Loans Receivable, Net

9 Months Ended

Sep. 30, 2023

Receivables [Abstract]

Loans Receivable, Net

Loans Receivable, Net

The following table presents loans receivable for each portfolio segment of loans:

.

(Dollars in thousands)	September 30, 2023		December 31, 2022
Residential real estate	$	1,653,777	1,446,008
Commercial real estate	10,292,446		9,797,047
Other commercial	2,916,785		2,799,668
Home equity	869,963		822,232
Other consumer	402,075		381,857
Loans receivable	16,135,046		15,246,812
Allowance for credit losses	(192,271)		(182,283)
Loans receivable, net	$	15,942,775	15,064,529
Net deferred origination (fees) costs included in loans receivable	$	(26,121)	(25,882)
Net purchase accounting (discounts) premiums included in loans receivable	$	(14,619)	(17,832)
Accrued interest receivable on loans	$	72,017	54,971

Substantially all of the Company’s loans receivable are with borrowers in the Company’s geographic market areas. Although the Company has a diversified loan portfolio, a substantial portion of borrowers’ ability to service their obligations is dependent upon the economic performance in the Company’s markets.

The Company had no significant purchases or sales of portfolio loans or reclassification of loans held for investment to loans held for sale during the nine months ended September 30, 2023.

Allowance for Credit Losses - Loans Receivable

The ACL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on loans. The following tables summarize the activity in the ACL:

	Three Months ended September 30, 2023
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Balance at beginning of period	$	189,385	20,847	129,598	21,797	11,053	6,090
Provision for credit losses	5,095		848	1,415	306	534	1,992
Charge-offs	(3,201)		—	(203)	(654)	—	(2,344)
Recoveries	992		2	42	322	37	589
Balance at end of period	$	192,271	21,697	130,852	21,771	11,624	6,327

	Three Months ended September 30, 2022
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Balance at beginning of period	$	172,963	16,959	121,259	21,079	9,333	4,333
Provision for credit losses	8,382		1,473	3,093	1,785	142	1,889
Charge-offs	(3,865)		(17)	—	(1,502)	—	(2,346)
Recoveries	711		7	47	2	87	568
Balance at end of period	$	178,191	18,422	124,399	21,364	9,562	4,444

	Nine Months ended September 30, 2023
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Balance at beginning of period	$	182,283	19,683	125,816	21,454	10,759	4,571
Provision for credit losses	16,609		2,021	5,369	1,845	881	6,493
Charge-offs	(10,284)		(20)	(619)	(2,895)	(102)	(6,648)
Recoveries	3,663		13	286	1,367	86	1,911
Balance at end of period	$	192,271	21,697	130,852	21,771	11,624	6,327

	Nine Months ended September 30, 2022
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Balance at beginning of period	$	172,665	16,458	117,901	24,703	8,566	5,037
Provision for credit losses	11,373		1,910	6,635	(1,763)	742	3,849
Charge-offs	(10,905)		(17)	(1,642)	(3,105)	(45)	(6,096)
Recoveries	5,058		71	1,505	1,529	299	1,654
Balance at end of period	$	178,191	18,422	124,399	21,364	9,562	4,444

During the nine months ended September 30, 2023, the ACL increased primarily as a result of loan portfolio growth.

The charge-offs in the other consumer loan segment is driven by deposit overdraft charge-offs which typically experience high charge-off rates and the amounts were comparable to historical trends. The other segments experience routine charge-offs and recoveries, with occasional large credit relationships charge-offs and recoveries that cause fluctuations from prior periods. During the nine months ended September 30, 2023, there have been no significant changes to the types of collateral securing collateral-dependent loans.

