Loans and Leases | LOANS AND LEASES BancShares’ accounting methods for loans and leases depends on whether they are originated or purchased, and if purchased, whether or not the loans reflect more than insignificant credit deterioration since origination, which is determined as of the acquisition date. Non-purchased credit deteriorated (“PCD”) loans consist of loans originated by BancShares and loans purchased from other institutions, that do not reflect more than insignificant credit deterioration at acquisition. Purchased loans which reflect more than insignificant credit deterioration are classified as PCD and reported as a single loan segment or class. At the date of acquisition, all acquired loans are recorded at fair value. Loans and leases outstanding included the following at September 30, 2021 and December 31, 2020: (Dollars in thousands) September 30, 2021 December 31, 2020 Commercial: Construction and land development $ 1,247,680 $ 985,424 Owner occupied commercial mortgage 11,625,554 11,165,012 Non-owner occupied commercial mortgage 3,002,928 2,987,689 Commercial and industrial and leases 5,266,266 5,013,644 SBA-PPP 1,086,917 2,406,291 Total commercial loans 22,229,345 22,558,060 Consumer: Residential mortgage 5,701,346 5,561,686 Revolving mortgage 1,834,690 2,052,854 Construction and land development 391,768 348,123 Consumer auto 1,350,377 1,255,402 Consumer other 635,408 552,968 Total consumer loans 9,913,589 9,771,033 PCD loans 373,255 462,882 Total loans and leases $ 32,516,189 $ 32,791,975 At September 30, 2021 and December 31, 2020, accrued interest receivable on loans was $88.1 million and $107.7 million, respectively, and was excluded from the estimate of credit losses. Certain residential real estate loans are originated to be sold to investors. BancShares has elected the fair value option on these loans, which are recorded in loans held for sale. In addition, BancShares may change its strategy for certain portfolio loans and decide to sell them in the secondary market. At that time, portfolio loans are transferred to loans held for sale at the lower of cost or market value. Loans held for sale totaled $98.5 million and $124.8 million at September 30, 2021 and December 31, 2020, respectively. The following table presents selected components of the amortized cost of loans. (Dollars in thousands) September 30, 2021 December 31, 2020 Deferred fees, including unearned fees and unamortized costs on non-PCD loans Net deferred fees related to SBA-PPP loans $ 39,372 $ 41,064 Net deferred fees related to other portfolios 15,162 9,153 Total net deferred fees $ 54,534 $ 50,217 Net unamortized discount on purchased loans Non-PCD $ 13,350 $ 19,473 PCD 32,623 45,254 Total $ 45,973 $ 64,727 The aging of the outstanding loans and leases, by class, at September 30, 2021 and December 31, 2020 is provided in the tables below. Loans and leases past due less than 30 days are considered current as various grace periods allow borrowers to make payments within a stated period after the due date and still remain in compliance with the loan agreement. September 30, 2021 (Dollars in thousands) 30-59 days 60-89 days 90 days or greater Total past Current Total loans Commercial: Construction and land development $ 233 $ — $ 1,424 $ 1,657 $ 1,246,023 $ 1,247,680 Owner occupied commercial mortgage 7,210 5,553 8,198 20,961 11,604,593 11,625,554 Non-owner occupied commercial mortgage 752 1,245 6,716 8,713 2,994,215 3,002,928 Commercial and industrial and leases 10,309 3,234 9,690 23,233 5,243,033 5,266,266 