risk rating system which is assigned at the time of loan origination and reviewed on a periodic or on an “as needed” basis. Consumer, mortgage warehouse and manufactured housing loans are evaluated based on the payment activity of the loan and are not assigned internal risk ratings. |
To facilitate the monitoring of credit quality within the commercial and industrial, commercial real estate, construction, and residential real estate classes, and for purposes of analyzing historical loss rates used in the determination of the allowance for loan losses for the respective portfolio class, the Bank utilizes the following categories of risk ratings: pass/satisfactory (includes risk rating 1 through 6), special mention, substandard, doubtful, and loss. The risk rating categories, which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter. Pass/satisfactory ratings, which are assigned to those borrowers who do not have identified potential or well-defined weaknesses and for whom there is a high likelihood of orderly repayment, are updated periodically based on the size and credit characteristics of the borrower. All other categories are updated on a quarterly basis during the month preceding the end of the calendar quarter. While assigning risk ratings involves judgment, the risk-rating process allows management to identify riskier credits in a timely manner and allocate the appropriate resources to manage those loans. |
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The risk rating grades are defined as follows: |
“1” – Pass/Excellent |
Loans rated 1 represent a credit extension of the highest quality. The borrower’s historic (at least five years) cash flows manifest extremely large and stable margins of coverage. Balance sheets are conservative, well capitalized, and liquid. After considering debt service for proposed and existing debt, projected cash flows continue to be strong and provide ample coverage. The borrower typically reflects broad geographic and product diversification and has access to alternative financial markets. |
“2” – Pass/Superior |
Loans rated 2 are those for which the borrower has a strong financial condition, balance sheet, operations, cash flow, debt capacity and coverage with ratios better than industry norms. The borrowers of these loans exhibit a limited leverage position, borrowers are virtually immune to local economies in stable growing industries, and where management is well respected and the company has ready access to public markets. |
“3” – Pass/Strong |
Loans rated 3 are those loans for which the borrower has above average financial condition and flexibility; more than satisfactory debt service coverage, balance sheet and operating ratios are consistent with or better than industry peers, have little industry risk, move in diversified markets and are experienced and competent in their industry. These borrowers’ access to capital markets is limited mostly to private sources, often secured, but the borrower typically has access to a wide range of refinancing alternatives. |
“4” – Pass/Good |
Loans rated 4 have a sound primary and secondary source of repayment. The borrower may have access to alternative sources of financing, but sources are not as widely available as they are to a higher grade borrower. These loans carry a normal level of risk, with very low loss exposure. The borrower has the ability to perform according to the terms of the credit facility. The margins of cash flow coverage are satisfactory but vulnerable to more rapid deterioration than the higher quality loans. |
“ 5” – Satisfactory |
Loans rated 5 are extended to borrowers who are determined to be a reasonable credit risk and demonstrate the ability to repay the debt from normal business operations. Risk factors may include reliability of margins and cash flows, liquidity, dependence on a single product or industry, cyclical trends, depth of management, or limited access to alternative financing sources. The borrower’s historical financial information may indicate erratic performance, but current trends are positive and the quality of financial information is adequate, but is not as detailed and sophisticated as information found on higher grade loans. If adverse circumstances arise, the impact on the borrower may be significant. |
“6” – Satisfactory/Bankable with Care |
