Loans, Allowance for Credit Losses and Credit Quality

9 Months Ended

Sep. 30, 2023

Receivables [Abstract]

Loans, Allowance for Credit Losses and Credit Quality

LOANS, ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

Loans Held for Investment and Allowance for Credit 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 September 30, 2023
	(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	$	15,142	$	78,396	$	9,038	$	3,606	$	21,465	$	12,433	$	567	$	140,647
Charge-offs	—		(5,072)		—		(112)		—		—		(834)		(6,018)
Recoveries	111		—		—		35		—		12		282		440
Provision for (release of) credit losses	1,681		1,078		(208)		385		1,682		101		781		5,500
Ending balance (1)	$	16,934	$	74,402	$	8,830	$	3,914	$	23,147	$	12,546	$	796	$	140,569
	Three Months Ended September 30, 2022
	(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	$	14,107	$	83,456	$	11,710	$	2,784	$	19,750	$	11,740	$	772	$	144,319
Charge-offs	—		(62)		—		—		—		—		(679)		(741)
Recoveries	2		330		—		88		—		65		251		736
Provision for (release of) credit losses	6,060		(3,688)		(291)		(248)		852		(154)		469		3,000
Ending balance (1)	$	20,169	$	80,036	$	11,419	$	2,624	$	20,602	$	11,651	$	812	$	147,313
	Nine Months Ended September 30, 2023
	(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	$	27,559	$	77,799	$	10,762	$	2,834	$	20,973	$	11,504	$	988	$	152,419
Charge-offs	(23,471)		(5,072)		—		(199)		—		—		(1,858)		(30,600)
Recoveries	132		—		—		74		—		38		756		1,000
Provision for (release of) credit losses	12,714		1,675		(1,932)		1,205		2,174		1,004		910		17,750
Ending balance (1)	$	16,934	$	74,402	$	8,830	$	3,914	$	23,147	$	12,546	$	796	$	140,569
	Nine Months Ended September 30, 2022
	(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	$	14,402	$	83,486	$	12,316	$	3,508	$	14,484	$	17,986	$	740	$	146,922
Charge-offs	—		(62)		—		(59)		—		(122)		(1,749)		(1,992)
Recoveries	44		333		—		147		—		105		754		1,383
Provision for (release of) credit losses	5,723		(3,721)		(897)		(972)		6,118		(6,318)		1,067		1,000
Ending balance (1)	$	20,169	$	80,036	$	11,419	$	2,624	$	20,602	$	11,651	$	812	$	147,313

(1)Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $58.1 million and $42.7 million as of September 30, 2023 and September 30, 2022, respectively.

The balance of allowance for credit losses decreased to $140.6 million as of September 30, 2023 compared to $152.4 million at December 31, 2022, driven primarily by outsized charge-offs on two large commercial loans, partially offset by net loan growth during the nine months ended September 30, 2023.

For the purpose of estimating the allowance for credit losses, management segregated the loan portfolio into the portfolio segments detailed in the above tables.  Each of these loan categories possesses unique risk characteristics that are considered when determining the appropriate level of allowance for each segment.  Some of the characteristics unique to each loan category include:

Commercial Portfolio

•Commercial and Industrial: Consists of revolving and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment.  Collateral generally consists of accounts receivable, inventory, plant and equipment, real estate, or other business assets. The primary source of repayment is operating cash flow and, secondarily, liquidation of assets.

•Commercial Real Estate: Consists of mortgage loans to finance investment in real property such as multi-family residential, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties and is inclusive of owner-occupied commercial properties.  Loans are typically written with amortizing payment structures.  Collateral values are determined based upon third party appraisals and evaluations.  Permissible loan to value ratios at origination are governed by Company policy and regulatory guidelines. The primary source of repayment is cash flow from operating leases and rents and, secondarily, liquidation of assets.

•Commercial Construction: Consists of short-term construction loans, revolving and nonrevolving credit lines and construction/permanent loans to finance the acquisition, development and construction or rehabilitation of real property.  Project types include residential land development, one-to-four family, condominium, and multi-family home construction, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties.  Loans may be written with nonamortizing or hybrid payment structures depending upon the type of project.  Collateral values are determined based upon third party appraisals and evaluations.  Permissible loan to value ratios at origination are governed by Company policy and regulatory guidelines.  Repayment sources vary depending upon the type of project and may consist of proceeds from the sale or lease of units, operating cash flows or liquidation of other assets.

