Quarterly report pursuant to Section 13 or 15(d)

LOANS AND ALLOWANCE FOR LOAN LOSSES

v3.19.3
LOANS AND ALLOWANCE FOR LOAN LOSSES
9 Months Ended
Sep. 30, 2019
Loans and Leases Receivable Disclosure [Abstract]  
LOANS AND ALLOWANCE FOR LOAN LOSSES

4. LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are stated at their face amount, net of deferred fees and costs, and consist of the following at September 30, 2019 and December 31, 2018 (dollars in thousands):

September 30, 2019

    

December 31, 2018

Construction and Land Development

$

1,201,149

$

1,194,821

Commercial Real Estate - Owner Occupied

 

1,979,052

 

1,337,345

Commercial Real Estate - Non-Owner Occupied

 

3,198,580

 

2,467,410

Multifamily Real Estate

 

659,946

 

548,231

Commercial & Industrial

 

2,058,133

 

1,317,135

Residential 1-4 Family - Commercial

 

721,185

 

640,419

Residential 1-4 Family - Consumer

 

913,245

 

673,909

Auto

 

328,456

 

301,943

HELOC

 

660,963

 

613,383

Consumer

 

386,848

 

379,694

Other Commercial

 

199,440

 

241,917

Total loans held for investment, net (1)

$

12,306,997

$

9,716,207

(1) Loans, as presented, are net of deferred fees and costs totaling $8.1 million and $5.1 million as of September 30, 2019 and December 31, 2018, respectively.

The following table shows the aging of the Company’s loan portfolio, by segment, at September 30, 2019 (dollars in thousands):

    

    

    

Greater than

    

    

    

    

30-59 Days

60-89 Days

90 Days and

Past Due

Past Due

still Accruing

PCI

Nonaccrual

Current

Total Loans

Construction and Land Development

$

1,062

$

351

$

171

$

8,387

$

7,785

$

1,183,393

$

1,201,149

Commercial Real Estate - Owner Occupied

 

4,977

 

 

2,571

 

27,817

 

5,684

 

1,938,003

 

1,979,052

Commercial Real Estate - Non-Owner Occupied

 

5,757

 

1,878

 

36

 

17,285

 

381

 

3,173,243

 

3,198,580

Multifamily Real Estate

 

107

 

164

 

1,212

 

93

 

 

658,370

 

659,946

Commercial & Industrial

 

2,079

 

1,946

 

265

 

3,262

 

1,585

 

2,048,996

 

2,058,133

Residential 1-4 Family - Commercial

 

1,842

 

3,081

 

916

 

12,237

 

3,879

 

699,230

 

721,185

Residential 1-4 Family - Consumer

 

1,527

 

5,182

 

3,815

 

14,977

 

8,292

 

879,452

 

913,245

Auto

 

1,787

 

407

 

183

 

7

 

604

 

325,468

 

328,456

HELOC

 

4,965

 

1,747

 

1,674

 

4,275

 

1,641

 

646,661

 

660,963

Consumer

 

2,000

 

1,666

 

1,163

 

682

 

84

 

381,253

 

386,848

Other Commercial

579

9

30

713

97

198,012

199,440

Total loans held for investment

$

26,682

$

16,431

$

12,036

$

89,735

$

30,032

$

12,132,081

$

12,306,997

The following table shows the aging of the Company’s loan portfolio, by segment, at December 31, 2018 (dollars in thousands):

    

    

    

Greater than

    

    

    

    

30-59 Days

60-89 Days

90 Days and

Past Due

Past Due

still Accruing

PCI

Nonaccrual

Current

Total Loans

Construction and Land Development

$

759

$

6

$

180

$

8,654

$

8,018

$

1,177,204

$

1,194,821

Commercial Real Estate - Owner Occupied

 

8,755

 

1,142

 

3,193

 

25,644

 

3,636

 

1,294,975

 

1,337,345

Commercial Real Estate - Non-Owner Occupied

 

338

 

41

 

 

17,335

 

1,789

 

2,447,907

 

2,467,410

Multifamily Real Estate

 

 

146

 

 

88

 

 

547,997

 

548,231

Commercial & Industrial

 

3,353

 

389

 

132

 

2,156

 

