Allowance for Credit Losses

6 Months Ended

Jun. 30, 2020

Allowance for Credit Losses

Allowance for Credit Losses

4. Allowance for Credit Losses

The Company maintains an ACL that is deducted from the amortized cost basis of loans and leases to present the net carrying value of loans and leases expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount of loans and leases.

The Company also maintains an estimated reserve for unfunded commitments on the unaudited interim consolidated balance sheets. The reserve for unfunded commitments is reduced in the period in which the OBS financial instruments expire, loan funding occurs, or is otherwise settled.

In response to the COVID-19 pandemic, on March 27, 2020, the CARES Act was signed into law. The CARES Act creates a forbearance program for federally backed mortgage loans, protects borrowers from negative credit reporting due to loan accommodations related to the National Emergency, and provides financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19. Financial institutions accounting for eligible loans under the CARES Act are not required to report such loans as TDRs in accordance with GAAP. In addition, Interagency Statements were issued on March 22, 2020 and April 7, 2020 to encourage financial institutions to work prudently with borrowers and to describe the agencies’ interpretation of how current accounting rules under GAAP apply to certain COVID-19 related modifications. The agencies confirmed with the FASB that short-term modifications (e.g., six months or less) for payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant and made on a good faith basis in response to borrowers impacted by COVID-19 who were current prior to any relief are not TDRs under GAAP. The agencies also confirmed that these short-term modifications should not be reported as being on nonaccrual status and should not be considered past due during the period of the deferral. The Company has adopted the provisions of both the CARES Act and Interagency Statements. The Company is first applying the CARES Act guidance in determining if certain loan modifications are not required to be reported as TDRs. If the loan modification does not qualify under the CARES Act, then the Interagency Statement guidance is applied. The interim consolidated financial information below reflects the application of this guidance.

Rollforward of the Allowance for Credit Losses

The following presents the activity in the ACL by class of loans and leases for the three and six months ended June 30, 2020:

	Three Months Ended June 30, 2020
	Commercial Lending								Residential Lending
	Commercial		Commercial								Home
	and		Real				Lease		Residential		Equity
(dollars in thousands)	Industrial		Estate		Construction		Financing		Mortgage		Line		Consumer		Total
Allowance for credit losses:
Balance at beginning of period	$	20,884	$	42,838	$	8,824	$	851	$	30,021	$	6,556	$	56,039	$	166,013
Charge-offs		(13,974)		(2,723)		(379)		—		(14)		—		(8,907)		(25,997)
Recoveries		100		—		30		—		17		8		2,456		2,611
Increase (decrease) in Provision		14,289		13,007		(3,199)		2,986		3,850		1,071		17,489		49,493
Balance at end of period	$	21,299	$	53,122	$	5,276	$	3,837	$	33,874	$	7,635	$	67,077	$	192,120

	Six Months Ended June 30, 2020
	Commercial Lending								Residential Lending
	Commercial		Commercial								Home
	and		Real				Lease		Residential		Equity
(dollars in thousands)	Industrial		Estate		Construction		Financing		Mortgage		Line		Consumer		Unallocated		Total
Allowance for credit losses:
Balance at beginning of period	$	28,975	$	22,325	$	4,844	$	424	$	29,303	$	9,876	$	34,644	$	139	$	130,530
Adoption of ASU No. 2016-13		(16,105)		10,559		(1,803)		207		(2,793)		(4,731)		15,575		(139)		770
Charge-offs		(14,175)		(2,723)		(379)		—		(14)		(8)		(17,504)		—		(34,803)
Recoveries		320		—		140		—		152		130		4,539		—		5,281
Increase in Provision		22,284		22,961		2,474		3,206		7,226		2,368		29,823		—		90,342
Balance at end of period	$	21,299	$	53,122	$	5,276	$	3,837	$	33,874	$	7,635	$	67,077	$	—	$	192,120

The following presents the activity in the ACL by class of loans and leases for the three and six months ended June 30, 2019, presented in accordance with Topic 310, Receivables:

