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ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY INFORMATION
 3 Months Ended
Mar. 31, 2023
Receivables [Abstract]  
ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY INFORMATION
7. ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY INFORMATION
The following tables provide the activity of allowance for credit losses and loan balances for the three months ended March 31, 2023 and 2022. The increase was primarily due to the impacts of the economic uncertainty and forecast and net loan growth.
(Dollars in thousands)
Commercial and Industrial(1)
Owner-occupied
Commercial		Commercial
Mortgages		Construction
Residential(2)
Consumer(3)
Total
Three months ended March 31, 2023
Allowance for credit losses
Beginning balance$59,394 $6,019 $21,473 $6,987 $4,668 $53,320 $151,861 
Charge-offs(9,462)— — — — (4,204)(13,666)
Recoveries1,216 5 2 530 43 159 1,955 
Provision11,561 32 8,639 2,155 616 6,009 29,012 
Ending balance$62,709 $6,056 $30,114 $9,672 $5,327 $55,284 $169,162 
Period-end allowance allocated to:
Loans evaluated on an individual basis$4,562 $91 $— $— $— $— $4,653 
Loans evaluated on a collective basis58,147 5,965 30,114 9,672 5,327 55,284 164,509 
Ending balance$62,709 $6,056 $30,114 $9,672 $5,327 $55,284 $169,162 
Period-end loan balances:
Loans evaluated on an individual basis
$22,443 $1,907 $7,343 $760 $6,522 $1,916 $40,891 
Loans evaluated on a collective basis3,122,883 1,844,754 3,465,740 1,022,951 779,538 1,866,511 12,102,377 
Ending balance
$3,145,326 $1,846,661 $3,473,083 $1,023,711 $786,060 $1,868,427 $12,143,268 
(1)Includes commercial small business leases.
(2)Period-end loan balance excludes reverse mortgages at fair value of $2.7 million.
(3)Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.

(Dollars in thousands)
Commercial and Industrial(1)
Owner -
occupied
Commercial		Commercial
Mortgages		Construction
Residential(2)
Consumer(3)
Total
Three months ended March 31, 2022
Allowance for credit losses
Beginning balance$49,967 $4,574 $11,623 $1,903 $3,352 $23,088 $94,507 
Initial allowance on acquired PCD loans22,614 595 2,684 71 61 78 26,103 
Charge-offs(3,639)(179)(37)— (186)(810)(4,851)
Recoveries601 126 121 — 386 366 1,600 
(Credit) provision(4)
(3,827)1,009 8,714 1,171 1,343 10,561 18,971 
Ending balance$65,716 $6,125 $23,105 $3,145 $4,956 $33,283 $136,330 
Period-end allowance allocated to:
Loans evaluated on an individual basis$6,987 $— $5 $— $— $— $6,992 
Loans evaluated on a collective basis58,729 6,125 23,100 3,145 4,956 33,283 129,338 
Ending balance$65,716 $6,125 $23,105 $3,145 $4,956 $33,283 $136,330 
Period-end loan balances:
Loans evaluated on an individual basis$27,735 $1,023 $7,106 $5,556 $6,424 $2,322 $50,166 
Loans evaluated on a collective basis2,956,392 1,871,804 3,354,136 918,334 798,902 1,379,794 11,279,362 
Ending balance
$2,984,127 $1,872,827 $3,361,242 $923,890 $805,326 $1,382,116 $11,329,528 
(1)Includes commercial small business leases.
(2)Period-end loan balance excludes reverse mortgages at fair value of $4.3 million.
(3)Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.
(4)Includes $23.5 million initial provision for credit losses on non-PCD loans.
