Loans Held for Investment (Tables)

6 Months Ended

Jun. 30, 2020

Loans Held for Investment

Summary of loans held for investment by portfolio segment

Loans held for investment summarized by portfolio segment are as follows (in thousands).

	June 30,		December 31,
	2020		2019
Commercial real estate	$	3,043,723	$	3,000,523
Commercial and industrial (1)		2,736,089		2,025,720
Construction and land development		931,899		940,564
1-4 family residential		672,843		791,020
Consumer		42,459		47,046
Broker-dealer (2)		422,891		576,527
		7,849,904		7,381,400
Allowance for credit losses		(156,383)		(61,136)
Total loans held for investment, net of allowance	$	7,693,521	$	7,320,264

(1) Included loans totaling $671.9 million at June 30, 2020 funded through the Paycheck Protection Program.

(2) Primarily represents margin loans to customers and correspondents associated with broker-dealer segment operations.

Summary of non-accrual loans by portfolio segment

Non-accrual loans, excluding those classified as held for sale, are summarized by class in the following table (in thousands).

	June 30,		December 31,
	2020		2019
Commercial real estate:
Non-owner occupied	$	3,519	$	3,813
Owner occupied		10,224		3,495
Commercial and industrial		32,259		15,262
Construction and land development		1,404		1,316
1-4 family residential		11,351		7,382
Consumer		308		26
Broker-dealer		—		—
	$	59,065	$	31,294

At June 30, 2020 and December 31, 2019, an additional $9.2 million and $4.8 million, respectively, of real estate loans secured by residential properties and classified as held for sale were in non-accrual status.

Loans accounted for on a non-accrual basis increased from December 31, 2019 to June 30, 2020, primarily due to the addition of commercial real estate loans totaling $9.1 million, a single commercial and industrial relationship totaling $11.8 million and various 1-4 family residential loans. The increase in commercial real estate loans in non-accrual status

at June 30, 2020 of $6.4 million was primarily related to the addition of 24 loans totaling $9.1 million, with a reserve of $1.4 million, that were previously accruing at December 31, 2019. This increase from December 31, 2019 was partially offset by the settlement of a single loan accounted for on a non-accrual basis with a carrying amount of $2.5 million. The increase in commercial and industrial loans in non-accrual status since December 31, 2019 was primarily due to a single relationship that included three loans totaling $11.8 million and had a $4.8 million reserve at June 30, 2020 and a CECL transition gross-up adjustment of $4.6 million related to a loan with an amortized cost of $6.8 million and a reserve of $4.4 million at June 30, 2020. The increase in 1-4 family residential loans in non-accrual status at June 30, 2020, compared to December 31, 2019, was primarily related to the classification of $4.0 million of loans as non-accrual, that were previously classified as accruing.

The following table provides further details associated with non-accrual loans (in thousands).

	Non-accrual Loans						Interest Income Recognized (1)
	With		With No				Three Months Ended		Six Months Ended
June 30, 2020	Allowance		Allowance		Total		June 30, 2020		June 30, 2020
Commercial real estate:
Non-owner occupied	$	2,174	$	1,345	$	3,519	$	86	$	(11)
Owner occupied		2,277		7,947		10,224		69		85
Commercial and industrial		25,566		6,693		32,259		102		402
Construction and land development		198		1,206		1,404		31		53
1-4 family residential		1,252		10,099		11,351		182		1,165
Consumer		308		—		308		2		(3)
Broker-dealer		—		—		—		—		—
	$	31,775	$	27,290	$	59,065	$	472	$	1,691

(1) Interest income recognized on non-accrual loans during the three and six months ended June 30, 2019 was $0.3 million and $0.7 million, respectively.

Schedule of information regarding TDRs granted

Information regarding TDRs granted during the three and six months ended June 30, 2020, is shown in the following table (dollars in thousands). At June 30, 2020, the Bank had $0.1 million of unadvanced commitments to borrowers whose loans had been restructured in TDRs, while such unadvanced commitments were nominal at December 31, 2019.