	Three Months Ended June 30, 2019
	Commercial Lending
	Commercial		Commercial
	and		Real				Lease
(dollars in thousands)	Industrial		Estate		Construction		Financing		Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Balance at beginning of period	$	31,793	$	21,197	$	5,381	$	411	$	44,911	$	35,099	$	2,754	$	141,546
Charge-offs		(2,000)		—		—		—		—		(7,505)		—		(9,505)
Recoveries		25		32		—		—		185		2,382		—		2,624
Increase (decrease) in Provision		1,870		975		(367)		35		(1,676)		3,662		(629)		3,870
Balance at end of period	$	31,688	$	22,204	$	5,014	$	446	$	43,420	$	33,638	$	2,125	$	138,535

	Six Months Ended June 30, 2019
	Commercial Lending
	Commercial		Commercial
	and		Real				Lease
(dollars in thousands)	Industrial		Estate		Construction		Financing		Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Balance at beginning of period	$	34,501	$	19,725	$	5,813	$	432	$	44,906	$	35,813	$	528	$	141,718
Charge-offs		(2,000)		—		—		(24)		—		(16,103)		—		(18,127)
Recoveries		62		63		—		—		435		4,834		—		5,394
Increase (decrease) in Provision		(875)		2,416		(799)		38		(1,921)		9,094		1,597		9,550
Balance at end of period	$	31,688	$	22,204	$	5,014	$	446	$	43,420	$	33,638	$	2,125	$	138,535

The disaggregation of the ACL and recorded investment in loans by impairment methodology as of December 31, 2019, presented in accordance with Topic 310, Receivables, was as follows:

	December 31, 2019
	Commercial Lending
	Commercial		Commercial
	and		Real				Lease
(dollars in thousands)	Industrial		Estate		Construction		Financing		Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Individually evaluated for impairment	$	46	$	27	$	—	$	—	$	130	$	—	$	—	$	203
Collectively evaluated for impairment		28,929		22,298		4,844		424		39,049		34,644		139		130,327
Balance at end of period	$	28,975	$	22,325	$	4,844	$	424	$	39,179	$	34,644	$	139	$	130,530
Loans and leases:
Individually evaluated for impairment	$	4,951	$	723	$	—	$	—	$	14,964	$	—	$	—	$	20,638
Collectively evaluated for impairment		2,738,291		3,463,230		519,241		202,483		4,647,211		1,620,556		—		13,191,012
Balance at end of period	$	2,743,242	$	3,463,953	$	519,241	$	202,483	$	4,662,175	$	1,620,556	$	—	$	13,211,650

Rollforward of the Reserve for Unfunded Commitments

The following presents the activity in the Reserve for Unfunded Commitments for the three and six months ended June 30, 2020:

	Three Months Ended June 30, 2020
	Commercial Lending								Residential Lending
	Commercial		Commercial								Home
	and		Real				Lease		Residential		Equity
(dollars in thousands)	Industrial		Estate		Construction		Financing		Mortgage		Line		Consumer		Total
Reserve for unfunded commitments:
Balance at beginning of period	$	4,791	$	696	$	4,813	$	—	$	1	$	6,927	$	23	$	17,251
Increase in Provision		3,390		472		1,095		—		2		963		31		5,953
Balance at end of period	$	8,181	$	1,168	$	5,908	$	—	$	3	$	7,890	$	54	$	23,204

	Six Months Ended June 30, 2020
	Commercial Lending								Residential Lending
	Commercial		Commercial								Home
	and		Real				Lease		Residential		Equity
(dollars in thousands)	Industrial		Estate		Construction		Financing		Mortgage		Line		Consumer		Total
Reserve for unfunded commitments:
Balance at beginning of period	$	—	$	—	$	—	$	—	$	—	$	—	$	600	$	600
Adoption of ASU No. 2016-13		5,390		778		4,119		—		7		6,587		(581)		16,300
Increase (decrease) in Provision		2,791		390		1,789		—		(4)		1,303		35		6,304
Balance at end of period	$	8,181	$	1,168	$	5,908	$	—	$	3	$	7,890	$	54	$	23,204

Credit Quality Information

The Company performs an internal loan review and grading or scoring procedures on an ongoing basis. The review provides management with periodic information as to the quality of the loan portfolio and effectiveness of the Company’s lending policies and procedures. The objective of the loan review and grading or scoring procedures is to identify, in a timely manner, existing or emerging credit quality issues so that appropriate steps can be initiated to avoid or minimize future losses.

