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

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

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

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 September 30, 2019, December 31, 2018 and September 30, 2018:

As of September 30, 2019			90+ days and still accruing		60-89 days past due		30-59 days past due
(In thousands)	Nonaccrual								Current		Total Loans
Loan Balances:
Commercial
Commercial, industrial and other	$	34,397	$	—	$	2,296	$	16,995	$	5,096,879	$	5,150,567
Franchise	3,752		—		—		7,327		903,695		914,774
Mortgage warehouse lines of credit	—		—		—		3,196		311,501		314,697
Asset-based lending	5,782		—		9,521		23,369		1,007,197		1,045,869
Leases	—		—		—		393		753,770		754,163
PCI - commercial (1)	—		382		1,043		207		13,900		15,532
Total commercial	43,931		382		12,860		51,487		8,086,942		8,195,602
Commercial real estate:
Construction	1,030		—		—		2,103		847,442		850,575
Land	994		—		88		4,947		169,357		175,386
Office	8,158		—		158		2,145		986,470		996,931
Industrial	100		—		950		961		1,007,669		1,009,680
Retail	7,174		—		2,235		3,684		991,627		1,004,720
Multi-family	690		—		1,073		2,265		1,287,797		1,291,825
Mixed use and other	3,411		—		928		10,084		1,987,844		2,002,267
PCI - commercial real estate (1)	—		4,992		4,197		6,909		101,185		117,283
Total commercial real estate	21,557		4,992		9,629		33,098		7,379,391		7,448,667
Home equity	7,920		—		95		3,100		501,188		512,303
Residential real estate, including PCI	13,447		3,244		1,868		1,433		1,198,674		1,218,666
Premium finance receivables
Commercial insurance loans	15,950		10,612		8,853		16,972		3,397,563		3,449,950
Life insurance loans	590		—		17,753		27,795		4,608,450		4,654,588
PCI - life insurance loans (1)	—		—		—		—		140,908		140,908
Consumer and other, including PCI	224		117		55		272		88,819		89,487
Total loans, net of unearned income	$	103,619	$	19,347	$	51,113	$	134,157	$	25,401,935	$	25,710,171

(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, 2018			90+ days and still accruing		60-89 days past due		30-59 days past due
(In thousands)	Nonaccrual								Current		Total Loans
Loan Balances:
Commercial
Commercial, industrial and other	$	34,298	$	—	$	1,451	$	21,618	$	5,062,729	$	5,120,096
Franchise	16,051		—		—		8,738		924,190		948,979
Mortgage warehouse lines of credit	—		—		—		—		144,199		144,199
Asset-based lending	635		—		200		3,156		1,022,065		1,026,056
Leases	—		—		—		1,250		564,430		565,680
PCI - commercial (1)	—		3,313		—		99		20,116		23,528
Total commercial	50,984		3,313		1,651		34,861		7,737,729		7,828,538
Commercial real estate
Construction	1,554		—		—		9,424		749,846		760,824
Land	107		—		170		107		141,097		141,481
Office	3,629		—		877		5,077		929,739		939,322
Industrial	285		—		—		16,596		885,367		902,248
Retail	10,753		—		1,890		1,729		878,106		892,478
Multi-family	311		—		77		5,575		970,597		976,560
Mixed use and other	2,490		—		1,617		8,983		2,192,105		2,205,195
PCI - commercial real estate (1)	—		6,241		6,195		4,075		98,633		115,144
Total commercial real estate	19,129		6,241		10,826		51,566		6,845,490		6,933,252
Home equity	7,147		—		131		3,105		541,960		552,343
Residential real estate, including PCI	16,383		1,292		1,692		6,171		976,926		1,002,464
Premium finance receivables
Commercial insurance loans	11,335		7,799		11,382		15,085		2,796,058		2,841,659
Life insurance loans	—		—		8,407		24,628		4,340,856		4,373,891
PCI - life insurance loans (1)	—		—		—		—		167,903		167,903
Consumer and other, including PCI	348		227		87		733		119,246		120,641
Total loans, net of unearned income	$	105,326	$	18,872	$	34,176	$	136,149	$	23,526,168	$	23,820,691

