Loans and Allowance for Credit Losses

3 Months Ended

Mar. 31, 2024

Receivables [Abstract]

Loans and Allowance for Credit Losses

Loans and Allowance for Credit Losses

Loans

The following table provides a summary of the Company’s loan portfolio as of the dates indicated:

	March 31, 2024		December 31, 2023
	(In thousands)
Commercial and industrial	$	3,084,580	$	3,034,068
Commercial real estate	5,519,505		5,457,349
Commercial construction	388,024		386,999
Business banking	1,100,637		1,085,763
Residential real estate	2,544,462		2,565,485
Consumer home equity	1,217,141		1,208,231
Other consumer	234,398		235,533
Gross loans before unamortized premiums, unearned discounts and deferred fees	14,088,747		13,973,428
Allowance for loan losses (1)	(149,190)		(148,993)
Unamortized premiums, net of unearned discounts and deferred fees, net of costs	(32,947)		(25,068)
Loans after the allowance for loan losses, unamortized premiums, unearned discounts and deferred fees and costs	$	13,906,610	$	13,799,367

(1)The balance of accrued interest receivable excluded from amortized cost and the calculation of the allowance for loan losses amounted to $54.2 million and $53.9 million as of March 31, 2024 and December 31, 2023, respectively, and is included within other assets on the Consolidated Balance Sheets.

There are no other loan categories that exceed 10% of total loans not already reflected in the preceding table.

The Company’s lending activities are conducted principally in the New England area with the exception of its Shared National Credit Program (“SNC Program”) portfolio and certain purchased loans. The Company participates in the SNC Program in an effort to improve its industry and geographical diversification The SNC Program portfolio is included in the Company’s commercial and industrial, commercial real estate, and commercial construction portfolios. The SNC Program portfolio is defined as loan syndications with exposure over $100 million and with three or more lenders participating.

Most loans originated by the Company are either collateralized by real estate or other assets or guaranteed by federal and local governmental authorities. The ability and willingness of the single-family residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of overall economic activity within the borrowers’ geographic areas and real estate values. The ability and willingness of commercial real estate, commercial and industrial, and construction loan borrowers to honor their repayment commitments is generally dependent on the health of the real estate economy in the borrowers’ geographic areas and the general economy.

Loans Pledged as Collateral

The carrying value of loans pledged to secure advances from the Federal Home Loan Bank (“FHLB”) of Boston (“FHLBB”) were $4.4 billion and $4.6 billion at March 31, 2024 and December 31, 2023, respectively. The balance of funds borrowed from the FHLBB were $17.6 million and $17.7 million at March 31, 2024 and December 31, 2023, respectively.

The carrying value of loans pledged to secure advances from the Federal Reserve Bank (“FRB”) were $1.1 billion at both March 31, 2024 and December 31, 2023, respectively. There were no funds borrowed from the FRB outstanding at March 31, 2024 or December 31, 2023.

Serviced Loans

At March 31, 2024 and December 31, 2023, mortgage loans partially or wholly-owned by others and serviced by the Company amounted to approximately $76.2 million and $77.2 million, respectively.

Purchased Loans

The Company began purchasing residential real estate mortgage loans during the third quarter of 2022 and ceased such purchases in the first quarter of 2023. Loans purchased were subject to the same underwriting criteria as those loans originated directly by the Company. During the three months ended March 31, 2024, the Company did not purchase any residential real estate mortgage loans. The Company purchased $32.0 million of residential real estate mortgage loans during

the three months ended March 31, 2023. As of March 31, 2024 and December 31, 2023, the amortized cost balance of loans purchased was $381.2 million and $385.5 million, respectively.

Allowance for Loan Losses

The allowance for loan losses is established to provide for management’s estimate of expected lifetime credit losses on loans measured at amortized cost at the balance sheet date through a provision for loan losses charged to net income. Charge-offs, net of recoveries, are charged directly to the allowance for loan losses. Commercial and residential loans are charged-off in the period in which they are deemed uncollectible. Delinquent loans in these product types are subject to ongoing review and analysis to determine if a charge-off in the current period is appropriate. For consumer loans, policies and procedures exist that require charge-off consideration upon a certain triggering event depending on the product type.