	Three Months Ended June 30, 2020					Three Months Ended June 30, 2019
	Number of	Balance at		Balance at		Number of	Balance at		Balance at
	Loans	Extension		End of Period		Loans	Extension		End of Period
Commercial real estate:
Non-owner occupied	—	$	—	$	—	—	$	—	$	—
Owner occupied	—		—		—	—		—		—
Commercial and industrial	1		6,750		2,000	3		7,993		7,973
Construction and land development	—		—		—	—		—		—
1-4 family residential	—		—		—	—		—		—
Consumer	—		—		—	—		—		—
Broker-dealer	—		—		—	—		—		—
	1	$	6,750	$	2,000	3	$	7,993	$	7,973

	Six Months Ended June 30, 2020					Six Months Ended June 30, 2019
	Number of	Balance at		Balance at		Number of	Balance at		Balance at
	Loans	Extension		End of Period		Loans	Extension		End of Period
Commercial real estate:
Non-owner occupied	—	$	—	$	—	—	$	—	$	—
Owner occupied	—		—		—	—		—		—
Commercial and industrial	2		7,839		3,166	3		7,993		7,973
Construction and land development	—		—		—	—		—		—
1-4 family residential	—		—		—	—		—		—
Consumer	—		—		—	—		—		—
Broker-dealer	—		—		—	—		—		—
	2	$	7,839	$	3,166	3	$	7,993	$	7,973

The following table presents information regarding TDRs granted during the twelve months preceding June 30, 2020, for which a payment was at least 30 days past due (dollars in thousands). There were no TDRs granted during the twelve months preceding June 30, 2019 for which a payment was at least 30 days past due.

	Twelve Months Preceding June 30, 2020
	Number of	Balance at		Balance at
	Loans	Extension		End of Period
Commercial real estate:
Non-owner occupied	—	$	—	$	—
Owner occupied	—		—		—
Commercial and industrial	1		1,625		1,421
Construction and land development	—		—		—
1-4 family residential	—		—		—
Consumer	—		—		—
Broker-dealer	—		—		—
	1	$	1,625	$	1,421

Schedule of analysis of the aging of the entity's loan portfolio

An analysis of the aging of the Company’s loan portfolio is shown in the following tables (in thousands).

													Accruing Loans
	Loans Past Due		Loans Past Due		Loans Past Due		Total		Current		Total		Past Due
June 30, 2020	30-59 Days		60-89 Days		90 Days or More		Past Due Loans		Loans		Loans		90 Days or More
Commercial real estate:
Non-owner occupied	$	1,662	$	—	$	1,313	$	2,975	$	1,729,473	$	1,732,448	$	—
Owner occupied		1,822		681		6,662		9,165		1,302,110		1,311,275		—
Commercial and industrial		1,325		—		6,909		8,234		2,727,855		2,736,089		939
Construction and land development		3,755		—		29		3,784		928,115		931,899		—
1-4 family residential		8,700		1,807		5,755		16,262		656,581		672,843		—
Consumer		72		22		284		378		42,081		42,459		—
Broker-dealer		—		—		—		—		422,891		422,891		—
	$	17,336	$	2,510	$	20,952	$	40,798	$	7,809,106	$	7,849,904	$	939

													Accruing Loans
	Loans Past Due		Loans Past Due		Loans Past Due		Total		Current		Total		Past Due
December 31, 2019	30-59 Days		60-89 Days		90 Days or More		Past Due Loans		Loans		Loans		90 Days or More
Commercial real estate:
Non-owner occupied	$	4,062	$	—	$	2,790	$	6,852	$	1,702,500	$	1,709,352	$	—
Owner occupied		1,813		880		3,265		5,958		1,285,213		1,291,171		—
Commercial and industrial		5,967		1,735		3,395		11,097		2,014,623		2,025,720		3
Construction and land development		7,580		1,827		—		9,407		931,157		940,564		—
1-4 family residential		12,058		3,442		6,520		22,020		769,000		791,020		—
Consumer		455		34		—		489		46,557		47,046		—
Broker-dealer		—		—		—		—		576,527		576,527		—
	$	31,935	$	7,918	$	15,970	$	55,823	$	7,325,577	$	7,381,400	$	3

Schedule of internal risk grades of loans by class

The following table presents loans held for investment grouped by asset class and credit quality indicator, segregated by year of origination or renewal (in thousands).

