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Loans
 9 Months Ended
Sep. 30, 2020
Loans and Leases Receivable Disclosure [Abstract]  
Loans Loans

The following table shows the Company’s loan portfolio by category as of the dates shown:
 
September 30,
 
December 31,
 
September 30,
(Dollars in thousands)
2020
 
2019
 
2019
Balance:
 
 
 
 
 
Commercial
$
12,276,999

 
$
8,285,920

 
$
8,195,602

Commercial real estate
8,423,142

 
8,020,276

 
7,448,667

Home equity
446,274

 
513,066

 
512,303

Residential real estate
1,384,810

 
1,354,221

 
1,218,666

Premium finance receivables
 
 
 
 
 
Commercial insurance
4,060,144

 
3,442,027

 
3,449,950

Life insurance
5,488,832

 
5,074,602

 
4,795,496

Consumer and other
55,354

 
110,178

 
89,487

    Total loans, net of unearned income
$
32,135,555

 
$
26,800,290

 
$
25,710,171

Mix:
 
 
 
 
 
Commercial
39
%
 
31
%
 
32
%
Commercial real estate
26

 
30

 
29

Home equity
1

 
2

 
2

Residential real estate
4

 
5

 
5

Premium finance receivables
 
 
 
 
 
Commercial insurance
13

 
13

 
13

Life insurance
17

 
19

 
19

Consumer and other
0

 
0

 
0

Total loans, net of unearned income
100
%
 
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. Additionally, to provide short-term relief due to macroeconomic deterioration from the COVID-19 pandemic to small businesses within such market areas, the Company originated loans through the Paycheck Protection Program ("PPP"), an expansion of guaranteed lending under Section 7(a) of the Small Business Act within the CARES Act. As of September 30, 2020, the Company's commercial portfolio included approximately $3.4 billion of such PPP loans. 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 $108.5 million at September 30, 2020, $118.4 million at December 31, 2019 and $117.5 million at September 30, 2019.

Total loans, excluding PCD loans, include net deferred loan fees and costs and fair value purchase accounting adjustments totaling $(42.3) million at September 30, 2020, $9.1 million at December 31, 2019 and $8.9 million at September 30, 2019. Prior to January 1, 2020, PCI loans were recorded net of credit discounts. See “PCI Loans” below. Net deferred fees as of September 30, 2020 includes $49.3 million of net deferred fees paid by the Small Business Administration ("SBA") for loans originated under PPP. As PPP loans share similar characteristics (loan terms), and prepayments are considered probable and can reasonably be estimated due to terms of the program, the Company considers estimated future principal prepayments in recognizing such deferred fee for determining a constant effective yield on the portfolio of loans.

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 ensure access to collateral, in the event of default, through adherence to state lending laws and the Company’s credit monitoring procedures.

PCI Loans

Prior to January 1, 2020, PCI loans were aggregated into pools by common risk characteristics for accounting purposes, including recognition of interest income on a pool basis. Measurement of any allowance for loan losses on these loans were offset by the remaining credit discount related to the pool. Changes in expected cash flows would vary from period to period as the Company periodically updated 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, included changes in the benchmark interest rate indices for variable-rate products and changes in prepayment assumptions and loss estimates. As a result of the implementation of ASU No. 2016-13, beginning in the first quarter of 2020, PCI loans transitioned to a classification of PCD, which no longer maintains the prior pools and related accounting concepts. The following tables present the required disclosures for PCI loans before the adoption of ASU No. 2016-13.

Acquired Loan Information at Acquisition—PCI Loans

The following table presents the unpaid principal balance and carrying value for these acquired loans:
 
 
December 31, 2019
 
(In thousands)
Unpaid
Principal
Balance
 
Carrying
Value
 
 
PCI loans
$
455,784

 
$
425,372



Accretable Yield Activity - PCI Loans

The following table provides activity for the accretable yield of PCI loans as of September 30, 2019:

 
Three Months Ended
 
Nine Months Ended
(In thousands)

September 30,
2019

September 30,
2019
Accretable yield, beginning balance
 
$
34,289

 
$
34,876

Acquisitions
 
—

 
1,874

Accretable yield amortized to interest income
 
(4,266
)
 
(12,179
)
Reclassification from non-accretable difference (1)
 
184

 
2,190

Increases in interest cash flows due to payments and changes in interest rates
 
1,164

 
4,610

Accretable yield, ending balance
 
$
31,371

 
$
31,371


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