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Portfolio Loans
 12 Months Ended
Dec. 31, 2019
Receivables [Abstract]  
Portfolio Loans LOANS

The loan portfolio is comprised of loans originated by the Company and loans that were acquired in connection with the Company’s acquisitions. Loans are accounted for using the guidance in the ASC sections 310-30 and 310-20. Loans accounted for using ASC 310-30 are sometimes referred to as purchased credit impaired, or PCI, loans.
 
The table below shows the loan portfolio composition including carrying value by segment of loans accounted for at amortized cost, which includes originated loans, and loans accounted for as PCI.
($ in thousands)

December 31, 2019
 
December 31, 2018
Loans accounted for at amortized cost
$
5,224,048

 
$
4,303,600

Loans accounted for as PCI
90,289

 
46,401

Total loans
$
5,314,337

 
$
4,350,001


The following tables refer to loans accounted for at amortized cost.

Below is a summary of loans by category at December 31, 2019 and 2018:
 
($ in thousands)
December 31, 2019
 
December 31, 2018
Commercial and industrial
$
2,345,823

 
$
2,121,008

Real estate loans:
 
 
 
Commercial - investor owned
1,262,981

 
843,728

Commercial - owner occupied
678,522

 
604,498

Construction and land development
449,380

 
330,097

Residential
355,192

 
298,944

Total real estate loans
2,746,075

 
2,077,267

Consumer and other
134,766

 
107,351

Loans, before unearned loan fees
5,226,664

 
4,305,626

Unearned loan fees, net
(2,616
)
 
(2,026
)
    Loans, including unearned loan fees
$
5,224,048

 
$
4,303,600



Following is a summary of activity for the years ended December 31, 2019, 2018, and 2017 of loans to executive officers and directors, or to entities in which such individuals had beneficial interests as a shareholder, officer, or director. Such loans were made in the normal course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other customers and did not involve more than the normal risk of collectibility.
($ in thousands)
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Balance at beginning of year
$
17,169

 
$
5,349

 
$
15,406

New loans and advances
1,376

 
13,995

 
1,353

Payments and other reductions
(13,070
)
 
(2,175
)
 
(11,410
)
Balance at end of year
$
5,475

 
$
17,169

 
$
5,349




A summary of activity in the allowance for loan losses and the recorded investment in loans by class and category based on impairment method for the years ended indicated below is as follows:

($ in thousands)
Commercial and industrial
 
CRE - investor owned
 
CRE - owner occupied
 
Construction and land development
 
Residential real estate
 
Consumer and other
 
Total
Balance at December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of year
$
29,039

 
$
4,683

 
$
4,239

 
$
1,987

 
$
1,616

 
$
731

 
$
42,295

Provision for loan losses
4,801

 
1,708

 
673

 
(237
)
 
(330
)
 
67

 
6,682

Charge-offs
(6,882
)
 
(551
)
 
(58
)
 
(54
)
 
(667
)
 
(382
)
 
(8,594
)
Recoveries
338

 
95

 
19

 
776

 
661

 
295

 
2,184

Balance, end of year
$
27,296

 
$
5,935


$
4,873


$
2,472


$
1,280


$
711


$
42,567

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of year
$
26,406

 
$
3,890

 
$
3,308

 
$
1,487

 
$
2,237

 
$
838

 
$
38,166

Provision for loan losses
8,394

 
709

 
1,216

 
97

 
(583
)
 
(20
)
 
9,813

Charge-offs
(6,894
)
 
—

 
(313
)
 
(56
)
 
(546
)
 
(167
)
 
(7,976
)
Recoveries
1,133

 
84

 
28

 
459

 
508

 
80

 
2,292

Balance, end of year
$
29,039

 
$
4,683


$
4,239


$
1,987


$
1,616


$
731


$
42,295

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of year
$
26,996

 
$
3,420

 
$
2,890

 
$
1,304

 
$
2,023

 
$
932

 
$
37,565

Provision for loan losses
8,737

 
456

 
404

 
336

 
797

 
34

 
10,764

Charge-offs
(9,872
)
 
(117
)
 
(90
)
 
(254
)
 
(973
)
 
(201
)
 
