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Allowance for Credit Losses

9 Months Ended

Sep. 30, 2024

4. Allowance for Credit Losses

The Company maintains the allowance for credit losses for loans and leases (the “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 collectibility of the reported amount of loans and leases. While management utilizes its best judgment and information available, the ultimate appropriateness of the ACL is dependent upon a variety of factors beyond our control, including the performance of our loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.

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 off-balance sheet financial instruments expire, loan funding occurs, or is otherwise settled.

During the three months ended June 30, 2024, the Company updated its methodology for one of its quantitative models to estimate the total ACL (inclusive of the allowance for credit losses for loans and leases and the reserve for unfunded commitments) by changing from a one-variable forward-looking macroeconomic outlook model to a multi-variable forward-looking macroeconomic outlook model. The impact of this update was a reduction to the total ACL of $9.0 million as of June 30, 2024. Additionally, the Company updated certain components of its qualitative adjustments, resulting in a $5.8 million increase to the total ACL as of June 30, 2024. The net impact of these updates was a net $3.2 million decrease to the total ACL as of June 30, 2024. The Company’s methodology is more fully described in our Annual Report on Form 10-K for the year ended December 31, 2023 and should be read in conjunction with these unaudited interim consolidated financial statements as of and for the three and nine months ended September 30, 2024.

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 nine months ended September 30, 2024 and 2023:

Three Months Ended September 30, 2024

Commercial Lending

Residential Lending

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

14,713

44,412

9,331

2,352

46,152

9,183

34,374

160,517

Charge-offs

(1,178)

(400)

—

(4,192)

(5,770)

Recoveries

160

—

1,560

1,837

Provision

(470)

481

(62)

(3,287)

1,268

9,185

7,116

Balance at end of period

13,225

44,013

9,812

2,290

42,896

10,537

40,927

163,700

Nine Months Ended September 30, 2024

Commercial Lending

Residential Lending

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

14,956

43,944

10,392

1,754

36,880

11,728

36,879

156,533

Charge-offs

(2,764)

(400)

—

(13,228)

(16,392)

Recoveries

621

—

242

5,199

6,151

Provision

412

469

(580)

536

5,927

(1,433)

12,077

17,408

Balance at end of period

13,225

44,013

9,812

2,290

42,896

10,537

40,927

163,700


	Three Months Ended September 30, 2023
	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	$	13,810	$	39,887	$	9,871	$	1,447	$	32,803	$	11,806	$	38,957	$	148,581
Charge-offs		(784)		—		—		—		—		—		(3,665)		(4,449)
Recoveries		2,637		—		—		—		53		303		1,746		4,739
Provision		(1,963)		3,911		333		263		4,143		(682)		(81)		5,924
Balance at end of period	$	13,700	$	43,798	$	10,204	$	1,710	$	36,999	$	11,427	$	36,957	$	154,795


	Nine Months Ended September 30, 2023
	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	$	14,564	$	43,810	$	5,843	$	1,551	$	35,175	$	8,296	$	34,661	$	143,900
Charge-offs		(2,572)		—		—		—		(122)		(272)		(12,963)		(15,929)
Recoveries		3,175		—		—		—		110		539		5,640		9,464
Provision		(1,467)		(12)		4,361		159		1,836		2,864		9,619		17,360
Balance at end of period	$	13,700	$	43,798	$	10,204	$	1,710	$	36,999	$	11,427	$	36,957	$	154,795

Rollforward of the Reserve for Unfunded Commitments

The following presents the activity in the Reserve for Unfunded Commitments for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30, 2024

Commercial Lending

Residential Lending

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

7,947

1,435

7,122

—

16,879

33,413

Provision

104

(262)

643

—

(240)

284

Balance at end of period

8,051

1,173

7,765

—

16,639

33,697

Nine Months Ended September 30, 2024

Commercial Lending

Residential Lending

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

9,116

1,787

8,048

—

16,589

35,605

Provision

(1,065)

(614)

(283)

—

(2)

(1,908)