The following tables show nonaccrual and past due loans presented at amortized cost at the date indicated:
March 31, 2023
(Dollars in thousands)30–89 Days
Past Due and
Still 
Accruing		Greater 
Than
90 Days
Past Due and
Still Accruing		Total Past
Due
And Still
Accruing		Accruing
Current
Balances		Nonaccrual Loans With No AllowanceNonaccrual
Loans With An Allowance		Total
Loans
Commercial and industrial(1)
$31,426 $915 $32,341 $3,092,524 $3,749 $16,712 $3,145,326 
Owner-occupied commercial5,326 304 5,630 1,840,450 377 204 1,846,661 
Commercial mortgages8,187 687 8,874 3,458,076 6,133 — 3,473,083 
Construction6,332 — 6,332 1,016,619 760 — 1,023,711 
Residential(2)
4,136 — 4,136 779,860 2,064 — 786,060 
Consumer(3)
11,361 11,659 23,020 1,843,389 2,018 — 1,868,427 
Total
$66,768 $13,565 $80,333 $12,030,918 $15,101 $16,916 $12,143,268 
% of Total Loans0.55 %0.11 %0.66 %99.08 %0.12 %0.14 %100 %
(1)Includes commercial small business leases.
(2)Residential accruing current balances excludes reverse mortgages at fair value of $2.7 million.
(3)Includes $15.5 million of delinquent, but still accruing, U.S. government-guaranteed student loans that carry little risk of credit loss.
December 31, 2022
(Dollars in thousands)30–89 Days
Past Due and
Still 
Accruing		Greater 
Than
90 Days
Past Due and
Still Accruing		Total Past
Due
And Still
Accruing		Accruing
Current
Balances
Nonaccrual Loans(1)
Total
Loans
Commercial and industrial(2)
$10,767 $311 $11,078 $3,116,478 $6,770 $3,134,326 
Owner-occupied commercial3,500 474 3,974 1,805,222 386 1,809,582 
Commercial mortgages2,137 237 2,374 3,343,551 5,159 3,351,084 
Construction— — — 1,038,906 5,143 1,044,049 
Residential(3)
2,563 — 2,563 753,703 3,199 759,465 
Consumer(4)
12,263 15,513 27,776 1,781,009 2,145 1,810,930 
Total(4)
$31,230 $16,535 $47,765 $11,838,869 $22,802 $11,909,436 
% of Total Loans0.26 %0.14 %0.40 %99.41 %0.19 %100 %
(1)There were no nonaccrual loans with an allowance as of December 31, 2022.
(2)Includes commercial small business leases.
(3)Residential accruing current balances excludes reverse mortgages, at fair value of $2.4 million.
(4)Includes $21.1 million of delinquent, but still accruing, U.S. government-guaranteed student loans that carry little risk of credit loss.
The following table presents the amortized cost basis of nonaccruing collateral-dependent loans by class at March 31, 2023 and December 31, 2022:
March 31, 2023December 31, 2022
(Dollars in thousands)Property
Equipment and other
Property
Equipment and other
Commercial and industrial(1)
$14,362 $6,100 $3,848 $2,922 
Owner-occupied commercial581 — 386 — 
Commercial mortgages6,133 — 5,159 — 
Construction760 — 5,143 — 
Residential(2)
2,064 — 3,199 — 
Consumer(3)
2,017 — 2,145 — 
Total$25,917 $6,100 $19,880 $2,922 
(1)Includes commercial small business leases.
(2)Excludes reverse mortgages at fair value.
(3)Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.
As of March 31, 2023, there were 42 residential loans and 14 commercial loans in the process of foreclosure. The total outstanding balance on these loans was $5.0 million and $3.2 million, respectively. As of December 31, 2022, there were 45 residential loans and 8 commercial loans in the process of foreclosure. The total outstanding balance on these loans was $6.7 million and $1.6 million, respectively. Loan workout and other real estate owned (OREO) (recoveries) expenses were $0.2 million during the three months ended March 31, 2023, and $0.3 million during three months ended March 31, 2022, respectively. Loan workout and OREO expenses are included in Loan workout and other credit costs on the unaudited Consolidated Statements of Income.
Credit Quality Indicators
Below is a description of each of the risk ratings for all commercial loans:
 
•Pass. These borrowers currently show no indication of deterioration or potential problems and their loans are considered fully collectible.