Loans rated 6 are those for which the borrower has higher than normal credit risk; however, cash flow and asset values are generally intact. These borrowers may exhibit declining financial characteristics, with increasing leverage and decreasing liquidity and may have limited resources and access to financial alternatives. Signs of weakness in these borrowers may include delinquent taxes, trade slowness and eroding profit margins. |
“7” – Special Mention |
Loans rated Special Mention are credit facilities that may have potential developing weaknesses and deserve extra attention from the account manager and other management personnel. In the event that potential weaknesses are not corrected or mitigated, deterioration in the ability of the borrower to repay the debt in the future may occur. This grade is not assigned to loans that bear certain peculiar risks normally associated with the type of financing involved, unless circumstances have caused the risk to increase to a level higher than would have been acceptable when the credit was originally approved. Loans where significant actual, not potential, weaknesses or problems are clearly evident are graded in the category below. |
“8” – Substandard |
Loans are classified Substandard when the loans are inadequately protected by the current sound worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt and are characterized by the distinct possibility that the Company will sustain some loss if the weaknesses are not corrected. |
|
“9” – Doubtful |
The Bank assigns a doubtful rating to loans that have all the attributes of a substandard rating 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. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage of and strengthen the credit quality of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing plans. |
“10” – Loss |
The Bank assigns a loss rating to loans considered uncollectible and of such little value that their continuance as an active asset is not warranted. Amounts classified as loss are immediately charged off. |
Risk ratings are not established for home equity loans, consumer loans, and installment loans, mainly because these portfolios consist of a larger number of homogenous loans with smaller balances. Instead, these portfolios are evaluated for risk mainly based upon aggregate payment history through the monitoring of delinquency levels and trends and are classified as performing and nonperforming. The following tables present the credit ratings of the non-covered loan portfolio as of September 30, 2014 and December 31, 2013: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2014 | | | | | | | | | | | | | | | | | | | | | |
| | Commercial | | | Commercial | | | Construction | | | Residential | | | | | | | | | | | | | | | | | | | | | |
and | Real Estate | Real Estate | | | | | | | | | | | | | | | | | | | | |
Industrial | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pass/Satisfactory | | $ | 417,350 | | | $ | 3,123,392 | | | $ | 56,131 | | | $ | 288,554 | | | | | | | | | | | | | | | | | | | | | |
Special Mention | | | 13,461 | | | | 21,674 | | | | 21 | | | | 4 | | | | | | | | | | | | | | | | | | | | | |
Substandard | | | 2,106 | | | | 8,914 | | | | 451 | | | | 1,607 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans receivable, non-covered | | $ | 432,917 | | | $ | 3,153,980 | | | $ | 56,603 | | | $ | 290,621 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Consumer | | | Mortgage | | | Manufactured | | | | | | | | | | | | | | | | | | | | | | | | | |
Warehouse | Housing | | | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Performing | | $ | 1,684 | | | $ | 8 | | | $ | 118,169 | | | | | | | | | | | | | | | | | | | | | | | | | |
Nonperforming (1) | | | 0 | | | | 0 | | | | 11,629 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans receivable, non-covered | | $ | 1,684 | | | $ | 8 | | | $ | 129,798 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2013 | | | | | | | | | | | | | | | | | | | | | |
| | Commercial | | | Commercial | | | Construction | | | Residential | | | | | | | | | | | | | | | | | | | | | |
and | Real Estate | Real Estate | | | | | | | | | | | | | | | | | | | | |
Industrial | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pass/Satisfactory | | $ | 228,748 | | | $ | 1,808,804 | | | $ | 34,822 | | | $ | 142,588 | | | | | | | | | | | | | | | | | | | | | |
Special Mention | | | 10,314 | | | | 12,760 | | | | 29 | | | | 940 | | | | | | | | | | | | | | | | | | | | | |