Balance at end of period

8,051

1,173

7,765

—

16,639

33,697


	Three Months Ended September 30, 2023
	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	$	6,354	$	1,991	$	9,789	$	—	$	19	$	18,015	$	31	$	36,199
Provision		3,577		(129)		(382)		—		(6)		(1,475)		(9)		1,576
Balance at end of period	$	9,931	$	1,862	$	9,407	$	—	$	13	$	16,540	$	22	$	37,775


	Nine Months Ended September 30, 2023
	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	$	7,811	$	2,004	$	7,470	$	—	$	30	$	16,483	$	37	$	33,835
Provision		2,120		(142)		1,937		—		(17)		57		(15)		3,940
Balance at end of period	$	9,931	$	1,862	$	9,407	$	—	$	13	$	16,540	$	22	$	37,775

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 mortgage 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 September 30, 2024 was as follows:

Revolving

Loans

Converted

Term Loans

Revolving

to Term

Amortized Cost Basis by Origination Year

Loans

Amortized

(dollars in thousands)

2024

2023

2022

2021

2020

Prior

Cost Basis

Total

Commercial Lending

Commercial and Industrial

Risk rating:

Pass

100,174

82,175

191,861

256,997

20,866

266,720

1,026,457

13,396

1,958,646

Special Mention

303

7,327

398

1,371

18,239

—

27,687

Substandard

—

8,251

219

358

2,033

32,296

—

43,157

Other ⁽¹⁾

10,797

10,542

7,779

3,074

1,052

1,723

45,620

—

80,587

Total Commercial and Industrial

111,274

92,718

215,218

260,338

22,674

271,847

1,122,612

13,396

2,110,077

Current period gross charge-offs

—

578

333

221

1,543

—

2,764

Commercial Real Estate

Risk rating:

Pass

118,884

347,480

810,746

649,133

325,887

1,774,529

87,188

7,760

4,121,607

Special Mention

3,587

2,261

7,537

41,384

3,306

11,973

7,815

—

77,863

Substandard

—

54,984

1,003

—

9,548

149

—

65,684

Other ⁽¹⁾

—

135

—

135

Total Commercial Real Estate

122,471

349,741

873,267

691,520

329,193

1,796,185

95,152

7,760

4,265,289

Current period gross charge-offs

—

400

—

400

Construction

Risk rating:

Pass

61,677

246,176

361,974

241,212

58,820

46,344

4,484

—

1,020,687

Special Mention

—

164

—

164

Other ⁽¹⁾

4,970

9,468

12,022

3,575

1,199

3,463

701

—

35,398

Total Construction

66,647

255,644

373,996

244,787

60,019

49,971

5,185

—

1,056,249

Current period gross charge-offs

—

Lease Financing

Risk rating:

Pass

126,380

105,523

66,764

15,483

23,133

89,254

—

426,537

Special Mention

—

100

300

—

447

Substandard

4,899

602

343

—

5,844

Total Lease Financing

131,279

106,167

67,207

15,783

23,138

89,254

—

432,828

Current period gross charge-offs

—

Total Commercial Lending

431,671

804,270

1,529,688

1,212,428

435,024

2,207,257

1,222,949

21,156

7,864,443

Current period gross charge-offs

—

578

333

221

1,943

—

3,164

(continued)