•Special Mention. These borrowers have potential weaknesses that deserve management’s close attention. Borrowers in this category may be experiencing adverse operating trends, for example, declining revenues or margins, high leverage, tight liquidity, or increasing inventory without increasing sales. These adverse trends can have a potential negative effect on the borrower’s repayment capacity. These assets are not adversely classified and do not expose the Bank to significant risk that would warrant a more severe rating. Borrowers in this category may also be experiencing significant management problems, pending litigation, or other structural credit weaknesses.
•Substandard or Lower. These borrowers have well-defined weaknesses that require extensive oversight by management. Borrowers in this category may exhibit one or more of the following: inadequate debt service coverage, unprofitable operations, insufficient liquidity, high leverage, and weak or inadequate capitalization. Relationships in this category are not adequately protected by the sound financial worth and paying capacity of the obligor or the collateral pledged on the loan, if any. A distinct possibility exists that the Bank will sustain some loss if the deficiencies are not corrected. In addition, some borrowers in this category could have the added characteristic that the possibility of loss is extremely high. Current circumstances in the credit relationship make collection or liquidation in full highly questionable. Such impending events include: perfecting liens on additional collateral, obtaining collateral valuations, an acquisition or liquidation preceding, proposed merger, or refinancing plan.
Residential and Consumer Loans
The residential and consumer loan portfolios are monitored on an ongoing basis using delinquency information and loan type as credit quality indicators. These credit quality indicators are assessed in the aggregate in these relatively homogeneous portfolios. Loans that are greater than 90 days past due are generally considered nonperforming and placed on nonaccrual status.
The following tables provide an analysis of loans by portfolio segment based on the credit quality indicators used to determine the allowance for credit losses as of March 31, 2023.
Term Loans Amortized Cost Basis by Origination Year
20232022202120202019
Prior
Revolving loans amortized cost basisRevolving loans converted to termTotal
(Dollars in thousands)
Commercial and industrial(1):
Risk Rating
Pass$238,635 $1,101,434 $413,315 $348,477 $169,308 $425,851 $8,520 $242,258 $2,947,798 
Special mention649 4,971 26,581 — 576 1,808 — 2,060 36,645 
Substandard or Lower19,542 32,951 15,912 11,249 32,297 42,405 — 6,527 160,883 
$258,826 $1,139,356 $455,808 $359,726 $202,181 $470,064 $8,520 $250,845 $3,145,326 
Current-period gross writeoffs$— $1,212 $2,080 $730 $2,751 $2,689 $— $— $9,462 
Owner-occupied commercial:
Risk Rating
Pass$83,580 $288,375 $309,616 $237,499 $216,853 $430,955 $— $164,335 $1,731,213 
Special mention— 528 4,404 — 8,793 1,577 — 3,321 18,623 
Substandard or Lower— 16,559 — 16,890 2,911 41,785 — 18,680 96,825 
$83,580 $305,462 $314,020 $254,389 $228,557 $474,317 $— $186,336 $1,846,661 
Current-period gross writeoffs$— $— $— $— $— $— $— $— $— 
Commercial mortgages:
Risk Rating
Pass$191,579 $549,453 $589,605 $521,373 $527,593 $792,548 $— $236,709 $3,408,860 
Special mention9,255 — 73 — 6,040 2,519 — — 17,887 
Substandard or Lower10,542 17,862 1,210 10,074 1,637 4,448 — 563 46,336 
$211,376 $567,315 $590,888 $531,447 $535,270 $799,515 $— $237,272 $3,473,083 
Current-period gross writeoffs$— $— $— $— $— $— $— $— $— 
Construction:
Risk Rating
Pass$145,220 $416,869 $271,834 $72,292 $3,474 $29,816 $— $74,513 $1,014,018 
Special mention— — — — — — — — — 
Substandard or Lower— — — 8,933 178 — — 582 9,693 
$145,220 $416,869 $271,834 $81,225 $3,652 $29,816 $— $75,095 $1,023,711 
Current-period gross writeoffs$— $— $— $— $— $— $— $— $— 
Residential(2):
Risk Rating
Performing$41,181 $70,948 $106,801 $59,743 $35,200 $465,665 $— $— $779,538 
Nonperforming— 171 848 495 994 4,014 — — 6,522 
$41,181 $71,119 $107,649 $60,238 $36,194 $469,679 $— $— $786,060 
Current-period gross writeoffs$— $— $— $— $— $— $— $— $— 
Consumer(3):
Risk Rating
Performing$47,316 $660,218 $184,966 $120,731 $51,660 $267,492 $529,652 $4,476 $1,866,511 
Nonperforming— — — 237 45 131 1,179 324 1,916 
$47,316 $660,218 $184,966 $120,968 $51,705 $267,623 $530,831 $4,800 $1,868,427 
Current-period gross writeoffs$220 $2,793 $994 $59 $79 $59 $— $— $4,204 
(1)Includes commercial small business leases.