Loans and leases subject to grading primarily include: commercial and industrial loans, commercial real estate loans, construction loans and lease financing. Other loans subject to grading include installment loans to businesses or individuals for business and commercial purposes, overdraft lines of credit, commercial credit cards, and other credits as may be determined. Credit quality indicators for internally graded loans and leases are generally updated on an annual basis or on a quarterly basis for those loans  and leases deemed to be of potentially higher risk.

An internal credit risk rating system is used to determine loan grade and is based on borrower credit risk and transactional risk. The loan grading process is a mechanism used to determine the risk of a particular borrower and is based on the following factors of a borrower: character, earnings and operating cash flow, asset and liability structure, debt capacity, management and controls, borrowing entity, and industry and operating environment.

Pass – “Pass” (uncriticized) loans and leases, are not considered to carry greater than normal risk. The borrower has the apparent ability to satisfy obligations to the Company, and therefore no loss in ultimate collection is anticipated.

Special Mention – Loans and leases that have potential weaknesses deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for assets or in the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard – Loans and leases that are inadequately protected by the current financial condition and paying capacity of the obligor or by any collateral pledged. Loans and leases so classified must have a well-defined weakness or weaknesses that jeopardize the collection of the debt. They are characterized by the distinct possibility that the bank may sustain some loss if the deficiencies are not corrected.

Doubtful – Loans and leases that have weaknesses found in substandard borrowers with the added provision that the weaknesses make collection of debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss – Loans and leases classified as loss are considered uncollectible and of such little value that their continuance as an asset is not warranted. This classification does not mean that the loan or lease has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future.

Loans that are primarily monitored for credit quality using FICO scores include: residential real estate loans, home equity lines and consumer loans. FICO scores are calculated primarily based on a consideration of payment history, the current amount of debt, the length of credit history available, a recent history of new sources of credit and the mix of credit type. FICO scores are updated on a monthly, quarterly or bi-annual basis, depending on the product type.

The amortized cost basis by year of origination and credit quality indicator of the Company's loans and leases as of June 30, 2020 was as follows:

															Revolving
															Loans
															Converted
	Term Loans												Revolving		to Term
	Amortized Cost Basis by Origination Year												Loans		Loans
													Amortized		Amortized
(dollars in thousands)	2020		2019		2018		2017		2016		Prior		Cost Basis		Cost Basis		Total
Commercial Lending
Commercial and Industrial
Risk rating:
Pass	$	989,501	$	349,261	$	271,941	$	76,742	$	62,113	$	68,468	$	1,182,299	$	39,617	$	3,039,942
Special Mention		28,136		9,235		8,460		841		335		27,174		113,642		509		188,332
Substandard		16,621		1,724		1,836		2,000		4,321		9,788		52,225		938		89,453
Other (1)		9,091		16,661		12,574		7,884		3,199		811		55,761		—		105,981
Total Commercial and Industrial		1,043,349		376,881		294,811		87,467		69,968		106,241		1,403,927		41,064		3,423,708
Commercial Real Estate
Risk rating:
Pass		171,445		618,501		523,149		440,549		296,474		927,232		33,878		—		3,011,228
Special Mention		—		113,286		53,391		62,165		47,790		66,008		2,999		—		345,639
Substandard		—		16,304		14,617		1,655		6,630		17,947		8,970		—		66,123
Other (1)		—		—		—		—		—		509		—		—		509
Total Commercial Real Estate		171,445		748,091		591,157		504,369		350,894		1,011,696		45,847		—		3,423,499
Construction
Risk rating:
Pass		16,615		135,963		192,016		96,137		24,106		41,457		29,297		—		535,591
Special Mention		—		—		2,152		4,782		—		10,850		196		—		17,980
Substandard		—		—		541		1,840		528		1,000		—		—		3,909
Other (1)		8,415		31,038		8,546		5,562		1,795		4,514		585		—		60,455
Total Construction		25,030		167,001		203,255		108,321		26,429		57,821		30,078		—		617,935
Lease Financing
Risk rating:
Pass		45,489		67,806		11,965		18,915		3,764		59,364		—		—		207,303
Special Mention		9,142		1,931		4,626		1,545		1,440		5,854		—		—		24,538
Substandard		2,697		1,651		368		1,207		—		523		—		—		6,446
Total Lease Financing		57,328		71,388		16,959		21,667		5,204		65,741		—		—		238,287
Total Commercial Lending	$	1,297,152	$	1,363,361	$	1,106,182	$	721,824	$	452,495	$	1,241,499	$	1,479,852	$	41,064	$	7,703,429

