XML 49 R13.htm IDEA: XBRL DOCUMENT v3.20.1
LOANS
3 Months Ended
Mar. 31, 2020
LOANS  
LOANS

Note 5 – Loans

The following table presents total loans outstanding by portfolio class, as of March 31, 2020 and December 31, 2019:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

 

​

​

March 31, 

​

December 31,

 

(dollars in thousands)

​

2020

​

2019

 

Commercial:

​

​

​

​

​

​

​

Commercial

​

$

649,403

​

$

628,056

​

Commercial Other

​

​

443,376

​

​

427,129

​

Commercial real estate:

​

​

​

​

​

​

​

Commercial real estate non-owner occupied

​

​

809,628

​

​

825,874

​

Commercial real estate owner occupied

​

​

471,360

​

​

464,601

​

Multi-family

​

​

142,770

​

​

146,795

​

Farmland

​

​

83,522

​

​

89,234

​

Construction and land development

​

​

208,361

​

​

208,733

​

Total commercial loans

​

​

2,808,420

​

​

2,790,422

​

Residential real estate:

​

​

​

​

​

​

​

Residential first lien

​

​

441,495

​

​

456,107

​

Other residential

​

​

106,519

​

​

112,184

​

Consumer:

​

​

​

​

​

​

​

Consumer

​

​

85,162

​

​

100,732

​

Consumer Other

​

​

588,242

​

​

609,384

​

Lease financing

​

​

346,366

​

​

332,581

​

Total loans, gross

​

$

4,376,204

​

$

4,401,410

​

​

​

Total loans include net deferred loan fees of $2.9 million and $2.2 million at March 31, 2020 and December 31, 2019, respectively, and unearned income of $40.1 million and $39.6 million within the lease financing portfolio at March 31, 2020 and December 31, 2019, respectively.

At March 31, 2020, the Company had commercial, residential and consumer loans held for sale totaling $113.9 million compared to $16.4 million at December 31, 2019. During the first quarter of 2020, the Company had committed

to a plan to sell certain loans and transferred $99.7 million of consumer loans to loans held for sale with no gain or loss recognized upon the transfer. The sale is expected to be completed in May 2020. During the three months ended March 31, 2020 and 2019, the Company sold commercial and residential real estate loans with proceeds totaling $73.1 million and $99.3 million, respectively.

The aggregate loans outstanding to the Company’s directors, executive officers, principal shareholders and their affiliates totaled $21.7 million and $23.0 million at March 31, 2020 and December 31, 2019, respectively. During the three months ended March 31, 2020, there were $80,000 of new loans and other additions, while repayments and other reductions totaled $1.3 million.

The following table represents, by loan portfolio segment, a summary of changes in the ACL on loans for the three months ended March 31, 2020 and 2019:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial Loan Portfolio

​

Other Loan Portfolio

​

​

​

 

​

​

​

​

​

Commercial

​

Construction

​

Residential

​

​

​

​

​

​

​

​

​

 

​

​

​

​

​

Real

​

and Land

​

Real

​

​

​

​

Lease

​

​

​

 

(dollars in thousands)

​

Commercial

​

Estate

​

Development

​

Estate

​

Consumer

​

Financing

​

Total

 

Changes in allowance for credit losses on loans for the three months ended March 31, 2020:

​

Balance, beginning of period

​

$

10,031

​

$

10,272

​

$

290

​

$

2,499

​

$

2,642

​

$

2,294

​

$

28,028

​

Impact of adopting ASC 326

​

​

2,327

​

​

4,104

​

​

724

​

​

1,211

​

​

(594)

​

​

774

​

​

8,546

​

Provision for credit losses on loans

​

 

1,730

​

 

5,755

​

 

(549)

​

 

257

​

 

256

​

 

3,120

​

 

10,569

​

Initial PCD Allowance

​

​

1,045

​

​

1,311

​

​

809

​

​

1,015

​

​

57

​

​

—

​

​

4,237

​

Charge-offs

​

 

(3,398)

​

 

(7,873)

​

 

(12)

​

 

(388)

​

 

(598)

​

 

(948)

​

 

(13,217)

​

Recoveries

​

 

5

​

 

14

​

 

59

​

 

44

​

 

191

​

 

69

​

 

382

​

Balance, end of period

​

$

11,740

​

$

13,583

​

$

1,321

​

$

4,638

​

$

1,954

​

$

5,309

​

$

38,545

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Changes in allowance for credit losses on loans for the three months ended March 31, 2019:

​

Balance, beginning of period

​

$

9,524

​

$

4,723

​

$

372

​

$

2,041

​

$

2,154

​

$

2,089

​

$

20,903

​

Provision for credit losses on loans

​

 

118

​

​

1,945

​

​

63

​

​

514

​

​

329

​

 

274

​

 

3,243

​

Charge-offs

​

 

(112)

​

 

(58)

​

 

(44)

​

 

(153)

​

 

(556)

​

 

(459)

​

 

(1,382)

​

Recoveries

​

 

15

​

 

7

​

 

7

​

 

22

​

 

210

​

 

66

​

 