(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 September 30, 2018			90+ days and still accruing		60-89 days past due		30-59 days past due
(In thousands)	Nonaccrual								Current		Total Loans
Loan Balances:
Commercial
Commercial, industrial and other	$	41,322	$	—	$	2,535	$	16,451	$	4,745,178	$	4,805,486
Franchise	16,351		5,122		—		—		915,817		937,290
Mortgage warehouse lines of credit	—		—		3,000		—		168,860		171,860
Asset-based lending	910		—		590		9,083		1,023,268		1,033,851
Leases	4		—		—		80		509,591		509,675
PCI - commercial (1)	—		3,372		15		—		12,409		15,796
Total commercial	58,587		8,494		6,140		25,614		7,375,123		7,473,958
Commercial real estate:
Construction	1,554		—		1,823		16,228		778,725		798,330
Land	228		—		365		—		118,411		119,004
Office	1,532		—		4,058		3,021		932,166		940,777
Industrial	178		—		122		145		885,486		885,931
Retail	10,586		—		4,570		10,645		861,901		887,702
Multi-family	318		—		—		1,162		922,413		923,893
Mixed use and other	3,119		—		9,654		11,503		2,062,179		2,086,455
PCI - commercial real estate (1)	—		5,578		6,448		1,380		91,276		104,682
Total commercial real estate	17,515		5,578		27,040		44,084		6,652,557		6,746,774
Home equity	8,523		—		1,075		3,478		565,768		578,844
Residential real estate, including PCI	16,062		1,865		1,714		603		904,006		924,250
Premium finance receivables
Commercial insurance loans	13,802		7,028		5,945		13,239		2,845,313		2,885,327
Life insurance loans	—		—		—		22,016		4,203,465		4,225,481
PCI - life insurance loans (1)	—		—		—		—		173,490		173,490
Consumer and other, including PCI	355		295		430		329		114,418		115,827
Total loans, net of unearned income	$	114,844	$	23,260	$	42,344	$	109,363	$	22,834,140	$	23,123,951

(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 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 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, per the most recent analysis at September 30, 2019, December 31, 2018 and September 30, 2018:

	Performing						Non-performing						Total
(In thousands)	September 30, 2019		December 31, 2018		September 30, 2018		September 30, 2019		December 31, 2018		September 30, 2018		September 30, 2019		December 31, 2018		September 30, 2018
Loan Balances:
Commercial
Commercial, industrial and other	$	5,116,170	$	5,085,798	$	4,764,164	$	34,397	$	34,298	$	41,322	$	5,150,567	$	5,120,096	$	4,805,486
Franchise	911,022		932,928		915,817		3,752		16,051		21,473		914,774		948,979		937,290
Mortgage warehouse lines of credit	314,697		144,199		171,860		—		—		—		314,697		144,199		171,860
Asset-based lending	1,040,087		1,025,421		1,032,941		5,782		635		910		1,045,869		1,026,056		1,033,851
Leases	754,163		565,680		509,671		—		—		4		754,163		565,680		509,675
PCI - commercial (1)	15,532		23,528		15,796		—		—		—		15,532		23,528		15,796
Total commercial	8,151,671		7,777,554		7,410,249		43,931		50,984		63,709		8,195,602		7,828,538		7,473,958
Commercial real estate
Construction	849,545		759,270		796,776		1,030		1,554		1,554		850,575		760,824		798,330
Land	174,392		141,374		118,776		994		107		228		175,386		141,481		119,004
Office	988,773		935,693		939,245		8,158		3,629		1,532		996,931		939,322		940,777
Industrial	1,009,580		901,963		885,753		100		285		178		1,009,680		902,248		885,931
Retail	997,546		881,725		877,116		7,174		10,753		10,586		1,004,720		892,478		887,702
Multi-family	1,291,135		976,249		923,575		690		311		318		1,291,825		976,560		923,893
Mixed use and other	1,998,856		2,202,705		2,083,336		3,411		2,490		3,119		2,002,267		2,205,195		2,086,455
PCI - commercial real estate(1)	117,283		115,144		104,682		—		—		—		117,283		115,144		104,682
Total commercial real estate	7,427,110		6,914,123		6,729,259		21,557		19,129		17,515		7,448,667		6,933,252		6,746,774
Home equity	504,383		545,196		570,321		7,920		7,147		8,523		512,303		552,343		578,844
Residential real estate, including PCI	1,205,219		986,081		908,188		13,447		16,383		16,062		1,218,666		1,002,464		924,250
Premium finance receivables
Commercial insurance loans	3,423,388		2,822,525		2,864,497		26,562		19,134		20,830		3,449,950		2,841,659		2,885,327
Life insurance loans	4,653,998		4,373,891		4,225,481		590		—		—		4,654,588		4,373,891		4,225,481
PCI - life insurance loans (1)	140,908		167,903		173,490		—		—		—		140,908		167,903		173,490
Consumer and other, including PCI	89,210		120,184		115,239		277		457		588		89,487		120,641		115,827
Total loans, net of unearned income	$	25,595,887	$	23,707,457	$	22,996,724	$	114,284	$	113,234	$	127,227	$	25,710,171	$	23,820,691	$	23,123,951