(11,507
)
Recoveries
545

 
131

 
104

 
101

 
390

 
73

 
1,344

Balance, end of year
$
26,406

 
$
3,890

 
$
3,308


$
1,487


$
2,237


$
838


$
38,166



($ in thousands)
Commercial and industrial
 
CRE - investor owned
 
CRE - owner occupied
 
Construction and land development
 
Residential real estate
 
Consumer and other
 
Total
Balance December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses - Ending balance:
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
2,286

 
$
247

 
$
—

 
$
—

 
$
33

 
$
1

 
$
2,567

Collectively evaluated for impairment
25,010

 
5,688

 
4,873

 
2,472

 
1,247

 
710

 
40,000

Total
$
27,296

 
$
5,935

 
$
4,873

 
$
2,472

 
$
1,280

 
$
711

 
$
42,567

Loans - Ending balance:
 
 
 
 
 
 
 

 
 
 
 
 
 
Individually evaluated for impairment
$
22,578

 
$
2,303

 
$
1,373

 
$
—

 
$
1,330

 
$
1

 
$
27,585

Collectively evaluated for impairment
2,323,245

 
1,260,678

 
677,149

 
449,380

 
353,862

 
132,149

 
5,196,463

Total
$
2,345,823

 
$
1,262,981

 
$
678,522

 
$
449,380

 
$
355,192

 
$
132,150

 
$
5,224,048

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses - Ending balance:
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
4,266

 
$
—

 
$
109

 
$
—

 
$
52

 
$
26

 
$
4,453

Collectively evaluated for impairment
24,773

 
4,683

 
4,130

 
1,987

 
1,564

 
705

 
37,842

Total
$
29,039

 
$
4,683

 
$
4,239

 
$
1,987

 
$
1,616

 
$
731

 
$
42,295

Loans - Ending balance:
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
12,950

 
$
398

 
$
2,135

 
$
—

 
$
2,277

 
$
311

 
$
18,071

Collectively evaluated for impairment
2,108,058

 
843,330

 
602,363

 
330,097

 
296,667

 
105,014

 
4,285,529

Total
$
2,121,008

 
$
843,728

 
$
604,498

 
$
330,097

 
$
298,944

 
$
105,325

 
$
4,303,600




A summary of nonperforming loans individually evaluated for impairment by category at December 31, 2019 and 2018, and the income recognized on impaired loans is as follows:
 
December 31, 2019
($ in thousands)
Unpaid
Contractual
Principal Balance
 
Recorded
Investment
With No Allowance
 
Recorded
Investment
With
Allowance
 
Total
Recorded Investment
 
Related Allowance
 
Average
Recorded Investment
Commercial and industrial
$
36,223

 
$
7,654

 
$
14,924

 
$
22,578

 
$
2,286

 
$
25,423

Real estate:
 
 
 
 
 
 
 
 
 
 
 
    Commercial - investor owned
2,988

 
811

 
1,492

 
2,303

 
247

 
2,457

    Commercial - owner occupied
237

 
213

 
—

 
213

 
—

 
231

    Residential
1,464

 
1,120

 
210

 
1,330

 
33

 
1,428

Consumer and other
1

 
—

 
1

 
1

 
1

 
1

Total
$
40,913

 
$
9,798

 
$
16,627

 
$
26,425

 
$
2,567

 
$
29,540


 
December 31, 2018
($ in thousands)
Unpaid
Contractual
Principal Balance
 
Recorded
Investment
With No Allowance
 
Recorded
Investment
With
Allowance
 
Total
Recorded Investment
 
Related Allowance
 
Average
Recorded Investment
Commercial and industrial
$
21,893

 
$
3,294

 
$
9,656

 
$
12,950

 
$
4,266

 
$
13,827

Real estate:
 
 
 
 
 
 
 
 
 
 
 