Substandard | | | 447 | | | | 13,622 | | | | 2,050 | | | | 1,660 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans receivable, non-covered | | $ | 239,509 | | | $ | 1,835,186 | | | $ | 36,901 | | | $ | 145,188 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Consumer | | | Mortgage | | | Manufactured | | | | | | | | | | | | | | | | | | | | | | | | | |
Warehouse | Housing | | | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Performing | | $ | 2,144 | | | $ | 866 | | | $ | 127,330 | | | | | | | | | | | | | | | | | | | | | | | | | |
Nonperforming (1) | | | 0 | | | | 0 | | | | 12,141 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans receivable, non-covered | | $ | 2,144 | | | $ | 866 | | | $ | 139,471 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
-1 | Includes loans that are past due and still accruing interest and loans on nonaccrual status. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The following tables present the credit ratings of the covered loan portfolio as of September 30, 2014 and December 31, 2013: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2014 | | | | | | | | | | | | | | | | | | | | | |
| | Commercial | | | Commercial | | | Construction | | | Residential | | | | | | | | | | | | | | | | | | | | | |
and | Real Estate | Real Estate | | | | | | | | | | | | | | | | | | | | |
Industrial | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pass/Satisfactory | | $ | 3,179 | | | $ | 9,271 | | | $ | 0 | | | $ | 11,361 | | | | | | | | | | | | | | | | | | | | | |
Special Mention | | | 0 | | | | 5,333 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Substandard | | | 341 | | | | 3,762 | | | | 6,755 | | | | 1,408 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans receivable, covered | | $ | 3,520 | | | $ | 18,366 | | | $ | 6,755 | | | $ | 12,769 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Manufactured | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Housing | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Performing | | $ | 2,901 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nonperforming (1) | | | 152 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans receivable, covered | | $ | 3,053 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2013 | | | | | | | | | | | | | | | | | | | | | |
| | Commercial | | | Commercial | | | Construction | | | Residential | | | | | | | | | | | | | | | | | | | | | |
and | Real Estate | Real Estate | | | | | | | | | | | | | | | | | | | | |
Industrial | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pass/Satisfactory | | $ | 3,688 | | | $ | 14,330 | | | $ | 1,967 | | | $ | 14,137 | | | | | | | | | | | | | | | | | | | | | |
Special Mention | | | 223 | | | | 2,989 | | | | 0 | | | | 455 | | | | | | | | | | | | | | | | | | | | | |
Substandard | | | 1,903 | | | | 6,939 | | | | 12,660 | | | | 4,141 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans receivable, covered | | $ | 5,814 | | | $ | 24,258 | | | $ | 14,627 | | | $ | 18,733 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Manufactured | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Housing | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Performing | | $ | 3,226 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nonperforming (1) | | | 67 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans receivable, covered | | $ | 3,293 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
-1 | Includes loans that are past due and still accruing interest and loans on nonaccrual status. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Allowance for loan losses |
The changes in the allowance for loan losses for the three and nine months ended September 30, 2014 and 2013 and the loans and allowance for loan losses by loan class based on impairment evaluation method are as follows. The amounts presented for the provision for loan losses below do not include the effect of changes to estimated benefits resulting from the FDIC loss share arrangements for the covered loans. |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Commercial | | | Commercial | | | Construction | | | Residential | | | Manufactured | | | Consumer | | | Mortgage | | | Total | | | | | |
and | Real Estate | Real Estate | Housing | Warehouse | | | | |