The following tables summarize the changes in the allowance for loan losses by loan category for the periods indicated:

	For the Three Months Ended March 31, 2024
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	26,959	$	65,475	$	6,666	$	14,913	$	25,954	$	5,595	$	3,431	$	148,993
Charge-offs	—		(7,250)		—		(102)		(10)		(2)		(651)		(8,015)
Recoveries	25		132		—		410		31		—		163		761
Provision (release)	1,879		6,272		(462)		(590)		(40)		91		301		7,451
Ending balance	$	28,863	$	64,629	$	6,204	$	14,631	$	25,935	$	5,684	$	3,244	$	149,190

	For the Three Months Ended March 31, 2023
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	26,859	$	54,730	$	7,085	$	16,189	$	28,129	$	6,454	$	2,765	$	142,211
Cumulative effect of change in accounting principle (1)	47		—		—		(140)		(849)		(201)		—		(1,143)
Charge-offs	—		—		—		(343)		—		(7)		(561)		(911)
Recoveries	139		4		—		481		15		1		116		756
Provision (release)	(116)		459		493		(1,102)		(165)		(65)		521		25
Ending balance	$	26,929	$	55,193	$	7,578	$	15,085	$	27,130	$	6,182	$	2,841	$	140,938

(1)Represents the adjustment needed to reflect the cumulative day one impact pursuant to the Company’s adoption of ASU 2022-02 (i.e., cumulative effect adjustment related to the adoption of ASU 2022-02 as of January 1, 2023). The adjustment represents a $1.1 million decrease to the allowance attributable to the change in accounting methodology for estimating the allowance for loan losses resulting from the Company’s adoption of the standard.

The Company recorded provisions for allowance for loan losses of $7.5 million and less than $0.1 million for the three months ended March 31, 2024 and 2023, respectively. Management determined a provision to be necessary for the three months ended March 31, 2024 primarily due to a $7.3 million partial charge-off of a commercial real estate loan collateralized by a property in the office risk segment which transitioned to non-accrual status during the three months ended March 31, 2024 and had not been previously reserved for on a specific reserve basis.

Reserve for Unfunded Commitments

Management evaluates the need for a reserve on unfunded lending commitments in a manner consistent with loans held for investment. As of March 31, 2024 and December 31, 2023, the Company’s reserve for unfunded lending commitments was $12.1 million and $14.1 million, respectively, which is recorded within other liabilities in the Company's Consolidated Balance Sheets. The Company’s adoption of ASU 2022-02 on January 1, 2023 did not impact the reserve for unfunded lending commitments.

Portfolio Segmentation

Management uses a methodology to systematically estimate the amount of expected losses in each segment of loans in the Company’s portfolio. Commercial and industrial business banking, investment commercial real estate, and commercial and industrial loans are evaluated based upon loan-level risk characteristics, historical losses and other factors which form the basis for estimating expected losses. Other portfolios, including owner occupied commercial real estate (which includes business banking owner occupied commercial real estate), commercial construction, residential mortgages, home equity and consumer loans, are analyzed as groups taking into account delinquency ratios, and the Company’s and peer banks’ historical loss experience. For the purposes of estimating the allowance for loan losses, management segregates the loan portfolio into loan categories that share similar risk characteristics such as the purpose of the loan, repayment source, and collateral. These characteristics are considered when determining the appropriate level of the allowance for each category. Some examples of these risk characteristics unique to each loan category include:

Commercial Lending

Commercial and industrial: The primary risk associated with commercial and industrial loans is the ability of borrowers to achieve business results consistent with those projected at origination. Collateral frequently consists of a first lien position on business assets including, but not limited to, accounts receivable, inventory, aircraft and equipment. The primary repayment source is operating cash flow and, secondarily, the liquidation of assets. Under its lending guidelines, the Company generally requires a corporate or personal guarantee from individuals that hold material ownership in the borrowing entity when the loan-to-value of a commercial and industrial loan is in excess of a specified threshold.

Commercial real estate: Collateral values are established by independent third-party appraisals and evaluations. Primary repayment sources include operating income generated by the real estate, permanent debt refinancing, sale of the real estate and, secondarily, liquidation of the collateral. Under its lending guidelines, the Company generally requires a corporate or personal guarantee from individuals that hold material ownership in the borrowing entity when the loan-to-value of a commercial real estate loan is in excess of a specified threshold.

Commercial construction: These loans are generally considered to present a higher degree of risk than other real estate loans and may be affected by a variety of factors, such as adverse changes in interest rates and the borrower’s ability to control costs and adhere to time schedules. Construction loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with the completed project. Construction loan repayment is substantially dependent on the ability of the borrower to complete the project and obtain permanent financing.

Business banking: These loans are typically secured by all business assets or commercial real estate. Business banking originations include traditionally underwritten loans as well as partially automated scored loans. Business banking scored loans are determined by utilizing the Company’s proprietary decision matrix that has a number of quantitative factors including, but not limited to, a guarantor’s credit score, industry risk, and time in business. The Company also engages in Small Business Association (“SBA”) lending. The SBA guarantees reduce the Company’s loss due to default and are considered a credit enhancement to the loan structure.

