Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Impaired Loans

The tables below show the aging of the Company’s loan portfolio at June 30, 2017, December 31, 2016 and June 30, 2016:



As of June 30, 2017			90+ days and still accruing		60-89 days past due		30-59 days past due
(Dollars in thousands)	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Loan Balances:
Commercial
Commercial, industrial and other	$	8,720	$	—	$	5,917	$	12,658	$	4,067,237	$	4,094,532
Franchise	—		—		—		—		838,394		838,394
Mortgage warehouse lines of credit	—		—		—		2,361		232,282		234,643
Asset-based lending	936		—		983		7,293		862,694		871,906
Leases	535		—		—		60		356,009		356,604
PCI - commercial ⁽¹⁾	—		1,572		162		—		8,476		10,210
Total commercial	10,191		1,572		7,062		22,372		6,365,092		6,406,289
Commercial real estate:
Construction	2,408		—		—		—		707,179		709,587
Land	202		—		—		6,455		105,496		112,153
Office	4,806		—		607		7,725		874,546		887,684
Industrial	2,193		—		—		709		789,889		792,791
Retail	1,635		—		—		15,081		903,778		920,494
Multi-family	354		—		—		1,186		813,058		814,598
Mixed use and other	5,382		—		713		7,590		2,005,265		2,018,950
PCI - commercial real estate ⁽¹⁾	—		8,768		322		3,303		133,844		146,237
Total commercial real estate	16,980		8,768		1,642		42,049		6,333,055		6,402,494
Home equity	9,482		—		855		2,858		676,288		689,483
Residential real estate, including PCI	14,292		775		1,273		300		746,170		762,810
Premium finance receivables
Commercial insurance loans	10,456		5,922		4,951		11,713		2,615,344		2,648,386
Life insurance loans	—		1,046		—		16,977		3,474,686		3,492,709
PCI - life insurance loans ⁽¹⁾	—		—		—		—		226,334		226,334
Consumer and other, including PCI	439		125		331		515		113,417		114,827
Total loans, net of unearned income, excluding covered loans	$	61,840	$	18,208	$	16,114	$	96,784	$	20,550,386	$	20,743,332
Covered loans	1,961		2,504		113		598		44,943		50,119
Total loans, net of unearned income	$	63,801	$	20,712	$	16,227	$	97,382	$	20,595,329	$	20,793,451


(1)	PCI loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.



As of December 31, 2016			90+ days and still accruing		60-89 days past due		30-59 days past due
(Dollars in thousands)	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Loan Balances:
Commercial
Commercial, industrial and other	$	13,441	$	174	$	2,341	$	11,779	$	3,716,977	$	3,744,712
Franchise	—		—		—		493		869,228		869,721
Mortgage warehouse lines of credit	—		—		—		—		204,225		204,225
Asset-based lending	1,924		—		135		1,609		871,402		875,070
Leases	510		—		—		1,331		293,073		294,914
PCI - commercial ⁽¹⁾	—		1,689		100		2,428		12,563		16,780
Total commercial	15,875		1,863		2,576		17,640		5,967,468		6,005,422
Commercial real estate
Construction	2,408		—		—		1,824		606,007		610,239
Land	394		—		188		—		104,219		104,801
Office	4,337		—		4,506		1,232		857,599		867,674
Industrial	7,047		—		4,516		2,436		756,602		770,601
Retail	597		—		760		3,364		907,872		912,593
Multi-family	643		—		322		1,347		805,312		807,624
Mixed use and other	6,498		—		1,186		12,632		1,931,859		1,952,175
PCI - commercial real estate ⁽¹⁾	—		16,188		3,775		8,888		141,529		170,380
Total commercial real estate	21,924		16,188		15,253		31,723		6,110,999		6,196,087
Home equity	9,761		—		1,630		6,515		707,887		725,793
Residential real estate, including PCI	12,749		1,309		936		8,271		681,956		705,221
Premium finance receivables
Commercial insurance loans	14,709		7,962		5,646		14,580		2,435,684		2,478,581
Life insurance loans	—		3,717		17,514		16,204		3,182,935		3,220,370
PCI - life insurance loans ⁽¹⁾	—		—		—		—		249,657		249,657
Consumer and other, including PCI	439		207		100		887		120,408		122,041
Total loans, net of unearned income, excluding covered loans	$	75,457	$	31,246	$	43,655	$	95,820	$	19,456,994	$	19,703,172
Covered loans	2,121		2,492		225		1,553		51,754		58,145
Total loans, net of unearned income	$	77,578	$	33,738	$	43,880	$	97,373	$	19,508,748	$	19,761,317



