Loans and Leases and the Allowance for Loan and Lease Losses | Loans and Leases The Company’s loan and lease portfolio was comprised of the following as of December 31, 2019 , and December 31, 2018 : December 31, (dollars in thousands) 2019 2018 Commercial Commercial and Industrial $ 1,379,152 $ 1,331,149 Commercial Mortgage 2,518,051 2,302,356 Construction 194,170 170,061 Lease Financing 122,454 176,226 Total Commercial 4,213,827 3,979,792 Consumer Residential Mortgage 3,891,100 3,673,796 Home Equity 1,676,073 1,681,442 Automobile 720,286 658,133 Other 1 489,606 455,611 Total Consumer 6,777,065 6,468,982 Total Loans and Leases $ 10,990,892 $ 10,448,774 1 Comprised of other revolving credit, installment, and lease financing. Total loans and leases were reported net of unearned fee of $1.3 million and income of $15.1 million as of December 31, 2019 and December 31, 2018 , respectively. Commercial loans and residential mortgage loans of $1.0 billion were pledged to secure an undrawn FRB line of credit as of December 31, 2019 , and December 31, 2018 . As of December 31, 2019 , and December 31, 2018 , residential mortgage loans of $3.1 billion and $2.9 billion , were pledged under a blanket pledge arrangement to secure FHLB advances, respectively. See Note 10 Other Debt for FHLB advances outstanding as of December 31, 2019 , and December 31, 2018 . Net gains related to sales of residential mortgage loans, recorded as a component of mortgage banking income, were $5.3 million , $1.5 million , and $4.9 million for the years ended December 31, 2019 , December 31, 2018 , and December 31, 2017 , respectively. Net gains on sales of commercial loans were not material for the years ended December 31, 2019 , December 31, 2018 , and December 31, 2017 . Substantially all of the Company’s lending activity is with customers located in Hawaii. A substantial portion of the Company’s real estate loans are secured by real estate in Hawaii. Allowance for Loan and Lease Losses The following presents by portfolio segment, the activity in the Allowance for the years ended December 31, 2019 , December 31, 2018 , and December 31, 2017 . The following also presents by portfolio segment, the balance in the Allowance disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans and leases as of December 31, 2019 , December 31, 2018 , and December 31, 2017 . (dollars in thousands) Commercial Consumer Total For the Year Ended December 31, 2019 Allowance for Loan and Lease Losses: Balance at Beginning of Period $ 66,874 $ 39,819 $ 106,693 Loans and Leases Charged-Off (2,738 ) (21,217 ) (23,955 ) Recoveries on Loans and Leases Previously Charged-Off 1,513 9,776 11,289 Net Loans and Leases Recovered (Charged-Off) (1,225 ) (11,441 ) (12,666 ) Provision for Credit Losses 8,152 7,848 16,000 Balance at End of Period $ 73,801 $ 36,226 $ 110,027 As of December 31, 2019 Allowance for Loan and Lease Losses: Individually Evaluated for Impairment $ 2,657 $ 3,246 $ 5,903 Collectively Evaluated for Impairment 71,144 32,980 104,124 Total $ 73,801 $ 36,226 $ 110,027 Recorded Investment in Loans and Leases: Individually Evaluated for Impairment $ 35,442 $ 39,760 $ 75,202 Collectively Evaluated for Impairment 4,178,385 6,737,305 10,915,690 Total $ 4,213,827 $ 6,777,065 $ 10,990,892 For the Year Ended December 31, 2018 Allowance for Loan and Lease Losses: Balance at Beginning of Period $ 65,822 $ 41,524 $ 107,346 Loans and Leases Charged-Off (1,505 ) (23,059 ) (24,564 ) Recoveries on Loans and Leases Previously Charged-Off 2,039 8,447 10,486 Net Loans and Leases Recovered (Charged-Off) 534 (14,612 ) (14,078 ) Provision for Credit Losses 518 12,907 13,425 Balance at End of Period $ 66,874 $ 39,819 $ 106,693 As of December 31, 2018 Allowance for Loan and Lease Losses: Individually Evaluated for Impairment $ 222 $ 3,754 $ 3,976 Collectively Evaluated for Impairment 66,652 36,065 102,717 Total $ 66,874 $ 39,819 $ 106,693 Recorded Investment in Loans and Leases: Individually Evaluated for Impairment $ 