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Loans and Loans Held for Sale
 9 Months Ended
Sep. 30, 2019
Receivables [Abstract]  
LOANS AND LOANS HELD FOR SALE LOANS AND LOANS HELD FOR SALE

Loans are presented net of unearned income of $4.6 million at September 30, 2019 and $5.3 million at December 31, 2018. The following table indicates the composition of loans as of the dates presented:
(dollars in thousands)
September 30, 2019
 
December 31, 2018
Commercial
 
 
 
Commercial real estate
$
2,922,197

 
$
2,921,832

Commercial and industrial
1,626,854

 
1,493,416

Commercial construction
314,813

 
257,197

Total Commercial Loans
4,863,864

 
4,672,445

Consumer
 
 
 
Residential mortgage
770,882

 
726,679

Home equity
475,024

 
471,562

Installment and other consumer
74,460

 
67,546

Consumer construction
11,535

 
8,416

Total Consumer Loans
1,331,901

 
1,274,203

Total Portfolio Loans
6,195,765

 
5,946,648

Loans held for sale
8,371

 
2,371

Total Loans
$
6,204,136

 
$
5,949,019



We attempt to limit our exposure to credit risk by diversifying our loan portfolio by segment, geography, collateral and industry and actively managing concentrations. When concentrations exist in certain segments, we mitigate this risk by reviewing the relevant economic indicators and internal risk rating trends and through stress testing of the loans in these segments. Total commercial loans represented 78.5 percent of total portfolio loans at September 30, 2019 and 78.6 percent at December 31, 2018. Within our commercial portfolio, the Commercial Real Estate, or CRE, and Commercial Construction portfolios combined comprised $3.2 billion or 66.6 percent of total commercial loans at September 30, 2019 and $3.2 billion or 68.0 percent of total commercial loans at December 31, 2018 and 52.2 percent of total portfolio loans at September 30, 2019 and 53.5 percent at December 31, 2018. Further segmentation of the CRE and Commercial Construction portfolios by collateral type reveals no concentration in excess of 13.3 percent of both total CRE and Commercial Construction loans at September 30, 2019 and 13.7 percent at December 31, 2018.
We lend primarily in Pennsylvania and the contiguous states of Ohio, New York, West Virginia and Maryland. The majority of our commercial and consumer loans are made to businesses and individuals in this geography, resulting in a concentration. We believe our knowledge and familiarity with customers and conditions locally outweighs this geographic concentration risk. The conditions of the local and regional economies are monitored closely through publicly available data and information supplied by our customers. We also use subscription services for additional geographic and industry specific information. Our CRE and Commercial Construction portfolios have exposure outside of this geography of 6.4 percent of the combined portfolios and 3.4 percent of total portfolio loans at September 30, 2019. This compares to 5.4 percent of the combined portfolios and 2.9 percent of total portfolio loans at December 31, 2018.
We individually evaluate all substandard commercial loans that have experienced a forbearance or change in terms agreement, and all substandard consumer and residential mortgage loans that entered into an agreement to modify their existing loan, to determine if they should be designated as troubled debt restructurings, or TDRs.
All TDRs are considered to be impaired loans and will be reported as impaired loans for the remaining life of the loan, unless the restructuring agreement specifies an interest rate equal to or greater than the rate that would be accepted at the time of the restructuring for a new loan with comparable risk and it is fully expected that the remaining principal and interest will be collected according to the restructured agreement. Further, all impaired loans are reported as nonaccrual loans unless the loan is a TDR that has met the requirements to be returned to accruing status. TDRs can be returned to accruing status if the ultimate collectability of all contractual amounts due, according to the restructured agreement, is not in doubt and there is a period of a minimum of six months of satisfactory payment performance by the borrower either immediately before or after the restructuring.
The following table summarizes restructured loans as of the dates presented:
 