•Small Business: Consists of revolving, term loan and mortgage obligations extended to sole proprietors and small businesses for purposes of financing working capital and/or capital investment.  Collateral generally consists of pledges of business assets including, but not limited to, accounts receivable, inventory, plant and equipment, or real estate if applicable.  The primary source of repayment is operating cash flows and, secondarily, liquidation of assets.

For the commercial portfolio it is the Company’s policy to obtain personal guarantees for payment from individuals holding material ownership interests in the borrowing entities.

Consumer Portfolio

•Residential Real Estate: Residential mortgage loans held in the Company’s portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors such as current and expected income, employment status, current assets, other financial resources, credit history and the value of the collateral.  Collateral consists of mortgage liens on one-to-four family residential properties.  Residential mortgage loans also include loans to construct owner-occupied one-to-four family residential properties.

•Home Equity: Home equity loans and credit lines are made to qualified individuals and are primarily secured by senior or junior mortgage liens on owner-occupied one-to-four family homes, condominiums or vacation homes. Each home equity loan has a fixed rate and is billed in equal payments comprised of principal and interest. The majority of home equity lines of credit have a variable rate and are billed in interest-only payments during the draw period. At the end of the draw period, the home equity line of credit is billed as a percentage of the then outstanding principal balance plus all accrued interest over a predetermined repayment period, as set forth in the note. Additionally, the Company has the option of renewing each line of credit for additional draw periods.  Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan to value ratios within established policy guidelines.

•Other Consumer: Other consumer loan products include personal lines of credit and amortizing loans made to qualified individuals for various purposes such as debt consolidation, personal expenses or overdraft protection.  Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines.  These loans may be secured or unsecured.

Credit Quality

The Company continually monitors the asset quality of the loan portfolio using all available information. Based on this information, loans demonstrating certain payment issues or other weaknesses may be categorized as adversely risk-rated, delinquent, nonperforming and/or put on nonaccrual status. Additionally, in the course of resolving such loans, the Company may choose to restructure the contractual terms of certain loans to match the borrower’s ability to repay the loan based on their current financial condition.

The Company reviews numerous credit quality indicators when assessing the risk in its loan portfolio. For the commercial portfolio, the Company utilizes a 10-point credit risk-rating system, which assigns a risk-grade to each loan obligation based on a number of quantitative and qualitative factors associated with a commercial or small business loan transaction. Factors considered include industry and market conditions, position within the industry, earnings trends, operating cash flow, asset/liability values, debt capacity, guarantor strength, management and controls, financial reporting, collateral, and other considerations. The risk-rating categories for the commercial portfolio are defined as follows:

•Pass: Risk-rating “1” through “6” comprises loans ranging from ‘Substantially Risk Free’ which indicates borrowers are of unquestioned credit standing and the pinnacle of credit quality, well established companies with a very strong financial condition, and loans fully secured by cash collateral, through ‘Acceptable Risk,’ which indicates borrowers may exhibit declining earnings, strained cash flow, increasing or above average leverage and/or weakening market fundamentals that indicate below average asset quality, margins and market share. Collateral coverage is protective.

•Potential Weakness: Borrowers exhibit potential credit weaknesses or downward trends deserving management’s close attention. If not checked or corrected, these trends will weaken the Company’s asset and position. While potentially weak, currently these borrowers are marginally acceptable; no loss of principal or interest is envisioned.

•Definite Weakness Loss Unlikely: Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt. Loans may be inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. However, there is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Collateral coverage may be inadequate to cover the principal obligation.

•Partial Loss Probable: Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt with the added provision that the weaknesses make collection of the debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Serious problems exist to the point where partial loss of principal is likely.

•Definite Loss: Borrowers deemed incapable of repayment. Loans to such borrowers are considered uncollectible and of such little value that continuation as active assets of the Company is not warranted.