															Revolving
															Loans
															Converted
	Term Loans												Revolving		to Term
	Amortized Cost Basis by Origination Year												Loans		Loans
(continued)													Amortized		Amortized
(dollars in thousands)	2024		2023		2022		2021		2020		Prior		Cost Basis		Cost Basis		Total
Residential Lending
Residential Mortgage
FICO:
740 and greater	$	113,307	$	206,224	$	504,141	$	956,983	$	503,160	$	1,129,857	$	—	$	—	$	3,413,672
680 - 739		11,614		28,638		65,128		109,018		66,719		157,263		—		—		438,380
620 - 679		1,519		1,792		22,921		19,854		11,651		37,979		—		—		95,716
550 - 619		—		896		3,703		6,707		2,269		15,751		—		—		29,326
Less than 550		—		286		2,380		3,818		2,959		5,569		—		—		15,012
No Score ⁽³⁾		543		7,117		16,923		10,512		5,553		52,526		—		—		93,174
Other ⁽²⁾		8,148		12,786		16,721		14,776		11,222		30,022		8,105		—		101,780
Total Residential Mortgage		135,131		257,739		631,917		1,121,668		603,533		1,428,967		8,105		—		4,187,060
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Home Equity Line
FICO:
740 and greater		—		—		—		—		—		—		930,909		1,730		932,639
680 - 739		—		—		—		—		—		—		167,097		1,137		168,234
620 - 679		—		—		—		—		—		—		36,540		985		37,525
550 - 619		—		—		—		—		—		—		14,514		581		15,095
Less than 550		—		—		—		—		—		—		4,477		571		5,048
No Score ⁽³⁾		—		—		—		—		—		—		1,282		—		1,282
Total Home Equity Line		—		—		—		—		—		—		1,154,819		5,004		1,159,823
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Total Residential Lending	$	135,131	$	257,739	$	631,917	$	1,121,668	$	603,533	$	1,428,967	$	1,162,924	$	5,004	$	5,346,883
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer Lending
FICO:
740 and greater		71,777		71,423		94,710		51,952		18,512		10,435		121,278		128		440,215
680 - 739		51,651		51,667		49,864		23,959		9,995		7,497		77,278		525		272,436
620 - 679		21,223		20,604		21,700		12,515		5,155		5,577		35,665		851		123,290
550 - 619		4,116		7,348		9,802		5,983		2,862		3,862		12,674		825		47,472
Less than 550		1,071		3,266		6,247		3,999		1,783		2,492		4,836		525		24,219
No Score ⁽³⁾		2,291		117		47		—		7		8		42,658		205		45,333
Other ⁽²⁾		—		—		296		911		101		981		74,790		—		77,079
Total Consumer Lending	$	152,129	$	154,425	$	182,666	$	99,319	$	38,415	$	30,852	$	369,179	$	3,059	$	1,030,044
Current period gross charge-offs	$	385	$	1,403	$	2,107	$	1,085	$	518	$	2,234	$	4,952	$	544	$	13,228

Total Loans and Leases	$	718,931	$	1,216,434	$	2,344,271	$	2,433,415	$	1,076,972	$	3,667,076	$	2,755,052	$	29,219	$	14,241,370
Current period gross charge-offs	$	385	$	1,981	$	2,440	$	1,174	$	739	$	4,177	$	4,952	$	544	$	16,392

(1)	Other credit quality indicators used for monitoring purposes are primarily FICO scores. The majority of the loans in this population were originated to borrowers with a prime FICO score (680 and above). As of September 30, 2024, the majority of the loans in this population were current.

(2)	Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. The majority of the loans in this population were graded with a “Pass” rating. As of September 30, 2024, the majority of the loans in this population were current.

(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.

The amortized cost basis by year of origination and credit quality indicator of the Company’s loans and leases as of December 31, 2023 was as follows:


															Revolving
															Loans
															Converted
	Term Loans												Revolving		to Term
	Amortized Cost Basis by Origination Year												Loans		Loans
													Amortized		Amortized
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Cost Basis		Cost Basis		Total
Commercial Lending
Commercial and Industrial
Risk rating:
Pass	$	85,839	$	273,663	$	346,024	$	32,753	$	146,893	$	141,681	$	971,065	$	1,823	$	1,999,741
Special Mention		1		44,069		80		653		1,032		1,290		22,807		14		69,946
Substandard		—		342		230		677		1,686		829		8,330		—		12,094
Other ⁽¹⁾		15,978		11,598		4,814		2,370		1,702		1,125		45,981		—		83,568
Total Commercial and Industrial		101,818		329,672		351,148		36,453		151,313		144,925		1,048,183		1,837		2,165,349
Current period gross charge-offs		130		70		75		87		168		2,952		—		—		3,482