(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 for the three and nine months ended September 30, 2019 and 2018 is as follows:

Three months ended September 30, 2019				Commercial Real Estate			Home  Equity			Residential Real Estate			Premium Finance Receivables			Consumer and Other			Total Loans
(In thousands)	Commercial
Allowance for credit losses
Allowance for loan losses at beginning of period	$	74,893		$	63,270		$	3,631		$	8,146		$	8,940		$	1,541		$	160,421
Other adjustments	—			—			—			—			(13		)	—			(13		)
Reclassification from allowance for unfunded lending-related commitments	—			(30		)	—			—			—			—			(30		)
Charge-offs	(6,775		)	(809		)	(1,594		)	(25		)	(1,866		)	(117		)	(11,186		)
Recoveries	367			385			183			203			563			36			1,737
Provision for credit losses	4,642			2,122			1,500			1,087			1,742			(259		)	10,834
Allowance for loan losses at period end	$	73,127		$	64,938		$	3,720		$	9,411		$	9,366		$	1,201		$	161,763
Allowance for unfunded lending-related commitments at period end	$	—		$	1,510		$	—		$	—		$	—		$	—		$	1,510
Allowance for credit losses at period end	$	73,127		$	66,448		$	3,720		$	9,411		$	9,366		$	1,201		$	163,273
Individually evaluated for impairment	$	10,606		$	3,600		$	313		$	315		$	—		$	106		$	14,940
Collectively evaluated for impairment	62,160			62,795			3,407			9,037			9,366			1,095			147,860
Loans acquired with deteriorated credit quality	361			53			—			59			—			—			473
Loans at period end
Individually evaluated for impairment	$	58,030		$	32,155		$	18,702		$	21,889		$	—		$	274		$	131,050
Collectively evaluated for impairment	8,122,040			7,299,229			493,601			1,070,795			8,104,538			86,887			25,177,090
Loans acquired with deteriorated credit quality	15,532			117,283			—			9,960			140,908			2,326			286,009
Loans held at fair value	—			—			—			116,022			—			—			116,022

Three months ended September 30, 2018	Commercial			Commercial Real Estate			Home  Equity			Residential Real Estate			Premium Finance Receivables			Consumer and Other			Total Loans
(In thousands)
Allowance for credit losses
Allowance for loan losses at beginning of period	$	60,727		$	57,660		$	9,551		$	6,336		$	7,734		$	1,394		$	143,402
Other adjustments	(1		)	(15		)	(2		)	(14		)	14			—			(18		)
Reclassification from allowance for unfunded lending-related commitments	—			(2		)	—			—			—			—			(2		)
Charge-offs	(3,219		)	(208		)	(561		)	(337		)	(2,512		)	(144		)	(6,981		)
Recoveries	304			193			142			466			1,142			66			2,313
Provision for credit losses	8,934			619			13			(160		)	1,796			(160		)	11,042
Allowance for loan losses at period end	$	66,745		$	58,247		$	9,143		$	6,291		$	8,174		$	1,156		$	149,756
Allowance for unfunded lending-related commitments at period end	$	—		$	1,245		$	—		$	—		$	—		$	—		$	1,245
Allowance for credit losses at period end	$	66,745		$	59,492		$	9,143		$	6,291		$	8,174		$	1,156		$	151,001
Individually evaluated for impairment	$	10,164		$	3,158		$	611		$	325		$	—		$	117		$	14,375
Collectively evaluated for impairment	55,987			56,316			8,532			5,894			8,174			1,039			135,942
Loans acquired with deteriorated credit quality	594			18			—			72			—			—			684
Loans at period end
Individually evaluated for impairment	$	67,381		$	31,952		$	11,284		$	21,781		$	—		$	401		$	132,799
Collectively evaluated for impairment	7,390,781			6,610,140			567,560			815,442			7,110,808			113,812			22,608,543
Loans acquired with deteriorated credit quality	15,796			104,682			—			9,144			173,490			1,614			304,726
Loans held at fair value	—			—			—			77,883			—			—			77,883