Residential Lending

These loans are made to borrowers who demonstrate the ability to repay principal and interest on a monthly basis. Underwriting considerations include, among others, income sources and their reliability, willingness to repay as evidenced by credit repayment history, financial resources (including cash reserves) and the value of the collateral. The Company maintains policy standards for minimum credit score and cash reserves and maximum loan-to-value consistent with a “prime” portfolio. Collateral consists of mortgage liens on 1-4 family residential dwellings. The policy standards applied to loans originated by the Company are the same as those applied to purchased loans. The Company does not originate or purchase sub-prime or other high-risk loans. Residential loans are originated either for sale to investors or retained in the Company’s loan portfolio. Decisions about whether to sell or retain residential loans are made based on the interest rate characteristics, pricing for loans in the secondary mortgage market, competitive factors and the Company’s liquidity and capital needs.

Consumer Lending

Consumer home equity: Home equity lines of credit are granted for ten years with monthly interest-only repayment requirements. Full principal repayment is required at the end of the ten-year draw period. Home equity loans are term loans that require the monthly payment of principal and interest such that the loan will be fully amortized at maturity. Underwriting considerations are materially consistent with those utilized in residential real estate. Collateral consists of a senior or subordinate lien on owner-occupied residential property.

Other consumer: The Company’s policy and underwriting in this category, which is comprised primarily of home improvement, automobile and aircraft loans, include the following factors, among others: income sources and reliability, credit histories, term of repayment, and collateral value, as applicable. These are typically granted on an unsecured basis, with the exception of aircraft and automobile loans.

Credit Quality

Commercial Lending Credit Quality

The credit quality of the Company’s commercial loan portfolio is actively monitored and supported by a comprehensive credit approval process and all large dollar transactions are sent for approval to a committee of seasoned business line and credit professionals. The Company maintains an independent credit risk review function that reports directly to the Risk Management Committee of the Board of Directors. Credits that demonstrate significant deterioration in credit quality are transferred to a specialized group of experienced officers for individual attention.

The Company monitors credit quality indicators and utilizes portfolio scorecards to assess the risk of its commercial portfolio. Specifically, the Company utilizes a 15-point credit risk-rating system to manage risk and identify potential problem loans. Under this point system, risk-rating assignments are based upon a number of quantitative and qualitative factors that are under continual review. Factors include cash flow, collateral coverage, liquidity, leverage, position within the industry, internal controls and management, financial reporting, and other considerations. Commercial loan risk ratings are (re)evaluated for each loan at least once-per-year. The risk-rating categories under the credit risk-rating system are defined as follows:

0 Risk Rating - Unrated

Certain segments of the portfolios are not rated. These segments include aircraft loans, business banking scored loan products, and other commercial loans managed by exception. Loans within this unrated loan segment are monitored by delinquency status; and for lines of credit greater than $100,000 in exposure, an annual review is conducted which includes the review of the business score and loan and deposit account performance. The Company supplements performance data with current business credit scores for the business banking portfolio on a quarterly basis. Unrated commercial and business banking loans are generally restricted to commercial exposure of less than $1.5 million. Loans included in this category generally are not required to provide regular financial reporting or regular covenant monitoring.

For purposes of estimating the allowance for loan losses, unrated loans are considered in the same manner as “Pass” rated loans. Unrated loans are included with “Pass” rated loans for disclosure purposes.

1-10 Risk Rating – Pass

Loans with a risk rating of 1-10 are classified as “Pass” and are comprised of loans that range from “substantially risk free” which indicates borrowers of unquestioned credit standing, well-established national companies with a very strong financial condition, and loans fully secured by policy conforming cash levels, through “low pass” which indicates acceptable rated loans that may be experiencing weak cash flow, impending lease rollover or minor liquidity concerns.

11 Risk Rating – Special Mention (Potential Weakness)

Loans to borrowers in this category exhibit potential weaknesses or downward trends deserving management’s close attention. While potentially weak, no loss of principal or interest is envisioned. Included in this category are borrowers who are performing as agreed, are weak when compared to industry standards, may be experiencing an interim loss and may be in declining industries. An element of asset quality, financial flexibility or management is below average. The Company does not consider borrowers within this category as new business prospects. Borrowers rated special mention may find it difficult to obtain alternative financing from traditional bank sources.

