Loans and Allowance for Loan Losses | 9 Months Ended |
Sep. 30, 2014 |
Loans and Allowance For Loan Losses [Abstract] | ' |
Loans and Allowance for Loan Losses | ' |
Note 6 – Loans and Allowance for Loan Losses |
Major classifications of loans as of September 30, 2014, December 31, 2013 and September 30, 2013, are summarized as follows (in thousands). |
|
| | September 30, | | | December 31, | | | September 30, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2014 | | | 2013 | | | 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 1,153,933 | | | $ | 1,133,543 | | | $ | 1,129,152 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income producing ommercial real estate | | | 604,727 | | | | 623,167 | | | | 613,619 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 649,853 | | | | 471,961 | | | | 457,414 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial construction | | | 180,794 | | | | 148,903 | | | | 137,146 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial | | | 2,589,307 | | | | 2,377,574 | | | | 2,337,331 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 865,568 | | | | 875,077 | | | | 888,679 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 458,819 | | | | 440,887 | | | | 420,616 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 307,178 | | | | 328,579 | | | | 317,789 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer installment | | | 105,345 | | | | 111,045 | | | | 116,535 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Indirect auto | | | 242,669 | | | | 196,104 | | | | 186,117 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | | 4,568,886 | | | | 4,329,266 | | | | 4,267,067 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Less allowance for loan losses | | | (71,928 | ) | | | (76,762 | ) | | | (80,372 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans, net | | $ | 4,496,958 | | | $ | 4,252,504 | | | $ | 4,186,695 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
At September 30, 2014, December 31, 2013 and September 30, 2013, loans with a carrying value of $2.21 billion, $1.77 billion and $1.94 billion, respectively, were pledged as collateral to secure FHLB advances and other contingent funding sources. |
|
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. |
|
The following table presents the balance and activity in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2014 and 2013 (in thousands). |
|
| | 2014 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Allocation | | | | | | | | | | | | | | | | | | | | | | | |
| | Beginning | | | Charge- | | | | | | of | | | | | | Ending | | | | | | | | | | | | | | | | | |
Three Months Ended September 30, | | Balance | | | Offs | | | Recoveries | | | Unallocated | | | Provision | | | Balance | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 17,804 | | | $ | (832 | ) | | $ | 86 | | | $ | — | | | | (1,758 | ) | | $ | 15,300 | | | | | | | | | | | | | | | | | |
Income producing commercial real estate | | | 11,761 | | | | (598 | ) | | | 494 | | | | — | | | | (866 | ) | | | 10,791 | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 3,885 | | | | -30 | | | 372 | | | | — | | | | (1,009 | ) | | | 3,218 | | | | | | | | | | | | | | | | | |
Commercial construction | | | 4,067 | | | | (104 | ) | | | 1 | | | | — | | | | 1,686 | | | | 5,650 | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 16,763 | | | | -1,357 | | | 240 | | | | — | | | | 1,940 | | | | 17,586 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 6,338 | | | | (405 | ) | | | 50 | | | | — | | | | (1,144 | ) | | | 4,839 | | | | | | | | | | | | | | | | | |
Residential construction | | | 11,208 | | | | (753 | ) | | | 41 | | | | — | | | | 2,358 | | | | 12,854 | | | | | | | | | | | | | | | | | |
Consumer installment | | | 599 | | | | (449 | ) | | | 256 | | | | — | | | | 333 | | | | 739 | | | | | | | | | | | | | | | | | |
Indirect auto | | | 823 | | | | (178 | ) | | | 11 | | | | — | | | | 295 | | | | 951 | | | | | | | | | | | | | | | | | |
Unallocated | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Total allowance for loan losses | | | 73,248 | | | | (4,706 | ) | | | 1,551 | | | | — | | | | 1,835 | | | | 71,928 | | | | | | | | | | | | | | | | | |
Allowance for unfunded commitments | | | 2,165 | | | | — | | | | — | | | | — | | | | 165 | | | | 2,330 | | | | | | | | | | | | | | | | | |
Total allowance for credit losses | | $ | 75,413 | | | $ | (4,706 | ) | | $ | 1,551 | | | $ | — | | | $ | 2,000 | | | $ | 74,258 | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | Allocation | | | | | | | | | | | | | | | | | | | | | | | |
| | Beginning | | | Charge- | | | | | | of | | | | | | Ending | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, | | Balance | | | Offs | | | Recoveries | | | Unallocated | | | Provision | | | Balance | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 17,164 | | | $ | (2,116 | ) | | $ | 2,929 | | | $ | 1,278 | | | $ | (3,955 | ) | | $ | 15,300 | | | | | | | | | | | | | | | | | |
Income producing commercial real estate | | | 7,174 | | | | (1,435 | ) | | | 691 | | | | 688 | | | | 3,673 | | | | 10,791 | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 6,527 | | | | (2,005 | ) | | | 1,263 | | | | 318 | | | | (2,885 | ) | | | 3,218 | | | | | | | | | | | | | | | | | |
Commercial construction | | | 3,669 | | | | (236 | ) | | | 1 | | | | 388 | | | | 1,828 | | | | 5,650 | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 15,446 | | | | (5,738 | ) | | | 597 | | | | 1,452 | | | | 5,829 | | | | 17,586 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 5,528 | | | | (2,032 | ) | | | 218 | | | | 391 | | | | 734 | | | | 4,839 | | | | | | | | | | | | | | | | | |