Aging Analysis

The following tables present an aging analysis of the recorded investment in loans:

	September 30, 2023
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Accruing loans 30-59 days past due	$	10,961	37	2,950	3,012	2,254	2,708
Accruing loans 60-89 days past due	4,292		735	598	782	1,452	725
Accruing loans 90 days or more past due	3,855		107	1,537	1,818	210	183
Non-accrual loans with no ACL	38,348		2,672	31,514	1,586	1,553	1,023
Non-accrual loans with ACL	32		—	—	15	—	17
Total past due and   non-accrual loans	57,488		3,551	36,599	7,213	5,469	4,656
Current loans receivable	16,077,558		1,650,226	10,255,847	2,909,572	864,494	397,419
Total loans receivable	$	16,135,046	1,653,777	10,292,446	2,916,785	869,963	402,075

 

	December 31, 2022
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Accruing loans 30-59 days past due	$	16,331	2,796	5,462	4,192	754	3,127
Accruing loans 60-89 days past due	4,636		142	2,865	297	529	803
Accruing loans 90 days or more past due	1,559		215	472	542	138	192
Non-accrual loans with no ACL	31,036		2,236	22,943	3,790	1,234	833
Non-accrual loans with ACL	115		—	—	56	—	59
Total past due and non-accrual loans	53,677		5,389	31,742	8,877	2,655	5,014
Current loans receivable	15,193,135		1,440,619	9,765,305	2,790,791	819,577	376,843
Total loans receivable	$	15,246,812	1,446,008	9,797,047	2,799,668	822,232	381,857

The Company had $108,000 and $801,000 of interest reversed on non-accrual loans during the nine months ended September 30, 2023 and September 30, 2022, respectively.

Collateral-Dependent Loans

A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The collateral on the loans is a significant portion of what secures the collateral-dependent loans and significant changes to the fair value of the collateral can impact the ACL. During 2023, there were no significant changes to collateral which secures the collateral-dependent loans, whether due to general deterioration or other reasons. The following table presents the amortized cost basis of collateral-dependent loans by collateral type:

	September 30, 2023
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Business assets	$	2,994	—	10	2,984	—	—
Residential real estate	7,234		2,605	2,617	147	1,550	315
Other real estate	46,579		39	45,519	630	31	360
Other	678		—	—	19	—	659
Total	$	57,485	2,644	48,146	3,780	1,581	1,334

	December 31, 2022
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Business assets	$	3,172	—	32	3,140	—	—
Residential real estate	5,061		2,407	990	318	1,201	145
Other real estate	33,125		49	32,333	300	75	368
Other	1,155		—	—	530	—	625
Total	$	42,513	2,456	33,355	4,288	1,276	1,138

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

On January 1, 2023, the Company adopted FASB ASU 2022-02, Financial Instruments - Credit Losses Troubled Debt Restructurings and Vintage Disclosures, which changed the disclosures and classifications of loans previously considered TDRs. The following disclosures for loan modifications made to borrowers experiencing financial difficulty (“MBFD”) are presented in accordance with ASC Topic 310, whereas prior periods are presented in accordance with the prior guidance as disclosed in the Company’s 2022 Annual Report Form 10-K. The following tables shows the amortized cost basis at the end of the period of the loans modified to borrowers experiencing financial difficulty by segment:

	At or for the Three Months ended September 30, 2023
	Term Extension and Payment Deferral				Combination - Term Extension and Interest Rate Reduction
(Dollars in thousands)	Amortized Cost Basis		% of Total Class of Financing Receivable		Amortized Cost Basis		% of Total Class of Financing Receivable		Total
Residential real estate	$	679	—	%	$	—	—	%	$	679
Commercial real estate	32,090		0.3	%	2,534		—	%	34,624
Other commercial	5,069		0.2	%	1,176		—	%	6,245
Home equity	—		—	%	—		—	%	—
Other consumer	102		—	%	550		0.1	%	652
Total	$	37,940			$	4,260			$	42,200

	At or for the Nine Months ended September 30, 2023
	Term Extension and Payment Deferral				Combination - Term Extension and Interest Rate Reduction
(Dollars in thousands)	Amortized Cost Basis		% of Total Class of Financing Receivable		Amortized Cost Basis		% of Total Class of Financing Receivable		Total
Residential real estate	$	679	—	%	$	—	—	%	$	679
Commercial real estate	37,880		0.4	%	2,869		—	%	40,749
Other commercial	10,398		0.4	%	1,199		—	%	11,597
Home equity	51		—	%	—		—	%	51
Other consumer	118		—	%	550		0.1	%	668
Total	$	49,126			$	4,618			$	53,744

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty by segment:

	At or for the Three Months ended September 30, 2023
	Weighted Average Interest Rate Reduction	Weighted Average Term Extension	Principal Forgiveness
Commercial real estate	0.17%	6 months	—
Other commercial	(0.04)%	7 months	—
Other consumer	(1.17)%	1 year, 10 months	—

	At or for the Nine Months ended September 30, 2023
	Weighted Average Interest Rate Reduction	Weighted Average Term Extension	Principal Forgiveness
Commercial real estate	0.19%	8 months	—
Other commercial	(0.04)%	19 months	—
Other consumer	(1.17)%	1 year, 10 months	$10 thousand

Loans that were modified in the twelve months that had a payment default during the period had an ending balance $25 thousand at September 30, 2023, and were included in other commercial loans.

