XML 114 R14.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
CREDIT QUALITY ASSESSMENT
 12 Months Ended
Dec. 31, 2019
Credit Quality Assessment [Abstract]  
CREDIT QUALITY ASSESSMENT

Note 6 – CREDIT QUALITY ASSESSMENT

Allowance for Loan Losses

Credit risk can vary significantly as losses, as a percentage of outstanding loans, can vary widely during economic cycles and are sensitive to changing economic conditions. The amount of loss in any particular type of loan can vary depending on the purpose of the loan and the underlying collateral securing the loan. Collateral securing commercial loans can range from accounts receivable to equipment to improved or unimproved real estate depending on the purpose of the loan. Home mortgage and home equity loans and lines are typically secured by first or second liens on residential real estate. Consumer loans may be secured by personal property, such as auto loans or they may be unsecured loan products.

 

Management has an internal credit process in place to maintain credit standards. This process along with an in-house loan administration, accompanied by oversight and review procedures, combines to control and manage credit risk. The primary purpose of loan underwriting is the evaluation of specific lending risks that involves the analysis of the borrower’s ability to service the debt as well as the assessment of the value of the underlying collateral. Oversight and review procedures include the monitoring of the portfolio credit quality, early identification of potential problem credits and the management of the problem credits. As part of the oversight and review process, the Company maintains an allowance for loan losses (the “allowance”) to absorb estimated and probable losses in the loan portfolio. The allowance is based on consistent, periodic review and evaluation of the loan portfolio, along with ongoing, monthly assessments of the probable losses and problem credits in each portfolio. While portions of the allowance are attributed to specific portfolio segments, the entire allowance is available to absorb credit losses inherent in the total loan portfolio.

 

Summary information on the allowance for loan loss activity for the years ended December 31 is provided in the following table:

(In thousands)

 

2019

 

2018

 

2017

Balance at beginning of year

 

$

53,486

 

$

45,257

 

$

44,067

 

Provision for loan losses

 

 

4,684

 

 

9,023

 

 

2,977

 

Loan charge-offs

 

 

(2,668)

 

 

(1,416)

 

 

(2,566)

 

Loan recoveries

 

 

630

 

 

622

 

 

779

 

 

Net charge-offs

 

 

(2,038)

 

 

(794)

 

 

(1,787)

Balance at period end

 

$

56,132

 

$

53,486

 

$

45,257

The following tables provide information on the activity in the allowance for loan losses by the respective loan portfolio segment for the years ended December 31:

 

 

 

2019

 

 

 

 

 

 

Commercial Real Estate

 

 

 

 

Residential Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

Commercial

 

Commercial

 

Owner

 

 

 

 

Residential

 

Residential

 

 

 

(Dollars in thousands)

 

Business

 

AD&C

 

Investor R/E

 

Occupied R/E

 

Consumer

 

Mortgage

 

Construction

 

Total

Balance at beginning of year

 

$

11,377

 

$

5,944

 

$

17,603

 

$

6,307

 

$

2,113

 

$

8,881

 

$

1,261

 

$

53,486

Provision (credit)

 

 

1,164

 

 

1,418

 

 

788

 

 

577

 

 

565

 

 

474

 

 

(302)

 

 

4,684

Charge-offs

 

 

(1,195)

 

 

-

 

 

-

 

 

-

 

 

(783)

 

 

(690)

 

 

-

 

 

(2,668)

Recoveries

 

 

49

 

 

228

 

 

16

 

 

-

 

 

191

 

 

138

 

 

8

 

 

630

 

Net (charge-offs)/ recoveries

 

 

(1,146)

 

 

228

 

 

16

 

 

-

 

 

(592)

 

 

(552)

 

 

8

 

 

(2,038)

Balance at end of period

 

$

11,395

 

$

7,590

 

$

18,407

 

$

6,884

 

$

2,086

 

$

8,803

 

$

967

 

$

56,132

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans

 

$

801,019

 

$

684,010

 

$

2,169,156

 

$

1,288,677

 

$

466,764

 

$

1,149,327

 

$

146,279

 

$

6,705,232

Allowance for loans to total loans ratio

 

 

1.42%

 

 

1.11%

 

 

0.85%

 

 

0.53%

 

 

0.45%

 

 

0.77%

 

 

0.66%

 

 

0.84%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance of loans specifically evaluated for impairment

 

$

8,867

 

$

829

 

$

9,212

 

$

4,148

 

 

na.

