Loans

12 Months Ended

Dec. 31, 2020

Loans and Leases Receivable Disclosure [Abstract]

The following table shows the Company's loan portfolio by category as of the dates shown:


(Dollars in thousands)	December 31, 2020			December 31, 2019
Balance:
Commercial	$	11,955,967		$	8,285,920
Commercial real estate	8,494,132			8,020,276
Home equity	425,263			513,066
Residential real estate	1,259,598			1,354,221
Premium finance receivables—commercial	4,054,489			3,442,027
Premium finance receivables—life insurance	5,857,436			5,074,602
Consumer and other	32,188			110,178


Total loans, net of unearned income	$	32,079,073		$	26,800,290
Mix:
Commercial	37		%	31		%
Commercial real estate	26			30
Home equity	1			2
Residential real estate	5			5
Premium finance receivables—commercial	13			13
Premium finance receivables—life insurance	18			19
Consumer and other	0			0


Total loans, net of unearned income	100		%	100		%

The Company’s loan portfolio is generally comprised of loans to consumers and small to medium-sized businesses, which, for the commercial and commercial real estate portfolios, are located primarily within the geographic market areas that the banks serve. Various niche lending businesses, including lease finance and franchise lending, operate on a national level. Additionally, to provide short-term relief due to macroeconomic deterioration from the COVID-19 pandemic to small businesses within such market areas, the Company originated loans through PPP, an expansion of guaranteed lending under Section 7(a) of the Small Business Act within the CARES Act. As of December 31, 2020, the Company's commercial portfolio included approximately $2.7 billion of such PPP loans. The premium finance receivables portfolios are made to customers throughout the United States and Canada. The Company strives to maintain a loan portfolio that is diverse in terms of loan type, industry, borrower and geographic concentrations. Such diversification reduces the exposure to economic downturns that may occur in different segments of the economy or in different industries.

Certain premium finance receivables are recorded net of unearned income. The unearned income portions of such premium finance receivables were $113.1 million and $118.4 million at December 31, 2020 and 2019, respectively.

Total loans, excluding PCD loans, include net deferred loan fees and costs and fair value purchase accounting adjustments totaling $(3.2) million at December 31, 2020 and $9.1 million at December 31, 2019. Prior to January 1, 2020, PCI loans were recorded net of credit discounts. See “Acquired Loan Information - PCI Loans” below. Net deferred fees as of December 31, 2020 includes $32.5 million of net deferred fees paid by the SBA for loans originated under the PPP. As PPP loans share similar characteristics (loan terms), and prepayments are considered probable and can reasonably be estimated due to terms of the program, the Company considers estimated future principal prepayments in recognizing such deferred fee for determining a constant effective yield on the portfolio of loans.

Certain real estate loans, including mortgage loans held-for-sale, commercial, consumer, and home equity loans with balances totaling approximately $7.0 billion and $6.8 billion at December 31, 2020 and 2019, respectively, were pledged as collateral to secure the availability of borrowings from certain federal agency banks. At December 31, 2020, approximately $6.8 billion of these pledged loans are included in a blanket pledge of qualifying loans to the FHLB. The remaining $222.2 million of pledged loans was used to secure potential borrowings at the FRB discount window. At December 31, 2020 and 2019, the banks had outstanding borrowings of $1.2 billion and $674.9 million, respectively, from the FHLB in connection with these collateral arrangements. See Note 11, “Federal Home Loan Bank Advances,” for a summary of these borrowings.

It is the policy of the Company to review each prospective credit in order to determine the appropriateness and, when required, the adequacy of security or collateral necessary to obtain when making a loan. The type of collateral, when required, will vary

from liquid assets to real estate. The Company seeks to assure access to collateral, in the event of default, through adherence to state lending laws and the Company’s credit monitoring procedures.

Acquired Loan Information — PCI Loans

As part of the Company's previous acquisitions, the Company acquired loans for which there was evidence of credit quality deterioration since origination (PCI loans) and we determined that it was probable that the Company would be unable to collect all contractually required principal and interest payments. Prior to January 1, 2020, PCI loans were aggregated into pools by common risk characteristics for accounting purposes, including recognition of interest income on a pool basis. Measurement of any allowance for loan losses on these loans were offset by the remaining credit discount related to the pool. Changes in expected cash flows would vary from period to period as the Company periodically updated its cash flow model assumptions for PCI loans. The factors that most significantly affected the estimates of gross cash flows expected to be collected, and accordingly the accretable yield, included changes in the benchmark interest rate indices for variable-rate products and changes in prepayment assumptions and loss estimates. As a result of the implementation of ASU No. 2016-13, beginning in the first quarter of 2020, PCI loans transitioned to a classification of PCD, which no longer maintains the prior pools and related accounting concepts.

The following table presents the unpaid principal balance and carrying value for these acquired loans under the required disclosures for PCI loans before the adoption of ASU No. 2016-13:


	December 31, 2019
(Dollars in thousands)		Unpaid Principal Balance		Carrying Value
PCI loans		$	455,784	$	425,372

The following table provides activity for the accretable yield of PCI loans under the required disclosures for PCI loans before the adoption of ASU No. 2016-13:


		Years Ended December 31,
(Dollars in thousands)	2019
Accretable yield, beginning balance			$	34,876
Acquisitions			16,770
Accretable yield amortized to interest income			(18,226)

Reclassification from non-accretable difference (1)			5,516
Increases in interest cash flows due to payments and changes in interest rates			6,012
Accretable yield, ending balance			$	44,948

(1)Reclassification is the result of subsequent increases in expected principal cash flows.

See Note 5, “Allowance for Credit Losses,” for further discussion regarding the allowance for loan losses associated with PCI loans at December 31, 2019.