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Recent Accounting Pronouncements
 12 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
Recent Accounting Pronouncements Recent Accounting Pronouncements
The following FASB Accounting Standards Updates (“ASUs”) are divided into pronouncements which have been adopted by the Corporation during the year ended December 31, 2020, and those which are not yet effective as of December 31, 2020 and have been evaluated or are currently being evaluated by management.

Adopted Pronouncements in 2020:

FASB ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments”

On January 1, 2020, the Corporation adopted ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (or CECL) methodology. This standard eliminates the Provision for Loan and Lease Losses and Allowance for Loan and Lease Losses line items and establishes the Provision for Credit Losses (“PCL”) and ACL line items.

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to OBS credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. In addition, ASC 326 made changes to the accounting for available for sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities management does not intend to sell or believes that it is more likely than not they will be required to sell.

The Corporation adopted ASC 326 using the modified retrospective approach method for all financial assets measured at amortized cost and OBS credit exposures. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. In conjunction with the adoption of CECL, the Corporation has revised its segmentation to align with the methodology applied in determining the ACL for loans and leases under CECL, which is based on federal call report codes which classify loans based on the primary collateral supporting the loan. Segmentation prior to the adoption of CECL was based on product type or purpose. As such, certain reclassifications were made to conform prior-period amounts to current period presentation.

Upon adoption, the Corporation's total ACL increased by $4.0 million, or 17.5%, which included an increase in ACL on loans and leases of $3.2 million and an increase in the reserve for OBS exposures, which is included within Other Liabilities on the Consolidated Balance Sheet, of $821 thousand. The increase in the total ACL resulted in a $2.8 million decrease to retained earnings, net of deferred taxes. The overall change in total ACL upon adoption was primarily due to the move to a life of loan reserve estimate as well as methodology changes required under CECL.

The Corporation adopted CECL using the prospective transition approach for financial assets purchased with credit deterioration (“PCD”) that were previously classified as purchased credit impaired (“PCI”) and accounted for under ASC 310-30. In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. On January 1, 2020, the amortized cost basis of the PCD assets were adjusted to reflect the addition of $481 thousand of the allowance for credit losses. The remaining noncredit discount (based on the adjusted amortized cost basis) will be accreted into interest income at the effective interest rate as of January 1, 2020.
The following table illustrates the adoption of CECL on January 1, 2020:
January 1, 2020
Pre-CECL
Adoption		Reclassification to CECL
Portfolio Segmentation		Pre-CECL
Adoption
Portfolio Segmentation		Post-CECL
Adoption
Portfolio Segmentation		Impact of
CECL
Adoption
Assets:
Loans and leases:
Commercial mortgage$1,913,430 $(1,913,430)$— $— $— 
CRE - nonowner-occupied— 1,337,167 1,337,167 1,337,464 297 
CRE - owner-occupied— 527,607 527,607 527,607 — 
Home equity lines of credit194,639 29,623 224,262 224,262 — 
Residential mortgage489,903 (489,903)— — — 
Residential mortgage - first liens— 706,690 706,690 706,843 153 
Residential mortgage - junior liens— 36,843 36,843 36,843 — 
Construction159,867 42,331 202,198 202,198 — 
Commercial & Industrial709,257 (277,030)432,227 432,248 21 
Consumer57,139 102 57,241 57,241 — 
Leases165,078 — 165,078 165,088 10 
Total loans and leases$3,689,313 $— $3,689,313 $3,689,794 $481 
ACL on loans and leases
Commercial mortgage$10,434 $(10,434)$— $— $— 
CRE - nonowner-occupied— 7,960 7,960 7,493 (467)
CRE - owner-occupied— 2,825 2,825 2,841 16 
Home equity lines of credit890 224 1,114 1,068 (46)
Residential mortgage1,538 (1,538)— — — 
Residential mortgage - first liens— 2,501 2,501 4,909 2,408 
Residential mortgage - junior liens— 338 338 417 79 
Construction997 233 1,230 871 (359)
Commercial & Industrial6,029 (2,194)3,835 3,676 (159)
Consumer353 85 438 578 140 
Leases2,361 — 2,361 3,955 1,594 
Total ACL on loans and leases$22,602 $— $22,602 $25,808 $3,206 
Liabilities:
ACL on OBS credit exposures$360 $— $360 $1,181 $821 
Total ACL$22,962 $— $22,962 $26,989 $4,027 
Retained earnings:
Total increase in ACL$4,027 
Balance sheet reclassification(481)
Total pre-tax impact3,546 
Tax effect(745)
Decrease to retained earnings$2,801 

FASB ASU 2017-04 (Topic 350), “Intangibles – Goodwill and Others”
 
Issued in January 2017, ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 became effective for the Corporation on January 1, 2020, and will follow such guidance in connection with our next annual impairment testing, or prior to that if any such change constitutes a triggering event outside of the quarter from when the annual goodwill impairment test is performed. Management does not expect the adoption of this ASU to have a material impact on our Consolidated Financial Statements and related disclosures.
FASB ASU 2018-13, “Fair Value Measurement Disclosure Framework”

Issued in August 2018, ASU 2018-13 modifies, adds and removes certain disclosures aimed to improve the overall usefulness of the disclosure requirements for fair value measurements. The guidance became effective for the Corporation on January 1, 2020 and the adoption of this ASU did not have a material impact on our Consolidated Financial Statements and related disclosures.

Pronouncements Not Effective as of December 31, 2020:
 
FASB ASU 2018-14 (Topic 715), "Compensation-Retirement Benefits - Defined Benefit Plans-General"

Issued in August 2018, the ASU 2018-14, modifies, adds and removes certain disclosures aimed to improve the overall usefulness of the disclosure requirements to financial statement users. The guidance is effective for annual periods beginning after December 15, 2020. Early adoption is permitted. Use of the retrospective method is required. Management does not expect the adoption of this ASU to have a material impact on our Consolidated Financial Statements and related disclosures.

FASB ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”

Issued in December 2019, ASU 2019-12 adds new guidance to simplify accounting for income taxes, changes the accounting for certain income tax transactions and makes minor improvements to the codification. The guidance is effective for annual periods beginning after December 15, 2020. Early adoption is permitted. Management does not expect the adoption of this ASU to have a material impact on our Consolidated Financial Statements and related disclosures.

FASB ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”

Issued in March 2020, ASU No. 2020-04 provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. Specifically, the guidance permits an entity, when certain criteria are met, to consider amendments to contracts made to comply with reference rate reform to meet the definition of a modification under GAAP. It further allows hedge accounting to be maintained and a one-time transfer or sale of qualifying held-to-maturity securities. The expedients and exceptions provided by the amendments are permitted to be adopted any time through December 31, 2022 and do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for certain optional expedients elected for certain hedging relationships existing as of December 31, 2022. The Corporation will apply the guidance to any contracts modifications made due to reference rate reform.