327

​

Balance, end of period

​

$

9,545

​

$

6,617

​

$

398

​

$

2,424

​

$

2,137

​

$

1,970

​

$

23,091

​

The following table represents, by loan portfolio segment, details regarding the balance in the allowance for loan loss and the recorded investment in loans as of December 31, 2019 by impairment evaluation method:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial Loan Portfolio

​

Other Loan Portfolio

​

​

​

 

​

​

​

​

​

Commercial

​

Construction

​

Residential

​

​

​

​

​

​

​

​

​

 

​

​

​

​

​

Real

​

and Land

​

Real

​

​

​

​

Lease

​

​

​

 

(dollars in thousands)

​

Commercial

​

Estate

​

Development

​

Estate

​

Consumer

​

Financing

​

Total

 

Allowance for credit losses on loans:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans individually evaluated for impairment

​

$

3,563

​

$

5,968

​

$

—

​

$

290

​

$

—

​

$

156

​

$

9,977

​

Loans collectively evaluated for impairment

​

 

69

​

 

100

​

​

14

​

​

444

​

​

39

​

​

122

​

 

788

​

Non-impaired loans collectively evaluated for impairment

​

 

6,380

​

 

3,643

​

​

272

​

​

1,269

​

​

2,500

​

​

2,016

​

 

16,080

​

Loans acquired with deteriorated credit quality (1)

​

 

19

​

 

561

​

​

4

​

​

496

​

​

103

​

​

—

​

 

1,183

​

Total allowance for credit losses on loans

​

$

10,031

​

$

10,272

​

$

290

​

$

2,499

​

$

2,642

​

$

2,294

​

$

28,028

​

Recorded investment (loan balance):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Impaired loans individually evaluated for impairment

​

$

5,767

​

$

22,698

​

$

1,245

​

$

5,329

​

$

—

​

$

697

​

$

35,736

​

Impaired loans collectively evaluated for impairment

​

 

511

​

​

764

​

 

104

​

 

3,695

​

 

376

​

 

896

​

 

6,346

​

Non-impaired loans collectively evaluated for impairment

​

 

1,045,829

​

​

1,482,935

​

 

201,707

​

 

546,630

​

 

708,528

​

 

330,988

​

 

4,316,617

​

Loans acquired with deteriorated credit quality (1)

​

 

3,078

​

​

20,107

​

 

5,677

​

 

12,637

​

 

1,212

​

 

—

​

 

42,711

​

Total recorded investment (loan balance)

​

$

1,055,185

​

$

1,526,504

​

$

208,733

​

$

568,291

​

$

710,116

​

$

332,581

​

$

4,401,410

​

(1)Loans acquired with deteriorated credit quality were originally recorded at fair value at the acquisition date and the risk of credit loss was recognized at that date based on estimates of expected cash flows.

The Company utilizes the Probability of Default (“PD”)/Loss Given Default (“LGD”) methodology in determining expected future credit losses. PD is the risk that the borrower will be unable or unwilling to repay its debt in full or on time. The risk of default is derived by analyzing the obligor’s capacity to repay the debt in accordance with contractual terms. PD is generally associated with financial characteristics such as inadequate cash flow to service debt, declining revenues or operating margins, high leverage, declining or marginal liquidity, and the inability to successfully implement a business plan. In addition to these quantifiable factors, the borrower’s willingness to repay also must be evaluated.

As a method for estimating the allowance, it is a form of migration analysis that combines the estimated probability of loans experiencing default events and the losses ultimately associated with the loans experiencing those defaults. The LGD component is the percentage of defaulted loan balance that is ultimately charged off. Multiplying one by the other gives the Company its loss rate, which is then applied to the loan portfolio balance to determine expected future losses.

Within the model, the LGD approach produces segmented LGD estimates using a loss curve methodology, which is based on historical net losses from charge-off and recovery information. The main principle of a loss curve model is that the loss follows a steady timing schedule based on how long the defaulted loan has been on the books.

The Company’s expected loss estimate is anchored in historical credit loss experience, with an emphasis on all available portfolio data. The Company’s historical look-back period includes January 2012 through the current period, on a monthly basis. When historical credit loss experience is not sufficient for a specific portfolio, the Company may supplement its own portfolio data with external models or data.

Historical data is evaluated in multiple components of the expected credit loss, including the reasonable and supportable forecast and the post-reversion period of each loan segment. The historical experience is used to infer probability of default and loss given default in the reasonable and supportable forecast period. In the post-reversion period, long-term average loss rates are segmented by loan pool.

Qualitative reserves reflect management’s overall estimate of the extent to which current expected credit losses on collectively evaluated loans will differ from historical loss experience. The analysis takes into consideration other analytics performed within the organization, such as enterprise and concentration management, along with other credit-related analytics as deemed appropriate. Management attempts to quantify qualitative reserves whenever possible.

For the initial implementation, the Company’s CECL estimate applies a 12-month forecast that incorporates macroeconomic trends (i.e., unemployment, real estate prices, etc.), political environment, and historical loss experience. Management also took into consideration forecast assumptions used in budgeting, capital planning and stress testing. These considerations influenced the selection of a 12-month period, combined with a 12-month reversion period, for a 24-month period before historic loss experience is applied to the expected loss estimate, consistently for every loan pool.