The Company utilizes a comprehensive, continuous strategy for evaluating and monitoring commercial credit quality. Initially, credit quality is determined at loan origination and is re-evaluated when subsequent actions, such as renewals, modifications or reviews, occur. Actively managed commercial borrowers are required to provide updated financial information at least annually which is carefully evaluated for any changes in credit quality. Larger loan relationships are subject to a full annual credit review by experienced credit professionals, while continuous portfolio monitoring techniques are employed to evaluate changes in credit quality for smaller loan relationships. Any changes in credit quality are reflected in risk-rating changes. Additionally, the Company retains an independent loan review firm to evaluate the credit quality of the commercial loan portfolio. The independent loan review process achieves significant penetration into the commercial loan portfolio and reports the results of these reviews to the Audit Committee of the Board of Directors on a quarterly basis.

For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower. As a result, for this portfolio the Company utilizes a pass/default risk-rating system, based on an age analysis (i.e., days past due) associated with each consumer loan. Under this structure, consumer loans less than 90 days past due are assigned a "pass" rating, while any consumer loans 90 days or more past due are assigned a "default" rating.

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

	September 30, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving converted to Term		Total (1)
	(Dollars in thousands)
Commercial and industrial
Pass (2)	$	303,838	$	188,559	$	94,714	$	73,366	$	45,741	$	116,052	$	737,335	$	—	$	1,559,605
Potential weakness	6,511		2,417		614		10,278		90		132		46,706		—		66,748
Definite weakness - loss unlikely	1,933		4,707		1,074		132		1,165		806		16,833		—		26,650
Partial loss probable	—		—		—		—		—		—		—		—		—
Definite loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	$	312,282	$	195,683	$	96,402	$	83,776	$	46,996	$	116,990	$	800,874	$	—	$	1,653,003
Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	34	$	23,437	$	—	$	23,471
Commercial real estate
Pass	$	795,830	$	1,160,497	$	1,338,792	$	1,312,240	$	610,009	$	2,188,221	$	68,496	$	858	$	7,474,943
Potential weakness	62,572		37,695		57,987		14,662		2,945		118,830		—		—		294,691
Definite weakness - loss unlikely	30,667		27,504		23,568		4,321		19,211		21,325		—		—		126,596
Partial loss probable	—		—		—		—		—		—		—		—		—
Definite loss	—		—		—		—		—		—		—		—		—
Total commercial real estate	$	889,069	$	1,225,696	$	1,420,347	$	1,331,223	$	632,165	$	2,328,376	$	68,496	$	858	$	7,896,230
Current-period gross write-offs	$	—	$	5,072	$	—	$	—	$	—	$	—	$	—	$	—	$	5,072
Commercial construction
Pass	$	146,278	$	491,098	$	201,730	$	9,939	$	27,304	$	1,569	$	17,248	$	—	$	895,166
Potential weakness	13,484		—		4,823		—		—		—		—		—		18,307
Definite weakness - loss unlikely	9,440		26,199		16,330		—		—		—		—		—		51,969
Partial loss probable	—		—		—		—		—		—		—		—		—
Definite loss	—		—		—		—		—		—		—		—		—
Total commercial construction	$	169,202	$	517,297	$	222,883	$	9,939	$	27,304	$	1,569	$	17,248	$	—	$	965,442
Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Small business
Pass	$	40,551	$	52,883	$	40,706	$	26,759	$	13,759	$	23,458	$	43,759	$	—	$	241,875
Potential weakness	—		—		—		155		—		186		295		—		636
Definite weakness - loss unlikely	429		324		126		295		—		615		1,035		—		2,824
Partial loss probable	—		—		—		—		—		—		—		—		—
Definite loss	—		—		—		—		—		—		—		—		—
Total small business	$	40,980	$	53,207	$	40,832	$	27,209	$	13,759	$	24,259	$	45,089	$	—	$	245,335
Current-period gross write-offs	$	—	$	—	$	22	$	37	$	—	$	—	$	140	$	—	$	199
Residential real estate
Pass	$	391,121	$	645,593	$	408,752	$	186,334	$	89,911	$	612,878	$	—	$	—	$	2,334,589
Default	219		—		393		135		942		1,824		—		—		3,513
Total residential real estate	$	391,340	$	645,593	$	409,145	$	186,469	$	90,853	$	614,702	$	—	$	—	$	2,338,102
Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Home equity
Pass	$	21,729	$	39,251	$	56,216	$	50,724	$	30,039	$	126,897	$	765,079	$	4,190	$	1,094,125
Default	—		—		—		—		—		—		1,289		141		1,430
Total home equity	$	21,729	$	39,251	$	56,216	$	50,724	$	30,039	$	126,897	$	766,368	$	4,331	$	1,095,555
Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Other consumer (3)
Pass	$	538	$	320	$	1,370	$	912	$	410	$	2,154	$	24,843	$	—	$	30,547
Default	—		—		—		—		—		19		2		—		21
Total other consumer	$	538	$	320	$	1,370	$	912	$	410	$	2,173	$	24,845	$	—	$	30,568
Current-period gross write-offs	$	1,836	$	—	$	—	$	—	$	—	$	7	$	15	$	—	$	1,858
Total	$	1,825,140	$	2,677,047	$	2,247,195	$	1,690,252	$	841,526	$	3,214,966	$	1,722,920	$	5,189	$	14,224,235
Total current-period gross write-offs	$	1,836	$	5,072	$	22	$	37	$	—	$	41	$	23,592	$	—	$	30,600