1,524

 

1,309,581

 

1,317,135

Residential 1-4 Family - Commercial

 

6,619

 

1,577

 

1,409

 

13,601

 

2,481

 

614,732

 

640,419

Residential 1-4 Family - Consumer

 

12,049

 

5,143

 

2,437

 

16,872

 

7,276

 

630,132

 

673,909

Auto

 

3,320

 

403

 

195

 

7

 

576

 

297,442

 

301,943

HELOC

 

4,611

 

1,644

 

440

 

5,115

 

1,518

 

600,055

 

613,383

Consumer

 

1,504

 

1,096

 

870

 

32

 

135

 

376,057

 

379,694

Other Commercial

126

717

241,074

241,917

Total loans held for investment

$

41,434

$

11,587

$

8,856

$

90,221

$

26,953

$

9,537,156

$

9,716,207

The following table shows the PCI loan portfolios, by segment and their delinquency status, at September 30, 2019 (dollars in thousands):

    

30-89 Days

    

Greater than

    

    

Past Due

90 Days

Current

Total

Construction and Land Development

$

126

$

399

$

7,862

$

8,387

Commercial Real Estate - Owner Occupied

 

526

 

3,262

 

24,029

 

27,817

Commercial Real Estate - Non-Owner Occupied

 

137

 

980

 

16,168

 

17,285

Multifamily Real Estate

 

 

 

93

 

93

Commercial & Industrial

 

 

1,043

 

2,219

 

3,262

Residential 1-4 Family - Commercial

 

421

 

479

 

11,337

 

12,237

Residential 1-4 Family - Consumer

 

844

 

1,912

 

12,221

 

14,977

Auto

 

 

 

7

 

7

HELOC

 

208

 

287

 

3,780

 

4,275

Consumer

4

15

663

682

Other Commercial

 

 

 

713

 

713

Total

$

2,266

$

8,377

$

79,092

$

89,735

The following table shows the PCI loan portfolios, by segment and their delinquency status, at December 31, 2018 (dollars in thousands):

    

30-89 Days

    

Greater than

    

    

Past Due

90 Days

Current

Total

Construction and Land Development

$

108

$

1,424

$

7,122

$

8,654

Commercial Real Estate - Owner Occupied

 

658

 

4,281

 

20,705

 

25,644

Commercial Real Estate - Non-Owner Occupied

 

61

 

1,810

 

15,464

 

17,335

Multifamily Real Estate

 

 

 

88

 

88

Commercial & Industrial

 

47

 

1,092

 

1,017

 

2,156

Residential 1-4 Family - Commercial

 

871

 

3,454

 

9,276

 

13,601

Residential 1-4 Family - Consumer

 

1,959

 

2,422

 

12,491

 

16,872

Auto

7

7

HELOC

 

498

 

252

 

4,365

 

5,115

Consumer

5

9

18

32

Other Commercial

 

57

 

 

660

 

717

Total

$

4,264

$

14,744

$

71,213

$

90,221

The Company measures the amount of impairment by evaluating loans either in their collective homogeneous pools or individually. The following table shows the Company’s impaired loans, excluding PCI loans, by segment at September 30, 2019 and December 31, 2018 (dollars in thousands):

September 30, 2019

December 31, 2018

    

    

Unpaid

    

    

    

Unpaid

    

Recorded

Principal

Related

Recorded

Principal

Related

Investment

Balance

Allowance

Investment

Balance

Allowance

Loans without a specific allowance

 

  

 

  

 

  

 

  

 

  

 

  

Construction and Land Development

$

9,776

$

14,131

$

$

10,290

$

12,038

$

Commercial Real Estate - Owner Occupied

 

9,362

 

9,966

 

 

8,386

 

9,067

 

Commercial Real Estate - Non-Owner Occupied

 

2,028

 

2,578

 

 

6,578

 

6,929

 

Multifamily Real Estate

1,212

1,212

Commercial & Industrial

 

2,205

 

2,221

 

 

3,059

 

3,251

 

Residential 1-4 Family - Commercial

 

4,330

 

4,598

 

 

3,378

 

3,439

 

Residential 1-4 Family - Consumer

 

9,432

 

10,006

 

 

9,642

 

10,317

 