As of June 30, 2016			90+ days and still accruing		60-89 days past due		30-59 days past due
(Dollars in thousands)	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Loan Balances:
Commercial
Commercial, industrial and other	$	16,414	$	—	$	1,412	$	22,317	$	3,416,432	$	3,456,575
Franchise	—		—		560		87		289,258		289,905
Mortgage warehouse lines of credit	—		—		—		—		270,586		270,586
Asset-based lending	—		235		1,899		6,421		834,112		842,667
Leases	387		—		48		—		267,639		268,074
PCI - commercial ⁽¹⁾	—		1,956		630		1,426		12,714		16,726
Total commercial	16,801		2,191		4,549		30,251		5,090,741		5,144,533
Commercial real estate:
Construction	673		—		46		7,922		396,264		404,905
Land	1,725		—		—		340		103,816		105,881
Office	6,274		—		5,452		4,936		892,791		909,453
Industrial	10,295		—		1,108		719		754,647		766,769
Retail	916		—		535		6,450		889,945		897,846
Multi-family	90		—		2,077		1,275		775,075		778,517
Mixed use and other	4,442		—		4,285		8,007		1,795,931		1,812,665
PCI - commercial real estate ⁽¹⁾	—		27,228		1,663		2,608		140,799		172,298
Total commercial real estate	24,415		27,228		15,166		32,257		5,749,268		5,848,334
Home equity	8,562		—		380		4,709		747,253		760,904
Residential real estate, including PCI	12,413		1,479		1,367		299		638,106		653,664
Premium finance receivables
Commercial insurance loans	14,497		10,558		6,966		9,456		2,436,803		2,478,280
Life insurance loans	—		—		46,651		11,953		2,811,356		2,869,960
PCI - life insurance loans ⁽¹⁾	—		—		—		—		291,602		291,602
Consumer and other, including PCI	475		226		610		1,451		124,616		127,378
Total loans, net of unearned income, excluding covered loans	$	77,163	$	41,682	$	75,689	$	90,376	$	17,889,745	$	18,174,655
Covered loans	2,651		6,810		697		1,610		93,480		105,248
Total loans, net of unearned income	$	79,814	$	48,492	$	76,386	$	91,986	$	17,983,225	$	18,279,903


(1)	PCI loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.

The Company's ability to manage credit risk depends in large part on our ability to properly identify and manage problem loans. To do so, the Company operates a credit risk rating system under which our credit management personnel assign a credit risk rating (1 to 10 rating) to each loan at the time of origination and review loans on a regular basis.

Each loan officer is responsible for monitoring his or her loan portfolio, recommending a credit risk rating for each loan in his or her portfolio and ensuring the credit risk ratings are appropriate. These credit risk ratings are then ratified by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors including: a borrower’s financial strength, cash flow coverage, collateral protection and guarantees.

The Company’s Problem Loan Reporting system automatically includes all loans with credit risk ratings of 6 through 9. This system is designed to provide an on-going detailed tracking mechanism for each problem loan. Once management determines that a loan has deteriorated to a point where it has a credit risk rating of 6 or worse, the Company’s Managed Asset Division performs an overall credit and collateral review. As part of this review, all underlying collateral is identified and the valuation methodology is analyzed and tracked. As a result of this initial review by the Company’s Managed Asset Division, the credit risk rating is reviewed and a portion of the outstanding loan balance may be deemed uncollectible or an impairment reserve may be established. The Company’s impairment analysis utilizes an independent re-appraisal of the collateral (unless such a third-party evaluation is not possible due to the unique nature of the collateral, such as a closely-held business or thinly traded securities). In the case of commercial real estate collateral, an independent third party appraisal is ordered by the Company’s Real Estate Services Group to determine if there has been any change in the underlying collateral value. These independent appraisals are reviewed by the Real Estate Services Group and sometimes by independent third party valuation experts and may be adjusted depending upon market conditions.

Through the credit risk rating process, loans are reviewed to determine if they are performing in accordance with the original contractual terms. If the borrower has failed to comply with the original contractual terms, further action may be required by the Company, including a downgrade in the credit risk rating, movement to non-accrual status, a charge-off or the establishment of a specific impairment reserve. If a loan amount, or portion thereof, is determined to be uncollectible, the loan’s credit risk rating is immediately downgraded to an 8 or 9 and the uncollectible amount is charged-off. Any loan that has a partial charge-off continues to be assigned a credit risk rating of an 8 or 9 for the duration of time that a balance remains outstanding. The Company undertakes a thorough and ongoing analysis to determine if additional impairment and/or charge-offs are appropriate and to begin a workout plan for the credit to minimize actual losses.