The following table depicts the performance of loans that have been modified in the last twelve months by segment:

	September 30, 2023
(Dollars in thousands)	Total		Current	30-89 Days Past Due	90 Days or More Past Due	Non-Accrual
Residential real estate	$	679	679	—	—	—
Commercial real estate	40,749		39,196	—	—	1,553
Other commercial	11,597		10,081	926	25	565
Home equity	51		—	—	—	51
Other consumer	668		668	—	—	—
Total	$	53,744	50,624	926	25	2,169

Additional Disclosures

The implementation of FASB ASU 2022-02, Financial Instruments - Credit Losses Trouble Deb Restructings and Vintage Disclosures, eliminated the guidance and disclosure requirements related to TDRs. The following tables represent disclosures for the prior period that are no longer required as of January 1, 2023, but are included in this Form 10-Q since the Company is required to disclose comparative information with respected to restructured loans. A restructured loan was considered a TDR if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. The following tables present TDRs that occurred during the periods presented and the TDRs that occurred within the previous twelve months that subsequently defaulted during the periods presented:

	Three Months ended September 30, 2022
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
TDRs that occurred during the period
Number of loans	4		—	1	3	—	—
Pre-modification recorded balance	$	3,492	—	2,310	1,182	—	—
Post-modification recorded balance	$	4,223	—	2,906	1,317	—	—

	Nine Months ended September 30, 2022
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
TDRs that occurred during the period
Number of loans	9		1	3	5	—	—
Pre-modification recorded balance	$	5,511	31	4,242	1,238	—	—
Post-modification recorded balance	$	6,242	31	4,838	1,373	—	—

The modifications for the loans designated as TDRs during the nine months ended September 30, 2022 included one or a combination of the following: an extension of the maturity date, a reduction of the interest rate or a reduction in the principal amount.

In addition to the loans designated as TDRs during the prior periods provided in the preceding tables, the Company had TDRs with pre-modification loan balances of $1,227,000 for the nine months ended September 30, 2022, for which OREO was received in full or partial satisfaction of the loans. The majority of such TDRs were in Other Commercial for the nine months ended September 30, 2022. At December 31, 2022, the Company had $270,000, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process. At December 31, 2022, the Company did not have any OREO secured by residential real estate properties.

Credit Quality Indicators

The Company categorizes commercial real estate and other commercial loans into risk categories based on relevant information about the ability of borrowers to service their obligations. The following tables present the amortized cost in commercial real estate and other commercial loans based on the Company’s internal risk rating and the gross charge-offs. The date of a modification, renewal or extension of a loan is considered for the year of origination if the terms of the loan are as favorable to the Company as the terms are for a comparable loan to other borrowers with similar credit risk.

	September 30, 2023
(Dollars in thousands)	Gross Charge-Offs		Total	Pass	Special Mention	Substandard	Doubtful/ Loss
Commercial real estate loans
Term loans by origination year
2023 (year-to-date)	$	—	1,041,638	1,039,366	—	2,272	—
2022	305		2,598,013	2,589,388	—	8,625	—
2021	48		2,288,199	2,282,469	3,316	2,414	—
2020	—		1,164,141	1,158,471	—	5,670	—
2019	—		707,223	673,300	—	33,923	—
Prior	266		2,232,026	2,157,871	1,044	73,080	31
Revolving loans	—		261,206	260,843	1	361	1
Total	$	619	10,292,446	10,161,708	4,361	126,345	32
Other commercial loans
Term loans by origination year
2023 (year-to-date)	$	2,195	278,178	276,785	—	1,159	234
2022	386		601,009	596,414	3,626	968	1
2021	—		548,031	545,505	193	2,331	2
2020	40		258,604	253,866	—	4,736	2
2019	—		163,795	158,454	—	5,339	2
Prior	274		478,591	471,124	98	7,369	—
Revolving loans	—		588,577	575,621	7,547	5,409	—
Total	$	2,895	2,916,785	2,877,769	11,464	27,311	241