SBA-PPP — — — — 1,086,917 1,086,917 Total commercial loans 18,504 10,032 26,028 54,564 22,174,781 22,229,345 Consumer: Residential mortgage 18,417 6,607 20,864 45,888 5,655,458 5,701,346 Revolving mortgage 5,587 1,443 4,513 11,543 1,823,147 1,834,690 Construction and land development 477 1,719 70 2,266 389,502 391,768 Consumer auto 5,345 1,173 1,263 7,781 1,342,596 1,350,377 Consumer other 2,197 1,122 1,295 4,614 630,794 635,408 Total consumer loans 32,023 12,064 28,005 72,092 9,841,497 9,913,589 PCD loans 11,407 5,200 27,111 43,718 329,537 373,255 Total loans and leases $ 61,934 $ 27,296 $ 81,144 $ 170,374 $ 32,345,815 $ 32,516,189 December 31, 2020 (Dollars in thousands) 30-59 days 60-89 days 90 days or greater Total past Current Total loans Commercial: Construction and land development $ 956 $ 527 $ 1,603 $ 3,086 $ 982,338 $ 985,424 Owner occupied commercial mortgage 8,757 2,232 14,082 25,071 11,139,941 11,165,012 Non-owner occupied commercial mortgage 12,370 — 5,973 18,343 2,969,346 2,987,689 Commercial and industrial and leases 14,532 2,842 3,243 20,617 4,993,027 5,013,644 SBA-PPP — — — — 2,406,291 2,406,291 Total commercial loans 36,615 5,601 24,901 67,117 22,490,943 22,558,060 Consumer: Residential mortgage 43,218 8,364 31,690 83,272 5,478,414 5,561,686 Revolving mortgage 11,977 2,626 7,415 22,018 2,030,836 2,052,854 Construction and land development 932 77 330 1,339 346,784 348,123 Consumer auto 6,825 1,835 1,076 9,736 1,245,666 1,255,402 Consumer other 3,610 1,464 1,505 6,579 546,389 552,968 Total consumer loans 66,562 14,366 42,016 122,944 9,648,089 9,771,033 PCD loans 18,322 6,076 31,026 55,424 407,458 462,882 Total loans and leases $ 121,499 $ 26,043 $ 97,943 $ 245,485 $ 32,546,490 $ 32,791,975 The amortized cost, by class, of loans and leases on nonaccrual status, and loans and leases greater than 90 days past due and still accruing at September 30, 2021 and December 31, 2020, were as follows: September 30, 2021 December 31, 2020 (Dollars in thousands) Nonaccrual Loans and Nonaccrual Loans and Commercial: Construction and land development $ 1,457 $ — $ 1,661 $ — Owner occupied commercial mortgage 19,886 601 23,103 3,625 Non-owner occupied commercial mortgage 10,613 — 7,932 147 Commercial and industrial and leases 20,689 1,414 10,626 540 Total commercial loans 52,645 2,015 43,322 4,312 Consumer: Residential mortgage 44,463 779 66,345 — Revolving mortgage 17,295 — 22,236 — Construction and land development 571 — 652 — Consumer auto 3,287 — 3,166 — Consumer other 476 1,033 823 1,195 Total consumer loans 66,092 1,812 93,222 1,195 PCD loans 45,038 1,787 54,939 355 Total loans and leases $ 163,775 $ 5,614 $ 191,483 $ 5,862 Credit Quality Loans and leases are monitored for credit quality on a recurring basis. Commercial and consumer loans and leases have different credit quality indicators as a result of the unique characteristics of the loan segments being evaluated. The credit quality indicators for commercial loans and leases are borrower risk classifications developed through a review of individual borrowers on an ongoing basis. Commercial loans are evaluated at least annually, with more frequent evaluations done on criticized loans. Commercial loans are also updated if there is evidence of potential credit deterioration, such as delinquency. Commercial credit cards are included in the Commercial and industrial and leases segment, but are evaluated based primarily upon delinquency status. The risk classifications as of the date presented are based on the most recent assessment performed