Allowance for Credit Losses

3 Months Ended

Mar. 31, 2021

We maintain an ACL at a level determined to be adequate to absorb estimated expected credit losses within the loan portfolio over the contractual life of an instrument that considers our historical loss experience, current conditions and forecasts of future economic conditions as of the balance sheet date. We develop and document a systematic ACL methodology based on the following portfolio segments: 1) Commercial Real Estate, or CRE, 2) Commercial and Industrial, or C&I, 3) Commercial Construction, 4) Business Banking, 5) Consumer Real Estate and 6) Other Consumer.

The following are key risks within each portfolio segment:

CRE—Loans secured by commercial purpose real estate, including both owner-occupied properties and investment properties for various purposes such as hotels, retail, multifamily and health care. Operations of the individual projects and global cash flows of the debtors are the primary sources of repayment for these loans. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the collateral type and the business prospects of the lessee, if the project is not owner-occupied.

C&I—Loans made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. Cash flow from the operations of the company is the primary source of repayment for these loans. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the industry of the company. Collateral for these types of loans often does not have sufficient value in a distressed or liquidation scenario to satisfy the outstanding debt.

Commercial Construction—Loans made to finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. While the risk of these loans is generally confined to the construction/development period, if there are problems, the project may not be completed, and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer.

Business Banking—Commercial purpose loans made to small businesses that are standard, non-complex products evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards that meet small business market customers’ needs. The business banking portfolio is monitored by utilizing a standard and closely managed process focusing on behavioral and performance criteria. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the collateral type and business.

Consumer Real Estate—Loans secured by first and second liens such as home equity loans, home equity lines of credit and 1-4 family residential mortgages, including purchase money mortgages. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the local housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt.

Other Consumer—Loans made to individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. This segment includes auto loans, unsecured loans and lines. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.

Management monitors various credit quality indicators for the commercial, business banking and consumer loan portfolios, including changes in risk ratings, nonperforming status and delinquency on a monthly basis.

We monitor the commercial loan portfolio through an internal risk rating system. Loan risk ratings are assigned based upon the creditworthiness of the borrower and are reviewed on an ongoing basis according to our internal policies. Loans within the pass rating generally have a lower risk of loss than loans risk rated as special mention or substandard.

Our risk ratings are consistent with regulatory guidance and are as follows:

Pass—The loan is currently performing and is of high quality.

Special Mention—A special mention loan has potential weaknesses that warrant management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects or in the strength of our credit position at some future date.

Substandard—A substandard loan is not adequately protected by the net worth and/or paying capacity of the borrower or by the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. These loans are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.

Doubtful—Loans classified doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

The following tables presents loan balances by year of origination and internally assigned risk rating for our portfolio segments as of the dates presented:


	March 31, 2021
	Risk Rating
(dollars in thousands)	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Revolving-Term		Total

Commercial real estate
Pass	$	96,988	$	319,206	$	444,668	$	376,347	$	258,362	$	850,342	$	44,872	—		$	2,390,785
Special mention	—		450		35,420		8,342		22,541		113,614		—		—		180,367
Substandard	—		—		17,259		15,772		19,894		146,624		1,482		—		201,030
Doubtful	—		—		645		—		—		7,499		—		—		8,144
Total commercial real estate	96,988		319,656		497,992		400,461		300,796		1,118,080		46,354		—		2,780,327

Commercial and industrial
Pass	252,427		478,363		168,546		110,278		55,096		179,887		361,828		—		1,606,425
Special mention	—		3,090		28,623		3,562		180		1,289		17,718		—		54,461
Substandard	5,476		—		6,165		4,415		5,778		12,715		4,153		—		38,701
Doubtful	—		—		—		—		—		—		—		—		—
Total commercial and industrial	257,902		481,453		203,334		118,255		61,054		193,891		383,699		—		1,699,588