    Commercial - investor owned
553

 
398

 
—

 
398

 
—

 
277

    Commercial - owner occupied
847

 
472

 
336

 
808

 
109

 
691

    Residential
2,425

 
1,659

 
618

 
2,277

 
52

 
778

Consumer and other
329

 
—

 
312

 
312

 
26

 
—

Total
$
26,047

 
$
5,823

 
$
10,922

 
$
16,745

 
$
4,453

 
$
15,573



 
December 31,
($ in thousands)
2019
 
2018
 
2017
Total interest income that would have been recognized under original terms on impaired loans
$
1,137

 
$
2,153

 
$
1,324

Total cash received and recognized as interest income on impaired loans
307

 
284

 
643

Total interest income recognized on impaired loans still accruing
116

 
149

 
63

Average balance of impaired loans
29,540

 
15,573

 
19,722





The recorded investment in nonperforming loans by category at December 31, 2019 and 2018 is as follows:
 
 
December 31, 2019
($ in thousands)
Non-accrual
 
Restructured, not on non-accrual
 
Loans over 90 days past due and still accruing interest
 
Total
Commercial and industrial
$
22,328

 
$
—

 
$
250

 
$
22,578

Real estate:
 
 
 
 
 
 
 
    Commercial - investor owned
2,303

 
—

 
—

 
2,303

    Commercial - owner occupied
213

 
—

 
—

 
213

    Residential
1,251

 
79

 
—

 
1,330

Consumer and other
1

 
—

 
—

 
1

       Total
$
26,096

 
$
79

 
$
250

 
$
26,425


 
December 31, 2018
($ in thousands)
Non-accrual
 
Restructured, not on non-accrual
 
Total
Commercial and industrial
$
12,805

 
$
145

 
$
12,950

Real estate:
 
 
 
 
 
    Commercial - investor owned
398

 
—

 
398

    Commercial - owner occupied
808

 
—

 
808

    Residential
2,197

 
80

 
2,277

Consumer and other
312

 
—

 
312

       Total
$
16,520

 
$
225

 
$
16,745




The recorded investment by category for loans restructured during the years ended December 31, 2019 and 2018 is as follows:
 
Year ended December 31, 2019
 
Year ended December 31, 2018
($ in thousands, except for number of loans)
Number of Loans
 
Pre-Modification Outstanding
Recorded Balance
 
Post-Modification Outstanding
Recorded Balance
 
Number of Loans
 
Pre-Modification Outstanding
Recorded Balance
 
Post-Modification Outstanding
Recorded Balance
Commercial and industrial
—

 
$
—

 
$
—

 
1

 
$
187

 
$
187

Real estate:
 
 
 
 
 
 
 
 
 
 
 
     Commercial - owner occupied
1

 
188

 
188

 
—

 
—

 
—

     Residential
2

 
332

 
332

 
1

 
80

 
80

  Total
3

 
$
520

 
$
520

 
2

 
$
267

 
$
267



Restructured loans primarily resulted from interest rate concessions. As of December 31, 2019, the Company allocated an immaterial amount in specific reserves to loans that have been restructured.

Loans restructured that subsequently defaulted during the year ended December 31, 2019, and 2018 are as follows:
 
Year ended December 31, 2019
 
Year ended December 31, 2018
($ in thousands, except for number of loans)
Number of Loans
 
Recorded Balance
 
Number of Loans
 
Recorded Balance
Commercial and industrial
2

 
$
352

 
—

 
$
—

  Total
2

 
$
352

 
—

 
$
—



The aging of the recorded investment in past due loans by class and category at December 31, 2019 and 2018 is shown below:
 
December 31, 2019
($ in thousands)
30-89 Days
 Past Due
 
90 or More
Days
Past Due
 
Total
Past Due
 
Current
 
Total
Commercial and industrial
$
5,679

 
$
8,212

 
$
13,891

 
$
2,331,932

 
$
2,345,823

Real estate:
 
 
 
 
 
 
 
 
 
Commercial - investor owned
321

 
1,492

 
1,813

 
1,261,168

 
1,262,981

Commercial - owner occupied
562

 
213

 
775

 
677,747

 
678,522

Construction and land development
308

 
—

 
308

 
449,072

 
449,380

Residential
4,689

 
595

 
5,284

 
349,908

 
355,192

Consumer and other
81

 
—

 
81

 
132,069

 
132,150

Total
$
11,640

 
$
10,512

 
$
22,152

 
$
5,201,896

 
$
5,224,048


 
December 31, 2018
($ in thousands)
30-89 Days
 Past Due
 
90 or More
Days
Past Due
 
Total
Past Due
 
Current
 
Total
Commercial and industrial
$
66

 
$
10,257

 
$
10,323

 
$
2,110,685

 
$
2,121,008

Real estate:
 