(continued)

															Revolving
															Loans
															Converted
	Term Loans												Revolving		to Term
	Amortized Cost Basis by Origination Year												Loans		Loans
(continued)													Amortized		Amortized
(dollars in thousands)	2020		2019		2018		2017		2016		Prior		Cost Basis		Cost Basis		Total
Residential Lending
Residential Mortgage
FICO:
740 and greater	$	300,079	$	411,883	$	353,197	$	411,670	$	362,197	$	988,771	$	—	$	—	$	2,827,797
680 - 739		50,937		72,139		64,920		65,992		43,666		161,897		—		—		459,551
620 - 679		6,098		12,708		12,060		12,648		10,789		55,000		—		—		109,303
550 - 619		2,006		1,824		3,533		3,389		3,032		13,329		—		—		27,113
Less than 550		—		—		1,204		1,907		528		6,324		—		—		9,963
No Score (3)		15,676		21,603		24,182		23,736		16,298		51,943		—		—		153,438
Other (2)		8,244		20,308		22,241		23,435		12,412		17,063		579		503		104,785
Total Residential Mortgage		383,040		540,465		481,337		542,777		448,922		1,294,327		579		503		3,691,950
Home Equity Line
FICO:
740 and greater		—		—		—		—		—		—		626,897		858		627,755
680 - 739		—		—		—		—		—		—		169,547		1,283		170,830
620 - 679		—		—		—		—		—		—		48,655		1,013		49,668
550 - 619		—		—		—		—		—		—		14,276		562		14,838
Less than 550		—		—		—		—		—		—		6,661		212		6,873
No Score (3)		—		—		—		—		—		—		6,527		—		6,527
Total Home Equity Line		—		—		—		—		—		—		872,563		3,928		876,491
Total Residential Lending		383,040		540,465		481,337		542,777		448,922		1,294,327		873,142		4,431		4,568,441
Consumer Lending
FICO:
740 and greater		65,206		141,704		120,178		71,525		35,932		12,451		109,702		—		556,698
680 - 739		47,584		109,728		87,056		48,728		24,478		10,094		83,021		—		410,689
620 - 679		24,185		65,310		43,282		31,318		16,144		7,013		42,511		—		229,763
550 - 619		5,881		26,220		22,891		20,874		10,869		5,467		18,429		—		110,631
Less than 550		1,562		12,306		13,110		10,628		5,397		2,567		7,777		—		53,347
No Score (3)		3,799		124		125		126		27		1		34,281		—		38,483
Other (2)		594		9,160		96		2,225		72		6,804		73,598		—		92,549
Total Consumer Lending		148,811		364,552		286,738		185,424		92,919		44,397		369,319		—		1,492,160
Total Loans and Leases	$	1,829,003	$	2,268,378	$	1,874,257	$	1,450,025	$	994,336	$	2,580,223	$	2,722,313	$	45,495	$	13,764,030

(1) Other credit quality indicators used for monitoring purposes are primarily FICO scores.

(2) Other credit quality indicators used for monitoring purposes are primarily internal risk ratings.

(3) No FICO scores are primarily related to loans and leases extended to non-residents.  Loans and leases of this nature are primarily secured by collateral and/or are closely monitored for performance.

There were no loans and leases graded as Loss as of June 30, 2020.

