Notes to Unaudited Consolidated Financial Statements
NOTE A - ACCOUNTING POLICIES AND BASIS OF PRESENTATION
First Citizens BancShares, Inc. (“BancShares”) is a financial holding company organized under the laws of Delaware and conducts operations through its banking subsidiary, First-Citizens Bank & Trust Company (“FCB”), which is headquartered in Raleigh, North Carolina.
General
These consolidated financial statements and notes thereto are presented in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flow activity required in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the consolidated financial position and consolidated results of operations have been made. The unaudited interim consolidated financial statements included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial Statements included in BancShares’ Annual Report on Form 10-K for the year ended December 31, 2020.
Reclassifications
In certain instances, amounts reported in prior periods’ consolidated financial statements have been reclassified to conform to the current financial statement presentation. Such reclassifications had no effect on previously reported cash flows, shareholders’ equity or net income.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions which affect the amounts reported. Actual results could differ from those estimates. The estimates BancShares considers significant are the allowance for credit losses, “ACL”, fair value measurements, and income taxes.
Share Repurchases
During the first quarter of 2021, BancShares did not repurchase shares of Class A common stock. During the first quarter of 2020, BancShares purchased a total of 349,390 shares of Class A common stock for $159.7 million at an average cost per share of $457.10.
During 2020, share repurchases included 45,000 shares of Class A common stock purchased from Ella Ann Holding, as trustee of her revocable trust. Mrs. Holding is the widow of BancShares’ former Executive Vice Chairman, Frank B. Holding, and the mother of Frank B. Holding, Jr. and Hope H. Bryant, BancShares’ Chairman and Chief Executive Officer and Vice Chairman, respectively.
Small Business Administration Paycheck Protection Program
The Small Business Administration Paycheck Protection Program (“SBA-PPP”) is one of the centerpieces of the Coronavirus Aid Relief and Economic Security Act (the “CARES Act”), which was passed on March 27, 2020 in response to the outbreak of a novel strain of coronavirus (“COVID-19”) and was supplemented with subsequent legislation. Overseen by the United States (“U.S.”) Treasury Department, the SBA-PPP offers cash-flow assistance to nonprofit and small business employers through guaranteed loans for expenses incurred between February 15, 2020, and August 8, 2020. Borrowers are eligible for forgiveness of principal and accrued interest on SBA-PPP loans to the extent that the proceeds were used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of between eight and 24-weeks after the loan is made as long as the borrower retains its employees and their compensation levels. The CARES Act authorized the SBA to temporarily guarantee these loans. The SBA began processing forgiveness payments during the fourth quarter of 2020.
The Consolidated Appropriations Act 2021 was signed into law during the fourth quarter of 2020 and contained provisions for a second round of funding of SBA-PPP loans. During the first quarter of 2021, BancShares originated over 9,600 SBA-PPP loans totaling over $1.1 billion.
Due to the unique nature of these provisions, SBA-PPP loans have been disclosed as a separate loan class. Origination fees received from the SBA are capitalized into the carrying amount of the loans. The deferred fee income, net of origination costs, is recognized over the life of the loans as an adjustment to yield using the effective interest method. As of March 31, 2021, SBA-PPP loans outstanding were $2.8 billion.
Recently Issued Accounting Pronouncements
There were no Accounting Standards Updates (“ASUs”) issued during the first quarter of 2021 by the Financial Accounting Standards Board (“FASB”) that will have a material impact on BancShares’ consolidated financial statements.
NOTE B - BUSINESS COMBINATIONS
Recently Announced Business Combinations
CIT Group Inc.
On October 15, 2020, BancShares and CIT Group Inc., a Delaware corporation (“CIT”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among BancShares, FCB, FC Merger Subsidiary IX, Inc., a direct, wholly owned subsidiary of FCB (“Merger Sub”), and CIT, the parent company of CIT Bank, N.A., a national banking association (“CIT Bank”). Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into CIT, with CIT as the surviving entity (the “First-Step Merger”), and as soon as reasonably practicable following the effective time of the First-Step Merger, CIT will merge with and into FCB, with FCB as the surviving entity (together with the First-Step Merger, the “Mergers”). The Merger Agreement further provides that immediately following the consummation of the Mergers, CIT Bank will merge with and into FCB, with FCB as the surviving bank (together with the Mergers, the “Transaction”).
The Merger Agreement was unanimously approved by the Board of Directors of each of BancShares and CIT. The Transaction was approved by the North Carolina Commissioner of Banks on February 5, 2021, as well as the shareholders of both companies on February 9, 2021. The parties are continuing to work with other regulators on remaining approvals and anticipate closing in mid-2021 subject to regulatory approval and the satisfaction of customary closing conditions.
Upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the First-Step Merger (the “Effective Time”), each share of CIT common stock, par value $0.01 per share, issued and outstanding immediately prior to the Effective Time (“CIT Common Stock”), except for certain shares of CIT Common Stock owned by CIT or BancShares, will be converted into the right to receive 0.06200 shares of BancShares Class A common stock, par value $1.00 per share. Holders of CIT Common Stock will receive cash in lieu of fractional shares.
In addition, at the Effective Time, each share of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share, of CIT and 5.625% Non-Cumulative Perpetual Preferred Stock, Series B, par value $0.01 per share, of CIT issued and outstanding will automatically be converted into the right to receive one share of a newly created series of preferred stock, Series B, of BancShares and one share of a newly created series of preferred stock, Series C, of BancShares, respectively.
The Merger Agreement requires that, effective as of the Effective Time, the Boards of Directors of the combined company and the combined bank will consist of 14 directors, (i) 11 of whom will be members of the current Board of Directors of BancShares, and (ii) three of whom will be selected from among the current Board of Directors of CIT and will include as one of those three Ellen R. Alemany, Chairwoman and Chief Executive Officer of CIT. BancShares intends to appoint Michael A. Carpenter and Vice Admiral John R. Ryan, USN (Ret.), as the two other members from CIT’s current Board of Directors who will join the Boards of Directors of the combined company and the combined bank .
NOTE C - INVESTMENTS
The amortized cost and fair value of investment securities at March 31, 2021 and December 31, 2020, were as follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
(Dollars in thousands)
|
Amortized cost
|
|
Gross
unrealized
gains
|
|
Gross unrealized
losses
|
|
Fair
value
|
Investment securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency
|
$
|
852,305
|
|
|
$
|
784
|
|
|
$
|
6,403
|
|
|
$
|
846,686
|
|
Residential mortgage-backed securities
|
4,736,893
|
|
|
47,742
|
|
|
26,046
|
|
|
4,758,589
|
|
Commercial mortgage-backed securities
|
1,096,259
|
|
|
14,619
|
|
|
11,891
|
|
|
1,098,987
|
|
Corporate bonds
|
585,095
|
|
|
18,313
|
|
|
548
|
|
|
602,860
|
|
|
|
|
|
|
|
|
|
Total investment securities available for sale
|
$
|
7,270,552
|
|
|
$
|
81,458
|
|
|
$
|
44,888
|
|
|
$
|
7,307,122
|
|
Investment in marketable equity securities
|
84,297
|
|
|
22,872
|
|
|
283
|
|
|
106,886
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|
Investment securities held to maturity
|
|
|
|
|
|
|
|
Residential mortgage-backed securities
|
1,740,314
|
|
|
5,191
|
|
|
20,510
|
|
|
1,724,995
|
|
Commercial mortgage-backed securities
|
1,065,778
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|
|
13
|
|
|
17,811
|
|
|
1,047,980
|
|
Other
|
2,007
|
|
|
—
|
|
|
—
|
|
|
2,007
|
|
Total investment securities held to maturity
|
2,808,099
|
|
|
5,204
|
|
|
38,321
|
|
|
2,774,982
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|
Total investment securities
|
$
|
10,162,948
|
|
|
$
|
109,534
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|
|
$
|
83,492
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|
|
$
|
10,188,990
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|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
(Dollars in thousands)
|
Amortized cost
|
|
Gross
unrealized
gains
|
|
Gross unrealized
losses
|
|
Fair
value
|
Investment securities available for sale
|
|
|
|
|
|
|
|
U.S. Treasury
|
$
|
499,832
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|
|
$
|
101
|
|
|
$
|
—
|
|
|
$
|
499,933
|
|
Government agency
|
706,241
|
|
|
723
|
|
|
5,573
|
|
|
701,391
|
|
Residential mortgage-backed securities
|
4,369,130
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|
|
70,283
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|
|
1,310
|
|
|
4,438,103
|
|
Commercial mortgage-backed securities
|
745,892
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|
|
25,645
|
|
|
—
|
|
|
771,537
|
|
Corporate bonds
|
590,870
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|
|
14,437
|
|
|
2,028
|
|
|
603,279
|
|
|
|
|
|
|
|
|
|
Total investment securities available for sale
|
$
|
6,911,965
|
|
|
$
|
111,189
|
|
|
$
|
8,911
|
|
|
$
|
7,014,243
|
|
Investment in marketable equity securities
|
84,837
|
|
|
8,654
|
|
|
1,811
|
|
|
91,680
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|
Investment securities held to maturity
|
|
|
|
|
|
|
|
Residential mortgage-backed securities
|
1,877,692
|
|
|
17,689
|
|
|
—
|
|
|
1,895,381
|
|
Commercial mortgage-backed securities
|
937,034
|
|
|
3,884
|
|
|
56
|
|
|
940,862
|
|
Other
|
2,256
|
|
|
—
|
|
|
—
|
|
|
2,256
|
|
Total investment securities held to maturity
|
2,816,982
|
|
|
21,573
|
|
|
56
|
|
|
2,838,499
|
|
Total investment securities
|
$
|
9,813,784
|
|
|
$
|
141,416
|
|
|
$
|
10,778
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|
|
$
|
9,944,422
|
|
On November 1, 2020, mortgage-backed securities with an amortized cost of $1.46 billion were transferred from investment securities available for sale to the held to maturity portfolio. At the time of transfer, the mortgage-backed securities had a fair value of $1.47 billion and a weighted average contractual maturity of 18 years. The unrealized gain on these securities at the date of transfer was $5.9 million, or $4.5 million net of tax, and was reported as a component of AOCI. This unrealized gain is accreted over the remaining expected life of the securities as an adjustment of yield.
Investments in residential and commercial mortgage-backed securities represent securities issued by the Government National Mortgage Association, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation. Investments in government agency securities represent securities issued by the United States Small Business Administration. Investments in corporate bonds and marketable equity securities represent positions in securities of other financial institutions. Other held to maturity investments include certificates of deposit with other financial institutions.
BancShares also holds approximately 354,000 shares of Visa Class B common stock, which are not considered to have a readily determinable fair value and are recorded at $0. BancShares held FHLB stock of $40.6 million and $45.4 million and other non-marketable equity securities of $11.4 million and $11.6 million at March 31, 2021 and December 31, 2020, respectively. These securities are recorded at cost within other assets.
As of March 31, 2021 and December 31, 2020, no ACL was required for available for sale and held to maturity debt securities. Accrued interest receivables for available for sale and held to maturity debt securities were excluded from the estimate for credit losses. At March 31, 2021, accrued interest receivables for available for sale and held to maturity debt securities were $21.3 million and $5.3 million, respectively. At December 31, 2020, accrued interest receivables for available for sale and held to maturity debt securities were $17.6 million and $5.4 million, respectively. During the three months ended March 31, 2021 and 2020, no accrued interest was deemed uncollectible and written off against interest income.
The following table provides the amortized cost and fair value by contractual maturity for investment securities available for sale and held to maturity. Expected maturities will differ from contractual maturities on certain securities because issuers and borrowers of underlying collateral may have the right to call or prepay obligations with or without prepayment penalties. Residential and commercial mortgage-backed and government agency securities are stated separately as they are not due at a single maturity date.