HELOC

 

864

 

867

 

 

1,150

 

1,269

 

Consumer

30

102

Other Commercial

 

 

 

 

478

 

478

 

Total impaired loans without a specific allowance

$

39,209

$

45,579

$

$

42,991

$

46,890

$

Loans with a specific allowance

 

  

 

  

 

  

 

  

 

  

 

  

Construction and Land Development

$

829

$

868

$

78

$

372

$

491

$

63

Commercial Real Estate - Owner Occupied

 

3,570

 

3,685

 

234

 

4,304

 

4,437

 

359

Commercial Real Estate - Non-Owner Occupied

 

336

 

384

 

3

 

391

 

391

 

1

Commercial & Industrial

 

1,783

 

1,810

 

866

 

1,183

 

1,442

 

752

Residential 1-4 Family - Commercial

 

1,763

 

1,807

 

170

 

2,120

 

2,152

 

89

Residential 1-4 Family - Consumer

 

10,047

 

10,631

 

805

 

6,389

 

6,645

 

470

Auto

 

605

 

905

 

239

 

576

 

830

 

231

HELOC

 

1,177

 

1,312

 

262

 

724

 

807

 

188

Consumer

 

180

 

345

 

50

 

178

 

467

 

64

Other Commercial

565

569

27

Total impaired loans with a specific allowance

$

20,855

$

22,316

$

2,734

$

16,237

$

17,662

$

2,217

Total impaired loans

$

60,064

$

67,895

$

2,734

$

59,228

$

64,552

$

2,217

The following tables show the average recorded investment and interest income recognized for the Company’s impaired loans, excluding PCI loans, by segment for the three and nine months ended September 30, 2019 and 2018 (dollars in thousands):

Three Months Ended

Nine Months Ended

September 30, 2019

September 30, 2019

    

    

Interest

    

    

Interest

Average

Income

Average

Income

Investment

Recognized

Investment

Recognized

Construction and Land Development

$

13,581

$

40

$

13,601

$

351

Commercial Real Estate - Owner Occupied

 

13,301

 

85

 

13,436

 

339

Commercial Real Estate - Non-Owner Occupied

 

2,748

 

26

 

3,543

 

82

Multifamily Real Estate

1,217

15

1,234

46

Commercial & Industrial

 

3,986

 

41

 

4,046

 

129

Residential 1-4 Family - Commercial

 

6,334

 

41

 

6,521

 

125

Residential 1-4 Family - Consumer

 

19,802

 

75

 

20,007

 

264

Auto

 

691

 

 

781

 

9

HELOC

 

2,125

 

5

 

2,242

 

31

Consumer

 

184

 

2

 

192

 

5

Other Commercial

570

7

579

21

Total impaired loans

$

64,539

$

337

$

66,182

$

1,402

Three Months Ended

Nine Months Ended

September 30, 2018

September 30, 2018

    

    

Interest

    

    

Interest

Average

Income

Average

Income

Investment

Recognized

Investment

Recognized

Construction and Land Development

$

12,481

$

63

$

12,083

$

203

Commercial Real Estate - Owner Occupied

 

11,873

 

102

 

11,966

 

322

Commercial Real Estate - Non-Owner Occupied

 

6,932

 

57

 

7,141

 

175

Commercial & Industrial

 

2,607

 

15

 

2,713

 

57

Residential 1-4 Family - Commercial

 

4,233

 

29

 

4,322

 

105

Residential 1-4 Family - Consumer

 

16,570

 

48

 

16,693

 

162

Auto

 

609

 

 

685

 

12

HELOC

 

1,800

 

4

 

1,871

 

14

Consumer

 

180

 

 

218

 

Other Commercial

509

7

538

22

Total impaired loans

$

57,794

$

325

$

58,230

$

1,072

The Company considers TDRs to be impaired loans. A modification of a loan’s terms constitutes a TDR if the creditor grants a concession that it would not otherwise consider to the borrower for economic or legal reasons related to the borrower’s financial difficulties. All loans that are considered to be TDRs are evaluated for impairment in accordance with the Company’s allowance for loan loss methodology and are included in the preceding impaired loan tables. For the three and nine months ended September 30, 2019, the recorded investment in TDRs prior to modifications was not materially impacted by the modifications.