and are defined below: Pass – A pass rated asset is not adversely classified because it does not display any of the characteristics for adverse classification. Special mention – A special mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, such potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and do not warrant adverse classification. Substandard – A substandard asset is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Assets classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These assets are characterized by the distinct possibility of loss if the deficiencies are not corrected. Doubtful – An asset classified as doubtful has all the weaknesses inherent in an asset classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently existing facts, conditions and values. Loss – Assets classified as loss are considered uncollectible and of such little value that it is inappropriate to be carried as an asset. This classification is not necessarily equivalent to any potential for recovery or salvage value, but rather that it is not appropriate to defer a full charge-off even though partial recovery may be affected in the future. Ungraded – Ungraded loans represent loans that are not included in the individual credit grading process due to their relatively small balances or borrower type. The majority of ungraded loans at September 30, 2021 relate to business credit cards. Business credit card loans are subject to automatic charge-off when they become 120 days past due in the same manner as unsecured consumer lines of credit. The remaining balance is comprised of a small amount of commercial mortgage, lease financing and other commercial real estate loans. The credit quality indicators for consumer and PCD loans are based on delinquency status of the borrower as of the date presented. As the borrower becomes more delinquent, the likelihood of loss increases. The following tables represent current credit quality indicators by origination year as of September 30, 2021. September 30, 2021 Commercial Loans Amortized Cost Basis by Origination Year Classification: 2021 2020 2019 2018 2017 Prior Revolving Revolving converted to term loans Total (Dollars in thousands) Construction and land development Pass $ 373,012 $ 451,926 $ 256,321 $ 98,892 $ 44,343 $ 12,396 $ 4,231 $ — $ 1,241,121 Special Mention 19 157 — 134 63 — — — 373 Substandard 300 38 326 1,442 4,070 10 — — 6,186 Total 373,331 452,121 256,647 100,468 48,476 12,406 4,231 — 1,247,680 Owner occupied commercial mortgage Pass 2,069,209 3,078,093 1,989,052 1,316,012 1,036,593 1,778,334 122,411 120 11,389,824 Special Mention 2,082 24,356 29,358 28,165 12,199 20,469 4,047 71 120,747 Substandard 9,459 7,495 22,482 10,947 18,598 39,695 6,307 — 114,983 Total 2,080,750 3,109,944 2,040,892 1,355,124 1,067,390 1,838,498 132,765 191 11,625,554 Non-owner occupied commercial mortgage Pass 438,949 770,507 587,335 278,507 283,867 507,411 31,876 — 2,898,452 Special Mention 495 487 263 10,219 800 5,654 500 — 18,418 Substandard 2,615 11,742 22,600 10,184 10,243 27,352 1,322 — 86,058 Total 442,059 782,736 610,198 298,910 294,910 540,417 33,698 — 3,002,928 Commercial and industrial and leases Pass 1,238,557 1,162,246 714,374 344,220 193,857 350,870 1,087,462 5,136 5,096,722 Special Mention 2,323 8,279 22,100 3,528 4,070 4,324 4,575 206 49,405 Substandard 7,765 7,978 4,770 4,241 3,175 4,221 17,392 1,280 50,822 Doubtful — — — — — 1 1 — 2 Ungraded — — — — — — 69,315 — 69,315 Total 1,248,645 1,178,503 741,244 351,989 201,102 359,416 1,178,745 6,622 5,266,266 