12 Risk Rating – Substandard (Well-Defined Weakness)

Loans with a risk-rating of 12 exhibit well-defined weaknesses that, if not corrected, may jeopardize the orderly liquidation of the debt. A loan is classified as substandard if it is inadequately protected by the repayment capacity of the obligor or by the collateral pledged. Specifically, repayment under market rates and terms, or by the requirements under the existing loan documents, is in jeopardy, but no loss of principal or interest is envisioned. There is a possibility that a partial loss of principal and/or interest will occur in the future if the deficiencies are not corrected. Loss potential, while existing in the aggregate portfolio of substandard assets, does not have to exist in individual assets classified as substandard. Non-accrual is possible, but not mandatory, in this class.

13 Risk Rating – Doubtful (Loss Probable)

Loans classified as doubtful have comparable weaknesses as found in the loans classified as substandard, with the added provision that such weaknesses make collection of the debt in full (based on currently existing facts, conditions and values) highly questionable and improbable. Serious problems exist such that a partial loss of principal is likely. The probability of loss exists, but because of reasonably specific pending factors that may work to strengthen the credit, estimated losses are deferred until a more exact status can be determined. Specific reserves will be the amount identified after specific review. Non-accrual is mandatory in this class.

14 Risk Rating – Loss

Loans to borrowers in this category are deemed incapable of repayment. Loans to such borrowers are considered uncollectible and of such little value that continuance as active assets of the Company is not warranted. This classification does not mean that the loans have no recovery or salvage value, but rather, it is not practical or desirable to defer writing off these assets even though partial recovery may occur in the future. Loans in this category have a recorded investment of $0 at the time of the downgrade.

Residential and Consumer Lending Credit Quality

For the Company’s residential and consumer portfolios, the quality of the loan is best indicated by the repayment performance of an individual borrower. Updated appraisals, broker opinions of value and other collateral valuation methods are employed in the residential and consumer portfolios, typically for credits that are deteriorating. Delinquency status is determined using payment performance, while accrual status may be determined using a combination of payment performance, expected borrower viability and collateral value. Delinquent consumer loans are handled by a team of seasoned collection specialists.

The following table details the amortized cost balances of the Company’s loan portfolios, presented by credit quality indicator and origination year as of March 31, 2024, and gross charge-offs for the three month period then ended:

	2024		2023		2022		2021		2020		Prior		Revolving Loans		Revolving Loans Converted to Term Loans (1)		Total
	(In thousands)
Commercial and industrial
Pass	$	143,899	$	421,800	$	406,278	$	316,717	$	332,314	$	754,805	$	499,682	$	502	$	2,875,997
Special Mention	9,486		4,904		27,196		40,184		14,880		5,528		36,145		—		138,323
Substandard	—		18,383		11,587		1,753		387		2,591		21,711		—		56,412
Doubtful	—		—		—		—		—		8		—		—		8
Loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	153,385		445,087		445,061		358,654		347,581		762,932		557,538		502		3,070,740
Current period gross charge-offs	—		—		—		—		—		—		—		—		—
Commercial real estate
Pass	123,767		477,412		1,424,456		840,761		558,826		1,739,173		37,588		—		5,201,983
Special Mention	—		66,182		7,958		23,728		11,311		24,482		2,432		—		136,093
Substandard	8,376		19,662		12,537		6,737		2,325		83,352		8,003		—		140,992
Doubtful	—		10,506		—		—		—		26,806		—		—		37,312
Loss	—		—		—		—		—		—		—		—		—
Total commercial real estate	132,143		573,762		1,444,951		871,226		572,462		1,873,813		48,023		—		5,516,380
Current period gross charge-offs	—		—		—		—		—		7,250		—		—		7,250
Commercial construction
Pass	13,845		135,106		182,718		54,108		—		—		—		—		385,777
Special Mention	—		455		—		—		—		—		—		—		455
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial construction	13,845		135,561		182,718		54,108		—		—		—		—		386,232