The following table provides a summary, by segment, of TDRs that continue to accrue interest under the terms of the applicable restructuring agreement, which are considered to be performing, and TDRs that have been placed on nonaccrual status, which are considered to be nonperforming, as of September 30, 2019 and December 31, 2018 (dollars in thousands):

September 30, 2019

December 31, 2018

    

No. of

    

Recorded

    

Outstanding

    

No. of

    

Recorded

    

Outstanding

Loans

Investment

Commitment

Loans

Investment

Commitment

Performing

 

  

 

  

 

  

 

  

 

  

 

  

Construction and Land Development

 

4

$

1,130

$

 

5

$

2,496

$

Commercial Real Estate - Owner Occupied

 

6

 

2,228

 

 

8

 

2,783

 

Commercial Real Estate - Non-Owner Occupied

 

1

 

1,089

 

 

4

 

4,438

 

Commercial & Industrial

 

5

 

1,123

 

 

4

 

978

 

Residential 1-4 Family - Commercial

 

5

 

293

 

 

8

 

1,075

 

Residential 1-4 Family - Consumer

 

64

 

8,738

 

 

52

 

6,882

 

HELOC

 

2

 

56

 

 

2

 

58

 

Consumer

 

4

 

31

 

 

1

 

13

 

Other Commercial

1

468

1

478

Total performing

 

92

$

15,156

$

 

85

$

19,201

$

Nonperforming

 

  

 

  

 

  

 

  

 

  

 

  

Construction and Land Development

 

$

$

 

2

$

3,474

$

Commercial Real Estate - Owner Occupied

 

2

 

180

 

 

2

 

198

 

Commercial & Industrial

 

1

 

56

 

 

6

 

461

 

Residential 1-4 Family - Commercial

 

 

 

 

1

 

60

 

Residential 1-4 Family - Consumer

 

18

 

3,288

 

 

15

 

3,135

 

HELOC

 

2

 

58

 

 

2

 

62

 

Consumer

1

7

Total nonperforming

 

23

$

3,582

$

 

29

$

7,397

$

Total performing and nonperforming

 

115

$

18,738

$

 

114

$

26,598

$

The Company considers a default of a TDR to occur when the borrower is 90 days past due following the restructure or a foreclosure and repossession of the applicable collateral occurs. During the three and nine months ended September 30, 2019 and 2018, the Company did not have any material loans that went into default that had been restructured in the twelve-month period prior to the time of default.

The following table shows, by segment and modification type, TDRs that occurred during the three and nine months ended September 30, 2019 (dollars in thousands):

All Restructurings

Three Months Ended September 30, 2019

Nine Months Ended September 30, 2019

    

    

Recorded

    

    

Recorded

No. of

Investment at

No. of

Investment at

Loans

Period End

Loans

Period End

Modified to interest only, at a market rate

 

  

 

  

 

  

 

  

Total interest only at market rate of interest

 

$

 

$

Term modification, at a market rate

 

  

 

  

 

  

 

  

Commercial & Industrial

 

1

$

376

 

1

$

376

Residential 1-4 Family - Commercial

 

 

1

73

Residential 1-4 Family - Consumer

 

1

 

461

 

4

 

761

Consumer

2

18

3

26

Total loan term extended at a market rate

 

4

$

855

 

9

$

1,236

Term modification, below market rate

 

  

 

  

 

  

 

  

Construction and Land Development

2

$

164

2

$

164

Residential 1-4 Family - Consumer

 

5

 

883

 

17

 

2,211

Consumer

1

5

Total loan term extended at a below market rate

 

7

$

1,047

 

20

$

2,380

Total

 

11

$

1,902

 

29

$

3,616

The following table shows, by segment and modification type, TDRs that occurred during the three and nine months ended September 30, 2018 (dollars in thousands):

All Restructurings

Three Months Ended September 30, 2018

Nine Months Ended September 30, 2018

    

    

Recorded

    

    

Recorded

No. of

Investment at

No. of

Investment at

Loans

Period End

Loans

Period End

Modified to interest only, at a market rate

 

  

 

  

 

  

 

  

Total interest only at market rate of interest

 

$

 

$

Term modification, at a market rate

 