Residential construction | | | 12,532 | | | | (3,004 | ) | | | 410 | | | | 1,728 | | | | 1,188 | | | | 12,854 | | | | | | | | | | | | | | | | | |
Consumer installment | | | 1,353 | | | | (1,580 | ) | | | 974 | | | | — | | | | (8 | ) | | | 739 | | | | | | | | | | | | | | | | | |
Indirect auto | | | 1,126 | | | | (344 | ) | | | 38 | | | | — | | | | 131 | | | | 951 | | | | | | | | | | | | | | | | | |
Unallocated | | | 6,243 | | | | — | | | | — | | | | (6,243 | ) | | | — | | | | — | | | | | | | | | | | | | | | | | |
Total allowance for loan losses | | | 76,762 | | | | (18,490 | ) | | | 7,121 | | | | — | | | | 6,535 | | | | 71,928 | | | | | | | | | | | | | | | | | |
Allowance for unfunded commitments | | | 2,165 | | | | — | | | | — | | | | — | | | | 165 | | | | 2,330 | | | | | | | | | | | | | | | | | |
Total allowance for credit losses | | $ | 78,927 | | | $ | (18,490 | ) | | $ | 7,121 | | | $ | — | | | $ | 6,700 | | | $ | 74,258 | | | | | | | | | | | | | | | | | |
|
In the first quarter of 2014, United modified its allowance for loan losses methodology to incorporate a loss emergence period. The increase in precision resulting from the use of the loss emergence period led to the full allocation of the portion of the allowance that had previously been unallocated. |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Beginning | | | Charge- | | | | | | | | | Ending | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended September 30, | | Balance | | | Offs | | Recoveries | | Provision | | | Balance | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 15,785 | | | $ | (1,712 | ) | | $ | 71 | | | $ | (78 | ) | | $ | 14,066 | | | | | | | | | | | | | | | | | | | | | |
Income producing commercial real estate | | | 7,023 | | | | (216 | ) | | | — | | | | 3,262 | | | | 10,069 | | | | | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 8,054 | | | | (826 | ) | | | 690 | | | | 14 | | | | 7,932 | | | | | | | | | | | | | | | | | | | | | |
Commercial construction | | | 4,275 | | | | (134 | ) | | | 1 | | | | (324 | ) | | | 3,818 | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 14,498 | | | | (918 | ) | | | 229 | | | | 1,335 | | | | 15,144 | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 5,529 | | | | (388 | ) | | | 2 | | | | 415 | | | | 5,558 | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 17,322 | | | | (1,096 | ) | | | 24 | | | | (1,908 | ) | | | 14,342 | | | | | | | | | | | | | | | | | | | | | |
Consumer installment | | | 1,515 | | | | (345 | ) | | | 210 | | | | (31 | ) | | | 1,349 | | | | | | | | | | | | | | | | | | | | | |
Indirect auto | | | 875 | | | | (74 | ) | | | 9 | | | | 258 | | | | 1,068 | | | | | | | | | | | | | | | | | | | | | |
Unallocated | | | 6,969 | | | | — | | | | — | | | | 57 | | | | 7,026 | | | | | | | | | | | | | | | | | | | | | |
Total allowance for loan losses | | | 81,845 | | | | (5,709 | ) | | | 1,236 | | | | 3,000 | | | | 80,372 | | | | | | | | | | | | | | | | | | | | | |
Allowance for unfunded commitments | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Total allowance for credit losses | | $ | 81,845 | | | $ | (5,709 | ) | | $ | 1,236 | | | $ | 3,000 | | | $ | 80,372 | | | | | | | | | | | | | | | | | | | | | |
|
| Beginning | | | Charge- | | | | | | | | | | | Ending | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, | | Balance | | | Offs | | Recoveries | | Provision | | | Balance | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 17,265 | | | $ | (23,444 | ) | | $ | 1,296 | | | $ | 18,949 | | | $ | 14,066 | | | | | | | | | | | | | | | | | | | | | |
Income producing commercial real estate | | | 10,582 | | | | (10,678 | ) | | | 260 | | | | 9,905 | | | | 10,069 | | | | | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 5,537 | | | | (18,581 | ) | | | 1,368 | | | | 19,608 | | | | 7,932 | | | | | | | | | | | | | | | | | | | | | |
Commercial construction | | | 8,389 | | | | (6,484 | ) | | | 60 | | | | 1,853 | | | | 3,818 | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 19,117 | | | | (8,272 | ) | | | 479 | | | | 3,820 | | | | 15,144 | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 7,525 | | | | (2,108 | ) | | | 170 | | | | (29 | ) | | | 5,558 | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 26,662 | | | | (22,608 | ) | | | 57 | | | | 10,231 | | | | 14,342 | | | | | | | | | | | | | | | | | | | | | |
Consumer installment | | | 2,527 | | | | (1,521 | ) | | | 891 | | | | (548 | ) | | | 1,349 | | | | | | | | | | | | | | | | | | | | | |
Indirect auto | | | 220 | | | | (170 | ) | | | 20 | | | | 998 | | | | 1,068 | | | | | | | | | | | | | | | | | | | | | |
Unallocated | | | 9,313 | | | | — | | | | — | | | | (2,287 | ) | | | 7,026 | | | | | | | | | | | | | | | | | | | | | |
Total allowance for loan losses | | | 107,137 | | | | (93,866 | ) | | | 4,601 | | | | 62,500 | | | | 80,372 | | | | | | | | | | | | | | | | | | | | | |
Allowance for unfunded commitments | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Total allowance for credit losses | | $ | 107,137 | | | $ | (93,866 | ) | | $ | 4,601 | | | $ | 62,500 | | | $ | 80,372 | | | | | | | | | | | | | | | | | | | | | |
|
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 September 30, 2014, December 31, 2013 and September 30, 2013 (in thousands). |
|
