Loans Held for Investment and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2020

Loans held for investment are summarized by portfolio segment as follows:



(in thousands)	March 31, 2020			December 31, 2019
Commercial	$	9,402,250		$	9,133,444
Energy	1,331,489			1,425,309
Mortgage finance(1)	7,588,803			8,169,849
Real estate	6,196,653			6,008,040
Gross loans held for investment(2)	24,519,195			24,736,642
Deferred income (net of direct origination costs)	(72,813		)	(90,380		)
Allowance for credit losses on loans	(240,958		)	(195,047		)
Total loans held for investment, net(2)	$	24,205,424		$	24,451,215


(1)	Balances at March 31, 2020 and December 31, 2019 are stated net of $895.9 million and $682.7 million of participations sold, respectively.

(2)

Excludes accrued interest receivable of $61.7 million and $63.4 million at March 31, 2020 and December 31, 2019, respectively, that is recorded in accrued interest receivable and other assets.

Schedule of the credit risk profile of loan portfolio by internally assigned grades and nonaccrual status

The following table summarizes our gross loans held for investment by year of origination and internally assigned credit grades:



(in thousands)	2020	2019	2018	2017	2016	2015 and prior	Revolving lines of credit	Revolving lines of credit converted to term loans	Total
March 31, 2020
Commercial
(1-7) Pass	164,393	3,097,118	828,225	488,711	357,598	350,754	3,768,821	37,506	9,093,126
(8) Special mention	—	12,122	21,109	1,629	13,372	13,351	57,836	3,636	123,055
(9) Substandard - accruing	688	26,003	8,057	14,473	11,860	10,602	50,790	1,643	124,116
(9+) Non-accrual	—	6,586	876	10,368	1,395	24,752	16,906	1,070	61,953
Total commercial	165,081	3,141,829	858,267	515,181	384,225	399,459	3,894,353	43,855	9,402,250
Energy
(1-7) Pass	—	20,525	15,183	25,163	—	59,578	961,833	714	1,082,996
(8) Special mention	—	—	10,000	—	—	—	50,024	—	60,024
(9) Substandard - accruing	—	2,556	—	6,105	—	14,386	13,564	—	36,611
(9+) Non-accrual	—	40,881	56,700	3,139	11,822	10,689	26,778	1,849	151,858
Total energy	—	63,962	81,883	34,407	11,822	84,653	1,052,199	2,563	1,331,489
Mortgage finance
(1-7) Pass	282,291	623,955	673,328	492,038	67,179	5,450,012	—	—	7,588,803
(8) Special mention	—	—	—	—	—	—	—	—	—
(9) Substandard - accruing	—	—	—	—	—	—	—	—	—
(9+) Non-accrual	—	—	—	—	—	—	—	—	—
Total mortgage finance	282,291	623,955	673,328	492,038	67,179	5,450,012	—	—	7,588,803
Real estate
CRE
(1-7) Pass	133,556	733,076	951,198	811,991	284,324	640,181	87,979	44,327	3,686,632
(8) Special mention	—	—	16,484	20,918	9,558	12,908	—	1,883	61,751
(9) Substandard - accruing	—	—	—	—	—	21,305	—	1,250	22,555
(9+) Non-accrual	—	—	—	—	—	244	—	—	244
RBF
(1-7) Pass	36,669	218,642	143,204	39,091	15,521	13,968	633,422	—	1,100,517
(8) Special mention	—	689	287	—	—	—	—	—	976
(9) Substandard - accruing	—	—	—	—	—	—	—	—	—
(9+) Non-accrual	—	—	—	—	—	—	—	—	—
Other
(1-7) Pass	84,156	167,071	138,751	170,548	107,942	184,010	23,390	39,043	914,911
(8) Special mention	—	—	5,969	312	2,911	8,178	—	6,323	23,693
(9) Substandard - accruing	—	—	531	701	—	2,348	—	—	3,580
(9+) Non-accrual	—	594	—	—	—	3,095	—	—	3,689
Secured by 1-4 family
(1-7) Pass	15,641	68,913	79,808	72,265	93,948	40,231	5,460	—	376,266
(8) Special mention	—	—	—	—	—	309	—	—	309
(9) Substandard - accruing	—	—	—	—	—	109	—	—	109
(9+) Non-accrual	—	—	—	—	—	1,421	—	—	1,421
Total real estate	270,022	1,188,985	1,336,232	1,115,826	514,204	928,307	750,251	92,826	6,196,653
Total loans held for investment	717,394	5,018,731	2,949,710	2,157,452	977,430	6,862,431	5,696,803	139,244	24,519,195

Schedule of activity in the reserve for loan losses by portfolio segment

The following table details activity in the allowance for credit losses on loans. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.



