Allowance for Credit Losses | Allowance for Credit LossesIn accordance with ASC 326, the Company is required to measure the allowance for credit losses of financial assets with similar risk characteristics on a collective or pooled basis. In considering the segmentation of financial assets measured at amortized cost into pools, the Company considered various risk characteristics in its analysis. Generally, the segmentation utilized represents the level at which the Company develops and documents its systematic methodology to determine the allowance for credit losses for the financial assets held at amortized cost, specifically the Company's loan portfolio and debt securities classified as held-to-maturity. Descriptions of the Company’s loan portfolio segments and major debt security types are included in Note (5) “Allowance for Credit Losses” of the 2022 Form 10-K. In accordance with ASC 326, the Company elected to not measure an allowance for credit losses on accrued interest. As such accrued interest is written off in a timely manner when deemed uncollectible. Any such write-off of accrued interest will reverse previously recognized interest income. In addition, the Company elected to not include accrued interest within presentation and disclosures of the carrying amount of financial assets held at amortized cost. This election is applicable to the various disclosures included within the Company's financial statements. Accrued interest related to financial assets held at amortized cost is included within accrued interest receivable and other assets The tables below show the aging of the Company’s loan portfolio by the segmentation noted above at June 30, 2023, December 31, 2022 and June 30, 2022: As of June 30, 2023 90+ days and still accruing 60-89 days past due 30-59 days past due (In thousands) Nonaccrual Current Total Loans Loan Balances (includes PCD): Commercial Commercial, industrial and other $ 40,460 $ 573 $ 22,808 $ 48,970 $ 12,487,660 $ 12,600,471 Commercial real estate Construction and development 12,536 — — 766 1,747,134 1,760,436 Non-construction 5,947 — 1,054 13,452 8,827,922 8,848,375 Home equity 1,361 110 316 601 334,586 336,974 Residential real estate, excluding early buy-out loans 13,652 — 7,243 872 2,433,625 2,455,392 Premium finance receivables Property and casualty insurance loans 19,583 12,785 22,670 32,751 6,674,909 6,762,698 Life insurance loans 6 1,667 3,729 90,117 7,943,754 8,039,273 Consumer and other 4 28 51 146 31,712 31,941 Total loans, net of unearned income, excluding early buy-out loans $ 93,549 $ 15,163 $ 57,871 $ 187,675 $ 40,481,302 $ 40,835,560 Early buy-out loans guaranteed by U.S. government agencies (1) 117 57,728 918 — 129,085 187,848 Total loans, net of unearned income $ 93,666 $ 72,891 $ 58,789 $ 187,675 $ 40,610,387 $ 41,023,408 As of December 31, 2022 90+ days and still accruing 60-89 days past due 30-59 days past due (In thousands) Nonaccrual Current Total Loans Loan Balances (includes PCD): Commercial Commercial, industrial and other $ 35,579 $ 462 $ 21,128 $ 56,696 $ 12,435,299 $ 12,549,164 Commercial real estate Construction and development 416 — 361 14,390 1,471,763 1,486,930 Non-construction 5,971 — 1,883 16,285 8,439,878 8,464,017 Home equity 1,487 — — 2,152 329,059 332,698 Residential real estate, excluding early buy-out loans 10,171 — 4,364 9,982 2,183,078 2,207,595 Premium finance receivables Property and casualty insurance loans 13,470 15,841 14,926 40,557 5,764,665 5,849,459 Life insurance