Loans

12 Months Ended

Dec. 31, 2019

Loans and Leases Receivable Disclosure [Abstract]

The following table shows the Company's loan portfolio by category as of the dates shown:



(Dollars in thousands)	December 31, 2019			December 31, 2018
Balance:
Commercial	$	8,285,920		$	7,828,538
Commercial real estate	8,020,276			6,933,252
Home equity	513,066			552,343
Residential real estate	1,354,221			1,002,464
Premium finance receivables—commercial	3,442,027			2,841,659
Premium finance receivables—life insurance	5,074,602			4,541,794
Consumer and other	110,178			120,641
Total loans, net of unearned income	$	26,800,290		$	23,820,691
Mix:
Commercial	31		%	33		%
Commercial real estate	30			29
Home equity	2			2
Residential real estate	5			4
Premium finance receivables—commercial	13			12
Premium finance receivables—life insurance	19			19
Consumer and other	—			1
Total loans, net of unearned income	100		%	100		%

The Company’s loan portfolio is generally comprised of loans to consumers and small to medium-sized businesses located within the geographic market areas that the banks serve. The premium finance receivables portfolios are made to customers throughout

the United States and Canada. The Company strives to maintain a loan portfolio that is diverse in terms of loan type, industry, borrower and geographic concentrations. Such diversification reduces the exposure to economic downturns that may occur in different segments of the economy or in different industries.

Certain premium finance receivables are recorded net of unearned income. The unearned income portions of such premium finance receivables were $118.4 million and $112.9 million at December 31, 2019 and 2018, respectively.

Total loans, excluding PCI loans, include net deferred loan fees and costs and fair value purchase accounting adjustments totaling $9.1 million and $4.5 million at December 31, 2019 and 2018, respectively. PCI loans are recorded net of credit discounts. See “Acquired Loan Information at Acquisition - PCI Loans” below.

Certain real estate loans, including mortgage loans held-for-sale, commercial, consumer, and home equity loans with balances totaling approximately $6.8 billion and $6.1 billion at December 31, 2019 and 2018, respectively, were pledged as collateral to secure the availability of borrowings from certain federal agency banks. At December 31, 2019, approximately $6.4 billion of these pledged loans are included in a blanket pledge of qualifying loans to the FHLB. The remaining $359.3 million of pledged loans was used to secure potential borrowings at the FRB discount window. At December 31, 2019 and 2018, the banks had outstanding borrowings of $674.9 million and $426.3 million, respectively, from the FHLB in connection with these collateral arrangements. See Note 11, “Federal Home Loan Bank Advances,” for a summary of these borrowings.

It is the policy of the Company to review each prospective credit in order to determine the appropriateness and, when required, the adequacy of security or collateral necessary to obtain when making a loan. The type of collateral, when required, will vary from liquid assets to real estate. The Company seeks to assure access to collateral, in the event of default, through adherence to state lending laws and the Company’s credit monitoring procedures.

Acquired Loan Information at Acquisition — PCI Loans

As part of the Company's previous acquisitions, the Company acquired loans for which there was evidence of credit quality deterioration since origination (PCI loans) and we determined that it was probable that the Company would be unable to collect all contractually required principal and interest payments. The following table presents the unpaid principal balance and carrying value for these acquired loans as of the dates shown:



	December 31, 2019				December 31, 2018
(Dollars in thousands)	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
PCI loans	$	455,784	$	425,372	$	341,555	$	318,394

See Note 5, “Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Impaired Loans,” for further discussion regarding the allowance for loan losses associated with PCI loans at December 31, 2019.

The following table provides estimated details as of the date of acquisition on loans acquired in 2019 with evidence of credit quality deterioration since origination:



(Dollars in thousands)	ROC		STC		SBC
Contractually required payments including interest	$	29,963	$	54,422	$	140,541
Less: Nonaccretable difference	2,606		5,066		7,604
Cash flows expected to be collected ⁽¹⁾	$	27,357	$	49,356	$	132,937
Less: Accretable yield	2,319		5,974		8,477
Fair value of PCI loans acquired	$	25,038	$	43,382	$	124,460

(1) Represents undiscounted expected principal and interest cash at acquisition.

Accretable Yield Activity — PCI Loans

Changes in expected cash flows may vary from period to period as the Company periodically updates its cash flow model assumptions for PCI loans. The factors that most significantly affect the estimates of gross cash flows expected to be collected, and accordingly the accretable yield, include changes in the benchmark interest rate indices for variable-rate products and changes in prepayment assumptions and loss estimates. The following table provides activity for the accretable yield of PCI loans.



	Years Ended December 31,
(Dollars in thousands)	2019			2018
Accretable yield, beginning balance	$	34,876		$	36,565
Acquisitions	16,770			6,175
Accretable yield amortized to interest income	(18,226		)	(16,711		)
Reclassification from non-accretable difference ⁽¹⁾	5,516			4,835
Increases in interest cash flows due to payments and changes in interest rates	6,012			4,012
Accretable yield, ending balance	$	44,948		$	34,876


(1)	Reclassification is the result of subsequent increases in expected principal cash flows.

Accretion to interest income accounted for under ASC 310-30 totaled $18.2 million and $16.7 million in 2019 and 2018, respectively. These amounts include accretion and are included together within interest and fees on loans in the Consolidated Statements of Income.