(2)Excludes reverse mortgages at fair value.
(3)Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.
The following tables provide an analysis of loans by portfolio segment based on the credit quality indicators used to determine the allowance for credit losses, as of December 31, 2022.
Term Loans Amortized Cost Basis by Origination Year
20222021202020192018
Prior
Revolving loans amortized cost basisRevolving loans converted to termTotal
(Dollars in thousands)
Commercial and industrial(1):
Risk Rating
Pass$1,123,803 $501,761 $387,225 $211,310 $153,713 $276,588 $8,099 $250,486 $2,912,985 
Special mention28,672 27,689 7,585 9,451 347 1,010 — 2,596 77,350 
Substandard or Lower32,362 16,162 6,943 37,534 37,133 6,768 — 7,089 143,991 
$1,184,837 $545,612 $401,753 $258,295 $191,193 $284,366 $8,099 $260,171 $3,134,326 
Owner-occupied commercial:
Risk Rating
Pass$280,898 $325,388 $258,177 $226,717 $106,390 $363,420 $— $132,942 $1,693,932 
Special mention17,376 — — — — 2,166 — 3,351 22,893 
Substandard or Lower2,981 1,500 23,284 4,401 11,864 35,311 — 13,416 92,757 
$301,255 $326,888 $281,461 $231,118 $118,254 $400,897 $— $149,709 $1,809,582 
Commercial mortgages:
Risk Rating
Pass$516,783 $600,226 $526,312 $549,788 $276,414 $594,024 $— $210,550 $3,274,097 
Special mention1,450 75 3,848 6,121 9,596 32,014 — — 53,104 
Substandard or Lower1,861 1,210 12,552 2,909 3,573 1,209 — 569 23,883 
$520,094 $601,511 $542,712 $558,818 $289,583 $627,247 $— $211,119 $3,351,084 
Construction:
Risk Rating
Pass$448,581 $299,619 $115,667 $9,319 $26,553 $7,539 $— $122,116 $1,029,394 
Special mention— — — — — — — 581 581 
Substandard or Lower— 4,200 8,930 183 — — — 761 14,074 
$448,581 $303,819 $124,597 $9,502 $26,553 $7,539 $— $123,458 $1,044,049 
Residential(2):
Risk Rating
Performing$64,500 $110,508 $60,625 $36,118 $45,859 $434,175 $— $— $751,785 
Nonperforming— 729 502 999 1,218 4,232 — — 7,680 
$64,500 $111,237 $61,127 $37,117 $47,077 $438,407 $— $— $759,465 
Consumer(3):
Risk Rating
Performing$595,158 $195,397 $126,456 $54,449 $220,039 $71,478 $540,308 $5,232 $1,808,517 
Nonperforming— — 350 — 479 — 1,255 329 2,413 
$595,158 $195,397 $126,806 $54,449 $220,518 $71,478 $541,563 $5,561 $1,810,930 
(1)Includes commercial small business leases.
(2)Excludes reverse mortgages at fair value.
(3)Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.
Troubled Loans
The following table shows the amortized cost basis at the end of the reporting period of troubled loans, disaggregated by portfolio segment and type of concession granted.