 

$

1,717

 

$

-

 

$

24,773

Allowance for loans specifically evaluated for impairment

 

$

3,817

 

$

132

 

$

1,529

 

$

23

 

 

na.

 

$

-

 

$

-

 

$

5,501

Specific allowance to specific loans ratio

 

 

43.05%

 

 

15.92%

 

 

16.60%

 

 

0.55%

 

 

na.

 

 

-

 

 

-

 

 

22.21%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance of loans collectively evaluated

 

$

789,613

 

$

683,181

 

$

2,150,400

 

$

1,284,529

 

$

465,771

 

$

1,147,602

 

$

146,279

 

$

6,667,375

Allowance for loans collectively evaluated

 

$

7,578

 

$

7,458

 

$

16,878

 

$

6,861

 

$

2,086

 

$

8,803

 

$

967

 

$

50,631

Collective allowance to collective loans ratio

 

 

0.96%

 

 

1.09%

 

 

0.78%

 

 

0.53%

 

 

0.45%

 

 

0.77%

 

 

0.66%

 

 

0.76%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance of loans acquired with deteriorated credit quality

 

$

2,539

 

$

-

 

$

9,544

 

$

-

 

$

993

 

$

8

 

$

-

 

$

13,084

Allowance for loans acquired with deteriorated credit quality

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

Allowance for loans acquired with deteriorated credit quality ratio

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

2018

 

 

 

 

 

 

Commercial Real Estate

 

 

 

 

Residential Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

Commercial

 

Commercial

 

Owner

 

 

 

 

Residential

 

Residential

 

 

 

(Dollars in thousands)

 

Business

 

AD&C

 

Investor R/E

 

Occupied R/E

 

Consumer

 

Mortgage

 

Construction

 

Total

Balance at beginning of year

 

$

8,711

 

$

3,501

 

$

14,970

 

$

7,178

 

$

2,383

 

$

7,268

 

$

1,246

 

$

45,257

Provision (credit)

 

 

2,857

 

 

2,381

 

 

2,677

 

 

(871)

 

 

203

 

 

1,776

 

 

-

 

 

9,023

Charge-offs

 

 

(449)

 

 

-

 

 

(131)

 

 

-

 

 

(611)

 

 

(225)

 

 

-

 

 

(1,416)

Recoveries

 

 

258

 

 

62

 

 

87

 

 

-

 

 

138

 

 

62

 

 

15

 

 

622

 

Net (charge-offs)/ recoveries

 

 

(191)

 

 

62

 

 

(44)

 

 

-

 

 

(473)

 

 

(163)

 

 

15

 

 

(794)

Balance at end of period

 

$

11,377

 

$

5,944

 

$

17,603

 

$

6,307

 

$

2,113

 

$

8,881

 

$

1,261

 

$

53,486

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans

 

$

796,264

 

$

681,201

 

$

1,958,395

 

$

1,202,903

 

$

517,839

 

$

1,228,247

 

$

186,785

 

$

6,571,634

Allowance for loans total loans ratio

 

 

1.43%

 

 

0.87%

 

 

0.90%

 

 

0.52%

 

 

0.41%

 

 

0.72%

 

 

0.68%

 

 

0.81%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance of loans specifically evaluated for impairment

 

$

7,586

 

$

3,306

 

$

5,355

 

$

4,234

 

 

na.

 

$

1,729

 

$

-

 

$

22,210

Allowance for loans specifically evaluated for impairment

 

$

3,594

 

$

-

 

$

1,207

 

$

123

 

 

na.

 

$

-

 

$

-

 

$

4,924

Specific allowance to specific loans ratio

 

 

47.38%

 

 

na.

 

 

22.54%

 

 

2.91%

 

 

na.

 

 

-

 

 

-

 

 

22.17%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance of loans collectively evaluated

 

$

780,523

 

$

677,895

 

$

1,938,712

 

$

1,196,487

 

$

516,567

 

$

1,226,508

 

$

186,785

 

$

6,523,477

Allowance for loans collectively evaluated

 

$

7,783

 

$

5,944

 

$

16,396

 

$

6,184

 

$

2,113

 

$

8,881

 

$

1,261

 

$

48,562

Collective allowance to collective loans ratio

 

 

1.00%

 

 

0.88%

 

 

0.85%

 

 

0.52%

 

 

0.41%

 

 

0.72%

 

 

0.68%

 

 

0.74%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance of loans acquired with deteriorated credit quality

 

