Loans, Allowance for Loan Losses and Credit Quality (Tables)

6 Months Ended

Jun. 30, 2020

Financing Receivable, Allowance for Credit Loss [Line Items]

Tabular disclosure of financing receivables bifurcated by type of impairment evaluation [Table Text Block]

The following table bifurcates the amount of loans and the allowance allocated to each loan category based on the type of impairment analysis as of December 31, 2019:

	December 31, 2019
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Residential Real Estate		Home Equity		Other Consumer		Total
	(Dollars in thousands)
Financing receivables ending balance:
Collectively evaluated for impairment	$	1,370,580	$	3,987,848	$	547,293	$	173,960	$	1,571,848	$	1,127,963	$	29,663	$	8,809,155
Individually evaluated for impairment	24,456		8,337		—		537		11,228		4,948		122		49,628
Purchased credit impaired loans	—		6,174		—		—		7,493		887		302		14,856
Total loans by group	$	1,395,036	$	4,002,359	$	547,293	$	174,497	$	1,590,569	$	1,133,798	$	30,087	$	8,873,639	(1)

(1)

The amount of net deferred costs on originated loans included in the ending balance was $7.1 million at December 31, 2019. Net unamortized discounts on acquired loans not deemed to be purchased credit impaired ("PCI") included in the ending balance was $21.6 million at December 31, 2019.

Summary of changes in allowance for loan losses

The following table summarizes the change in allowance for credit losses by loan category, and bifurcates the amount of loans allocated to each loan category for the period indicated:

	Three Months Ended June 30, 2020
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate			Commercial Construction			Small Business			Residential Real Estate		Home  Equity			Other Consumer			Total
Allowance for credit losses
Beginning balance	$	21,649		$	29,498		$	3,747		$	3,829		$	14,847	$	17,910		$	896		$	92,376
Charge-offs	—			—			—			(36		)	—		(4		)	(670		)	(710		)
Recoveries	4			—			—			3			—		95			408			510
Provision for credit loss expense	4,009			7,458			754			765			199		6,859			(44		)	20,000
Ending balance (1)	$	25,662		$	36,956		$	4,501		$	4,561		$	15,046	$	24,860		$	590		$	112,176
	Six Months Ended June 30, 2020
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate			Commercial Construction			Small Business			Residential Real Estate		Home  Equity			Other Consumer			Total
Allowance for credit losses
Beginning balance, pre adoption of Topic 326	$	17,594		$	32,935		$	6,053		$	1,746		$	3,440	$	5,576		$	396		$	67,740
Cumulative effect accounting adjustment (2)	(1,984		)	(13,048		)	(3,652		)	495			9,828		7,012			212			(1,137		)
Cumulative effect accounting adjustment (3)	49			337			—			—			423		319			29			1,157
Charge-offs	—			—			—			(145		)	—		(142		)	(1,157		)	(1,444		)
Recoveries	46			—			—			6			1		153			654			860
Provision for credit loss expense	9,957			16,732			2,100			2,459			1,354		11,942			456			45,000
Ending balance (1)	$	25,662		$	36,956		$	4,501		$	4,561		$	15,046	$	24,860		$	590		$	112,176

(1) Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $32.9 million as of June 30, 2020.

(2) Represents adjustment needed to reflect the cumulative day one impact pursuant to the Company's adoption of Accounting Standards Update 2016-13. The adjustment represents a $1.1 million decrease to the allowance attributable to the change in accounting methodology for estimating the allowance for credit losses resulting from the Company's adoption of the standard.

(3)

Represents adjustment needed to reflect the day one re-class of the Company's PCI loan balances to PCD and the associated gross-up, pursuant to the Company's adoption of Accounting Standards Update 2016-13. The adjustment represents a $1.2 million increase to the allowance resulting from the day one re-class.

