Loans and Allowance for Loan Losses | 3 Months Ended |
Mar. 31, 2014 |
Loans and Allowance For Loan Losses [Abstract] | ' |
Loans and Allowance for Loan Losses | ' |
Note 5 – Loans and Allowance for Loan Losses |
Major classifications of loans as of March 31, 2014, December 31, 2013 and March 31, 2013, are summarized as follows (in thousands). |
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| | March 31, | | | December 31, | | | March 31, | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2014 | | | 2013 | | | 2013 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Commercial (secured by real estate) | | $ | 1,765,621 | | | $ | 1,756,710 | | | $ | 1,804,030 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 495,178 | | | | 471,961 | | | | 453,764 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial construction | | | 148,454 | | | | 148,903 | | | | 152,410 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial | | | 2,409,253 | | | | 2,377,574 | | | | 2,410,204 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 866,615 | | | | 875,077 | | | | 849,802 | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 446,705 | | | | 440,887 | | | | 396,173 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 317,749 | | | | 328,579 | | | | 371,733 | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer installment | | | 106,991 | | | | 111,045 | | | | 110,796 | | | | | | | | | | | | | | | | | | | | | | | | | |
Indirect auto | | | 208,395 | | | | 196,104 | | | | 54,852 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total loans | | | 4,355,708 | | | | 4,329,266 | | | | 4,193,560 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Less allowance for loan losses | | | (75,223 | ) | | | (76,762 | ) | | | (105,753 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
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Loans, net | | $ | 4,280,485 | | | $ | 4,252,504 | | | $ | 4,087,807 | | | | | | | | | | | | | | | | | | | | | | | | | |
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At March 31, 2014, December 31, 2013 and March 31, 2013, loans with a carrying value of $2.07 billion, $1.77 billion and $1.94 billion, respectively, were pledged as collateral to secure FHLB advances and other contingent funding sources. |
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During the second quarter of 2013, United executed a plan to accelerate the disposition of classified assets including performing classified loans, nonperforming loans and foreclosed properties. The purpose of the accelerated classified asset disposition plan was to resolve legacy credit problems remaining from the recent financial crisis and to accelerate the improvement of United’s credit measures toward pre-crisis levels. The classified asset sales included individual note and foreclosed property sales and a large bulk sale of classified assets to a single investor. The bulk sale included performing and nonperforming classified loans and foreclosed properties. The assets were divided into four separate pools that were bid separately by potential buyers. A single purchaser was the high bidder for each of the four pools. The table below shows the allocation among impaired loans, loans that were not considered impaired and foreclosed properties, including United’s recorded investment in those assets, the sales proceeds and the resulting net charge-offs of assets sold in the bulk sale transaction (in thousands). |
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| | Recorded Investment | | | Net Sales Proceeds | | | Net | | | | | | | | | | | | | | | | | | | | | | | | | |
Charge-Off | | | | | | | | | | | | | | | | | | | | | | | | |
Loans considered impaired | | $ | 96,829 | | | $ | 56,298 | | | $ | (40,531 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Loans not considered impaired | | | 25,687 | | | | 15,227 | | | | (10,460 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Foreclosed properties | | | 8,398 | | | | 5,933 | | | | (2,465 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Total assets sold | | $ | 130,914 | | | $ | 77,458 | | | $ | (53,456 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
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The loans considered impaired in the table above were assigned specific reserves of $6.86 million in the most recent analysis of the allowance for loan losses prior to the sale. Because the assets were sold at liquidation prices in a bulk transaction with no recourse, the sales price was generally lower than the appraised value of the foreclosed properties and loan collateral. Although the classified asset sales increased charge-offs during the second quarter of 2013, they accomplished management’s goal of moving classified asset levels toward the pre-crisis range. |
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The allowance for loan losses represents management’s estimate of probable incurred losses in the loan portfolio as of the end of the period. In 2013, United established an allowance for unfunded commitments separate from the allowance for loan losses due to significant growth in unfunded loan commitments. The allowance for unfunded commitments is included in other liabilities in the consolidated balance sheet. Combined, the allowance for loan losses and allowance for unfunded commitments are referred to as the allowance for credit losses. |
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The following table presents the balance and activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2014 and 2013 (in thousands). |
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Three Months Ended March 31, 2014 | | Beginning Balance | | | Charge-Offs | | | Recoveries | | | Provision | | | Ending Balance | | | | | | | | | | | | | | | | | |
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Commercial (secured by real estate) | | $ | 24,338 | | | $ | (572 | ) | | $ | 89 | | | $ | 7,363 | | | $ | 31,218 | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 6,527 | | | | (963 | ) | | | 541 | | | | (1,858 | ) | | | 4,247 | | | | | | | | | | | | | | | | | |