| | 30-Sep-14 | | | 31-Dec-13 | | | 30-Sep-13 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Individually | | | Collectively | | | | | | Individually | | | Collectively | | | | | | Individually | | | Collectively | | | | | | | | |
| | Evaluated for | | | Evaluated for | | | Ending | | | Evaluated for | | | Evaluated for | | | Ending | | | Evaluated for | | | Evaluated for | | | Ending | | | | | |
Allowance for Loan Losses | | Impairment | | | Impairment | | | Balance | | | Impairment | | | Impairment | | | Balance | | | Impairment | | | Impairment | | | Balance | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 2,125 | | | $ | 13,175 | | | $ | 15,300 | | | $ | 1,023 | | | $ | 16,141 | | | $ | 17,164 | | | $ | 770 | | | $ | 13,296 | | | $ | 14,066 | | | | | |
Income producing commercial real estate | | | 2,380 | | | | 8,411 | | | | 10,791 | | | | 990 | | | | 6,184 | | | | 7,174 | | | | 1,205 | | | | 8,864 | | | | 10,069 | | | | | |
Commercial & industrial | | | 26 | | | | 3,192 | | | | 3,218 | | | | 66 | | | | 6,461 | | | | 6,527 | | | | 546 | | | | 7,386 | | | | 7,932 | | | | | |
Commercial construction | | | 1,164 | | | | 4,486 | | | | 5,650 | | | | 112 | | | | 3,557 | | | | 3,669 | | | | 150 | | | | 3,668 | | | | 3,818 | | | | | |
Residential mortgage | | | 3,501 | | | | 14,085 | | | | 17,586 | | | | 2,914 | | | | 12,532 | | | | 15,446 | | | | 2,008 | | | | 13,136 | | | | 15,144 | | | | | |
Home equity lines of credit | | | 51 | | | | 4,788 | | | | 4,839 | | | | 5 | | | | 5,523 | | | | 5,528 | | | | — | | | | 5,558 | | | | 5,558 | | | | | |
Residential construction | | | 1,037 | | | | 11,817 | | | | 12,854 | | | | 688 | | | | 11,844 | | | | 12,532 | | | | 662 | | | | 13,680 | | | | 14,342 | | | | | |
Consumer installment | | | 23 | | | | 716 | | | | 739 | | | | 224 | | | | 1,129 | | | | 1,353 | | | | 11 | | | | 1,338 | | | | 1,349 | | | | | |
Indirect auto | | | — | | | | 951 | | | | 951 | | | | — | | | | 1,126 | | | | 1,126 | | | | — | | | | 1,068 | | | | 1,068 | | | | | |
Unallocated | | | — | | | | — | | | | — | | | | — | | | | 6,243 | | | | 6,243 | | | | — | | | | 7,026 | | | | 7,026 | | | | | |
Total allowance for loan losses | | | 10,307 | | | | 61,621 | | | | 71,928 | | | | 6,022 | | | | 70,740 | | | | 76,762 | | | | 5,352 | | | | 75,020 | | | | 80,372 | | | | | |
Allowance for unfunded commitments | | | — | | | | 2,330 | | | | 2,330 | | | | — | | | | 2,165 | | | | 2,165 | | | | — | | | | — | | | | — | | | | | |
Total allowance for credit losses | | $ | 10,307 | | | $ | 63,951 | | | $ | 74,258 | | | $ | 6,022 | | | $ | 72,905 | | | $ | 78,927 | | | $ | 5,352 | | | $ | 75,020 | | | $ | 80,372 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans Outstanding | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 33,635 | | | $ | 1,120,298 | | | $ | 1,153,933 | | | $ | 32,969 | | | $ | 1,100,574 | | | $ | 1,133,543 | | | $ | 31,138 | | | $ | 1,098,014 | | | $ | 1,129,152 | | | | | |
Income producing commercial real estate | | | 26,120 | | | | 578,607 | | | | 604,727 | | | | 27,239 | | | | 595,928 | | | | 623,167 | | | | 23,325 | | | | 590,294 | | | | 613,619 | | | | | |
Commercial & industrial | | | 4,540 | | | | 645,313 | | | | 649,853 | | | | 4,217 | | | | 467,744 | | | | 471,961 | | | | 4,105 | | | | 453,309 | | | | 457,414 | | | | | |
Commercial construction | | | 12,127 | | | | 168,667 | | | | 180,794 | | | | 13,715 | | | | 135,188 | | | | 148,903 | | | | 13,478 | | | | 123,668 | | | | 137,146 | | | | | |
Residential mortgage | | | 18,778 | | | | 846,790 | | | | 865,568 | | | | 20,167 | | | | 854,910 | | | | 875,077 | | | | 18,970 | | | | 869,709 | | | | 888,679 | | | | | |
Home equity lines of credit | | | 531 | | | | 458,288 | | | | 458,819 | | | | 505 | | | | 440,382 | | | | 440,887 | | | | — | | | | 420,616 | | | | 420,616 | | | | | |
Residential construction | | | 13,055 | | | | 294,123 | | | | 307,178 | | | | 14,808 | | | | 313,771 | | | | 328,579 | | | | 14,121 | | | | 303,668 | | | | 317,789 | | | | | |
Consumer installment | | | 245 | | | | 105,100 | | | | 105,345 | | | | 999 | | | | 110,046 | | | | 111,045 | | | | 204 | | | | 116,331 | | | | 116,535 | | | | | |
Indirect auto | | | — | | | | 242,669 | | | | 242,669 | | | | — | | | | 196,104 | | | | 196,104 | | | | — | | | | 186,117 | | | | 186,117 | | | | | |
Total loans | | $ | 109,031 | | | $ | 4,459,855 | | | $ | 4,568,886 | | | $ | 114,619 | | | $ | 4,214,647 | | | $ | 4,329,266 | | | $ | 105,341 | | | $ | 4,161,726 | | | $ | 4,267,067 | | | | | |
|
United considers all substandard loan relationships that are on nonaccrual with a balance of $500,000 or greater and all troubled debt restructurings (“TDRs”) to be individually impaired. In addition, United reviews all accruing substandard loan relationships greater than $2 million to determine if the loan is individually impaired. A loan is considered individually 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 individually 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 individually impaired loans for the amount of calculated impairment. Interest payments received on individually 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 individual impairment quarterly and specific reserves are established in the allowance for loan losses for any measured specific impairment on individually impaired loans. |
|
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 on individually impaired loans, 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 periods, 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 moving forward to capture the full range and impacts of credit losses experienced during the most recent economic and credit cycle. 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 losses incurred within the loan portfolio. |