Current period gross charge-offs	—		—		—		—		—		—		—		—		—
Business banking
Pass	49,239		131,526		161,887		175,923		143,842		321,838		78,227		2,325		1,064,807
Special Mention	1,449		653		2,563		2,795		3,509		16,775		74		—		27,818
Substandard	—		499		580		2,712		2,086		4,633		21		570		11,101
Doubtful	131		—		—		—		—		27		—		—		158
Loss	—		—		—		—		—		—		—		—		—
Total business banking	50,819		132,678		165,030		181,430		149,437		343,273		78,322		2,895		1,103,884
Current period gross charge-offs	—		—		—		2		—		100		—		—		102
Residential real estate
Current and accruing	18,971		252,943		723,437		658,347		349,251		534,416		—		—		2,537,365
30-89 days past due and accruing	—		762		2,947		2,965		2,790		6,715		—		—		16,179
Loans 90 days or more past due and still accruing	—		—		—		—		—		—		—		—		—
Non-accrual	—		104		1,548		167		170		4,708		—		—		6,697
Total residential real estate	18,971		253,809		727,932		661,479		352,211		545,839		—		—		2,560,241
Current period gross charge-offs	—		—		—		—		—		10		—		—		10
Consumer home equity
Current and accruing	2,112		28,609		81,312		8,879		4,725		88,814		987,234		3,431		1,205,116
30-89 days past due and accruing	—		—		236		—		—		847		4,418		37		5,538
Loans 90 days or more past due and still accruing	—		—		—		—		—		—		—		—		—
Non-accrual	—		—		118		—		—		1,669		7,411		70		9,268
Total consumer home equity	2,112		28,609		81,666		8,879		4,725		91,330		999,063		3,538		1,219,922
Current period gross charge-offs	—		—		—		—		—		2		—		—		2
Other consumer
Current and accruing	21,400		75,057		33,794		22,081		11,253		22,161		11,824		40		197,610
30-89 days past due and accruing	—		165		162		102		31		80		29		—		569
Loans 90 days or more past due and still accruing	—		—		—		—		—		—		—		—		—
Non-accrual	—		40		113		25		—		16		28		—		222
Total other consumer	21,400		75,262		34,069		22,208		11,284		22,257		11,881		40		198,401
Current period gross charge-offs	280		74		125		105		14		37		16		—		651
Total	$	392,675	$	1,644,768	$	3,081,427	$	2,157,984	$	1,437,700	$	3,639,444	$	1,694,827	$	6,975	$	14,055,800

(1)The amounts presented represent the amortized cost as of March 31, 2024 of revolving loans that were converted to term loans during the three months ended March 31, 2024.

The following table details the amortized cost balances of the Company’s loan portfolios, presented by credit quality indicator and origination year as of December 31, 2023:

	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Loans Converted to Term Loans (1)		Total
	(In thousands)
Commercial and industrial
Pass	$	477,138	$	442,896	$	350,782	$	341,243	$	140,641	$	641,342	$	485,448	$	3,255	$	2,882,745
Special Mention	4,229		25,796		14,994		13,563		89		553		51,106		455		110,785
Substandard	1,534		11,995		1,775		405		—		2,581		7,803		—		26,093
Doubtful	—		—		—		—		—		8		—		—		8
Loss	—		—		—		—		—		—		—		—		—

Total commercial and industrial	482,901		480,687		367,551		355,211		140,730		644,484		544,357		3,710		3,019,631
Commercial real estate
Pass	498,590		1,435,893		855,014		573,370		516,689		1,291,189		47,581		2,556		5,220,882
Special Mention	15,200		7,990		—		736		2,281		34,803		—		—		61,010
Substandard	19,738		12,589		15,237		3,938		33,413		48,978		8,006		—		141,899
Doubtful	10,615		—		—		—		—		19,441		—		—		30,056
Loss	—		—		—		—		—		—		—		—		—
Total commercial real estate	544,143		1,456,472		870,251		578,044		552,383		1,394,411		55,587		2,556		5,453,847
Commercial construction
Pass	133,463		151,957		96,147		—		—		—		2,614		—		384,181
Special Mention	456		—		—		—		—		—		—		—		456
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial construction	133,919		151,957		96,147		—		—		—		2,614		—		384,637
Business banking
Pass	139,237		165,247		182,606		146,180		110,638		229,636		73,054		3,996		1,050,594
Special Mention	1,474		2,553		1,009		4,294		4,692		11,479		23		27		25,551
Substandard	1,310		596		2,684		2,071		1,464		3,423		594		579		12,721
Doubtful	—		—		—		—		507		220		—		—		727
Loss	—		—		—		—		—		—		—		—		—
Total business banking	142,021		168,396		186,299		152,545		117,301		244,758		73,671		4,602		1,089,593
Residential real estate
Current and accruing	257,671		728,997		665,811		354,003		93,817		451,812		—		—		2,552,111
30-89 days past due and accruing	750		6,615		2,437		2,112		1,496		8,219		—		—		21,629
Loans 90 days or more past due and still accruing	—		—		—		—		—		—		—		—		—
Non-accrual	—		1,755		1,433		291		288		4,958		—		—		8,725
Total residential real estate	258,421		737,367		669,681		356,406		95,601		464,989		—		—		2,582,465
Consumer home equity
Current and accruing	30,393		84,065		9,151		4,899		4,166		80,687		970,882		9,472		1,193,715
30-89 days past due and accruing	148		483		—		—		—		558		7,509		223		8,921
Loans 90 days or more past due and still accruing	—		—		—		—		—		—		—		—		—
Non-accrual	—		66		—		—		—		1,466		6,770		230		8,532
Total consumer home equity	30,541		84,614		9,151		4,899		4,166		82,711		985,161		9,925		1,211,168
Other consumer
Current and accruing	93,659		36,601		23,962		12,427		11,367		14,609		13,353		85		206,063
30-89 days past due and accruing	170		271		153		25		12		92		40		—		763
Loans 90 days or more past due and still accruing	—		—		—		—		—		—		—		—		—
Non-accrual	50		61		25		2		14		34		7		—		193
Total other consumer	93,879		36,933		24,140		12,454		11,393		14,735		13,400		85		207,019
Total	$	1,685,825	$	3,116,426	$	2,223,220	$	1,459,559	$	921,574	$	2,846,088	$	1,674,790	$	20,878	$	13,948,360