	September 30, 2022
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving converted to Term		Total (1)
	(Dollars in thousands)
Commercial and industrial
Pass (2)	$	292,601	$	149,588	$	122,752	$	67,591	$	82,911	$	22,943	$	759,390	$	3,362	$	1,501,138
Potential weakness	1,540		973		1,038		1,844		3,955		715		6,557		—		16,622
Definite weakness - loss unlikely	2,485		935		—		39		—		111		27,019		—		30,589
Partial loss probable	—		—		—		—		—		—		—		—		—
Definite loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	$	296,626	$	151,496	$	123,790	$	69,474	$	86,866	$	23,769	$	792,966	$	3,362	$	1,548,349
Commercial real estate
Pass	$	922,772	$	1,467,370	$	1,265,711	$	773,102	$	733,621	$	1,976,282	$	47,317	$	1,070	$	7,187,245
Potential weakness	32,579		53,096		41,164		14,147		68,298		205,234		—		—		414,518
Definite weakness - loss unlikely	26,684		2,224		4,722		2,585		17,928		21,836		—		—		75,979
Partial loss probable	—		—		—		—		—		175		—		—		175
Definite loss	—		—		—		—		—		—		—		—		—
Total commercial real estate	$	982,035	$	1,522,690	$	1,311,597	$	789,834	$	819,847	$	2,203,527	$	47,317	$	1,070	$	7,677,917
Commercial construction
Pass	$	388,627	$	392,229	$	231,336	$	57,768	$	26,263	$	7,844	$	21,457	$	632	$	1,126,156
Potential weakness	40,631		—		3,387		—		—		—		—		—		44,018
Definite weakness - loss unlikely	2,138		12,845		—		—		—		—		—		—		14,983
Partial loss probable	—		—		—		—		—		—		—		—		—
Definite loss	—		—		—		—		—		—		—		—		—
Total commercial construction	$	431,396	$	405,074	$	234,723	$	57,768	$	26,263	$	7,844	$	21,457	$	632	$	1,185,157
Small business
Pass	$	41,923	$	46,581	$	31,968	$	17,536	$	10,454	$	20,227	$	37,455	$	—	$	206,144
Potential weakness	—		163		394		369		193		129		697		—		1,945
Definite weakness - loss unlikely	194		—		442		7		20		224		591		—		1,478
Partial loss probable	—		—		—		—		—		—		—		—		—
Definite loss	—		—		—		—		—		—		—		—		—
Total small business	$	42,117	$	46,744	$	32,804	$	17,912	$	10,667	$	20,580	$	38,743	$	—	$	209,567
Residential real estate
Pass	$	557,643	$	426,721	$	196,538	$	95,689	$	96,828	$	582,830	$	—	$	—	$	1,956,249
Default	—		—		676		466		376		1,487		—		—		3,005
Total residential real estate	$	557,643	$	426,721	$	197,214	$	96,155	$	97,204	$	584,317	$	—	$	—	$	1,959,254
Home equity
Pass	$	37,298	$	61,898	$	56,262	$	32,761	$	27,906	$	124,325	$	741,952	$	3,190	$	1,085,592
Default	—		—		—		122		—		285		1,171		—		1,578
Total home equity	$	37,298	$	61,898	$	56,262	$	32,883	$	27,906	$	124,610	$	743,123	$	3,190	$	1,087,170
Other consumer (3)
Pass	$	383	$	2,498	$	1,969	$	1,370	$	380	$	3,630	$	22,680	$	—	$	32,910
Default	—		14		—		—		—		11		1		—		26
Total other consumer	$	383	$	2,512	$	1,969	$	1,370	$	380	$	3,641	$	22,681	$	—	$	32,936
Total	$	2,347,498	$	2,617,135	$	1,958,359	$	1,065,396	$	1,069,133	$	2,968,288	$	1,666,287	$	8,254	$	13,700,350