Industrial | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended September 30, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning Balance, July 1, 2014 | | $ | 3,193 | | | $ | 20,089 | | | $ | 2,187 | | | $ | 2,028 | | | $ | 401 | | | $ | 138 | | | $ | 150 | | | $ | 28,186 | | | | | |
Charge-offs | | | (91 | ) | | | (278 | ) | | | (284 | ) | | | (139 | ) | | | 0 | | | | 0 | | | | 0 | | | | (792 | ) | | | | |
Recoveries | | | 67 | | | | 369 | | | | 4 | | | | 23 | | | | 0 | | | | 4 | | | | 0 | | | | 467 | | | | | |
Provision for loan losses | | | 1,335 | | | | 2,139 | | | | (208 | ) | | | 217 | | | | (80 | ) | | | (31 | ) | | | (150 | ) | | | 3,222 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance, September 30, 2014 | | $ | 4,504 | | | $ | 22,319 | | | $ | 1,699 | | | $ | 2,129 | | | $ | 321 | | | $ | 111 | | | $ | 0 | | | $ | 31,083 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
Nine Months Ended September 30, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning Balance, January 1, 2014 | | $ | 2,638 | | | $ | 15,705 | | | $ | 2,385 | | | $ | 2,490 | | | $ | 614 | | | $ | 130 | | | $ | 36 | | | $ | 23,998 | | | | | |
Charge-offs | | | (536 | ) | | | (1,438 | ) | | | (284 | ) | | | (442 | ) | | | 0 | | | | (33 | ) | | | 0 | | | | (2,733 | ) | | | | |
Recoveries | | | 292 | | | | 395 | | | | 7 | | | | 265 | | | | 0 | | | | 6 | | | | 0 | | | | 965 | | | | | |
Provision for loan losses | | | 2,110 | | | | 7,657 | | | | (409 | ) | | | (184 | ) | | | (293 | ) | | | 8 | | | | (36 | ) | | | 8,853 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance, September 30, 2014 | | $ | 4,504 | | | $ | 22,319 | | | $ | 1,699 | | | $ | 2,129 | | | $ | 321 | | | $ | 111 | | | $ | 0 | | | $ | 31,083 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At September 30, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 17,885 | | | $ | 25,315 | | | $ | 3,867 | | | $ | 2,256 | | | $ | 0 | | | $ | 135 | | | $ | 0 | | | $ | 49,458 | | | | | |
Collectively evaluated for impairment | | | 417,012 | | | | 3,107,732 | | | | 54,920 | | | | 290,722 | | | | 128,594 | | | | 1,285 | | | | 8 | | | | 4,000,273 | | | | | |
Loans acquired with credit deterioration | | | 1,540 | | | | 39,299 | | | | 4,571 | | | | 10,412 | | | | 4,257 | | | | 264 | | | | 0 | | | | 60,343 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans receivable, excluding deferred fees and costs | | $ | 436,437 | | | $ | 3,172,346 | | | $ | 63,358 | | | $ | 303,390 | | | $ | 132,851 | | | $ | 1,684 | | | $ | 8 | | | $ | 4,110,074 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 1,066 | | | $ | 841 | | | $ | 722 | | | $ | 235 | | | $ | 0 | | | $ | 32 | | | $ | 0 | | | $ | 2,896 | | | | | |
Collectively evaluated for impairment | | | 3,179 | | | | 15,756 | | | | 391 | | | | 917 | | | | 88 | | | | 29 | | | | 0 | | | | 20,360 | | | | | |
Loans acquired with credit deterioration | | | 259 | | | | 5,722 | | | | 586 | | | | 977 | | | | 233 | | | | 50 | | | | 0 | | | | 7,827 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Allowance for loan losses | | $ | 4,504 | | | $ | 22,319 | | | $ | 1,699 | | | $ | 2,129 | | | $ | 321 | | | $ | 111 | | | $ | 0 | | | $ | 31,083 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Commercial | | | Commercial | | | Construction | | | Residential | | | Manufactured | | | Consumer | | | Mortgage | | | Residual | | | Total | |
and | Real Estate | Real Estate | Housing | Warehouse | Reserve |
Industrial | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended September 30, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning Balance, July 1, 2013 | | $ | 2,485 | | | $ | 16,685 | | | $ | 4,317 | | | $ | 3,552 | | | $ | 678 | | | $ | 106 | | | $ | 56 | | | $ | 263 | | | $ | 28,142 | |
Charge-offs | | | (1,311 | ) | | | (851 | ) | | | 0 | | | | (116 | ) | | | 0 | | | | (16 | ) | | | 0 | | | | 0 | | | | (2,294 | ) |
Recoveries | | | 16 | | | | 186 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 202 | |
Provision for loan losses | | | 2,029 | | | | (349 | ) | | | (1,163 | ) | | | (216 | ) | | | 1 | | | | 13 | | | | (14 | ) | | | 449 | | | | 750 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance, September 30, 2013 | | $ | 3,219 | | | $ | 15,671 | | | $ | 3,154 | | | $ | 3,220 | | | $ | 679 | | | $ | 103 | | | $ | 42 | | | $ | 712 | | | $ | 26,800 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning Balance, January 1, 2013 | | $ | 1,477 | | | $ | 15,439 | | | $ | 3,991 | | | $ | 3,233 | | | $ | 750 | | | $ | 154 | | | $ | 71 | | | $ | 722 | | | $ | 25,837 | |