	Amortized Cost Basis by Origination Year
												2015 and
June 30, 2020	2020		2019		2018		2017		2016			Prior	Revolving		Total
Commercial real estate: non-owner occupied
Internal Grade 1-3 (Pass low risk)	$	8,455	$	39,658	$	5,310	$	12,951	$	13,452	$	16,990	$	402	$	97,218
Internal Grade 4-7 (Pass normal risk)		123,378		157,843		160,125		124,013		160,255		105,776		22,671		854,061
Internal Grade 8-11 (Pass high risk and watch)		114,528		133,162		128,832		106,085		144,102		66,126		381		693,216
Internal Grade 12 (Special mention)		—		—		—		—		—		—		—		—
Internal Grade 13 (Substandard accrual)		3,620		10,571		8,550		13,949		8,153		39,591		—		84,434
Internal Grade 14 (Substandard non-accrual)		—		—		—		882		222		2,415		—		3,519
Commercial real estate: owner occupied
Internal Grade 1-3 (Pass low risk)	$	28,290	$	30,841	$	11,075	$	30,513	$	23,041	$	46,508	$	2	$	170,270
Internal Grade 4-7 (Pass normal risk)		104,569		143,052		216,241		84,590		69,401		111,861		29,618		759,332
Internal Grade 8-11 (Pass high risk and watch)		75,276		83,909		65,866		29,401		30,419		40,902		9,644		335,417
Internal Grade 12 (Special mention)		—		—		—		—		—		30		—		30
Internal Grade 13 (Substandard accrual)		4,418		2,427		3,945		7,614		6,840		10,758		—		36,002
Internal Grade 14 (Substandard non-accrual)		552		—		270		5,591		2,881		930		—		10,224
Commercial and industrial
Internal Grade 1-3 (Pass low risk)	$	22,556	$	12,880	$	6,327	$	5,761	$	4,310	$	698	$	19,218	$	71,750
Internal Grade 4-7 (Pass normal risk)		56,557		107,050		70,933		56,709		23,741		16,322		367,699		699,011
Internal Grade 8-11 (Pass high risk and watch)		66,368		84,275		50,768		20,955		33,751		3,035		183,972		443,124
Internal Grade 12 (Special mention)		6,211		1,337		—		350		—		—		301		8,199
Internal Grade 13 (Substandard accrual)		3,260		3,087		10,155		1,447		5,618		666		11,525		35,758
Internal Grade 14 (Substandard non-accrual)		11,441		10,413		1,851		446		646		3,448		4,014		32,259
Construction and land development
Internal Grade 1-3 (Pass low risk)	$	5,880	$	6,986	$	22,927	$	279	$	1,115	$	311	$	2,224	$	39,722
Internal Grade 4-7 (Pass normal risk)		121,835		184,223		75,290		32,349		7,530		4,572		23,898		449,697
Internal Grade 8-11 (Pass high risk and watch)		86,018		158,812		137,512		18,524		3,701		1,050		8,398		414,015
Internal Grade 12 (Special mention)		—		—		—		—		—		—		—		—
Internal Grade 13 (Substandard accrual)		—		1,112		—		5,356		—		—		—		6,468
Internal Grade 14 (Substandard non-accrual)		—		437		29		—		769		169		—		1,404
Construction and land development - individuals
FICO less than 620	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
FICO between 620 and 720		1,884		82		1,467		—		—		—		—		3,433
FICO greater than 720		6,086		5,330		5,744		—		—		—		—		17,160
Substandard non-accrual		—		—		—		—		—		—		—		—
Other (1)		—		—		—		—		—		—		—		—
1-4 family residential
FICO less than 620	$	719	$	882	$	3,704	$	229	$	1,049	$	38,230	$	538	$	45,351
FICO between 620 and 720		8,514		23,071		11,113		9,476		13,609		46,358		1,428		113,569
FICO greater than 720		44,434		110,514		94,278		49,710		48,653		95,031		6,342		448,962
Substandard non-accrual		—		—		—		98		476		10,777		—		11,351
Other (1)		11,881		18,060		9,735		2,211		1,418		9,764		541		53,610
Consumer
FICO less than 620	$	594	$	1,625	$	155	$	155	$	53	$	90	$	356	$	3,028
FICO between 620 and 720		2,795		4,283		792		846		156		125		2,347		11,344
FICO greater than 720		7,075		5,027		3,487		410		450		66		4,584		21,099
Substandard non-accrual		—		—		—		35		—		23		250		308
Other (1)		3,893		2,123		364		59		50		—		191		6,680
Total loans with credit quality measures	$	931,087	$	1,343,072	$	1,106,845	$	620,994	$	605,861	$	672,622	$	700,544	$	5,981,025
Commercial and industrial (mortgage warehouse lending)															$	774,129
Commercial and industrial (Paycheck Protection Program loans)															$	671,859
Broker-Dealer (margin loans and correspondent receivables)															$	422,891
Total loans held for investment															$	7,849,904