Commercial construction
Pass	24,730		127,643		195,245		53,248		2,059		10,856		13,232		—		427,012
Special mention	—		3,490		2,862		—		—		8,478		—		—		14,830
Substandard	—		—		4,148		—		501		2,967		—		—		7,616
Doubtful	—		—		—		—		—		—		—		—		—
Total commercial construction	24,730		131,133		202,255		53,248		2,560		22,301		13,232		—		449,459

Business banking
Pass	34,568		121,017		167,764		134,358		89,027		362,534		110,572		265		1,020,105
Special mention	—		502		1,972		1,379		1,621		7,759		287		122		13,642
Substandard	—		72		1,267		3,777		2,990		25,409		1,141		674		35,330
Doubtful	—		—		—		—		—		—		—		—		—
Total business banking	34,568		121,591		171,003		139,513		93,638		395,703		112,001		1,061		1,069,078

Consumer real estate
Pass	20,000		116,640		110,942		58,166		55,435		267,411		436,449		23,550		1,088,594
Special mention	—		—		—		—		—		2,246		—		—		2,246
Substandard	—		—		186		2,089		1,506		7,896		503		1,080		13,260
Doubtful	—		—		—		—		—		—		—		—		—
Total consumer real estate	20,000		116,640		111,128		60,255		56,942		277,553		436,952		24,630		1,104,099

Other consumer
Pass	872		14,119		11,576		5,723		2,673		2,283		35,151		955		73,354
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		109		125		104		4,968		374		1,579		7,260
Doubtful	—		—		—		—		—		4		—		—		4
Total other consumer	872		14,119		11,686		5,848		2,778		7,255		35,525		2,534		80,618

Pass	429,585		1,176,989		1,098,741		738,120		462,653		1,673,313		1,002,104		24,770		6,606,275
Special mention	—		7,532		68,876		13,283		24,342		133,387		18,005		122		265,547
Substandard	5,476		72		29,134		26,177		30,773		200,579		7,653		3,332		303,198
Doubtful	—		—		645		—		—		7,503		—		—		8,148
Total	$	435,060	$	1,184,593	$	1,197,397	$	777,580	$	517,769	$	2,014,783	$	1,027,762	$	28,225	$	7,183,168


	December 31, 2020
	Risk Rating
(dollars in thousands)	2020		2019		2018		2017		2016		2015 and Prior		Revolving		Revolving-Term		Total

Commercial real estate
Pass	$	334,086	$	422,800	$	394,963	$	277,724	$	307,321	$	615,217	$	46,330	$	—	$	2,398,441
Special mention	—		35,499		10,200		22,502		55,174		75,022		—		—		198,397
Substandard	—		17,259		12,781		19,914		50,700		83,792		1,500		—		185,946
Doubtful	—		645		—		—		1,989		6,529		—		—		9,163
Total commercial real estate	334,086		476,203		417,944		320,140		415,184		780,560		47,830		—		2,791,947

Commercial and industrial
Pass	454,131		199,453		140,049		68,607		27,645		206,782		383,082		—		1,479,749
Special mention	3,697		8,211		2,628		697		768		1,046		23,527		—		40,574
Substandard	—		7,793		2,613		8,544		75		13,781		2,022		—		34,828
Doubtful	—		—		—		4,401		—		—		—		—		4,401
Total commercial and industrial	457,828		215,457		145,290		82,249		28,488		221,609		408,631		—		1,559,552

Commercial construction
Pass	131,235		224,794		59,649		2,420		6,346		4,555		12,778		—		441,777
Special mention	1,578		2,533		3,886		—		—		8,593		—		—		16,590
Substandard	—		3,580		—		501		—		3,629		—		—		7,710
Doubtful	—		—		—		—		—		—		—		—		—
Total commercial construction	132,813		230,907		63,535		2,921		6,346		16,777		12,778		—		466,077

Business banking
Pass	296,254		154,335		123,207		86,552		77,238		266,042		103,571		291		1,107,490
Special mention	—		1,060		1,147		1,602		1,084		6,866		637		123		12,519
Substandard	103		1,078		3,896		3,209		3,880		25,871		1,341		680		40,058
Doubtful	—		—		—		—		—		—		—		—		—
Total business banking	296,357		156,473		128,250		91,363		82,202		298,779		105,549		1,094		1,160,067