Charge-offs | | | (1,407 | ) | | | (2,742 | ) | | | (1,470 | ) | | | (315 | ) | | | 0 | | | | (16 | ) | | | 0 | | | | 0 | | | | (5,950 | ) |
Recoveries | | | 181 | | | | 246 | | | | 0 | | | | 7 | | | | 0 | | | | 9 | | | | 0 | | | | 0 | | | | 443 | |
Provision for loan losses | | | 2,968 | | | | 2,728 | | | | 633 | | | | 295 | | | | (71 | ) | | | (44 | ) | | | (29 | ) | | | (10 | ) | | | 6,470 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance, September 30, 2013 | | $ | 3,219 | | | $ | 15,671 | | | $ | 3,154 | | | $ | 3,220 | | | $ | 679 | | | $ | 103 | | | $ | 42 | | | $ | 712 | | | $ | 26,800 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
At September 30, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 20,162 | | | $ | 22,910 | | | $ | 3,978 | | | $ | 3,205 | | | $ | 0 | | | $ | 75 | | | $ | 0 | | | $ | 0 | | | $ | 50,330 | |
Collectively evaluated for impairment | | | 195,857 | | | | 1,449,009 | | | | 39,058 | | | | 134,582 | | | | 140,869 | | | | 1,258 | | | | 1,006 | | | | 0 | | | | 1,961,639 | |
Loans acquired with credit deterioration | | | 4,601 | | | | 48,634 | | | | 13,830 | | | | 14,949 | | | | 5,189 | | | | 556 | | | | 0 | | | | 0 | | | | 87,759 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans receivable, excluding deferred fees and costs | | $ | 220,620 | | | $ | 1,520,553 | | | $ | 56,866 | | | $ | 152,736 | | | $ | 146,058 | | | $ | 1,889 | | | $ | 1,006 | | | $ | 0 | | | $ | 2,099,728 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 961 | | | $ | 2,233 | | | $ | 368 | | | $ | 187 | | | $ | 0 | | | $ | 1 | | | $ | 0 | | | $ | 0 | | | $ | 3,750 | |
Collectively evaluated for impairment | | | 1,991 | | | | 8,315 | | | | 241 | | | | 1,115 | | | | 80 | | | | 40 | | | | 42 | | | | 712 | | | | 12,536 | |
Loans acquired with credit deterioration | | | 267 | | | | 5,123 | | | | 2,545 | | | | 1,918 | | | | 599 | | | | 62 | | | | 0 | | | | 0 | | | | 10,514 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Allowance for loan losses | | $ | 3,219 | | | $ | 15,671 | | | $ | 3,154 | | | $ | 3,220 | | | $ | 679 | | | $ | 103 | | | $ | 42 | | | $ | 712 | | | $ | 26,800 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The non-covered manufactured housing portfolio was purchased in August 2010. A portion of the purchase price may be used to reimburse the Bank under the specified terms in the purchase agreement for defaults of the underlying borrower and other specified items. At September 30, 2014 and 2013, funds available for reimbursement, if necessary, were $3.2 million and $2.7 million, respectively. Each quarter, these funds are evaluated to determine if they would be sufficient to absorb the probable incurred losses within the manufactured housing portfolio. |
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The changes in accretable yield related to purchased-credit-impaired loans for the three and nine months ended September 30, 2014 and 2013 were as follows: |
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For the Three Months Ended September 30, | | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretable yield balance, beginning of period | | $ | 19,691 | | | $ | 27,649 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion to interest income | | | (839 | ) | | | (1,362 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reclassification from nonaccretable difference and disposals, net | | | (378 | ) | | | (754 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Accretable yield balance, end of period | | $ | 18,474 | | | $ | 25,533 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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For the Nine Months Ended September 30, | | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretable yield balance, beginning of period | | $ | 22,557 | | | $ | 32,174 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion to interest income | | | (2,462 | ) | | | (5,034 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reclassification from nonaccretable difference and disposals, net | | | (1,621 | ) | | | (1,607 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Accretable yield balance, end of period | | $ | 18,474 | | | $ | 25,533 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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