(1)    Loans classified in this category were assigned a FICO score based on various factors specific to the borrower for credit modeling purposes.

Schedule of changes in the allowance for loan losses by portfolio segment

Changes in the allowance for credit losses for loans held for investment, distributed by portfolio segment, are shown below (in thousands).

	Balance,		Transition		Provision for				Recoveries on		Balance,
	Beginning of		Adjustment		(Reversal of)		Loans		Charged Off		End of
Three Months Ended June 30, 2020	Period		CECL		Credit Losses		Charged Off		Loans		Period
Commercial real estate	$	53,939	$	—	$	56,875	$	(4,274)	$	11	$	106,551
Commercial and industrial		38,550		—		5,176		(12,544)		681		31,863
Construction and land development		6,360		—		2,031		—		2		8,393
1-4 family residential		6,365		—		1,199		(170)		5		7,399
Consumer		1,203		—		319		(197)		104		1,429
Broker-dealer		322		—		426		—		—		748
Total	$	106,739	$	—	$	66,026	$	(17,185)	$	803	$	156,383

	Balance,		Transition		Provision for				Recoveries on		Balance,
	Beginning of		Adjustment		(Reversal of)		Loans		Charged Off		End of
Six Months Ended June 30, 2020	Period		CECL		Credit Losses		Charged Off		Loans		Period
Commercial real estate	$	31,595	$	8,073	$	71,350	$	(4,488)	$	21	$	106,551
Commercial and industrial		17,964		3,193		23,622		(13,984)		1,068		31,863
Construction and land development		4,878		577		2,938		(2)		2		8,393
1-4 family residential		6,386		(29)		1,400		(373)		15		7,399
Consumer		265		748		565		(373)		224		1,429
Broker-dealer		48		—		700		—		—		748
Total	$	61,136	$	12,562	$	100,575	$	(19,220)	$	1,330	$	156,383

	Balance,		Transition		Provision for				Recoveries on		Balance,
	Beginning of		Adjustment		(Reversal of)		Loans		Charged Off		End of
Three Months Ended June 30, 2019	Period		CECL		Credit Losses		Charged Off		Loans		Period
Commercial real estate	$	26,845	$	—	$	(1,731)	$	—	$	—	$	25,114
Commercial and industrial		21,268		—		1,254		(2,430)		322		20,414
Construction and land development		5,908		—		(1,512)		—		—		4,396
1-4 family residential		4,331		—		1,447		(871)		17		4,924
Consumer		409		—		(128)		(10)		12		283
Broker-dealer		48		—		(2)		—		—		46
Total	$	58,809	$	—	$	(672)	$	(3,311)	$	351	$	55,177

	Balance,		Transition		Provision for				Recoveries on		Balance,
	Beginning of		Adjustment		(Reversal of)		Loans		Charged Off		End of
Six Months Ended June 30, 2019	Period		CECL		Credit Losses		Charged Off		Loans		Period
Commercial real estate	$	27,100	$	—	$	(1,986)	$	—	$	—	$	25,114
Commercial and industrial		21,980		—		1,712		(4,248)		970		20,414
Construction and land development		6,061		—		(1,665)		—		—		4,396
1-4 family residential		3,956		—		1,836		(899)		31		4,924
Consumer		267		—		458		(464)		22		283
Broker-dealer		122		—		(76)		—		—		46
Total	$	59,486	$	—	$	279	$	(5,611)	$	1,023	$	55,177