|
Also, beginning in the first quarter of 2014, United updated its measurement of the loss emergence period in the calculation of the allowance for credit losses. The rapidly deteriorating credit conditions during the peak of the credit cycle shortened the length of time between management’s estimation of the incurrence of a loss and its recognition as a charge-off. In most cases, the loss emergence period was within a twelve month period which made the use of annualized loss factors appropriate for measuring the amount of incurred yet unconfirmed credit losses within the loan portfolio. As United has moved out beyond the peak of the financial crisis, management has observed that the loss emergence period 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. |
|
The updates to the weightings to the eight quarters of loss history and the update to our estimation of the loss emergence period did not have a material effect on the total allowance for loan losses or the provision for loan losses for the first nine months of 2014. These updates resulted in the full allocation of the previously unallocated portion of the allowance for loan losses. |
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
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).The following table presents loans individually evaluated for impairment by class of loans as of September 30, 2014, December 31, 2013 and September 30, 2013 (in thousands). |
|
| | 30-Sep-14 | | | 31-Dec-13 | | | 30-Sep-13 | | | | | |
| | | | | | | | Allowance | | | | | | | | | Allowance | | | | | | | | | Allowance | | | | | |
| | Unpaid | | | | | | for Loan | | | Unpaid | | | | | | for Loan | | | Unpaid | | | | | | for Loan | | | | | |
| | Principal | | | Recorded | | | Losses | | | Principal | | | Recorded | | | Losses | | | Principal | | | Recorded | | | Losses | | | | | |
| | Balance | | | Investment | | | Allocated | | | Balance | | | Investment | | | Allocated | | | Balance | | | Investment | | | Allocated | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 11,370 | | | $ | 10,370 | | | $ | — | | | $ | 17,717 | | | $ | 14,458 | | | $ | — | | | $ | 18,423 | | | $ | 15,059 | | | $ | — | | | | | |
Income producing commercial real estate | | | 9,872 | | | | 9,872 | | | | | | | | 12,644 | | | | 9,747 | | | | — | | | | 6,643 | | | | 5,325 | | | | — | | | | | |
Commercial & industrial | | | 2,178 | | | | 1,560 | | | | — | | | | 2,252 | | | | 2,252 | | | | — | | | | 235 | | | | 235 | | | | — | | | | | |
Commercial construction | | | — | | | | — | | | | — | | | | 974 | | | | 974 | | | | — | | | | 1,127 | | | | 1,127 | | | | — | | | | | |
Total commercial | | | 23,420 | | | | 21,802 | | | | — | | | | 33,587 | | | | 27,431 | | | | — | | | | 26,428 | | | | 21,746 | | | | — | | | | | |
Residential mortgage | | | 1,319 | | | | 954 | | | | — | | | | 4,496 | | | | 3,634 | | | | — | | | | 4,768 | | | | 3,729 | | | | — | | | | | |
Home equity lines of credit | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Residential construction | | | 5,460 | | | | 4,172 | | | | — | | | | 9,462 | | | | 7,807 | | | | — | | | | 9,101 | | | | 7,364 | | | | — | | | | | |
Consumer installment | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Indirect auto | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Total with no related allowance recorded | | | 30,199 | | | | 26,928 | | | | — | | | | 47,545 | | | | 38,872 | | | | — | | | | 40,297 | | | | 32,839 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | | 24,828 | | | | 23,265 | | | | 2,125 | | | | 18,595 | | | | 18,513 | | | | 1,023 | | | | 16,163 | | | | 16,079 | | | | 770 | | | | | |
Income producing commercial real estate | | | 16,797 | | | | 16,248 | | | | 2,380 | | | | 17,490 | | | | 17,490 | | | | 990 | | | | 20,020 | | | | 18,000 | | | | 1,205 | | | | | |
Commercial & industrial | | | 2,980 | | | | 2,980 | | | | 26 | | | | 2,248 | | | | 1,965 | | | | 66 | | | | 4,002 | | | | 3,870 | | | | 546 | | | | | |
Commercial construction | | | 12,281 | | | | 12,127 | | | | 1,164 | | | | 12,821 | | | | 12,741 | | | | 112 | | | | 12,430 | | | | 12,351 | | | | 150 | | | | | |
Total commercial | | | 56,886 | | | | 54,620 | | | | 5,695 | | | | 51,154 | | | | 50,709 | | | | 2,191 | | | | 52,615 | | | | 50,300 | | | | 2,671 | | | | | |
Residential mortgage | | | 18,657 | | | | 17,824 | | | | 3,501 | | | | 17,119 | | | | 16,533 | | | | 2,914 | | | | 15,598 | | | | 15,241 | | | | 2,008 | | | | | |
Home equity lines of credit | | | 531 | | | | 531 | | | | 51 | | | | 505 | | | | 505 | | | | 5 | | | | — | | | | — | | | | — | | | | | |
Residential construction | | | 9,427 | | | | 8,883 | | | | 1,037 | | | | 8,469 | | | | 7,001 | | | | 688 | | | | 7,257 | | | | 6,757 | | | | 662 | | | | | |
Consumer installment | | | 245 | | | | 245 | | | | 23 | | | | 999 | | | | 999 | | | | 224 | | | | 214 | | | | 204 | | | | 11 | | | | | |
Indirect auto | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Total with an allowance recorded | | | 85,746 | | | | 82,103 | | | | 10,307 | | | | 78,246 | | | | 75,747 | | | | 6,022 | | | | 75,684 | | | | 72,502 | | | | 5,352 | | | | | |
Total | | $ | 115,945 | | | $ | 109,031 | | | $ | 10,307 | | | $ | 125,791 | | | $ | 114,619 | | | $ | 6,022 | | | $ | 115,981 | | | $ | 105,341 | | | $ | 5,352 | | | | | |
|