  

 

  

 

  

 

  

Construction and Land Development

 

2

$

3,545

 

4

$

4,809

Commercial Real Estate - Owner Occupied

 

 

 

5

 

1,371

Commercial Real Estate - Non-Owner Occupied

 

1

 

1,089

 

1

 

1,089

Commercial & Industrial

 

2

 

278

 

3

 

339

Residential 1-4 Family - Commercial

 

 

 

1

 

71

Residential 1-4 Family - Consumer

 

 

 

6

 

759

Consumer

 

1

 

14

 

1

 

14

Total loan term extended at a market rate

 

6

$

4,926

 

21

$

8,452

Term modification, below market rate

 

  

 

  

 

  

 

  

Commercial Real Estate - Non-Owner Occupied

 

1

$

2,782

 

1

$

2,782

Residential 1-4 Family - Consumer

 

9

 

1,598

 

16

 

2,612

HELOC

 

2

 

46

 

2

 

46

Total loan term extended at a below market rate

 

12

$

4,426

 

19

$

5,440

Total

 

18

$

9,352

 

40

$

13,892

The following tables show the ALL activity by segment for the nine months ended September 30, 2019 and 2018. The tables below include the provision for loan losses. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories (dollars in thousands):

Nine Months Ended September 30, 2019

Allowance for loan losses

    

Balance,

    

Recoveries

    

Loans

    

Provision

    

Balance,

beginning of

credited to

charged

charged to

end of

the year

allowance

off

operations

period

Construction and Land Development

$

6,803

$

269

$

(4,028)

$

2,863

$

5,907

Commercial Real Estate - Owner Occupied

 

4,023

 

118

 

(483)

 

361

 

4,019

Commercial Real Estate - Non-Owner Occupied

 

8,865

 

95

 

(270)

 

996

 

9,686

Multifamily Real Estate

 

649

 

85

 

 

46

 

780

Commercial & Industrial

 

7,636

 

936

 

(2,162)

 

2,739

 

9,149

Residential 1-4 Family - Commercial

 

1,692

 

244

 

(397)

 

50

 

1,589

Residential 1-4 Family - Consumer

 

1,492

 

256

 

(108)

 

158

 

1,798

Auto

 

1,443

 

452

 

(957)

 

614

 

1,552

HELOC

 

1,297

 

589

 

(570)

 

(179)

 

1,137

Consumer and all other(1)

 

7,145

 

1,896

 

(12,215)

 

11,377

 

8,203

Total

$

41,045

$

4,940

$

(21,190)

$

19,025

$

43,820

(1)Consumer and Other Commercial are grouped together as Consumer and all other for reporting purposes.

Nine Months Ended September 30, 2018

Allowance for loan losses

    

Balance,

    

Recoveries

    

Loans

    

Provision

    

Balance,

beginning of

credited to

charged

charged to

end of

the year

allowance

off

operations

period

Construction and Land Development

$

9,709

$

400

$

(703)

$

(1,218)

$

8,188

Commercial Real Estate - Owner Occupied

 

2,931

 

488

 

(174)

 

(300)

 

2,945

Commercial Real Estate - Non-Owner Occupied

 

7,544

 

82

 

(94)

 

806

 

8,338

Multifamily Real Estate

 

1,092

 

5

 

 

525

 

1,622

Commercial & Industrial

 

4,552

 

413

 

(692)

 

2,429

 

6,702

Residential 1-4 Family - Commercial

 

4,437

 

306

 

(137)

 

(2,512)

 

2,094

Residential 1-4 Family - Consumer

 

1,524

 

235

 

(640)

 

770

 

1,889

Auto

 

975

 

365

 

(759)

 

760

 

1,341

HELOC

 

1,360

 

554

 

(488)

 

(70)

 

1,356

Consumer and all other(1)

 

4,084

 

1,234

 

(6,412)

 

7,913

 

6,819

Total

$

38,208

$

4,082

$

(10,099)

$

9,103

$

41,294

(1)Consumer and Other Commercial are grouped together as Consumer and all other for reporting purposes.