September 30, 2019
 
December 31, 2018
(dollars in thousands)
Performing
TDRs
 
Nonperforming
TDRs
 
Total
TDRs
 
Performing
TDRs
 
Nonperforming
TDRs
 
Total
TDRs
Commercial real estate
$
21,448

 
$
10,880

 
$
32,328

 
$
2,054

 
$
1,139

 
$
3,193

Commercial and industrial
9,065

 
787

 
9,852

 
7,026

 
6,646

 
13,672

Commercial construction
1,913

 
406

 
2,319

 
1,912

 
406

 
2,318

Residential mortgage
1,922

 
1,195

 
3,117

 
2,214

 
1,543

 
3,757

Home equity
4,076

 
1,226

 
5,302

 
3,568

 
1,349

 
4,917

Installment and other consumer
10

 
2

 
12

 
12

 
5

 
17

Total
$
38,434

 
$
14,496

 
$
52,930

 
$
16,786

 
$
11,088

 
$
27,874



The significant increase in performing TDRs primarily related to a $19.9 million CRE relationship that was modified during the third quarter of 2019. The modification granted a concession to the borrower that reduced their monthly payments resulting in the TDR. The loan remains in performing status based on the strong historical repayment performance of the borrower prior to the restructure as well as recent changes occurring in the business which demonstrate the borrower’s ability to pay under the revised contractual terms. Guarantor support and sufficient collateral value further support the performing status of the loan.
There were three TDRs totaling $0.2 million that returned to accruing status during the three months ended September 30, 2019 and five TDRs totaling $0.2 million that returned to accruing status during the nine months ended September 30, 2019. There were no TDRs that returned to accruing status during the three and nine months ended September 30, 2018.
The following tables present the restructured loans by loan segment and by type of concession for the three and nine months ended September 30, 2019 and 2018:
 
Three Months Ended September 30, 2019
 
Three Months Ended September 30, 2018
(dollars in thousands)
Number of
Loans
 
Pre-Modification
Outstanding
Recorded
Investment(1)
 
Post-Modification
Outstanding
Recorded
Investment(1)
 
Total  Difference
in Recorded
Investment
 
Number of
Loans
 
Pre-Modification
Outstanding
Recorded
Investment(1)
 
Post-Modification
Outstanding
Recorded
Investment(1)
 
Total  Difference
in Recorded
Investment
Totals by Loan Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Real Estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maturity date extension
—

 
$
—

 
$
—

 
$
—

 
1

 
$
256

 
$
250

 
$
(6
)
Principal deferral
3

 
23,517

 
23,236

 
(281
)
 
—

 
—

 
—

 
—

Below market interest rate
2

 
569

 
548

 
(21
)
 
—

 
—

 
—

 
—

Total Commercial Real Estate
5

 
24,086

 
23,784

 
(302
)
 
1

 
256

 
250

 
(6
)
Commercial and Industrial
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Principal deferral
1

 
1,250

 
1,250

 
—

 
—

 
—

 
—

 
—

Principal deferral and maturity date extension
1

 
292

 
277

 
(15
)
 
—

 
—

 
—

 
—

Total Commercial and Industrial
2


1,542


1,527


(15
)
 
—

 
—

 
—

 
—

Residential Mortgage
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Consumer bankruptcy(2)
—

 
—

 
—

 
—

 
2

 
188

 
186

 
(2
)
Total Residential Mortgage
—

 
—

 
—

 
—

 
2

 
188

 
186

 
(2
)
Home equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Consumer bankruptcy(2)
14

 
504

 
485

 
(19
)
 
6

 
193

 
191

 
(2
)
Total Home Equity
14

 
504

 
485

 
(19
)
 
6

 
193

 
191

 
(2
)
Installment and Other Consumer
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Consumer bankruptcy(2)
1

 
4

 
4

 
—

 
1

 
12

 
6

 
(6
)
Total Installment and Other Consumer
1

 
$
4

 
$
4

 
$
—

 
1

 
$
12

 
$
6

 
$
(6
)
Totals by Concession Type
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Consumer bankruptcy(2)
15

 
508

 
489

 
(19
)
 
9

 
393

 
383

 
$
(10
)
Maturity date extension
—

 
—

 
—

 
—

 
1

 
256

 
250

 
$
(6
)
Principal deferral
4

 
24,767

 
24,486

 
(281
)
 
—

 
—

 
—

 
$
—

Principal deferral and maturity date extension
1

 
292

 
277


(15
)

—


—


—

 
—

Below market interest rate
2

 
569

 
548

 
(21
)
 
—

 
—

 
—

 
—

Total
22


$
26,136


$
25,800


$
(336
)
 
10

 
$
649

 
$
633

 
$
(16
)
(1) Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end.
(2) Consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.