There were no loans more than 90 days past due and still accruing interest at September 30, 2014, December 31, 2013 or September 30, 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 revenue that would have been earned if the loans classified as nonaccrual had performed in accordance with the original terms was approximately $705,000 and $346,000 for the three months ended September 30, 2014 and 2013, respectively, and $1.37 million and $1.69 million for the nine months ended September 30, 2014 and 2013, respectively. The gross additional interest revenue that would have been earned for the three and nine months ended September 30, 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 are presented below for the three and nine months ended September 30, 2014 and 2013 (in thousands). |
| | 2014 | | | 2013 | | | | | | | | | | | | | | | | | |
| | | | | Interest | | | | | | | | | Interest | | | | | | | | | | | | | | | | | | | | |
| | | | | Revenue | | | Cash Basis | | | | | | Revenue | | | Cash Basis | | | | | | | | | | | | | | | | | |
| | | | | Recognized | | | Interest | | | | | | Recognized | | | Interest | | | | | | | | | | | | | | | | | |
| | Average | | | During | | | Revenue | | | Average | | | During | | | Revenue | | | | | | | | | | | | | | | | | |
Three Months Ended September 30, | | Balance | | | Impairment | | | Received | | | Balance | | | Impairment | | | Received | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 33,715 | | | $ | 430 | | | $ | 448 | | | $ | 31,695 | | | $ | 737 | | | $ | 861 | | | | | | | | | | | | | | | | | |
Income producing commercial real estate | | | 26,622 | | | | 325 | | | | 341 | | | | 23,608 | | | | 599 | | | | 600 | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 4,698 | | | | 43 | | | | 85 | | | | 4,189 | | | | 114 | | | | 104 | | | | | | | | | | | | | | | | | |
Commercial construction | | | 12,203 | | | | 119 | | | | 96 | | | | 13,501 | | | | 244 | | | | 246 | | | | | | | | | | | | | | | | | |
Total commercial | | | 77,238 | | | | 917 | | | | 970 | | | | 72,993 | | | | 1,694 | | | | 1,811 | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 19,235 | | | | 215 | | | | 215 | | | | 18,548 | | | | 425 | | | | 435 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 538 | | | | 6 | | | | 5 | | | | 522 | | | | 11 | | | | 11 | | | | | | | | | | | | | | | | | |
Residential construction | | | 13,146 | | | | 130 | | | | 130 | | | | 14,136 | | | | 346 | | | | 307 | | | | | | | | | | | | | | | | | |
Consumer installment | | | 251 | | | | 4 | | | | 5 | | | | 214 | | | | 7 | | | | 7 | | | | | | | | | | | | | | | | | |
Indirect auto | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Total | | $ | 110,408 | | | $ | 1,272 | | | $ | 1,325 | | | $ | 106,413 | | | $ | 2,483 | | | $ | 2,571 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 31,460 | | | $ | 1,191 | | | $ | 1,219 | | | $ | 37,732 | | | $ | 1,836 | | | $ | 2,049 | | | | | | | | | | | | | | | | | |
Income producing commercial real estate | | | 26,299 | | | | 953 | | | | 991 | | | | 38,328 | | | | 1,077 | | | | 1,077 | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 4,314 | | | | 135 | | | | 186 | | | | 8,821 | | | | 333 | | | | 803 | | | | | | | | | | | | | | | | | |
Commercial construction | | | 12,086 | | | | 335 | | | | 338 | | | | 14,620 | | | | 509 | | | | 593 | | | | | | | | | | | | | | | | | |
Total commercial | | | 74,159 | | | | 2,614 | | | | 2,734 | | | | 99,501 | | | | 3,755 | | | | 4,522 | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 20,384 | | | | 672 | | | | 670 | | | | 19,382 | | | | 860 | | | | 841 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 531 | | | | 16 | | | | 17 | | | | 524 | | | | 22 | | | | 21 | | | | | | | | | | | | | | | | | |
Residential construction | | | 13,315 | | | | 452 | | | | 455 | | | | 14,219 | | | | 850 | | | | 882 | | | | | | | | | | | | | | | | | |
Consumer installment | | | 345 | | | | 16 | | | | 19 | | | | 228 | | | | 17 | | | | 17 | | | | | | | | | | | | | | | | | |
Indirect auto | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Total | | $ | 108,734 | | | $ | 3,770 | | | $ | 3,895 | | | $ | 133,854 | | | $ | 5,504 | | | $ | 6,283 | | | | | | | | | | | | | | | | | |
|
|
The following table presents the aging of the recorded investment in past due loans as of September 30, 2014, December 31, 2013 and September 30, 2013 by class of loans (in thousands). |
| | Loans Past Due | | | Loans Not | | | | | | | | | | | | | | | | | | | | |
As of September 30, 2014 | | 30 - 59 Days | | | 60 - 89 Days | | | > 90 Days | | | Total | | | Past Due | | | Total | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 2,769 | | | $ | 257 | | | $ | 947 | | | $ | 3,973 | | | $ | 1,149,960 | | | $ | 1,153,933 | | | | | | | | | | | | | | | | | |
Income producing commercial real estate | | | 417 | | | | 991 | | | $ | 226 | | | | 1,634 | | | | 603,093 | | | | 604,727 | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 900 | | | | 103 | | | | 861 | | | | 1,864 | | | | 647,989 | | | | 649,853 | | | | | | | | | | | | | | | | | |
Commercial construction | | | 123 | | | | 182 | | | | — | | | | 305 | | | | 180,489 | | | | 180,794 | | | | | | | | | | | | | | | | | |
Total commercial | | | 4,209 | | | | 1,533 | | | | 2,034 | | | | 7,776 | | | | 2,581,531 | | | | 2,589,307 | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 6,985 | | | | 3,136 | | | | 2,563 | | | | 12,684 | | | | 852,884 | | | | 865,568 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 1,566 | | | | 373 | | | | 375 | | | | 2,314 | | | | 456,505 | | | | 458,819 | | | | | | | | | | | | | | | | | |