$

8,155

 

$

-

 

$

14,328

 

$

2,182

 

$

1,272

 

$

10

 

$

-

 

$

25,947

Allowance for loans acquired with deteriorated credit quality

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

Allowance for loans acquired with deteriorated credit quality ratio

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

The Company’s methodology for evaluating whether a loan is impaired begins with risk-rating credits on an individual basis and includes consideration of the borrower’s overall financial condition, payment record and available cash resources that may include the collateral value and, in a select few cases, verifiable support from financial guarantors. In measuring impairment, the Company looks primarily to the discounted cash flows of the project itself or to the value of the collateral as the primary sources of repayment of the loan. Collateral values or estimates of discounted cash flows (inclusive of any potential cash flow from guarantees) are evaluated to estimate the probability and severity of potential losses. The actual occurrence and severity of losses involving impaired credits can differ substantially from estimates.

 

The Company may consider the existence of guarantees and the financial strength and wherewithal of the guarantors involved in any loan relationship. Guarantees may be considered as a source of repayment based on the guarantor’s financial condition and respective payment capacity. Accordingly, absent a verifiable payment capacity, a guarantee alone would not be sufficient to avoid classifying the loan as impaired.

 

Management has established a credit process that dictates that procedures be performed to monitor impaired loans between the receipt of an original appraisal and the updated appraisal. These procedures include the following:

 

An internal evaluation is updated quarterly to include borrower financial statements and/or cash flow projections.

The borrower may be contacted for a meeting to discuss an updated or revised action plan which may include a request for additional collateral.

Re-verification of the documentation supporting the Company’s position with respect to the collateral securing the loan.

At the monthly credit committee meeting the loan may be downgraded.

Upon receipt of the updated appraisal or based on an updated internal financial evaluation, the loan balance is compared to the appraisal and a specific allowance is determined for the particular loan, typically for the amount of the difference between the appraisal and the loan balance.

The Company will specifically reserve for or charge-off the excess of the loan amount over the amount of the appraisal. In certain cases the Company may establish a larger reserve due to knowledge of current market conditions or the existence of an offer for the collateral that will facilitate a more timely resolution of the loan.

 

The Company generally follows a policy of not extending maturities on non-performing loans under existing terms. Certain performing loans that have displayed some inherent weakness in the underlying collateral values, an inability to comply with certain loan covenants which do not affect the performance of the credit or other identified weakness may have their terms extended on an exception basis. Maturity date extensions only occur under revised terms that place the Company in a better position to fully collect the loan under the contractual terms and /or terms at the time of the extension that may eliminate or mitigate the inherent weakness in the loan. These terms may incorporate, but are not limited to additional assignment of collateral, significant balance curtailments/liquidations and assignments of additional project cash flows. Documented or demonstrated guarantees may be a consideration in the extension of loan maturities. As a general matter, the Company does not view extension of a loan to be a satisfactory approach to resolving non-performing credits.

Loans that have their terms restructured (e.g., interest rates, loan maturity date, payment and amortization period, etc.) in circumstances that provide payment relief or other concessions to a borrower experiencing financial difficulty are considered troubled debt restructured loans. All restructurings that constitute concessions to a troubled borrower are considered impaired loans that may either be in accruing status or non-accruing status. Non-accruing restructured loans may return to accruing status provided there is a sufficient period of payment performance in accordance with the restructure terms. Loans may be removed from the restructured category if the borrower is no longer experiencing financial difficulty, a re-underwriting event took place and the revised loan terms of the subsequent restructuring agreement are considered to be consistent with terms that can be obtained in the credit market for loans with comparable credit risk. At December 31, 2019, restructured loans totaled $7.9 million, of which $2.6 million were accruing and $5.3 million were non-accruing. Commitments to lend additional funds on loans that have been restructured at December 31, 2019 were insignificant. Restructured loans at December 31, 2018 totaled $7.4 million, of which $2.0 million were accruing and $5.4 million were non-accruing. Commitments to lend additional funds on loans that have been restructured at December 31, 2018 were insignificant.The following table provides summary information regarding impaired loans at December 31 and for the years then ended:

(In thousands)

 

2019

 

2018

 

2017

Impaired loans with a specific allowance

 

$

15,333

 

$

12,876

 

$

11,693

Impaired loans without a specific allowance

 

 

9,440

 

 

9,334

 

 

9,116

 

Total impaired loans

 

$

24,773

 

$

22,210

 

$

20,809

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses related to impaired loans