Commercial Real Estate
Risk rating:
Pass		346,369		872,783		676,362		337,529		523,446		1,414,613		74,238		1,350		4,246,690
Special Mention		2,307		7,618		41,320		1,359		13,550		11,998		819		—		78,971
Substandard		205		5,079		2,003		—		2,953		2,545		1,655		—		14,440
Other ⁽¹⁾		—		—		—		—		—		142		—		—		142
Total Commercial Real Estate		348,881		885,480		719,685		338,888		539,949		1,429,298		76,712		1,350		4,340,243
Current period gross charge-offs		—		—		—		—		2,500		—		—		—		2,500

Construction
Risk rating:
Pass		156,432		269,623		265,674		60,057		63,018		27,847		6,070		—		848,721
Special Mention		—		—		—		—		189		665		—		—		854
Other ⁽¹⁾		12,728		21,036		8,250		2,143		2,031		3,820		709		—		50,717
Total Construction		169,160		290,659		273,924		62,200		65,238		32,332		6,779		—		900,292
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Lease Financing
Risk rating:
Pass		145,914		82,833		18,680		31,791		30,299		68,520		—		—		378,037
Special Mention		56		137		414		35		—		—		—		—		642
Substandard		712		416		—		—		2		—		—		—		1,130
Total Lease Financing		146,682		83,386		19,094		31,826		30,301		68,520		—		—		379,809
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Total Commercial Lending	$	766,541	$	1,589,197	$	1,363,851	$	469,367	$	786,801	$	1,675,075	$	1,131,674	$	3,187	$	7,785,693
Current period gross charge-offs	$	130	$	70	$	75	$	87	$	2,668	$	2,952	$	—	$	—	$	5,982

(continued)


															Revolving
															Loans
															Converted
	Term Loans												Revolving		to Term
	Amortized Cost Basis by Origination Year												Loans		Loans
(continued)													Amortized		Amortized
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Cost Basis		Cost Basis		Total
Residential Lending
Residential Mortgage
FICO:
740 and greater	$	211,598	$	529,296	$	999,522	$	529,881	$	227,058	$	987,251	$	—	$	—	$	3,484,606
680 - 739		36,975		67,205		117,337		68,122		33,148		130,387		—		—		453,174
620 - 679		3,544		16,395		19,184		12,811		4,096		38,987		—		—		95,017
550 - 619		1,305		6,521		1,917		2,492		398		11,679		—		—		24,312
Less than 550		—		—		2,909		2,017		582		6,439		—		—		11,947
No Score ⁽³⁾		9,137		19,311		11,492		6,043		9,679		51,109		—		—		106,771
Other ⁽²⁾		15,802		17,528		17,432		12,534		8,599		25,513		10,080		—		107,488
Total Residential Mortgage		278,361		656,256		1,169,793		633,900		283,560		1,251,365		10,080		—		4,283,315
Current period gross charge-offs		—		—		—		—		—		122		—		—		122

Home Equity Line
FICO:
740 and greater		—		—		—		—		—		—		964,932		1,511		966,443
680 - 739		—		—		—		—		—		—		151,716		1,920		153,636
620 - 679		—		—		—		—		—		—		36,541		1,189		37,730
550 - 619		—		—		—		—		—		—		9,896		1,012		10,908
Less than 550		—		—		—		—		—		—		4,488		100		4,588
No Score ⁽³⁾		—		—		—		—		—		—		1,283		—		1,283
Total Home Equity Line		—		—		—		—		—		—		1,168,856		5,732		1,174,588
Current period gross charge-offs		—		—		—		—		—		—		273		19		292

Total Residential Lending	$	278,361	$	656,256	$	1,169,793	$	633,900	$	283,560	$	1,251,365	$	1,178,936	$	5,732	$	5,457,903
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	122	$	273	$	19	$	414