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|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
(Dollars in thousands)
|
Amortized cost
|
|
Fair
value
|
|
Amortized cost
|
|
Fair
value
|
Investment securities available for sale
|
|
|
|
|
|
|
|
Non-amortizing securities maturing in:
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|
|
|
|
|
|
One year or less
|
$
|
1,020
|
|
|
$
|
1,021
|
|
|
$
|
500,846
|
|
|
$
|
500,954
|
|
One through five years
|
72,340
|
|
|
74,536
|
|
|
72,565
|
|
|
73,881
|
|
Five through 10 years
|
502,757
|
|
|
517,922
|
|
|
508,320
|
|
|
519,570
|
|
Over 10 years
|
8,978
|
|
|
9,381
|
|
|
8,971
|
|
|
8,807
|
|
Government agency
|
852,305
|
|
|
846,686
|
|
|
706,241
|
|
|
701,391
|
|
Residential mortgage-backed securities
|
4,736,893
|
|
|
4,758,589
|
|
|
4,369,130
|
|
|
4,438,103
|
|
Commercial mortgage-backed securities
|
1,096,259
|
|
|
1,098,987
|
|
|
745,892
|
|
|
771,537
|
|
Total investment securities available for sale
|
$
|
7,270,552
|
|
|
$
|
7,307,122
|
|
|
$
|
6,911,965
|
|
|
$
|
7,014,243
|
|
Investment securities held to maturity
|
|
|
|
|
|
|
|
Non-amortizing securities maturing in:
|
|
|
|
|
|
|
|
One year or less
|
998
|
|
|
998
|
|
|
1,507
|
|
|
1,507
|
|
One through five years
|
1,009
|
|
|
1,009
|
|
|
749
|
|
|
749
|
|
Residential mortgage-backed securities
|
1,740,314
|
|
|
1,724,995
|
|
|
1,877,692
|
|
|
1,895,381
|
|
Commercial mortgage-backed securities
|
1,065,778
|
|
|
1,047,980
|
|
|
937,034
|
|
|
940,862
|
|
Total investment securities held to maturity
|
$
|
2,808,099
|
|
|
$
|
2,774,982
|
|
|
$
|
2,816,982
|
|
|
$
|
2,838,499
|
|
The following table provides the gross realized gains and losses on the sales of investment securities available for sale for the three months ended March 31, 2021 and 2020:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(Dollars in thousands)
|
|
|
|
|
2021
|
|
2020
|
Gross realized gains on sales of investment securities available for sale
|
|
|
|
|
$
|
9,207
|
|
|
$
|
20,474
|
|
Gross realized losses on sales of investment securities available for sale
|
|
|
|
|
—
|
|
|
(679)
|
|
Net realized gains on sales of investment securities available for sale
|
|
|
|
|
$
|
9,207
|
|
|
$
|
19,795
|
|
The following table provides the realized and unrealized gains and losses on marketable equity securities for the three months ended March 31, 2021 and 2020:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(Dollars in thousands)
|
|
|
|
|
2021
|
|
2020
|
Marketable equity securities gains (losses), net
|
|
|
|
|
$
|
16,011
|
|
|
$
|
(51,408)
|
|
Less net gains recognized on marketable equity securities sold
|
|
|
|
|
263
|
|
|
323
|
|
Unrealized gains (losses) recognized on marketable equity securities held
|
|
|
|
|
$
|
15,748
|
|
|
$
|
(51,731)
|
|
The following table provides information regarding securities with unrealized losses as of March 31, 2021 and December 31, 2020:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
(Dollars in thousands)
|
Fair
value
|
|
Unrealized
losses
|
|
Fair
value
|
|
Unrealized
losses
|
|
Fair
value
|
|
Unrealized
losses
|
Investment securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency
|
$
|
331,034
|
|
|
$
|
3,501
|
|
|
$
|
415,379
|
|
|
$
|
2,902
|
|
|
$
|
746,413
|
|
|
$
|
6,403
|
|
Residential mortgage-backed securities
|
2,345,301
|
|
|
26,001
|
|
|
12,495
|
|
|
45
|
|
|
2,357,796
|
|
|
26,046
|
|
Commercial mortgage-backed securities
|
685,575
|
|
|
11,891
|
|
|
—
|
|
|
—
|
|
|
685,575
|
|
|
11,891
|
|
Corporate bonds
|
8,394
|
|
|
14
|
|
|
26,183
|
|
|
534
|
|
|
34,577
|
|
|
548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
3,370,304
|
|
|
$
|
41,407
|
|
|
$
|
454,057
|
|
|
$
|
3,481
|
|
|
$
|
3,824,361
|
|
|
$
|
44,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
(Dollars in thousands)
|
Fair
value
|
|
Unrealized
losses
|
|
Fair
value
|
|
Unrealized
losses
|
|
Fair
value
|
|
Unrealized
losses
|
Investment securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency
|
$
|
268,622
|
|
|
$
|
3,197
|
|
|
$
|
328,777
|
|
|
$
|
2,376
|
|
|
$
|
597,399
|
|
|
$
|
5,573
|
|
Residential mortgage-backed securities
|
433,816
|
|
|
1,241
|
|
|
23,064
|
|
|
69
|
|
|
456,880
|
|
|
1,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
57,715
|
|
|
2,028
|
|
|
—
|
|
|
—
|
|
|
57,715
|
|
|
2,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
760,153
|
|
|
$
|
6,466
|
|
|
$
|
351,841
|
|
|
$
|
2,445
|
|
|
$
|
1,111,994
|
|
|
$
|
8,911
|
|
|
|
|
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As of March 31, 2021, there were 60 investment securities available for sale with continuous losses for more than 12 months, of which 54 were government sponsored enterprise-issued mortgage-backed securities or government agency securities and six were corporate bonds.
None of the unrealized losses identified as of March 31, 2021, or December 31, 2020, relate to the issuer’s ability to honor redemption obligations. Rather, the unrealized losses relate to changes in interest rates relative to when the investment securities were purchased, and do not indicate credit-related impairment. BancShares considered other factors including changes in credit ratings, delinquencies, and other macroeconomic factors in this determination. As a result, none of the securities were deemed to require an allowance for credit losses. BancShares has the ability and intent to retain these securities for a period of time sufficient to recover all unrealized losses.
Investment securities having an aggregate carrying value of $4.8 billion at March 31, 2021, and $4.6 billion at December 31, 2020, were pledged as collateral to secure public funds on deposit and certain short-term borrowings, and for other purposes as required by law.
BancShares’ portfolio of held to maturity debt securities consists of mortgage-backed securities issued by government agencies and government sponsored entities. Given the consistently strong credit rating of the U.S. Treasury and the long history of no credit losses on debt securities issued by government agencies and government sponsored entities, no further credit monitoring is performed on these portfolios. Should there be downgrades to the credit rating of the U.S. Treasury or losses reported on securities issued by government agencies and government sponsored entities, BancShares will reevaluate its determination of zero expected credit losses on held to maturity debt securities.
There were no debt securities held to maturity on nonaccrual status as of March 31, 2021.
A security is considered past due once it is 30 days contractually past due under the terms of the agreement. There were no securities past due as of March 31, 2021.
NOTE D - LOANS AND LEASES
BancShares’ accounting methods for loans and leases depends on whether they are originated or purchased, and if purchased, whether or not the loans reflect more than insignificant credit deterioration since origination, which is determined as of the acquisition date. Non purchased credit deteriorated (“PCD”) loans consist of loans originated by BancShares and loans purchased from other institutions, that do not reflect more than insignificant credit deterioration at acquisition. Purchased loans which reflect more than insignificant credit deterioration are classified as PCD and reported as a single loan segment or class. At the date of acquisition, all acquired loans are recorded at fair value.
Loans and leases outstanding included the following at March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
March 31, 2021
|
|
December 31, 2020
|
Commercial:
|
|
|
|
Construction and land development
|
$
|
1,022,087
|
|
|
$
|
985,424
|
|
Owner occupied commercial mortgage
|
11,340,966
|
|
|
11,165,012
|
|
Non-owner occupied commercial mortgage
|
3,017,898
|
|
|
2,987,689
|
|
Commercial and industrial and leases
|
4,946,445
|
|
|
5,013,644
|
|
SBA-PPP
|
2,769,906
|
|
|
2,406,291
|
|
Total commercial loans
|
23,097,302
|
|
|
22,558,060
|
|
Consumer:
|
|
|
|
Residential mortgage
|
5,566,026
|
|
|
5,561,686
|
|
Revolving mortgage
|
1,938,422
|
|
|
2,052,854
|
|
Construction and land development
|
336,065
|
|
|
348,123
|
|
Consumer auto
|
1,271,586
|
|
|
1,255,402
|
|
Consumer other
|
538,677
|
|
|
552,968
|
|
Total consumer loans
|
9,650,776
|
|
|
9,771,033
|
|
|
|
|
|
PCD loans
|
432,773
|
|
|
462,882
|
|
Total loans and leases
|
$
|
33,180,851
|
|
|
$
|
32,791,975
|
|
At March 31, 2021 and December 31, 2020, accrued interest receivable on loans was $103.2 million and $107.7 million, respectively, and was excluded from the estimate of credit losses.
Certain residential real estate loans are originated to be sold to investors and are recorded in loans held for sale at fair value. In addition, BancShares may change its strategy for certain portfolio loans and decide to sell them in the secondary market. At that time, portfolio loans are transferred to loans held for sale at fair value. Loans held for sale totaled $129.3 million and $124.8 million at March 31, 2021 and December 31, 2020, respectively.
The following table presents selected components of the amortized cost of loans.