 

$

5,501

 

$

4,924

 

$

4,014

Allowance for loan related to loans collectively evaluated

 

 

50,631

 

 

48,562

 

 

41,243

 

Total allowance for loan losses

 

$

56,132

 

$

53,486

 

$

45,257

 

 

 

 

 

 

 

 

 

 

 

Average impaired loans for the period

 

$

23,365

 

$

20,211

 

$

23,179

Contractual interest income due on impaired loans during the period

 

$

1,947

 

$

2,513

 

$

2,314

Interest income on impaired loans recognized on a cash basis

 

$

465

 

$

506

 

$

754

Interest income on impaired loans recognized on an accrual basis

 

$

169

 

$

138

 

$

169

The following tables present the recorded investment with respect to impaired loans, the associated allowance by the applicable portfolio segment and the principal balance of the impaired loans prior to amounts charged-off at December 31 for the years indicated:

 

 

 

 

2019

 

 

 

 

 

 

 

Commercial Real Estate

 

 

 

 

Total Recorded

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

All

 

Investment in

 

 

 

 

 

 

 

Commercial

 

Commercial

 

Owner

 

Other

 

Impaired

(In thousands)

 

Commercial

 

AD&C

 

Investor R/E

 

Occupied R/E

 

Loans

 

Loans

Impaired loans with a specific allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accruing

 

$

5,608

 

$

829

 

$

5,448

 

$

767

 

$

-

 

$

12,652

 

 

Restructured accruing

 

 

266

 

 

-

 

 

-

 

 

-

 

 

-

 

 

266

 

 

Restructured non-accruing

 

 

1,856

 

 

-

 

 

437

 

 

122

 

 

-

 

 

2,415

 

Balance

 

$

7,730

 

$

829

 

$

5,885

 

$

889

 

$

-

 

$

15,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance

 

$

3,817

 

$

132

 

$

1,529

 

$

23

 

$

-

 

$

5,501

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impaired loans without a specific allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accruing

 

$

114

 

$

-

 

$

2,552

 

$

1,522

 

$

-

 

$

4,188

 

 

Restructured accruing

 

 

151

 

 

-

 

 

775

 

 

-

 

 

1,444

 

 

2,370

 

 

Restructured non-accruing

 

 

872

 

 

-

 

 

-

 

 

1,737

 

 

273

 

 

2,882

 

Balance

 

$

1,137

 

$

-

 

$

3,327

 

$

3,259

 

$

1,717

 

$

9,440

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total impaired loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accruing

 

$

5,722

 

$

829

 

$

8,000

 

$

2,289

 

$

-

 

$

16,840

 

 

Restructured accruing

 

 

417

 

 

-

 

 

775

 

 

-

 

 

1,444

 

 

2,636

 

 

Restructured non-accruing

 

 

2,728

 

 

-

 

 

437

 

 

1,859

 

 

273

 

 

5,297

 

Balance

 

$

8,867

 

$

829

 

$

9,212

 

$

4,148

 

$

1,717

 

$

24,773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance in total impaired loans

 

$

11,296

 

$

829

 

$

13,805

 

$

6,072

 

$

2,618

 

$

34,620

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate

 

 

 

 

Total Recorded

 

 

 

 

 

 

 

 

 

Commercial

 

All

 

Investment in

 

 

 

 

 

Commercial

 

Commercial

 

Owner

 

Other

 

Impaired

(In thousands)

 

Commercial

 

AD&C

 

Investor R/E

 

Occupied R/E

 

Loans

 

Loans

Average impaired loans for the period

 

$

7,781

 

$

2,052

 

$

7,565

 

$

4,390

 

$

1,577

 

$

23,365

Contractual interest income due on impaired loans during the period

 

$

648

 

$

127

 

$

786

 

$

258

 

$

128

 

 

 

Interest income on impaired loans recognized on a cash basis

 

$

221

 

$

-

 

$

49

 

$

187

 

$

8

 

 

 

Interest income on impaired loans recognized on an accrual basis

 

$

62

 

$

-

 

$

39

 

$

-

 

$

68

 

 

 

 

 

 

 

2018

 

 

 

 

 

 

 

Commercial Real Estate

 

 

 

 

Total Recorded

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

All

 

Investment in

 

 

 

 

 

 

 

Commercial

 

Commercial

 

Owner

 

Other

 

Impaired

(In thousands)

 

Commercial

 

AD&C

 

Investor R/E

 