Consumer Lending
FICO:
740 and greater		92,117		128,358		76,148		33,507		21,819		8,970		123,592		155		484,666
680 - 739		68,865		71,031		37,925		17,116		13,270		5,690		76,645		401		290,943
620 - 679		28,533		29,229		16,919		7,843		7,972		4,624		35,210		781		131,111
550 - 619		4,996		10,859		7,760		4,917		4,651		2,986		13,223		925		50,317
Less than 550		1,790		6,370		4,842		2,796		2,905		2,040		5,222		455		26,420
No Score ⁽³⁾		1,545		229		—		—		1		10		42,933		136		44,854
Other ⁽²⁾		361		368		982		335		1,059		1		78,484		—		81,590
Total Consumer Lending	$	198,207	$	246,444	$	144,576	$	66,514	$	51,677	$	24,321	$	375,309	$	2,853	$	1,109,901
Current period gross charge-offs	$	639	$	2,400	$	2,135	$	1,142	$	1,816	$	2,622	$	5,790	$	566	$	17,110

Total Loans and Leases	$	1,243,109	$	2,491,897	$	2,678,220	$	1,169,781	$	1,122,038	$	2,950,761	$	2,685,919	$	11,772	$	14,353,497
Current period gross charge-offs	$	769	$	2,470	$	2,210	$	1,229	$	4,484	$	5,696	$	6,063	$	585	$	23,506

(1)	Other credit quality indicators used for monitoring purposes are primarily FICO scores. The majority of the loans in this population were originated to borrowers with a prime FICO score (680 and above). As of December 31, 2023, the majority of the loans in this population were current.

(2)	Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. The majority of the loans in this population were graded with a “Pass” rating. As of December 31, 2023, the majority of the loans in this population were current.

(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 September 30, 2024 and December 31, 2023.

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 September 30, 2024 and December 31, 2023, the aging analysis of the amortized cost basis of the Company’s past due loans and leases was as follows:

September 30, 2024

Past Due

Loans and

Greater

Leases Past

Than or

Due 90 Days

30-59

60-89

Equal to

or More and

Days

90 Days

Total

Total Loans

Still Accruing

(dollars in thousands)

Past Due

Current

and Leases

Interest

Commercial and industrial

2,118

670

1,463

4,251

2,105,826

2,110,077

529

Commercial real estate

—

246

720

966

4,264,323

4,265,289

568

Construction

1,179

139

—

1,318

1,054,931

1,056,249

—

Lease financing

—

432,828

—

Residential mortgage

15,356

4,631

6,425

26,412

4,160,648

4,187,060

931

Home equity line

4,659

891

3,408

8,958

1,150,865

1,159,823

—

Consumer

15,227

2,939

2,515

20,681

1,009,363

1,030,044

2,515

Total

38,539

9,516

14,531

62,586

14,178,784

14,241,370

4,543


	December 31, 2023
	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	$	2,611	$	349	$	1,464	$	4,424	$	2,160,925	$	2,165,349	$	494
Commercial real estate		—		196		300		496		4,339,747		4,340,243		300
Construction		25,191		—		—		25,191		875,101		900,292		—
Lease financing		—		—		—		—		379,809		379,809		—
Residential mortgage		5,244		1,475		4,720		11,439		4,271,876		4,283,315		—
Home equity line		5,940		624		3,550		10,114		1,164,474		1,174,588		—
Consumer		23,259		3,897		2,702		29,858		1,080,043		1,109,901		2,702
Total	$	62,245	$	6,541	$	12,736	$	81,522	$	14,271,975	$	14,353,497	$	3,496

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 September 30, 2024 and December 31, 2023 and the amortized cost basis of loans and leases on nonaccrual status with no ACL as of September 30, 2024 and December 31, 2023 were as follows:


	September 30, 2024
	Nonaccrual
	Loans
	and Leases
	With No		Nonaccrual
	Allowance		Loans
(dollars in thousands)	for Credit Losses		and Leases
Commercial and industrial	$	—	$	934
Commercial real estate		—		152
Residential mortgage		3,264		9,103
Home equity line		1,651		7,645
Total Nonaccrual Loans and Leases	$	4,915	$	17,834