Consumer real estate
Pass	120,736		122,171		67,700		63,653		73,805		243,939		438,888		22,667		1,153,559
Special mention	—		—		1,489		—		—		150		132		—		1,771
Substandard	—		373		742		1,480		2,449		6,958		—		—		12,002
Doubtful	—		—		—		—		—		—		—		—		—
Total consumer real estate	120,736		122,544		69,931		65,133		76,254		251,047		439,020		22,667		1,167,332

Other consumer
Pass	18,849		13,162		6,784		3,395		2,082		687		26,647		2,767		74,373
Special mention	—		—		—		—		—		—		—		—		—
Substandard	15		—		—		—		—		3,367		744		2,386		6,512
Doubtful	—		—		—		—		—		—		—		—		—
Total other consumer	18,864		13,162		6,784		3,395		2,082		4,054		27,391		5,153		80,885


Pass	1,355,291		1,136,715		792,352		502,350		494,436		1,337,221		1,011,297		25,726		6,655,389
Special Mention	5,274		47,302		19,350		24,802		57,026		91,677		24,296		123		269,851
Substandard	118		30,083		20,032		33,648		57,105		137,398		5,607		3,066		287,056
Doubtful	—		645		—		4,401		1,989		6,529		—		—		13,564
Total	$	1,360,684	$	1,214,746	$	831,734	$	565,201	$	610,556	$	1,572,826	$	1,041,199	$	28,914	$	7,225,860

We monitor the delinquent status of the commercial and consumer portfolios on a monthly basis. Loans are considered nonperforming when interest and principal are 90 days or more past due or management has determined that a material deterioration in the borrower’s financial condition exists. The risk of loss is generally highest for nonperforming loans.

The following tables presents loan balances by year of origination and performing and nonperforming status for our portfolio segments as of March 31, 2021 and December 31, 2020:


	March 31, 2021
(dollars in thousands)	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Revolving-Term		Total

Commercial real estate
Performing	$	96,988	$	319,656	$	481,588	$	400,461	$	294,122	$	1,046,085	$	46,354	$	—	$	2,685,253
Nonperforming	—		—		16,404		—		6,674		71,995		—		—		95,074
Total commercial real estate	96,988		319,656		497,992		400,461		300,796		1,118,080		46,354		—		2,780,327

Commercial and industrial
Performing	252,427		481,453		203,334		117,623		55,366		193,614		383,355		—		1,687,172
Nonperforming(1)	5,476		—		—		631		5,689		276		344		—		12,416
Total commercial and industrial	257,902		481,453		203,334		118,255		61,054		193,891		383,699		—		1,699,588

Commercial construction
Performing	24,730		131,133		202,255		53,248		2,560		21,917		13,232		—		449,074
Nonperforming	—		—		—		—		—		384		—		—		384
Total commercial construction	24,730		131,133		202,255		53,248		2,560		22,301		13,232		—		449,459

Business Banking
Performing	34,568		121,591		170,640		137,748		92,837		384,332		111,932		1,004		1,054,651
Nonperforming	—		—		362		1,765		801		11,371		69		57		14,426
Total business banking	34,568		121,591		171,003		139,513		93,638		395,703		112,001		1,061		1,069,078

Consumer real estate
Performing	20,000		116,640		110,249		59,931		56,397		272,547		436,628		23,759		1,096,150
Nonperforming	—		—		880		324		545		5,006		324		871		7,949
Total consumer real estate	20,000		116,640		111,128		60,255		56,942		277,553		436,952		24,630		1,104,099

Other consumer
Performing	872		14,119		11,485		5,848		2,697		5,689		35,346		2,397		78,455
Nonperforming	—		—		201		—		81		1,566		179		137		2,163
Total other consumer	872		14,119		11,686		5,848		2,778		7,255		35,525		2,534		80,618

Performing	429,585		1,184,593		1,179,550		774,859		503,978		1,924,183		1,026,847		27,160		7,050,755
Nonperforming	5,476		—		17,847		2,720		13,790		90,599		915		1,065		132,413
Total	$	435,060	$	1,184,593	$	1,197,397	$	777,580	$	517,769	$	2,014,783	$	1,027,762	$	28,225	$	7,183,168
(1) In addition to nonperforming loans of $132.4 million, we have a $2.8 million commercial and industrial held for sale loan that is nonperforming resulting in total nonperforming loans of $135.2 million.


