v3.24.3
Loans and Allowance for Credit Losses on Loans
 9 Months Ended
Sep. 30, 2024
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
Loans and Allowance for Credit Losses on Loans Loans and Allowance for Credit Losses on Loans
Loans are summarized by portfolio segment as follows:
(in thousands)September 30, 2024December 31, 2023
Loans held for investment(1):
Commercial$10,967,807 $10,410,766 
Mortgage finance5,529,659 3,978,328 
Commercial real estate5,314,814 5,500,774 
Consumer568,962 530,948 
Gross loans held for investment22,381,242 20,420,816 
Unearned income (net of direct origination costs)(87,071)(80,258)
Total loans held for investment22,294,171 20,340,558 
Allowance for credit losses on loans(273,143)(249,973)
Total loans held for investment, net$22,021,028 $20,090,585 
Loans held for sale:
Mortgage loans, at fair value$— $706 
Non-mortgage loans, at lower of cost or fair value9,022 43,399 
Total loans held for sale$9,022 $44,105 
(1)    Excludes accrued interest receivable of $114.8 million and $118.1 million at September 30, 2024 and December 31, 2023, respectively, that is recorded in accrued interest receivable and other assets on the consolidated balance sheets.
During the third quarter of 2024, the Company purchased a $332.0 million commercial loan portfolio, which included certain loans that had experienced a more than insignificant deterioration in credit quality since origination (“PCD loans”). PCD loans are recorded at fair value at the acquisition date along with an allowance for credit losses determined using the same methodology as originated loans. The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a non-credit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through provision for credit losses. The following table provides a summary of PCD loans purchased and the associated credit loss reserve at acquisition date:
(in thousands)Total
Par value (unpaid principal balance)$20,139 
Allowance for credit losses on loans at acquisition
(2,579)
Non-credit premium
2,448 
Purchase price
$20,008 
The following tables summarize gross loans held for investment by year of origination and internally assigned credit grades:
(in thousands)202420232022202120202019
and prior		Revolving lines of creditRevolving lines of credit converted to term loansTotal
September 30, 2024
Commercial
(1-7) Pass$1,206,729 $1,189,307 $1,330,253 $336,556 $90,941 $194,600 $5,939,588 $12,458 $10,300,432 
(8) Special mention20,805 39,957 146,912 22,833 40 6,754 197,723 — 435,024 
(9) Substandard - accruing— 45,275 60,646 8,107 341 3,435 28,734 — 146,538 
(9+) Non-accrual— 9,370 2,593 287 897 24,810 47,549 307 85,813 
Total commercial$1,227,534 $1,283,909 $1,540,404 $367,783 $92,219 $229,599 $6,213,594 $12,765 $10,967,807 
Mortgage finance
(1-7) Pass$— $— $— $— $— $— $5,529,659 $— $5,529,659 
(8) Special mention— — — — — — — — — 
(9) Substandard - accruing— — — — — — — — — 
(9+) Non-accrual— — — — — — — — — 
Total mortgage finance$— $— $— $— $— $— $5,529,659 $— $5,529,659 
Commercial real estate
(1-7) Pass$193,065 $844,988 $1,751,369 $913,488 $333,252 $755,864 $275,717 $18,933 $5,086,676 
(8) Special mention589 5,001 77,796 — 322 59,922 — 898 144,528 
(9) Substandard - accruing— — 44,607 15,831 — 20,989 — — 81,427 
(9+) Non-accrual— — 2,183 — — — — — 2,183 
Total commercial real estate$193,654 $849,989 $1,875,955 $929,319 $333,574 $836,775 $275,717 $19,831 $5,314,814 
Consumer
(1-7) Pass$34,545 $28,741 $53,741 $76,839 $46,699 $109,562 $216,621 $— $566,748 
(8) Special mention— — — — — — 250 — 250 
(9) Substandard - accruing— — — — — — 1,000 — 1,000 
(9+) Non-accrual— — — — — 964 — — 964 
Total consumer$34,545 $28,741 $53,741 $76,839 $46,699 $110,526 $217,871 $— $568,962 
Total$1,455,733 $2,162,639 $3,470,100 $1,373,941 $472,492 $1,176,900 $12,236,841 $32,596 $22,381,242 