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
March 31, 2021
|
|
December 31, 2020
|
Deferred fees, including unearned fees and unamortized costs on non-PCD loans
|
|
|
|
Net deferred fees related to SBA-PPP loans
|
$
|
66,717
|
|
|
$
|
41,064
|
|
Net deferred fees related to other portfolios
|
11,932
|
|
9,153
|
Total net deferred fees
|
$
|
78,649
|
|
|
$
|
50,217
|
|
|
|
|
|
Net unamortized discount on purchased loans
|
|
|
|
Non-PCD
|
$
|
17,009
|
|
|
$
|
19,473
|
|
PCD
|
41,141
|
|
|
45,254
|
|
Total
|
$
|
58,150
|
|
|
$
|
64,727
|
|
The aging of the outstanding loans and leases, by class, at March 31, 2021 and December 31, 2020 is provided in the tables below. Loans and leases past due less than 30 days are considered current as various grace periods allow borrowers to make payments within a stated period after the due date and still remain in compliance with the loan agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
(Dollars in thousands)
|
30-59 days
past due
|
|
60-89 days
past due
|
|
90 days or greater
|
|
Total past
due
|
|
Current
|
|
Total loans
and leases
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
$
|
277
|
|
|
$
|
—
|
|
|
$
|
1,595
|
|
|
$
|
1,872
|
|
|
$
|
1,020,215
|
|
|
$
|
1,022,087
|
|
Owner occupied commercial mortgage
|
13,153
|
|
|
2,996
|
|
|
11,028
|
|
|
27,177
|
|
|
11,313,789
|
|
|
11,340,966
|
|
Non-owner occupied commercial mortgage
|
5,046
|
|
|
303
|
|
|
8,917
|
|
|
14,266
|
|
|
3,003,632
|
|
|
3,017,898
|
|
Commercial and industrial and leases
|
13,284
|
|
|
4,771
|
|
|
3,249
|
|
|
21,304
|
|
|
4,925,141
|
|
|
4,946,445
|
|
SBA-PPP
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,769,906
|
|
|
2,769,906
|
|
Total commercial loans
|
31,760
|
|
|
8,070
|
|
|
24,789
|
|
|
64,619
|
|
|
23,032,683
|
|
|
23,097,302
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
34,350
|
|
|
7,396
|
|
|
30,789
|
|
|
72,535
|
|
|
5,493,491
|
|
|
5,566,026
|
|
Revolving mortgage
|
6,222
|
|
|
1,603
|
|
|
8,531
|
|
|
16,356
|
|
|
1,922,066
|
|
|
1,938,422
|
|
Construction and land development
|
266
|
|
|
944
|
|
|
652
|
|
|
1,862
|
|
|
334,203
|
|
|
336,065
|
|
Consumer auto
|
4,432
|
|
|
1,014
|
|
|
860
|
|
|
6,306
|
|
|
1,265,280
|
|
|
1,271,586
|
|
Consumer other
|
2,246
|
|
|
1,213
|
|
|
1,516
|
|
|
4,975
|
|
|
533,702
|
|
|
538,677
|
|
Total consumer loans
|
47,516
|
|
|
12,170
|
|
|
42,348
|
|
|
102,034
|
|
|
9,548,742
|
|
|
9,650,776
|
|
PCD loans
|
11,250
|
|
|
4,322
|
|
|
33,694
|
|
|
49,266
|
|
|
383,507
|
|
|
432,773
|
|
Total loans and leases
|
$
|
90,526
|
|
|
$
|
24,562
|
|
|
$
|
100,831
|
|
|
$
|
215,919
|
|
|
$
|
32,964,932
|
|
|
$
|
33,180,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
(Dollars in thousands)
|
30-59 days
past due
|
|
60-89 days
past due
|
|
90 days or greater
|
|
Total past
due
|
|
Current
|
|
Total loans
and leases
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
$
|
956
|
|
|
$
|
527
|
|
|
$
|
1,603
|
|
|
$
|
3,086
|
|
|
$
|
982,338
|
|
|
$
|
985,424
|
|
Owner occupied commercial mortgage
|
8,757
|
|
|
2,232
|
|
|
14,082
|
|
|
25,071
|
|
|
11,139,941
|
|
|
11,165,012
|
|
Non-owner occupied commercial mortgage
|
12,370
|
|
|
—
|
|
|
5,973
|
|
|
18,343
|
|
|
2,969,346
|
|
|
2,987,689
|
|
Commercial and industrial and leases
|
14,532
|
|
|
2,842
|
|
|
3,243
|
|
|
20,617
|
|
|
4,993,027
|
|
|
5,013,644
|
|
SBA-PPP
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,406,291
|
|
|
2,406,291
|
|
Total commercial loans
|
36,615
|
|
|
5,601
|
|
|
24,901
|
|
|
67,117
|
|
|
22,490,943
|
|
|
22,558,060
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
43,218
|
|
|
8,364
|
|
|
31,690
|
|
|
83,272
|
|
|
5,478,414
|
|
|
5,561,686
|
|
Revolving mortgage
|
11,977
|
|
|
2,626
|
|
|
7,415
|
|
|
22,018
|
|
|
2,030,836
|
|
|
2,052,854
|
|
Construction and land development
|
932
|
|
|
77
|
|
|
330
|
|
|
1,339
|
|
|
346,784
|
|
|
348,123
|
|
Consumer auto
|
6,825
|
|
|
1,835
|
|
|
1,076
|
|
|
9,736
|
|
|
1,245,666
|
|
|
1,255,402
|
|
Consumer other
|
3,610
|
|
|
1,464
|
|
|
1,505
|
|
|
6,579
|
|
|
546,389
|
|
|
552,968
|
|
Total consumer loans
|
66,562
|
|
|
14,366
|
|
|
42,016
|
|
|
122,944
|
|
|
9,648,089
|
|
|
9,771,033
|
|
PCD loans
|
18,322
|
|
|
6,076
|
|
|
31,026
|
|
|
55,424
|
|
|
407,458
|
|
|
462,882
|
|
Total loans and leases
|
$
|
121,499
|
|
|
$
|
26,043
|
|
|
$
|
97,943
|
|
|
$
|
245,485
|
|
|
$
|
32,546,490
|
|
|
$
|
32,791,975
|
|
The amortized cost, by class, of loans and leases on nonaccrual status, and loans and leases greater than 90 days past due and still accruing at March 31, 2021 and December 31, 2020, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
(Dollars in thousands)
|
Nonaccrual
loans and
leases
|
|
Loans and
leases > 90
days and
accruing
|
|
Nonaccrual
loans and
leases
|
|
Loans and
leases > 90
days and
accruing
|
Commercial:
|
|
|
|
|
|
|
|
Construction and land development
|
$
|
1,648
|
|
|
$
|
—
|
|
|
$
|
1,661
|
|
|
$
|
—
|
|
Owner occupied commercial mortgage
|
22,796
|
|
|
1,400
|
|
|
23,103
|
|
|
3,625
|
|
Non-owner occupied commercial mortgage
|
10,939
|
|
|
2,211
|
|
|
7,932
|
|
|
147
|
|
Commercial and industrial and leases
|
15,718
|
|
|
607
|
|
|
10,626
|
|
|
540
|
|
Total commercial loans
|
51,101
|
|
|
4,218
|
|
|
43,322
|
|
|
4,312
|
|
Consumer:
|
|
|
|
|
|
|
|
Residential mortgage
|
61,907
|
|
|
29
|
|
|
66,345
|
|
|
—
|
|
Revolving mortgage
|
23,952
|
|
|
—
|
|
|
22,236
|
|
|
—
|
|
Construction and land development
|
566
|
|
|
543
|
|
|
652
|
|
|
—
|
|
Consumer auto
|
3,027
|
|
|
—
|
|
|
3,166
|
|
|
—
|
|
Consumer other
|
816
|
|
|
1,155
|
|
|
823
|
|
|
1,195
|
|
Total consumer loans
|
90,268
|
|
|
1,727
|
|
|
93,222
|
|
|
1,195
|
|
PCD loans
|
53,165
|
|
|
1,432
|
|
|
54,939
|
|
|
355
|
|
Total loans and leases
|
$
|
194,534
|
|
|
$
|
7,377
|
|
|
$
|
191,483
|
|
|
$
|
5,862
|
|
Credit Quality
Loans and leases are monitored for credit quality on a recurring basis. Commercial and consumer loans and leases have different credit quality indicators as a result of the unique characteristics of the loan segments being evaluated. The credit quality indicators for commercial loans and leases are borrower risk classifications developed through a review of individual borrowers on an ongoing basis. Commercial loans are evaluated at least annually, with more frequent evaluations done on criticized loans. Commercial loans are also updated if there is evidence of potential credit deterioration, such as delinquency. Commercial credit cards are included in the Commercial and industrial and leases segment, but are evaluated based primarily upon delinquency status. The risk classifications as of the date presented are based on the most recent assessment performed and are defined below:
Pass – A pass rated asset is not adversely classified because it does not display any of the characteristics for adverse classification.
Special mention – A special mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, such potential 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 asset is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Assets classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These assets are characterized by the distinct possibility of loss if the deficiencies are not corrected.
Doubtful – An asset classified as doubtful has all the weaknesses inherent in an asset classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently existing facts, conditions and values.
Loss – Assets classified as loss are considered uncollectible and of such little value that it is inappropriate to be carried as an asset. This classification is not necessarily equivalent to any potential for recovery or salvage value, but rather that it is not appropriate to defer a full charge-off even though partial recovery may be affected in the future.
Ungraded – Ungraded loans represent loans that are not included in the individual credit grading process due to their relatively small balances or borrower type. The majority of ungraded loans at March 31, 2021 relate to business credit cards. Business credit card loans are subject to automatic charge-off when they become 120 days past due in the same manner as unsecured consumer lines of credit. The remaining balance is comprised of a small amount of commercial mortgage, lease financing and other commercial real estate loans.
The credit quality indicators for consumer and PCD loans are based on delinquency status of the borrower as of the date presented. As the borrower becomes more delinquent, the likelihood of loss increases.
The following tables represent current credit quality indicators by origination year as of March 31, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
Commercial Loans Amortized Cost Basis by Origination Year
|
|
|
|
|
|
|
Classification:
|
2021
|
|
2020
|
|
2019
|
|
2018
|
|
2017
|
|
Prior
|
|
Revolving
|
|
Revolving converted to term loans
|
|
Total
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
$
|
46,039
|
|
|
$
|
399,172
|
|
|
$
|
310,753
|
|
|
$
|
168,534
|
|
|
$
|
48,089
|
|
|
$
|
28,797
|
|
|
$
|
12,548
|
|
|
$
|
—
|
|
|
$
|
1,013,932
|
|
Special Mention
|
—
|
|
|
232
|
|
|
—
|
|
|
181
|
|
|
85
|
|
|
—
|
|
|
145
|
|
|
—
|
|
|
643
|
|
Substandard
|
—
|
|
|
225
|
|
|
590
|
|
|
1,447
|
|
|
5,170
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|
7,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
46,039
|
|
|
399,629
|
|
|
311,343
|
|
|
170,162
|
|
|
53,344
|
|
|
28,877
|
|
|
12,693
|
|
|
—
|
|
|
1,022,087
|
|
Owner occupied commercial mortgage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
632,239
|
|
|
3,202,842
|
|
|
2,166,465
|
|
|
1,521,886
|
|
|
1,206,771
|
|
|
2,249,426
|
|
|
106,579
|
|
|
101
|
|
|
11,086,309
|
|
Special Mention
|
687
|
|
|
10,398
|
|
|
29,975
|
|
|
39,868
|
|
|
12,074
|
|
|
37,441
|
|
|
2,974
|
|
|
72
|
|
|
133,489
|
|
Substandard
|
3,564
|
|
|
9,322
|
|
|
14,441
|
|
|
9,287
|
|
|
26,702
|
|
|
49,856
|
|
|
7,996
|
|
|
—
|
|
|
121,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
636,490
|
|
|
3,222,562
|
|
|
2,210,881
|
|
|
1,571,041
|
|
|
1,245,547
|
|
|
2,336,723
|
|
|
117,549
|
|
|
173
|
|
|
11,340,966
|
|
Non-owner occupied commercial mortgage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
158,815
|
|
|
809,647
|
|
|
603,274
|
|
|
332,010
|
|
|
319,514
|
|
|
638,882
|
|
|
35,835
|
|
|
—
|
|
|
2,897,977
|
|
Special Mention
|
794
|
|
|
676
|
|
|
880
|
|
|
10,778
|
|
|
1,440
|
|
|
2,918
|
|
|
500
|
|
|
—
|
|
|
17,986
|
|
Substandard
|
75
|
|
|
12,018
|
|
|
22,293
|
|
|
12,643
|
|
|
8,762
|
|
|
44,396
|
|
|
1,748
|
|
|
—
|
|
|
101,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
159,684
|
|
|
822,341
|
|
|
626,447
|
|
|
355,431
|
|
|
329,716
|
|
|
686,196
|
|
|
38,083
|
|
|
—
|
|
|
3,017,898
|
|