	December 31, 2022
(Dollars in thousands)	Total		Pass	Special Mention	Substandard	Doubtful/ Loss
Commercial real estate loans
Term loans by origination year
2022	$	2,584,831	2,578,558	—	6,273	—
2021	2,457,790		2,454,696	—	3,094	—
2020	1,274,852		1,269,254	—	5,598	—
2019	744,634		709,246	—	35,388	—
2018	658,268		634,316	—	23,952	—
Prior	1,851,965		1,787,941	1,416	62,576	32
Revolving loans	224,707		224,629	—	78	—
Total	$	9,797,047	9,658,640	1,416	136,959	32
Other commercial loans
Term loans by origination year
2022	$	603,393	599,498	371	3,469	55
2021	573,273		569,542	—	2,707	1,024
2020	308,555		304,179	—	4,373	3
2019	191,498		185,748	—	5,748	2
2018	140,122		135,727	—	4,394	1
Prior	404,319		398,523	114	5,322	360
Revolving loans	578,508		567,770	—	10,604	134
Total	$	2,799,668	2,760,987	485	36,617	1,579

For residential real estate, home equity and other consumer loan segments, the Company evaluates credit quality primarily on the aging status of the loan. The following tables present the amortized cost in residential real estate, home equity and other consumer loans based on payment performance:

	September 30, 2023
(Dollars in thousands)	Gross Charge-Offs		Total	Performing	30-89 Days Past Due	Non-Accrual and 90 Days or More Past Due
Residential real estate loans
Term loans by origination year
2023 (year-to-date)	$	—	163,944	163,944	—	—
2022	5		667,972	667,863	109	—
2021	—		512,704	512,704	—	—
2020	—		101,111	101,111	—	—
2019	—		42,480	42,480	—	—
Prior	15		164,869	161,427	663	2,779
Revolving loans	—		697	697	—	—
Total	$	20	1,653,777	1,650,226	772	2,779
Home equity loans
Term loans by origination year
2023 (year-to-date)	$	—	—	—	—	—
2022	—		—	—	—	—
2021	48		—	—	—	—
2020	50		23	23	—	—
2019	—		183	183	—	—
Prior	4		6,351	6,139	10	202
Revolving loans	—		863,406	858,149	3,696	1,561
Total	$	102	869,963	864,494	3,706	1,763
Other consumer loans
Term loans by origination year
2023 (year-to-date)	$	5,766	116,739	114,684	1,956	99
2022	544		108,500	107,466	682	352
2021	137		67,923	67,493	384	46
2020	76		34,794	34,680	100	14
2019	50		14,302	14,101	47	154
Prior	75		19,161	18,534	77	550
Revolving loans	—		40,656	40,461	187	8
Total	$	6,648	402,075	397,419	3,433	1,223

	December 31, 2022
(Dollars in thousands)	Total		Performing	30-89 Days Past Due	Non-Accrual and 90 Days or More Past Due
Residential real estate loans
Term loans by origination year
2022	$	543,469	543,023	446	—
2021	552,748		551,756	992	—
2020	116,810		116,543	136	131
2019	45,055		44,604	451	—
2018	37,252		36,993	—	259
Prior	149,292		146,318	913	2,061
Revolving loans	1,382		1,382	—	—
Total	$	1,446,008	1,440,619	2,938	2,451
Home equity loans
Term loans by origination year
2022	$	60	60	—	—
2021	77		77	—	—
2020	82		82	—	—
2019	225		195	—	30
2018	594		594	—	—
Prior	7,165		6,868	131	166
Revolving loans	814,029		811,701	1,152	1,176
Total	$	822,232	819,577	1,283	1,372
Other consumer loans
Term loans by origination year
2022	$	152,685	149,702	2,825	158
2021	94,210		93,749	421	40
2020	49,257		48,990	212	55
2019	20,432		20,166	96	170
2018	10,598		9,970	91	537
Prior	16,014		15,786	106	122
Revolving loans	38,661		38,480	179	2
Total	$	381,857	376,843	3,930	1,084