Gross charge-offs$— $7,542 $550 $3,775 $— $7,212 $10,266 $44 $29,389 
(in thousands)202320222021202020192018
and prior		Revolving lines of creditRevolving lines of credit converted to term loansTotal
December 31, 2023
Commercial
(1-7) Pass$1,546,257 $1,408,672 $279,266 $144,699 $142,301 $157,808 $6,284,464 $16,580 $9,980,047 
(8) Special mention22,148 118,991 35,619 285 823 13,385 40,647 89 231,987 
(9) Substandard - accruing12,477 50,876 9,334 18,547 — 78 38,372 — 129,684 
(9+) Non-accrual9,395 34,229 340 2,085 15,080 7,840 79 — 69,048 
Total commercial$1,590,277 $1,612,768 $324,559 $165,616 $158,204 $179,111 $6,363,562 $16,669 $10,410,766 
Mortgage finance
(1-7) Pass$— $— $— $— $— $— $3,978,328 $— $3,978,328 
(8) Special mention— — — — — — — — — 
(9) Substandard - accruing— — — — — — — — — 
(9+) Non-accrual— — — — — — — — — 
Total mortgage finance$— $— $— $— $— $— $3,978,328 $— $3,978,328 
Commercial real estate
(1-7) Pass$561,801 $1,689,325 $1,042,953 $419,703 $317,480 $559,026 $575,928 $28,175 $5,194,391 
(8) Special mention— 136,801 32,937 24,440 34,181 22,833 7,895 — 259,087 
(9) Substandard - accruing— 2,232 — — — 28,573 4,141 — 34,946 
(9+) Non-accrual— — 12,350 — — — — — 12,350 
Total commercial real estate$561,801 $1,828,358 $1,088,240 $444,143 $351,661 $610,432 $587,964 $28,175 $5,500,774 
Consumer
(1-7) Pass$31,876 $56,425 $78,096 $47,423 $14,141 $102,691 $199,171 $— $529,823 
(8) Special mention— — — — — — 100 41 141 
(9) Substandard - accruing— — — — — 984 — — 984 
(9+) Non-accrual— — — — — — — — — 
Total Consumer$31,876 $56,425 $78,096 $47,423 $14,141 $103,675 $199,271 $41 $530,948 
Total$2,183,954 $3,497,551 $1,490,895 $657,182 $524,006 $893,218 $11,129,125 $44,885 $20,420,816 
Gross charge-offs$8,364 $5,090 $25,578 $— $15,243 $883 $698 $871 $56,727 
The following table details activity in the allowance for credit losses on loans. Allocation of a portion of the allowance to one category does not preclude its availability to absorb losses in other categories.
(in thousands)CommercialMortgage
Finance		Commercial Real EstateConsumerTotal
Nine Months Ended September 30, 2024
Beginning balance$171,437 $4,173 $71,829 $2,534 $249,973 
Allowance established for acquired PCD loans2,579 — — — 2,579 
Provision for credit losses on loans54,529 1,290 (6,840)414 49,393 
Charge-offs23,661 — 5,698 30 29,389 
Recoveries587 — — — 587 
Net charge-offs (recoveries)23,074 — 5,698 30 28,802 
Ending balance$205,471 $5,463 $59,291 $2,918 $273,143 
Nine Months Ended September 30, 2023
Beginning balance$185,303 $10,745 $54,268 $3,153 $253,469 
Provision for credit losses on loans20,569 (4,438)12,935 (543)28,523 
Charge-offs42,830 — — 41 42,871 
Recoveries5,776 — — 5 5,781 
Net charge-offs (recoveries)37,054 — — 36 37,090 
Ending balance$168,818 $6,307 $67,203 $2,574 $244,902 
The Company recorded a $49.4 million provision for credit losses on loans for the nine months ended September 30, 2024, compared to $28.5 million for the same period of 2023. The $49.4 million provision for credit losses on loans resulted primarily from growth in loans held for investment and $28.8 million in net charge-offs during the nine months ended September 30, 2024. Net charge-offs of $28.8 million were recorded during the nine months ended September 30, 2024, compared to net charge-offs of $37.1 million during the same period of 2023. Criticized loans totaled $897.7 million at September 30, 2024, compared to $738.2 million at December 31, 2023.
A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. At September 30, 2024, the Company had $44.0 million in collateral-dependent commercial loans, collateralized by business assets, and $2.2 million and $1.0 million in collateral-dependent commercial real estate and consumer loans, respectively, both of which are collateralized by real estate.