(1)Loan origination dates in the tables above reflect the original origination date, or the date of a material modification of a previously originated loan.

(2)Loans originated as part of the Paycheck Protection Program ("PPP") established by the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") are included within commercial and industrial under the 2021 and 2020 vintage year and "pass" category as these loans are 100% guaranteed by the U.S. Government. Outstanding PPP loans totaled $5.1 million and $11.1 million as of September 30, 2023 and 2022, respectively.

(3)Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances and the associated gross write-offs.

    For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower. However, the Company does supplement performance data with current Fair Isaac Corporation (“FICO”) scores and Loan to Value (“LTV”) estimates. Current FICO data is purchased and appended to all consumer loans on a regular basis. In addition, automated valuation services and broker opinions of value are used to supplement original value data for the residential real estate and home equity portfolios, periodically. The following table shows the weighted average FICO scores and the weighted average combined LTV ratios at the dates indicated below:

	September 30 2023		December 31 2022
Residential real estate portfolio
FICO score (re-scored)(1)	753		753
LTV (re-valued)(2)	59.4	%	57.0	%
Home equity portfolio
FICO score (re-scored)(1)	770		771
LTV (re-valued)(2)(3)	43.1	%	41.3	%

(1)The average FICO scores at September 30, 2023 are based upon rescores from September 2023, as available for previously originated loans, or origination score data for loans booked in September 2023.  The average FICO scores at December 31, 2022 were based upon rescores available from December 2022, as available for previously originated loans, or origination score data for loans booked in December 2022.

(2)The combined LTV ratios for September 30, 2023 are based upon updated automated valuations as of August 2023, when available, and/or the most current valuation data available.  The combined LTV ratios for December 31, 2022 were based upon updated automated valuations as of November 2022, 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.

Unfunded Commitments

Management evaluates the need for a reserve on unfunded lending commitments in a manner consistent with loans held for investment. At September 30, 2023 and December 31, 2022, the Company's estimated reserve for unfunded commitments amounted to $1.5 million and $1.3 million, respectively.

Asset Quality

The Company’s philosophy toward managing its loan portfolios is predicated upon careful monitoring, which stresses early detection and response to delinquent and default situations. Delinquent loans are managed by a team of collection specialists and the Company seeks to make arrangements to resolve any delinquent or default situation over the shortest possible time frame.  As a general rule, loans 90 days or more past due with respect to principal or interest are classified as nonaccrual loans. The Company also may use discretion regarding other loans 90 days or more delinquent if the loan is well secured and/or in process of collection.

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

	Nonaccrual Balances
	September 30, 2023						December 31, 2022
	With Allowance for Credit Losses		Without Allowance for Credit Losses (2)		Total		With Allowance for Credit Losses		Without Allowance for Credit Losses (2)		Total (1)
	(Dollars in thousands)
Commercial and industrial	$	2,655	$	298	$	2,953	$	26,395	$	298	$	26,693
Commercial real estate	12,178		11,689		23,867		12,961		2,769		15,730
Small business	368		4		372		99		5		104
Residential real estate	8,493		—		8,493		8,479		—		8,479
Home equity	3,411		—		3,411		3,400		—		3,400
Other consumer	72		—		72		475		—		475
Total nonaccrual loans	$	27,177	$	11,991	$	39,168	$	51,809	$	3,072	$	54,881

(1)Nonaccrual balances at December 31, 2022 included $11.5 million of nonaccruing troubled debt restructures ("TDRs").