Residential construction | | | 1,262 | | | | 329 | | | | 2,803 | | | | 4,394 | | | | 302,784 | | | | 307,178 | | | | | | | | | | | | | | | | | |
Consumer installment | | | 995 | | | | 322 | | | | 191 | | | | 1,508 | | | | 103,837 | | | | 105,345 | | | | | | | | | | | | | | | | | |
Indirect auto | | | 278 | | | | 83 | | | | 200 | | | | 561 | | | | 242,108 | | | | 242,669 | | | | | | | | | | | | | | | | | |
Total loans | | $ | 15,295 | | | $ | 5,776 | | | $ | 8,166 | | | $ | 29,237 | | | $ | 4,539,649 | | | $ | 4,568,886 | | | | | | | | | | | | | | | | | |
As of December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 1,845 | | | $ | 705 | | | $ | 2,017 | | | $ | 4,567 | | | $ | 1,128,976 | | | $ | 1,133,543 | | | | | | | | | | | | | | | | | |
Income producing commercial real estate | | | 3,879 | | | | 2,092 | | | | 530 | | | | 6,501 | | | | 616,666 | | | | 623,167 | | | | | | | | | | | | | | | | | |
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 September 30, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 1,332 | | | $ | 910 | | | $ | 1,896 | | | $ | 4,138 | | | $ | 1,125,014 | | | $ | 1,129,152 | | | | | | | | | | | | | | | | | |
Income producing commercial real estate | | | 694 | | | | 373 | | | | 533 | | | | 1,600 | | | | 612,019 | | | | 613,619 | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 763 | | | | 191 | | | | 93 | | | | 1,047 | | | | 456,367 | | | | 457,414 | | | | | | | | | | | | | | | | | |
Commercial construction | | | 16 | | | | — | | | | 235 | | | | 251 | | | | 136,895 | | | | 137,146 | | | | | | | | | | | | | | | | | |
Total commercial | | | 2,805 | | | | 1,474 | | | | 2,757 | | | | 7,036 | | | | 2,330,295 | | | | 2,337,331 | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 7,672 | | | | 2,467 | | | | 4,279 | | | | 14,418 | | | | 874,261 | | | | 888,679 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 1,177 | | | | 610 | | | | 373 | | | | 2,160 | | | | 418,456 | | | | 420,616 | | | | | | | | | | | | | | | | | |
Residential construction | | | 3,705 | | | | 418 | | | | 924 | | | | 5,047 | | | | 312,742 | | | | 317,789 | | | | | | | | | | | | | | | | | |
Consumer installment | | | 633 | | | | 19 | | | | 94 | | | | 746 | | | | 115,789 | | | | 116,535 | | | | | | | | | | | | | | | | | |
Indirect auto | | | 220 | | | | 84 | | | | 55 | | | | 359 | | | | 185,758 | | | | 186,117 | | | | | | | | | | | | | | | | | |
Total loans | | $ | 16,212 | | | $ | 5,072 | | | $ | 8,482 | | | $ | 29,766 | | | $ | 4,237,301 | | | $ | 4,267,067 | | | | | | | | | | | | | | | | | |
|
As of September 30, 2014, December 31, 2013, and September 30, 2013, $9.82 million, $5.64 million and $4.72 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 $38,000, $6,000 and $3,000 as of September 30, 2014, December 31, 2013 and September 30, 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). |
| | 30-Sep-14 | | | 31-Dec-13 | | | 30-Sep-13 | | | | | |
| | | | | Pre- | | | Post- | | | | | | Pre- | | | Post- | | | | | | Pre- | | | Post- | | | | | |
| | | | Modification | | Modification | | | | | Modification | | Modification | | | | | Modification | | Modification | | | | | |
| | Number | | Outstanding | | Outstanding | | | Number | | Outstanding | | Outstanding | | | Number | | Outstanding | | Outstanding | | | | | |
| | of | | Recorded | | Recorded | | | of | | Recorded | | Recorded | | | of | | Recorded | | Recorded | | | | | |
| | Contracts | | Investment | | Investment | | | Contracts | | Investment | | Investment | | | Contracts | | Investment | | Investment | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | | 52 | | | $ | 27,811 | | | $ | 26,248 | | | | 45 | | | $ | 24,064 | | | $ | 22,399 | | | | 45 | | | $ | 25,829 | | | $ | 24,368 | | | | | |
Income producing commercial real estate | | | 32 | | | | 19,652 | | | | 19,104 | | | | 32 | | | | 20,900 | | | | 18,268 | | | | 32 | | | | 22,134 | | | | 18,795 | | | | | |
Commercial & industrial | | | 33 | | | | 2,941 | | | | 2,941 | | | | 36 | | | | 3,527 | | | | 3,245 | | | | 34 | | | | 3,051 | | | | 2,919 | | | | | |
Commercial construction | | | 14 | | | | 11,238 | | | | 11,084 | | | | 13 | | | | 13,122 | | | | 13,042 | | | | 12 | | | | 12,904 | | | | 12,825 | | | | | |
Total commercial | | | 131 | | | | 61,642 | | | | 59,377 | | | | 126 | | | | 61,613 | | | | 56,954 | | | | 123 | | | | 63,918 | | | | 58,907 | | | | | |
Residential mortgage | | | 160 | | | | 19,555 | | | | 18,356 | | | | 133 | | | | 20,117 | | | | 18,852 | | | | 115 | | | | 18,511 | | | | 17,408 | | | | | |
Home equity lines of credit | | | 4 | | | | 531 | | | | 531 | | | | 3 | | | | 505 | | | | 505 | | | | 5 | | | | 521 | | | | 521 | | | | | |
Residential construction | | | 50 | | | | 10,916 | | | | 10,084 | | | | 57 | | | | 12,459 | | | | 10,452 | | | | 55 | | | | 12,360 | | | | 10,290 | | | | | |
Consumer installment | | | 20 | | | | 245 | | | | 245 | | | | 26 | | | | 203 | | | | 203 | | | | 36 | | | | 214 | | | | 204 | | | | | |
Indirect auto | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Total loans | | | 365 | | | | 92,889 | | | | 88,593 | | | | 345 | | | | 94,897 | | | $ | 86,966 | | | | 334 | | | | 95,524 | | | | 87,330 | | | | | |
|
Loans modified under the terms of a TDR during the three and nine months ended September 30, 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 and nine months ended September 30, 2014 and 2013, that were initially restructured within one year prior to becoming delinquent (dollars in thousands). |
|
| | New Troubled Debt Restructurings | | | New Troubled Debt Restructurings | |