12,298 $ 42,327 $ 54,625 Collectively Evaluated for Impairment 3,967,494 6,426,655 10,394,149 Total $ 3,979,792 $ 6,468,982 $ 10,448,774 For the Year Ended December 31, 2017 Allowance for Loan and Lease Losses: Balance at Beginning of Period $ 65,680 $ 38,593 $ 104,273 Loans and Leases Charged-Off (1,408 ) (21,847 ) (23,255 ) Recoveries on Loans and Leases Previously Charged-Off 1,485 7,943 9,428 Net Loans and Leases Recovered (Charged-Off) 77 (13,904 ) (13,827 ) Provision for Credit Losses 65 16,835 16,900 Balance at End of Period $ 65,822 $ 41,524 $ 107,346 As of December 31, 2017 Allowance for Loan and Lease Losses: Individually Evaluated for Impairment $ 141 $ 3,775 $ 3,916 Collectively Evaluated for Impairment 65,681 37,749 103,430 Total $ 65,822 $ 41,524 $ 107,346 Recorded Investment in Loans and Leases: Individually Evaluated for Impairment $ 20,216 $ 41,002 $ 61,218 Collectively Evaluated for Impairment 3,746,282 5,989,447 9,735,729 Total $ 3,766,498 $ 6,030,449 $ 9,796,947 Credit Quality Indicators The Company uses several credit quality indicators to manage credit risk in an ongoing manner. The Company uses an internal credit risk rating system that categorizes loans and leases into pass, special mention, or classified categories. Credit risk ratings are applied individually to those classes of loans and leases that have significant or unique credit characteristics that benefit from a case-by-case evaluation. These are typically loans and leases to businesses or individuals in the classes which comprise the commercial portfolio segment. Groups of loans and leases that are underwritten and structured using standardized criteria and characteristics, such as statistical models (e.g., credit scoring or payment performance), are typically risk-rated and monitored collectively. These are typically loans and leases to individuals in the classes which comprise the consumer portfolio segment. The following are the definitions of the Company’s credit quality indicators: Pass: Loans and leases in all classes within the commercial and consumer portfolio segments that are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan or lease agreement. Management believes that there is a low likelihood of loss related to those loans and leases that are considered Pass. Special Mention: Loans and leases that have potential weaknesses that deserve management’s close attention. If not addressed, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease. Management believes that there is a moderate likelihood of some loss related to those loans and leases that are considered Special Mention. Classified: Loans and leases in the classes within the commercial portfolio segment that are inadequately protected by the sound worth and paying capacity of the borrower or of the collateral pledged, if any. Classified loans and leases are also those in the classes within the consumer portfolio segment that are past due 90 days or more as to principal or interest. Residential mortgage loans that are past due 90 days or more as to principal or interest may be considered pass if the Company is in the process of collection and the current loan-to-value ratio is 60% or less. Home equity loans that are past due 90 days or more as to principal or interest may be considered pass if the Company is in the process of collection, the first mortgage is with the Company, and the current combined loan-to-value ratio is 60% or less. Residential mortgage and home equity loans may be current as to principal and interest, but may be considered Classified for a period of up to six months following a loan modification. Following a period of demonstrated performance in accordance with the modified contractual terms, the loan may be removed from classified status. Management believes that there is a distinct possibility that the Company will sustain some loss if the deficiencies related to Classified loans and leases are not corrected in a timely manner. The Company’s credit quality indicators