SBA-PPP Pass 1,011,370 75,547 — — — — — — 1,086,917 Total commercial $ 5,156,155 $ 5,598,851 $ 3,648,981 $ 2,106,491 $ 1,611,878 $ 2,750,737 $ 1,349,439 $ 6,813 $ 22,229,345 Consumer and PCD Loans Amortized Cost Basis by Origination Year Days Past Due: 2021 2020 2019 2018 2017 Prior Revolving Revolving converted to term loans Total (Dollars in thousands) Residential mortgage Current $ 1,591,381 $ 1,651,853 $ 690,779 $ 410,446 $ 390,940 $ 900,129 $ 19,930 $ — $ 5,655,458 30-59 days 252 1,506 4,728 3,066 1,486 7,379 — — 18,417 60-89 days 788 295 — 764 881 3,879 — — 6,607 90 days or greater 55 713 1,059 1,511 3,084 14,193 249 — 20,864 Total 1,592,476 1,654,367 696,566 415,787 396,391 925,580 20,179 — 5,701,346 Revolving mortgage Current — — — — — — 1,700,947 122,200 1,823,147 30-59 days — — — — — — 2,939 2,648 5,587 60-89 days — — — — — — 378 1,065 1,443 90 days or greater — — — — — — 1,901 2,612 4,513 Total — — — — — — 1,706,165 128,525 1,834,690 Construction and land development Current 165,993 175,007 26,889 10,258 5,745 3,016 2,594 — 389,502 30-59 days 33 416 — — — 28 — — 477 60-89 days — 1,650 — — 69 — — — 1,719 90 days or greater — 29 — — — 41 — — 70 Total 166,026 177,102 26,889 10,258 5,814 3,085 2,594 — 391,768 Consumer auto Current 504,537 384,849 229,033 139,764 59,487 24,926 — — 1,342,596 30-59 days 889 1,262 1,450 877 586 281 — — 5,345 60-89 days 200 330 234 255 84 70 — — 1,173 90 days or greater 140 347 420 228 83 45 — — 1,263 Total 505,766 386,788 231,137 141,124 60,240 25,322 — — 1,350,377 Consumer other Current 117,047 33,700 16,222 5,431 5,011 29,871 423,512 — 630,794 30-59 days 89 63 18 24 — 13 1,990 — 2,197 60-89 days 11 25 89 1 — — 996 — 1,122 90 days or greater 49 12 17 1 — — 1,216 — 1,295 Total 117,196 33,800 16,346 5,457 5,011 29,884 427,714 — 635,408 Total consumer $ 2,381,464 $ 2,252,057 $ 970,938 $ 572,626 $ 467,456 $ 983,871 $ 2,156,652 $ 128,525 $ 9,913,589 PCD loans Current $ — $ 23,091 $ 23,792 $ 21,034 $ 20,864 $ 213,681 $ 10,622 $ 16,453 $ 329,537 30-59 days — 846 61 785 1,393 7,777 113 432 11,407 60-89 days — 98 149 48 — 4,699 29 177 5,200 90 days or greater — 806 230 3,698 1,070 20,319 16 972 27,111 Total PCD $ — $ 24,841 $ 24,232 $ 25,565 $ 23,327 $ 246,476 $ 10,780 $ 18,034 $ 373,255 Total loans and leases $ 7,537,619 $ 7,875,749 $ 4,644,151 $ 2,704,682 $ 2,102,661 $ 3,981,084 $ 3,516,871 $ 153,372 $ 32,516,189 The following tables represent current credit quality indicators by origination year as of December 31, 2020. December 31, 2020 Commercial Loans Amortized Cost Basis by Origination Year Classification: 2020 2019 2018 2017 2016 Prior Revolving Revolving converted to term loans Total (Dollars in thousands) Construction and land development Pass $ 342,183 $ 341,233 $ 190,429 $ 50,776 $ 23,969 $ 11,306 $ 10,969 $ — $ 970,865 Special Mention 246 — 6,421 5,342 — — 153 — 12,162 Substandard 229 629 1,450 — 8 81 — — 2,397 Total 342,658 341,862 198,300 56,118 23,977 11,387 11,122 — 985,424 Owner occupied commercial mortgage Pass 3,183,467 2,201,165 1,625,141 1,301,412 1,049,858 1,454,020 101,556 133 10,916,752 Special Mention 6,274 20,702 36,739 12,387 17,699 25,693 5,115 72 124,681 Substandard 10,280 19,052 9,842 20,928 13,736 41,303 8,438 — 123,579 Total 3,200,021 2,240,919 1,671,722 1,334,727 1,081,293 1,521,016 115,109 205 11,165,012 Non-owner occupied commercial mortgage Pass 865,514 609,975 378,136 331,800 282,810 391,517 32,149 — 2,891,901 Special Mention 569 905 10,794 1,808 5,121 3,279 483 — 22,959 Substandard 2,899 18,546 12,296 8,764 14,087 15,427 810 — 