Commercial construction | | | 3,669 | | | | - | | | | - | | | | 308 | | | | 3,977 | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 15,446 | | | | (1,581 | ) | | | 66 | | | | 2,036 | | | | 15,967 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 5,528 | | | | (1,003 | ) | | | 10 | | | | 1,585 | | | | 6,120 | | | | | | | | | | | | | | | | | |
Residential construction | | | 12,532 | | | | (304 | ) | | | 93 | | | | (140 | ) | | | 12,181 | | | | | | | | | | | | | | | | | |
Consumer installment | | | 1,353 | | | | (676 | ) | | | 327 | | | | (287 | ) | | | 717 | | | | | | | | | | | | | | | | | |
Indirect auto | | | 1,126 | | | | (77 | ) | | | 11 | | | | (264 | ) | | | 796 | | | | | | | | | | | | | | | | | |
Unallocated | | | 6,243 | | | | - | | | | - | | | | (6,243 | ) | | | - | | | | | | | | | | | | | | | | | |
Total allowance for loan losses | | | 76,762 | | | | (5,176 | ) | | | 1,137 | | | | 2,500 | | | | 75,223 | | | | | | | | | | | | | | | | | |
Allowance for unfunded commitments | | | 2,165 | | | | - | | | | - | | | | - | | | | 2,165 | | | | | | | | | | | | | | | | | |
Total allowance for credit losses | | $ | 78,927 | | | $ | (5,176 | ) | | $ | 1,137 | | | $ | 2,500 | | | $ | 77,388 | | | | | | | | | | | | | | | | | |
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Three Months Ended March 31, 2013 | | Beginning Balance | | | Charge-Offs | | | Recoveries | | | Provision | | | Ending Balance | | | | | | | | | | | | | | | | | |
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Commercial (secured by real estate) | | $ | 27,847 | | | $ | (5,454 | ) | | $ | 211 | | | $ | 7,804 | | | $ | 30,408 | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 5,537 | | | | (1,823 | ) | | | 322 | | | | 1,590 | | | | 5,626 | | | | | | | | | | | | | | | | | |
Commercial construction | | | 8,389 | | | | (45 | ) | | | 49 | | | | (285 | ) | | | 8,108 | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 19,117 | | | | (1,797 | ) | | | 162 | | | | 1,741 | | | | 19,223 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 7,525 | | | | (559 | ) | | | 47 | | | | 692 | | | | 7,705 | | | | | | | | | | | | | | | | | |
Residential construction | | | 26,662 | | | | (2,982 | ) | | | 9 | | | | (363 | ) | | | 23,326 | | | | | | | | | | | | | | | | | |
Consumer installment | | | 2,527 | | | | (665 | ) | | | 181 | | | | (263 | ) | | | 1,780 | | | | | | | | | | | | | | | | | |
Indirect auto | | | 220 | | | | (42 | ) | | | 2 | | | | 132 | | | | 312 | | | | | | | | | | | | | | | | | |
Unallocated | | | 9,313 | | | | - | | | | - | | | | (48 | ) | | | 9,265 | | | | | | | | | | | | | | | | | |
Total allowance for loan losses | | | 107,137 | | | | (13,367 | ) | | | 983 | | | | 11,000 | | | | 105,753 | | | | | | | | | | | | | | | | | |
Allowance for unfunded commitments | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | |
Total allowance for credit losses | | $ | 107,137 | | | $ | (13,367 | ) | | $ | 983 | | | $ | 11,000 | | | $ | 105,753 | | | | | | | | | | | | | | | | | |
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The following table represents the recorded investment in loans by portfolio segment and the balance of the allowance for loan losses assigned to each segment based on the method of evaluating the loans for impairment as of March 31, 2014, December 31, 2013 and March 31, 2013 (in thousands). |
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| | Allowance for Loan Losses | |
| | 31-Mar-14 | | | 31-Dec-13 | | | 31-Mar-13 | |
| | Individually evaluated for impairment | | | Collectively evaluated for impairment | | | Ending Balance | | | Individually evaluated for impairment | | | Collectively evaluated for impairment | | | Ending Balance | | | Individually evaluated for impairment | | | Collectively evaluated for impairment | | | Ending Balance | |
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Commercial (secured by real estate) | | $ | 3,259 | | | $ | 27,959 | | | $ | 31,218 | | | $ | 2,013 | | | $ | 22,325 | | | $ | 24,338 | | | $ | 5,089 | | | $ | 25,319 | | | $ | 30,408 | |
Commercial & industrial | | | 253 | | | | 3,994 | | | | 4,247 | | | | 66 | | | | 6,461 | | | | 6,527 | | | | 1,026 | | | | 4,600 | | | | 5,626 | |
Commercial construction | | | 469 | | | | 3,508 | | | | 3,977 | | | | 112 | | | | 3,557 | | | | 3,669 | | | | 2,093 | | | | 6,015 | | | | 8,108 | |
Residential mortgage | | | 3,079 | | | | 12,888 | | | | 15,967 | | | | 2,914 | | | | 12,532 | | | | 15,446 | | | | 1,804 | | | | 17,419 | | | | 19,223 | |
Home equity lines of credit | | | 67 | | | | 6,053 | | | | 6,120 | | | | 5 | | | | 5,523 | | | | 5,528 | | | | - | | | | 7,705 | | | | 7,705 | |
Residential construction | | | 1,253 | | | | 10,928 | | | | 12,181 | | | | 688 | | | | 11,844 | | | | 12,532 | | | | 1,945 | | | | 21,381 | | | | 23,326 | |
Consumer installment | | | 19 | | | | 698 | | | | 717 | | | | 224 | | | | 1,129 | | | | 1,353 | | | | 14 | | | | 1,766 | | | | 1,780 | |
Indirect auto | | | - | | | | 796 | | | | 796 | | | | - | | | | 1,126 | | | | 1,126 | | | | - | | | | 312 | | | | 312 | |
Unallocated | | | - | | | | - | | | | - | | | | - | | | | 6,243 | | | | 6,243 | | | | - | | | | 9,265 | | | | 9,265 | |
Total allowance for loan losses | | | 8,399 | | | | 66,824 | | | | 75,223 | | | | 6,022 | | | | 70,740 | | | | 76,762 | | | | 11,971 | | | | 93,782 | | | | 105,753 | |
Allowance for unfunded commitments | | | - | | | | 2,165 | | | | 2,165 | | | | - | | | | 2,165 | | | | 2,165 | | | | - | | | | - | | | | - | |
Total allowance for credit losses | | $ | 8,399 | | | $ | 68,989 | | | $ | 77,388 | | | $ | 6,022 | | | $ | 72,905 | | | $ | 78,927 | | | $ | 11,971 | | | $ | 93,782 | | | $ | 105,753 | |
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| | Loans Outstanding | |
| | 31-Mar-14 | | | 31-Dec-13 | | | 31-Mar-13 | |
| | Individually | | | Collectively | | | Ending Balance | | | Individually | | | Collectively | | | Ending Balance | | | Individually | | | Collectively | | | Ending Balance | |