The following tables show the loan and ALL balances based on impairment methodology by segment as of September 30, 2019 and December 31, 2018 (dollars in thousands):

September 30, 2019

Loans individually

Loans collectively

Loans acquired with

evaluated for

evaluated for

deteriorated credit

impairment

impairment

quality

Total

    

Loans

    

ALL

    

Loans

    

ALL

    

Loans

    

ALL

    

Loans

    

ALL

Construction and Land Development

$

10,605

$

78

$

1,182,157

$

5,829

$

8,387

$

$

1,201,149

$

5,907

Commercial Real Estate - Owner Occupied

 

12,932

 

234

 

1,938,303

 

3,785

 

27,817

 

 

1,979,052

 

4,019

Commercial Real Estate - Non-Owner Occupied

 

2,364

 

3

 

3,178,931

 

9,683

 

17,285

 

 

3,198,580

 

9,686

Multifamily Real Estate

 

1,212

 

 

658,641

 

780

 

93

 

 

659,946

 

780

Commercial & Industrial

 

3,988

 

866

 

2,050,883

 

8,066

 

3,262

 

217

 

2,058,133

 

9,149

Residential 1-4 Family - Commercial

 

6,093

 

170

 

702,855

 

1,419

 

12,237

 

 

721,185

 

1,589

Residential 1-4 Family - Consumer

 

19,479

 

805

 

878,789

 

993

 

14,977

 

 

913,245

 

1,798

Auto

 

605

 

239

 

327,844

 

1,313

 

7

 

 

328,456

 

1,552

HELOC

 

2,041

 

262

 

654,647

 

875

 

4,275

 

 

660,963

 

1,137

Consumer and all other(1)

 

745

 

77

 

584,148

 

8,126

 

1,395

 

 

586,288

 

8,203

Total loans held for investment, net

$

60,064

$

2,734

$

12,157,198

$

40,869

$

89,735

$

217

$

12,306,997

$

43,820

(1)Consumer and Other Commercial are grouped together as Consumer and all other for reporting purposes.

December 31, 2018

Loans individually

Loans collectively

Loans acquired with

evaluated for

evaluated for

deteriorated credit

impairment

impairment

quality

Total

    

Loans

    

ALL

    

Loans

    

ALL

    

Loans

    

ALL

    

Loans

    

ALL

Construction and Land Development

$

10,662

$

63

$

1,175,505

$

6,740

$

8,654

$

$

1,194,821

$

6,803

Commercial Real Estate - Owner Occupied

 

12,690

 

359

 

1,299,011

 

3,664

 

25,644

 

 

1,337,345

 

4,023

Commercial Real Estate - Non-Owner Occupied

 

6,969

 

1

 

2,443,106

 

8,864

 

17,335

 

 

2,467,410

 

8,865

Multifamily Real Estate

 

 

 

548,143

 

649

 

88

 

 

548,231

 

649

Commercial & Industrial

 

4,242

 

752

 

1,310,737

 

6,884

 

2,156

 

 

1,317,135

 

7,636

Residential 1-4 Family - Commercial

 

5,498

 

89

 

621,320

 

1,603

 

13,601

 

 

640,419

 

1,692

Residential 1-4 Family - Consumer

 

16,031

 

470

 

641,006

 

1,022

 

16,872

 

 

673,909

 

1,492

Auto

 

576

 

231

 

301,360

 

1,212

 

7

 

 

301,943

 

1,443

HELOC

 

1,874

 

188

 

606,394

 

1,109

 

5,115

 

 

613,383

 

1,297

Consumer and all other(1)

 

686

 

64

 

620,176

 

7,081

 

749

 

 

621,611

 

7,145

Total loans held for investment, net

$

59,228

$

2,217

$

9,566,758

$

38,828

$

90,221

$

$

9,716,207

$

41,045

(1)Consumer and Other Commercial are grouped together as Consumer and all other for reporting purposes.