72,829 Total 868,982 629,426 401,226 342,372 302,018 410,223 33,442 — 2,987,689 Commercial and industrial and leases Pass 1,620,622 983,852 504,463 310,468 234,735 286,996 899,978 5,520 4,846,634 Special Mention 3,146 17,065 7,265 5,393 3,307 4,912 9,152 189 50,429 Substandard 17,811 4,095 4,370 4,257 2,548 3,801 22,384 983 60,249 Ungraded — — — — — — 56,332 — 56,332 Total 1,641,579 1,005,012 516,098 320,118 240,590 295,709 987,846 6,692 5,013,644 SBA-PPP Pass 2,406,291 — — — — — — — 2,406,291 Total commercial $ 8,459,531 $ 4,217,219 $ 2,787,346 $ 2,053,335 $ 1,647,878 $ 2,238,335 $ 1,147,519 $ 6,897 $ 22,558,060 Consumer and PCD Loans Amortized Cost Basis by Origination Year Days Past Due: 2020 2019 2018 2017 2016 Prior Revolving Revolving converted to term loans Total (Dollars in thousands) Residential mortgage Current $ 1,882,683 $ 978,298 $ 655,798 $ 596,309 $ 461,719 $ 878,634 $ 24,973 $ — $ 5,478,414 30-59 days 2,278 4,573 11,463 3,772 8,613 12,299 220 — 43,218 60-89 days 30 100 1,246 1,449 834 4,705 — — 8,364 90 days or greater 282 4,831 3,150 4,015 5,689 13,723 — — 31,690 Total 1,885,273 987,802 671,657 605,545 476,855 909,361 25,193 — 5,561,686 Revolving mortgage Current — — — — — — 1,879,968 150,868 2,030,836 30-59 days — — — — — — 8,241 3,736 11,977 60-89 days — — — — — — 527 2,099 2,626 90 days or greater — — — — — — 2,301 5,114 7,415 Total — — — — — — 1,891,037 161,817 2,052,854 Construction and land development Current 215,112 85,707 24,860 10,269 6,093 2,218 2,525 — 346,784 30-59 days — 420 121 370 — 21 — — 932 60-89 days — — — 9 — 68 — — 77 90 days or greater — — — — — 330 — — 330 Total 215,112 86,127 24,981 10,648 6,093 2,637 2,525 — 348,123 Consumer auto Current 521,719 340,594 219,597 104,280 49,872 9,604 — — 1,245,666 30-59 days 2,175 1,873 1,257 842 544 134 — — 6,825 60-89 days 329 689 312 351 109 45 — — 1,835 90 days or greater 170 527 217 57 102 3 — — 1,076 Total 524,393 343,683 221,383 105,530 50,627 9,786 — — 1,255,402 Consumer other Current 53,842 27,117 10,911 7,159 2,980 29,336 415,044 — 546,389 30-59 days 322 114 77 18 11 7 3,061 — 3,610 60-89 days 102 20 13 18 3 23 1,285 — 1,464 90 days or greater 53 84 8 — — — 1,360 — 1,505 Total 54,319 27,335 11,009 7,195 2,994 29,366 420,750 — 552,968 Total consumer $ 2,679,097 $ 1,444,947 $ 929,030 $ 728,918 $ 536,569 $ 951,150 $ 2,339,505 $ 161,817 $ 9,771,033 PCD loans Current $ 31,475 $ 25,425 $ 27,183 $ 27,955 $ 28,995 $ 232,186 $ 13,212 $ 21,027 $ 407,458 30-59 days 999 925 801 718 1,341 12,637 156 745 18,322 60-89 days 447 81 312 695 97 4,098 9 337 6,076 90 days or greater 721 2,325 4,755 1,208 897 19,963 111 1,046 31,026 Total PCD $ 33,642 $ 28,756 $ 33,051 $ 30,576 $ 31,330 $ 268,884 $ 13,488 $ 23,155 $ 462,882 Total loans and leases $ 11,172,270 $ 5,690,922 $ 3,749,427 $ 2,812,829 $ 2,215,777 $ 3,458,369 $ 3,500,512 $ 191,869 $ 32,791,975 The following table provides information regarding loans pledged as collateral for borrowing capacity through the FHLB of Atlanta and the Federal Reserve Bank (“FRB”) as of September 30, 2021 and December 31, 2020: (Dollars in thousands) September 30, 2021 December 31, 2020 FHLB of Atlanta Lendable collateral value of pledged non-PCD loans $ 9,171,610 $ 8,637,844 Less: Advances 645,663 652,675 Available borrowing capacity $ 8,525,947 $ 7,985,169 Pledged non-PCD loans $ 12,646,208 $ 12,157,153 FRB Lendable collateral value of pledged non-PCD loans $ 3,795,878 $ 3,321,762 Less: Advances — — Available borrowing capacity $ 3,795,878 $ 3,321,762 Pledged non-PCD loans $ 4,610,291 $ 4,104,866 |