evaluated for | evaluated for | evaluated for | evaluated for | evaluated for | evaluated for |
impairment | impairment | impairment | impairment | impairment | impairment |
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Commercial (secured by real estate) | | $ | 55,006 | | | $ | 1,710,615 | | | $ | 1,765,621 | | | $ | 60,208 | | | $ | 1,696,502 | | | $ | 1,756,710 | | | $ | 86,978 | | | $ | 1,717,052 | | | $ | 1,804,030 | |
Commercial & industrial | | | 4,167 | | | | 491,011 | | | | 495,178 | | | | 4,217 | | | | 467,744 | | | | 471,961 | | | | 50,347 | | | | 403,417 | | | | 453,764 | |
Commercial construction | | | 11,390 | | | | 137,064 | | | | 148,454 | | | | 13,715 | | | | 135,188 | | | | 148,903 | | | | 38,970 | | | | 113,440 | | | | 152,410 | |
Residential mortgage | | | 21,303 | | | | 845,312 | | | | 866,615 | | | | 20,167 | | | | 854,910 | | | | 875,077 | | | | 21,916 | | | | 827,886 | | | | 849,802 | |
Home equity lines of credit | | | 505 | | | | 446,200 | | | | 446,705 | | | | 505 | | | | 440,382 | | | | 440,887 | | | | 240 | | | | 395,933 | | | | 396,173 | |
Residential construction | | | 12,409 | | | | 305,340 | | | | 317,749 | | | | 14,808 | | | | 313,771 | | | | 328,579 | | | | 31,936 | | | | 339,797 | | | | 371,733 | |
Consumer installment | | | 340 | | | | 106,651 | | | | 106,991 | | | | 999 | | | | 110,046 | | | | 111,045 | | | | 407 | | | | 110,389 | | | | 110,796 | |
Indirect auto | | | - | | | | 208,395 | | | | 208,395 | | | | - | | | | 196,104 | | | | 196,104 | | | | - | | | | 54,852 | | | | 54,852 | |
Total loans | | $ | 105,120 | | | $ | 4,250,588 | | | $ | 4,355,708 | | | $ | 114,619 | | | $ | 4,214,647 | | | $ | 4,329,266 | | | $ | 230,794 | | | $ | 3,962,766 | | | $ | 4,193,560 | |
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United considers all loan relationships that are on nonaccrual with a balance of $500,000 or greater and all troubled debt restructurings (“TDRs”) to be impaired. In addition, United reviews all accruing substandard loan relationships greater than $2 million to determine if the loan is impaired. A loan is considered impaired when, based on current events and circumstances, it is probable that all amounts due, according to the contractual terms of the loan, will not be collected. All TDRs are considered impaired regardless of accrual status. Impairment 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 fair value of the collateral if the loan is collateral dependent. A specific reserve is established for impaired loans for the amount of calculated impairment. Interest payments received on impaired nonaccrual loans are applied as a reduction of the outstanding principal balance. For impaired loans not on nonaccrual status, interest is accrued according to the terms of the loan agreement. Loans are evaluated for impairment quarterly and specific reserves are established in the allowance for loan losses for any measured impairment. |
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Each quarter, United’s management prepares an analysis of the allowance for credit losses to determine the appropriate balance that measures and quantifies the amount of probable incurred loss in the loan portfolio. The allowance is comprised of specific reserves which are determined as described above and general reserves which are determined based on historical loss experience as adjusted for current trends and economic conditions multiplied by a loss emergence period factor. United uses eight quarters of historical loss experience weighted toward the most recent four quarters to determine the loss factors to be used in the reserve calculation for loans evaluated in the aggregate. Eight quarters has been determined to be an appropriate time period as it is recent enough to be relevant to current conditions and covers a length of time sufficient to minimize distortions caused by nonrecurring and unusual activity that might otherwise influence a shorter time period. In previous quarters, the weighted average was calculated by multiplying each quarter’s annualized historical net charge-off rate by 1 through 8, with 8 representing the most recent quarter and 1 representing the oldest quarter. United adopted this method of weighting quarterly loss rates to capture the rapidly deteriorating credit conditions in its loss factors during the financial crisis. Now that credit conditions have begun to stabilize, management concluded in the first quarter of 2014 that it was appropriate to apply a more level weighting to capture the full range of the loss cycle. Therefore in the first quarter of 2014, United applied different weighting factors to the eight quarters of losses. For the four most recent quarters, United applied a weighting factor of 1.75. For the four oldest quarters, United applied a weighting of 1.00 for each quarterly loss factor. Management believes the current weightings are more appropriate to measure the unconfirmed loss present in the loan portfolio. |
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Also, beginning in the first quarter of 2014, United changed its method of measuring the loss emergence period in the allowance analysis. The rapidly deteriorating credit conditions during the peak of the credit cycle shortened the length of time between the incurrence of a loss and its recognition as a charge off. In most cases, the loss confirmation cycle was within a twelve month period which made the use of annualized loss factors appropriate for measuring the amount of unconfirmed loss in the loan portfolio. As United has moved out beyond the peak of the financial crisis, the loss confirmation cycle has extended. United calculates the loss emergence period for each pool of loans based on the average length of time between the date a loan first exceeds 30 days past due and the date the loan is charged off. |