are periodically updated on a case-by-case basis. The following presents by class and by credit quality indicator, the recorded investment in the Company’s loans and leases as of December 31, 2019 , and December 31, 2018 . December 31, 2019 (dollars in thousands) Commercial Commercial Construction Lease Total Pass $ 1,306,040 $ 2,463,858 $ 188,832 $ 120,933 $ 4,079,663 Special Mention 37,722 16,453 4,148 — 58,323 Classified 35,390 37,740 1,190 1,521 75,841 Total $ 1,379,152 $ 2,518,051 $ 194,170 $ 122,454 $ 4,213,827 (dollars in thousands) Residential Home Automobile Other 1 Total Pass $ 3,886,389 $ 1,671,468 $ 719,337 $ 488,113 $ 6,765,307 Classified 4,711 4,605 949 1,493 11,758 Total $ 3,891,100 $ 1,676,073 $ 720,286 $ 489,606 $ 6,777,065 Total Recorded Investment in Loans and Leases $ 10,990,892 December 31, 2018 (dollars in thousands) Commercial Commercial Construction Lease Total Pass $ 1,302,278 $ 2,256,128 $ 168,740 $ 175,223 $ 3,902,369 Special Mention 17,688 30,468 — 5 48,161 Classified 11,183 15,760 1,321 998 29,262 Total $ 1,331,149 $ 2,302,356 $ 170,061 $ 176,226 $ 3,979,792 (dollars in thousands) Residential Home Automobile Other 1 Total Pass $ 3,668,475 $ 1,677,193 $ 657,620 $ 454,697 $ 6,457,985 Classified 5,321 4,249 513 914 10,997 Total $ 3,673,796 $ 1,681,442 $ 658,133 $ 455,611 $ 6,468,982 Total Recorded Investment in Loans and Leases $ 10,448,774 1 Comprised of other revolving credit, installment, and lease financing. Aging Analysis The following presents by class, an aging analysis of the Company’s loan and lease portfolio as of December 31, 2019 , and December 31, 2018 . (dollars in thousands) 30 - 59 60 - 89 Past Due Non- Total Current Total Loans Non-Accrual 2 As of December 31, 2019 Commercial Commercial and Industrial $ 12,534 $ 148 $ — $ 830 $ 13,512 $ 1,365,640 $ 1,379,152 $ 421 Commercial Mortgage 2,998 — — 9,244 12,242 2,505,809 2,518,051 9,244 Construction 101 51 — — 152 194,018 194,170 — Lease Financing 720 — — — 720 121,734 122,454 — Total Commercial 16,353 199 — 10,074 26,626 4,187,201 4,213,827 9,665 Consumer Residential Mortgage 6,097 2,070 1,839 4,125 14,131 3,876,969 3,891,100 1,429 Home Equity 3,949 2,280 4,125 3,181 13,535 1,662,538 1,676,073 412 Automobile 16,067 4,154 949 — 21,170 699,116 720,286 — Other 1 3,498 2,074 1,493 — 7,065 482,541 489,606 — Total Consumer 29,611 10,578 8,406 7,306 55,901 6,721,164 6,777,065 1,841 Total $ 45,964 $ 10,777 $ 8,406 $ 17,380 $ 82,527 $ 10,908,365 $ 10,990,892 $ 11,506 As of December 31, 2018 Commercial Commercial and Industrial $ 3,653 $ 118 $ 10 $ 542 $ 4,323 $ 1,326,826 $ 1,331,149 $ 515 Commercial Mortgage 561 — — 2,040 2,601 2,299,755 2,302,356 2,040 Construction — — — — — 170,061 170,061 — Lease Financing — — — — — 176,226 176,226 — Total Commercial 4,214 118 10 2,582 6,924 3,972,868 3,979,792 2,555 Consumer Residential Mortgage 5,319 638 2,446 5,321 13,724 3,660,072 3,673,796 1,203 Home Equity 3,323 1,581 2,684 3,671 11,259 1,670,183 1,681,442 765 Automobile 12,372 2,240 513 — 15,125 643,008 658,133 — Other 1 2,913 1,245 914 — 5,072 450,539 455,611 — Total Consumer 23,927 5,704 6,557 8,992 45,180 6,423,802 6,468,982 1,968 Total $ 28,141 $ 5,822 $ 6,567 $ 11,574 $ 52,104 $ 10,396,670 $ 10,448,774 $ 4,523 1 Comprised of other revolving credit, installment, and lease financing. 2 Represents non-accrual loans that are not past due 30 days or more; however, full payment of principal and interest is still not expected. Impaired Loans The following presents by class, information related to impaired loans as of December 31, 2019 , and December 31, 2018 . (dollars in thousands) Recorded Unpaid Related December 31, 2019 Impaired Loans with No Related Allowance Recorded: Commercial Commercial and Industrial $ 3,334 $ 3,334 $ — Commercial Mortgage 10,658 15,774 — Construction 1,190 1,190 — Total Commercial 15,182 20,298 — Total Impaired Loans with No Related Allowance Recorded $ 15,182 $ 20,298 $ — Impaired Loans with an Allowance Recorded: Commercial Commercial and