Occupied R/E

 

Loans

 

Loans

Impaired loans with a specific allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accruing

 

$

4,126

 

$

-

 

$

5,117

 

$

767

 

$

-

 

$

10,010

 

 

Restructured accruing

 

 

328

 

 

-

 

 

-

 

 

-

 

 

-

 

 

328

 

 

Restructured non-accruing

 

 

1,766

 

 

-

 

 

-

 

 

772

 

 

-

 

 

2,538

 

Balance

 

$

6,220

 

$

-

 

$

5,117

 

$

1,539

 

$

-

 

$

12,876

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance

 

$

3,594

 

$

-

 

$

1,207

 

$

123

 

$

-

 

$

4,924

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impaired loans without a specific allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accruing

 

$

220

 

$

3,170

 

$

238

 

$

1,216

 

$

-

 

$

4,844

 

 

Restructured accruing

 

 

172

 

 

-

 

 

-

 

 

-

 

 

1,442

 

 

1,614

 

 

Restructured non-accruing

 

 

974

 

 

136

 

 

-

 

 

1,479

 

 

287

 

 

2,876

 

Balance

 

$

1,366

 

$

3,306

 

$

238

 

$

2,695

 

$

1,729

 

$

9,334

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total impaired loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accruing

 

$

4,346

 

$

3,170

 

$

5,355

 

$

1,983

 

$

-

 

$

14,854

 

 

Restructured accruing

 

 

500

 

 

-

 

 

-

 

 

-

 

 

1,442

 

 

1,942

 

 

Restructured non-accruing

 

 

2,740

 

 

136

 

 

-

 

 

2,251

 

 

287

 

 

5,414

 

Balance

 

$

7,586

 

$

3,306

 

$

5,355

 

$

4,234

 

$

1,729

 

$

22,210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance in total impaired loans

 

$

11,056

 

$

4,419

 

$

9,909

 

$

6,656

 

$

3,081

 

$

35,121

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate

 

 

 

 

Total Recorded

 

 

 

 

 

 

 

 

 

Commercial

 

All

 

Investment in

 

 

 

 

 

Commercial

 

Commercial

 

Owner

 

Other

 

Impaired

(In thousands)

 

Commercial

 

AD&C

 

Investor R/E

 

Occupied R/E

 

Loans

 

Loans

Average impaired loans for the period

 

$

7,685

 

$

770

 

$

5,696

 

$

3,823

 

$

2,237

 

$

20,211

Contractual interest income due on impaired loans during the period

 

$

858

 

$

495

 

$

610

 

$

407

 

$

143

 

 

 

Interest income on impaired loans recognized on a cash basis

 

$

215

 

$

-

 

$

20

 

$

175

 

$

96

 

 

 

Interest income on impaired loans recognized on an accrual basis

 

$

63

 

$

-

 

$

-

 

$

-

 

$

75

 

 

 

Credit Quality

The following tables provide information on the credit quality of the loan portfolio by segment at December 31 for the years indicated:

 

 

 

2019

 

 

 

 

 

 

Commercial Real Estate

 

 

 

 

Residential Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

Commercial

 

Owner

 

 

 

 

Residential

 

Residential

 

 

 

(In thousands)

 

Commercial

 

AD&C

 

Investor R/E

 

Occupied R/E

 

Consumer

 

Mortgage

 

Construction

 

Total

Non-performing loans and assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans (1)

 

$

8,450

 

$

829

 

$

8,437

 

$

4,148

 

$

4,107

 

$

12,661

 

$

-

 

$

38,632

 

Loans 90 days past due

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Restructured loans

 

 

417

 

 

-

 

 

775

 

 

-

 

 

364

 

 

1,080

 

 

-

 

 

2,636

Total non-performing loans

 

 

8,867

 

 

829

 

 

9,212

 

 

4,148

 

 

4,471

 

 

13,741

 

 

-

 

 

41,268

 

Other real estate owned

 

 

39

 

 

665

 

 

409

 

 

-

 

 

64

 

 

305

 

 

-

 

 

1,482

Total non-performing assets

 

$

8,906

 

$

1,494

 

$

9,621

 

$

4,148

 

$

4,535

 

$

14,046

 

$

-

 

$

42,750

(1) Includes $2.9 million of loans acquired from WashingtonFirst and considered performing at the acquisition date.