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The change in the application of weightings to the eight quarters of loss history and the change to the method of determining the loss emergence period did not have a material effect on the balance of the allowance for loan losses or the provision for loan losses for the first quarter of 2014. They did, however, result in the full allocation of the previously unallocated portion of the allowance for loan losses. |
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On junior lien home equity loans, United has limited ability to monitor the delinquency status of the first lien unless the first lien is also held by United. As a result, United applies the weighted average historical loss factor for this category and appropriately adjusts it to reflect the increased risk of loss from these credits. |
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Management carefully reviews the resulting loss factors for each category of the loan portfolio and evaluates whether qualitative adjustments are necessary to take into consideration recent credit trends such as increases or decreases in past due, nonaccrual, criticized and classified loans, acceleration or delays in timing of recognition of losses that may affect historical loss emergence periods, and other macro environmental factors such as changes in unemployment rates, lease vacancy rates and trends in property values and absorption rates. |
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United’s management believes that its method of determining the balance of the allowance for loan losses provides a reasonable and reliable basis for measuring and reporting losses that are inherent in the loan portfolio as of the reporting date. |
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When a loan officer determines that a loan is uncollectible, he or she is responsible for recommending that the loan be charged off. Full or partial charge-offs may also be recommended by the Collections Department, the Special Assets Department and the Foreclosure / OREO department. Nonaccrual real estate loans that are collateral dependent are generally charged down to 80% of the appraised value of the underlying collateral at the time they are placed on nonaccrual status. |
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A committee consisting of the Chief Risk Officer, Senior Risk Officer and the Senior Credit Officers meets monthly to review charge-offs that have occurred during the previous month. |
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Closed-end retail loans (installment and residential mortgage loans) and open-end (revolving) retail loans past due 90 cumulative days are charged off unless the loan is secured and in process of collection (within the next 90 days). |
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The following table presents loans individually evaluated for impairment by class of loans as of March 31, 2014, December 31, 2013 and March 31, 2013 (in thousands). |
| | 31-Mar-14 | | | 31-Dec-13 | | | 31-Mar-13 | |
| | Unpaid Principal Balance | | | Recorded Investment | | | Allowance for Loan Losses Allocated | | | Unpaid Principal Balance | | | Recorded Investment | | | Allowance for Loan Losses Allocated | | | Unpaid Principal Balance | | | Recorded Investment | | | Allowance for Loan Losses Allocated | |
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With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial (secured by real estate) | | $ | 24,716 | | | $ | 17,850 | | | $ | - | | | $ | 30,361 | | | $ | 24,205 | | | $ | - | | | $ | 50,386 | | | $ | 37,202 | | | $ | - | |
Commercial & industrial | | | 2,417 | | | | 1,851 | | | | - | | | | 2,252 | | | | 2,252 | | | | - | | | | 73,196 | | | | 46,895 | | | | - | |
Commercial construction | | | 390 | | | | 390 | | | | - | | | | 974 | | | | 974 | | | | - | | | | 23,486 | | | | 16,703 | | | | - | |
Total commercial | | | 27,523 | | | | 20,091 | | | | - | | | | 33,587 | | | | 27,431 | | | | - | | | | 147,068 | | | | 100,800 | | | | - | |
Residential mortgage | | | 7,292 | | | | 5,364 | | | | - | | | | 4,496 | | | | 3,634 | | | | - | | | | 7,522 | | | | 6,066 | | | | - | |
Home equity lines of credit | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 240 | | | | 240 | | | | - | |
Residential construction | | | 6,474 | | | | 5,174 | | | | - | | | | 9,462 | | | | 7,807 | | | | - | | | | 19,026 | | | | 15,223 | | | | - | |
Consumer installment | | | 82 | | | | 82 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Indirect auto | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Total with no related allowance recorded | | | 41,371 | | | | 30,711 | | | | - | | | | 47,545 | | | | 38,872 | | | | - | | | | 173,856 | | | | 122,329 | | | | - | |
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With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial (secured by real estate) | | | 39,377 | | | | 37,156 | | | | 3,259 | | | | 36,085 | | | | 36,003 | | | | 2,013 | | | | 52,363 | | | | 49,777 | | | | 5,089 | |
Commercial & industrial | | | 2,598 | | | | 2,316 | | | | 253 | | | | 2,248 | | | | 1,965 | | | | 66 | | | | 3,562 | | | | 3,451 | | | | 1,026 | |
Commercial construction | | | 11,079 | | | | 11,000 | | | | 469 | | | | 12,821 | | | | 12,741 | | | | 112 | | | | 23,150 | | | | 22,267 | | | | 2,093 | |
Total commercial | | | 53,054 | | | | 50,472 | | | | 3,981 | | | | 51,154 | | | | 50,709 | | | | 2,191 | | | | 79,075 | | | | 75,495 | | | | 8,208 | |
Residential mortgage | | | 16,688 | | | | 15,939 | | | | 3,079 | | | | 17,119 | | | | 16,533 | | | | 2,914 | | | | 16,104 | | | | 15,850 | | | | 1,804 | |
Home equity lines of credit | | | 505 | | | | 505 | | | | 67 | | | | 505 | | | | 505 | | | | 5 | | | | - | | | | - | | | | - | |
Residential construction | | | 8,615 | | | | 7,235 | | | | 1,253 | | | | 8,469 | | | | 7,001 | | | | 688 | | | | 17,244 | | | | 16,713 | | | | 1,945 | |
Consumer installment | | | 360 | | | | 258 | | | | 19 | | | | 999 | | | | 999 | | | | 224 | | | | 420 | | | | 407 | | | | 14 | |
Indirect auto | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Total with an allowance recorded | | | 79,222 | | | | 74,409 | | | | 8,399 | | | | 78,246 | | | | 75,747 | | | | 6,022 | | | | 112,843 | | | | 108,465 | | | | 11,971 | |