| | for the Three Months Ended September 30, | | | for the Nine Months Ended September 30, | |
| | | | | | | | | | | Modified Within the | | | | | | | | | | | | Modified Within the | |
| | | | | | | | | | | Previous Twelve Months | | | | | | | | | | | | Previous Twelve Months | |
| | | | | | | | | | | that Have Subsequently | | | | | | | | | | | | that Have Subsequently | |
| | | | | Pre- | | Post- | | | Defaulted During the | | | | | Pre- | | Post- | | | Defaulted During the Nine | |
| | | | Modification | | Modification | | | Three Months Ended | | | | | Modification | | Modification | | | Months Ended | |
| | | | Outstanding | | Outstanding | | | 30-Sep-14 | | | | | Outstanding | | Outstanding | | | 30-Sep-14 | |
| | Number of | | Recorded | | Recorded | | | Number of | | Recorded | | | Number of | | Recorded | | Recorded | | | Number of | | Recorded | |
2014 | | Contracts | | Investment | | Investment | | | Contracts | | Investment | | | Contracts | | Investment | | Investment | | | Contracts | | Investment | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | | 2 | | | $ | 747 | | | $ | 747 | | | | — | | | $ | — | | | | 9 | | | $ | 4,139 | | | $ | 4,139 | | | $ | 1 | | | $ | 104 | |
Income producing commercial real estate | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5 | | | | 1,992 | | | | 1,992 | | | | — | | | | — | |
Commercial & industrial | | | 6 | | | | 452 | | | | 452 | | | | — | | | | — | | | | 10 | | | | 782 | | | | 782 | | | | 2 | | | | 54 | |
Commercial construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2 | | | | 471 | | | | 471 | | | | — | | | | — | |
Total commercial | | | 8 | | | | 1,199 | | | | 1,199 | | | | — | | | | — | | | | 26 | | | | 7,384 | | | | 7,384 | | | | 3 | | | | 158 | |
Residential mortgage | | | 10 | | | | 778 | | | | 673 | | | | 2 | | | | 139 | | | | 33 | | | | 2,924 | | | | 2,778 | | | | 8 | | | | 871 | |
Home equity lines of credit | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1 | | | | 36 | | | | 36 | | | | — | | | | — | |
Residential construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3 | | | | 1,124 | | | | 1,124 | | | | — | | | | — | |
Consumer installment | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5 | | | | 226 | | | | 226 | | | | — | | | | — | |
Indirect auto | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Total loans | | | 18 | | | $ | 1,977 | | | $ | 1,872 | | | | 2 | | | $ | 139 | | | | 68 | | | $ | 11,694 | | | $ | 11,548 | | | | 11 | | | $ | 1,029 | |
|
| | | | | | | | | | | | | | Modified Within the | | | | | | | | | | | | | | Modified Within the | |
| | | | | | | | | | | | | | Previous Twelve Months | | | | | | | | | | | | | | Previous Twelve Months | |
| | | | | | | | | | | | | | that Have Subsequently | | | | | | | | | | | | | | that Have Subsequently | |
| | | | | | Pre- | | | Post- | | | Defaulted During the | | | | | | | Pre- | | | Post- | | Defaulted During the Nine | |
| | | | | Modification | | Modification | | | Three Months Ended | | | | | | Modification | | Modification | | Months Ended | |
| | | | | Outstanding | | Outstanding | | | 30-Sep-13 | | | | | | Outstanding | | Outstanding | | 30-Sep-13 | |
| | Number of | | Recorded | | Recorded | | | Number of | | Recorded | | | Number of | | Recorded | | Recorded | | Number of | | Recorded | |
2013 | | Contracts | | Investment | | Investment | | | Contracts | | Investment | | | Contracts | | Investment | | Investment | | Contracts | | Investment | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | | 1 | | | $ | 1,841 | | | $ | 741 | | | | — | | | $ | — | | | | 11 | | | $ | 5,923 | | | $ | 4,823 | | | $ | 1 | | | $ | 432 | |
Income producing commercial real estate | | | — | | | | — | | | | — | | | | — | | | | — | | | | 7 | | | | 6,009 | | | | 6,009 | | | | — | | | | — | |
Commercial & industrial | | | 1 | | | | 68 | | | | 68 | | | | — | | | | — | | | | 10 | | | | 883 | | | | 777 | | | | 1 | | | | 35 | |
Commercial construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2 | | | | 1,454 | |
Total commercial | | | 2 | | | | 1,909 | | | | 809 | | | | — | | | | — | | | | 28 | | | | 12,815 | | | | 11,609 | | | | 4 | | | | 1,921 | |
Residential mortgage | | | 16 | | | | 2,365 | | | | 2,207 | | | | 1 | | | | 533 | | | | 29 | | | | 5,129 | | | | 4,827 | | | | 3 | | | | 641 | |
Home equity lines of credit | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Residential construction | | | 3 | | | | 727 | | | | 727 | | | | 1 | | | | 414 | | | | 10 | | | | 1,850 | | | | 1,721 | | | | 3 | | | | 531 | |
Consumer installment | | | 1 | | | | 7 | | | | 7 | | | | 2 | | | | 9 | | | | 5 | | | | 28 | | | | 28 | | | | 5 | | | | 29 | |
Indirect auto | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Total loans | | | 22 | | | $ | 5,008 | | | $ | 3,750 | | | | 4 | | | $ | 956 | | | | 72 | | | $ | 19,822 | | | $ | 18,185 | | | | 15 | | | $ | 3,122 | |
|
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 September 30, 2014, December 31, 2013 and September 30, 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 September 30, 2014 | | Pass | | | Watch | | | Performing | | | Nonaccrual | | | Loss | | | Total | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 1,076,822 | | | $ | 25,098 | | | $ | 49,857 | | | $ | 2,156 | | | $ | — | | | $ | 1,153,933 | | | | | | | | | | | | | | | | | |
Income producing commercial real estate | | | 563,451 | | | | 17,319 | | | | 22,215 | | | | 1,742 | | | | — | | | | 604,727 | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 637,160 | | | | 3,602 | | | | 7,498 | | | | 1,593 | | | | — | | | | 649,853 | | | | | | | | | | | | | | | | | |