loans — 17,245 5,260 68,725 7,999,768 8,090,998 Consumer and other 6 49 18 224 50,539 50,836 Total loans, net of unearned income, excluding early buy-out loans $ 67,100 $ 33,597 $ 47,940 $ 209,011 $ 38,674,049 $ 39,031,697 Early buy-out loans guaranteed by U.S. government agencies (1) 31,279 47,450 984 1,584 83,491 164,788 Total loans, net of unearned income $ 98,379 $ 81,047 $ 48,924 $ 210,595 $ 38,757,540 $ 39,196,485 (1) Early buy-out loans are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs, subject to indemnifications and insurance limits for certain loans. As of June 30, 2022 90+ days and still accruing 60-89 days past due 30-59 days past due (In thousands) Nonaccrual Current Total Loans Loan Balances (includes PCD): Commercial Commercial, industrial and other $ 32,436 $ — $ 16,789 $ 14,120 $ 11,983,760 $ 12,047,105 Commercial real estate Construction and development 889 — — 1,144 1,504,285 1,506,318 Non-construction 9,829 — 6,771 33,076 7,851,211 7,900,887 Home equity 1,084 — 154 930 323,658 325,826 Residential real estate, excluding early buy-out loans 8,330 — 534 147 1,956,040 1,965,051 Premium finance receivables Property and casualty insurance loans 13,303 6,447 15,299 23,313 5,483,085 5,541,447 Life insurance loans — — 1,796 65,155 7,541,482 7,608,433 Consumer and other 8 25 8 119 44,020 44,180 Total loans, net of unearned income, excluding early buy-out loans $ 65,879 $ 6,472 $ 41,351 $ 138,004 $ 36,687,541 $ 36,939,247 Early buy-out loans guaranteed by U.S. government agencies (1) 23,815 50,314 272 — 39,455 113,856 Total loans, net of unearned income $ 89,694 $ 56,786 $ 41,623 $ 138,004 $ 36,726,996 $ 37,053,103 (1) Early buy-out loans are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs, subject to indemnifications and insurance limits for certain loans. Credit Quality Indicators Credit quality indicators, specifically the Company's internal risk rating systems, reflect how the Company monitors credit losses and represents factors used by the Company when measuring the allowance for credit losses. Descriptions of the Company’s credit quality indicators by financial asset are included in Note (5) “Allowance for Credit Losses” of the 2022 Form 10-K. The table below shows the Company’s loan portfolio by credit quality indicator and year of origination at June 30, 2023: Year of Origination Revolving Total (In thousands) 2023 2022 2021 2020 2019 Prior Revolving to Term Loans Loan Balances: Commercial, industrial and other Pass $ 1,432,042 $ 2,302,642 $ 1,892,615 $ 842,764 $ 536,136 $ 1,091,823 $ 4,016,909 $ 3,612 $ 12,118,543 Special mention 4,953 44,081 72,155 5,689 18,040 6,820 94,418 1,328 247,484 Substandard accrual 3,046 36,007 39,858 3,177 9,549 41,282 60,683 382 193,984 Substandard nonaccrual/doubtful — 1,100 5,576 1,848 27,455 4,316 165 — 40,460 Total commercial, industrial and other $ 1,440,041 $ 2,383,830 $ 2,010,204 $ 853,478 $ 591,180 $ 1,144,241 $ 4,172,175 $ 5,322 $ 12,600,471 Construction and development Pass $ 137,138 $ 623,589 $ 479,051 $ 191,308 $ 110,298 $ 115,876 $ 16,549 $ 367 $ 1,674,176 Special mention — — 1,699 18,420 20,000 14,250 — — 54,369 Substandard accrual — 2,475 — — 3,464 13,416 — — 19,355 Substandard nonaccrual/doubtful — 4,190 — 8,248 — 98 — — 12,536 Total construction and development $ 137,138 $ 630,254 $ 480,750 $ 217,976 $ 133,762 $ 143,640 $ 16,549 $ 367 $ 1,760,436 Non-construction Pass $ 824,864 $ 1,857,052 $ 1,423,876 $ 972,603 $ 788,128 $ 2,549,042 $ 192,636 $ 1,415 $ 8,609,616 Special