March 31, 2023
(Dollars in thousands)Term ExtensionMore-Than-Insignificant Payment DelayCombination- Term Extension and Payment DelayCombination- Term Extension and Interest Rate ReductionCombination - Payment Delay and Interest Rate ReductionTotal% of Total Loan Category
Commercial and industrial(1)
$12,837 $— $— $— $— $12,837 0.41 %
Owner-occupied commercial— — — 148 — 148 0.01 %
Commercial mortgages2,057 — — — — 2,057 0.06 %
Consumer(2)
803 162 1,777 158 119 3,019 0.16 %
Total$15,697 $162 $1,777 $306 $119 $18,061 0.15 %
(1)Includes commercial small business leases.
(2)Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.
The following table describes the financial effect of the modifications made to troubled loans as of March 31, 2023:
Term Extension(1)
Interest Rate Reduction(2)
More-Than-Insignificant Payment Delay(3)
Commercial and industrial0.91—%—
Owner-occupied commercial0.962.56—
Commercial mortgages0.48——
Consumer6.712.0777.76%
(1)Represents the weighted-average increase in the life of modified loans measured in years, which reduces monthly payment amounts for borrowers.
(2)Represents the weighted-average decrease in the contractual interest rate on the modified loans.
(3)Represents the weighted-average percentage monthly payments were reduced during the period of modification.
As of March 31, 2023, the Company had commitments to extend credit of $1.5 million to borrowers experiencing financial difficulty whose terms had been modified.
Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. There were no loans that had a payment default during the period and were modified in the 12 months before default to borrowers experiencing financial difficulty.
The Company closely monitors the performance of troubled loans to understand the effectiveness of its modification efforts. The following table shows the performance of loans that have been modified in the last 12 months:
March 31, 2023
(Dollars in thousands)30-89 Days Past Due and Still Accruing90+ Days Past Due and Still AccruingAccruing Current BalancesTotal
Commercial and industrial(1)
$— $— $12,837 $12,837 
Owner-occupied commercial— — 148 148 
Commercial mortgages1,016 1,041 — 2,057 
Consumer(2)
25 — 2,994 3,019 
Total$1,041 $1,041 $15,979 $18,061 
(1)Includes commercial small business leases.
(2)Includes home equity lines of credit, installment loans, unsecured lines of credit and education loans.
Troubled Debt Restructurings (TDRs) under ASC 326 for periods prior to adoption of ASU 2022-02
The following table presents the balance of TDRs as of the indicated date:
(Dollars in thousands)December 31, 2022
Performing TDRs$19,737 
Nonperforming TDRs2,006 
Total TDRs$21,743 
Approximately $0.6 million in related reserves have been established for these loans at December 31, 2022.
The following table presents information regarding the types of loan modifications made for the three months ended March 31, 2022:
Three months ended March 31, 2022
Contractual payment reduction and term extensionMaturity Date ExtensionDischarged in bankruptcy
Other(1)
Total
Commercial and industrial1 — — — 1 
Residential1 — — — 1 
Consumer1 — 2 1 4 
Total3 — 2 1 6 
(1)Other includes interest rate reduction, forbearance, and interest only payments.
Principal balances are generally not forgiven when a loan is modified as a TDR. Nonaccruing restructured loans remain in nonaccrual status until there has been a period of sustained repayment performance, which is typically six months, and repayment is reasonably assured. The following table presents loans modified as TDRs during the three months ended March 31, 2022.
Three Months Ended March 31, 2022
(Dollars in thousands)Pre ModificationPost Modification
Commercial$(8)$(8)
Residential$6 $6 
Consumer258 258 
Total(1)(2)
$256 $256 
(1)During the three months ended March 31, 2022 the TDRs set forth in the table above resulted in a $0.1 million increase in the allowance for credit losses, and no additional charge-offs. During the three months ended March 31, 2022, no TDRs defaulted that had received troubled debt modification during the past twelve months.
(2)The TDRs set forth in the table above did not occur as a result of the loan forbearance program under the CARES Act.