	December 31, 2020
(dollars in thousands)	2020		2019		2018		2017		2016		2015 and Prior		Revolving		Revolving-Term		Total

Commercial real estate
Performing	$	334,086	$	459,799	$	417,944	$	313,465	$	394,972	$	722,782	$	47,830	$	—	$	2,690,879
Nonperforming	—		16,404		—		6,675		20,212		57,778		—		—		101,070
Total commercial real estate	334,086		476,203		417,944		320,140		415,184		780,560		47,830		—		2,791,947

Commercial and industrial
Performing	457,828		214,144		143,706		69,411		28,426		220,701		408,350		—		1,542,566
Nonperforming	—		1,313		1,584		12,838		62		908		281		—		16,985
Total commercial and industrial	457,828		215,457		145,290		82,249		28,488		221,609		408,631		—		1,559,552

Commercial construction
Performing	132,813		230,907		63,535		2,921		6,346		16,393		12,778		—		465,692
Nonperforming	—		—		—		—		—		384		—		—		384
Total commercial construction	132,813		230,907		63,535		2,921		6,346		16,777		12,778		—		466,077

Business Banking
Performing	296,327		156,164		126,432		90,414		80,106		286,970		105,494		1,037		1,142,944
Nonperforming	30		309		1,818		949		2,096		11,809		55		57		17,123
Total business banking	296,357		156,473		128,250		91,363		82,202		298,779		105,549		1,094		1,160,067

Consumer real estate
Performing	120,736		122,315		69,225		63,647		74,690		245,331		438,702		21,572		1,156,216
Nonperforming	—		229		706		1,486		1,564		5,716		318		1,096		11,116
Total consumer real estate	120,736		122,544		69,931		65,133		76,254		251,047		439,020		22,667		1,167,332

Other consumer
Performing	18,864		13,162		6,784		3,395		2,082		3,958		27,391		5,153		80,789
Nonperforming	—		—		—		—		—		96		—		—		96
Total other consumer	18,864		13,162		6,784		3,395		2,082		4,054		27,391		5,153		80,885

Performing	1,360,654		1,196,491		827,625		543,253		586,622		1,496,135		1,040,544		27,762		7,079,086
Nonperforming	30		18,254		4,108		21,948		23,934		76,691		654		1,153		146,774
Total	$	1,360,684	$	1,214,746	$	831,734	$	565,201	$	610,556	$	1,572,826	$	1,041,199	$	28,914	$	7,225,860

The following tables present the age analysis of past due loans segregated by class of loans as of the dates presented:


	March 31, 2021
(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		Non - performing		Total Past Due Loans		Total Loans
Commercial real estate	$	2,685,253	$	—	$	—	$	95,074	$	95,074	$	2,780,327
Commercial and industrial(1)	1,687,172		—		—		12,416		12,416		1,699,588
Commercial construction	449,074		—		—		384		384		449,459
Business banking	1,053,430		1,191		30		14,426		15,647		1,069,078
Consumer real estate	1,094,601		1,444		104		7,949		9,498		1,104,099
Other consumer	78,314		102		39		2,163		2,304		80,618
Total(2)	$	7,047,844	$	2,737	$	174	$	132,413	$	135,324	$	7,183,168

(1)In addition to nonperforming loans of $132.4 million, we have a $2.8 million commercial and industrial held for sale loan that is nonperforming resulting in total nonperforming loans of $135.2 million.

(2) We had 40 loans that were modified totaling $61.8 million under the CARES Act at March 31, 2021. These customers were not considered past due as a result of their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program. Due to the modification program, this delinquency table may not accurately reflect the credit risk associated with these loans.