The amortized cost basis of revolving loans that were converted to term loans during the three and six months ended June 30, 2020 was as follows:

	Three Months Ended
(dollars in thousands)	June 30, 2020
Commercial and industrial	$	294
Home equity line		3,928
Total Revolving Loans Converted to Term Loans During the Period	$	4,222

	Six Months Ended
(dollars in thousands)	June 30, 2020
Commercial and industrial	$	28,522
Residential mortgage		296
Home equity line		3,928
Total Revolving Loans Converted to Term Loans During the Period	$	32,746

The credit risk profiles by internally assigned grade for loans and leases as of December 31, 2019, presented in accordance with Topic 310, Receivables, were as follows:

	December 31, 2019
	Commercial		Commercial
	and		Real				Lease
(dollars in thousands)	Industrial		Estate		Construction		Financing		Total
Grade:
Pass	$	2,585,908	$	3,327,659	$	515,993	$	201,461	$	6,631,021
Special mention		91,365		106,331		127		1,022		198,845
Substandard		65,969		29,963		3,121		—		99,053
Total	$	2,743,242	$	3,463,953	$	519,241	$	202,483	$	6,928,919

There were no loans and leases graded as Loss as of December 31, 2019.

The credit risk profiles based on payment activity for loans and leases that were not subject to loan grading as of December 31, 2019 presented in accordance with Topic 310, Receivables, were as follows:

	December 31, 2019
(dollars in thousands)	Residential Mortgage		Home Equity Line		Consumer		Consumer - Auto		Credit Cards		Total
Performing	$	3,759,799	$	886,879	$	219,046	$	1,016,142	$	347,264	$	6,229,130
Non-performing and delinquent		9,137		6,360		7,258		24,326		6,520		53,601
Total	$	3,768,936	$	893,239	$	226,304	$	1,040,468	$	353,784	$	6,282,731

Past-Due Status

The Company continually updates its aging analysis for loans and leases to monitor the migration of loans and leases into past due categories. The Company considers loans and leases that are delinquent for 30 days or more to be past due. As of June 30, 2020, the aging analysis of the amortized cost basis of the Company’s past due loans and leases was as follows:

	June 30, 2020
	Past Due												Loans and
					Greater								Leases Past
					Than or								Due 90 Days
	30-59		60-89		Equal to								or More and
	Days		Days		90 Days		Total				Total Loans		Still Accruing
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		and Leases		Interest
Commercial and industrial	$	2,535	$	2,501	$	2,374	$	7,410	$	3,416,298	$	3,423,708	$	2,309
Commercial real estate		2,761		94		1,655		4,510		3,418,989		3,423,499		900
Construction		2,737		—		2,292		5,029		612,906		617,935		248
Lease financing		—		—		—		—		238,287		238,287		—
Residential mortgage		2,630		4,778		4,152		11,560		3,680,390		3,691,950		—
Home equity line		2,041		1,591		4,496		8,128		868,363		876,491		4,496
Consumer		11,053		3,103		2,167		16,323		1,475,837		1,492,160		2,167
Total	$	23,757	$	12,067	$	17,136	$	52,960	$	13,711,070	$	13,764,030	$	10,120

As of December 31, 2019, the aging analysis of the Company’s past due loans and leases, presented in accordance with Topic 310, Receivables, was as follows:

	December 31, 2019
	Accruing Loans and Leases
					Greater								Total Non
					Than or						Total		Accruing
	30-59		60-89		Equal to		Total				Accruing		Loans
	Days		Days		90 Days		Past				Loans and		and		Total
(dollars in thousands)	Past Due		Past Due		Past Due		Due		Current		Leases		Leases		Outstanding
Commercial and industrial	$	1,525	$	808	$	1,429	$	3,762	$	2,739,448	$	2,743,210	$	32	$	2,743,242
Commercial real estate		1,664		1,125		1,013		3,802		3,460,121		3,463,923		30		3,463,953
Construction		—		—		2,367		2,367		516,874		519,241		—		519,241
Lease financing		—		—		—		—		202,483		202,483		—		202,483
Residential mortgage		3,258		399		74		3,731		3,759,799		3,763,530		5,406		3,768,936
Home equity line		2,971		394		2,995		6,360		886,879		893,239		—		893,239
Consumer		26,810		7,022		4,272		38,104		1,582,452		1,620,556		—		1,620,556
Total	$	36,228	$	9,748	$	12,150	$	58,126	$	13,148,056	$	13,206,182	$	5,468	$	13,211,650

Nonaccrual Loans and Leases

The Company generally places a loan or lease on nonaccrual status when management believes that collection of principal or interest has become doubtful or when a loan or lease becomes 90 days past due as to principal or interest, unless it is well secured and in the process of collection. The Company charges off a loan or lease when facts indicate that the loan or lease is considered uncollectible.