The Company segments the loan portfolio into pools based on the following risk characteristics: financial asset type, collateral type, loan characteristics, credit characteristics, outstanding loan balances, contractual terms and prepayment assumptions, geographic location, effective interest rate, vintage, industry of borrower and concentrations, historical or expected credit loss patterns, and reasonable and supportable forecast periods.

Within the PD segmentation, credit metrics are identified to further segment the financial assets. The Company utilizes risk ratings for the commercial portfolios and days past due for the consumer and the leasing company portfolios.

​

The Company has defined five transitioning risk states for each asset pool within the expected credit loss model. The below table illustrates the transition matrix:

​

​

​

​

​

​

Consumer Loans and

​

Commercial Loans

Equipment Finance Loans and Leases

Risk State

Risk Rating

Days Past Due

1

0-5

0-14

2

6

15-29

3

7

30-59

4

8

60-89

Default

9+ and nonaccrual

90+ and nonaccrual

​

Expected Credit Losses

In calculating expected credit losses, the Company includes loans on nonaccrual status, loans past due 90 days or more and still accruing interest, and loans modified under TDRs.

The following table presents amortized cost basis of individually evaluated loans on nonaccrual status as of March 31, 2020 and December 31, 2019:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

March 31, 2020

​

December 31, 2019

​

 

​

​

​

​

Nonaccrual

​

​

​

Nonaccrual

​

​

​

​

​

​

with no Allowance

​

​

​

with no Allowance

​

 

(dollars in thousands)

​

Nonaccrual

​

for Credit Loss

​

Nonaccrual

​

for Credit Loss

​

 

Commercial:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial

​

$

1,948

​

$

—

​

$

1,492

​

$

119

​

​

Commercial Other

​

​

2,504

​

​

371

​

​

4,351

​

​

1,519

​

​

Commercial real estate:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate non-owner occupied

​

 

9,639

​

 

4,489

​

 

10,915

​

 

4,572

​

​

Commercial real estate owner occupied

​

​

11,672

​

​

6,613

​

​

4,396

​

​

2,648

​

​

Multi-family

​

​

10,557

​

​

2,392

​

​

6,231

​

​

1,430

​

​

Farmland

​

​

—

​

​

—

​

​

200

​

​

150

​

​

Construction and land development

​

​

4,954

​

​

693

​

​

1,304

​

​

1,245

​

​

Total commercial loans

​

 

41,274

​

 

14,558

​

 

28,889

​

 

11,683

​

​

Residential real estate:

​

 

​

​

 

​

​

 

​

​

 

​

​

​

Residential first lien

​

​

8,414

​

​

789

​

​

6,140

​

​

2,416

​

​

Other residential

​

​

2,289

​

​

—

​

​

1,656

​

​

912

​

​

Consumer:

​

 

​

​

 

​

​

 

​

​

 

​

​

​

Consumer

​

​

480

​

​

—

​

​

341

​

​

7

​

​

Consumer Other

​

​

—

​

​

—

​

​

—

​

​

—

​

​

Lease financing

​

 

1,775

​

 

—

​

 

1,375

​

 

116

​

​

Total loans

​

$

54,232

​

$

15,347

​

$

38,401

​

$

15,134

​

​

​

During the first quarter of 2019, as part of the adoption of CECL, $9.8 million of PCD loans were reclassified to nonaccrual loans. These PCD loans are predominantly well secured and in the process of collection.

There was no interest income recognized on nonaccrual loans during the three months ended March 31, 2020 and 2019 while the loans were in nonaccrual status. Additional interest income that would have been recorded on nonaccrual loans had they been current in accordance with their original terms was $890,000 and $653,000 for the three months ended March 31, 2020 and 2019, respectively. The Company recognized interest income on commercial and commercial real estate loans modified under troubled debt restructurings of $20,000 and $32,000 for the three months ended March 31, 2020 and 2019, respectively.

​

Collateral Dependent Financial Assets

A collateral dependent financial loan relies solely on the operation or sale of the collateral for repayment. In evaluating the overall risk associated with a loan, the Company considers character, overall financial condition and resources, and payment record of the borrower; the prospects for support from any financially responsible guarantors; and the nature and degree of protection provided by the cash flow and value of any underlying collateral. However, as other sources of repayment become inadequate over time, the significance of the collateral’s value increases and the loan may become collateral dependent.

The table below presents the value of collateral dependent loans by loan class as of March 31, 2020:

​

​

​

​

​

​

(dollars in thousands)

​

March 31, 2020

​

Commercial

​

​

​

​

Commercial Other

​

$

371

​

Commercial Real Estate

​

​

​

​

Non-Owner Occupied

​

​

8,874

​

Owner Occupied

​

​

7,264

​

Multi-Family

​

​

10,338

​

Construction and Land Development

​

​

2,941

​

Residential Real Estate

​

​

​

​

Residential First Lien

​

​

110

​

Total Collateral Dependent Loans

​

$

29,898

​

​

​

The aging status of the recorded investment in loans by portfolio as of March 31, 2020 is as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accruing Loans

​

​

​

​

​

​

​

​

​

 

​

​

30-59

​

60-89

​

Past Due

​

​

​

​

​

​

​

​

​

 

​

​

Days

​

Days

​

90 Days

​

Total

​

​

​

​

​

 