(in thousands)	Commercial			Energy		Mortgage Finance		Real Estate			Additional Qualitative Reserve			Total
Three months ended March 31, 2020
Allowance for credit losses on loans:
Beginning balance	$	102,254		$	60,253	$	2,265	$	30,275		$	—		$	195,047
Impact of CECL adoption	(15,740		)	24,154		2,031		(1,860		)	—			8,585
Provision for credit losses on loans	24,902			66,821		35		3,271			—			95,029
Charge-offs	20,653			37,730		—		—			—			58,383
Recoveries	257			423		—		—			—			680
Net charge-offs (recoveries)	20,396			37,307		—		—			—			57,703
Ending balance	$	91,020		$	113,921	$	4,331	$	31,686		$	—		$	240,958
Three months ended March 31, 2019
Allowance for credit losses on loans:
Beginning balance	$	96,814		$	34,882	$	—	$	52,595		$	7,231		$	191,522
Provision for credit losses on loans	12,872			12,387		1,300		2,311			(7,231		)	21,639
Charge-offs	4,865			—		—		—			—			4,865
Recoveries	277			—		—		—			—			277
Net charge-offs (recoveries)	4,588			—		—		—			—			4,588
Ending balance	$	105,098		$	47,269	$	1,300	$	54,906		$	—		$	208,573

Schedule of impaired loans, by portfolio class

The table below provides an age analysis of our loans held for investment:



(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Non-accrual loans as of March 31, 2020(2)		Current		Total		Non-accrual With No Allowance
March 31, 2020
Commercial	$	26,013	$	9,656	$	19,373	$	55,042	$	61,953	$	9,285,255	$	9,402,250	$	16,903
Energy	—		—		—		—		151,858		1,179,631		1,331,489		40,719
Mortgage finance loans	—		—		—		—		—		7,588,803		7,588,803		—
Real estate
CRE	9,301		—		1,837		11,138		244		3,759,800		3,771,182		—
RBF	—		—		—		—		—		1,101,493		1,101,493		—
Other	16,395		—		—		16,395		3,689		925,789		945,873		3,689
Secured by 1-4 family	79		—		64		143		1,421		376,541		378,105		1,202
Total loans held for investment	$	51,788	$	9,656	$	21,274	$	82,718	$	219,165	$	24,217,312	$	24,519,195	$	62,513


(1)	Loans past due 90 days and still accruing includes premium finance loans of $8.6 million. These loans are generally secured by obligations of insurance carriers to refund premiums on canceled insurance policies. The receipt of the refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.

(2)

As of March 31, 2020 and December 31, 2019, none of our non-accrual loans were earning interest income on a cash basis. Additionally, no interest income was recognized on non-accrual loans for the three months ended March 31, 2020. Accrued interest of $393,000 was reversed during the three months ended March 31, 2020.

Schedule of loans that have been restructured

The following table details the recorded investment at March 31, 2019 of loans restructured during the three months ended March 31, 2019 by type of modification:



	Extended Maturity			Adjusted Payment Schedule			Total
(in thousands, except number of contracts)	Number of Contracts	Balance at Period End		Number of Contracts	Balance at Period End		Number of Contracts	Balance at Period End
Three months ended March 31, 2019
Energy loans	1	$	22,540	—	$	—	1	$	22,540
Total	1	$	22,540	—	$	—	1	$	22,540

Financing Receivable, Nonaccrual

The following table summarizes collateral-dependent gross loans held for investment by collateral type as follows:



	Collateral type
(in thousands)	Business assets		Real property		Energy		Total
March 31, 2020
Commercial	$	24,752	$	—	$	—	$	24,752
Energy loans	—		—		151,858		151,858
Real estate
Secured by 1-4 family	—		1,202		—		1,202
Total collateral-dependent loans held for investment	$	24,752	$	1,202	$	151,858	$	177,812