Commercial and industrial and leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
424,035
|
|
|
1,423,941
|
|
|
884,987
|
|
|
442,129
|
|
|
251,356
|
|
|
445,265
|
|
|
874,664
|
|
|
5,150
|
|
|
4,751,527
|
|
Special Mention
|
102
|
|
|
10,601
|
|
|
22,183
|
|
|
8,335
|
|
|
6,160
|
|
|
7,764
|
|
|
11,376
|
|
|
194
|
|
|
66,715
|
|
Substandard
|
5,507
|
|
|
15,179
|
|
|
4,398
|
|
|
5,572
|
|
|
3,950
|
|
|
5,597
|
|
|
24,608
|
|
|
1,410
|
|
|
66,221
|
|
Doubtful
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Ungraded
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61,980
|
|
|
—
|
|
|
61,980
|
|
Total
|
429,644
|
|
|
1,449,721
|
|
|
911,568
|
|
|
456,036
|
|
|
261,466
|
|
|
458,626
|
|
|
972,630
|
|
|
6,754
|
|
|
4,946,445
|
|
SBA-PPP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
936,012
|
|
|
1,833,894
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,769,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
$
|
2,207,869
|
|
|
$
|
7,728,147
|
|
|
$
|
4,060,239
|
|
|
$
|
2,552,670
|
|
|
$
|
1,890,073
|
|
|
$
|
3,510,422
|
|
|
$
|
1,140,955
|
|
|
$
|
6,927
|
|
|
$
|
23,097,302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and PCD Loans Amortized Cost Basis by Origination Year
|
|
|
|
|
|
|
Days Past Due:
|
2021
|
|
2020
|
|
2019
|
|
2018
|
|
2017
|
|
Prior
|
|
Revolving
|
|
Revolving converted to term loans
|
|
Total
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
$
|
521,849
|
|
|
$
|
1,810,979
|
|
|
$
|
889,902
|
|
|
$
|
561,267
|
|
|
$
|
518,205
|
|
|
$
|
1,166,958
|
|
|
$
|
24,331
|
|
|
$
|
—
|
|
|
$
|
5,493,491
|
|
30-59 days
|
2,367
|
|
|
2,193
|
|
|
236
|
|
|
9,619
|
|
|
4,113
|
|
|
15,567
|
|
|
255
|
|
|
—
|
|
|
34,350
|
|
60-89 days
|
—
|
|
|
256
|
|
|
1,012
|
|
|
1,040
|
|
|
558
|
|
|
4,530
|
|
|
—
|
|
|
—
|
|
|
7,396
|
|
90 days or greater
|
—
|
|
|
286
|
|
|
1,455
|
|
|
838
|
|
|
3,797
|
|
|
24,384
|
|
|
29
|
|
|
—
|
|
|
30,789
|
|
Total
|
524,216
|
|
|
1,813,714
|
|
|
892,605
|
|
|
572,764
|
|
|
526,673
|
|
|
1,211,439
|
|
|
24,615
|
|
|
—
|
|
|
5,566,026
|
|
Revolving mortgage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,772,173
|
|
|
149,893
|
|
|
1,922,066
|
|
30-59 days
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,877
|
|
|
2,345
|
|
|
6,222
|
|
60-89 days
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
699
|
|
|
904
|
|
|
1,603
|
|
90 days or greater
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,112
|
|
|
4,419
|
|
|
8,531
|
|
Total
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,780,861
|
|
|
157,561
|
|
|
1,938,422
|
|
Construction and land development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
40,360
|
|
|
209,701
|
|
|
52,406
|
|
|
16,883
|
|
|
8,037
|
|
|
5,241
|
|
|
1,575
|
|
|
—
|
|
|
334,203
|
|
30-59 days
|
—
|
|
|
108
|
|
|
15
|
|
|
61
|
|
|
30
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|
266
|
|
60-89 days
|
—
|
|
|
240
|
|
|
138
|
|
|
59
|
|
|
366
|
|
|
141
|
|
|
—
|
|
|
—
|
|
|
944
|
|
90 days or greater
|
—
|
|
|
543
|
|
|
—
|
|
|
—
|
|
|
59
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
652
|
|
Total
|
40,360
|
|
|
210,592
|
|
|
52,559
|
|
|
17,003
|
|
|
8,492
|
|
|
5,484
|
|
|
1,575
|
|
|
—
|
|
|
336,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer auto
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
155,101
|
|
|
484,026
|
|
|
302,622
|
|
|
191,055
|
|
|
87,139
|
|
|
45,337
|
|
|
—
|
|
|
—
|
|
|
1,265,280
|
|
30-59 days
|
—
|
|
|
1,327
|
|
|
962
|
|
|
1,054
|
|
|
703
|
|
|
386
|
|
|
—
|
|
|
—
|
|
|
4,432
|
|
60-89 days
|
—
|
|
|
433
|
|
|
197
|
|
|
253
|
|
|
117
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
1,014
|
|
90 days or greater
|
—
|
|
|
294
|
|
|
134
|
|
|
217
|
|
|
129
|
|
|
86
|
|
|
—
|
|
|
—
|
|
|
860
|
|
Total
|
155,101
|
|
|
486,080
|
|
|
303,915
|
|
|
192,579
|
|
|
88,088
|
|
|
45,823
|
|
|
—
|
|
|
—
|
|
|
1,271,586
|
|
Consumer other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
20,879
|
|
|
45,239
|
|
|
22,631
|
|
|
8,552
|
|
|
6,246
|
|
|
34,873
|
|
|
395,282
|
|
|
—
|
|
|
533,702
|
|
30-59 days
|
3
|
|
|
131
|
|
|
100
|
|
|
106
|
|
|
1
|
|
|
—
|
|
|
1,905
|
|
|
—
|
|
|
2,246
|
|
60-89 days
|
—
|
|
|
95
|
|
|
7
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
1,101
|
|
|
—
|
|
|
1,213
|
|
90 days or greater
|
—
|
|
|
14
|
|
|
114
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
1,382
|
|
|
—
|
|
|
1,516
|
|
Total
|
20,882
|
|
|
45,479
|
|
|
22,852
|
|
|
8,674
|
|
|
6,247
|
|
|
34,873
|
|
|
399,670
|
|
|
—
|
|
|
538,677
|
|
Total consumer
|
$
|
740,559
|
|
|
$
|
2,555,865
|
|
|
$
|
1,271,931
|
|
|
$
|
791,020
|
|
|
$
|
629,500
|
|
|
$
|
1,297,619
|
|
|
$
|
2,206,721
|
|
|
$
|
157,561
|
|
|
$
|
9,650,776
|
|
PCD loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
$
|
—
|
|
|
$
|
28,056
|
|
|
$
|
24,347
|
|
|
$
|
26,763
|
|
|
$
|
24,879
|
|
|
$
|
247,606
|
|
|
$
|
11,788
|
|
|
$
|
20,068
|
|
|
$
|
383,507
|
|
30-59 days
|
—
|
|
|
344
|
|
|
390
|
|
|
407
|
|
|
300
|
|
|
9,423
|
|
|
19
|
|
|
367
|
|
|
11,250
|
|
60-89 days
|
—
|
|
|
51
|
|
|
88
|
|
|
—
|
|
|
165
|
|
|
3,896
|
|
|
—
|
|
|
122
|
|
|
4,322
|
|
90 days or greater
|
—
|
|
|
1,294
|
|
|
2,404
|
|
|
4,412
|
|
|
1,826
|
|
|
22,504
|
|
|
105
|
|
|
1,149
|
|
|
33,694
|
|
Total PCD
|
$
|
—
|
|
|
$
|
29,745
|
|
|
$
|
27,229
|
|
|
$
|
31,582
|
|
|
$
|
27,170
|
|
|
$
|
283,429
|
|
|
$
|
11,912
|
|
|
$
|
21,706
|
|
|
$
|
432,773
|
|
Total loans and leases
|
$
|
2,948,428
|
|
|
$
|
10,313,757
|
|
|
$
|
5,359,399
|
|
|
$
|
3,375,272
|
|
|
$
|
2,546,743
|
|
|
$
|
5,091,470
|
|
|
$
|
3,359,588
|
|
|
$
|
186,194
|
|
|
$
|
33,180,851
|
|
The following tables represent current credit quality indicators by origination year as of December 31, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
Commercial Loans Amortized Cost Basis by Origination Year
|
|
|
|
|
|
|
Classification:
|
2020
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
Prior
|
|
Revolving
|
|
Revolving converted to term loans
|
|
Total
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
$
|
342,183
|
|
|
$
|
341,233
|
|
|
$
|
190,429
|
|
|
$
|
50,776
|
|
|
$
|
23,969
|
|
|
$
|
11,306
|
|
|
$
|
10,969
|
|
|
$
|
—
|
|
|
$
|
970,865
|
|
Special Mention
|
246
|
|
|
—
|
|
|
6,421
|
|
|
5,342
|
|
|
—
|
|
|
—
|
|
|
153
|
|
|
—
|
|
|
12,162
|
|
Substandard
|
229
|
|
|
629
|
|
|
1,450
|
|
|
—
|
|
|
8
|
|
|
81
|
|
|
—
|
|
|
—
|
|
|
2,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
342,658
|
|
|
341,862
|
|
|
198,300
|
|
|
56,118
|
|
|
23,977
|
|
|
11,387
|
|
|
11,122
|
|
|
—
|
|
|
985,424
|
|
Owner occupied commercial mortgage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
3,183,467
|
|
|
2,201,165
|
|
|
1,625,141
|
|
|
1,301,412
|
|
|
1,049,858
|
|
|
1,454,020
|
|
|
101,556
|
|
|
133
|
|
|
10,916,752
|
|
Special Mention
|
6,274
|
|
|
20,702
|
|
|
36,739
|
|
|
12,387
|
|
|
17,699
|
|
|
25,693
|
|
|
5,115
|
|
|
72
|
|
|
124,681
|
|
Substandard
|
10,280
|
|
|
19,052
|
|
|
9,842
|
|
|
20,928
|
|
|
13,736
|
|
|
41,303
|
|
|
8,438
|
|
|
—
|
|
|
123,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
3,200,021
|
|
|
2,240,919
|
|
|
1,671,722
|
|
|
1,334,727
|
|
|
1,081,293
|
|
|
1,521,016
|
|
|
115,109
|
|
|
205
|
|
|
11,165,012
|
|
Non-owner occupied commercial mortgage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
865,514
|
|
|
609,975
|
|
|
378,136
|
|
|
331,800
|
|
|
282,810
|
|
|
391,517
|
|
|
32,149
|
|
|
—
|
|
|
2,891,901
|
|
Special Mention
|
569
|
|
|
905
|
|
|
10,794
|
|
|
1,808
|
|
|
5,121
|
|
|
3,279
|
|
|
483
|
|
|
—
|
|
|
22,959
|
|
Substandard
|
2,899
|
|
|
18,546
|
|
|
12,296
|
|
|
8,764
|
|
|
14,087
|
|
|
15,427
|
|
|
810
|
|
|
—
|
|
|
72,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
868,982
|
|
|
629,426
|
|
|
401,226
|
|
|
342,372
|
|
|
302,018
|
|
|
410,223
|
|
|
33,442
|
|
|
—
|
|
|
2,987,689
|
|
Commercial and industrial and leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
1,620,622
|
|
|
983,852
|
|
|
504,463
|
|
|
310,468
|
|
|
234,735
|
|
|
286,996
|
|
|
899,978
|
|
|
5,520
|
|
|
4,846,634
|
|
Special Mention
|
3,146
|
|
|
17,065
|
|
|
7,265
|
|
|
5,393
|
|
|
3,307
|
|
|
4,912
|
|
|
9,152
|
|
|
189
|
|
|
50,429
|
|
Substandard
|
17,811
|
|
|
4,095
|
|
|
4,370
|
|
|
4,257
|
|
|
2,548
|
|
|
3,801
|
|
|
22,384
|
|
|
983
|
|
|
60,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ungraded
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56,332
|
|
|
—
|
|
|
56,332
|
|
Total
|
1,641,579
|
|
|
1,005,012
|
|
|
516,098
|
|
|
320,118
|
|
|
240,590
|
|
|
295,709
|
|
|
987,846
|
|
|
6,692
|
|
|
5,013,644
|
|
SBA-PPP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
2,406,291
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,406,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
$
|
8,459,531
|
|
|
$
|
4,217,219
|
|
|
$
|
2,787,346
|
|
|
$
|
2,053,335
|
|
|
$
|
1,647,878
|
|
|
$
|
2,238,335
|
|
|
$
|
1,147,519
|
|
|
$
|
6,897
|
|
|
$
|
22,558,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and PCD Loans Amortized Cost Basis by Origination Year
|
|
|
|
|
|
|
Days Past Due:
|
2020
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
Prior
|
|
Revolving
|
|
Revolving converted to term loans
|
|
Total
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
$
|
1,882,683
|
|
|
$
|
978,298
|
|
|
$
|
655,798
|
|
|
$
|
596,309
|
|
|
$
|
461,719
|
|
|
$
|
878,634
|
|
|
$
|
24,973
|
|
|
$
|
—
|
|
|
$
|
5,478,414
|
|
30-59 days
|
2,278
|
|
|
4,573
|
|
|
11,463
|
|
|
3,772
|
|
|
8,613
|
|
|
12,299
|
|
|
220
|
|
|
—
|
|
|
43,218
|
|
60-89 days
|
30
|
|
|
100
|
|
|
1,246
|
|
|
1,449
|
|
|
834
|
|
|
4,705
|
|
|
—
|
|
|
—
|
|
|
8,364
|
|
90 days or greater
|
282
|
|
|
4,831
|
|
|
3,150
|
|
|
4,015
|
|
|
5,689
|
|
|
13,723
|
|
|
—
|
|
|
—
|
|
|
31,690
|
|
Total
|
1,885,273
|
|
|
987,802
|
|
|
671,657
|
|
|
605,545
|
|
|
476,855
|
|
|
909,361
|
|
|
25,193
|
|
|
—
|
|
|
5,561,686
|
|
Revolving mortgage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,879,968
|
|
|
150,868
|
|
|
2,030,836
|
|
30-59 days
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,241
|
|
|
3,736
|
|
|
11,977
|
|
60-89 days
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
527
|
|
|
2,099
|
|
|
2,626
|
|
90 days or greater
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,301
|
|
|
5,114
|
|
|
7,415
|
|
Total
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,891,037
|
|
|
161,817
|
|
|
2,052,854
|
|
Construction and land development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
215,112
|
|
|
85,707
|
|
|
24,860
|
|
|
10,269
|
|
|
6,093
|
|
|
2,218
|
|
|
2,525
|
|
|
—
|
|
|
346,784
|
|
30-59 days
|
—
|
|
|
420
|
|
|
121
|
|
|
370
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
932
|
|
60-89 days
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
—
|
|
|
77
|
|
90 days or greater
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