The table below provides an age analysis of gross loans held for investment:
(in thousands)30-59 Days
Past Due		60-89 Days
Past Due		90 Days or More Past DueTotal Past
Due		Non-accrual(1)CurrentTotalNon-accrual With No Allowance
September 30, 2024
Commercial$1,933 $40,718 $5,281 $47,932 $85,813 $10,834,062 $10,967,807 $12,086 
Mortgage finance— — — — — 5,529,659 5,529,659 — 
Commercial real estate501 648 — 1,149 2,183 5,311,482 5,314,814 — 
Consumer1,966 — — 1,966 964 566,032 568,962 964 
Total$4,400 $41,366 $5,281 $51,047 $88,960 $22,241,235 $22,381,242 $13,050 
(1)As of September 30, 2024, $1.1 million of non-accrual loans were earning interest income on a cash basis compared to $358,000 as of December 31, 2023. Additionally, $272,000 of interest income was recognized on non-accrual loans for the nine months ended September 30, 2024 compared to $37,000 for the same period in 2023. Accrued interest of $917,000 and $1.7 million was reversed during the nine months ended September 30, 2024 and September 30, 2023, respectively.
Modifications to Borrowers Experiencing Financial Difficulty
The table below details gross loans held for investment as of September 30, 2024 and September 30, 2023 made to borrowers experiencing financial difficulty that were modified during the three and nine months ended September 30, 2024 and September 30, 2023, by type of modification granted and the financial effect of those modifications:
Financial Statement Impact
($ in thousands)Payment
Deferral		Term
Extension		Payment
Deferral
and Term
Extension		Interest Rate
Reduction
and Term
Extension		TotalPercentage of Loans Held for InvestmentInterest Rate ReductionTerm Extension (in months)Payment Deferrals
Three Months Ended September 30, 2024
Commercial$360 $— $— $— $360 — %—%
0
$42 
Total$360 $— $— $— $360 — %
Three Months Ended September 30, 2023
Commercial$271 $6,372 $— $— $6,643 0.03 %—%
1
$59 
Total$271 $6,372 $— $— $6,643 0.03 %
Nine Months Ended September 30, 2024
Commercial$6,762 $974 $6,929 $— $14,665 0.07 %—%
12 to 13
$826 
Commercial real estate— 15,831 — — 15,831 0.07 %—%
3
— 
Total$6,762 $16,805 $6,929 $— $30,496 0.14 %
Nine Months Ended September 30, 2023
Commercial$31,327 $7,065 $5,893 $14,332 $58,617 0.28 %0.70%
1 to 36
$5,139 
Total$31,327 $7,065 $5,893 $14,332 $58,617 0.28 %
The table below details gross loans held for investment as of September 30, 2024 and September 30, 2023 that experienced a default during the periods presented subsequent to being granted a modification in the prior twelve months. Default is defined as movement to nonperforming status, foreclosure or charge-off, whichever occurs first.
(in thousands)
Payment
Deferral		Term
Extension
Payment Deferral
and Term Extension
Total
Three Months Ended September 30, 2024
Commercial$2,902 $— $— $2,902 
Total$2,902 $— $— $2,902 
Three Months Ended September 30, 2023
Commercial$— $— $— $— 
Commercial$— $— $— $— 
Nine Months Ended September 30, 2024
Commercial$2,902 $— $1,370 $4,272 
Total$2,902 $— $1,370 $4,272 
Nine Months Ended September 30, 2023
Commercial$— $161 $— $161 
Commercial$— $161 $— $161 
The table below provides an age analysis of gross loans held for investment as of September 30, 2024 made to borrowers experiencing financial difficulty that were modified in the prior twelve months, and as of September 30, 2023 for loans that were modified since January 1, 2023, the date of adoptions of Accounting Standards Update 2022-02:
(in thousands)30-89 Days
Past Due		90+ Days
Past Due		Non-AccrualCurrentTotal
September 30, 2024
Commercial$— $— $10,191 $4,474 $14,665 
Commercial real estate
— — — 15,831 15,831 
Total$— $— $10,191 $20,305 $30,496 
September 30, 2023
Commercial$— $— $5,893 $52,724 $58,617 
Total$— $— $5,893 $52,724 $58,617