	December 31, 2023
	Nonaccrual
	Loans
	and Leases
	With No		Nonaccrual
	Allowance		Loans
(dollars in thousands)	for Credit Losses		and Leases
Commercial and industrial	$	—	$	970
Commercial real estate		2,685		2,953
Residential mortgage		2,667		7,620
Home equity line		1,163		7,052
Total Nonaccrual Loans and Leases	$	6,515	$	18,595

For the three and nine months ended September 30, 2024, the Company recognized interest income of $0.3 million and $0.8 million, respectively, on nonaccrual loans and leases. For the three and nine months ended September 30, 2023, the Company recognized interest income of $0.1 million and $0.4 million, respectively, on nonaccrual loans and leases. Furthermore, for the three and nine months ended September 30, 2024, the amount of accrued interest receivables written off by reversing interest income was $0.3 million and $0.8 million, respectively, and for the three and nine months ended September 30, 2023, the amount of accrued interest receivables written off by reversing interest income was $0.2 million and $0.7 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 September 30, 2024 and December 31, 2023, the amortized cost basis of collateral-dependent loans were $29.8 million and $11.1 million, respectively. As of September 30, 2024, these loans were primarily collateralized by residential real estate property and borrower assets and the fair value of collateral on substantially all collateral-dependent loans were significantly in excess of their amortized cost basis. As of December 31, 2023, these loans were primarily collateralized by residential real estate property and the fair value of collateral on substantially all collateral-dependent loans were significantly in excess of their amortized cost basis.

Loan Modifications to Borrowers Experiencing Financial Difficulty

Commercial and industrial loans with a borrower experiencing financial difficulty may be modified through interest rate reductions, term extensions, and converting revolving credit lines to term loans. Modifications of commercial real estate and construction loans with a borrower experiencing financial difficulty may involve reducing the interest rate for the remaining term of the loan or extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk. Modifications of construction loans with a borrower experiencing financial difficulty 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. Modifications of residential real estate loans with a borrower experiencing financial difficulty may be comprised of loans where monthly payments are lowered to accommodate the borrowers' financial needs for a period of time, including extended interest-only periods and reamortization of the balance. Modifications of consumer loans with a borrower experiencing financial difficulty may involve interest rate reductions and term extensions.

Loans modified with a borrower experiencing financial difficulty, whether in default or not, 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 with a borrower experiencing financial difficulty are evaluated for impairment. As a result, this may have a financial effect of impacting the specific ACL associated with the loan. An ACL for impaired commercial loans, including commercial real estate and construction loans, 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 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 tables present, by class of financing receivable and type of modification granted, the amortized cost basis as of September 30, 2024 and 2023, related to loans modified to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2024 and 2023, respectively:

Interest Rate Reduction

Three Months Ended

Nine Months Ended

September 30, 2024

Amortized

% of Total Class

Amortized

% of Total Class

(dollars in thousands)

Cost Basis⁽¹⁾

of Financing Receivable

Cost Basis⁽¹⁾

of Financing Receivable

Consumer

416

0.04

1,384

0.13

Total

416

n/m

1,384

n/m

n/m – Represents less than 0.01% of total class of financing receivable.

(1)	The amortized cost basis reflects all partial paydowns and charge-offs since the modification date and do not include loans modified to borrowers experiencing financial difficulty that have been fully paid off, charged off, or foreclosed upon by the end of the period.


	Interest Rate Reduction
		Three Months Ended				Nine Months Ended
		September 30, 2023				September 30, 2023
		Amortized	% of Total Class			Amortized	% of Total Class
(dollars in thousands)		Cost Basis⁽¹⁾	of Financing Receivable			Cost Basis⁽¹⁾	of Financing Receivable
Consumer	$	255	0.02	%	$	889	0.08	%
Total	$	255	n/m	%	$	889	0.01	%

n/m – Represents less than 0.01% of total class of financing receivable.

(1)	The amortized cost basis reflects all partial paydowns and charge-offs since the modification date and do not include loans modified to borrowers experiencing financial difficulty that have been fully paid off, charged off, or foreclosed upon by the end of the period.