If, based on current information and events, it is probable that the Company will be unable to collect all amounts due to it according to the contractual terms of the loan agreement, a specific impairment reserve is established. In determining the appropriate charge-off for collateral-dependent loans, the Company considers the results of appraisals for the associated collateral.

Non-performing loans include all non-accrual loans (8 and 9 risk ratings) as well as loans 90 days past due and still accruing interest, excluding PCI and covered loans. The remainder of the portfolio is considered performing under the contractual terms of the loan agreement. The following table presents the recorded investment based on performance of loans by class, excluding covered loans, per the most recent analysis at June 30, 2017, December 31, 2016 and June 30, 2016:



	Performing						Non-performing						Total
(Dollars in thousands)	June 30, 2017		December 31, 2016		June 30, 2016		June 30, 2017		December 31, 2016		June 30, 2016		June 30, 2017		December 31, 2016		June 30, 2016
Loan Balances:
Commercial
Commercial, industrial and other	$	4,085,812	$	3,731,097	$	3,440,161	$	8,720	$	13,615	$	16,414	$	4,094,532	$	3,744,712	$	3,456,575
Franchise	838,394		869,721		289,905		—		—		—		838,394		869,721		289,905
Mortgage warehouse lines of credit	234,643		204,225		270,586		—		—		—		234,643		204,225		270,586
Asset-based lending	870,970		873,146		842,432		936		1,924		235		871,906		875,070		842,667
Leases	356,069		294,404		267,687		535		510		387		356,604		294,914		268,074
PCI - commercial ⁽¹⁾	10,210		16,780		16,726		—		—		—		10,210		16,780		16,726
Total commercial	6,396,098		5,989,373		5,127,497		10,191		16,049		17,036		6,406,289		6,005,422		5,144,533
Commercial real estate
Construction	707,179		607,831		404,232		2,408		2,408		673		709,587		610,239		404,905
Land	111,951		104,407		104,156		202		394		1,725		112,153		104,801		105,881
Office	882,878		863,337		903,179		4,806		4,337		6,274		887,684		867,674		909,453
Industrial	790,598		763,554		756,474		2,193		7,047		10,295		792,791		770,601		766,769
Retail	918,859		911,996		896,930		1,635		597		916		920,494		912,593		897,846
Multi-family	814,244		806,981		778,427		354		643		90		814,598		807,624		778,517
Mixed use and other	2,013,568		1,945,677		1,808,223		5,382		6,498		4,442		2,018,950		1,952,175		1,812,665
PCI - commercial real estate⁽¹⁾	146,237		170,380		172,298		—		—		—		146,237		170,380		172,298
Total commercial real estate	6,385,514		6,174,163		5,823,919		16,980		21,924		24,415		6,402,494		6,196,087		5,848,334
Home equity	680,001		716,032		752,342		9,482		9,761		8,562		689,483		725,793		760,904
Residential real estate, including PCI	748,339		692,472		641,251		14,471		12,749		12,413		762,810		705,221		653,664
Premium finance receivables
Commercial insurance loans	2,632,008		2,455,910		2,453,225		16,378		22,671		25,055		2,648,386		2,478,581		2,478,280
Life insurance loans	3,491,663		3,216,653		2,869,960		1,046		3,717		—		3,492,709		3,220,370		2,869,960
PCI - life insurance loans ⁽¹⁾	226,334		249,657		291,602		—		—		—		226,334		249,657		291,602
Consumer and other, including PCI	114,325		121,458		126,740		502		583		638		114,827		122,041		127,378
Total loans, net of unearned income, excluding covered loans	$	20,674,282	$	19,615,718	$	18,086,536	$	69,050	$	87,454	$	88,119	$	20,743,332	$	19,703,172	$	18,174,655


(1)	PCI loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. See Note 6 - Loans for further discussion of these purchased loans.

A summary of activity in the allowance for credit losses by loan portfolio (excluding covered loans) for the three and six months ended June 30, 2017 and 2016 is as follows:



Three months ended June 30, 2017				Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivables			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivables			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	46,582		$	52,633		$	12,203		$	5,530		$	7,559		$	1,312		$	125,819
Other adjustments	(2		)	(47		)	—			(3		)	22			—			(30		)
Reclassification from allowance for unfunded lending-related commitments	92			14			—			—			—			—			106
Charge-offs	(913		)	(1,985		)	(1,631		)	(146		)	(1,878		)	(175		)	(6,728		)
Recoveries	561			276			144			54			404			33			1,472
Provision for credit losses	6,038			1,448			418			708			245			95			8,952
Allowance for loan losses at period end	$	52,358		$	52,339		$	11,134		$	6,143		$	6,352		$	1,265		$	129,591
Allowance for unfunded lending-related commitments at period end	$	500		$	1,205		$	—		$	—		$	—		$	—		$	1,705
Allowance for credit losses at period end	$	52,858		$	53,544		$	11,134		$	6,143		$	6,352		$	1,265		$	131,296
Individually evaluated for impairment	$	2,528		$	1,473		$	1,296		$	764		$	—		$	91		$	6,152
Collectively evaluated for impairment	49,692			51,952			9,838			5,306			6,352			1,174			124,314
Loans acquired with deteriorated credit quality	638			119			—			73			—			—			830
Loans at period end
Individually evaluated for impairment	$	14,469		$	34,690		$	9,633		$	20,859		$	—		$	421		$	80,072
Collectively evaluated for impairment	6,381,610			6,221,567			679,850			708,042			6,141,095			113,319			20,245,483
Loans acquired with deteriorated credit quality	10,210			146,237			—			3,736			226,334			1,087			387,604
Loans held at fair value	—			—			—			30,173			—			—			30,173



Three months ended June 30, 2016	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivables			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivables			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	38,435		$	45,263		$	12,915		$	5,164		$	7,205		$	1,189		$	110,171
Other adjustments	(59		)	(70		)	—			(9		)	4			—			(134		)
Reclassification from allowance for unfunded lending-related commitments	—			(40		)	—			—			—			—			(40		)
Charge-offs	(721		)	(502		)	(2,046		)	(693		)	(1,911		)	(224		)	(6,097		)
Recoveries	121			296			71			31			633			35			1,187
Provision for credit losses	3,878			1,877			443			912			1,883			276			9,269
Allowance for loan losses at period end	$	41,654		$	46,824		$	11,383		$	5,405		$	7,814		$	1,276		$	114,356
Allowance for unfunded lending-related commitments at period end	$	—		$	1,070		$	—		$	—		$	—		$	—		$	1,070
Allowance for credit losses at period end	$	41,654		$	47,894		$	11,383		$	5,405		$	7,814		$	1,276		$	115,426
Individually evaluated for impairment	$	3,417		$	2,121		$	477		$	625		$	—		$	5		$	6,645
Collectively evaluated for impairment	37,571			45,736			10,906			4,720			7,814			1,271			108,018
Loans acquired with deteriorated credit quality	666			37			—			60			—			—			763
Loans at period end
Individually evaluated for impairment	$	21,173		$	49,284		$	8,562		$	17,281		$	—		$	536		$	96,836
Collectively evaluated for impairment	5,106,634			5,626,752			752,342			615,831			5,348,240			126,842			17,576,641
Loans acquired with deteriorated credit quality	16,726			172,298			—			4,258			291,602			—			484,884
Loans held at fair value	—			—			—			16,294			—			—			16,294



Six months ended June 30, 2017				Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	44,493		$	51,422		$	11,774		$	5,714		$	7,625		$	1,263		$	122,291
Other adjustments	(21		)	(83		)	—			(7		)	25			—			(86		)
Reclassification from allowance for unfunded lending-related commitments	—			(32		)	—			—			—			—			(32		)
Charge-offs	(1,554		)	(2,246		)	(2,256		)	(475		)	(3,305		)	(309		)	(10,145		)
Recoveries	834			830			209			232			1,016			174			3,295
Provision for credit losses	8,606			2,448			1,407			679			991			137			14,268
Allowance for loan losses at period end	$	52,358		$	52,339		$	11,134		$	6,143		$	6,352		$	1,265		$	129,591
Allowance for unfunded lending-related commitments at period end	$	500		$	1,205		$	—		$	—		$	—		$	—		$	1,705
Allowance for credit losses at period end	$	52,858		$	53,544		$	11,134		$	6,143		$	6,352		$	1,265		$	131,296



Six months ended June 30, 2016				Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	36,135		$	43,758		$	12,012		$	4,734		$	7,233		$	1,528		$	105,400
Other adjustments	(68		)	(146		)	—			(39		)	41			—			(212		)
Reclassification from allowance for unfunded lending-related commitments	—			(121		)	—			—			—			—			(121		)
Charge-offs	(1,392		)	(1,173		)	(3,098		)	(1,186		)	(4,391		)	(331		)	(11,571		)
Recoveries	750			665			119			143			1,420			71			3,168
Provision for credit losses	6,229			3,841			2,350			1,753			3,511			8			17,692
Allowance for loan losses at period end	$	41,654		$	46,824		$	11,383		$	5,405		$	7,814		$	1,276		$	114,356
Allowance for unfunded lending-related commitments at period end	$	—		$	1,070		$	—		$	—		$	—		$	—		$	1,070
Allowance for credit losses at period end	$	41,654		$	47,894		$	11,383		$	5,405		$	7,814		$	1,276		$	115,426