The Company uses a risk rating system and past due status as the primary credit quality indicators for the loan categories. The risk rating system on a scale of 0 through 9 is used to determine risk level as used in the calculation of the ALL; on those loans without a risk rating, the Company uses past due status to determine risk level. The risk levels, as described below, do not necessarily follow the regulatory definitions of risk levels with the same name. A general description of the characteristics of the risk levels follows:

Pass is determined by the following criteria:

Risk rated 0 loans have little or no risk and are with General Obligation Municipal Borrowers;
Risk rated 1 loans have little or no risk and are generally secured by cash or cash equivalents;
Risk rated 2 loans have minimal risk to well qualified borrowers and no significant questions as to safety;
Risk rated 3 loans are satisfactory loans with strong borrowers and secondary sources of repayment;
Risk rated 4 loans are satisfactory loans with borrowers not as strong as risk rated 3 loans and may exhibit a greater degree of financial risk based on the type of business supporting the loan; or
Loans that are not risk rated but that are 0 to 29 days past due.

Watch & Special Mention is determined by the following criteria:

Risk rated 5 loans are watch loans that warrant more than the normal level of supervision and have the possibility of an event occurring that may weaken the borrower’s ability to repay;
Risk rated 6 loans have increasing potential weaknesses beyond those at which the loan originally was granted and if not addressed could lead to inadequately protecting the Company’s credit position; or
Loans that are not risk rated but that are 30 to 89 days past due.

Substandard is determined by the following criteria:

Risk rated 7 loans are substandard loans and are inadequately protected by the current sound worth or paying capacity of the obligor or the collateral pledged; these have well defined weaknesses that jeopardize the liquidation of the debt with the distinct possibility the Company will sustain some loss if the deficiencies are not corrected; or
Loans that are not risk rated but that are 90 to 149 days past due.

Doubtful is determined by the following criteria:

Risk rated 8 loans are doubtful of collection and the possibility of loss is high but pending specific borrower plans for recovery, its classification as a loss is deferred until its more exact status is determined;
Risk rated 9 loans are loss loans which are considered uncollectable and of such little value that their continuance as bankable assets is not warranted; or
Loans that are not risk rated but that are over 149 days past due.

The following table shows the recorded investment in all loans, excluding PCI loans, by segment with their related risk level as of September 30, 2019 (dollars in thousands):

    

Pass

    

Watch & Special Mention

    

Substandard

    

Doubtful

    

Total

Construction and Land Development

$

1,148,732

$

33,136

$

10,894

$

$

1,192,762

Commercial Real Estate - Owner Occupied

 

1,850,909

 

78,451

 

21,730

 

145

 

1,951,235

Commercial Real Estate - Non-Owner Occupied

 

3,124,018

 

54,884

 

2,297

 

96

 

3,181,295

Multifamily Real Estate

 

645,193

 

13,448

 

1,212

 

 

659,853

Commercial & Industrial

 

1,949,546

 

99,337

 

5,988

 

 

2,054,871

Residential 1-4 Family - Commercial

 

679,023

 

22,772

 

7,153

 

 

708,948

Residential 1-4 Family - Consumer

 

871,391

 

4,584

 

22,293

 

 

898,268

Auto

 

324,396

 

1,990

 

2,063

 

 

328,449

HELOC

 

644,019

 

6,529

 

6,140

 

 

656,688

Consumer

 

384,744

 

1,182

 

240

 

 

386,166

Other Commercial

196,511

2,057

159

198,727

Total

$

11,818,482

$

318,370

$

80,169

$

241

$

12,217,262

The following table shows the recorded investment in all loans, excluding PCI loans, by segment with their related risk level as of December 31, 2018 (dollars in thousands):

    

Pass

    

Watch & Special Mention

    

Substandard

    

Doubtful

    

Total

Construction and Land Development

$

1,130,577

$

43,894

$

11,696

$

$

1,186,167

Commercial Real Estate - Owner Occupied

 

1,231,422

 

50,939

 

29,340

 

 

1,311,701

Commercial Real Estate - Non-Owner Occupied

 

2,425,500

 

17,648

 

6,927

 

 

2,450,075

Multifamily Real Estate

 

537,572

 

10,571

 

 

 

548,143

Commercial & Industrial

 

1,273,549

 

34,864

 

6,566

 

 

1,314,979

Residential 1-4 Family - Commercial

 

606,955

 

14,876

 

4,987

 

 

626,818

Residential 1-4 Family - Consumer

 

624,346

 

17,065

 

15,626

 

 

657,037

Auto

 

296,907

 

3,590

 

1,439

 

 

301,936

HELOC

 

598,444

 

6,316

 

3,508

 