The amortized cost basis of loans and leases on nonaccrual status as of June 30, 2020 and January 1, 2020 and the amortized cost basis of loans and leases on nonaccrual status with no allowance for credit losses as of June 30, 2020 were as follows:

	June 30, 2020				January 1, 2020
	Nonaccrual
	Loans
	and Leases
	With No		Nonaccrual		Nonaccrual
	Allowance		Loans		Loans
(dollars in thousands)	for Credit Losses		and Leases		and Leases
Commercial and industrial	$	11,494	$	11,559	$	32
Commercial real estate		13,088		13,168		30
Construction		1,840		2,043		—
Residential mortgage		1,475		6,059		5,406
Total Nonaccrual Loans and Leases	$	27,897	$	32,829	$	5,468

For both the three and six months ended June 30, 2020, the Company recognized interest income of $0.1 million on nonaccrual loans and leases. Furthermore, for the three and six months ended June 30, 2020, the amount of accrued interest receivables written off by reversing interest income was $0.5 million and $0.9 million, respectively.

Collateral-Dependent Loans and Leases

Collateral-dependent loans and leases are those for which repayment (on the basis of the Company’s assessment as of the reporting date) is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. As of June 30, 2020, the amortized cost basis of collateral-dependent loans was $55.9 million. These loans were primarily collateralized by commercial and residential real estate property and borrower assets. As of June 30, 2020, the fair value of collateral on substantially all collateral-dependent loans were significantly in excess of their amortized cost basis.

Impaired Loans

The total carrying amounts and the total unpaid principal balances of impaired loans and leases as of December 31, 2019, presented in accordance with Topic 310, Receivables, were as follows:

	December 31, 2019
			Unpaid
	Recorded		Principal		Related
(dollars in thousands)	Investment		Balance		Allowance
Impaired loans with no related allowance recorded:
Commercial and industrial	$	3,825	$	3,841	$	—
Commercial real estate		30		30		—
Residential mortgage		10,425		10,718		—
Total	$	14,280	$	14,589	$	—
Impaired loans with a related allowance recorded:
Commercial and industrial	$	1,126	$	1,126	$	46
Commercial real estate		693		693		27
Residential mortgage		4,539		4,819		130
Total	$	6,358	$	6,638	$	203
Total impaired loans:
Commercial and industrial	$	4,951	$	4,967	$	46
Commercial real estate		723		723		27
Residential mortgage		14,964		15,537		130
Total	$	20,638	$	21,227	$	203

The following table provides information with respect to the Company’s average balances, and of interest income recognized from, impaired loans for the three and six months ended June 30, 2019, presented in accordance with Topic 310, Receivables:

	Three Months Ended				Six Months Ended
	June 30, 2019				June 30, 2019
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(dollars in thousands)	Investment		Recognized		Investment		Recognized
Impaired loans with no related allowance recorded:
Commercial and industrial	$	3,833	$	94	$	4,038	$	175
Commercial real estate		3,102		40		3,740		212
Residential mortgage		7,948		92		8,336		191
Total	$	14,883	$	226	$	16,114	$	578
Impaired loans with a related allowance recorded:
Commercial and industrial	$	5,645	$	61	$	5,187	$	117
Commercial real estate		715		10		719		20
Residential mortgage		7,220		103		7,147		199
Total	$	13,580	$	174	$	13,053	$	336
Total impaired loans:
Commercial and industrial	$	9,478	$	155	$	9,225	$	292
Commercial real estate		3,817		50		4,459		232
Residential mortgage		15,168		195		15,483		390
Total	$	28,463	$	400	$	29,167	$	914

Modifications

Commercial and industrial loans modified in a TDR may involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Modifications of commercial real estate and construction loans in a TDR may involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Modifications of construction loans in a TDR may also involve extending the interest-only payment period. Interest continues to accrue on the missed payments and as a result, the effective yield on the loan remains unchanged. As the forbearance period usually involves an insignificant payment delay, lease financing modifications typically do not meet the reporting criteria for a TDR. Residential real estate loans modified in a TDR may be comprised of loans where monthly payments are lowered to accommodate the borrowers' financial needs for a period of time, normally two years. Generally, consumer loans

are not classified as a TDR as they are normally charged off upon reaching a predetermined delinquency status that ranges from 120 to 180 days and varies by product type.