A summary of activity in the allowance for covered loan losses for the three and six months ended June 30, 2017 and 2016 is as follows:



	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
(Dollars in thousands)	2017			2016			2017			2016
Balance at beginning of period	$	1,319		$	2,507		$	1,322		$	3,026
Provision for covered loan losses before benefit attributable to FDIC loss share agreements	(303		)	(702		)	(838		)	(2,648		)
Benefit attributable to FDIC loss share agreements	242			562			670			2,119
Net provision for covered loan losses	(61		)	(140		)	(168		)	(529		)
Increase/decrease in FDIC indemnification liability/asset	(242		)	(562		)	(670		)	(2,119		)
Loans charged-off	(120		)	(143		)	(336		)	(373		)
Recoveries of loans charged-off	178			750			926			2,407
Net recoveries	58			607			590			2,034
Balance at end of period	$	1,074		$	2,412		$	1,074		$	2,412

In conjunction with FDIC-assisted transactions, the Company entered into loss share agreements with the FDIC. Additional expected losses, to the extent such expected losses result in the recognition of an allowance for loan losses, will increase the FDIC loss share asset or reduce any FDIC loss share liability. The allowance for loan losses for loans acquired in FDIC-assisted transactions is determined without giving consideration to the amounts recoverable through loss share agreements (since the loss share agreements are separately accounted for and thus presented “gross” on the balance sheet). On the Consolidated Statements of Income, the provision for credit losses is reported net of changes in the amount recoverable under the loss share agreements. Reductions to expected losses, to the extent such reductions to expected losses are the result of an improvement to the actual or expected cash flows from the covered assets, will reduce the FDIC loss share asset or increase any FDIC loss share liability. Additions to expected losses will require an increase to the allowance for covered loan losses, and a corresponding increase to the FDIC loss share asset or reduction to any FDIC loss share liability. See “FDIC-Assisted Transactions” within Note 3 – Business Combinations for more detail.

Impaired Loans

A summary of impaired loans, including troubled debt restructurings ("TDRs"), is as follows:



	June 30,		December 31,		June 30,
(Dollars in thousands)	2017		2016		2016
Impaired loans (included in non-performing and TDRs):
Impaired loans with an allowance for loan loss required ⁽¹⁾	$	29,037	$	33,146	$	42,968
Impaired loans with no allowance for loan loss required	50,281		57,370		53,008
Total impaired loans ⁽²⁾	$	79,318	$	90,516	$	95,976
Allowance for loan losses related to impaired loans	$	5,633	$	6,377	$	6,611
TDRs	$	33,091	$	41,708	$	49,635


(1)	These impaired loans require an allowance for loan losses because the estimated fair value of the loans or related collateral is less than the recorded investment in the loans.


(2)	Impaired loans are considered by the Company to be non-accrual loans, TDRs or loans with principal and/or interest at risk, even if the loan is current with all payments of principal and interest.

The following tables present impaired loans by loan class, excluding covered loans, for the periods ended as follows:



							For the Six Months Ended
	As of June 30, 2017						June 30, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	2,969	$	3,006	$	1,499	$	3,061	$	83
Asset-based lending	511		512		293		704		21
Leases	2,504		2,508		235		2,578		62
Commercial real estate
Construction	7,632		7,632		957		7,665		165
Land	1,750		1,750		7		1,750		32
Office	1,314		1,418		32		1,318		44
Industrial	—		—		—		—		—
Retail	1,582		1,631		130		1,596		40
Multi-family	1,513		1,513		27		1,518		28
Mixed use and other	1,455		1,531		302		1,478		35
Home equity	1,901		1,950		1,296		1,920		35
Residential real estate	5,815		6,090		764		5,731		118
Consumer and other	91		93		91		96		2
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	6,815	$	7,785	$	—	$	7,285	$	213
Asset-based lending	425		425		—		764		16
Leases	852		852		—		879		26
Commercial real estate
Construction	1,504		1,504		—		1,534		33
Land	2,375		2,472		—		2,380		56
Office	3,973		5,074		—		4,076		131
Industrial	2,193		3,622		—		4,328		190
Retail	1,188		1,273		—		1,188		51
Multi-family	89		174		—		89		4
Mixed use and other	7,761		9,299		—		8,494		239
Home equity	7,732		11,260		—		8,906		258
Residential real estate	15,044		17,068		—		15,203		368
Consumer and other	330		434		—		333		11
Total impaired loans, net of unearned income	$	79,318	$	90,876	$	5,633	$	84,874	$	2,261