(2)Nonaccrual balances reported above without an allowance for credit losses are attributable to loans evaluated on an individual basis where it was determined that there was no risk of loss due to sufficient underlying collateral values.

It is the Company's policy to reverse any accrued interest when a loan is put on nonaccrual status, and, as such, the Company did not record any interest income on nonaccrual loans during the nine months ended September 30, 2023 and 2022, except for instances where nonaccrual loans were paid off in excess of the recorded book balance.

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

	September 30, 2023		December 31, 2022
	(Dollars in thousands)
Foreclosed residential real estate property held by the creditor	$	110	$	—
Recorded investment in mortgage loans collateralized by residential real estate property that are in the process of foreclosure	$	1,667	$	1,615

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

	September 30, 2023
	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	1	$	63	2	$	527	3	$	390	6	$	980	$	1,652,023	$	1,653,003	$	—
Commercial real estate	2	736		1	659		2	11,688		5	13,083		7,883,147		7,896,230		—
Commercial construction	1	7,499		—	—		—	—		1	7,499		957,943		965,442		—
Small business	7	91		4	69		11	204		22	364		244,971		245,335		—
Residential real estate	14	2,405		8	1,446		14	2,067		36	5,918		2,332,184		2,338,102		—
Home equity	11	919		4	185		17	1,431		32	2,535		1,093,020		1,095,555		—
Other consumer (1)	409	691		12	42		4	24		425	757		29,811		30,568		3
Total	445	$	12,404	31	$	2,928	51	$	15,804	527	$	31,136	$	14,193,099	$	14,224,235	$	3

	December 31, 2022
	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	3	$	49	1	$	175	3	$	23,726	7	$	23,950	$	1,611,153	$	1,635,103	$	—
Commercial real estate	7	2,052		5	4,971		3	2,977		15	10,000		7,750,230		7,760,230		—
Commercial construction	—	—		—	—		—	—		—	—		1,154,413		1,154,413		—
Small business	12	111		3	25		3	5		18	141		218,961		219,102		—
Residential real estate	8	1,654		8	1,105		16	1,725		32	4,484		2,031,040		2,035,524		—
Home equity	19	1,647		3	201		17	965		39	2,813		1,085,937		1,088,750		—
Other consumer (1)	432	421		15	83		4	28		451	532		35,021		35,553		—
Total	481	$	5,934	35	$	6,560	46	$	29,426	562	$	41,920	$	13,886,755	$	13,928,675	$	—

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

(2)The amount of net deferred costs on originated loans included in the ending balance was $6.1 million and $5.0 million at September 30, 2023 and December 31, 2022, respectively.

Loan Modifications

In the course of resolving nonperforming loans, the Company may choose to restructure the contractual terms of certain loans. The Company attempts to work out an alternative payment schedule with the borrower in order to avoid foreclosure actions. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and the restructuring of the loan may include principal forgiveness, interest rate reductions, term extensions, other-than-insignificant payment delays, and/or any combinations thereof. Any loans that are modified are reviewed by the Company to determine whether the modification is the direct result of a borrower experiencing financial difficulty, as the Company adopted the accounting and disclosure requirements for loan modifications made to borrowers experiencing financial difficulty and ceased to recognize TDRs effective January 1, 2023.

Loan modifications made to borrowers experiencing financial difficulty are evaluated on a collective basis with loans sharing similar risk characteristics in accordance with the current expected credit loss ("CECL") methodology. Under previously applicable accounting guidance, the Company determined the amount of allowance for credit losses on TDRs using a discounted cash flow analysis or a fair value of collateral approach if the loan was determined to be individually evaluated. This change in methodology did not have a material impact on the Company's allowance for credit loss estimate.

The following tables present the amortized cost basis of loans modified to borrowers experiencing financial difficulty during the periods presented, disaggregated by class of financing receivable and type of modification granted. The amortized cost basis amounts presented in these tables are as of the modification date and, in certain instances, may include multiple modifications of the same loan during the periods presented.

	Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
	Term Extension
	Amortized Cost Basis		% of Total Class of Financing Receivable	Amortized Cost Basis		% of Total Class of Financing Receivable
Loan Category	(Dollars in thousands)
Commercial and industrial	$	7,915	0.48%	$	16,108	0.97%
Commercial real estate	719		0.01%	19,180		0.24%
Commercial construction	—		—%	2,369		0.25%
Small business	—		—%	105		0.04%
Total	$	8,634		$	37,762
	Other-Than-Insignificant Payment Delay
	Amortized Cost Basis		% of Total Class of Financing Receivable	Amortized Cost Basis		% of Total Class of Financing Receivable
Loan Category	(Dollars in thousands)
Commercial and industrial	$	—	—%	$	2,805	0.17%
Commercial real estate	—		—%	7,013		0.09%
Total	$	—		$	9,818
	Combination - Interest Rate Reduction and Term Extension
	Amortized Cost Basis		% of Total Class of Financing Receivable	Amortized Cost Basis		% of Total Class of Financing Receivable
Loan Category	(Dollars in thousands)
Small business	$	—	—%	$	44	0.02%
Total	$	—		$	44
	Combination - Term Extension and Other-Than-Insignificant Payment Delay
	Amortized Cost Basis		% of Total Class of Financing Receivable	Amortized Cost Basis		% of Total Class of Financing Receivable
Loan Category	(Dollars in thousands)
Commercial and industrial	$	—	—%	$	1,965	0.12%
Commercial real estate	—		—%	6,857		0.09%
Total	$	—		$	8,822

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty for the periods indicated:

Three Months Ended September 30, 2023
Term Extension
Loan Category	Financial Effect
Commercial and industrial	Added a weighted-average contractual term of 2 months to the life of the loans
Commercial real estate	Added a weighted-average contractual term of 2.9 years to the life of the loans
Nine Months Ended September 30, 2023
Term Extension
Loan Category	Financial Effect
Commercial and industrial	Added a weighted-average contractual term of 2 months to the life of the loans
Commercial real estate	Added a weighted-average contractual term of 1.8 years to the life of the loans
Commercial construction	Added a weighted-average contractual term of 2 months to the life of the loans
Combination - Interest Rate Reduction and Term Extension
Loan Category	Financial Effect
Small business	Reduced weighted-average contractual interest rate from 10.00% to 6.50% and added a weighted-average contractual term of 4.3 years to the life of the loan

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the amortized cost and payment status of loans that have been modified in the last 12 months as of September 30, 2023:

	Payment Status (Amortized Cost Basis)
	Current		30-89 Days Past Due		90+ Days Past Due		Nonaccrual Status
	(Dollars in thousands)
Loan Type
Commercial and industrial	$	7,409	$	504	$	—	$	2,446
Commercial real estate	16,252		660		—		6,850
Small business	140		—		—		—
Total	$	23,801	$	1,164	$	—	$	9,296

The Company considers a loan to have defaulted when it reaches 90 days past due. During the three and nine months ended September 30, 2023, there was one commercial real estate loan that had a payment default and was modified within the previous 12 months as a combination term extension and other-than-insignificant payment delay, which had an amortized cost

basis of $6.7 million at September 30, 2022. During the nine months ended September 30, 2022 there were no TDRs modified during the previous 12 months that subsequently defaulted.

At September 30, 2023, the Company did not have any additional commitments to lend to borrowers experiencing financial difficulty who were party to a loan modification.

As previously noted, the Company adopted the accounting and disclosure requirements for loan modifications made to borrowers experiencing financial difficulty and ceased to recognize TDRs effective January 1, 2023. As such, the following table and related disclosures show the Company’s total TDRs and other pertinent TDR information as of December 31, 2022 and for the prior applicable periods:

	(Dollars in thousands)
TDRs on accrual status		$	11,278
TDRs on nonaccrual		11,520
Total TDRs		$	22,798

During the three and nine months ended September 30, 2022, one new TDR occurred within the commercial and industrial category and was comprised of an extended maturity modification, with a pre-modification outstanding recorded investment of $68,000 and a post-modification outstanding recorded investment of $67,000.

At December 31, 2022, the Company had additional commitments to lend to borrowers who had been a party to a TDR of $64,000.