	December 31, 2020
(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Past Due (2)		Non - performing		Total Past Due Loans		Total Loans
Commercial real estate	$	2,690,877	$	—	$	—	$	—	$	101,070	$	101,070	$	2,791,947
Commercial and industrial	1,542,567		—		—		—		16,985		16,985		1,559,552
Commercial construction	462,094		19		3,580		—		384		3,983		466,077
Business banking	1,140,581		1,614		379		371		17,122		19,486		1,160,067
Consumer real estate	1,153,028		1,087		1,968		132		11,117		14,304		1,167,332
Other consumer	80,583		168		37		—		96		302		80,885
Total(1)	$	7,069,730	$	2,888	$	5,965	$	503	$	146,774	$	156,130	$	7,225,860
(1) We had 52 loans that were modified totaling $195.6 million under the CARES Act at December 31, 2020. These customers were not considered past due as a result of their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program. Due to the modification program, this delinquency table may not accurately reflect the credit risk associated with these loans. (2) Represents acquired loans that were recorded at fair value at the acquisition date and remain performing at December 31, 2020.

The following table presents loans on nonaccrual status by class of loan:


									March 31, 2021
	March 31, 2021								For the three months ended
(dollars in thousands)	Beginning of Period Nonaccrual		End of Period Nonaccrual		Nonaccrual With No Related Allowance		Past Due 90+ Days Still Accruing		Interest Income Recognized on Nonaccrual(1)
Commercial real estate	$	101,070	$	95,074	$	52,460	$	—	$	61
Commercial and industrial(2)	16,985		12,416		11,425		—		43
Commercial construction	384		384		—		—		—
Business banking	17,122		14,426		397		—		137
Consumer real estate	11,117		7,949		345		—		110
Other consumer	96		2,163		—		—		1
Total	$	146,774	$	132,413	$	64,628	$—		$	352

(1) Represents only cash payments received and applied to interest on nonaccrual loans.

(2)In addition to nonperforming loans of $132.4 million, we have a $2.8 million commercial and industrial held for sale loan that is nonperforming resulting in total nonperforming loans of $135.2 million.


									December 31, 2020
	December 31, 2020								For the twelve months ended
(dollars in thousands)	Beginning of Period Nonaccrual		End of Period Nonaccrual		Nonaccrual With No Related Allowance		Past Due 90+ Days Still Accruing		Interest Income Recognized on Nonaccrual(1)
Commercial real estate	$	25,356	$	101,070	$	60,401	$	—	$	22
Commercial and industrial	10,911		16,985		6,436		—		101
Commercial construction	737		384		285		—		—
Business banking	9,863		17,122		3,890		371		275
Consumer real estate	6,063		11,117		398		132		423
Other consumer	1,127		96		—		—		4
Total	$	54,057	$	146,774	$	71,410	$	503	$	826

(1) Represents only cash payments received and applied to interest on nonaccrual loans.

The following tables present collateral-dependent loans by class of loan as of the dates presented:


	March 31, 2021
	Type of Collateral
(dollars in thousands)	Real Estate		Business Assets		Investment/Cash		Other
Commercial real estate	$	86,683	$	—	$	5,350	$	—
Commercial and industrial	335		11,968		—		—
Commercial construction	3,245		—		—		—
Business banking	1,856		12		—		—
Consumer real estate	345		—		—		—

Total	$	92,464	$	11,980	$	5,350	$	—


	December 31, 2020
	Type of Collateral
(dollars in thousands)	Real Estate		Business Assets		Investment/Cash		Other
Commercial real estate	$	100,450	$	—	$	—	$	—
Commercial and industrial	1,040		15,080		—		—
Commercial construction	3,552		—		—		—
Business banking	3,085		1,619		—		689
Consumer real estate	398		—		—		—

Total	$	108,525	$	16,699	$	—	$	689

The following tables present activity in the ACL for the periods presented:


	Three Months Ended March 31, 2021
(dollars in thousands)	Commercial Real Estate		Commercial and Industrial		Commercial Construction		Business Banking		Consumer Real Estate		Other Consumer		Total Loans
Allowance for credit losses on loans:
Balance at beginning of period	$	65,656	$	16,100	$	7,239	$	15,917	$	10,014	$	2,686	$	117,612
Provision for credit losses on loans(1)	1,996		2,728		(911)		514		(844)		(182)		3,301
Charge-offs	(810)		(4,302)		—		(917)		(271)		(232)		(6,532)
Recoveries	—		137		1		166		82		334		720
Net (Charge-offs)/Recoveries	(810)		(4,165)		1		(751)		(189)		102		(5,812)
Balance at End of Period	$	66,842	$	14,663	$	6,329	$	15,680	$	8,981	$	2,606	$	115,101
(1) Excludes unfunded commitments


	Three Months Ended March 31, 2020
(dollars in thousands)	Commercial Real Estate		Commercial and Industrial		Commercial Construction		Business Banking		Consumer Real Estate		Other Consumer		Total Loans
Allowance for credit losses on loans:
Balance at beginning of period	$	30,577	$	15,681	$	7,900	$	—	$	6,337	$	1,729	$	62,224
Impact of CECL adoption	4,810		7,853		(3,376)		12,898		4,525		642		27,352
Provision for credit losses on loans(1)	7,639		6,196		2,309		1,194		472		620		18,430
Charge-offs	(442)		(9,879)		(229)		(460)		(172)		(248)		(11,430)
Recoveries	27		19		2		74		38		114		274
Net (Charge-offs)/Recoveries	(415)		(9,860)		(227)		(386)		(134)		(134)		(11,156)
Balance at End of Period	$	42,611	$	19,870	$	6,606	$	13,706	$	11,200	$	2,857	$	96,850

(1) Excludes unfunded commitments

The adoption of ASU 2016-13 resulted in an increase to our ACL of $27.4 million on January 1, 2020. The increase included $8.2 million for S&T legacy loans and $9.3 million for acquired loans from the DNB merger. We also recorded a day one adjustment of $9.9 million primarily related to a C&I relationship that was charged off in the first quarter of 2020. We obtained information on the relationship subsequent to filing our December 31, 2019 10-K, but before the end of the first quarter of 2020. The updated information supported a loss existed at January 1, 2020.

The provision for credit losses, which includes a provision for losses on loans and on unfunded commitments, is a charge to earnings to maintain the ACL at a level consistent with management's assessment of expected losses in the loan portfolio at the balance sheet date. The provision for credit losses decreased $16.9 million to $3.1 million for the three months ended

March 31, 2021 compared to $20.0 million for the same period in 2020. The decrease in the provision for credit losses of $16.9 million was primarily due to a significant increase in provision needed during the three months ended March 31, 2020 due to the negative impact of the COVID-19 pandemic and our adoption of CECL on January 1, 2020. The provision for credit losses for the three months ended March 31, 2020 included $14.3 million related to the economic forecast and other qualitative reserves established for the uncertainty of the pandemic. Our total qualitative reserve decreased $2.7 million for the three months ended March 31, 2021 compared to the same period in 2020 mainly due to a decrease of $3.1 million for the economic forecast. Our economic forecast covers a period of two years and is driven primarily by national unemployment data. The forecasted national unemployment rate improved at March 31, 2021 compared to the same time in 2020.

Net loan charge-offs were $5.8 million, or 0.33 percent annualized as a percentage of average loans at March 31, 2021 compared to $11.2 million, or 0.63 percent of average loans during the same period in 2020. Nonperforming loans increased $61.4 million to $135.2 million at March 31, 2021 compared to $73.8 million at March 31, 2020. The significant increase in nonperforming loans primarily related to the addition of $53.6 million of hotel loans which moved to nonperforming during the fourth quarter of 2020 as a result of continued deterioration due to the pandemic.

The C&I portfolio included $499.1 million of loans originated under the PPP at March 31, 2021. The loans are 100 percent guaranteed by the SBA, therefore, we have not assigned any ACL to these loans at March 31, 2021.