							For the Twelve Months Ended
	As of December 31, 2016						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	2,601	$	2,617	$	1,079	$	2,649	$	134
Asset-based lending	233		235		26		235		10
Leases	2,441		2,443		107		2,561		128
Commercial real estate
Construction	5,302		5,302		86		5,368		164
Land	1,283		1,283		1		1,303		47
Office	2,687		2,697		324		2,797		137
Industrial	5,207		5,843		1,810		7,804		421
Retail	1,750		1,834		170		2,039		101
Multi-family	—		—		—		—		—
Mixed use and other	3,812		4,010		592		4,038		195
Home equity	1,961		1,873		1,233		1,969		75
Residential real estate	5,752		6,327		849		5,816		261
Consumer and other	117		121		100		131		7
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	12,534	$	14,704	$	—	$	14,944	$	948
Asset-based lending	1,691		2,550		—		8,467		377
Leases	873		873		—		939		56
Commercial real estate
Construction	4,003		4,003		—		4,161		81
Land	3,034		3,503		—		3,371		142
Office	3,994		5,921		—		4,002		323
Industrial	2,129		2,436		—		2,828		274
Retail	—		—		—		—		—
Multi-family	1,903		1,987		—		1,825		84
Mixed use and other	6,815		7,388		—		6,912		397
Home equity	8,033		10,483		—		8,830		475
Residential real estate	11,983		14,124		—		12,041		622
Consumer and other	378		489		—		393		26
Total impaired loans, net of unearned income	$	90,516	$	103,046	$	6,377	$	105,423	$	5,485



							For the Six Months Ended
	As of June 30, 2016						June 30, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	10,253	$	12,866	$	3,280	$	10,172	$	375
Asset-based lending	—		—		—		—		—
Leases	387		387		128		390		10
Commercial real estate
Construction	—		—		—		—		—
Land	4,538		4,538		18		4,592		83
Office	2,401		3,059		176		2,427		70
Industrial	7,369		7,773		1,514		7,552		195
Retail	7,007		7,024		264		7,064		95
Multi-family	1,274		1,274		15		1,066		18
Mixed use and other	3,040		3,162		109		3,063		73
Home equity	1,349		1,511		477		1,443		30
Residential real estate	5,230		5,840		625		5,289		123
Consumer and other	120		148		5		123		4
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	10,092	$	10,950	$	—	$	10,045	$	328
Asset-based lending	—		—		—		—		—
Leases	—		—		—		—		—
Commercial real estate
Construction	2,677		2,677		—		2,693		77
Land	2,979		7,492		—		3,001		254
Office	6,967		8,715		—		7,107		227
Industrial	3,966		5,093		—		4,326		168
Retail	1,122		1,122		—		1,129		27
Multi-family	90		174		—		119		3
Mixed use and other	5,435		5,960		—		5,498		159
Home equity	7,213		9,674		—		8,356		219
Residential real estate	12,051		14,180		—		11,997		308
Consumer and other	416		494		—		427		14
Total impaired loans, net of unearned income	$	95,976	$	114,113	$	6,611	$	97,879	$	2,860

TDRs

At June 30, 2017, the Company had $33.1 million in loans modified in TDRs. The $33.1 million in TDRs represents 77 credits in which economic concessions were granted to certain borrowers to better align the terms of their loans with their current ability to pay.

The Company’s approach to restructuring loans, excluding PCI loans, is built on its credit risk rating system which requires credit management personnel to assign a credit risk rating to each loan. In each case, the loan officer is responsible for recommending a credit risk rating for each loan and ensuring the credit risk ratings are appropriate. These credit risk ratings are then reviewed and approved by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors including a borrower’s financial strength, cash flow coverage, collateral protection and guarantees. The Company’s credit risk rating scale is one through ten with higher scores indicating higher risk. In the case of loans rated six or worse following modification, the Company’s Managed Assets Division evaluates the loan and the credit risk rating and determines that the loan has been restructured to be reasonably assured of repayment and of performance according to the modified terms and is supported by a current, well-documented credit assessment of the borrower’s financial condition and prospects for repayment under the revised terms.

A modification of a loan, excluding PCI loans, with an existing credit risk rating of 6 or worse or a modification of any other credit, which will result in a restructured credit risk rating of six or worse, must be reviewed for possible TDR classification. In that event, our Managed Assets Division conducts an overall credit and collateral review. A modification of these loans is considered to be a TDR if both (1) the borrower is experiencing financial difficulty and (2) for economic or legal reasons, the bank grants a concession to a borrower that it would not otherwise consider. The modification of a loan, excluding PCI loans, where the credit risk rating is 5 or better both before and after such modification is not considered to be a TDR. Based on the Company’s credit risk rating system, it considers that borrowers whose credit risk rating is 5 or better are not experiencing financial difficulties and therefore, are not considered TDRs.