Total | | $ | 120,593 | | | $ | 105,120 | | | $ | 8,399 | | | $ | 125,791 | | | $ | 114,619 | | | $ | 6,022 | | | $ | 286,699 | | | $ | 230,794 | | | $ | 11,971 | |
|
There were no loans more than 90 days past due and still accruing interest at March 31, 2014, December 31, 2013 or March 31, 2013. Nonaccrual loans include both homogeneous loans that are collectively evaluated for impairment and individually evaluated impaired loans. United’s policy is to place loans on nonaccrual status when, in the opinion of management, the principal and interest on a loan is not likely to be repaid in accordance with the loan terms or when the loan becomes 90 days past due and is not well secured and in the process of collection. When a loan is classified on nonaccrual status, interest previously accrued but not collected is reversed against current interest revenue. Principal and interest payments received on a nonaccrual loan are applied to reduce outstanding principal. |
|
The gross additional interest income that would have been earned if the loans classified as nonaccrual had performed in accordance with the original terms was approximately $460,000, and $1.14 million for the three months ended March 31, 2014 and 2013, respectively. The gross additional interest income that would have been earned in for the three months ended March 31, 2014 and 2013 had performing TDRs performed in accordance with the original terms is immaterial. |
|
The average balances of impaired loans and income recognized on impaired loans while they were considered impaired is presented below for the three months ended March 31, 2014 and 2013 (in thousands). |
|
| | Three Months Ended March 31, | | | | | | | | | | | | | |
| | 2014 | | | 2013 | | | | | | | | | | | | | |
| | Average | | | Interest | | | Cash Basis Interest | | | Average | | | Interest | | | Cash Basis Interest | | | | | | | | | | | | | |
Balance | Revenue Recognized During Impairment | Revenue Received | Balance | Revenue Recognized During Impairment | Revenue Received | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial (secured by real estate) | | $ | 54,969 | | | $ | 670 | | | $ | 713 | | | $ | 91,631 | | | $ | 946 | | | $ | 1,000 | | | | | | | | | | | | | |
Commercial & industrial | | | 4,560 | | | | 53 | | | | 51 | | | | 43,694 | | | | 156 | | | | 629 | | | | | | | | | | | | | |
Commercial construction | | | 12,714 | | | | 112 | | | | 135 | | | | 39,208 | | | | 151 | | | | 232 | | | | | | | | | | | | | |
Total commercial | | | 72,243 | | | | 835 | | | | 899 | | | | 174,533 | | | | 1,253 | | | | 1,861 | | | | | | | | | | | | | |
Residential mortgage | | | 21,321 | | | | 229 | | | | 238 | | | | 19,912 | | | | 238 | | | | 220 | | | | | | | | | | | | | |
Home equity lines of credit | | | 505 | | | | 5 | | | | 6 | | | | 502 | | | | 3 | | | | 3 | | | | | | | | | | | | | |
Residential construction | | | 13,037 | | | | 145 | | | | 150 | | | | 40,592 | | | | 326 | | | | 428 | | | | | | | | | | | | | |
Consumer installment | | | 448 | | | | 6 | | | | 9 | | | | 276 | | | | 6 | | | | 6 | | | | | | | | | | | | | |
Indirect auto | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | |
Total | | $ | 107,554 | | | $ | 1,220 | | | $ | 1,302 | | | $ | 235,815 | | | $ | 1,826 | | | $ | 2,518 | | | | | | | | | | | | | |
|
The following table presents the recorded investment (unpaid principal less amounts charged off) in nonaccrual loans by loan class as of March 31, 2014, December 31, 2013 and March 31, 2013 (in thousands). |
|
| | Nonaccrual Loans | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 31, | | | December 31, | | | March 31, | | | | | | | | | | | | | | | | | | | | | | | | | |
2014 | 2013 | 2013 | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial (secured by real estate) | | $ | 5,146 | | | $ | 8,340 | | | $ | 17,304 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 822 | | | | 427 | | | | 29,545 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial construction | | | 479 | | | | 361 | | | | 22,359 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial | | | 6,447 | | | | 9,128 | | | | 69,208 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 13,307 | | | | 11,730 | | | | 10,901 | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 1,106 | | | | 1,448 | | | | 916 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 3,805 | | | | 4,264 | | | | 14,592 | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer installment | | | 291 | | | | 249 | | | | 389 | | | | | | | | | | | | | | | | | | | | | | | | | |
Indirect auto | | | 294 | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 25,250 | | | $ | 26,819 | | | $ | 96,006 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance as a percentage of unpaid principal | | | 65.8 | % | | | 65.3 | % | | | 66.3 | % | | | | | | | | | | | | | | | | | | | | | | | | |
|
The following table presents the aging of the recorded investment in past due loans as of March 31, 2014, December 31, 2013 and March 31, 2013 by class of loans (in thousands). |
|
| | Loans Past Due | | | Loans Not | | | | | | | | | | | | | | | | |
As of March 31, 2014 | | 30 - 59 Days | | | 60 - 89 Days | | | > 90 Days | | | Total | | | Past Due | | | Total | | | | | | | | | | | | | |
Commercial (secured by real estate) | | $ | 2,310 | | | $ | 1,446 | | | $ | 1,865 | | | $ | 5,621 | | | $ | 1,760,000 | | | $ | 1,765,621 | | | | | | | | | | | | | |
Commercial & industrial | | | 1,468 | | | | 231 | | | | 589 | | | | 2,288 | | | | 492,890 | | | | 495,178 | | | | | | | | | | | | | |
Commercial construction | | | 313 | | | | 46 | | | | 366 | | | | 725 | | | | 147,729 | | | | 148,454 | | | | | | | | | | | | | |
Total commercial | | | 4,091 | | | | 1,723 | | | | 2,820 | | | | 8,634 | | | | 2,400,619 | | | | 2,409,253 | | | | | | | | | | | | | |
Residential mortgage | | | 7,295 | | | | 3,520 | | | | 4,806 | | | | 15,621 | | | | 850,994 | | | | 866,615 | | | | | | | | | | | | | |
Home equity lines of credit | | | 1,554 | | | | 551 | | | | 502 | | | | 2,607 | | | | 444,098 | | | | 446,705 | | | | | | | | | | | | | |