Term Extension

Three Months Ended

Nine Months Ended

September 30, 2024

Amortized

% of Total Class

Amortized

% of Total Class

(dollars in thousands)

Cost Basis⁽¹⁾

of Financing Receivable

Cost Basis⁽¹⁾

of Financing Receivable

Commercial and industrial

115

n/m

371

0.02

Commercial real estate

705

0.02

1,873

0.04

Residential mortgage

—

1,077

0.03

Consumer

n/m

213

0.02

Total

910

n/m

3,534

0.02

n/m – Represents less than 0.01% of total class of financing receivable.

(1)	The amortized cost basis reflects all partial paydowns and charge-offs since the modification date and do not include loans modified to borrowers experiencing financial difficulty that have been fully paid off, charged off, or foreclosed upon by the end of the period.


	Term Extension
		Three Months Ended				Nine Months Ended
		September 30, 2023				September 30, 2023
		Amortized	% of Total Class			Amortized	% of Total Class
(dollars in thousands)		Cost Basis⁽¹⁾	of Financing Receivable			Cost Basis⁽¹⁾	of Financing Receivable
Commercial and industrial	$	145	0.01	%	$	248	0.01	%
Commercial real estate		—	—			1,214	0.03
Construction		669	0.08			897	0.10
Residential mortgage		—	—			33	n/m
Consumer		17	n/m			130	0.01
Total	$	831	0.01	%	$	2,522	0.02	%

n/m – Represents less than 0.01% of total class of financing receivable.

(1)	The amortized cost basis reflects all partial paydowns and charge-offs since the modification date and do not include loans modified to borrowers experiencing financial difficulty that have been fully paid off, charged off, or foreclosed upon by the end of the period.

Other-Than-Insignificant Payment Delay

Three Months Ended

Nine Months Ended

September 30, 2024

Amortized

% of Total Class

Amortized

% of Total Class

(dollars in thousands)

Cost Basis⁽¹⁾

of Financing Receivable

Cost Basis⁽¹⁾

of Financing Receivable

Residential mortgage

—

1,062

0.03

Total

—

1,062

n/m

n/m – Represents less than 0.01% of total class of financing receivable.

(1)	The amortized cost basis reflects all partial paydowns and charge-offs since the modification date and do not include loans modified to borrowers experiencing financial difficulty that have been fully paid off, charged off, or foreclosed upon by the end of the period.

The following tables describe, by class of financing receivable and type of modification granted, the financial effect of the modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2024 and 2023, respectively:


	Interest Rate Reduction
	Financial Effect
	Three Months Ended September 30, 2024	Nine Months Ended September 30, 2024
Consumer	Reduced weighted-average contractual interest rate by 13.41%.	Reduced weighted-average contractual interest rate by 13.53%.


	Interest Rate Reduction
	Financial Effect
	Three Months Ended September 30, 2023	Nine Months Ended September 30, 2023
Consumer	Reduced weighted-average contractual interest rate by 13.31%.	Reduced weighted-average contractual interest rate by 13.22%.


	Term Extension
	Financial Effect
	Three Months Ended September 30, 2024	Nine Months Ended September 30, 2024
Commercial and industrial	Added a weighted-average 5.0 years to the life of loans.	Added a weighted-average 4.3 years to the life of loans.
Commercial real estate	Added a weighted-average 0.4 years to the life of loans.	Added a weighted-average 0.8 years to the life of loans.
Residential mortgage	—	Added a weighted-average 0.8 years to the life of loans.
Consumer	Added a weighted-average 5.0 years to the life of loans.	Added a weighted-average 4.5 years to the life of loans.


	Term Extension
	Financial Effect
	Three Months Ended September 30, 2023	Nine Months Ended September 30, 2023
Commercial and industrial	Added a weighted-average 2.6 years to the life of loans.	Added a weighted-average 3.0 years to the life of loans.
Commercial real estate	—	Added a weighted-average 1.0 years to the life of loans.
Construction	Added a weighted-average 1.0 years to the life of loans.	Added a weighted-average 1.4 years to the life of loans.
Residential mortgage	—	Added a weighted-average 5.9 years to the life of loans.
Consumer	Added a weighted-average 2.9 years to the life of loans.	Added a weighted-average 3.6 years to the life of loans.