(1)The amounts presented represent the amortized cost as of December 31, 2023 of revolving loans that were converted to term loans during the year ended December 31, 2023.

Asset Quality

The Company manages its loan portfolio with careful monitoring. As a general rule, loans more than 90 days past due with respect to principal and interest are classified as non-accrual loans. Exceptions may be made if management believes that collateral held by the Company is clearly sufficient and in full satisfaction of both principal and interest. The Company may also use discretion regarding other loans over 90 days delinquent if the loan is well secured and in the process of collection. Non-accrual loans and loans that are more than 90 days past due but still accruing interest are considered non-performing loans.

Non-accrual loans may be returned to an accrual status when principal and interest payments are no longer delinquent, and the risk characteristics of the loan have improved to the extent that there no longer exists a concern as to the collectability of principal and interest. Loans are considered past due based upon the number of days delinquent according to their contractual terms.

A loan is expected to remain on non-accrual status until it becomes current with respect to principal and interest, the loan is liquidated, or the loan is determined to be uncollectible and is charged-off against the allowance for loan losses.

The following tables show the age analysis of past due loans as of the dates indicated:

	As of March 31, 2024
	30-59 Days Past Due		60-89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans
	(In thousands)
Commercial and industrial	$	300	$	—	$	465	$	765	$	3,069,975	$	3,070,740
Commercial real estate	—		—		—		—		5,516,380		5,516,380
Commercial construction	—		—		—		—		386,232		386,232
Business banking	3,788		1,083		2,296		7,167		1,096,717		1,103,884
Residential real estate	11,964		4,522		5,014		21,500		2,538,741		2,560,241
Consumer home equity	4,411		1,321		8,815		14,547		1,205,375		1,219,922
Other consumer	398		171		222		791		197,610		198,401
Total	$	20,861	$	7,097	$	16,812	$	44,770	$	14,011,030	$	14,055,800

	As of December 31, 2023
	30-59 Days Past Due		60-89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans
	(In thousands)
Commercial and industrial	$	3,316	$	—	$	465	$	3,781	$	3,015,850	$	3,019,631
Commercial real estate	—		—		—		—		5,453,847		5,453,847
Commercial construction	—		—		—		—		384,637		384,637
Business banking	3,455		1,647		1,202		6,304		1,083,289		1,089,593
Residential real estate	17,116		4,888		6,764		28,768		2,553,697		2,582,465
Consumer home equity	6,517		2,600		8,204		17,321		1,193,847		1,211,168
Other consumer	532		235		189		956		206,063		207,019
Total	$	30,936	$	9,370	$	16,824	$	57,130	$	13,891,230	$	13,948,360

The following table presents information regarding non-accrual loans as of the dates indicated:

	As of March 31, 2024						As of December 31, 2023
	Non-Accrual Loans With ACL		Non-Accrual Loans Without ACL (1)		Total Nonaccrual Loans		Non-Accrual Loans With ACL		Non-Accrual Loans Without ACL (1)		Total Nonaccrual Loans
	(In thousands)
Commercial and industrial	$	4	$	465	$	469	$	4	$	464	$	468
Commercial real estate	21,646		15,667		37,313		13,969		16,087		30,056
Commercial construction	—		—		—		—		—		—
Business banking	3,196		8		3,204		4,572		11		4,583
Residential real estate	6,697		—		6,697		8,725		—		8,725
Consumer home equity	9,268		—		9,268		8,532		—		8,532
Other consumer	222		—		222		193		—		193
Total non-accrual loans	$	41,033	$	16,140	$	57,173	$	35,995	$	16,562	$	52,557

(1)The loans on non-accrual status and without an ACL as of both March 31, 2024 and December 31, 2023, were primarily comprised of collateral dependent loans for which the fair value of the underlying loan collateral exceeded the loan carrying value.

The amount of interest income recognized on non-accrual loans during the three months ended March 31, 2024 and 2023 was not significant. As of both March 31, 2024 and December 31, 2023, there were no loans greater than 90 days past due and still accruing.

