Loans

3 Months Ended

Mar. 31, 2019

Receivables [Abstract]

Loans

Loans

The period end loan composition was as follows:

	March 31, 2019(a)		December 31, 2018(a)
	($ in Thousands)
Commercial and industrial	$	7,587,597	$	7,398,044
Commercial real estate — owner occupied	932,393		920,443
Commercial and business lending	8,519,990		8,318,487
Commercial real estate — investor	3,809,253		3,751,554
Real estate construction	1,273,782		1,335,031
Commercial real estate lending	5,083,035		5,086,585
Total commercial	13,603,025		13,405,072
Residential mortgage	8,323,846		8,277,712
Home equity	868,886		894,473
Other consumer	352,602		363,171
Total consumer	9,545,333		9,535,357
Total loans	$	23,148,359	$	22,940,429

(a) Includes $5 million of purchased credit-impaired loans at March 31, 2019 and December 31, 2018.

The following table presents commercial and consumer loans by credit quality indicator at March 31, 2019:

	Pass		Special Mention		Potential Problem		Nonaccrual		Total
	($ in Thousands)
Commercial and industrial	$	7,371,790	$	30,657	$	111,772	$	73,379	$	7,587,597
Commercial real estate - owner occupied	874,152		8,422		48,929		890		932,393
Commercial and business lending	8,245,942		39,079		160,701		74,269		8,519,990
Commercial real estate - investor	3,698,679		39,184		70,613		776		3,809,253
Real estate construction	1,259,661		8,782		4,600		739		1,273,782
Commercial real estate lending	4,958,341		47,966		75,213		1,516		5,083,035
Total commercial	13,204,282		87,045		235,914		75,784		13,603,025
Residential mortgage	8,250,915		256		5,351		67,323		8,323,846
Home equity	855,603		891		91		12,300		868,886
Other consumer	351,734		719		—		149		352,602
Total consumer	9,458,252		1,866		5,443		79,772		9,545,333
Total loans	$	22,662,534	$	88,912	$	241,357	$	155,556	$	23,148,359

The following table presents commercial and consumer loans by credit quality indicator at December 31, 2018:

	Pass		Special Mention		Potential Problem		Nonaccrual		Total
	($ in Thousands)
Commercial and industrial	$	7,162,370	$	78,075	$	116,578	$	41,021	$	7,398,044
Commercial real estate - owner occupied	854,265		6,257		55,964		3,957		920,443
Commercial and business lending	8,016,635		84,332		172,542		44,978		8,318,487
Commercial real estate - investor	3,653,642		28,479		67,481		1,952		3,751,554
Real estate construction	1,321,447		8,771		3,834		979		1,335,031
Commercial real estate lending	4,975,089		37,249		71,315		2,931		5,086,585
Total commercial	12,991,724		121,582		243,856		47,909		13,405,072
Residential mortgage	8,203,729		434		5,975		67,574		8,277,712
Home equity	880,808		1,223		103		12,339		894,473
Other consumer	362,343		749		—		79		363,171
Total consumer	9,446,881		2,406		6,078		79,992		9,535,357
Total loans	$	22,438,605	$	123,988	$	249,935	$	127,901	$	22,940,429

Factors that are important to managing overall credit quality are sound loan underwriting and administration, systematic monitoring of existing loans and commitments, effective loan review on an ongoing basis, early identification of potential

problems, and appropriate allowance for loan losses, allowance for unfunded commitments, nonaccrual, and charge off policies.

For commercial loans, management has determined the pass credit quality indicator to include credits exhibiting acceptable financial statements, cash flow, and leverage. If any risk exists, it is mitigated by the loan structure, collateral, monitoring, or control. For consumer loans, performing loans include credits performing in accordance with the original contractual terms. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Special mention credits have potential weaknesses that deserve management’s attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the credit. Potential problem loans are considered inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged. These loans generally have a well-defined weakness, or weaknesses, that may jeopardize liquidation of the debt and are characterized by the distinct possibility the Corporation will sustain some loss if the deficiencies are not corrected. Lastly, management considers a loan to be impaired when it is probable the Corporation will be unable to collect all amounts due according to the original contractual terms of the note agreement, including both principal and interest. Management has determined commercial and consumer loan relationships in nonaccrual status or those with their terms restructured in a troubled debt restructuring meet this impaired loan definition. Commercial loans classified as special mention, potential problem, and nonaccrual are reviewed at a minimum on a quarterly basis, while pass and performing rated credits are reviewed on an annual basis or more frequently if the loan renewal is less than one year or if otherwise warranted.

The following table presents loans by past due status at March 31, 2019:

	Accruing
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual(a)		Total
	($ in Thousands)
Commercial and industrial	$	7,510,637	$	2,902	$	392	$	287	$	73,379	$	7,587,597
Commercial real estate - owner occupied	925,437		6,066		—		—		890		932,393
Commercial and business lending	8,436,074		8,968		392		287		74,269		8,519,990
Commercial real estate - investor	3,807,387		1,090		—		—		776		3,809,253
Real estate construction	1,266,270		6,727		46		—		739		1,273,782
Commercial real estate lending	5,073,657		7,816		46		—		1,516		5,083,035
Total commercial	13,509,731		16,785		439		287		75,784		13,603,025
Residential mortgage	8,243,248		13,018		256		—		67,323		8,323,846
Home equity	850,223		5,472		891		—		12,300		868,886
Other consumer	348,158		1,389		975		1,931		149		352,602
Total consumer	9,441,629		19,879		2,123		1,931		79,772		9,545,333
Total loans	$	22,951,360	$	36,663	$	2,562	$	2,218	$	155,556	$	23,148,359

(a) Of the total nonaccrual loans, $106 million, or 68%, were current with respect to payment at March 31, 2019.

The following table presents loans by past due status at December 31, 2018:

	Accruing
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual(a)		Total
	($ in Thousands)
Commercial and industrial	$	7,356,187	$	187	$	338	$	311	$	41,021	$	7,398,044
Commercial real estate - owner occupied	913,787		2,580		119		—		3,957		920,443
Commercial and business lending	8,269,974		2,767		457		311		44,978		8,318,487
Commercial real estate - investor	3,745,835		2,954		813		—		1,952		3,751,554
Real estate construction	1,333,722		330		—		—		979		1,335,031
Commercial real estate lending	5,079,557		3,284		813		—		2,931		5,086,585
Total commercial	13,349,531		6,051		1,270		311		47,909		13,405,072
Residential mortgage	8,200,432		9,272		434		—		67,574		8,277,712
Home equity	876,085		4,826		1,223		—		12,339		894,473
Other consumer	358,970		1,401		868		1,853		79		363,171
Total consumer	9,435,487		15,499		2,525		1,853		79,992		9,535,357
Total loans	$	22,785,019	$	21,550	$	3,795	$	2,165	$	127,901	$	22,940,429

(a) Of the total nonaccrual loans, $74 million, or 58%, were current with respect to payment at December 31, 2018.

The following table presents impaired loans individually evaluated under ASC Topic 310, excluding $5 million of purchased credit-impaired loans, at March 31, 2019:

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	($ in Thousands)
Loans with a related allowance
Commercial and industrial	$	44,810	$	48,448	$	10,876	$	36,288	$	317
Commercial real estate — owner occupied	2,104		2,111		50		2,122		27
Commercial and business lending	46,914		50,559		10,926		38,411		344
Commercial real estate — investor	1,700		1,799		26		792		17
Real estate construction	498		578		69		502		9
Commercial real estate lending	2,198		2,377		94		1,293		25
Total commercial	49,112		52,936		11,021		39,704		369
Residential mortgage	46,165		49,395		6,197		43,194		527
Home equity	10,792		11,815		3,348		10,015		128
Other consumer	1,158		1,161		119		1,159		—
Total consumer	58,116		62,370		9,664		54,368		655
Total loans(a)	$	107,228	$	115,307	$	20,684	$	94,072	$	1,025
Loans with no related allowance
Commercial and industrial	$	42,988	$	61,425	$	—	$	15,896	$	1,657
Commercial real estate — owner occupied	730		740		—		—		3
Commercial and business lending	43,718		62,166		—		15,896		1,660
Commercial real estate — investor	635		1,805		—		1,559		—
Real estate construction	—		—		—		—		—
Commercial real estate lending	635		1,805		—		1,559		—
Total commercial	44,353		63,970		—		17,455		1,660
Residential mortgage	8,182		8,429		—		7,885		48
Home equity	—		—		—		523		—
Other consumer	—		—		—		—		—
Total consumer	8,182		8,429		—		8,408		48
Total loans(a)	$	52,535	$	72,399	$	—	$	25,863	$	1,708
Total
Commercial and industrial	$	87,798	$	109,873	$	10,876	$	52,184	$	1,974
Commercial real estate — owner occupied	2,834		2,851		50		2,122		30
Commercial and business lending	90,632		112,724		10,926		54,307		2,004
Commercial real estate — investor	2,335		3,604		26		2,351		17
Real estate construction	498		578		69		502		9
Commercial real estate lending	2,833		4,182		94		2,852		25
Total commercial	93,465		116,906		11,021		57,159		2,029
Residential mortgage	54,348		57,824		6,197		51,079		574
Home equity	10,792		11,815		3,348		10,538		128
Other consumer	1,158		1,161		119		1,159		—
Total consumer	66,298		70,799		9,664		62,776		703
Total loans(a)	$	159,763	$	187,705	$	20,684	$	119,935	$	2,732

(a) The net recorded investment (defined as recorded investment, net of the related allowance) of the impaired loans represented 74% of the unpaid principal balance at March 31, 2019.

The following table presents impaired loans individually evaluated under ASC Topic 310, excluding $5 million of purchased credit-impaired loans, at December 31, 2018: 

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	($ in Thousands)
Loans with a related allowance
Commercial and industrial	$	40,747	$	42,131	$	5,721	$	52,461	$	1,167
Commercial real estate — owner occupied	2,080		2,087		24		2,179		104
Commercial and business lending	42,827		44,218		5,745		54,640		1,271
Commercial real estate — investor	799		805		28		827		38
Real estate construction	510		589		75		533		32
Commercial real estate lending	1,309		1,394		103		1,360		70
Total commercial	44,136		45,612		5,848		56,000		1,341
Residential mortgage	41,691		45,149		6,023		42,687		1,789
Home equity	9,601		10,539		3,312		10,209		566
Other consumer	1,181		1,183		121		1,184		3
Total consumer	52,473		56,871		9,456		54,080		2,358
Total loans(a)	$	96,609	$	102,483	$	15,304	$	110,079	$	3,699
Loans with no related allowance
Commercial and industrial	$	22,406	$	45,024	$	—	$	21,352	$	(344	)
Commercial real estate — owner occupied	3,772		4,823		—		3,975		—
Commercial and business lending	26,178		49,847		—		25,327		(344		)
Commercial real estate — investor	1,585		2,820		—		980		68
Real estate construction	—		—		—		—		—
Commercial real estate lending	1,585		2,820		—		980		68
Total commercial	27,763		52,667		—		26,307		(276		)
Residential mortgage	8,795		9,074		—		8,790		203
Home equity	523		542		—		530		—
Other consumer	—		—		—		—		—
Total consumer	9,318		9,616		—		9,320		203
Total loans(a)	$	37,081	$	62,283	$	—	$	35,627	$	(73	)
Total
Commercial and industrial	$	63,153	$	87,155	$	5,721	$	73,813	$	823
Commercial real estate — owner occupied	5,852		6,910		24		6,154		104
Commercial and business lending	69,005		94,065		5,745		79,967		927
Commercial real estate — investor	2,384		3,625		28		1,807		106
Real estate construction	510		589		75		533		32
Commercial real estate lending	2,894		4,214		103		2,340		138
Total commercial	71,899		98,279		5,848		82,307		1,065
Residential mortgage	50,486		54,223		6,023		51,477		1,992
Home equity	10,124		11,081		3,312		10,739		566
Other consumer	1,181		1,183		121		1,184		3
Total consumer	61,791		66,487		9,456		63,400		2,561
Total loans(a)	$	133,690	$	164,766	$	15,304	$	145,707	$	3,626

(a) The net recorded investment (defined as recorded investment, net of the related allowance) of the impaired loans represented 72% of the unpaid principal balance at December 31, 2018.

Troubled Debt Restructurings (“Restructured Loans”)

Loans are considered restructured loans if concessions have been granted to borrowers that are experiencing financial difficulty. The Corporation had a recorded investment of approximately $5 million in loans modified in troubled debt restructurings during the three months ended March 31, 2019, of which $1 million were in accrual status and approximately $4 million were in nonaccrual pending a sustained period of repayment.

The following table presents nonaccrual and performing restructured loans by loan portfolio:

	March 31, 2019				December 31, 2018
	Performing Restructured Loans		Nonaccrual Restructured Loans(a)		Performing Restructured Loans		Nonaccrual Restructured Loans(a)
	($ in Thousands)
Commercial and industrial	$	15,443	$	107	$	25,478	$	249
Commercial real estate — owner occupied	2,026		78		2,080		—
Commercial real estate — investor	1,700		—		799		933
Real estate construction	311		187		311		198
Residential mortgage	18,226		21,549		16,036		22,279
Home equity	7,688		2,247		7,385		2,627
Other consumer	1,154		5		1,174		6
Total restructured loans	$	46,548	$	24,172	$	53,263	$	26,292

(a) Nonaccrual restructured loans have been included within nonaccrual loans.

The following table provides the number of loans modified in a troubled debt restructuring by loan portfolio, the recorded investment and unpaid principal balance for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31, 2019					Three Months Ended March 31, 2018
	Number of Loans	Recorded Investment(a)		Unpaid Principal Balance(b)		Number of Loans	Recorded Investment(a)		Unpaid Principal Balance(b)
	($ in Thousands)
Commercial and industrial	—	$	—	$	—	2	$	92	$	92
Commercial real estate — owner occupied	1	78		78		—	—		—
Commercial real estate — investor	—	—		—		1	1,007		1,037
Residential mortgage	25	4,357		4,374		11	1,807		1,807
Home equity	13	293		312		17	1,044		1,060
Other consumer	1	11		11		2	8		11
Total loans modified	40	$	4,739	$	4,776	33	$	3,958	$	4,007

(a) Represents post-modification outstanding recorded investment.

(b) Represents pre-modification outstanding recorded investment.

Restructured loan modifications may include payment schedule modifications, interest rate concessions, maturity date extensions, modification of note structure (A/B Note), non-reaffirmed Chapter 7 bankruptcies, principal reduction, or some combination of these concessions. During the three months ended March 31, 2019, restructured loan modifications of commercial and industrial, commercial real estate, and real estate construction loans primarily included maturity date extensions and payment schedule modifications. Restructured loan modifications of home equity and residential mortgage loans primarily included maturity date extensions, interest rate concessions, non-reaffirmed Chapter 7 bankruptcies, or a combination of these concessions for the three months ended March 31, 2019.

The following table provides the number of loans modified in a troubled debt restructuring during the previous twelve months which subsequently defaulted during the three months ended March 31, 2019 and 2018 and the recorded investment in these restructured loans as of March 31, 2019 and 2018:

	Three Months Ended March 31, 2019			Three Months Ended March 31, 2018
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
	($ in Thousands)
Residential mortgage	5	$	613	4	$	467
Home equity	7	177		12	954
Total loans modified	12	$	790	16	$	1,421

All loans modified in a troubled debt restructuring are evaluated for impairment. The nature and extent of the impairment of restructured loans, including those which have experienced a subsequent payment default, are considered in the determination of an appropriate level of the allowance for loan losses.

Allowance for Credit Losses

The allowance for credit losses is comprised of the allowance for loan losses and the allowance for unfunded commitments. The level of the allowance for loan losses represents management’s estimate of an amount appropriate to provide for probable credit losses in the loan portfolio at the balance sheet date. The allowance for unfunded commitments is maintained at a level believed by management to be sufficient to absorb estimated probable losses related to unfunded credit facilities (including unfunded loan commitments and letters of credit) and is included in accrued expenses and other liabilities on the consolidated balance sheets. See Note 12 for additional information on the allowance for unfunded commitments.

The following table presents a summary of the changes in the allowance for loan losses by portfolio segment for the three months ended March 31, 2019:

($ in Thousands)	Commercial and industrial			Commercial real estate - owner occupied		Commercial real estate -  investor		Real estate construction			Residential mortgage			Home equity			Other consumer			Total
December 31, 2018	$	108,835		$	9,255	$	40,844	$	28,240		$	25,595		$	19,266		$	5,988		$	238,023
Charge offs	(13,216		)	—		—		(52		)	(652		)	(254		)	(1,312		)	(15,486		)
Recoveries	5,788			1,193		31		52			195			563			222			8,044
Net Charge offs	(7,428		)	1,193		31		—			(457		)	309			(1,090		)	(7,442		)
Provision for loan losses	7,525			131		289		(1,326		)	(1,567		)	(1,639		)	1,087			4,500
March 31, 2019	$	108,933		$	10,579	$	41,164	$	26,914		$	23,571		$	17,936		$	5,984		$	235,081
Allowance for loan losses
Individually evaluated for impairment	$	10,876		$	50	$	26	$	69		$	6,197		$	3,348		$	119		$	20,684
Collectively evaluated for impairment	98,057			10,529		41,138		26,845			17,373			14,588			5,866			214,396
Acquired and accounted for under ASC 310-30(a)	—			—		—		—			—			—			—			—
Total allowance for loan losses	$	108,933		$	10,579	$	41,164	$	26,914		$	23,571		$	17,936		$	5,984		$	235,081
Loans
Individually evaluated for impairment	$	87,798		$	2,834	$	2,335	$	498		$	54,347		$	10,793		$	1,158		$	159,763
Collectively evaluated for impairment	7,496,743			928,723		3,806,635		1,273,267			8,268,834			858,044			351,443			22,983,688
Acquired and accounted for under ASC 310-30(a)	3,057			836		283		18			664			49			—			4,907
Total loans	$	7,587,597		$	932,393	$	3,809,253	$	1,273,782		$	8,323,846		$	868,886		$	352,602		$	23,148,359

(a) Loans acquired in business combinations and accounted for under ASC topic 310-30 "Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality."

For comparison purposes, a summary of the changes in the allowance for loan losses by portfolio segment for the year ended December 31, 2018, was as follows:

($ in Thousands)	Commercial and industrial			Commercial real estate - owner occupied			Commercial real estate -  investor			Real estate construction			Residential mortgage			Home equity			Other consumer			Total
December 31, 2017	$	123,068		$	10,352		$	41,059		$	34,370		$	29,607		$	22,126		$	5,298		$	265,880
Charge offs	(30,837		)	(1,363		)	(7,914		)	(298		)	(1,627		)	(3,236		)	(5,261		)	(50,536		)
Recoveries	13,714			639			668			446			1,271			2,628			812			20,179
Net Charge offs	(17,123		)	(724		)	(7,246		)	149			(355		)	(608		)	(4,448		)	(30,358		)
Provision for loan losses	2,890			(373		)	7,031			(6,279		)	(3,657		)	(2,252		)	5,138			2,500
December 31, 2018	$	108,835		$	9,255		$	40,844		$	28,240		$	25,595		$	19,266		$	5,988		$	238,023
Allowance for loan losses
Individually evaluated for impairment	$	5,721		$	24		$	28		$	75		$	6,023		$	3,312		$	121		$	15,304
Collectively evaluated for impairment	103,114			9,231			40,816			28,165			19,572			15,954			5,867			222,719
Acquired and accounted for under ASC 310-30(a)	—			—			—			—			—			—			—			—
Total allowance for loan losses	$	108,835		$	9,255		$	40,844		$	28,240		$	25,595		$	19,266		$	5,988		$	238,023
Loans
Individually evaluated for impairment	$	63,153		$	5,852		$	2,384		$	510		$	50,486		$	10,124		$	1,181		$	133,690
Collectively evaluated for impairment	7,331,898			913,708			3,748,883			1,334,500			8,226,642			884,266			361,990			22,801,887
Acquired and accounted for under ASC 310-30(a)	2,994			883			287			21			584			83			—			4,853
Total loans	$	7,398,044		$	920,443		$	3,751,554		$	1,335,031		$	8,277,712		$	894,473		$	363,171		$	22,940,429

(a) Loans acquired in business combinations and accounted for under ASC Subtopic 310-30 "Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality."

The allowance for unfunded commitments is maintained at a level believed by management to be sufficient to absorb estimated probable losses related to unfunded credit facilities (including unfunded loan commitments and letters of credit) and is included in accrued expenses and other liabilities on the consolidated balance sheets. The following table presents a summary of the changes in the allowance for unfunded commitments:

	Three Months Ended March 31, 2019		Year Ended December 31, 2018
	($ in Thousands)
Allowance for Unfunded Commitments
Balance at beginning of period	$	24,336	$	24,400
Provision for unfunded commitments	1,500		(2,500		)
Amount recorded at acquisition	—		2,436
Balance at end of period	$	25,836	$	24,336

Loans Acquired in Acquisition

Loans acquired in a business combination are recorded at estimated fair value on their purchase date without a carryover of the related allowance for loan and lease losses. Acquired loans are segregated into two types:

• Performing loans are accounted for in accordance with ASC Topic 310-20 "Nonrefundable Fees and Other Costs" as these loans do not have evidence of credit deterioration since origination.

• Nonperforming loans are accounted for in accordance with ASC Topic 310-30 as they display significant credit deterioration since origination.

For performing loans the difference between the estimated fair value of the loans and the principal outstanding is accreted over the remaining life of the loans.

In accordance with ASC 310-30, purchased credit-impaired loans are pooled by loan type and the difference between contractually required payments at acquisition and the cash flows expected to be collected is referred to as the non-accretable difference. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan pools when there is a reasonable expectation

about the amount and timing of such cash flows. If a reasonable expectation on the amount or timing of such cash flows cannot be determined, accretion of the fair value discount for nonperforming loans will be recognized using the cost recovery method of accounting.

Changes in the accretable yield for loans acquired and accounted for under ASC Topic 310-30 were as follows for the three months ended March 31, 2019 and for the year ended December 31, 2018:

	Three Months Ended March 31, 2019			Year Ended December 31, 2018
	($ in Thousands)
Changes in Accretable Yield
Balance at beginning of period	$	1,482		$	—
Purchases	—			4,853
Accretion	(221		)	(4,954		)
Net reclassification from non-accretable yield	23			1,605
Other(a)	—			(22		)
Balance at end of period	$	1,285		$	1,482

(a) Primarily includes charge-offs which are accounted for under ASC Subtopic 310-30 "Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality."

For loans acquired, the fair value of purchased credit-impaired loans, on the acquisition date, was determined based on assigned risk ratings, expected cash flows and the fair value of loan collateral. The fair value of loans that were non-impaired was determined based on estimates of losses on defaults and other market factors.

At March 31, 2019, the Corporation had a total of approximately $18 million in net unaccreted purchase discount, of which approximately $16 million was related to performing loans and approximately $2 million was related to the Corporation's purchased credit-impaired loans.