(dollars in thousands)

​

Past Due

​

Past Due

​

or More

​

Past Due

​

Current

​

Total

 

Commercial:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial

​

$

214

​

$

498

​

$

—

​

$

712

​

$

646,743

​

$

647,455

​

Commercial Other

​

​

7,367

​

​

3,474

​

​

147

​

​

10,988

​

​

429,884

​

​

440,872

​

Commercial real estate:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate non-owner occupied

​

 

7,754

​

 

176

​

 

—

​

 

7,930

​

 

792,059

​

 

799,989

​

Commercial real estate owner occupied

​

​

149

​

​

93

​

​

—

​

​

242

​

​

459,446

​

​

459,688

​

Multi-family

​

​

—

​

​

—

​

​

—

​

​

—

​

​

132,213

​

​

132,213

​

Farmland

​

​

108

​

​

—

​

​

—

​

​

108

​

​

83,414

​

​

83,522

​

Construction and land development

​

​

2,410

​

​

156

​

​

8

​

​

2,574

​

​

200,833

​

​

203,407

​

Total commercial loans

​

 

18,002

​

 

4,397

​

 

155

​

 

22,554

​

 

2,744,592

​

 

2,767,146

​

Residential real estate:

​

 

​

​

 

​

​

 

​

​

 

​

​

 

​

​

 

​

​

Residential first lien

​

​

1,151

​

​

—

​

​

248

​

​

1,399

​

​

431,682

​

​

433,081

​

Other residential

​

​

888

​

​

—

​

​

—

​

​

888

​

​

103,342

​

​

104,230

​

Consumer:

​

 

​

​

 

​

​

 

​

​

 

​

​

 

​

​

 

​

​

Consumer

​

​

357

​

​

75

​

​

—

​

​

432

​

​

84,250

​

​

84,682

​

Consumer Other

​

​

4,913

​

​

4,063

​

​

—

​

​

8,976

​

​

579,266

​

​

588,242

​

Lease financing

​

 

5,601

​

 

945

​

 

376

​

 

6,922

​

 

337,669

​

 

344,591

​

Total loans

​

$

30,912

​

$

9,480

​

$

779

​

$

41,171

​

$

4,280,801

​

$

4,321,972

​

​

​

The aging status of the recorded investment in loans by portfolio (excluding PCI) as of December 31, 2019 is as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accruing Loans

​

​

​

​

​

​

​

​

​

​

​

30-59

​

60-89

​

Past Due

​

​

​

​

​

​

​

​

​

​

​

Days

​

Days

​

90 Days

​

Total

​

​

​

​

​

(dollars in thousands)

​

Past Due

​

Past Due

​

or More

​

Past Due

​

Current

​

Total

Commercial

​

$

5,910

​

$

3,086

​

$

—

​

$

8,996

​

$

1,037,268

​

$

1,046,264

Commercial real estate

​

 

2,895

​

 

399

​

 

—

​

 

3,294

​

 

1,481,361

​

 

1,484,655

Construction and land development

​

 

1,539

​

 

72

​

 

—

​

 

1,611

​

 

200,141

​

 

201,752

Residential real estate

​

 

588

​

 

1,561

​

 

145

​

 

2,294

​

 

545,564

​

 

547,858

Consumer

​

 

6,701

​

 

4,154

​

 

—

​

 

10,855

​

 

697,708

​

 

708,563

Lease financing

​

 

1,783

​

 

1,188

​

 

218

​

 

3,189

​

 

328,017

​

 

331,206

Total loans (excluding PCI)

​

$

19,416

​

$

10,460

​

$

363

​

$

30,239

​

$

4,290,059

​

$

4,320,298

​

Troubled Debt Restructurings

Loans modified as TDRs for commercial and commercial real estate loans generally consist of allowing commercial borrowers to defer scheduled principal payments and make interest only payments for a specified period of time at the stated interest rate of the original loan agreement or lower payments due to a modification of the loans’ contractual terms. TDRs that continue to accrue interest and are greater than $50,000 are individually evaluated for impairment on a quarterly basis, and transferred to nonaccrual status when it is probable that any remaining principal and interest payments due on the loan will not be collected in accordance with the contractual terms of the loan. TDRs that subsequently default are individually evaluated for impairment at the time of default.

The CARES Act provides all banks with the option to elect either or both of the following from March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the termination of the national emergency:

(i) to suspend the requirements under GAAP for loan modifications related to the COVID–19 pandemic that would otherwise be categorized as a TDR; and/or

(ii) to suspend any determination of a loan modified as a result of the effects of the COVID–19 pandemic as being a TDR, including impairment for accounting purposes.

If a bank elects a suspension noted above, the suspension (i) will be effective for the term of the loan modification, but solely with respect to any modification, including a forbearance arrangement, an interest rate modification, a repayment plan, and any other similar arrangement that defers or delays the payment of principal or interest, that occurs during the applicable period for a loan that was not more than 30 days past due as of December 31, 2019; and (ii) will not apply to any adverse impact on the credit of a borrower that is not related to the COVID–19 pandemic.