 
Nine Months Ended September 30, 2019
 
Nine Months Ended September 30, 2018
(dollars in thousands)
Number of
Loans
 
Pre-Modification
Outstanding
Recorded
Investment(1)
 
Post-Modification
Outstanding
Recorded
Investment(1)
 
Total  Difference
in Recorded
Investment
 
Number of
Loans
 
Number of
Loans
 
Pre-Modification
Outstanding
Recorded
Investment(1)
 
Post-Modification
Outstanding
Recorded
Investment(1)
Totals by Loan Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maturity date extension
1

 
$
1,322

 
$
1,298

 
$
(24
)
 
1

 
$
256

 
$
250

 
$
(6
)
Maturity date extension and interest rate reduction
1

 
151

 
147

 
(4
)
 
—

 
—

 
—

 
—

Principal deferral
3

 
23,517

 
23,236

 
(281
)
 
—

 
—

 
—

 
—

Principal forgiveness
1

 
4,690

 
4,518

 
(172
)
 
—

 
—

 
—

 
—

Non Market Rate Loan
2

 
569

 
548

 
(21
)
 
—

 
—

 
—

 
—

Total Commercial Real Estate
8

 
30,249

 
29,747

 
(502
)
 
1

 
256

 
250

 
(6
)
Commercial and Industrial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maturity date extension
—

 
—

 
—

 
—

 
2

 
768

 
657

 
(111
)
Maturity date extension and interest rate reduction
1

 
4,751

 
4,333

 
(418
)
 
—

 
—

 
—

 
—

Principal deferral
1

 
1,250

 
1,250

 
—

 
3

 
4,815

 
4,466

 
(349
)
Principal deferral and Maturity date extension
1

 
292

 
277

 
(15
)
 
6

 
5,355

 
5,225

 
(130
)
Total Commercial and Industrial
3

 
6,293

 
5,860

 
(433
)
 
11

 
10,938

 
10,348

 
(590
)
Residential Mortgage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer bankruptcy(2)
3

 
165

 
160

 
(5
)
 
5

 
387

 
380

 
(7
)
Total Residential Mortgage
3

 
165

 
160

 
(5
)
 
5

 
387

 
380

 
(7
)
Home equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer bankruptcy(2)
27

 
801

 
746

 
(55
)
 
17

 
798

 
668

 
(130
)
Interest rate reduction
2

 
190

 
189

 
(1
)
 
—

 
—

 
—

 
—

Maturity date extension and interest rate reduction
—

 
—

 
—

 
—

 
2

 
47

 
47

 
—

Total Home Equity
29

 
991

 
934

 
(56
)
 
19

 
845

 
715

 
(130
)
Installment and Other Consumer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer bankruptcy(2)
3

 
13

 
10

 
(3
)
 
1

 
12

 
6

 
(6
)
Total Installment and Other Consumer
3

 
$
13

 
$
10

 
$
(3
)
 
1

 
$
12

 
$
6

 
$
(6
)
Totals by Concession Type
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Chapter 7 bankruptcy(2)
33

 
979

 
916

 
(63
)
 
23


1,197


1,054

 
(143
)
Interest rate reduction
2


190


189


(1
)

—


—


—

 
—

Maturity date extension
1

 
1,322

 
1,298

 
(24
)
 
3


1,024


907

 
(117
)
Maturity date extension and interest rate reduction
2

 
4,902

 
4,480

 
(422
)
 
2

 
47


47

 
—

Principal deferral
4

 
24,767

 
24,486

 
(281
)
 
3

 
4,815


4,466

 
(349
)
Principal deferral and maturity date extension
1

 
292

 
277

 
(15
)
 
6


5,355


5,225

 
(130
)
Principal forgiveness
1

 
4,690

 
4,518

 
(172
)
 
—

 
—


—

 
—

Below market interest rate
2


569


548

 
(21
)
 
—

 
—

 
—

 
—

Total
46

 
$
37,711

 
$
36,712

 
$
(999
)
 
37

 
$
12,438

 
$
11,699

 
$
(739
)
(1) Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end.
(2) Consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.


As of September 30, 2019, we had 13 commitments to lend an additional $10.5 million on TDRs. Defaulted TDRs are defined as loans having a payment default of 90 days or more after the restructuring takes place. There were no TDRs that defaulted during the three and nine months ended September 30, 2019 and 2018 that were restructured within the last 12 months prior to defaulting.
The following table is a summary of nonperforming assets as of the dates presented:
 
Nonperforming Assets
(dollars in thousands)
September 30, 2019
 
 
December 31, 2018
 
Nonperforming Assets
 
 
 
 
 
Nonaccrual loans
 
$
35,487

 
 
$
34,985

Nonaccrual TDRs
 
14,496

 
 
11,088

Total Nonaccrual Loans
 
49,983

 
 
46,073

OREO
 
1,724

 
 
3,092

Total Nonperforming Assets
 
$
51,707

 
 
$
49,165