 
 
 
 
 
 
 
 
Commercial - investor owned
529

 
127

 
656

 
843,072

 
843,728

Commercial - owner occupied
292

 
565

 
857

 
603,641

 
604,498

Construction and land development
6

 
—

 
6

 
330,091

 
330,097

Residential
709

 
897

 
1,606

 
297,338

 
298,944

Consumer and other
—

 
312

 
312

 
105,013

 
105,325

Total
$
1,602

 
$
12,158

 
$
13,760

 
$
4,289,840

 
$
4,303,600



The Company categorizes 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, and current economic factors among other factors. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:
•
Grades 1, 2, and 3 – Includes loans to borrowers with a continuous record of strong earnings, sound balance sheet condition and capitalization, ample liquidity with solid cash flow, and whose management team has experience and depth within their industry.
•
Grade 4 – Includes loans to borrowers with positive trends in profitability, satisfactory capitalization and balance sheet condition, and sufficient liquidity and cash flow.
•
Grade 5 – Includes loans to borrowers that may display fluctuating trends in sales, profitability, capitalization, liquidity, and cash flow.
•
Grade 6 – Includes loans to borrowers where an adverse change or perceived weakness has occurred, but may be correctable in the near future. Alternatively, this rating category may also include circumstances where the borrower is starting to reverse a negative trend or condition, or has recently been upgraded from a 7, 8, or 9 rating.
•
Grade 7 – Watch credits are borrowers that have experienced financial setback of a nature that is not determined to be severe or influence ‘ongoing concern’ expectations. Although possible, no loss is anticipated, due to strong collateral and/or guarantor support.
•
Grade 8 – Substandard credits will include those borrowers characterized by significant losses and sustained downward trends in balance sheet condition, liquidity, and cash flow. Repayment reliance may have shifted to secondary sources. Collateral exposure may exist and additional reserves may be warranted.
•
Grade 9 – Doubtful credits include borrowers that may show deteriorating trends that are unlikely to be corrected. Collateral values may appear insufficient for full recovery, therefore requiring a partial charge-off, or debt renegotiation with the borrower. The borrower may have declared bankruptcy or bankruptcy is likely in the near term. All doubtful rated credits will be on non-accrual.

The recorded investment by risk category of the loans by class and category at December 31, 2019 and December 31, 2018 is as follows:
 
December 31, 2019
($ in thousands)
Pass (1-6)
 
Watch (7)
 
Classified (8 & 9)
 
Total
Commercial and industrial
$
2,151,084

 
$
124,718

 
$
70,021

 
$
2,345,823

Real estate:
 
 
 
 
 
 
 
Commercial - investor owned
1,242,569

 
17,572

 
2,840

 
1,262,981

Commercial - owner occupied
643,276

 
28,773

 
6,473

 
678,522

Construction and land development
437,134

 
12,140

 
106

 
449,380

Residential
348,246

 
4,450

 
2,496

 
355,192

Consumer and other
132,096

 
3

 
51

 
132,150

Total
$
4,954,405

 
$
187,656

 
$
81,987

 
$
5,224,048


 
December 31, 2018
($ in thousands)
Pass (1-6)
 
Watch (7)
 
Classified (8 & 9)
 
Total
Commercial and industrial
$
1,927,782

 
$
146,033

 
$
47,193

 
$
2,121,008

Real estate:
 
 
 
 
 
 
 
Commercial - investor owned
823,128

 
15,083

 
5,517

 
843,728

Commercial - owner occupied
563,003

 
31,834

 
9,661

 
604,498

Construction and land development
318,451

 
11,580

 
66

 
330,097

Residential
287,802

 
4,232

 
6,910

 
298,944

Consumer and other
105,007

 
6

 
312

 
105,325

Total
$
4,025,173

 
$
208,768

 
$
69,659

 
$
4,303,600