​

The Company’s TDRs are identified on a case-by-case basis in connection with the ongoing loan collection processes. The following table presents TDRs by loan portfolio as of March 31, 2020 and December 31, 2019:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

March 31, 2020

​

December 31, 2019 (3)

(dollars in thousands)

​

Accruing (1)

​

Non-accrual (2)

​

Total

​

Accruing (1)

​

Non-accrual (2) 

​

Total

Commercial

    

$

60

    

$

1,181

    

$

1,241

    

$

435

    

$

369

    

$

804

Commercial real estate

​

 

1,692

​

 

6,032

​

 

7,724

​

 

1,720

​

 

9,834

​

 

11,554

Construction and land development

​

 

43

​

 

163

​

 

206

​

 

45

​

 

167

​

 

212

Residential real estate

​

 

1,328

​

 

2,414

​

 

3,742

​

 

1,083

​

 

1,993

​

 

3,076

Consumer

​

 

32

​

 

—

​

 

32

​

 

35

​

 

—

​

 

35

Lease financing

​

 

—

​

 

52

​

 

52

​

 

—

​

 

55

​

 

55

Total loans

​

$

3,155

​

$

9,842

​

$

12,997

​

$

3,318

​

$

12,418

​

$

15,736

(1)These loans are still accruing interest.
(2)These loans are included in non-accrual loans in the preceding tables.
(3)TDRs as of December 31, 2019 exclude PCI loans.

​

The ACL on TDRs totaled $760,000 and $2.0 million as of March 31, 2020 and December 31, 2019, respectively. The Company had no unfunded commitments in connection with TDRs at March 31, 2020 and December 31, 2019.

The following table presents a summary of loans by portfolio that were restructured during the three months ended March 31, 2020 and 2019 and the loans by portfolio that were modified as TDRs within the previous twelve months that subsequently defaulted during the three months ended March 31, 2020 and 2019:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial Loan Portfolio

​

Other Loan Portfolio

​

​

​

​

​

​

​

​

​

Commercial

​

Construction

​

Residential

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Real

​

and Land

​

Real

​

​

​

​

Lease

​

​

​

(dollars in thousands)

​

Commercial

​

Estate

​

Development

​

Estate

​

Consumer

​

Financing

​

Total

​

For the three months ended March 31, 2020

​

Troubled debt restructurings:

    

​

​

    

​

​

    

​

​

    

​

​

    

​

​

    

​

​

​

​

​

​

Number of loans

​

​

—

 

​

—

 

​

—

 

​

6

 

​

—

 

​

—

​

​

6

​

Pre-modification outstanding balance

​

$

—

​

$

—

​

$

—

​

$

675

​

$

—

​

$

—

​

$

675

​

Post-modification outstanding balance

​

 

—

​

 

—

​

 

—

​

​

670

​

 

—

​

 

—

​

 

670

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Troubled debt restructurings that subsequently defaulted

​

Number of loans

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

Recorded balance

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended March 31, 2019:

​

Troubled debt restructurings:

    

​

​

    

​

​

    

​

​

    

​

​

    

​

​

    

​

​

​

​

​

​

Number of loans

​

​

—

 

​

3

 

​

1

 

​

7

 

​

1

 

​

—

​

​

12

​

Pre-modification outstanding balance

​

$

—

​

$

1,924

​

$

62

​

$

224

​

$

15

​

$

—

​

$

2,225

​

Post-modification outstanding balance

​

 

—

​

 

1,838

​

 

17

​

 

222

​

 

15

​

 

—

​

 

2,092

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Troubled debt restructurings that subsequently defaulted

​

Number of loans

​

 

—

​

 

—

​

 

1

​

 

—

​

 

—

​

 

—

​

 

1

​

Recorded balance

​

$

—

​

$

—

​

$

43

​

$

—

​

$

—

​

$

—

​

$

43

​

​

Credit Quality Monitoring

The Company maintains loan policies and credit underwriting standards as part of the process of managing credit risk. These standards include making loans generally within the Company’s four main regions, which include eastern, northern and southern Illinois and the St. Louis metropolitan area. Our equipment leasing business provides financing to business customers across the country.

The Company has a loan approval process involving underwriting and individual and group loan approval authorities to consider credit quality and loss exposure at loan origination. The loans in the Company’s commercial loan portfolio are risk rated at origination based on the grading system set forth below. All loan authority is based on the aggregate credit to a borrower and its related entities.

The Company’s consumer loan portfolio is primarily comprised of both secured and unsecured loans that are relatively small and are evaluated at origination on a centralized basis against standardized underwriting criteria. The ongoing measurement of credit quality of the consumer loan portfolio is largely done on an exception basis. If payments are made on schedule, as agreed, then no further monitoring is performed. However, if delinquency occurs, the delinquent loans are turned over to the Company’s Consumer Collections Group for resolution. Credit quality for the entire consumer loan portfolio is measured by the periodic delinquency rate, nonaccrual amounts and actual losses incurred.

Loans in the commercial loan portfolio tend to be larger and more complex than those in the other loan portfolio, and therefore, are subject to more intensive monitoring. All loans in the commercial loan portfolio have an assigned relationship manager, and most borrowers provide periodic financial and operating information that allows the relationship managers to stay abreast of credit quality during the life of the loans. The risk ratings of loans in the commercial loan portfolio are reassessed at least annually, with loans below an acceptable risk rating reassessed more frequently and reviewed by various individuals within the Company at least quarterly.