Nine months ended September 30, 2019				Commercial Real Estate			Home  Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total Loans
(In thousands)	Commercial
Allowance for credit losses
Allowance for loan losses at beginning of period	$	67,826		$	60,267		$	8,507		$	7,194		$	7,715		$	1,261		$	152,770
Other adjustments	—			(35		)	(20		)	(15		)	19			—			(51		)
Reclassification from allowance for unfunded lending-related commitments	—			(116		)	—			—			—			—			(116		)
Charge-offs	(24,658		)	(4,869		)	(2,372		)	(315		)	(9,085		)	(355		)	(41,654		)
Recoveries	974			1,112			313			372			1,853			152			4,776
Provision for credit losses	28,985			8,579			(2,708		)	2,175			8,864			143			46,038
Allowance for loan losses at period end	$	73,127		$	64,938		$	3,720		$	9,411		$	9,366		$	1,201		$	161,763
Allowance for unfunded lending-related commitments at period end	$	—		$	1,510		$	—		$	—		$	—		$	—		$	1,510
Allowance for credit losses at period end	$	73,127		$	66,448		$	3,720		$	9,411		$	9,366		$	1,201		$	163,273

Nine months ended September 30, 2018				Commercial Real Estate			Home  Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total Loans
(In thousands)	Commercial
Allowance for credit losses
Allowance for loan losses at beginning of period	$	57,811		$	55,227		$	10,493		$	6,688		$	6,846		$	840		$	137,905
Other adjustments	(3		)	(66		)	(2		)	(19		)	(12		)	—			(102		)
Reclassification from allowance for unfunded lending-related commitments	—			24			—			—			—			—			24
Charge-offs	(8,116		)	(1,176		)	(1,530		)	(1,088		)	(10,487		)	(732		)	(23,129		)
Recoveries	1,232			4,267			436			2,028			2,502			162			10,627
Provision for credit losses	15,821			(29		)	(254		)	(1,318		)	9,325			886			24,431
Allowance for loan losses at period end	$	66,745		$	58,247		$	9,143		$	6,291		$	8,174		$	1,156		$	149,756
Allowance for unfunded lending-related commitments at period end	$	—		$	1,245		$	—		$	—		$	—		$	—		$	1,245
Allowance for credit losses at period end	$	66,745		$	59,492		$	9,143		$	6,291		$	8,174		$	1,156		$	151,001

Impaired Loans

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

	September 30,		December 31,		September 30,
(In thousands)	2019		2018		2018
Impaired loans (included in non-performing and TDRs):
Impaired loans with an allowance for loan loss required (1)	$	52,485	$	60,219	$	83,349
Impaired loans with no allowance for loan loss required	78,338		67,050		49,173
Total impaired loans (2)	$	130,823	$	127,269	$	132,522
Allowance for loan losses related to impaired loans	$	14,934	$	11,437	$	14,365
TDRs	$	66,308	$	66,102	$	66,219

(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 for the periods ended as follows:

							For the Nine Months Ended
	As of September 30, 2019						September 30, 2019
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average  Recorded Investment		Interest Income Recognized
(In thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	20,281	$	20,536	$	10,606	$	20,411	$	1,011
Franchise	—		—		—		—		—
Mortgage warehouse lines of credit	—		—		—		—		—
Asset-based lending	130		130		—		130		6
Leases	1,585		1,585		—		1,651		62
Commercial real estate
Construction	—		—		—		—		—
Land	—		—		—		—		—
Office	8,043		8,190		3,470		8,114		283
Industrial	—		—		—		—		—
Retail	5,029		5,029		32		5,076		171
Multi-family	1,168		1,168		25		1,178		39
Mixed use and other	774		821		67		813		30
Home equity	8,374		8,969		313		8,534		251
Residential real estate	6,995		7,261		315		7,061		188
Consumer and other	106		124		106		110		5
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	25,804	$	30,152	$	—	$	29,361	$	1,769
Franchise	3,752		10,083		—		11,857		715
Asset-based lending	5,782		6,164		—		5,457		215
Leases	696		733		—		761		36
Commercial real estate
Construction	1,030		1,554		—		1,146		65
Land	994		1,303		—		1,184		54
Office	662		679		—		667		31
Industrial	105		218		—		122		9
Retail	7,507		10,993		—		8,307		437
Multi-family	690		797		—		704		23
Mixed use and other	5,926		6,189		—		6,091		275
Home equity	10,328		12,132		—		10,709		465
Residential real estate	14,894		17,309		—		15,259		595
Consumer and other	168		325		—		190		11
Total impaired loans, net of unearned income	$	130,823	$	152,444	$	14,934	$	144,893	$	6,746