Residential construction | | | 1,440 | | | | 30 | | | | 782 | | | | 2,252 | | | | 315,497 | | | | 317,749 | | | | | | | | | | | | | |
Consumer installment | | | 677 | | | | 495 | | | | 60 | | | | 1,232 | | | | 105,759 | | | | 106,991 | | | | | | | | | | | | | |
Indirect auto | | | 263 | | | | 179 | | | | 137 | | | | 579 | | | | 207,816 | | | | 208,395 | | | | | | | | | | | | | |
Total loans | | $ | 15,320 | | | $ | 6,498 | | | $ | 9,107 | | | $ | 30,925 | | | $ | 4,324,783 | | | $ | 4,355,708 | | | | | | | | | | | | | |
|
| | Loans Past Due | | | Loans Not | | | | | | | | | | | | | | | | |
As of December 31, 2013 | | 30 - 59 Days | | | 60 - 89 Days | | | > 90 Days | | | Total | | | Past Due | | | Total | | | | | | | | | | | | | |
Commercial (secured by real estate) | | $ | 5,724 | | | $ | 2,797 | | | $ | 2,547 | | | $ | 11,068 | | | $ | 1,745,642 | | | $ | 1,756,710 | | | | | | | | | | | | | |
Commercial & industrial | | | 2,349 | | | | 223 | | | | 88 | | | | 2,660 | | | | 469,301 | | | | 471,961 | | | | | | | | | | | | | |
Commercial construction | | | 94 | | | | 190 | | | | 235 | | | | 519 | | | | 148,384 | | | | 148,903 | | | | | | | | | | | | | |
Total commercial | | | 8,167 | | | | 3,210 | | | | 2,870 | | | | 14,247 | | | | 2,363,327 | | | | 2,377,574 | | | | | | | | | | | | | |
Residential mortgage | | | 9,011 | | | | 2,832 | | | | 4,140 | | | | 15,983 | | | | 859,094 | | | | 875,077 | | | | | | | | | | | | | |
Home equity lines of credit | | | 2,056 | | | | 430 | | | | 941 | | | | 3,427 | | | | 437,460 | | | | 440,887 | | | | | | | | | | | | | |
Residential construction | | | 1,335 | | | | 588 | | | | 1,375 | | | | 3,298 | | | | 325,281 | | | | 328,579 | | | | | | | | | | | | | |
Consumer installment | | | 1,058 | | | | 358 | | | | 24 | | | | 1,440 | | | | 109,605 | | | | 111,045 | | | | | | | | | | | | | |
Indirect auto | | | 185 | | | | 65 | | | | 42 | | | | 292 | | | | 195,812 | | | | 196,104 | | | | | | | | | | | | | |
Total loans | | $ | 21,812 | | | $ | 7,483 | | | $ | 9,392 | | | $ | 38,687 | | | $ | 4,290,579 | | | $ | 4,329,266 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of March 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial (secured by real estate) | | $ | 7,402 | | | $ | 2,304 | | | $ | 5,750 | | | $ | 15,456 | | | $ | 1,788,574 | | | $ | 1,804,030 | | | | | | | | | | | | | |
Commercial & industrial | | | 1,485 | | | | 419 | | | | 219 | | | | 2,123 | | | | 451,641 | | | | 453,764 | | | | | | | | | | | | | |
Commercial construction | | | 856 | | | | - | | | | 5,530 | | | | 6,386 | | | | 146,024 | | | | 152,410 | | | | | | | | | | | | | |
Total commercial | | | 9,743 | | | | 2,723 | | | | 11,499 | | | | 23,965 | | | | 2,386,239 | | | | 2,410,204 | | | | | | | | | | | | | |
Residential mortgage | | | 10,293 | | | | 2,395 | | | | 4,014 | | | | 16,702 | | | | 833,100 | | | | 849,802 | | | | | | | | | | | | | |
Home equity lines of credit | | | 1,606 | | | | 272 | | | | 145 | | | | 2,023 | | | | 394,150 | | | | 396,173 | | | | | | | | | | | | | |
Residential construction | | | 2,310 | | | | 2,371 | | | | 2,373 | | | | 7,054 | | | | 364,679 | | | | 371,733 | | | | | | | | | | | | | |
Consumer installment | | | 672 | | | | 100 | | | | 109 | | | | 881 | | | | 109,915 | | | | 110,796 | | | | | | | | | | | | | |
Indirect auto | | | 10 | | | | 52 | | | | - | | | | 62 | | | | 54,790 | | | | 54,852 | | | | | | | | | | | | | |
Total loans | | $ | 24,634 | | | $ | 7,913 | | | $ | 18,140 | | | $ | 50,687 | | | $ | 4,142,873 | | | $ | 4,193,560 | | | | | | | | | | | | | |
|
As of March 31, 2014, December 31, 2013, and March 31, 2013, $8.25 million, $5.64 million and $8.12 million, respectively, of specific reserves were allocated to customers whose loan terms have been modified in TDRs. United committed to lend additional amounts totaling up to $12,000, $6,000 and $613,000 as of March 31, 2014, December 31, 2013 and March 31, 2013, respectively, to customers with outstanding loans that are classified as TDRs. |
|
The modification of the terms of the TDRs included one or a combination of the following: a reduction of the stated interest rate of the loan or an extension of the amortization period that would not otherwise be considered in the current market for new debt with similar risk characteristics; a permanent reduction of the principal amount; a restructuring of the borrower’s debt into an A/B note structure where the A note would fall within the borrower’s ability to pay and the remainder would be included in the B note, or a mandated bankruptcy restructuring. |
|
The following table presents information on TDRs including the number of loan contracts restructured and the pre- and post-modification recorded investment (dollars in thousands). |
|
| | 31-Mar-14 | | | 31-Dec-13 | | | 31-Mar-13 | |
| | Number | | | Pre- | | | Post- | | | Number | | | Pre- | | | Post- | | | Number | | | Pre- | | | Post- | |
of | Modification | Modification | of | Modification | Modification | of | Modification | Modification |
Contracts | Outstanding | Outstanding | Contracts | Outstanding | Outstanding | Contracts | Outstanding | Outstanding |
| Recorded | Recorded | | Recorded | Recorded | | Recorded | Recorded |
| Investment | Investment | | Investment | Investment | | Investment | Investment |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial (sec by RE) | | | 78 | | | $ | 45,130 | | | $ | 40,959 | | | | 77 | | | $ | 44,964 | | | $ | 40,667 | | | | 97 | | | $ | 80,618 | | | $ | 74,675 | |
Commercial & industrial | | | 35 | | | | 3,574 | | | | 3,292 | | | | 36 | | | | 3,527 | | | | 3,245 | | | | 41 | | | | 8,944 | | | | 8,834 | |
Commercial construction | | | 14 | | | | 11,678 | | | | 11,598 | | | | 13 | | | | 13,122 | | | | 13,042 | | | | 25 | | | | 36,491 | | | | 32,614 | |
Total commercial | | | 127 | | | | 60,382 | | | | 55,849 | | | | 126 | | | | 61,613 | | | | 56,954 | | | | 163 | | | | 126,053 | | | | 116,123 | |
Residential mortgage | | | 148 | | | | 21,163 | | | | 19,657 | | | | 133 | | | | 20,117 | | | | 18,852 | | | | 119 | | | | 19,661 | | | | 18,783 | |