The Company maintains a centralized independent loan review function that monitors the approval process and ongoing asset quality of the loan portfolio, including the accuracy of loan grades. The Company also maintains an independent appraisal review function that participates in the review of all appraisals obtained by the Company.

Credit Quality Indicators

The Company uses a ten grade risk rating system to monitor the ongoing credit quality of its commercial loan portfolio, which includes commercial, commercial real estate and construction and land development loans. These loan grades rank the credit quality of a borrower by measuring liquidity, debt capacity, and coverage and payment behavior as shown in the borrower’s financial statements. The risk grades also measure the quality of the borrower’s management and the repayment support offered by any guarantors.

The Company considers all loans with Risk Grades of 1 – 6 as acceptable credit risks and structures and manages such relationships accordingly. Periodic financial and operating data combined with regular loan officer interactions are deemed adequate to monitor borrower performance. Loans with Risk Grades of 7 are considered “watch credits” categorized as special mention and the frequency of loan officer contact and receipt of financial data is increased to stay abreast of borrower performance. Loans with Risk Grades of 8 – 10 are considered problematic and require special care. Risk Grade 8 is categorized as substandard, 9 as substandard – nonaccrual and 10 as doubtful. Further, loans with Risk Grades of 7 – 10 are managed and monitored regularly through a number of processes, procedures and committees, including oversight by a loan administration committee comprised of executive and senior management of the Company, which includes highly structured reporting of financial and operating data, intensive loan officer intervention and strategies to exit, as well as potential management by the Company’s Special Assets Group. Loans not graded in the commercial loan portfolio are monitored by aging status and payment activity.

​

The following tables present the recorded investment of the commercial loan portfolio by risk category as of March 31, 2020 and December 31, 2019:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

Term Loans

​

​

​

​

​

 

​

​

​

​

​

Amortized Cost Basis by Origination Year

​

​

​

​

​

​

​

​

(dollars in thousands)

​

​

​

​

2020

​

2019

​

2018

​

2017

​

2016

​

Prior

​

Revolving Loans

​

Total

​

​

Commercial

Commercial

​

Acceptable credit quality

​

$

36,244

​

$

118,192

​

$

50,709

​

$

79,205

​

$

39,003

​

$

64,281

​

$

226,404

​

$

614,038

​

​

​

​

​

Special mention

​

​

945

​

 

379

​

 

3,643

​

 

34

​

 

431

​

 

4,314

​

 

7,795

​

 

17,541

​

​

​

​

​

Substandard

​

​

—

​

 

823

​

 

692

​

 

849

​

 

89

​

 

4,633

​

 

8,790

​

 

15,876

​

​

​

​

​

Substandard – nonaccrual

​

​

—

​

 

—

​

 

66

​

 

38

​

 

433

​

 

514

​

 

897

​

 