It is the Company’s policy to reverse any accrued interest when a loan is put on non-accrual status and, generally, to record any payments received from a borrower related to a loan on non-accrual status as a reduction of the amortized cost basis of the loan. Accrued interest reversed against interest income for the three months ended March 31, 2024 and 2023 was not significant.

For collateral values for residential mortgage and home equity loans, the Company relies primarily upon third-party valuation information from certified appraisers and values are generally based upon recent appraisals of the underlying collateral, brokers’ opinions based upon recent sales of comparable properties, or estimated auction or liquidation values less estimated costs to sell. As of March 31, 2024 and December 31, 2023, the Company had collateral-dependent residential mortgage and home equity loans totaling $0.9 million and $0.8 million, respectively.

For collateral-dependent commercial loans, the amount of the allowance for loan losses is individually assessed based upon the fair value of the collateral. Various types of collateral are used, including real estate, inventory, equipment, accounts receivable, securities and cash, among others. For commercial real estate loans, the Company relies primarily upon third-party valuation information from certified appraisers and values are generally based upon recent appraisals of the underlying collateral, brokers’ opinions based upon recent sales of comparable properties, estimated equipment auction or liquidation values, income capitalization, or a combination of income capitalization and comparable sales. As of March 31, 2024 and December 31, 2023, the Company had collateral-dependent commercial loans totaling $37.8 million and $30.7 million, respectively.

Appraisals for all loan types are obtained at the time of loan origination as part of the loan approval process and are updated at the time of a loan modification and/or refinance and as considered necessary by management for impairment review purposes. In addition, appraisals are updated as required by regulatory pronouncements.

As of both March 31, 2024 and December 31, 2023, the Company had no residential real estate held in other real estate owned (“OREO”). As of March 31, 2024, there were four residential real estate loans, which had an aggregate balance of $0.4 million, collateralized by residential real estate property for which formal foreclosure proceedings were in-process. As of December 31, 2023, there were two residential real estate loans, which had an aggregate balance of $0.2 million, collateralized by residential real estate property for which formal foreclosure proceedings were in-process. As of both March 31, 2024 and December 31, 2023, there were three consumer home equity loans, which had an aggregate balance of $0.2 million, collateralized by residential real estate property for which formal foreclosure proceedings were in-process.

Loan Modifications to Borrowers Experiencing Financial Difficulty

The following table shows the amortized cost balance as of March 31, 2024 and 2023 of loans modified during the three month periods then ended to borrowers experiencing financial difficulty by the type of concession granted:

	Three Months Ended March 31,
	2024				2023
	Amortized Cost Balance		% of Total Portfolio		Amortized Cost Balance		% of Total Portfolio
	(Dollars in thousands)
Interest Rate Reduction:
Business banking	$	—	—	%	$	47	0.00	%
Consumer home equity	542		0.04	%	813		0.07	%
Total interest rate reduction	$	542	0.00	%	$	860	0.01	%
Other-than-Insignificant Delay in Repayment:
Residential real estate	—		—	%	327		0.01	%
Consumer home equity	—		—	%	23		0.00	%
Total other-than-insignificant delay in repayment	$	—	0.00	%	$	350	0.00	%
Term Extension:
Business banking	165		0.01	%	—		—	%
Residential real estate	238		0.01	%	—		—	%
Total term extension	$	403	0.00	%	$	—	—	%
Combination—Interest Rate Reduction & Other-than-Insignificant Delay in Repayment:
Business banking	$	—	—	%	$	64	0.01	%
Consumer home equity	129		0.01	%	175		0.01	%
Total combination—interest rate reduction & other-than-insignificant delay in repayment	$	129	0.00	%	$	239	0.00	%
Combination—Interest Rate Reduction & Term Extension:
Business banking	$	—	—	%	$	460	0.04	%
Consumer home equity	—		—	%	220		0.02	%
Total combination—interest rate reduction & term extension	$	—	—	%	$	680	0.00	%
Combination—Term Extension & Other-than-Insignificant Delay in Repayment:
Business banking	$	—	—	%	$	29	0.00	%
Total combination—term extension & other-than-insignificant delay in repayment	$	—	—	%	$	29	0.00	%
Combination—Interest Rate Reduction, Term Extension & Other-than-Insignificant Delay in Repayment
Business banking	$	—	—	%	$	131	0.01	%
Total combination—interest rate reduction, term extension & other-than-insignificant delay in repayment	$	—	—	%	$	131	0.00	%
Total by portfolio segment
Business banking	$	165	0.01	%	$	731	0.07	%
Residential real estate	238		0.01	%	327		0.01	%
Consumer home equity	671		0.06	%	1,231		0.10	%
Total	$	1,074	0.01	%	$	2,289	0.02	%