 

 

 

2018

 

 

 

 

 

 

Commercial Real Estate

 

 

 

 

Residential Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

Commercial

 

Owner

 

 

 

 

Residential

 

Residential

 

 

 

(In thousands)

 

Commercial

 

AD&C

 

Investor R/E

 

Occupied R/E

 

Consumer

 

Mortgage

 

Construction

 

Total

Non-performing loans and assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans (1)

 

$

7,086

 

$

3,306

 

$

5,355

 

$

4,234

 

$

4,107

 

$

9,336

 

$

159

 

$

33,583

 

Loans 90 days past due

 

 

49

 

 

-

 

 

-

 

 

-

 

 

219

 

 

221

 

 

-

 

 

489

 

Restructured loans

 

 

500

 

 

-

 

 

-

 

 

-

 

 

-

 

 

1,442

 

 

-

 

 

1,942

Total non-performing loans

 

 

7,635

 

 

3,306

 

 

5,355

 

 

4,234

 

 

4,326

 

 

10,999

 

 

159

 

 

36,014

 

Other real estate owned

 

 

39

 

 

315

 

 

409

 

 

-

 

 

-

 

 

821

 

 

-

 

 

1,584

Total non-performing assets

 

$

7,674

 

$

3,621

 

$

5,764

 

$

4,234

 

$

4,326

 

$

11,820

 

$

159

 

$

37,598

(1) Includes $4.8 million of loans acquired from WashingtonFirst and considered performing at the acquisition date.

 

 

 

 

2019

 

 

 

 

 

 

 

Commercial Real Estate

 

 

 

 

Residential Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

Commercial

 

Owner

 

 

 

 

Residential

 

Residential

 

 

 

(In thousands)

 

Commercial

 

AD&C

 

Investor R/E

 

Occupied R/E

 

Consumer

 

Mortgage

 

Construction

 

Total

Past due loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31-60 days

 

$

908

 

$

-

 

$

932

 

$

316

 

$

2,697

 

$

14,853

 

$

280

 

$

19,986

 

61-90 days

 

 

370

 

 

-

 

 

-

 

 

-

 

 

1,517

 

 

4,541

 

 

1,334

 

 

7,762

 

> 90 days

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Total past due

 

 

1,278

 

 

-

 

 

932

 

 

316

 

 

4,214

 

 

19,394

 

 

1,614

 

 

27,748

 

Non-accrual loan (1)

 

 

8,450

 

 

829

 

 

8,437

 

 

4,148

 

 

4,107

 

 

12,661

 

 

-

 

 

38,632

 

Loans acquired with deteriorated credit quality

 

2,539

 

 

-

 

 

9,544

 

 

-

 

 

993

 

 

8

 

 

-

 

 

13,084

 

Current loans

 

 

788,752

 

 

683,181

 

 

2,150,243

 

 

1,284,213

 

 

457,450

 

 

1,117,264

 

 

144,665

 

 

6,625,768

 

 

Total loans

 

$

801,019

 

$

684,010

 

$

2,169,156

 

$

1,288,677

 

$

466,764

 

$

1,149,327

 

$

146,279

 

$

6,705,232

 

(1) Includes $2.9 million of loans acquired from WashingtonFirst and considered performing at the acquisition date.

 

 

 

 

2018

 

 

 

 

 

 

 

Commercial Real Estate

 

 

 

 

Residential Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

Commercial

 

Owner

 

 

 

 

Residential

 

Residential

 

 

 

(In thousands)

 

Commercial

 

AD&C

 

Investor R/E

 

Occupied R/E

 

Consumer

 

Mortgage

 

Construction

 

Total

Past due loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31-60 days

 

$

2,737

 

$

474

 

$

3,041

 

$

433

 

$

3,871

 

$

8,181

 

$

3,226

 

$

21,963

 

61-90 days

 

 

-

 

 

-

 

 

789

 

 

-

 

 

1,477

 

 

2,517

 

 

-

 

 

4,783

 

> 90 days

 

 

49

 

 

-

 

 

-

 

 

-

 

 

219

 

 

221

 

 

-

 

 

489

 

Total past due

 

 

2,786

 

 

474

 

 

3,830

 

 

433

 

 

5,567

 

 

10,919

 

 

3,226

 

 

27,235

 

Non-accrual loans (1)

 

 

7,086

 

 

3,306

 

 

5,355

 

 

4,234

 

 

4,107

 

 

9,336

 

 

159

 

 

33,583

 

Loans acquired with deteriorated credit quality

 

8,155

 

 

-

 

 

14,328

 

 

2,182

 

 

1,272

 

 

10

 

 

-

 

 

25,947

 

Current loans

 

 

778,237

 

 

677,421

 

 

1,934,882

 

 

1,196,054

 

 

506,893

 

 

1,207,982

 

 

183,400

 

 

6,484,869

 

 

Total loans

 

$

796,264

 

$

681,201

 

$

1,958,395

 

$

1,202,903

 

$

517,839

 

$

1,228,247

 

$

186,785

 

$

6,571,634

 

(1) Includes $4.8 million of loans acquired from WashingtonFirst and considered performing at the acquisition date.