	Other-Than-Insignificant Payment Delay
	Financial Effect
	Three Months Ended September 30, 2024	Nine Months Ended September 30, 2024
Residential mortgage	—	Deferred an average of $172 thousand in loan payments.

The following table presents, by class of financing receivable and type of modification granted, the amortized cost basis, as of September 30, 2024 and 2023, of loans that had a payment default during the three and nine months ended September 30, 2024 and 2023, respectively, and were modified in the 12 months before default to borrowers experiencing financial difficulty. The Company is reporting these defaulted loans based on a payment default definition of 30 days past due:

Amortized Cost Basis of Modified Loans That Subsequently Defaulted⁽¹⁾

Three Months Ended September 30, 2024

Nine Months Ended September 30, 2024

(dollars in thousands)

Interest Rate Reduction

Term Extension

Interest Rate Reduction

Term Extension

Commercial and industrial

—

122

—

122

Residential mortgage

—

323

—

323

Consumer

452

584

Total

452

469

584

469

(1)	The amortized cost basis reflects all partial paydowns and charge-offs since the modification date and do not include loans modified to borrowers experiencing financial difficulty that have been fully paid off, charged off, or foreclosed upon by the end of the period.


	Amortized Cost Basis of Modified Loans That Subsequently Defaulted⁽¹⁾
	Three Months Ended September 30, 2023				Nine Months Ended September 30, 2023
(dollars in thousands)	Interest Rate Reduction		Term Extension		Interest Rate Reduction		Term Extension
Consumer	$	166	$	—	$	186	$	—
Total	$	166	$	—	$	186	$	—

(1)	The amortized cost basis reflects all partial paydowns and charge-offs since the modification date and do not include loans modified to borrowers experiencing financial difficulty that have been fully paid off, charged off, or foreclosed upon by the end of the period.

Performance of the loans that are modified to borrowers experiencing financial difficulty is monitored to understand the effectiveness of the Company’s modification efforts. As of September 30, 2024 and 2023, the aging analysis of the amortized cost basis of the performance of loans that have been modified in the last 12 months related to borrowers experiencing financial difficulty was as follows:

September 30, 2024

Past Due

Greater Than

or Equal to

30-59 Days

60-89 Days

90 Days

Total

(dollars in thousands)

Past Due

Current

Total

Commercial and industrial

—

371

Commercial real estate

—

2,308

Residential mortgage

—

323

—

323

1,816

2,139

Consumer

141

102

322

1,544

1,866

Total

141

425

645

6,039

6,684


		September 30, 2023
		Past Due
						Greater Than
						or Equal to
		30-59 Days		60-89 Days		90 Days		Total
(dollars in thousands)		Past Due		Past Due		Past Due		Past Due		Current		Total
Commercial and industrial	$	—	$	—	$	—	$	—	$	248	$	248
Commercial real estate		—		—		—		—		1,214		1,214
Construction		—		—		—		—		897		897
Residential mortgage		—		—		—		—		33		33
Consumer		62		18		18		98		921		1,019
Total	$	62	$	18	$	18	$	98	$	3,313	$	3,411

The Company had commitments to extend credit, standby letters of credit, and commercial letters of credit totaling $6.5 billion as of September 30, 2024 and December 31, 2023. Of the $6.5 billion at September 30, 2024, there were no commitments to lend additional funds to borrowers experiencing financial difficulty for which the Company had modified the terms of the loans in the form of an interest rate reduction, term extension, or other-than-insignificant payment delay during the nine months ended September 30, 2024. Of the $6.5 billion at December 31, 2023, there were commitments of $5.0 million to lend additional funds to borrowers experiencing financial difficulty for which the Company had modified the terms of the loans in the form of an interest rate reduction or a term extension during the year ended December 31, 2023.

Foreclosed Property

As of both September 30, 2024 and December 31, 2023, there were no residential real estate properties held from foreclosed residential mortgage loans.