330
|
|
|
—
|
|
|
—
|
|
|
330
|
|
Total
|
215,112
|
|
|
86,127
|
|
|
24,981
|
|
|
10,648
|
|
|
6,093
|
|
|
2,637
|
|
|
2,525
|
|
|
—
|
|
|
348,123
|
|
Consumer auto
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
521,719
|
|
|
340,594
|
|
|
219,597
|
|
|
104,280
|
|
|
49,872
|
|
|
9,604
|
|
|
—
|
|
|
—
|
|
|
1,245,666
|
|
30-59 days
|
2,175
|
|
|
1,873
|
|
|
1,257
|
|
|
842
|
|
|
544
|
|
|
134
|
|
|
—
|
|
|
—
|
|
|
6,825
|
|
60-89 days
|
329
|
|
|
689
|
|
|
312
|
|
|
351
|
|
|
109
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
1,835
|
|
90 days or greater
|
170
|
|
|
527
|
|
|
217
|
|
|
57
|
|
|
102
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
1,076
|
|
Total
|
524,393
|
|
|
343,683
|
|
|
221,383
|
|
|
105,530
|
|
|
50,627
|
|
|
9,786
|
|
|
—
|
|
|
—
|
|
|
1,255,402
|
|
Consumer other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
53,842
|
|
|
27,117
|
|
|
10,911
|
|
|
7,159
|
|
|
2,980
|
|
|
29,336
|
|
|
415,044
|
|
|
—
|
|
|
546,389
|
|
30-59 days
|
322
|
|
|
114
|
|
|
77
|
|
|
18
|
|
|
11
|
|
|
7
|
|
|
3,061
|
|
|
—
|
|
|
3,610
|
|
60-89 days
|
102
|
|
|
20
|
|
|
13
|
|
|
18
|
|
|
3
|
|
|
23
|
|
|
1,285
|
|
|
—
|
|
|
1,464
|
|
90 days or greater
|
53
|
|
|
84
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,360
|
|
|
—
|
|
|
1,505
|
|
Total
|
54,319
|
|
|
27,335
|
|
|
11,009
|
|
|
7,195
|
|
|
2,994
|
|
|
29,366
|
|
|
420,750
|
|
|
—
|
|
|
552,968
|
|
Total consumer
|
$
|
2,679,097
|
|
|
$
|
1,444,947
|
|
|
$
|
929,030
|
|
|
$
|
728,918
|
|
|
$
|
536,569
|
|
|
$
|
951,150
|
|
|
$
|
2,339,505
|
|
|
$
|
161,817
|
|
|
$
|
9,771,033
|
|
PCD loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
$
|
31,475
|
|
|
$
|
25,425
|
|
|
$
|
27,183
|
|
|
$
|
27,955
|
|
|
$
|
28,995
|
|
|
$
|
232,186
|
|
|
$
|
13,212
|
|
|
$
|
21,027
|
|
|
$
|
407,458
|
|
30-59 days
|
999
|
|
|
925
|
|
|
801
|
|
|
718
|
|
|
1,341
|
|
|
12,637
|
|
|
156
|
|
|
745
|
|
|
18,322
|
|
60-89 days
|
447
|
|
|
81
|
|
|
312
|
|
|
695
|
|
|
97
|
|
|
4,098
|
|
|
9
|
|
|
337
|
|
|
6,076
|
|
90 days or greater
|
721
|
|
|
2,325
|
|
|
4,755
|
|
|
1,208
|
|
|
897
|
|
|
19,963
|
|
|
111
|
|
|
1,046
|
|
|
31,026
|
|
Total PCD
|
$
|
33,642
|
|
|
$
|
28,756
|
|
|
$
|
33,051
|
|
|
$
|
30,576
|
|
|
$
|
31,330
|
|
|
$
|
268,884
|
|
|
$
|
13,488
|
|
|
$
|
23,155
|
|
|
$
|
462,882
|
|
Total loans and leases
|
$
|
11,172,270
|
|
|
$
|
5,690,922
|
|
|
$
|
3,749,427
|
|
|
$
|
2,812,829
|
|
|
$
|
2,215,777
|
|
|
$
|
3,458,369
|
|
|
$
|
3,500,512
|
|
|
$
|
191,869
|
|
|
$
|
32,791,975
|
|
The following table provides information regarding loans pledged as collateral for borrowing capacity through the FHLB of Atlanta and the Federal Reserve Bank (“FRB”) as of March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
March 31, 2021
|
|
December 31, 2020
|
FHLB of Atlanta
|
|
|
|
Lendable collateral value of pledged non-PCD loans
|
$
|
8,847,178
|
|
|
$
|
8,637,844
|
|
Less: Advances
|
648,671
|
|
|
652,675
|
|
Available borrowing capacity
|
$
|
8,198,507
|
|
|
$
|
7,985,169
|
|
Pledged non-PCD loans
|
$
|
12,327,626
|
|
|
$
|
12,157,153
|
|
|
|
|
|
FRB
|
|
|
|
Lendable collateral value of pledged non-PCD loans
|
$
|
3,367,466
|
|
|
$
|
3,321,762
|
|
Less: Advances
|
—
|
|
|
—
|
|
Available borrowing capacity
|
$
|
3,367,466
|
|
|
$
|
3,321,762
|
|
Pledged non-PCD loans
|
$
|
4,181,520
|
|
|
$
|
4,104,866
|
|
NOTE E - ALLOWANCE FOR CREDIT LOSSES
The ACL is calculated using a variety of factors, including, but not limited to, charge-off and recovery activity, loan growth, changes in macroeconomic factors, collateral type, estimated loan life and changes in credit quality. For the period ended March 31, 2021, the primary reason for the ACL change since December 31, 2020 was improvement in macroeconomic factors. Forecasted economic conditions are developed using third party macroeconomic scenarios adjusted based on management’s expectations over a forecast period of two years. For most pools, we use a 12-month straight-line reversion period to historical averages for model inputs; however for the consumer other, consumer card and commercial card pools, immediate reversion to historical net loss rates is utilized. Significant macroeconomic factors used in estimating the expected losses include unemployment, gross domestic product, home price index and commercial real estate index. Our ACL forecast considers a range of economic scenarios from an upside scenario to a severely adverse scenario, but the March 31, 2021 ACL forecast was calculated using the consensus baseline scenario. This scenario showed improvements in the most significant economic factors compared to what was used to generate the December 31, 2020 ACL. These loss estimates were also influenced by our strong credit quality, low net charge-offs and recent credit trends, which remained stable through the quarter ended March 31, 2021, despite potential impacts from COVID-19.
Activity in the ACL by portfolio segment is summarized as follows:
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|
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|
|
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|
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|
|
|
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|
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|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2021
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
PCD
|
|
Total
|
Balance at January 1
|
|
|
|
|
|
|
|
|
$
|
80,842
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
119,485
|
|
|
$
|
23,987
|
|
|
$
|
224,314
|
|
Provision (credit)
|
|
|
|
|
|
|
|
|
(3,922)
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,504)
|
|
|
(1,548)
|
|
|
(10,974)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs
|
|
|
|
|
|
|
|
|
(3,331)
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,469)
|
|
|
(763)
|
|
|
(8,563)
|
|
Recoveries
|
|
|
|
|
|
|
|
|
1,275
|
|
|
|
|
|
|
|
|
|
|
|
|
3,340
|
|
|
1,259
|
|
|
5,874
|
|
Balance at March 31
|
|
|
|
|
|
|
|
|
$
|
74,864
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
112,852
|
|
|
$
|
22,935
|
|
|
$
|
210,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2020
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
PCD
|
|
Total
|
Balance at December 31
|
|
|
|
|
|
|
|
|
$
|
142,369
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
75,236
|
|
|
$
|
7,536
|
|
|
$
|
225,141
|
|
Adoption of ASC 326
|
|
|
|
|
|
|
|
|
(87,554)
|
|
|
|
|
|
|
|
|
|
|
|
|
30,629
|
|
|
19,001
|
|
|
(37,924)
|
|
Balance at January 1
|
|
|
|
|
|
|
|
|
54,815
|
|
|
|
|
|
|
|
|
|
|
|
|
105,865
|
|
|
26,537
|
|
|
187,217
|
|
Provision (credit)
|
|
|
|
|
|
|
|
|
21,537
|
|
|
|
|
|
|
|
|
|
|
|
|
9,406
|
|
|
(2,588)
|
|
|
28,355
|
|
Initial allowance on PCD loans
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
1,193
|
|
|
1,193
|
|
Charge-offs
|
|
|
|
|
|
|
|
|
(5,369)
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,769)
|
|
|
(1,123)
|
|
|
(14,261)
|
|
Recoveries
|
|
|
|
|
|
|
|
|
1,427
|
|
|
|
|
|
|
|
|
|
|
|
|
2,431
|
|
|
2,897
|
|
|
6,755
|
|
Balance at March 31
|
|
|
|
|
|
|
|
|
$
|
72,410
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
109,933
|
|
|
$
|
26,916
|
|
|
$
|
209,259
|
|
BancShares records an allowance for credit losses on unfunded commitments within other liabilities. Activity in the allowance for credit losses for unfunded commitments is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(Dollars in thousands)
|
|
|
|
|
2021
|
|
2020
|
Allowance for credit losses:
|
|
|
|
|
|
|
|
Beginning balance
|
|
|
|
|
$
|
12,814
|
|
|
$
|
1,055
|
|
Adoption of ASC 326
|
|
|
|
|
—
|
|
|
8,885
|
|
Adjusted beginning balance
|
|
|
|
|
$
|
12,814
|
|
|
$
|
9,940
|
|
Provision (credit)
|
|
|
|
|
(1,243)
|
|
|
572
|
|
Ending balance
|
|
|
|
|
11,571
|
|
|
10,512
|
|
BancShares individually reviews loans greater than $500 thousand that are determined to be collateral-dependent. These collateral-dependent loans are evaluated based on the fair value of the underlying collateral as repayment of the loan is expected to be made through the operation or sale of the collateral. Commercial and industrial loans and leases are collateralized by business assets, while the remaining loan classes are collateralized by real property.
The following table presents information on collateral-dependent loans by class and includes the amortized cost of collateral-dependent loans and leases, the net realizable value of the collateral, the extent to which collateral secures collateral-dependent loans and the associated ACL as of March 31, 2021 and December 31, 2020 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
(Dollars in thousands)
|
Collateral-Dependant Loans
|
|
Net Realizable Value of Collateral
|
|
Collateral Coverage
|
|
Allowance for Credit Losses
|
Commercial loans:
|
|
|
|
|
|
|
|
Construction and land development
|
$
|
1,424
|
|
|
$
|
1,795
|
|
|
126.1
|
%
|
|
$
|
—
|
|
Owner occupied commercial mortgage
|
11,886
|
|
|
16,417
|
|
|
138.1
|
|
|
—
|
|
Non-owner occupied commercial mortgage
|
6,951
|
|
|
9,312
|
|
|
134.0
|
|
|
—
|
|
Commercial and industrial and leases
|
1,256
|
|
|
2,916
|
|
|
232.2
|
|
|
—
|
|
Total commercial loans
|
21,517
|
|
|
30,440
|
|
|
141.5
|
|
|
—
|
|
Consumer:
|
|
|
|
|
|
|
|
Residential mortgage
|
21,303
|
|
|
27,279
|
|
|
128.1
|
|
|
120
|
|
Revolving mortgage
|
1,385
|
|
|
1,724
|
|
|
124.5
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consumer loans
|
22,688
|
|
|
29,003
|
|
|
127.8
|
|
|
120
|
|
PCD loans
|
20,361
|
|
|
35,016
|
|
|
172.0
|
|
|
—
|
|
Total collateral-dependent loans
|
$
|
64,566
|
|
|
$
|
94,459
|
|
|
146.3
|
%
|
|
$
|
120
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
(Dollars in thousands)
|
Collateral-Dependant Loans
|
|
Net Realizable Value of Collateral
|
|
Collateral Coverage
|
|
Allowance for Credit Losses
|
Commercial loans:
|
|
|
|
|
|
|
|
Construction and land development
|
$
|
1,424
|
|
|
$
|
1,795
|
|
|
126.1
|
%
|
|
$
|
—
|
|
Owner occupied commercial mortgage
|
9,792
|
|
|
14,253
|
|
|
145.6
|
|
|
—
|
|
Non-owner occupied commercial mortgage
|
5,556
|
|
|
7,577
|
|
|
136.4
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Total commercial loans
|
16,772
|
|
|
23,625
|
|
|
140.9
|
|
|
—
|
|
Consumer:
|
|
|
|
|
|
|
|
Residential mortgage
|
23,011
|
|
|
29,775
|
|
|
129.4
|
|
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCD loans
|
19,042
|
|
|
27,872
|
|
|
146.4
|
|
|
—
|
|
Total collateral-dependent loans
|
$
|
58,825
|
|
|
$
|
81,272
|
|
|
138.2
|
%
|
|
$
|
131
|
|
Collateral-dependent nonaccrual loans with no recorded allowance totaled $61.7 million and $57.5 million as of March 31, 2021 and December 31, 2020, respectively. All other nonaccrual loans have a recorded allowance.