1,948

​

​

​

​

​

Doubtful

​

​

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

​

​

​

​

Not graded

​

​

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

​

​

​

​

Subtotal

​

​

37,189

​

​

119,394

​

​

55,110

​

​

80,126

​

​

39,956

​

​

73,742

​

​

243,886

​

​

649,403

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial Other

​

Acceptable credit quality

​

​

63,535

​

​

197,784

​

​

69,918

​

​

1,046

​

​

537

​

​

1,253

​

​

96,875

​

​

430,948

​

​

​

​

​

Special mention

​

​

152

​

​

1,188

​

​

825

​

​

5

​

​

15

​

​

—

​

​

2,050

​

​

4,235

​

​

​

​

​

Substandard

​

​

76

​

​

58

​

​

572

​

​

30

​

​

46

​

​

5

​

​

4,772

​

​

5,559

​

​

​

​

​

Substandard – nonaccrual

​

​

—

​

​

1,229

​

​

836

​

​

—

​

​

49

​

​

12

​

​

378

​

​

2,504

​

​

​

​

​

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

​

​

​

Not graded

​

​

61

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

69

​

​

130

​

​

​

​

​

Subtotal

​

​

63,824

​

​

200,259

​

​

72,151

​

​

1,081

​

​

647

​

​

1,270

​

​

104,144

​

​

443,376

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial Real Estate

Non-Owner Occupied

​

Acceptable credit quality

​

​

21,416

​

​

124,691

​

​

84,571

​

​

125,985

​

​

147,992

​

​

252,159

​

​

9,777

​

​

766,591

​

​

​

​

​

Special mention

​

​

—

​

​

4,479

​

​

110

​

​

271

​

​

27

​

​

10,647

​

​

—

​

​

15,534

​

​

​

​

​

Substandard

​

​

906

​

​

—

​

​

282

​

​

5,204

​

​

474

​

​

10,707

​

​

250

​

​

17,823

​

​

​

​

​

Substandard – nonaccrual

​

​

—

​

​

456

​

​

111

​

​

—

​

​

3,495

​

​

5,577

​

​

—

​

​

9,639

​

​

​

​

​

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

​

​

​

Not graded

​

​

—

​

​

41

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

41

​

​

​

​

​

Subtotal

​

​

22,322

​

​

129,667

​

​

85,074

​

​

131,460

​

​

151,988

​

​

279,090

​

​

10,027

​

​

809,628

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Owner Occupied

​

Acceptable credit quality

​

​

27,644

​

​

59,290

​

​

37,062

​

​

65,814

​

​

77,379

​

​

150,209

​

​

4,084

​

​

421,482

​

​

​

​

​

Special mention

​

​

—

​

​

1,723

​

​

253

​

​

380

​

​

3,037

​

​

8,538

​

​

—

​

​

13,931

​

​

​

​

​

Substandard

​

​

—

​

​

368

​

​

796

​

​

169

​

​

2,630

​

​

19,708

​

​

604

​

​

24,275

​

​

​

​

​

Substandard – nonaccrual

​

​

—

​

​

264

​

​

170

​

​

249

​

​

33

​

​

9,962

​

​

994

​

​

11,672

​

​

​

​

​

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

​

​

​

Not graded

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

​

​

​

Subtotal

​

​

27,644

​

​

61,645

​

​

38,281

​

​

66,612

​

​

83,079

​

​

188,417

​

​

5,682

​

​

471,360

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Multi-Family

​

Acceptable credit quality

​

​

795

​

​

15,248

​

​

21,586

​

​

32,871

​

​

22,933

​

​

32,045

​

​

1,101

​

​

126,579

​

​

​

​

​

Special mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

1,348

​

​

—

​

​

1,348

​

​

​

​

​

Substandard

​

​

—

​

​

198

​

​

—

​

​

—

​

​

4,008

​

​

80

​

​

—

​

​

4,286

​

​

​

​

​

Substandard – nonaccrual

​

​

—

​

​

—

​

​

—

​

​

—

​

​

8,029

​

​

2,528

​

​

—

​

​

10,557

​

​

​

​

​

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

​

​

​

Not graded

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

​

​

​

Subtotal

​

​

795

​

​

15,446

​

​

21,586

​

​

32,871

​

​

34,970

​

​

36,001

​

​

1,101

​

​

142,770

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Farmland

​

Acceptable credit quality

​

​

1,702

​

​

11,046

​

​

8,414

​

​

11,405

​

​

8,071

​

​

36,196

​

​

2,358

​

​

79,192

​

​

​

​

​

Special mention

​

​

—

​

​

465

​

​

193

​

​

—

​

​

18

​

​

280

​

​

105

​

​

1,061

​

​

​

​

​

Substandard

​

​

—

​

​

52

​

​

602

​

​

323

​

​

—

​

​

2,146

​

​

146

​

​

3,269

​

​

​

​

​

Substandard – nonaccrual

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

​

​

​

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

​

​

​

Not graded

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

​

​

​

Subtotal

​

​

1,702

​

​

11,563

​

​

9,209

​

​

11,728

​

​

8,089

​

​

38,622

​

​

2,609

​

​

83,522

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Construction and Land Development

​

​

Acceptable credit quality

​

​

2,604

​

​

102,813

​

​

29,700

​

​

25,183

​

​

5,151

​

​

9,022

​

​

19,590

​

​

194,063

​

​

​

​

​

Special mention

​

​

—

​

​

—

​

​

—

​

​

2,410

​

​

—

​

​

1,447

​

​

—

​

​

3,857

​

​

​

​

​

Substandard

​

​

—

​

​

153

​

​

225

​

​

—

​

​

—

​

​

919

​

​

—

​

​

1,297

​

​

​

​

​

Substandard – nonaccrual

​

​

—

​

​

—

​

​

—

​

​

—

​

​

150

​

​

4,804

​

​

—

​

​

4,954

​

​

​

​

​

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

​

​

​

Not graded

​

​

​

​

​

4,190

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

4,190

​

​

​

​

​

Subtotal

​

​

2,604

​

​

107,156

​

​

29,925

​

​

27,593

​

​

5,301

​

​

16,192

​

​

19,590

​

​

208,361

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Acceptable credit quality

​

​

153,940

​

​

629,064

​

​

301,960

​

​

341,509

​

​

301,066

​

​

545,165

​

​

360,189

​

​

2,632,893

​

​

​

​

​

Special mention

​

​

1,097

​

​

8,234

​

​

5,024

​

​

3,100

​

​

3,528

​

​

26,574

​

​

9,950

​

​

57,507

​

​

​

​

​

Substandard

​

​

982

​

​

1,652

​

​

3,169

​

​

6,575

​

​

7,247

​

​

38,198

​

​

14,562

​

​

72,385

​

​

​

​

​

Substandard – nonaccrual

​

​

—

​

​

1,949

​

​

1,183

​

​

287

​

​

12,189

​

​

23,397

​

​

2,269

​

​

41,274

​

​

​

​

​

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

​

​

​

Not graded

​

​

61

​

​

4,231

​

​

—

​

​

—

​

​

—

​

​

—

​

​

69

​

​

4,361

​

​

Total Commercial Loans

​

​

​

$

156,080

​

$

645,130

​

$

311,336

​

$

351,471

​

$

324,030

​

$

633,334

​

$

387,039

​

$

2,808,420

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2019

​

​

​

​

​

​

Commercial

​

Construction

​

​

​

​

​

​

​

​

​

Real

​

and Land

​

​

​

​

(dollars in thousands)