The following table summarizes changes in allowance for loan losses by loan category for the periods indicated:

	Three Months Ended June 30, 2019
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate		Commercial Construction		Small Business			Residential Real Estate		Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	16,872		$	32,049	$	5,355	$	1,784		$	3,234	$	5,507		$	339		$	65,140
Charge-offs	—			—		—		(49		)	—		(71		)	(352		)	(472		)
Recoveries	—			13		—		20			—		18			241			292
Provision (benefit)	(15		)	598		238		13			62		93			11			1,000
Ending balance	$	16,857		$	32,660	$	5,593	$	1,768		$	3,296	$	5,547		$	239		$	65,960
	Six Months Ended June 30, 2019
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate		Commercial Construction		Small Business			Residential Real Estate		Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	15,760		$	32,370	$	5,158	$	1,756		$	3,219	$	5,608		$	422		$	64,293
Charge-offs	—			—		—		(194		)	—		(184		)	(653		)	(1,031		)
Recoveries	124			46		—		47			1		84			396			698
Provision (benefit)	973			244		435		159			76		39			74			2,000
Ending balance	$	16,857		$	32,660	$	5,593	$	1,768		$	3,296	$	5,547		$	239		$	65,960
Ending balance: collectively evaluated for impairment	$	16,850		$	32,586	$	5,593	$	1,730		$	2,507	$	5,388		$	233		$	64,887
Ending balance: individually evaluated for impairment	$	7		$	74	$	—	$	38		$	789	$	159		$	6		$	1,073

Internal risk-rating categories for the Company's commercial portfolio

he following table details the amortized cost balances of the Company's loan portfolios, presented by credit quality indicator and origination year as of the date indicated below:

	June 30, 2020
	2020			2019		2018		2017		2016		Prior		Revolving Loans		Revolving converted to Term		Total
	(Dollars in thousands)
Commercial and industrial
Pass	$	911,414	(1)	$	193,832	$	129,199	$	44,664	$	27,640	$	25,095	$	565,953	$	2,668	$	1,900,465
Potential weakness	1,896			1,818		1,426		4,787		1,609		544		12,515		50		24,645
Definite weakness - loss unlikely	2,124			1,779		23,609		5,552		2,555		1,430		42,437		—		79,486
Partial loss probable	—			—		—		—		—		49		—		—		49
Definite loss	—			—		—		—		—		—		—		—		—
Total commercial and industrial	$	915,434		$	197,429	$	154,234	$	55,003	$	31,804	$	27,118	$	620,905	$	2,718	$	2,004,645
Commercial real estate
Pass	$	490,280		$	895,594	$	546,513	$	607,633	$	438,455	$	846,195	$	48,889	$	14,854	$	3,888,413
Potential weakness	5,218			6,423		4,821		23,123		14,159		47,055		—		—		100,799
Definite weakness - loss unlikely	3,747			2,992		37,155		21,091		4,525		12,325		—		—		81,835
Partial loss probable	—			—		—		—		—		—		—		—		—
Definite loss	—			—		—		—		—		—		—		—		—
Total commercial real estate	$	499,245		$	905,009	$	588,489	$	651,847	$	457,139	$	905,575	$	48,889	$	14,854	$	4,071,047
Commercial construction
Pass	$	91,981		$	241,910	$	95,253	$	66,282	$	—	$	6,810	$	32,012	$	1,095	$	535,343
Potential weakness	—			367		382		—		—		—		177		—		926
Definite weakness - loss unlikely	—			—		1,519		—		—		—		—		—		1,519
Partial loss probable	—			—		—		—		—		—		—		—		—
Definite loss	—			—		—		—		—		—		—		—		—
Total commercial construction	$	91,981		$	242,277	$	97,154	$	66,282	$	—	$	6,810	$	32,189	$	1,095	$	537,788
Small business
Pass	$	14,711		$	30,764	$	22,702	$	16,803	$	16,109	$	25,521	$	39,804	$	—	$	166,414
Potential weakness	—			11		17		12		748		246		563		—		1,597
Definite weakness - loss unlikely	186			444		80		173		114		447		833		—		2,277
Partial loss probable	—			—		—		—		—		—		—		—		—
Definite loss	—			—		—		—		—		—		—		—		—
Total small business	$	14,897		$	31,219	$	22,799	$	16,988	$	16,971	$	26,214	$	41,200	$	—	$	170,288
Residential real estate
Pass	$	78,072		$	185,896	$	213,340	$	187,713	$	263,749	$	495,816	$	—	$	—	$	1,424,586
Default	—			—		427		939		369		4,808		—		—		6,543
Total residential real estate	$	78,072		$	185,896	$	213,767	$	188,652	$	264,118	$	500,624	$	—	$	—	$	1,431,129
Home equity
Pass	$	43,516		$	70,369	$	64,874	$	64,569	$	49,347	$	130,900	$	691,110	$	2,635	$	1,117,320
Default	—			—		—		15		—		419		2,466		303		3,203
Total home equity	$	43,516		$	70,369	$	64,874	$	64,584	$	49,347	$	131,319	$	693,576	$	2,938	$	1,120,523