Troubled Debt Restructurings
BancShares accounts for certain loan modifications or restructurings as troubled debt restructurings (“TDRs”). In general, the modification or restructuring of a loan is considered a TDR if, for economic or legal reasons related to a borrower’s financial difficulties, a concession is granted to the borrower that creditors would not otherwise consider. Concessions may relate to the contractual interest rate, maturity date, payment structure or other actions. Within BancShares’ ACL loss models, TDRs are not individually evaluated unless determined to be collateral-dependent. Consumer TDRs are included in the definition of default which provides for a 100% probability of default applied within the models. As a result, subsequent changes in credit quality metrics do not impact the calculation of the ACL on consumer TDRs. For commercial TDRs, the TDR distinction does impact the calculation of ACL, as the standard definition of default is utilized.
The Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus was published by banking regulators in April 2020 to clarify expectations around loan modifications and the determination of TDRs for borrowers experiencing financial difficulty due to COVID-19. BancShares applied this regulatory guidance during its TDR identification process for short-term loan forbearance agreements as a result of COVID-19 and in most cases did not record these as TDRs.
The following tables provides a summary of total TDRs by accrual status:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
(Dollars in thousands)
|
Accruing
|
|
Nonaccruing
|
|
Total
|
|
Accruing
|
|
Nonaccruing
|
|
Total
|
Commercial loans:
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
$
|
529
|
|
|
$
|
41
|
|
|
$
|
570
|
|
|
$
|
578
|
|
|
$
|
54
|
|
|
$
|
632
|
|
Owner occupied commercial mortgage
|
38,969
|
|
|
9,986
|
|
|
48,955
|
|
|
37,574
|
|
|
10,889
|
|
|
48,463
|
|
Non-owner occupied commercial mortgage
|
20,541
|
|
|
1,335
|
|
|
21,876
|
|
|
18,336
|
|
|
1,649
|
|
|
19,985
|
|
Commercial and industrial and leases
|
30,956
|
|
|
6,551
|
|
|
37,507
|
|
|
29,131
|
|
|
3,528
|
|
|
32,659
|
|
Total commercial loans
|
90,995
|
|
|
17,913
|
|
|
108,908
|
|
|
85,619
|
|
|
16,120
|
|
|
101,739
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
25,323
|
|
|
20,802
|
|
|
46,125
|
|
|
29,458
|
|
|
19,380
|
|
|
48,838
|
|
Revolving mortgage
|
18,729
|
|
|
7,331
|
|
|
26,060
|
|
|
20,124
|
|
|
7,128
|
|
|
27,252
|
|
Construction and land development
|
1,501
|
|
|
9
|
|
|
1,510
|
|
|
1,573
|
|
|
9
|
|
|
1,582
|
|
Consumer auto
|
2,173
|
|
|
668
|
|
|
2,841
|
|
|
2,018
|
|
|
696
|
|
|
2,714
|
|
Consumer other
|
910
|
|
|
163
|
|
|
1,073
|
|
|
955
|
|
|
137
|
|
|
1,092
|
|
Total consumer loans
|
48,636
|
|
|
28,973
|
|
|
77,609
|
|
|
54,128
|
|
|
27,350
|
|
|
81,478
|
|
PCD loans
|
20,920
|
|
|
9,509
|
|
|
30,429
|
|
|
17,617
|
|
|
7,346
|
|
|
24,963
|
|
Total loans
|
$
|
160,551
|
|
|
$
|
56,395
|
|
|
$
|
216,946
|
|
|
$
|
157,364
|
|
|
$
|
50,816
|
|
|
$
|
208,180
|
|
The following table provides the types of modifications designated as TDRs during the three months ended March 31, 2021 and March 31, 2020, as well as a summary of loans modified as a TDR during the twelve-month periods ended March 31, 2021 and March 31, 2020 that subsequently defaulted during the three months ended March 31, 2021 and March 31, 2020. BancShares defines payment default as movement of the TDR to nonaccrual status, which is generally 90 days past due for TDRs, foreclosure or charge-off, whichever occurs first.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2021
|
|
Three months ended March 31, 2020
|
|
All restructurings
|
|
Restructurings with payment default
|
|
All restructurings
|
|
Restructurings with payment default
|
(Dollars in thousands)
|
Number of Loans
|
Recorded investment at period end
|
|
Number of Loans
|
Recorded investment at period end
|
|
Number of Loans
|
Recorded investment at period end
|
|
Number of Loans
|
Recorded investment at period end
|
Loans and leases
|
|
|
|
|
|
|
|
|
|
|
|
Interest only
|
6
|
|
$
|
6,947
|
|
|
2
|
|
$
|
42
|
|
|
10
|
|
$
|
3,986
|
|
|
—
|
|
$
|
—
|
|
Loan term extension
|
25
|
|
3,863
|
|
|
12
|
|
1,749
|
|
|
6
|
|
794
|
|
|
3
|
|
263
|
|
Below market interest rate
|
53
|
|
8,122
|
|
|
20
|
|
1,428
|
|
|
88
|
|
8,165
|
|
|
29
|
|
1,421
|
|
Discharged from bankruptcy
|
45
|
|
4,100
|
|
|
12
|
|
2,365
|
|
|
68
|
|
5,032
|
|
|
28
|
|
1,767
|
|
Total restructurings
|
129
|
|
$
|
23,032
|
|
|
46
|
|
$
|
5,584
|
|
|
172
|
|
$
|
17,977
|
|
|
60
|
|
$
|
3,451
|
|
For the three months ended March 31, 2021 and March 31, 2020, the pre-modification and post-modification outstanding amortized cost of loans modified as TDRs were not materially different.
NOTE F - OTHER REAL ESTATE OWNED
The following table explains changes in other real estate owned (“OREO”) during the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
(Dollars in thousands)
|
OREO
|
Balance at December 31, 2020
|
$
|
50,890
|
|
Additions
|
7,106
|
|
|
|
Sales
|
(8,102)
|
|
Write-downs/losses
|
(1,382)
|
|
Balance at March 31, 2021
|
$
|
48,512
|
|
|
|
Balance at December 31, 2019
|
$
|
46,591
|
|
Additions
|
5,987
|
|
Acquired in business combinations
|
9,813
|
|
Sales
|
(5,321)
|
|
Write-downs/losses
|
(1,363)
|
|
Balance at March 31, 2020
|
$
|
55,707
|
|
At March 31, 2021 and December 31, 2020, BancShares had $6.5 million and $5.8 million, respectively, of foreclosed residential real estate property in OREO. The recorded investment in consumer mortgage loans collateralized by residential real estate property in the process of foreclosure was $27.1 million and $29.4 million at March 31, 2021 and December 31, 2020, respectively. Net gains recorded on the sale of OREO properties were $1.8 million for the three months ended March 31, 2021. Net losses recorded on the sale of OREO properties were $0.1 million for the three months ended March 31, 2020.
NOTE G - MORTGAGE SERVICING RIGHTS
BancShares originates certain residential mortgages loans to sell in the secondary market. BancShares’ portfolio of residential mortgage loans serviced for third parties was $3.3 billion as of March 31, 2021 and December 31, 2020. These loans are originated and sold to third parties on a non-recourse basis with servicing rights retained. The retained servicing rights are recorded as a servicing asset and are reported in other intangible assets. The associated amortization expense and any valuation allowance recognized were included as a reduction of mortgage income. Mortgage servicing rights are initially recorded at fair value and then carried at the lower of amortized cost or fair value.
Contractually specified mortgage servicing fees, late fees and ancillary fees earned were $2.1 million for the three months ended March 31, 2021 and 2020, and are reported in mortgage income.
The following table presents changes in the servicing asset during the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(Dollars in thousands)
|
|
|
|
|
2021
|
|
2020
|
Beginning balance
|
|
|
|
|
$
|
18,426
|
|
|
$
|
22,963
|
|
Servicing rights originated
|
|
|
|
|
3,444
|
|
|
1,583
|
|
Amortization
|
|
|
|
|
(2,248)
|
|
|
(1,823)
|
|
|
|
|
|
|
|
|
|
Valuation allowance decrease (increase)
|
|
|
|
|
3,123
|
|
|
(2,967)
|
|
Ending balance
|
|
|
|
|
$
|
22,745
|
|
|
$
|
19,756
|
|
The following table presents the activity in the servicing asset valuation allowance for the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(Dollars in thousands)
|
|
|
|
|
2021
|
|
2020
|
Beginning balance
|
|
|
|
|
$
|
4,365
|
|
|
$
|
222
|
|
Valuation allowance (decrease) increase
|
|
|
|
|
(3,123)
|
|
|
2,967
|
|
Ending balance
|
|
|
|
|
$
|
1,242
|
|
|
$
|
3,189
|
|
Mortgage servicing rights valuations are performed using a pooling methodology where loans with similar risk characteristics are grouped together and evaluated using discounted cash flows to estimate the present value of future earnings. Key economic assumptions used to value mortgage servicing rights were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
Discount rate - conventional fixed loans
|
8.74
|
%
|
|
7.92
|
%
|
Discount rate - all loans excluding conventional fixed loans
|
9.74
|
%
|
|
8.92
|
%
|
Weighted average constant prepayment rate
|
16.54
|
%
|
|
20.62
|
%
|
Weighted average cost to service a loan
|
$
|
87.58
|
|
|
$
|
87.58
|
|
The fair value of mortgage servicing rights is sensitive to changes in assumptions and is determined by estimating the present value of the asset’s future cash flows by utilizing discount rates, prepayment rates, and other inputs. The discount rate is based on the 10-year U.S. Treasury rate plus a risk premium of 700 basis points for conventional fixed loans and 800 basis points for all other loans. The prepayment rate is derived from the Public Securities Association Standard Prepayment model. Generally, as interest rates decline, mortgage loan prepayments accelerate due to increased refinance activity, which results in a decrease in the fair value and may result in the recognition of a valuation allowance. The average cost to service a loan is based on the number of loans serviced and the total cost to service the loans.
NOTE H - REPURCHASE AGREEMENTS
BancShares utilizes securities sold under agreements to repurchase to facilitate the needs of customers and secure wholesale funding needs. Repurchase agreements are transactions whereby BancShares offers to sell to a counterparty an undivided interest in an eligible security at an agreed upon price, and which obligates BancShares to repurchase the security at an agreed upon date, repurchase price, and interest rate. These agreements are recorded at the amount of cash received in connection with the transaction and are reflected as securities sold under customer repurchase agreements.
BancShares monitors collateral levels on a continuous basis and maintains records of each transaction specifically describing the applicable security and the counterparty’s interest in that security, and segregates the security from general assets in accordance with regulations governing custodial holdings of securities. The primary risk with repurchase agreements is market risk associated with the investments securing the transactions, as additional collateral may be required based on fair value changes of the underlying investments. Securities pledged as collateral under repurchase agreements are maintained with safekeeping agents. The carrying value of investment securities pledged as collateral under repurchase agreements was $685.6 million and $689.3 million at March 31, 2021 and December 31, 2020, respectively.
At March 31, 2021, BancShares held $680.7 million of securities sold under agreements to repurchase, with overnight and continuous remaining contractual maturities, made up of $485.8 million collateralized by government agency securities and $194.9 million collateralized by commercial mortgage-backed securities. At December 31, 2020, BancShares held securities sold under agreements to repurchase of $641.5 million, with overnight and continuous remaining contractual maturities, made up of $432.8 million collateralized by government agency securities and $208.7 million collateralized by commercial mortgage-backed securities.
NOTE I - FDIC SHARED-LOSS PAYABLE
For certain FDIC-assisted transactions, the shared-loss agreement included a provision related to a payment owed to the FDIC at the termination of the agreement. As of March 31, 2021, these agreements have been satisfied following a $16.1 million payment made to the FDIC related to the final active agreement.