Commercial construction | | | 174,443 | | | | 2,356 | | | | 3,847 | | | | 148 | | | | — | | | | 180,794 | | | | | | | | | | | | | | | | | |
Total commercial | | | 2,451,876 | | | | 48,375 | | | | 83,417 | | | | 5,639 | | | | — | | | | 2,589,307 | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 803,937 | | | | 10,300 | | | | 42,981 | | | | 8,350 | | | | — | | | | 865,568 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 450,026 | | | | — | | | | 8,073 | | | | 720 | | | | — | | | | 458,819 | | | | | | | | | | | | | | | | | |
Residential construction | | | 284,491 | | | | 7,389 | | | | 11,755 | | | | 3,543 | | | | — | | | | 307,178 | | | | | | | | | | | | | | | | | |
Consumer installment | | | 102,460 | | | | — | | | | 2,746 | | | | 139 | | | | — | | | | 105,345 | | | | | | | | | | | | | | | | | |
Indirect auto | | | 242,315 | | | | — | | | | — | | | | 354 | | | | — | | | | 242,669 | | | | | | | | | | | | | | | | | |
Total loans | | $ | 4,335,105 | | | $ | 66,064 | | | $ | 148,972 | | | $ | 18,745 | | | $ | — | | | $ | 4,568,886 | | | | | | | | | | | | | | | | | |
As of December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 1,054,924 | | | $ | 29,714 | | | $ | 43,083 | | | $ | 5,822 | | | $ | — | | | $ | 1,133,543 | | | | | | | | | | | | | | | | | |
Income producing commercial real estate | | | 575,597 | | | | 10,410 | | | | 34,642 | | | | 2,518 | | | | | | | | 623,167 | | | | | | | | | | | | | | | | | |
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 | | | | | | | | | | | | | | | | | |
As of September 30, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 1,046,900 | | | $ | 35,948 | | | $ | 39,946 | | | $ | 6,358 | | | $ | — | | | $ | 1,129,152 | | | | | | | | | | | | | | | | | |
Income producing commercial real estate | | | 556,963 | | | | 19,403 | | | | 35,596 | | | | 1,657 | | | | — | | | | 613,619 | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 436,401 | | | | 10,062 | | | | 10,342 | | | | 609 | | | | — | | | | 457,414 | | | | | | | | | | | | | | | | | |
Commercial construction | | | 109,332 | | | | 10,560 | | | | 16,911 | | | | 343 | | | | — | | | | 137,146 | | | | | | | | | | | | | | | | | |
Total commercial | | | 2,149,596 | | | | 75,973 | | | | 102,795 | | | | 8,967 | | | | — | | | | 2,337,331 | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 808,574 | | | | 23,277 | | | | 45,493 | | | | 11,335 | | | | — | | | | 888,679 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 406,575 | | | | 5,193 | | | | 7,679 | | | | 1,169 | | | | — | | | | 420,616 | | | | | | | | | | | | | | | | | |
Residential construction | | | 283,197 | | | | 14,943 | | | | 15,552 | | | | 4,097 | | | | — | | | | 317,789 | | | | | | | | | | | | | | | | | |
Consumer installment | | | 112,706 | | | | 1,162 | | | | 2,147 | | | | 520 | | | | — | | | | 116,535 | | | | | | | | | | | | | | | | | |
Indirect auto | | | 186,117 | | | | — | | | | — | | | | — | | | | — | | | | 186,117 | | | | | | | | | | | | | | | | | |
Total loans | | $ | 3,946,765 | | | $ | 120,548 | | | $ | 173,666 | | | $ | 26,088 | | | $ | — | | | $ | 4,267,067 | | | | | | | | | | | | | | | | | |
|
Risk Ratings |
|
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 continual basis. United uses the following definitions for its risk ratings: |
|
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. |
|
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. |
|
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. |
|
Loss. Loans categorized as Loss have the same characteristics as Doubtful; however, probability of loss is certain. Loans classified as Loss are charged off. |
|
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. |
|
Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. |
|
The following table presents the recorded investment (unpaid principal less amounts charged off) in nonaccrual loans by loan class as of September 30, 2014, December 31, 2013 and September 30, 2013 (in thousands). |
|
| | Nonaccrual Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, | | December 31, | | | September 30, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2014 | | 2013 | | | 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | $ | 2,156 | | | $ | 5,822 | | | $ | 6,358 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income producing commercial real estate | | | 1,742 | | | | 2,518 | | | | 1,657 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial & industrial | | | 1,593 | | | | 427 | | | | 609 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial construction | | | 148 | | | | 361 | | | | 343 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial | | | 5,639 | | | | 9,128 | | | | 8,967 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 8,350 | | | | 11,730 | | | | 11,335 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 720 | | | | 1,448 | | | | 1,169 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 3,543 | | | | 4,264 | | | | 4,097 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer installment | | | 139 | | | | 249 | | | | 520 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Indirect auto | | | 354 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 18,745 | | | $ | 26,819 | | | $ | 26,088 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance as a percentage of unpaid principal | | | 68.6 | % | | | 65.3 | % | | | 61.6 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | |