LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

12 Months Ended

Dec. 31, 2023

Receivables [Abstract]

Allowance for Credit Losses

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 periods indicated:

	Years Ended December 31, 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	(23,564)		(7,855)		—		(484)		—		(47)		(2,832)		(34,782)
Recoveries	145		—		—		92		—		62		1,036		1,335
Provision for credit losses	15,103		4,204		(3,079)		1,521		2,664		1,278		1,559		23,250
Ending balance (1)	$	19,243	$	74,148	$	7,683	$	3,963	$	23,637	$	12,797	$	751	$	142,222
	Years Ended December 31, 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)		—		(196)		—		(122)		(2,272)		(2,652)
Recoveries	49		333		—		149		—		121		997		1,649
Provision for credit losses	13,108		(5,958)		(1,554)		(627)		6,489		(6,481)		1,523		6,500
Ending balance (1)	$	27,559	$	77,799	$	10,762	$	2,834	$	20,973	$	11,504	$	988	$	152,419
	Year Ended December 31, 2021
	(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	$	21,086	$	45,009	$	5,397	$	5,095	$	14,275	$	22,060	$	470	$	113,392
Charge-offs	(3,474)		—		—		(219)		—		(69)		(1,182)		(4,944)
Recoveries	2,686		57		—		98		1		249		638		3,729
Initial reserve on PCD loans	166		14,397		1,019		—		429		163		366		16,540
Provision for credit losses	(6,062)		24,023		5,900		(1,466)		(221)		(4,417)		448		18,205
Ending balance (1)	$	14,402	$	83,486	$	12,316	$	3,508	$	14,484	$	17,986	$	740	$	146,922

(1)Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $60.2 million, $50.8 million, and $43.7 million at December 31, 2023, 2022, and 2021, respectively.

The balance of allowance for credit losses of $142.2 million at December 31, 2023 decreased by $10.2 million, or 6.7% from the prior year driven primarily by isolated charge-offs within the commercial portfolios, partially offset by general provisioning during the year.

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, non-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, as well as 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 as well as 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 the Company typically obtains 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 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 modify 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.

•Special Mention: 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.

•Substandard: 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.

•Doubtful: 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.

•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:

	December 31, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving converted to Term		Total (1)
	(Dollars in thousands)
Commercial and industrial
Pass	$	329,892	$	165,003	$	86,982	$	64,483	$	45,867	$	110,135	$	692,918	$	90	$	1,495,370
Special Mention	4,188		668		528		9,358		22		121		28,218		—		43,103

Substandard	1,867		1,329		902		110		917		3,660		32,728		—		41,513
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	$	335,947	$	167,000	$	88,412	$	73,951	$	46,806	$	113,916	$	753,864	$	90	$	1,579,986
Current-period gross write-offs	$	—	$	91	$	—	$	—	$	—	$	34	$	23,439	$	—	$	23,564
Commercial real estate
Pass	$	1,116,730	$	1,197,017	$	1,300,140	$	1,276,967	$	592,058	$	2,078,644	$	79,360	$	3,359	$	7,644,275
Special Mention	62,337		37,510		51,555		13,269		1,859		118,526		—		—		285,056
Substandard	37,302		18,321		22,844		4,556		7,881		12,923		—		—		103,827
Doubtful	—		—		—		—		8,350		—		—		—		8,350
Loss	—		—		—		—		—		—		—		—		—
Total commercial real estate	$	1,216,369	$	1,252,848	$	1,374,539	$	1,294,792	$	610,148	$	2,210,093	$	79,360	$	3,359	$	8,041,508
Current-period gross write-offs	$	—	$	5,072	$	—	$	—	$	2,783	$	—	$	—	$	—	$	7,855
Commercial construction
Pass	$	180,045	$	381,352	$	127,431	$	44,953	$	23,823	$	1,561	$	17,503	$	—	$	776,668
Special Mention	12,106		—		5,292		—		—		—		—		—		17,398
Substandard	10,955		26,146		18,419		—		—		—		—		—		55,520
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial construction	$	203,106	$	407,498	$	151,142	$	44,953	$	23,823	$	1,561	$	17,503	$	—	$	849,586
Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Small business
Pass	$	50,734	$	51,157	$	39,435	$	25,643	$	12,944	$	22,412	$	46,130	$	—	$	248,455
Special Mention	—		—		—		154		—		184		314		—		652
Substandard	530		282		90		475		—		669		803		—		2,849
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total small business	$	51,264	$	51,439	$	39,525	$	26,272	$	12,944	$	23,265	$	47,247	$	—	$	251,956
Current-period gross write-offs	$	—	$	—	$	54	$	40	$	—	$	—	$	390	$	—	$	484
Residential real estate
Pass	$	505,517	$	638,223	$	405,386	$	184,833	$	88,473	$	598,562	$	—	$	—	$	2,420,994
Default	—		—		—		—		854		2,906		—		—		3,760
Total residential real estate	$	505,517	$	638,223	$	405,386	$	184,833	$	89,327	$	601,468	$	—	$	—	$	2,424,754
Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Home equity
Pass	$	28,903	$	38,401	$	54,944	$	49,803	$	29,103	$	121,286	$	770,074	$	4,583	$	1,097,097
Default	—		—		—		—		—		63		324		142		529
Total home equity	$	28,903	$	38,401	$	54,944	$	49,803	$	29,103	$	121,349	$	770,398	$	4,725	$	1,097,626
Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	47	$	—	$	47
Other consumer (2)
Pass	$	639	$	263	$	1,178	$	706	$	256	$	1,835	$	27,769	$	—	$	32,646
Default	—		—		—		—		1		—		7		—		8
Total other consumer	$	639	$	263	$	1,178	$	706	$	257	$	1,835	$	27,776	$	—	$	32,654
Current-period gross write-offs	$	2,766	$	—	$	—	$	—	$	—	$	49	$	17	$	—	$	2,832
Total	$	2,341,745	$	2,555,672	$	2,115,126	$	1,675,310	$	812,408	$	3,073,487	$	1,696,148	$	8,174	$	14,278,070

Total current-period gross write-offs $ 2,766  $ 5,163  $ 54  $ 40  $ 2,783  $ 83  $ 23,893  $ —  $ 34,782 

	December 31, 2022
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving converted to Term		Total (1)
	(Dollars in thousands)
Commercial and industrial
Pass	$	350,036	$	137,832	$	113,020	$	59,936	$	79,391	$	18,197	$	815,128	$	3,165	$	1,576,705
Special Mention	4,836		925		1,023		1,744		467		623		17,122		—		26,740
Substandard	2,389		1,681		180		618		—		—		3,623		—		8,491
Doubtful	—		—		—		—		—		—		23,167		—		23,167
Loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	$	357,261	$	140,438	$	114,223	$	62,298	$	79,858	$	18,820	$	859,040	$	3,165	$	1,635,103
Commercial real estate
Pass	$	1,277,333	$	1,487,333	$	1,213,984	$	723,794	$	696,166	$	1,833,099	$	44,477	$	669	$	7,276,855
Special Mention	42,005		65,603		39,740		14,167		58,190		183,468		—		—		403,173
Substandard	42,629		3,843		4,774		4,066		3,553		21,162		—		—		80,027
Doubtful	—		—		—		—		—		175		—		—		175
Loss	—		—		—		—		—		—		—		—		—
Total commercial real estate	$	1,361,967	$	1,556,779	$	1,258,498	$	742,027	$	757,909	$	2,037,904	$	44,477	$	669	$	7,760,230
Commercial construction
Pass	$	504,932	$	327,194	$	169,838	$	56,693	$	3,135	$	1,588	$	23,122	$	951	$	1,087,453
Special Mention	33,000		1,775		3,347		—		—		—		—		—		38,122
Substandard	18,980		9,858		—		—		—		—		—		—		28,838
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial construction	$	556,912	$	338,827	$	173,185	$	56,693	$	3,135	$	1,588	$	23,122	$	951	$	1,154,413
Small business
Pass	$	54,876	$	44,811	$	31,051	$	16,588	$	9,882	$	18,891	$	39,434	$	—	$	215,533
Special Mention	—		152		373		366		191		117		686		—		1,885
Substandard	139		98		417		—		—		401		629		—		1,684
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total small business	$	55,015	$	45,061	$	31,841	$	16,954	$	10,073	$	19,409	$	40,749	$	—	$	219,102
Residential real estate
Pass	$	665,407	$	419,665	$	193,886	$	94,065	$	94,425	$	565,246	$	—	$	—	$	2,032,694
Default	—		—		729		158		—		1,943		—		—		2,830
Total residential real estate	$	665,407	$	419,665	$	194,615	$	94,223	$	94,425	$	567,189	$	—	$	—	$	2,035,524
Home equity
Pass	$	43,917	$	60,103	$	54,802	$	32,014	$	26,414	$	118,367	$	748,294	$	3,874	$	1,087,785
Default	—		—		—		122		—		83		760		—		965
Total home equity	$	43,917	$	60,103	$	54,802	$	32,136	$	26,414	$	118,450	$	749,054	$	3,874	$	1,088,750
Other consumer (2)
Pass	$	677	$	2,013	$	1,619	$	1,022	$	231	$	3,023	$	26,939	$	—	$	35,524
Default	—		—		—		18		—		11		—		—		29
Total other consumer	$	677	$	2,013	$	1,619	$	1,040	$	231	$	3,034	$	26,939	$	—	$	35,553
Total	$	3,041,156	$	2,562,886	$	1,828,783	$	1,005,371	$	972,045	$	2,766,394	$	1,743,381	$	8,659	$	13,928,675

(1)Loans origination dates in the tables above reflect the original date, or the date of a material modification of a previously originated loan, for both organic originations and acquired loans.

(2)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:

	December 31 2023		December 31 2022
Residential portfolio
FICO score (re-scored)(1)	754		753
LTV (re-valued)(2)	59.8	%	57.0	%
Home equity portfolio
FICO score (re-scored)(1)	770		771
LTV (re-valued)(2)(3)	43.3	%	41.3	%

(1)The average FICO scores at December 31, 2023 are based upon rescores from December 2023, as available for previously originated loans, or origination score data for loans booked in December 2023.  The average FICO scores at December 31, 2022 were based upon rescores 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 December 31, 2023 are based upon updated automated valuations as of November 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 December 31, 2023 and 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 at the dates indicated:

	Nonaccrual Balances
	December 31, 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	$	19,890	$	298	$	20,188	$	26,395	$	298	$	26,693
Commercial real estate	11,911		11,041		22,952		12,961		2,769		15,730
Small business	394		4		398		99		5		104
Residential real estate	7,634		—		7,634		8,479		—		8,479
Home equity	3,171		—		3,171		3,400		—		3,400
Other consumer	40		—		40		475		—		475
Total nonaccrual loans	$	43,040	$	11,343	$	54,383	$	51,809	$	3,072	$	54,881

(1)Nonaccrual balances at December 31, 2022 included $11.5 million of nonaccruing 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 for the years ended December 31, 2023, 2022, and 2021, except for instances where nonaccrual loans were paid off in excess of the recorded book balance. Total accrued interest reversed against interest income amounted to $1.0 million, $1.4 million, and $180,000 for the years ended December 31, 2023, 2022, and 2021, respectively.

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

	December 31, 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	$	1,697	$	1,615

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

	December 31, 2023
	30-59 days			60-89 days			90 days or more			Total Past Due					Total Financing Receivables (2)
	Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Current
	(Dollars in thousands)
Commercial and industrial	6	$	398	1	$	17,538	2	$	673	9	$	18,609	$	1,561,377	$	1,579,986
Commercial real estate	8	14,674		2	8,419		3	7,279		13	30,372		8,011,136		8,041,508
Commercial construction	—	—		—	—		—	—		—	—		849,586		849,586
Small business	6	400		1	20		6	243		13	663		251,293		251,956
Residential real estate	24	6,216		7	2,187		13	1,573		44	9,976		2,414,778		2,424,754
Home equity	23	1,640		4	1,238		10	529		37	3,407		1,094,219		1,097,626
Other consumer (1)	413	288		14	31		6	8		433	327		32,327		32,654
Total	480	$	23,616	29	$	29,433	40	$	10,305	549	$	63,354	$	14,214,716	$	14,278,070

	December 31, 2022
	30-59 days			60-89 days			90 days or more			Total Past Due					Total Financing Receivables (2)
	Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Current
	(Dollars in thousands)
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 $6.4 million at December 31, 2023, compared to net deferred fees of $5.0 million at December 31, 2022. Net unamortized discounts on acquired loans included in the ending balance was $8.6 million and $10.4 million at December 31, 2023 and 2022, respectively.

Loan Modifications

The following tables present the amortized cost basis as of December 31, 2023 of loans modified to borrowers experiencing financial difficulty during the twelve months then ended, disaggregated by class of financing receivable and type of modification granted:

	Year Ended December 31, 2023
	Term Extension
	Amortized Cost Basis		% of Total Class of Financing Receivable
	(Dollars in thousands)
Commercial and industrial	$	11,010	0.70%
Commercial real estate	17,530		0.22%
Small business	208		0.08%
Total	$	28,748
	Combination - Interest Rate Reduction and Term Extension
	Amortized Cost Basis		% of Total Class of Financing Receivable
	(Dollars in thousands)
Commercial and industrial	$	85	0.01%
Small business	$	38	0.02%
Total	$	123
	Combination - Term Extension and Other-Than-Insignificant Payment Delay
	Amortized Cost Basis		% of Total Class of Financing Receivable
	(Dollars in thousands)
Commercial and industrial	$	1,865	0.12%
Commercial real estate	6,505		0.08%
Total	$	8,370

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty for the year ended December 31, 2023:

Term Extension
	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 1.9 years to the life of the loans
Small business	Added a weighted-average contractual term of 4.7 years to the life of the loans
Interest Rate Reduction
	Financial Effect
Commercial and industrial	Reduced contractual rate on one loan from 10.00% to 7.00%
Small business	Reduced contractual rate on one loan from 10.00% to 6.50%

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 December 31, 2023:

	Current (1)		30-89 Days Past Due		90+ Days Past Due		Total
	(Dollars in thousands)
Commercial and industrial	$	12,585	$	—	$	375	$	12,960
Commercial real estate	23,899		—		136		24,035
Small business	246		—		—		246
Total	$	36,730	$	—	$	511	$	37,241

(1)Current category is inclusive of $8.4 million in nonaccrual loans which have yet to reach the six consecutive months of performance required to return to accruing status in accordance with the Company's accounting policy for nonaccrual loans

The Company considers a loan to have defaulted when it reaches 90 days past due. The table below shows the amortized cost basis of financing receivables modified during the twelve months ended December 31, 2023 that subsequently defaulted:

	Term Extension		Combination - Term Extension and Other Than Insignificant Payment Delay		Total
	(Dollars in thousands)
Commercial and industrial	$	374	$	—	$	374
Commercial real estate	136		6,505		6,641
Total	$	510	$	6,505	$	7,015

At December 31, 2023, the Company did not have any additional commitments to lend to borrowers experiencing financial difficulty who were party to a loan modification.

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, there are no current year TDRs and the prior period amounts are shown in the tables below.

The following table shows the Company’s total TDRs and other pertinent TDR information as of December 31, 2022:

	(Dollars in thousands)
TDRs on accrual status		$	11,278
TDRs on nonaccrual		11,520
Total TDRs		$	22,798
Additional commitments to lend to a borrower who has been a party to a TDR		$	64

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

	Year Ended December 31, 2022
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Commercial and industrial	4	$	3,466	$	3,465
Commercial real estate	1	7,850		7,850
Total (1)	5	$	11,316	$	11,315
	Year Ended December 31, 2021
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Commercial and industrial	1	$	14,148	$	14,148
Commercial real estate	5	3,964		3,964
Small business	2	189		189
Total (1)	8	$	18,301	$	18,301

(1)The pre-modification and post-modification balances represent the legal principal balance of the loan. Activity presented in the tables above includes $14.3 million of modifications on existing TDRs during the year ended December 31, 2021.

The following table shows the Company's post-modification balance of TDR's listed by type of modification for the periods indicated:

	Year Ended December 31
	2022		2021
	(Dollars in thousands)
Extended maturity	$	11,315	$	4,153
Combination rate and maturity	—		14,148
Total	$	11,315	$	18,301

During the twelve months ended December 31, 2022 and 2021, respectively, there were no loans modified during the prior twelve months that subsequently defaulted during the respective periods.