Other consumer
Pass	$	451	$	566	$	266	$	916	$	836	$	9,193	$	11,965	$	—	$	24,193
Default	—		—		—		—		—		35		—		—		35
Total other consumer	$	451	$	566	$	266	$	916	$	836	$	9,228	$	11,965	$	—	$	24,228
Total	$	1,643,596	$	1,632,765	$	1,141,583	$	1,044,272	$	820,215	$	1,606,888	$	1,448,724	$	21,605	$	9,359,648

The following tables detail the amount of outstanding principal balances relative to each of the risk-rating categories for the Company’s loan portfolio as of December 31, 2019:

		December 31, 2019
Category	Risk Rating	Commercial  and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in thousands)
Pass	1 - 6	$	1,274,155	$	3,860,555	$	542,608	$	171,213	$	5,848,531
Potential weakness	7	63,485		97,268		2,247		1,416		164,416
Definite weakness-loss unlikely	8	57,396		44,536		2,438		1,868		106,238
Partial loss probable	9	—		—		—		—		—
Definite loss	10	—		—		—		—		—
Total		$	1,395,036	$	4,002,359	$	547,293	$	174,497	$	6,119,185

Weighted average FICO scores and the weighted average combined LTV ratio

The following table shows the weighted average FICO scores and the weighted average combined LTV ratios as of the periods indicated below:

	June 30 2020		December 31 2019
Residential portfolio
FICO score (re-scored)(1)	750		749
LTV (re-valued)(2)	57.4	%	59.0	%
Home equity portfolio
FICO score (re-scored)(1)	770		767
LTV (re-valued)(2)(3)	47.0	%	46.6	%

 

(1) The average FICO scores at June 30, 2020 are based upon rescores available from May 2020 and origination score data for loans booked in June 2020.  The average FICO scores at December 31, 2019 were based upon rescores available from November 2019 and origination score data for loans booked in December 2019.

(2) The combined LTV ratios for June 30, 2020 are based upon updated automated valuations as of May 2020, when available, and/or the most current valuation data available.  The combined LTV ratios for December 31, 2019 were based upon updated automated valuations as of November 2019, when available, and/or the most current valuation data available as of such date.  The updated automated valuations provide new information on loans that may be available since the previous valuation was obtained.  If no new information is available, the valuation will default to the previously obtained data or most recent appraisal.

(3) For home equity loans and lines in a subordinate lien, the LTV data represents a combined LTV, taking into account the senior lien data for loans and lines.