The following table describes the financial effect of the modifications made during the three months ended March 31, 2024 to borrowers experiencing financial difficulty:

Loan Type	Financial Effect (1)
Interest Rate Reduction
Consumer home equity	Reduced weighted-average contractual interest rate from 8.0% to 4.4%.
Other-than-Insignificant Delay in Repayment
Consumer home equity	Deferred a weighted average of 7 principal and interest payments which were added to the end of the loan life.
Term Extension
Business banking	Added a weighted-average 1.6 years to the life of loans, which reduced monthly payment amounts for the borrowers.
Residential real estate	Added a weighted-average 2.0 years to the life of loans, which reduced monthly payment amounts for the borrowers.

(1)Loans that were modified in more than one manner are included in each modification type corresponding to the type of modifications performed.

The following table describes the financial effect of the modifications made during the three months ended March 31, 2023 to borrowers experiencing financial difficulty:

Loan Type	Financial Effect (1)
Interest Rate Reduction
Business banking	Reduced weighted-average contractual interest rate from 9.5% to 6.9%.
Consumer home equity	Reduced weighted-average contractual interest rate from 7.0% to 4.4%.
Other-than-Insignificant Delay in Repayment
Business banking	Deferred a weighted average of 3 payments. For principal and interest deferrals, the loans were re-amortized over an extended payment period resulting in reduced monthly payment amounts for the borrowers.
Residential real estate	Deferred a weighted average of 9 principal and interest payments which were added to the end of the loan life.
Consumer home equity	Deferred a weighted average of 6 principal and interest payments which were added to the end of the loan life.
Term Extension
Business banking	Added a weighted-average 4.2 years to the life of loans, which reduced monthly payment amounts for the borrowers.
Consumer home equity	Added a weighted-average 0.6 years to the life of loans, which reduced monthly payment amounts for the borrowers.

(1)Loans that were modified in more than one manner are included in each modification type corresponding to the type of modifications performed.

As of March 31, 2024 no loans to borrowers experiencing financial difficulty modified during the prior twelve months had a payment default during the three months ended March 31, 2024. As of March 31, 2023, no loans to borrowers experiencing financial difficulty modified during the three months ended March 31, 2023 had a payment default during the three months ended March 31, 2023.

Management closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table shows the age analysis of past due loans to borrowers experiencing financial difficulty that were modified during the prior twelve months as of March 31, 2024:

	As of March 31, 2024
	30-59 Days Past Due		60-89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total
	(In thousands)
Commercial real estate	$	—	$	—	$	—	$	—	$	10,506	$	10,506
Business banking	34		—		—		34		700		734
Residential real estate	774		—		36		810		2,778		3,588
Consumer home equity	—		—		400		400		2,527		2,927
Total	$	808	$	—	$	436	$	1,244	$	16,511	$	17,755

The following table shows the age analysis of past due loans to borrowers experiencing financial difficulty as of March 31, 2023 that were modified during the three months ended March 31, 2023:

	As of March 31, 2023
	30-59 Days Past Due		60-89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total
	(In thousands)
Business banking	$	28	$	—	$	—	$	28	$	703	$	731
Residential real estate	—		—		—		—		327		327
Consumer home equity	—		—		—		—		1,231		1,231
Total	$	28	$	—	$	—	$	28	$	2,261	$	2,289

As of March 31, 2024 and December 31, 2023, there were no additional commitments to lend to borrowers experiencing financial difficulty and which were modified during the three months ended March 31, 2024 and the year ended December 31, 2023, respectively, in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant delay in repayment, or a term extension.

Loan Participations

The Company occasionally purchases commercial loan participations or participates in syndications through the SNC Program. These participations meet the same underwriting, credit and portfolio management standards as the Company’s other loans and are applied against the same criteria to determine the allowance for loan losses as other loans.

The following table summarizes the Company’s loan participations:

	As of and for the Three Months Ended March 31, 2024						As of and for the Year Ended December 31, 2023
	Balance		Non-performing Loan Rate (%)		Gross Charge-offs		Balance		Non-performing Loan Rate (%)		Gross Charge-offs
	(Dollars in thousands)
Commercial and industrial	$	980,353	0.00	%	$	—	$	985,394	0.00	%	$	—
Commercial real estate	501,033		0.00	%	—		447,550		0.00	%	—
Commercial construction	126,822		0.00	%	—		146,043		0.00	%	—
Business banking	60		0.00	%	22		72		0.00	%	22
Total loan participations	$	1,608,268	0.00	%	$	22	$	1,579,059	0.00	%	$	22