Loans are monitored for credit quality on a recurring basis. The credit quality indicators used are dependent on the portfolio segment to which the loan relates. Commercial loans and non-commercial loans have different credit quality indicators as a result of the methods used to monitor each of these loan segments.

 

The credit quality indicators for commercial loans are developed through review of individual borrowers on an ongoing basis. Each borrower is evaluated at least annually with more frequent evaluation of more severely criticized loans. The indicators represent the rating for loans as of the date presented based on the most recent credit review performed. These credit quality indicators are defined as follows:

 

Pass - A pass rated credit is not adversely classified because it does not display any of the characteristics for adverse classification.

 

Special mention – A special mention credit has potential weaknesses that deserve management’s close attention. If uncorrected, such weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and do not warrant adverse classification.

 

Substandard – A substandard loan is inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These loans are characterized by the distinct possibility of loss if the deficiencies are not corrected.

 

Doubtful – A loan that is classified as doubtful has all the weaknesses inherent in a loan classified as substandard with added characteristics that the weaknesses make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions and values.

 

Loss – Loans classified as a loss are considered uncollectible and of such little value that their continuing to be carried as a loan is not warranted. This classification is not necessarily equivalent to no potential for recovery or salvage value, but rather that it is not appropriate to defer a full write-off even though partial recovery may be effected in the future.

 

The following tables provide information by credit risk rating indicators for each segment of the commercial loan portfolio at December 31 for the years indicated:

 

 

 

2019

 

 

 

 

 

 

Commercial Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

Commercial

 

Commercial

 

Owner

 

 

 

(In thousands)

 

Commercial

 

AD&C

 

Investor R/E

 

Occupied R/E

 

Total

 

Pass

 

$

783,909

 

$

683,181

 

$

2,146,971

 

$

1,278,337

 

$

4,892,398

 

Special Mention (1)

 

 

2,487

 

 

-

 

 

3,189

 

 

2,284

 

 

7,960

 

Substandard (2)

 

 

14,623

 

 

829

 

 

18,996

 

 

8,056

 

 

42,504

 

Doubtful

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

Total

 

$

801,019

 

$

684,010

 

$

2,169,156

 

$

1,288,677

 

$

4,942,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes $0.8 million of loans acquired from WashingtonFirst and considered performing at the acquisition date.

(2) Includes $11.7 million of purchased credit impaired loans acquired from WashingtonFirst and $6.7 million of loans acquired from WashingtonFirst and considered

performing at the acquisition date.

 

 

 

2018

 

 

 

 

 

 

Commercial Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

Commercial

 

Commercial

 

Owner

 

 

 

(In thousands)

 

Commercial

 

AD&C

 

Investor R/E

 

Occupied R/E

 

Total

 

Pass

 

$

773,958

 

$

677,574

 

$

1,934,886

 

$

1,189,903

 

$

4,576,321

 

Special Mention (1)

 

 

1,942

 

 

321

 

 

3,826

 

 

2,738

 

 

8,827

 

Substandard (2)

 

 

20,364

 

 

3,306

 

 

19,683

 

 

10,262

 

 

53,615

 

Doubtful

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

Total

 

$

796,264

 

$

681,201

 

$

1,958,395

 

$

1,202,903

 

$

4,638,763

(1) Includes $4.2 million of loans acquired from WashingtonFirst and considered performing at the acquisition date.

(2) Includes $24.3 million of purchased credit impaired loans acquired from WashingtonFirst and $7.2 million of loans acquired from WashingtonFirst and considered

performing at the acquisition date.