 

608,268

Consumer

 

378,873

 

547

 

242

 

 

379,662

Other Commercial

 

239,857

 

864

 

479

 

 

241,200

Total

$

9,344,002

$

201,174

$

80,810

$

$

9,625,986

The following table shows the recorded investment in only PCI loans by segment with their related risk level as of September 30, 2019 (dollars in thousands):

    

Pass

    

Watch & Special Mention

    

Substandard

    

Doubtful

    

Total

Construction and Land Development

$

1,233

$

3,993

$

3,161

$

$

8,387

Commercial Real Estate - Owner Occupied

 

8,273

 

10,845

 

8,699

 

 

27,817

Commercial Real Estate - Non-Owner Occupied

 

3,855

 

9,533

 

3,897

 

 

17,285

Multifamily Real Estate

 

 

93

 

 

 

93

Commercial & Industrial

 

115

 

57

 

3,090

 

 

3,262

Residential 1-4 Family - Commercial

 

6,490

 

2,780

 

2,967

 

 

12,237

Residential 1-4 Family - Consumer

 

10,074

 

233

 

4,670

 

 

14,977

Auto

 

3

 

 

4

 

 

7

HELOC

 

3,092

 

607

 

576

 

 

4,275

Consumer

 

660

 

4

 

18

 

 

682

Other Commercial

122

591

713

Total

$

33,917

$

28,736

$

27,082

$

$

89,735

The following table shows the recorded investment in only PCI loans by segment with their related risk level as of December 31, 2018 (dollars in thousands):

    

Pass

    

Watch & Special Mention

    

Substandard

    

Doubtful

    

Total

Construction and Land Development

$

1,835

$

1,308

$

5,511

$

$

8,654

Commercial Real Estate - Owner Occupied

 

8,347

 

6,685

 

10,612

 

 

25,644

Commercial Real Estate - Non-Owner Occupied

 

4,789

 

7,992

 

4,554

 

 

17,335

Multifamily Real Estate

 

 

88

 

 

 

88

Commercial & Industrial

 

762

 

134

 

1,260

 

 

2,156

Residential 1-4 Family - Commercial

 

6,476

 

2,771

 

4,354

 

 

13,601

Residential 1-4 Family - Consumer

 

9,930

 

1,030

 

5,912

 

 

16,872

Auto

7

7

HELOC

 

3,438

 

1,031

 

646

 

 

5,115

Consumer

 

17

 

 

15

 

 

32

Other Commercial

57

660

717

Total

$

35,658

$

21,699

$

32,864

$

$

90,221

Loans acquired are originally recorded at fair value, with certain loans being identified as impaired at the date of purchase. The fair values were determined based on the credit quality of the portfolio, expected future cash flows, and timing of those expected future cash flows.

The following shows changes in the accretable yield for loans accounted for under ASC 310-30, Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality, for the periods presented (dollars in thousands):

For the Nine Months Ended September 30, 

    

2019

    

2018

Balance at beginning of period

$

31,201

$

14,563

Additions

 

2,432

 

12,225

Accretion

 

(9,830)

 

(6,666)

Reclass of nonaccretable difference due to improvement in expected cash flows

 

1,372

 

360

Measurement period adjustment

 

2,629

 

2,981

Other, net (1)

 

5,083

 

1,845

Balance at end of period

$

32,887

$

25,308

(1) This line item represents changes in the cash flows expected to be collected due to the impact of non-credit changes such as prepayment assumptions, changes in interest rates on variable rate PCI loans, and discounted payoffs that occurred in the quarter.

The carrying value of the Company’s PCI loan portfolio, accounted for under ASC 310-30, Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality, totaled $89.7 million at September 30, 2019 and $90.2 million at December 31, 2018. The outstanding balance of the Company’s PCI loan portfolio totaled $113.8 million at September 30, 2019 and $113.5 million at December 31, 2018. The carrying value of the Company’s acquired performing loan portfolio, accounted for under ASC 310-20, Receivables – Nonrefundable Fees and Other Costs, totaled $3.3 billion at September 30, 2019 and $2.0 billion at December 31, 2018; the remaining discount on these loans totaled $54.1 million at September 30, 2019 and $30.3 million at December 31, 2018.