The following table provides changes in the FDIC shared-loss payable since December 31, 2020:
|
|
|
|
|
|
(Dollars in thousands)
|
Total
|
Balance at December 31, 2020
|
$
|
15,601
|
|
Accretion
|
502
|
|
Payment made to the FDIC to settle shared-loss agreement
|
(16,103)
|
|
Balance at March 31, 2021
|
$
|
—
|
|
NOTE J - ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Accumulated other comprehensive (loss) income included the following as of March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
(Dollars in thousands)
|
Accumulated
other
comprehensive
income (loss)
|
|
Deferred
tax
expense
(benefit)
|
|
Accumulated
other
comprehensive
income (loss),
net of tax
|
|
Accumulated
other
comprehensive
income (loss)
|
|
Deferred
tax
expense
(benefit)
|
|
Accumulated
other
comprehensive
income (loss),
net of tax
|
Unrealized gains on securities available for sale
|
$
|
36,570
|
|
|
$
|
8,411
|
|
|
$
|
28,159
|
|
|
$
|
102,278
|
|
|
$
|
23,524
|
|
|
$
|
78,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains on securities available for sale transferred from (to) held to maturity
|
4,924
|
|
|
1,133
|
|
|
3,791
|
|
|
5,399
|
|
|
1,242
|
|
|
4,157
|
|
Defined benefit pension items
|
(85,222)
|
|
|
(19,601)
|
|
|
(65,621)
|
|
|
(91,751)
|
|
|
(21,103)
|
|
|
(70,648)
|
|
Total
|
$
|
(43,728)
|
|
|
$
|
(10,057)
|
|
|
$
|
(33,671)
|
|
|
$
|
15,926
|
|
|
$
|
3,663
|
|
|
$
|
12,263
|
|
The following table highlights changes in accumulated other comprehensive (loss) income by component for the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2021
|
(Dollars in thousands, net of tax)
|
Unrealized gains on securities available for sale
|
|
Unrealized gains on securities available for sale transferred to held to maturity
|
|
|
|
Defined benefit pension items
|
|
Total
|
Beginning balance
|
$
|
78,754
|
|
|
$
|
4,157
|
|
|
|
|
$
|
(70,648)
|
|
|
$
|
12,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized losses arising during period
|
(43,506)
|
|
|
—
|
|
|
|
|
—
|
|
|
(43,506)
|
|
Amounts reclassified from accumulated other comprehensive income
|
(7,089)
|
|
|
(366)
|
|
|
|
|
5,027
|
|
|
(2,428)
|
|
Net current period other comprehensive (loss) income
|
(50,595)
|
|
|
(366)
|
|
|
|
|
5,027
|
|
|
(45,934)
|
|
Ending balance
|
$
|
28,159
|
|
|
$
|
3,791
|
|
|
|
|
$
|
(65,621)
|
|
|
$
|
(33,671)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2020
|
(Dollars in thousands, net of tax)
|
Unrealized gains on securities available for sale
|
|
Unrealized gains on securities available for sale transferred to held to maturity
|
|
|
|
Defined benefit pension items
|
|
Total
|
Beginning balance
|
$
|
5,792
|
|
|
$
|
—
|
|
|
|
|
$
|
(132,515)
|
|
|
$
|
(126,723)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gains arising during period
|
111,530
|
|
|
—
|
|
|
|
|
—
|
|
|
111,530
|
|
Amounts reclassified from accumulated other comprehensive loss
|
(15,242)
|
|
|
—
|
|
|
|
|
4,823
|
|
|
(10,419)
|
|
Net current period other comprehensive income
|
96,288
|
|
|
—
|
|
|
|
|
4,823
|
|
|
101,111
|
|
Ending balance
|
$
|
102,080
|
|
|
$
|
—
|
|
|
|
|
$
|
(127,692)
|
|
|
$
|
(25,612)
|
|
The following table presents the amounts reclassified from accumulated other comprehensive (loss) income and the line item affected in the statement where net income is presented for the three and three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
Three months ended March 31, 2021
|
Details about accumulated other comprehensive income (loss)
|
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
Affected line item in the statement where net income is presented
|
Unrealized gains on securities available for sale
|
|
$
|
9,207
|
|
|
Realized gains on investment securities available for sale, net
|
|
|
(2,118)
|
|
|
Income taxes
|
|
|
$
|
7,089
|
|
|
|
|
|
|
|
|
Accretion of unrealized gains on securities available for sale transferred to held to maturity
|
|
$
|
475
|
|
|
Net interest income
|
|
|
(109)
|
|
|
Income taxes
|
|
|
$
|
366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of defined benefit pension actuarial losses
|
|
(6,529)
|
|
|
Other noninterest expense
|
|
|
|
|
|
|
|
1,502
|
|
|
Income taxes
|
|
|
$
|
(5,027)
|
|
|
|
Total reclassifications for the period
|
|
$
|
2,428
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
Three months ended March 31, 2020
|
Details about accumulated other comprehensive income (loss)
|
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
Affected line item in the statement where net income is presented
|
Unrealized gains on securities available for sale
|
|
$
|
19,795
|
|
|
Realized gains on investment securities available for sale, net
|
|
|
(4,553)
|
|
|
Income taxes
|
|
|
$
|
15,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of defined benefit pension actuarial losses
|
|
(6,264)
|
|
|
Other noninterest expense
|
|
|
1,441
|
|
|
Income taxes
|
|
|
$
|
(4,823)
|
|
|
|
Total reclassifications for the period
|
|
$
|
10,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
NOTE K - ESTIMATED FAIR VALUES
Fair value estimates are intended to represent the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. Where there is no active market for a financial instrument, BancShares has made estimates using discounted cash flows or other valuation techniques. Inputs used in these valuation techniques are subjective in nature, involve uncertainties and require significant judgment and therefore can only be derived within a range of precision. Accordingly, the derived fair value estimates presented below are not necessarily indicative of the amounts BancShares would realize in a current market exchange.
ASC 820, Fair Value Measurements and Disclosures, indicates that assets and liabilities are recorded at fair value according to a fair value hierarchy comprised of three levels. The levels are based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The level within the fair value hierarchy for an asset or liability is based on the highest level of input that is significant to the fair value measurement (with Level 1 considered highest and Level 3 considered lowest). A brief description of each level follows:
•Level 1 values are based on quoted prices for identical instruments in active markets.
•Level 2 values are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.
•Level 3 values are derived from valuation techniques in which one or more significant inputs or assumptions are not observable in the market. These unobservable inputs and assumptions reflect estimates that market participants would use in pricing the asset or liability. Valuation techniques include the use of discounted cash flow models and similar techniques.
BancShares’ management reviews any changes to its valuation methodologies to ensure they are appropriate and supportable, and refines valuation methodologies as more market-based data becomes available. Accuracy of the levels of the fair value hierarchy are validated and transfers between levels of the fair value hierarchy are recognized at the end of the reporting period.
The methodologies used to estimate the fair value of financial assets and financial liabilities are discussed below:
Investment securities available for sale and held to maturity. The fair value of U.S. Treasury, government agency and mortgage-backed securities, municipal securities, as well as a portion of corporate bonds, is generally estimated using a third party pricing service. The third party provider evaluates securities based on comparable investments with trades and market data and will utilize pricing models that use a variety of inputs, such as benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids and offers as needed. These securities are generally classified as Level 2. The remaining corporate bonds held are generally measured at fair value based on indicative bids from broker-dealers which are unadjusted and are not directly observable. These securities are considered Level 3.
Investment in marketable equity securities. Equity securities are measured at fair value using observable closing prices and the market activity. Equity securities are classified as Level 1 if they are traded in an active market and as Level 2 if the observable closing price is from a less than active market.
Loans held for sale. Management elects the fair value option on certain residential real estate loans originated to be sold to investors. The loans are carried at fair value based on quoted market prices for similar types of loans. Accordingly, the inputs used to calculate fair value of originated residential real estate loans held for sale are classified as Level 2 inputs. Loans held for investment subsequently transferred to held for sale are carried at fair value when a firm commitment to purchase from a counterparty exists. The fair value of the transferred loans is based on the quoted prices and is considered a Level 1 input.
Net loans and leases. Fair value is estimated based on discounted future cash flows using the current interest rates at which loans with similar terms would be made to borrowers of similar credit quality. The inputs used in the fair value measurements for loans and leases are considered Level 3 inputs.
FHLB stock. The carrying amount of FHLB stock is a reasonable estimate of fair value as these securities are not readily marketable and are evaluated for impairment based on the ultimate recoverability of the par value. BancShares considers positive and negative evidence, including the profitability and asset quality of the issuer, dividend payment history and recent redemption experience, when determining the ultimate recoverability of the par value. BancShares believes its investment in FHLB stock is ultimately recoverable at par. The inputs used in the fair value measurement for the FHLB stock are considered Level 2 inputs.
Mortgage and other servicing rights. Mortgage and other servicing rights are carried at the lower of amortized cost or market value and are, therefore, carried at fair value only when fair value is less than the amortized cost. The fair value of mortgage and other servicing rights is performed using a pooling methodology. Similar loans are pooled together and a model that relies on discount rates, estimates of prepayment rates and the weighted average cost to service the loans is used to determine the fair value. The inputs used in the fair value measurement for mortgage and other servicing rights are considered Level 3 inputs.
Deposits. For non-time deposits, carrying value is a reasonable estimate of fair value. The fair value of time deposits is estimated by discounting future cash flows using the interest rates currently offered for deposits with similar remaining maturities. The inputs used in the fair value measurement for deposits are considered Level 2 inputs.
Borrowings. For borrowings, the fair values are determined based on recent trades or sales of the actual security if available. Otherwise, fair values are estimated by discounting future cash flows using current interest rates for similar financial instruments. The inputs used in the fair value measurement for FHLB borrowings, subordinated debentures, and other borrowings are considered Level 2 inputs.
Payable to the FDIC for shared-loss agreements. The fair value of the payable to the FDIC for shared-loss agreements was determined based on payments to the FDIC in accordance with the shared-loss agreements. Cash flows were discounted using current discount rates to reflect the timing of the estimated amounts due to the FDIC. The inputs used in the fair value measurement for the payable to the FDIC were considered Level 3 inputs.
Off-balance-sheet commitments and contingencies. Carrying amounts are reasonable estimates of the fair values for such financial instruments. Carrying amounts include unamortized fee income and, in some cases, reserves for any credit losses from those financial instruments. These amounts are not material to BancShares’ financial position.
For all other financial assets and liabilities, the carrying value is a reasonable estimate of the fair value as of March 31, 2021 and December 31, 2020. The carrying value and fair value for these assets and liabilities are equivalent because they are relatively short term in nature and there is no interest rate or credit risk that would cause the fair value to differ from the carrying value. Cash and due from banks is classified on the fair value hierarchy as Level 1. Overnight investments, income earned not collected, securities sold under customer repurchase agreements, and accrued interest payable are considered Level 2.