Home equity lines of credit | | | 3 | | | | 505 | | | | 505 | | | | 3 | | | | 505 | | | | 505 | | | | 1 | | | | 240 | | | | 240 | |
Residential construction | | | 52 | | | | 10,400 | | | | 9,518 | | | | 57 | | | | 12,459 | | | | 10,452 | | | | 71 | | | | 25,651 | | | | 23,345 | |
Consumer installment | | | 26 | | | | 442 | | | | 340 | | | | 26 | | | | 203 | | | | 203 | | | | 46 | | | | 282 | | | | 269 | |
Indirect auto | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Total loans | | | 356 | | | | 92,892 | | | | 85,869 | | | | 345 | | | | 94,897 | | | $ | 86,966 | | | | 400 | | | | 171,887 | | | | 158,760 | |
|
Loans modified under the terms of a TDR during the three months ended March 31, 2014 and 2013 are presented in the table below. In addition, the following table presents loans modified under the terms of a TDR that became 90 days or more delinquent during the three months ended March 31, 2014 and 2013, that were initially restructured within one year prior to becoming delinquent (dollars in thousands). |
|
New Troubled Debt | | Number of Contracts | | Pre- | | Post- | | Troubled Debt Restructurings Modified Within the Previous | | | | | | | | | | | | | | | | | |
Restructurings for the Three | Modification Outstanding Recorded Investment | Modification Outstanding Recorded Investment | Twelve Months that Have | | | | | | | | | | | | | | | | |
Months Ended March 31, 2014 | | | Subsequently Defaulted During | | | | | | | | | | | | | | | | |
| | | the Three Months Ended | | | | | | | | | | | | | | | | |
| | | 31-Mar-14 | | | | | | | | | | | | | | | | |
| | | | | | | Number of Contracts | | Recorded Investment | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial (secured by real estate) | | | 4 | | | $ | 1,138 | | | $ | 1,138 | | | | 1 | | | $ | 104 | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 1 | | | | 224 | | | | 224 | | | | 2 | | | | 54 | | | | | | | | | | | | | | | | | |
Commercial construction | | | 1 | | | | 231 | | | | 231 | | | | - | | | | - | | | | | | | | | | | | | | | | | |
Total commercial | | | 6 | | | | 1,593 | | | | 1,593 | | | | 3 | | | | 158 | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 14 | | | | 1,132 | | | | 1,132 | | | | 4 | | | | 452 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | |
Residential construction | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | |
Consumer installment | | | 2 | | | | 142 | | | | 142 | | | | - | | | | - | | | | | | | | | | | | | | | | | |
Indirect auto | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | |
Total loans | | | 22 | | | $ | 2,867 | | | $ | 2,867 | | | | 7 | | | $ | 610 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
New Troubled Debt | | Number of Contracts | | Pre- | | Post- | | Troubled Debt Restructurings Modified Within the Previous | | | | | | | | | | | | | | | | | |
Restructurings for the Three | Modification Outstanding Recorded Investment | Modification Outstanding Recorded Investment | Twelve Months that Have | | | | | | | | | | | | | | | | |
Months Ended March 31, 2013 | | | Subsequently Defaulted During | | | | | | | | | | | | | | | | |
| | | the Three Months Ended | | | | | | | | | | | | | | | | |
| | | 31-Mar-13 | | | | | | | | | | | | | | | | |
| | | | | | | Number of Contracts | | Recorded Investment | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial (secured by real estate) | | | 8 | | | $ | 3,568 | | | $ | 3,568 | | | $ | 1 | | | $ | 432 | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 9 | | | | 815 | | | | 709 | | | | 1 | | | | 35 | | | | | | | | | | | | | | | | | |
Commercial construction | | | - | | | | - | | | | - | | | | 2 | | | | 1,454 | | | | | | | | | | | | | | | | | |
Total commercial | | | 17 | | | | 4,383 | | | | 4,277 | | | | 4 | | | | 1,921 | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 11 | | | | 2,115 | | | | 2,115 | | | | 1 | | | | 68 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | |
Residential construction | | | 5 | | | | 784 | | | | 655 | | | | 2 | | | | 117 | | | | | | | | | | | | | | | | | |
Consumer installment | | | 4 | | | | 21 | | | | 21 | | | | 3 | | | | 20 | | | | | | | | | | | | | | | | | |
Indirect auto | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | |
Total loans | | | 37 | | | $ | 7,303 | | | $ | 7,068 | | | | 10 | | | $ | 2,126 | | | | | | | | | | | | | | | | | |
|
Collateral dependent TDRs that subsequently default and are placed on nonaccrual are charged down to the fair value of the collateral consistent with United’s policy for nonaccrual loans. Impairment on TDRs that are not collateral dependent continues to be measured on discounted cash flows regardless of whether the loan has subsequently defaulted. |
|
As of March 31, 2014, December 31, 2013 and March 31, 2013, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (in thousands). |
|
| | | | | | | | Substandard | | | Doubtful / | | | | | | | | | | | | | | | | |
As of March 31, 2014 | | Pass | | | Watch | | | Performing | | | Nonaccrual | | | Loss | | | Total | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial (secured by real estate) | | $ | 1,637,299 | | | $ | 38,851 | | | $ | 84,325 | | | $ | 5,146 | | | $ | - | | | $ | 1,765,621 | | | | | | | | | | | | | |
Commercial & industrial | | | 481,310 | | | | 4,905 | | | | 8,141 | | | | 822 | | | | - | | | | 495,178 | | | | | | | | | | | | | |
Commercial construction | | | 138,560 | | | | 4,134 | | | | 5,281 | | | | 479 | | | | - | | | | 148,454 | | | | | | | | | | | | | |
Total commercial | | | 2,257,169 | | | | 47,890 | | | | 97,747 | | | | 6,447 | | | | - | | | | 2,409,253 | | | | | | | | | | | | | |
Residential mortgage | | | 799,145 | | | | 10,591 | | | | 43,572 | | | | 13,307 | | | | - | | | | 866,615 | | | | | | | | | | | | | |
Home equity lines of credit | | | 437,908 | | | | 29 | | | | 7,662 | | | | 1,106 | | | | - | | | | 446,705 | | | | | | | | | | | | | |
Residential construction | | | 292,032 | | | | 8,935 | | | | 12,977 | | | | 3,805 | | | | - | | | | 317,749 | | | | | | | | | | | | | |