Loans modified in a TDR may already be on nonaccrual status and in some cases partial charge-offs may have already been taken against the outstanding loan balance. Loans modified in a TDR are evaluated for impairment. As a result, this may have a financial effect of increasing the specific ACL associated with the loan. An ACL for impaired commercial loans, including commercial real estate and construction loans, that have been modified in a TDR is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or if the loan is collateral dependent, the estimated fair value of the collateral, less any selling costs. An ACL for impaired residential real estate loans that have been modified in a TDR is measured based on the estimated fair value of the collateral, less any selling costs. Management exercises significant judgment in developing these estimates.

The following presents, by class, information related to loans modified in a TDR during the three and six months ended June 30, 2020 and 2019:

	Three Months Ended					Six Months Ended
	June 30, 2020					June 30, 2020
	Number of	Recorded		Related		Number of	Recorded		Related
(dollars in thousands)	Contracts	Investment(1)		Allowance		Contracts	Investment(1)		Allowance
Commercial and industrial	—	$	—	$	—	1	$	500	$	30
Total	—	$	—	$	—	1	$	500	$	30

(1) The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period.

	Three Months Ended					Six Months Ended
	June 30, 2019					June 30, 2019
	Number of	Recorded		Related		Number of	Recorded		Related
(dollars in thousands)	Contracts	Investment(1)		Allowance		Contracts	Investment(1)		Allowance
Commercial and industrial	—	$	—	$	—	4	$	906	$	41
Residential mortgage	—		—		—	1		351		14
Total	—	$	—	$	—	5	$	1,257	$	55

(1) The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period.

The above loans were modified in a TDR through an extension of maturity dates, temporary interest-only payments, reduced payments, or below-market interest rates.

The Company had commitments to extend credit, standby letters of credit, and commercial letters of credit totaling $6.3 billion and $6.1 billion as of June 30, 2020 and December 31, 2019, respectively. Of the $6.3 billion at June 30, 2020, there were no commitments related to borrowers who had loan terms modified in a TDR. Of the $6.1 billion at December 31, 2019, there were commitments of $4.5 million related to borrowers who had loan terms modified in a TDR.

The following table presents, by class, loans modified in TDRs that have defaulted in the current period within 12 months of their permanent modification date for the periods indicated. The Company is reporting these defaulted TDRs based on a payment default definition of 30 days past due:

	Three Months Ended			Six Months Ended			Three Months Ended			Six Months Ended
	June 30, 2020			June 30, 2020			June 30, 2019			June 30, 2019
	Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded
(dollars in thousands)	Contracts	Investment(1)		Contracts	Investment(1)		Contracts	Investment(1)		Contracts	Investment(1)
Commercial and industrial(2)	1	$	500	1	$	500	4	$	906	4	$	906
Residential mortgage(3)	—		—	—		—	1		351	1		351
Total	1	$	500	1	$	500	5	$	1,257	5	$	1,257

(1) The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period.

(2) For the three and six months ended June 30, 2020, the maturity date for the commercial and industrial loan that subsequently defaulted was extended. For the three and six months ended June 30, 2019, the commercial and industrial loans that subsequently defaulted were temporarily modified to interest-only payments.

(3) For the three and six months ended June 30, 2019, the maturity date for the residential mortgage loan that subsequently defaulted was extended.

Foreclosure Proceedings

As of June 30, 2020, there were no residential mortgage loans collateralized by real estate property that was modified in a TDR that was in process of foreclosure. As of December 31, 2019, there was one residential mortgage loan collateralized by real estate property of $0.3 million that was modified in a TDR that was in process of foreclosure.

Foreclosed Property

As of June 30, 2020, residential real estate property held from one foreclosed residential real estate loan was held and included in other real estate owned and repossessed personal property with a carrying value of $0.4 million on the unaudited interim consolidated balance sheets. As of December 31, 2019, residential real estate properties from two foreclosed residential real estate loans were held and included in other real estate owned and repossessed personal property with a carrying value of $0.3 million on the unaudited interim consolidated balance sheets.