							For the Twelve Months Ended
	As of December 31, 2018						December 31, 2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average  Recorded Investment		Interest Income Recognized
(In thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	16,703	$	17,029	$	4,866	$	17,868	$	1,181
Franchise	16,021		16,256		1,375		16,221		909
Mortgage warehouse lines of credit	—		—		—		—		—
Asset-based lending	557		557		317		689		50
Leases	1,730		1,730		—		1,812		91
Commercial real estate
Construction	1,554		1,554		550		1,554		76
Land	—		—		—		—		—
Office	573		638		21		587		25
Industrial	—		—		—		—		—
Retail	14,633		14,633		3,413		14,694		676
Multi-family	—		—		—		—		—
Mixed use and other	1,188		1,221		293		1,354		66
Home equity	3,133		3,470		282		3,165		131
Residential real estate	4,011		4,263		204		4,056		159
Consumer and other	116		129		116		119		7
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	18,314	$	21,501	$	—	$	20,547	$	1,143
Franchise	5,152		5,154		—		5,320		403
Asset-based lending	207		601		—		569		51
Leases	845		879		—		936		56
Commercial real estate
Construction	1,117		1,117		—		1,218		52
Land	3,396		3,491		—		3,751		198
Office	3,629		3,642		—		3,651		184
Industrial	322		450		—		363		30
Retail	1,592		1,945		—		1,699		110
Multi-family	1,498		1,595		—		1,529		55
Mixed use and other	3,522		3,836		—		3,611		227
Home equity	9,122		12,383		—		9,323		564
Residential real estate	18,053		20,765		—		18,552		883
Consumer and other	281		407		—		293		20
Total impaired loans, net of unearned income	$	127,269	$	139,246	$	11,437	$	133,481	$	7,347

							For the Nine Months Ended
	As of September 30, 2018						September 30, 2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average  Recorded Investment		Interest Income Recognized
(In thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	36,564	$	36,699	$	8,242	$	30,259	$	1,404
Franchise	16,316		18,504		1,638		18,387		771
Asset-based lending	646		646		283		724		39
Leases	1,777		1,777		1		1,836		69
Commercial real estate
Construction	1,554		1,554		390		1,554		56
Land	1,375		1,375		1		1,508		53
Office	579		647		26		591		19
Industrial	45		154		1		56		6
Retail	15,325		15,567		2,413		15,376		535
Multi-family	1,197		1,197		8		1,209		32
Mixed use and other	1,590		1,801		309		1,754		76
Home equity	2,287		2,651		611		2,303		78
Residential real estate	3,977		4,291		325		3,998		128
Consumer and other	117		130		117		119		5
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	5,758	$	7,022	$	—	$	9,325	$	465
Franchise	5,157		5,158		—		5,376		302
Asset-based lending	264		1,088		—		1,623		89
Leases	899		930		—		974		43
Commercial real estate
Construction	1,117		1,117		—		1,252		40
Land	2,325		2,431		—		2,366		98
Office	1,532		2,077		—		1,541		86
Industrial	178		195		—		188		9
Retail	777		946		—		874		42
Multi-family	318		412		—		329		9
Mixed use and other	3,763		4,362		—		3,950		194
Home equity	8,997		12,131		—		9,015		462
Residential real estate	17,804		20,291		—		18,193		643
Consumer and other	284		408		—		295		15
Total impaired loans, net of unearned income	$	132,522	$	145,561	$	14,365	$	134,975	$	5,768

TDRs

At September 30, 2019, the Company had $66.3 million in loans modified in TDRs. The $66.3 million in TDRs represents 230 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 September 30, 2019 and approximately $5.9 million of impairment was present and appropriately reserved for through the Company’s normal reserving methodology in the Company’s allowance for loan losses.

TDRs may arise when, 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. At September 30, 2019, the Company had $2.5 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 $12.6 million and $14.2 million at September 30, 2019 and 2018, respectively.