Consumer installment | | | 104,379 | | | | 11 | | | | 2,310 | | | | 291 | | | | - | | | | 106,991 | | | | | | | | | | | | | |
Indirect auto | | | 207,504 | | | | - | | | | 597 | | | | 294 | | | | - | | | | 208,395 | | | | | | | | | | | | | |
Total loans | | $ | 4,098,137 | | | $ | 67,456 | | | $ | 164,865 | | | $ | 25,250 | | | $ | - | | | $ | 4,355,708 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial (secured by real estate) | | $ | 1,630,521 | | | $ | 40,124 | | | $ | 77,725 | | | $ | 8,340 | | | $ | - | | | $ | 1,756,710 | | | | | | | | | | | | | |
Commercial & industrial | | | 456,563 | | | | 5,382 | | | | 9,589 | | | | 427 | | | | - | | | | 471,961 | | | | | | | | | | | | | |
Commercial construction | | | 120,852 | | | | 10,932 | | | | 16,758 | | | | 361 | | | | - | | | | 148,903 | | | | | | | | | | | | | |
Total commercial | | | 2,207,936 | | | | 56,438 | | | | 104,072 | | | | 9,128 | | | | - | | | | 2,377,574 | | | | | | | | | | | | | |
Residential mortgage | | | 793,381 | | | | 25,944 | | | | 44,022 | | | | 11,730 | | | | - | | | | 875,077 | | | | | | | | | | | | | |
Home equity lines of credit | | | 426,052 | | | | 5,420 | | | | 7,967 | | | | 1,448 | | | | | | | | 440,887 | | | | | | | | | | | | | |
Residential construction | | | 298,685 | | | | 11,526 | | | | 14,104 | | | | 4,264 | | | | - | | | | 328,579 | | | | | | | | | | | | | |
Consumer installment | | | 107,029 | | | | 1,229 | | | | 2,538 | | | | 249 | | | | - | | | | 111,045 | | | | | | | | | | | | | |
Indirect auto | | | 196,104 | | | | - | | | | - | | | | - | | | | - | | | | 196,104 | | | | | | | | | | | | | |
Total loans | | $ | 4,029,187 | | | $ | 100,557 | | | $ | 172,703 | | | $ | 26,819 | | | $ | - | | | $ | 4,329,266 | | | | | | | | | | | | | |
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As of March 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Commercial (secured by real estate) | | $ | 1,593,193 | | | $ | 65,413 | | | $ | 128,120 | | | $ | 17,304 | | | $ | - | | | $ | 1,804,030 | | | | | | | | | | | | | |
Commercial & industrial | | | 397,124 | | | | 6,775 | | | | 20,320 | | | | 29,545 | | | | - | | | | 453,764 | | | | | | | | | | | | | |
Commercial construction | | | 104,413 | | | | 7,176 | | | | 18,462 | | | | 22,359 | | | | - | | | | 152,410 | | | | | | | | | | | | | |
Total commercial | | | 2,094,730 | | | | 79,364 | | | | 166,902 | | | | 69,208 | | | | - | | | | 2,410,204 | | | | | | | | | | | | | |
Residential mortgage | | | 758,185 | | | | 26,722 | | | | 53,994 | | | | 10,901 | | | | - | | | | 849,802 | | | | | | | | | | | | | |
Home equity lines of credit | | | 381,064 | | | | 4,084 | | | | 10,109 | | | | 916 | | | | | | | | 396,173 | | | | | | | | | | | | | |
Residential construction | | | 296,029 | | | | 23,230 | | | | 37,882 | | | | 14,592 | | | | - | | | | 371,733 | | | | | | | | | | | | | |
Consumer installment | | | 106,725 | | | | 888 | | | | 2,794 | | | | 389 | | | | - | | | | 110,796 | | | | | | | | | | | | | |
Indirect auto | | | 54,852 | | | | - | | | | - | | | | - | | | | - | | | | 54,852 | | | | | | | | | | | | | |
Total loans | | $ | 3,691,585 | | | $ | 134,288 | | | $ | 271,681 | | | $ | 96,006 | | | $ | - | | | $ | 4,193,560 | | | | | | | | | | | | | |
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Risk Ratings |
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United categorizes commercial loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current industry and economic trends, among other factors. United analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. United uses the following definitions for its risk ratings: |
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Watch. Loans in this category are presently protected from apparent loss; however, weaknesses exist that could cause future impairment, including the deterioration of financial ratios, past due status and questionable management capabilities. These loans require more than the ordinary amount of supervision. Collateral values generally afford adequate coverage, but may not be immediately marketable. |
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Substandard. These loans are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged. Specific and well-defined weaknesses exist that may include poor liquidity and deterioration of financial ratios. The loan may be past due and related deposit accounts experiencing overdrafts. There is the distinct possibility that United will sustain some loss if deficiencies are not corrected. If possible, immediate corrective action is taken. |
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Doubtful. Specific weaknesses characterized as Substandard that are severe enough to make collection in full highly questionable and improbable. There is no reliable secondary source of full repayment. |
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Loss. Loans categorized as Loss have the same characteristics as Doubtful; however, probability of loss is certain. Loans classified as Loss are charged off. |
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Consumer Purpose Loans. Beginning in the first quarter of 2014, United began to apply a pass / fail grading system to all consumer purpose loans. Under the pass / fail grading system, consumer purpose loans meeting the criteria of substandard are classified as “fail” and all other loans are classified as “pass”. For reporting purposes, consumer purpose loans classified as “fail” are reported in the performing substandard or nonaccrual columns and all other consumer purpose loans are reported in the “pass” column. The first quarter grading change resulted in decreases in loans categorized as “watch” for the consumer installment, residential mortgage and home equity lines of credit loan classifications. Loan balances reported in the “watch” column for residential mortgage in the first quarter are generally commercial purpose loans secured by the borrower’s residence. |
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Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. |