Industrial $ 18,467 $ 18,750 $ 2,552 Commercial Mortgage 1,793 1,793 105 Total Commercial 20,260 20,543 2,657 Consumer Residential Mortgage 17,939 21,553 2,631 Home Equity 3,085 3,085 355 Automobile 17,086 17,086 212 Other 1 1,650 1,650 48 Total Consumer 39,760 43,374 3,246 Total Impaired Loans with an Allowance Recorded $ 60,020 $ 63,917 $ 5,903 Impaired Loans: Commercial $ 35,442 $ 40,841 $ 2,657 Consumer 39,760 43,374 3,246 Total Impaired Loans $ 75,202 $ 84,215 $ 5,903 December 31, 2018 Impaired Loans with No Related Allowance Recorded: Commercial Commercial and Industrial $ 4,587 $ 4,587 $ — Commercial Mortgage 2,712 6,212 — Construction 1,321 1,321 — Total Commercial 8,620 12,120 — Total Impaired Loans with No Related Allowance Recorded $ 8,620 $ 12,120 $ — Impaired Loans with an Allowance Recorded: Commercial Commercial and Industrial $ 1,856 $ 2,099 $ 130 Commercial Mortgage 1,822 1,822 92 Total Commercial 3,678 3,921 222 Consumer Residential Mortgage 19,753 23,635 3,051 Home Equity 3,359 3,359 350 Automobile 17,117 17,117 296 Other 1 2,098 2,098 57 Total Consumer 42,327 46,209 3,754 Total Impaired Loans with an Allowance Recorded $ 46,005 $ 50,130 $ 3,976 Impaired Loans: Commercial $ 12,298 $ 16,041 $ 222 Consumer 42,327 46,209 3,754 Total Impaired Loans $ 54,625 $ 62,250 $ 3,976 1 Comprised of other revolving credit and installment financing. The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2019 , and December 31, 2018 . Year Ended Year Ended (dollars in thousands) Average Interest Average Interest Impaired Loans with No Related Allowance Recorded: Commercial Commercial and Industrial $ 4,447 $ 284 $ 6,342 $ 310 Commercial Mortgage 8,308 62 4,642 160 Construction 1,243 81 1,360 69 Total Commercial 13,998 427 12,344 539 Total Impaired Loans with No Related Allowance Recorded $ 13,998 $ 427 $ 12,344 $ 539 Impaired Loans with an Allowance Recorded: Commercial Commercial and Industrial $ 5,651 $ 82 $ 1,475 $ 100 Commercial Mortgage 3,147 25 623 25 Total Commercial 8,798 107 2,098 125 Consumer Residential Mortgage 18,607 774 20,324 1,080 Home Equity 3,272 156 2,676 121 Automobile 17,529 1,179 16,190 1,116 Other 1 1,783 153 2,624 215 Total Consumer 41,191 2,262 41,814 2,532 Total Impaired Loans with an Allowance Recorded $ 49,989 $ 2,369 $ 43,912 $ 2,657 Impaired Loans: Commercial $ 22,796 $ 534 $ 14,442 $ 664 Consumer 41,191 2,262 41,814 2,532 Total Impaired Loans $ 63,987 $ 2,796 $ 56,256 $ 3,196 1 Comprised of other revolving credit and installment financing. For the year ended December 31, 2017 , the average recorded investment in impaired loans was $60.4 million and the interest income recognized on impaired loans was $2.8 million . For the years ended December 31, 2019 , December 31, 2018 , and December 31, 2017 , the amount of interest income recognized by the Company within the period that the loans were impaired were primarily related to loans modified in a troubled debt restructuring that were on accrual status. For the years ended December 31, 2019 , December 31, 2018 , and December 31, 2017 , the amount of interest income recognized using a cash-basis method of accounting during the time within that period that the loans were impaired was not material. Modifications A modification of a loan constitutes a troubled debt restructuring (“TDR”) when the Company for economic or legal reasons related to a borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Loans modified in a TDR were $69.1 million and $54.0 million as of December 31, 2019 , and December 31, 2018 , respectively. As of December 31, 2019 , there were $0.3 million commitments to lend additional funds on loans modified in a TDR. As of December 31, 2018 , there were $0.2 million commitments to lend additional funds on loans modified in a TDR. The Company offers various types of concessions when modifying a loan or lease. Commercial and industrial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor is often requested. Commercial mortgage and construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a co-borrower or guarantor. Construction loans modified in a TDR may also involve extending the interest-only payment period. Residential mortgage loans modified in a TDR generally include a lower interest rate and the loan being fully amortized for up to 40 years from the modification effective date. In some cases, the Company may forbear a portion of the unpaid principal balance with a balloon payment due upon maturity or pay-off of the loan. Land loans are also included in the class of residential mortgage loans. Land loans are typically structured as interest-only monthly payments with a balloon payment due at maturity. Land loan modifications usually involve extending the interest-only payments up to an additional five years with a balloon payment due at maturity, or re-amortizing the remaining balance over a period up to 360 months . Interest rates are not changed for land loan modifications. Home equity modifications are made infrequently and uniquely designed to meet the specific needs of each borrower. Automobile loans modified in a TDR are primarily comprised of loans where the Company has lowered monthly payments by extending the term. Loans modified in a TDR are typically already on non-accrual status and partial charge-offs have in some cases already been taken against the outstanding loan balance. As a result, loans modified in a TDR may have the financial effect of increasing the specific Allowance associated with the loan. An Allowance for impaired commercial and consumer loans that have been modified in a TDR is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates. The following presents by class, information related to loans modified in a TDR during the years ended December 31, 2019 , and December 31, 2018 . Loans Modified as a TDR for the Loans Modified as a TDR for the Troubled Debt Restructurings (dollars in thousands ) Number of Recorded 1 Increase in Number of Recorded 1 Increase in Commercial Commercial and Industrial 8 $ 17,585 $ 2,465 12 $ 1,449 $ 96 Commercial Mortgage 1 3,623 — 1 1,650 74 Total Commercial 9 21,208 2,465 13 3,099 170 Consumer Residential Mortgage 1 57 0 6 1,458 200 Home Equity 4 368 9 9 1,438 77 Automobile 332 5,911 73 366 7,400 128 Other 2 95 572 17 138 927 25 Total Consumer 432 6,908 99 519 11,223 430 Total 441 $ 28,116 $ 2,564 532 $ 14,322 $ 600 1 The period end balances reflect all partial paydowns and charge-offs since the modification date. TDRs fully paid off, charged off, or foreclosed upon by period end are not included. 2 Comprised of other revolving credit and installment financing. The following presents by class, loans modified in a TDR that defaulted during the year ended December 31, 2019 , and December 31, 2018 , and within twelve months of their modification date. A TDR is considered to be in default once it becomes 60 days or more past due following a modification. Year Ended December 31, 2019 Year Ended December 31, 2018 TDRs that Defaulted During the Period, (dollars in thousands) Number of Recorded 1 Number of Recorded 1 Commercial Commercial and Industrial — $ — 1 $ 3 Total Commercial — — 1 3 Consumer Residential Mortgage 1 132 — — Home Equity 1 192 — — Automobile 40 607 38 680 Other 2 22 129 34 194 Total Consumer 64 1,060 72 874 Total 64 $ 1,060 73 $ 877 1 The period end balances reflect all paydowns and charge-offs since the modification date. TDRs fully paid off, charged off, or foreclosed upon by period end are not included. 2 Comprised of other revolving credit and installment financing. Loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a TDR subsequently default, the Company evaluates the loan for possible further impairment. The specific Allowance associated with the loan may be increased, adjustments may be made in the allocation of the Allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan. Foreclosure Proceedings Consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure totaled $1.0 million as of December 31, 2019 . |