All credits determined to be a TDR will continue to be classified as a TDR in all subsequent periods, unless the borrower has been in compliance with the loan’s modified terms for a period of six months (including over a calendar year-end) and the current interest rate represents a market rate at the time of restructuring. The Managed Assets Division, in consultation with the respective loan officer, determines whether the modified interest rate represented a current market rate at the time of restructuring. Using knowledge of current market conditions and rates, competitive pricing on recent loan originations, and an assessment of various characteristics of the modified loan (including collateral position and payment history), an appropriate market rate for a new borrower with similar risk is determined. If the modified interest rate meets or exceeds this market rate for a new borrower with similar risk, the modified interest rate represents a market rate at the time of restructuring. Additionally, before removing a loan from TDR classification, a review of the current or previously measured impairment on the loan and any concerns related to future performance by the borrower is conducted. If concerns exist about the future ability of the borrower to meet its obligations under the loans based on a credit review by the Managed Assets Division, the TDR classification is not removed from the loan.

TDRs are reviewed at the time of the modification and on a quarterly basis to determine if a specific reserve is necessary. The carrying amount of the loan is compared to the expected payments to be received, discounted at the loan's original rate, or for collateral dependent loans, to the fair value of the collateral. Any shortfall is recorded as a specific reserve. The Company, in accordance with ASC 310-10, continues to individually measure impairment of these loans after the TDR classification is removed.

Each TDR was reviewed for impairment at June 30, 2017 and approximately $953,000 of impairment was present and appropriately reserved for through the Company’s normal reserving methodology in the Company’s allowance for loan losses. For TDRs in which impairment is calculated by the present value of future cash flows, the Company records interest income representing the decrease in impairment resulting from the passage of time during the respective period, which differs from interest income from contractually required interest on these specific loans. During the three months ended June 30, 2017 and 2016, the Company recorded $49,000 and $135,000, respectively, of interest income, which was reflected as a decrease in impairment. For the six months ended June 30, 2017 and 2016, the Company recorded $104,000 and $225,000, respectively, of interest income, which was reflected as a decrease in impairment.

TDRs may arise in which, due to financial difficulties experienced by the borrower, the Company obtains through physical possession one or more collateral assets in satisfaction of all or part of an existing credit. Once possession is obtained, the Company reclassifies the appropriate portion of the remaining balance of the credit from loans to OREO, which is included within other assets in the Consolidated Statements of Condition. For any residential real estate property collateralizing a consumer mortgage loan, the Company is considered to possess the related collateral only if legal title is obtained upon completion of foreclosure, or the borrower conveys all interest in the residential real estate property to the Company through completion of a deed in lieu of foreclosure or similar legal agreement. Excluding covered OREO, at June 30, 2017, the Company had $8.4 million of foreclosed residential real estate properties included within OREO. Furthermore, the recorded investment in residential mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process totaled $12.4 million at June 30, 2017.

The tables below present a summary of the post-modification balance of loans restructured during the three and six months ended June 30, 2017 and 2016, respectively, which represent TDRs:



Three months ended June 30, 2017 (Dollars in thousands)	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt⁽²⁾
Three months ended June 30, 2017 (Dollars in thousands)	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	—	$	—	—	$	—	—	$	—	—	$	—	—	$	—
Commercial real estate
Office	—	—		—	—		—	—		—	—		—	—
Industrial	—	—		—	—		—	—		—	—		—	—
Mixed use and other	—	—		—	—		—	—		—	—		—	—
Residential real estate and other	4	2,210		4	2,210		3	2,161		—	—		—	—
Total loans	4	$	2,210	4	$	2,210	3	$	2,161	—	$	—	—	$	—



Three months ended June 30, 2016 (Dollars in thousands)	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt⁽²⁾
Three months ended June 30, 2016 (Dollars in thousands)	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	1	$	275	1	$	275	—	$	—	—	$	—	1	$	275
Commercial real estate
Office	—	—		—	—		—	—		—	—		—	—
Industrial	—	—		—	—		—	—		—	—		—	—
Mixed use and other	—	—		—	—		—	—		—	—		—	—
Residential real estate and other	1	380		1	380		1	380		1	380		—	—
Total loans	2	$	655	2	$	655	1	$	380	1	$	380	1	$	275


(1)	TDRs may have more than one modification representing a concession. As such, TDRs during the period may be represented in more than one of the categories noted above.