The table presents the carrying values and estimated fair values for financial instruments as of March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
March 31, 2021
|
|
December 31, 2020
|
Carrying value
|
|
Fair value
|
|
Carrying value
|
|
Fair value
|
Assets
|
|
|
|
|
|
|
|
Cash and due from banks
|
$
|
410,495
|
|
|
$
|
410,495
|
|
|
$
|
362,048
|
|
|
$
|
362,048
|
|
Overnight investments
|
7,588,757
|
|
|
7,588,757
|
|
|
4,347,336
|
|
|
4,347,336
|
|
Investment in marketable equity securities
|
106,886
|
|
|
106,886
|
|
|
91,680
|
|
|
91,680
|
|
Investment securities available for sale
|
7,307,122
|
|
|
7,307,122
|
|
|
7,014,243
|
|
|
7,014,243
|
|
Investment securities held to maturity
|
2,808,099
|
|
|
2,774,982
|
|
|
2,816,982
|
|
|
2,838,499
|
|
Loans held for sale
|
129,334
|
|
|
129,334
|
|
|
124,837
|
|
|
124,837
|
|
Net loans and leases
|
32,970,200
|
|
|
33,202,437
|
|
|
32,567,661
|
|
|
33,298,166
|
|
Income earned not collected
|
148,022
|
|
|
148,022
|
|
|
145,694
|
|
|
145,694
|
|
Federal Home Loan Bank stock
|
40,563
|
|
|
40,563
|
|
|
45,392
|
|
|
45,392
|
|
|
|
|
|
|
|
|
|
Mortgage and other servicing rights
|
23,728
|
|
|
24,322
|
|
|
19,628
|
|
|
20,283
|
|
Liabilities
|
|
|
|
|
|
|
|
Deposits with no stated maturity
|
44,601,552
|
|
|
44,601,552
|
|
|
40,542,596
|
|
|
40,542,596
|
|
Time deposits
|
2,729,445
|
|
|
2,738,244
|
|
|
2,889,013
|
|
|
2,905,577
|
|
Securities sold under customer repurchase agreements
|
680,705
|
|
|
680,705
|
|
|
641,487
|
|
|
641,487
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Bank borrowings
|
648,671
|
|
|
664,996
|
|
|
655,175
|
|
|
677,579
|
|
Subordinated debt
|
497,153
|
|
|
517,091
|
|
|
504,518
|
|
|
525,610
|
|
Other borrowings
|
84,502
|
|
|
85,067
|
|
|
88,470
|
|
|
89,263
|
|
FDIC shared-loss payable
|
—
|
|
|
—
|
|
|
15,601
|
|
|
15,843
|
|
Accrued interest payable
|
5,149
|
|
|
5,149
|
|
|
9,414
|
|
|
9,414
|
|
For assets and liabilities carried at fair value on a recurring basis, the following table provides fair value information as of March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
|
|
Fair value measurements using:
|
(Dollars in thousands)
|
Fair value
|
|
Level 1 inputs
|
|
Level 2 inputs
|
|
Level 3 inputs
|
Assets measured at fair value
|
|
|
|
|
|
|
|
Investment securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency
|
$
|
846,686
|
|
|
$
|
—
|
|
|
$
|
846,686
|
|
|
$
|
—
|
|
Residential mortgage-backed securities
|
4,758,589
|
|
|
—
|
|
|
4,758,589
|
|
|
—
|
|
Commercial mortgage-backed securities
|
1,098,987
|
|
|
—
|
|
|
1,098,987
|
|
|
—
|
|
Corporate bonds
|
602,860
|
|
|
—
|
|
|
284,744
|
|
|
318,116
|
|
|
|
|
|
|
|
|
|
Total investment securities available for sale
|
$
|
7,307,122
|
|
|
$
|
—
|
|
|
$
|
6,989,006
|
|
|
$
|
318,116
|
|
Marketable equity securities
|
$
|
106,886
|
|
|
$
|
43,677
|
|
|
$
|
63,209
|
|
|
$
|
—
|
|
Loans held for sale
|
$
|
129,334
|
|
|
$
|
—
|
|
|
$
|
129,334
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
|
|
Fair value measurements using:
|
|
Fair value
|
|
Level 1 inputs
|
|
Level 2 inputs
|
|
Level 3 inputs
|
Assets measured at fair value
|
|
|
|
|
|
|
|
Investment securities available for sale
|
|
|
|
|
|
|
|
U.S. Treasury
|
$
|
499,933
|
|
|
$
|
—
|
|
|
$
|
499,933
|
|
|
$
|
—
|
|
Government agency
|
701,391
|
|
|
—
|
|
|
701,391
|
|
|
—
|
|
Residential mortgage-backed securities
|
4,438,103
|
|
|
—
|
|
|
4,438,103
|
|
|
—
|
|
Commercial mortgage-backed securities
|
771,537
|
|
|
—
|
|
|
771,537
|
|
|
—
|
|
Corporate bonds
|
603,279
|
|
|
—
|
|
|
286,655
|
|
|
316,624
|
|
|
|
|
|
|
|
|
|
Total investment securities available for sale
|
$
|
7,014,243
|
|
|
$
|
—
|
|
|
$
|
6,697,619
|
|
|
$
|
316,624
|
|
Marketable equity securities
|
$
|
91,680
|
|
|
$
|
32,855
|
|
|
$
|
58,825
|
|
|
$
|
—
|
|
Loans held for sale
|
$
|
124,837
|
|
|
$
|
—
|
|
|
$
|
124,837
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables summarize activity for Level 3 assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
|
|
Three months ended March 31
|
(Dollars in thousands)
|
|
|
|
|
2021
|
|
2020
|
Beginning balance
|
|
|
|
|
$
|
316,624
|
|
|
$
|
69,685
|
|
|
|
|
|
|
|
|
|
Unrealized net losses (gains) included in other comprehensive income
|
|
|
|
|
2,333
|
|
|
(4,366)
|
|
Amounts included in net income
|
|
|
|
|
(91)
|
|
|
(85)
|
|
Transfers in
|
|
|
|
|
—
|
|
|
1,782
|
|
Sales / Calls
|
|
|
|
|
(750)
|
|
|
—
|
|
Ending balance
|
|
|
|
|
$
|
318,116
|
|
|
$
|
67,016
|
|
During the three months ended March 31, 2021, there were no transfers between levels. During the three months ended March 31, 2020, there were transfers from Level 2 to Level 3 of $1.8 million. The transfers were due to a lack of observable inputs and trade activity for those securities.
The following table presents quantitative information about Level 3 fair value measurements for fair value on a recurring basis at March 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
March 31, 2021
|
Level 3 assets
|
|
Valuation technique
|
|
Significant unobservable input
|
|
Fair Value
|
Corporate bonds
|
|
Indicative bid provided by broker
|
|
Multiple factors, including but not limited to, current operations, financial condition, cash flows, and recently executed financing transactions related to the issuer
|
|
$
|
318,116
|
|
Fair Value Option
BancShares has elected the fair value option for residential real estate loans originated to be sold. This election reduces certain timing differences in the Consolidated Statement of Income and better aligns with the management of the portfolio from a business perspective. The changes in fair value were recorded as a component of mortgage income and included a loss of $2.7 million and a gain of $1.2 million for the three months ended March 31, 2021 and 2020, respectively. Interest earned on loans held for sale is recorded within interest income on loans and leases in the consolidated statements of income.
The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for residential real estate originated for sale measured at fair value as of March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
(Dollars in thousands)
|
Fair value
|
|
Aggregate unpaid principal balance
|
|
Difference
|
Originated loans held for sale
|
$
|
129,334
|
|
|
$
|
126,113
|
|
|
$
|
3,221
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
Fair value
|
|
Aggregate unpaid principal balance
|
|
Difference
|
Originated loans held for sale
|
$
|
124,837
|
|
|
$
|
118,902
|
|
|
$
|
5,935
|
|
No originated loans held for sale were 90 or more days past due or on nonaccrual status as of March 31, 2021 or December 31, 2020.
We may be required to measure certain financial assets at fair value on a nonrecurring basis. These adjustments to fair value usually result from the application of lower of amortized cost or fair value accounting or write-downs of individual assets due to impairment.
The population of loans measured at fair value on a non-recurring basis is limited to collateral-dependent loans evaluated individually. These collateral-dependent loans are deemed to be at fair value if there is an associated ACL or if a charge-off has been recorded in the previous 12 months. Collateral values are determined using appraisals or other third-party value estimates of the subject property discounted based on estimated selling costs, generally between 6% and 10%, and immaterial adjustments for other external factors that may impact the marketability of the collateral. The weighted average discount for estimated selling costs applied was 6.81%.
OREO acquired or written down within the previous 12 months is deemed to be at fair value. Asset valuations are determined by using appraisals or other third-party value estimates of the subject property with discounts generally between 6% and 15% applied for estimated selling costs and other external factors that may impact the marketability of the property. At March 31, 2021, the weighted average discount applied was 8.76%. Changes to the value of the assets between scheduled valuation dates are monitored through continued communication with brokers and monthly reviews by the asset manager assigned to each asset. If there are any significant changes in the market or the subject property, valuations are adjusted or new appraisals ordered to ensure the reported values reflect the most current information.
For financial assets and liabilities carried at fair value on a nonrecurring basis, the following table provides fair value information as of March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
|
|
Fair value measurements using:
|
(Dollars in thousands)
|
Fair value
|
|
Level 1 inputs
|
|
Level 2 inputs
|
|
Level 3 inputs
|
Collateral-dependent loans
|
$
|
10,247
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,247
|
|
Other real estate owned
|
36,642
|
|
|
—
|
|
|
—
|
|
|
36,642
|
|
Mortgage servicing rights
|
20,409
|
|
|
—
|
|
|
—
|
|
|
20,409
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
|
|
Fair value measurements using:
|
|
Fair value
|
|
Level 1 inputs
|
|
Level 2 inputs
|
|
Level 3 inputs
|
Collateral-dependent loans
|
$
|
11,779
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,779
|
|
Other real estate owned
|
40,115
|
|
|
—
|
|
|
—
|
|
|
40,115
|
|
Mortgage servicing rights
|
16,966
|
|
|
—
|
|
|
—
|
|
|
16,966
|
|
No financial liabilities were carried at fair value on a nonrecurring basis as of March 31, 2021 and December 31, 2020.
NOTE L - EMPLOYEE BENEFIT PLANS
BancShares sponsors noncontributory defined benefit pension plans for its qualifying employees. The service cost component of net periodic benefit cost is included in salaries and wages while all other non-service cost components are included in other noninterest expense.
For the three months ended March 31, 2021 and 2020, the components of net periodic benefit cost are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(Dollars in thousands)
|
|
|
|
|
2021
|
|
2020
|
Service cost
|
|
|
|
|
$
|
3,653
|
|
|
$
|
3,457
|
|
Interest cost
|
|
|
|
|
7,404
|
|
|
8,531
|
|
Expected return on assets
|
|
|
|
|
(19,595)
|
|
|
(16,409)
|
|
|
|
|
|
|
|
|
|
Amortization of net actuarial loss
|
|
|
|
|
6,529
|
|
|
6,264
|
|
Net periodic (benefit) cost
|
|
|
|
|
$
|
(2,009)
|
|
|
$
|
1,843
|
|
No discretionary contribution was made to the pension plans during the three months ended March 31, 2021. The funding policy of the pension plans is to contribute an amount each year to meet all Employee Retirement Income Security Act minimum requirements, including amounts to meet quarterly funding requirements, avoid “at-risk” status and avoid any benefit restrictions. BancShares may also contribute additional voluntary amounts each year (up to the maximum tax-deductible amount) in order to achieve certain target funding levels in the plans, with consideration also given to current and future cash flow and tax positions. No contributions are currently expected for the year ending December 31, 2021.
NOTE M - LEASES
The following table presents right-of-use lease assets and liabilities as of March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Classification
|
March 31, 2021
|
|
December 31, 2020
|
Assets:
|
|
|
|
|
Operating
|
Other assets
|
$
|
65,330
|
|
|
$
|
68,048
|
|
Finance
|
Premises and equipment
|
5,936
|
|
|
6,478
|
|
Total leased assets
|
|
$
|
71,266
|
|
|
$
|
74,526
|
|
Liabilities:
|
|
|
|
|
Operating
|
Other liabilities
|
$
|
65,841
|
|
|
$
|
68,343
|
|
Finance
|
Other borrowings
|
5,915
|
|
|
6,308
|
|
Total lease liabilities
|
|
$
|
71,756
|
|
|
$
|
74,651
|
|
NOTE N - COMMITMENTS AND CONTINGENCIES
To meet the financing needs of its customers, BancShares and its subsidiaries have financial instruments with off-balance sheet risk. These financial instruments involve elements of credit, interest rate or liquidity risk and include commitments to extend credit and standby letters of credit.
Commitments to extend credit are legally binding agreements to lend to customers. These commitments generally have fixed expiration dates or other termination clauses and may require payment of fees. Since many of these commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future liquidity requirements. Established credit standards control the credit risk exposure associated with these commitments. In some cases, BancShares requires collateral be pledged to secure the commitment, including cash deposits, securities and other assets.
Standby letters of credit are commitments guaranteeing performance of a customer to a third party. Those commitments are primarily issued to support public and private borrowing arrangements. To mitigate its risk, BancShares’ credit policies govern the issuance of standby letters of credit. The credit risk related to the issuance of these letters of credit is essentially the same as in extending loans to clients and, therefore, these letters of credit are collateralized when necessary.
The following table presents the commitments to extend credit and standby letters of credit as of March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
March 31, 2021
|
|
December 31, 2020
|
Unused commitments to extend credit
|
$
|
12,126,186
|
|
|
$
|
12,098,417
|
|
Standby letters of credit
|
139,572
|
|
|
129,819
|
|
BancShares has investments in qualified affordable housing projects primarily for the purposes of fulfilling Community Reinvestment Act requirements and obtaining tax credits. Affordable housing project investments were $162.4 million and $163.9 million as of March 31, 2021 and December 31, 2020, respectively, and were recorded in other assets. Unfunded commitments to fund future investments in affordable housing projects totaled $49.7 million and $53.7 million as of March 31, 2021 and December 31, 2020, respectively, and were recorded in other liabilities.
BancShares and various subsidiaries have been named as defendants in legal actions arising from their normal business activities in which damages in various amounts were claimed. BancShares has also been exposed to litigation risk relating to the prior business activities of banks from which assets were acquired and liabilities assumed in the various merger transactions. Although the amount of any ultimate liability with respect to such matters cannot be determined, in the opinion of management, any such liability will not have a material effect on BancShares’ consolidated financial statements.