Homogeneous loan pools do not have individual loans subjected to internal risk ratings therefore, the credit indicator applied to these pools is based on their delinquency status. The following tables provide information by credit risk rating indicators for those remaining segments of the loan portfolio at December 31 for the years indicated:

 

 

 

 

2019

 

 

 

 

 

 

 

Residential Real Estate

 

 

 

 

 

 

 

 

 

 

Residential

 

Residential

 

 

 

(In thousands)

 

Consumer

 

Mortgage

 

Construction

 

Total

 

Performing

 

$

462,293

 

$

1,135,586

 

$

146,279

 

$

1,744,158

 

Non-performing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

90 days past due

 

 

-

 

 

-

 

 

-

 

 

-

 

 

Non-accruing (1)

 

 

4,107

 

 

12,661

 

 

-

 

 

16,768

 

 

Restructured loans

 

 

364

 

 

1,080

 

 

-

 

 

1,444

Total

 

$

466,764

 

$

1,149,327

 

$

146,279

 

$

1,762,370

(1) Includes $1.2 million of consumer loans acquired from WashingtonFirst and considered performing at the acquisition date.

 

 

 

2018

 

 

 

 

 

 

 

Residential Real Estate

 

 

 

 

 

 

 

 

 

 

Residential

 

Residential

 

 

 

(In thousands)

 

Consumer

 

Mortgage

 

Construction

 

Total

 

Performing

 

$

513,513

 

$

1,217,248

 

$

186,626

 

$

1,917,387

 

Non-performing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

90 days past due

 

 

219

 

 

221

 

 

-

 

 

440

 

 

Non-accruing (1)

 

 

4,107

 

 

9,336

 

 

159

 

 

13,602

 

 

Restructured loans

 

 

-

 

 

1,442

 

 

-

 

 

1,442

Total

 

$

517,839

 

$

1,228,247

 

$

186,785

 

$

1,932,871

 

(1) Includes $1.3 million of consumer loans acquired from WashingtonFirst and considered performing at the acquisition date.

During the year ended December 31, 2019, the Company restructured $2.4 million in loans that were designated as troubled debt restructurings. Modifications consisted principally of interest rate concessions. No modifications resulted in the reduction of the principal in the associated loan balances. Restructured loans are subject to periodic credit reviews to determine the necessity and adequacy of a specific loan loss allowance based on the collectability of the recorded investment in the restructured loan. Loans restructured during 2019 have specific reserves of $0.4 million at December 31, 2019. For the year ended December 31, 2018, the Company restructured $1.6 million in loans. Modifications consisted principally of interest rate concessions and no modifications resulted in the reduction of the recorded investment in the associated loan balances. Loans restructured during 2018 had specific reserves of $0.6 million at December 31, 2018.The following table provides the amounts of the restructured loans at the date of restructuring for specific segments of the loan portfolio during the period indicated:

 

 

 

For the Year Ended December 31, 2019

 

 

 

 

 

 

Commercial Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

All

 

 

 

 

 

 

 

 

 

Commercial

 

Commercial

 

Owner

 

Other

 

 

 

(In thousands)

 

Commercial

 

AD&C

 

Investor R/E

 

Occupied R/E

 

Loans

 

Total

Troubled debt restructurings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructured accruing

 

$

170

 

$

-

 

$

775

 

$

-

 

$

364

 

$

1,309

 

Restructured non-accruing

 

 

261

 

 

-

 

 

789

 

 

-

 

 

-

 

 

1,050

Balance

 

$

431

 

$

-

 

$

1,564

 

$

-

 

$

364

 

$

2,359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specific allowance

 

$

196

 

$

-

 

$

205

 

$

-

 

$

-

 

$

401

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructured and subsequently defaulted

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

 

 

For the Year Ended December 31, 2018

 

 

 

 

 

 

Commercial Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

All

 

 

 

 

 

 

 

 

 

Commercial

 

Commercial

 

Owner

 

Other

 

 

 

(In thousands)

 

Commercial

 

AD&C

 

Investor R/E

 

Occupied R/E

 

Loans

 

Total

Troubled debt restructurings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructured accruing

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

Restructured non-accruing

 

 

1,464

 

 

-

 

 

-

 

 

158

 

 

-

 

 

1,622

Balance

 

$

1,464

 

$

-

 

$

-

 

$

158

 

$

-

 

$

1,622

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specific allowance

 

$

563

 

$

-

 

$

-

 

$

-

 

$

-

 

$

563

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructured and subsequently defaulted

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

Other Real Estate Owned

Other real estate owned totaled $1.5 million and $1.6 million at December 31, 2019 and 2018, respectively. At December 31, 2019, $0.4 million of the other real estate owned was comprised of consumer mortgage loans. There were no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of December 31, 2019.