Summary of nonaccrual loans

The following table shows information regarding nonaccrual loans as of the dates indicated:

	Nonaccrual Balances
	June 30, 2020							December 31, 2019
	With Allowance for Credit Losses		Without Allowance for Credit Losses		Total			Total
	(Dollars in thousands)
Commercial and industrial	$	1,045	$	19,691	$	20,736		$	22,574
Commercial real estate	2,169		4,144		6,313			3,016
Commercial construction	—		—		—			—
Small business	619		—		619			311
Residential real estate	12,331		2,230		14,561			13,360
Home equity	6,329		108		6,437			6,570
Other consumer	90		—		90			61
Total nonaccrual loans	$	22,583	$	26,173	$	48,756	(1)	$	45,892	(1)

(1)Included in these amounts were $24.1 million and $24.8 million of nonaccruing TDRs at June 30, 2020 and December 31, 2019, re

Foreclosed Residential Real Estate Property [Table Text Block]

The following table shows information regarding foreclosed residential real estate property at the dates indicated:

	June 30, 2020		December 31, 2019
	(Dollars in thousands)
Foreclosed residential real estate property held by the creditor	$	—	$	—
Recorded investment in mortgage loans collateralized by residential real estate property that are in the process of foreclosure	$	2,642	$	3,294

Age analysis of past due financing receivables

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

	June 30, 2020
	30-59 days			60-89 days			90 days or more			Total Past Due					Total Financing Receivables		Amortized Cost >90 Days and  Accruing
	Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Current
	(Dollars in thousands)
Loan Portfolio
Commercial and industrial	2	$	32	—	$	—	6	$	1,045	8	$	1,077	$	2,003,568	$	2,004,645	$	—
Commercial real estate	5	3,550		1	68		5	935		11	4,553		4,066,494		4,071,047		—
Commercial construction	—	—		1	510		—	—		1	510		537,278		537,788		—
Small business	13	917		17	453		11	123		41	1,493		168,795		170,288		—
Residential real estate	15	2,819		8	1,247		38	6,333		61	10,399		1,420,730		1,431,129		—
Home equity	8	554		8	671		40	3,203		56	4,428		1,116,095		1,120,523		—
Other consumer (1)	163	189		13	27		13	94		189	310		23,918		24,228		58
Total	206	$	8,061	48	$	2,976	113	$	11,733	367	$	22,770	$	9,336,878	$	9,359,648	$	58

	December 31, 2019
	30-59 days			60-89 days			90 days or more			Total Past Due					Total Financing Receivables		Recorded Investment >90 Days and  Accruing
	Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Current
	(Dollars in thousands)
Loan Portfolio
Commercial and industrial	1	$	253	2	$	323	5	$	760	8	$	1,336	$	1,393,700	$	1,395,036	$	—
Commercial real estate	7	1,690		1	194		8	2,038		16	3,922		3,998,437		4,002,359		218		(2	)
Commercial construction	1	560		—	—		—	—		1	560		546,733		547,293		—
Small business	11	837		3	15		6	115		20	967		173,530		174,497		—
Residential real estate	17	2,237		17	3,055		38	7,020		72	12,312		1,578,257		1,590,569		1,652		(2	)
Home equity	23	1,689		8	524		40	3,854		71	6,067		1,127,731		1,133,798		265		(2	)
Other consumer (1)	387	245		12	44		16	32		415	321		29,766		30,087		22
Total	447	$	7,511	43	$	4,155	113	$	13,819	603	$	25,485	$	8,848,154	$	8,873,639	$	2,157

(1) Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances.

(2) Represents purchased credit impaired loans that were accruing interest due to expectations of future cash collections.

Summary of Troubled Debt Restructuring and other pertinent information

The following table shows the Company’s total TDRs and other pertinent information as of the dates indicated:

		June 30, 2020		December 31, 2019
	(Dollars in thousands)
TDRs on accrual status		$	17,741	$	19,599
TDRs on nonaccrual		24,098		24,766
Total TDRs		$	41,839	$	44,365
Amount of specific reserves associated with TDRs		n/a		$	855
Additional commitments to lend to a borrower who has been a party to a TDR		$	139	$	63

Change in investment recorded subsequent to modifications

The following table shows the troubled debt restructurings which occurred during the periods indicated and the change in the recorded investment subsequent to the modifications occurring:

	Three Months Ended					Six Months Ended
	June 30, 2020					June 30, 2020
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Troubled debt restructurings
Commercial and industrial	1	$	40	$	40	3	$	308	$	308
Commercial real estate	4	1,170		1,170		5	1,774		1,774
Small business	1	63		63		2	112		88
Residential real estate	1	382		433		2	559		642
Home equity	—	—		—		—	—		—
Other consumer	—	—		—		—	—		—
Total	7	$	1,655	$	1,706	12	$	2,753	$	2,812

	Three Months Ended					Six Months Ended
	June 30, 2019					June 30, 2019
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Troubled debt restructurings
Commercial and industrial	1	$	97	$	97	1	$	97	$	97
Commercial real estate	—	—		—		1	150		150
Small business	2	56		56		2	56		56
Home equity	—	—		—		1	75		75
Total	3	$	153	$	153	5	$	378	$	378

Post modification balance of Troubled Debt Restructuring

	Three Months Ended					Six Months Ended
	June 30, 2019					June 30, 2019
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Troubled debt restructurings
Commercial and industrial	1	$	97	$	97	1	$	97	$	97
Commercial real estate	—	—		—		1	150		150
Small business	2	56		56		2	56		56
Home equity	—	—		—		1	75		75
Total	3	$	153	$	153	5	$	378	$	378

 

The following table shows the Company’s post-modification balance of TDRs listed by type of modification during the period indicated:

	Three Months Ended		Six Months Ended
	June 30		June 30
	2020	2019	2020		2019
	(Dollars in thousands)
Adjusted interest rate	—	—	$	604	$	150
Court ordered concession	—	—	25		75
Extended maturity	1,706	153	2,183		153
Total	1,706	153	$	2,812	$	378

Impaired loans by loan portfolio

The table below sets forth information regarding the Company’s impaired loans by loan portfolio at the date indicated:

	December 31, 2019
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
With no related allowance recorded
Commercial and industrial	$	23,786	$	34,970	$	—
Commercial real estate	6,213		12,101		—
Small business	469		484		—
Residential real estate	4,976		5,123		—
Home equity	3,764		3,893		—
Other consumer	34		34		—
Subtotal	39,242		56,605		—
With an allowance recorded
Commercial and industrial	$	670	$	670	$	126
Commercial real estate	2,124		2,124		48
Small business	68		105		8
Residential real estate	6,252		7,163		637
Home equity	1,184		1,382		156
Other consumer	88		91		5
Subtotal	10,386		11,535		980
Total	$	49,628	$	68,140	$	980

Interest income recognized on impaired loans

The following table sets forth information regarding interest income recognized on impaired loans, by portfolio, for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30, 2019				June 30, 2019
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial and industrial	$	27,406	$	34	$	28,971	$	70
Commercial real estate	7,496		92		7,582		186
Small business	309		2		319		6
Residential real estate	4,713		58		4,727		113
Home equity	4,751		53		4,783		107
Other consumer	42		1		45		1
Subtotal	44,717		240		46,427		483
With an allowance recorded
Commercial and industrial	$	268	$	3	$	270	$	6
Commercial real estate	1,662		24		1,672		49
Small business	190		2		192		5
Residential real estate	6,707		59		6,775		116
Home equity	972		11		978		22
Other consumer	132		2		135		2
Subtotal	9,931		101		10,022		200
Total	$	54,648	$	341	$	56,449	$	683

Certain Loans Acquired In Transfer Accounted For As Debt Securities Acquired During Period

The following table displays certain information pertaining to PCI loans at the date indicated:

	December 31, 2019
	(Dollars in thousands)
Outstanding balance	$	18,358
Carrying amount	$	14,856

Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement Schedule

The following table summarizes activity in the accretable yield for the PCI loan portfolio for the periods indicated:

	Three Months Ended June 30			Six Months Ended June 30
	2019			2019
	(Dollars in thousands)
Beginning balance	$	1,164		$	1,191
Acquisition	1,464			1,464
Accretion	(662		)	(803		)
Other change in expected cash flows (1)	272			386
Ending balance	$	2,238		$	2,238

(1) Represents changes in cash flows expected to be collected and resulting in increased interest income as a prospective yield adjustment over the remaining life of the loan(s).