The tables below present a summary of the post-modification balance of loans restructured during the three and nine months ended September 30, 2019 and 2018, respectively, which represent TDRs:

Three months ended September 30, 2019 (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)
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	5	$	3,526	2	$	2,721	—	$	—	3	$	807	—	$	—
Commercial real estate
Office	1	5,070		1	5,070		—	—		1	5,070		—	—
Mixed use and other	2	122		1	122		—	—		1	121		—	—
Residential real estate and other	60	4,879		59	4,568		9	1,048		1	311		—	—
Total loans	68	$	13,597	63	$	12,481	9	$	1,048	6	$	6,309	—	$	—

Three months ended September 30, 2018 (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)
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	1	$	519	1	$	519	—	$	—	—	$	—	—	$	—
Franchise	1	35		1	35		—	—		—	—		—	—
Leases	—	—		—	—		—	—		—	—		—	—
Commercial real estate
Mixed use and other	—	—		—	—		—	—		—	—		—	—
Residential real estate and other	20	3,679		20	3,679		7	621		—	—		—	—
Total loans	22	$	4,233	22	$	4,233	7	$	621	—	$	—	—	$	—

(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 September 30, 2019, 68 loans totaling $13.6 million were determined to be TDRs, compared to 22 loans totaling $4.2 million during the three months ended September 30, 2018. Of these loans extended at below market terms, the weighted average extension had a term of approximately 13 months during the quarter ended September 30, 2019 compared to 72 months for the quarter ended September 30, 2018. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately 161 basis points and 140 basis points during the three months ended September 30, 2019 and 2018, respectively. Interest-only payment terms were approximately nine months during the three months ended September 30, 2019. Additionally, no principal balances were forgiven in the third quarter of 2019 and 2018.

Nine months ended September 30, 2019 (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)
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	18	$	24,835	8	$	5,608	1	$	550	12	$	20,723	—	$	—
Asset based lending	1	76		1	76		—	—		—	—		—	—
Commercial real estate
Office	2	5,382		2	5,382		—	—		1	5,070		—	—
Mixed use and other	4	1,385		3	1,083		—	—		2	423		—	—
Residential real estate and other	102	15,126		101	14,815		24	4,537		1	311		—	—
Total loans	127	$	46,804	115	$	26,964	25	$	5,087	16	$	26,527	—	$	—

Nine months ended September 30, 2018 (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)
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	4	$	13,442	3	$	692	—	$	—	1	$	12,750	—	$	—
Franchise	3	5,157		1	35		—	—		2	5,122		—	—
Leases	1	239		1	239		—	—		—	—		—	—
Commercial real estate
Office	1	59		1	59		—	—		—	—		—	—
Mixed use and other	1	85		1	85		1	85		—	—		—	—
Residential real estate and other	31	5,846		31	5,846		12	1,417		—	—		—	—
Total loans	41	$	24,828	38	$	6,956	13	$	1,502	3	$	17,872	—	$	—

(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 nine months ended September 30, 2019, 127 loans totaling $46.8 million were determined to be TDRs, compared to 41 loans totaling $24.8 million in the same period of 2018. Of these loans extended at below market terms, the weighted average extension had a term of approximately 14 months during the nine months ended September 30, 2019 compared to 64 months for the nine months ended September 30, 2018. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately 205 basis points and 160 basis points for the year-to-date periods September 30, 2019 and 2018, respectively. Interest-only payment terms were approximately five months during the nine months ended September 30, 2019 compared to seven months during the same period of 2018. Additionally, no principal balance was forgiven in the first nine months of 2019 and 2018.

The following table presents a summary of all loans restructured in TDRs during the twelve months ended September 30, 2019 and 2018, and such loans which were in payment default under the restructured terms during the respective periods below:

(Dollars in thousands)	As of September 30, 2019			Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
	Total (1)(3)			Payments in Default  (2)(3)			Payments in Default  (2)(3)
	Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	18	$	24,835	3	$	1,743	6	$	13,348
Asset-based lending	2	206		2	206		2	206
Commercial real estate
Office	2	5,382		1	312		1	312
Mixed use and other	5	1,755		1	370		2	672
Residential real estate and other	130	19,041		11	3,914		12	4,154
Total loans	157	$	51,219	18	$	6,545	23	$	18,692

(Dollars in thousands)	As of September 30, 2018			Three Months Ended September 30, 2018			Nine Months Ended September 30, 2018
	Total (1)(3)			Payments in Default  (2)(3)			Payments in Default  (2)(3)
	Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	5	$	15,714	3	$	2,447	3	$	2,447
Franchise	6	21,413		2	5,122		2	5,122
Leases	1	239		—	—		—	—
Commercial real estate
Office	1	59		—	—		—	—
Mixed use and other	1	85		1	85		1	85
Residential real estate and other	35	6,257		7	1,457		7	1,457
Total loans	49	$	43,767	13	$	9,111	13	$	9,111

(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.