(2)	Balances represent the recorded investment in the loan at the time of the restructuring.

During the three months ended June 30, 2017, four loans totaling $2.2 million were determined to be TDRs, compared to two loans totaling $655,000 during the three months ended June 30, 2016. Of these loans extended at below market terms, the weighted average extension had a term of approximately 54 months during the quarter ended June 30, 2017 compared to 36 months for the quarter ended June 30, 2016. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately 195 basis points and 275 basis points during the three months ended June 30, 2017 and 2016, respectively. Interest-only payments terms were approximately six months during the three months ended June 30, 2016. Additionally, no principal balances were forgiven in the second quarter of 2017 compared to $300,000 of principal balance forgiven in the second quarter of 2016.



Six months ended June 30, 2017 (Dollars in thousands)	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt⁽²⁾
Six months ended June 30, 2017 (Dollars in thousands)	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	1	$	95	1	$	95	—	$	—	—	$	—	—	$	—
Commercial real estate
Office	—	—		—	—		—	—		—	—		—	—
Industrial	—	—		—	—		—	—		—	—		—	—
Mixed use and other	1	1,245		1	1,245		—	—		—	—		—	—
Residential real estate and other	6	2,383		6	2,383		5	2,334		—	—		—	—
Total loans	8	$	3,723	8	$	3,723	5	$	2,334	—	$	—	—	$	—


(1)	TDRs may have more than one modification representing a concession. As such, TDRs during the period may be represented in more than one of the categories noted above.


(2)	Balances represent the recorded investment in the loan at the time of the restructuring.



Six months ended June 30, 2016 (Dollars in thousands)	Total⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt⁽²⁾
Six months ended June 30, 2016 (Dollars in thousands)	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	2	$	317	2	$	317	—	$	—	—	$	—	1	$	275
Commercial real estate
Office	1	450		1	450		—	—		—	—		—	—
Industrial	6	7,921		6	7,921		3	7,196		—	—		—	—
Mixed use and other	2	150		2	150		—	—		—	—		—	—
Residential real estate and other	2	540		1	380		2	540		1	380		—	—
Total loans	13	$	9,378	12	$	9,218	5	$	7,736	1	$	380	1	$	275


(1)	TDRs may have more than one modification representing a concession. As such, TDRs during the period may be represented in more than one of the categories noted above.


(2)	Balances represent the recorded investment in the loan at the time of the restructuring.

During the six months ended June 30, 2017, eight loans totaling $3.7 million were determined to be TDRs, compared to 13 loans totaling $9.4 million in the same period of 2016. Of these loans extended at below market terms, the weighted average extension had a term of approximately 36 months during the six months ended June 30, 2017 compared to six months for the six months ended June 30, 2016. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately 184 basis points and 30 basis points for the year-to-date periods June 30, 2017 and 2016, respectively. Interest-only payment terms were approximately six months during the six months ended June 30, 2016. Additionally, no principal balances were forgiven in the first six months of 2017 compared to $300,000 of principal balance forgiven during the same period of 2016.

The following table presents a summary of all loans restructured in TDRs during the twelve months ended June 30, 2017 and 2016, and such loans which were in payment default under the restructured terms during the respective periods below:



(Dollars in thousands)	As of June 30, 2017			Three Months Ended June 30, 2017			Six Months Ended June 30, 2017
	Total ⁽¹⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾
	Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	2	$	123	1	$	28	1	$	28
Leases	2	2,949		—	—		—	—
Commercial real estate
Office	—	—		—	—		—	—
Industrial	—	—		—	—		—	—
Mixed use and other	1	1,245		—	—		—	—
Residential real estate and other	11	2,925		1	232		1	232
Total loans	16	$	7,242	2	$	260	2	$	260



(Dollars in thousands)	As of June 30, 2016			Three Months Ended June 30, 2016			Six Months Ended June 30, 2016
	Total ⁽¹⁾⁽³⁾			Payments in Default ⁽²⁾⁽³⁾			Payments in Default ⁽²⁾⁽³⁾
	Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	2	$	317	—	$	—	—	$	—
Leases	—	—		—	—		—	—
Commercial real estate
Office	1	450		1	450		1	450
Industrial	6	7,921		3	725		3	725
Mixed use and other	4	351		1	16		3	217
Residential real estate and other	3	762		1	222		1	222
Total loans	16	$	9,801	6	$	1,413	8	$	1,614


(1)	Total TDRs represent all loans restructured in TDRs during the previous twelve months from the date indicated.


(2)	TDRs considered to be in payment default are over 30 days past-due subsequent to the restructuring.


(3)	Balances represent the recorded investment in the loan at the time of the restructuring.