​

Commercial

​

Estate

​

Development

​

Total

​

Acceptable credit quality

​

$

1,005,442

​

$

1,398,400

​

$

194,992

​

$

2,598,834

​

Special mention

​

​

17,435

​

​

18,450

​

​

2,420

​

 

38,305

​

Substandard

​

​

23,387

​

​

67,805

​

​

1,250

​

 

92,442

​

Substandard – nonaccrual

​

​

5,843

​

​

21,742

​

​

1,304

​

 

28,889

​

Doubtful

​

​

—

​

​

—

​

​

—

​

 

—

​

Not graded

​

​

—

​

​

—

​

​

3,090

​

 

3,090

​

Total (excluding PCI)

​

$

1,052,107

​

$

1,506,397

​

$

203,056

​

$

2,761,560

​

​

​

The Company evaluates the credit quality of its other loan portfolios, which includes residential real estate, consumer and lease financing loans, based primarily on the aging status of the loan and payment activity. Accordingly, loans on nonaccrual status, loans past due 90 days or more and still accruing interest, and loans modified under troubled debt restructurings are considered to be nonperforming for purposes of credit quality evaluation. The following tables present the recorded investment of our other loan portfolio based on the credit risk profile of loans that are performing and loans that are nonperforming as of March 31, 2020 and December 31, 2019:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Term Loans

​

​

​

​

​

​

​

​

​

​

Amortized Cost Basis by Origination Year

​

​

​

​

​

​

(dollars in thousands)

​

​

​

2020

​

2019

​

2018

​

2017

​

2016

​

Prior

​

Revolving Loans

​

Total

Residential Real Estate

Residential First Lien

Performing

​

$

2,041

​

$

29,994

​

$

68,525

​

$

149,262

​

$

107,088

​

$

74,763

​

$

371

​

$

432,044

​

​

Nonperforming

​

​

—

​

​

110

​

​

572

​

​

920

​

​

698

​

​

7,151

​

​

—

​

​

9,451

​

​

Subtotal

​

​

2,041

​

​

30,104

​

​

69,097

​

​

150,182

​

​

107,786

​

​

81,914

​

​

371

​

​

441,495

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other Residential

Performing

​

​

242

​

​

3,235

​

​

4,495

​

​

2,999

​

​

1,872

​

​

2,746

​

​

88,102

​

​

103,691

​

​

Nonperforming

​

​

—

​

​

15

​

​

24

​

​

158

​

​

8

​

​

199

​

​

2,424

​

​

2,828

​

​

Subtotal

​

​

242

​

​

3,250

​

​

4,519

​

​

3,157

​

​

1,880

​

​

2,945

​

​

90,526

​

​

106,519

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Consumer

Consumer

Performing

​

​

2,970

​

​

19,553

​

​

23,622

​

​

14,689

​

​

11,131

​

​

9,753

​

​

2,932

​

​

84,650

​

​

Nonperforming

​

​

—

​

​

29

​

​

81

​

​

120

​

​

101

​

​

178

​

​

3

​

​

512

​

​

Subtotal

​

​

2,970

​

​

19,582

​

​

23,703

​

​

14,809

​

​

11,232

​

​

9,931

​

​

2,935

​

​

85,162

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Consumer Other

Performing

​

​

146,912

​

​

337,739

​

​

53,885

​

​

12,215

​

​

14,943

​

​

2,249

​

​

20,299

​

​

588,242

​

​

Nonperforming

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

Subtotal

​

​

146,912

​

​

337,739

​

​

53,885

​

​

12,215

​

​

14,943

​

​

2,249

​

​

20,299

​

​

588,242

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Leases Financing

​

Performing

​

​

44,905

​

​

147,056

​

​

89,465

​

​

32,284

​

​

24,106

​

​

6,399

​

​

—

​

​

344,215

​

​

Nonperforming

​

​

—

​

​

62

​

​

865

​

​

563

​

​

533

​

​

128

​

​

—

​

​

2,151

​

​

Subtotal

​

​

44,905

​

​

147,118

​

​

90,330

​

​

32,847

​

​

24,639

​

​

6,527

​

​

—

​

​

346,366

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performing

​

​

197,070

​

​

537,577

​

​

239,992

​

​

211,449

​

​

159,140

​

​

95,910

​

​

111,704

​

​

1,552,842

​

​

Nonperforming

​

​

—

​

​

216

​

​

1,542

​

​

1,761

​

​

1,340

​

​

7,656

​

​

2,427

​

​

14,942

Total Other Loans

​

$

197,070

​

$

537,793

​

$

241,534

​

$

213,210

​

$

160,480

​

$

103,566

​

$

114,131

​

$

1,567,784

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2019

​

​

​

Residential

    

​

​

    

Lease

    

​

​

​

(dollars in thousands)

​

Real Estate

​

Consumer

​

Financing

​

Total

​

Performing

​

$

546,630

​

$

708,528

​

$

330,988

​

$

1,586,146

​

Nonperforming

​

 

9,024

​

 

376

​

 

1,593

​

 

10,993

​

Total (excluding PCI)

​

$

555,654

​

$

708,904

​

$

332,581

​

$

1,597,139

​

​