mention 2,479 5,088 28,536 — 26,357 63,570 1,439 — 127,469 Substandard accrual — 1,431 2,964 21,406 11,012 68,530 — — 105,343 Substandard nonaccrual/doubtful — — 25 — 586 5,336 — — 5,947 Total non-construction $ 827,343 $ 1,863,571 $ 1,455,401 $ 994,009 $ 826,083 $ 2,686,478 $ 194,075 $ 1,415 $ 8,848,375 Home equity Pass $ — $ — $ 63 $ — $ 93 $ 6,207 $ 317,066 $ — $ 323,429 Special mention — 230 — — 59 1,763 2,370 — 4,422 Substandard accrual — — — — — 6,596 1,038 128 7,762 Substandard nonaccrual/doubtful — — 77 115 18 937 98 116 1,361 Total home equity $ — $ 230 $ 140 $ 115 $ 170 $ 15,503 $ 320,572 $ 244 $ 336,974 Residential real estate Early buy-out loans guaranteed by U.S. government agencies $ — $ 24 $ 1,384 $ 9,713 $ 19,125 $ 157,602 $ — $ — $ 187,848 Pass 254,659 827,009 809,152 221,005 116,043 189,815 — — 2,417,683 Special mention 39 3,470 994 1,355 534 5,317 — — 11,709 Substandard accrual 583 2,562 4,377 1,165 260 3,401 — — 12,348 Substandard nonaccrual/doubtful — 912 1,206 744 2,497 8,293 — — 13,652 Total residential real estate $ 255,281 $ 833,977 $ 817,113 $ 233,982 $ 138,459 $ 364,428 $ — $ — $ 2,643,240 Premium finance receivables - property and casualty Pass $ 5,638,768 $ 919,368 $ 26,646 $ 4,012 $ 361 $ — $ — $ — $ 6,589,155 Special mention 130,056 17,308 255 10 — — — — 147,629 Substandard accrual 3,220 3,110 1 — — — — — 6,331 Substandard nonaccrual/doubtful 4,554 14,811 213 5 — — — — 19,583 Total premium finance receivables - property and casualty $ 5,776,598 $ 954,597 $ 27,115 $ 4,027 $ 361 $ — $ — $ — $ 6,762,698 Premium finance receivables - life Pass $ 125,737 $ 584,412 $ 875,181 $ 1,063,640 $ 949,935 $ 4,404,124 $ — $ — $ 8,003,029 Special mention — — 758 6,323 — 29,157 — — 36,238 Substandard accrual — — — — — — — — — Substandard nonaccrual/doubtful — 6 — — — — — — 6 Total premium finance receivables - life $ 125,737 $ 584,418 $ 875,939 $ 1,069,963 $ 949,935 $ 4,433,281 $ — $ — $ 8,039,273 Consumer and other Pass $ 2,344 $ 1,904 $ 1,077 $ 163 $ 399 $ — $ 25,849 $ — $ 31,736 Special mention 2 13 — — 2 127 1 — 145 Substandard accrual — 9 — — — 37 10 — 56 Substandard nonaccrual/doubtful — — 4 — — — — — 4 Total consumer and other $ 2,346 $ 1,926 $ 1,081 $ 163 $ 401 $ 164 $ 25,860 $ — $ 31,941 Total loans Early buy-out loans guaranteed by U.S. government agencies $ — $ 24 $ 1,384 $ 9,713 $ 19,125 $ 157,602 $ — $ — $ 187,848 Pass 8,415,552 7,115,976 5,507,661 3,295,495 2,501,393 8,356,887 4,569,009 5,394 39,767,367 Special mention 137,529 70,190 104,397 31,797 64,992 121,004 98,228 1,328 629,465 Substandard accrual 6,849 45,594 47,200 25,748 24,285 133,262 61,731 510 345,179 Substandard nonaccrual/doubtful 4,554 21,019 7,101 10,960 30,556 18,980 263 116 93,549 Total loans $ 8,564,484 $ 7,252,803 $ 5,667,743 $ 3,373,713 $ 2,640,351 $ 8,787,735 $ 4,729,231 $ 7,348 $ 41,023,408 Gross write offs Three months ended June 30, 2023 $ 4,963 $ 569 $ 1,055 $ 5,159 $ 5,014 $ 1,756 $ — $ — $ 18,516 Six months ended June 30, 2023 5,441 5,462 2,249 5,496 5,332 1,887 — — 25,867 Held-to-maturity debt securities The Company conducts an assessment of its investment securities, including those classified as held-to-maturity, at the time of purchase and on at least an annual basis to ensure such investment securities remain within appropriate levels of risk and continue to perform satisfactorily in fulfilling its obligations. The Company considers, among other factors, the nature of the securities and credit ratings or financial condition of the issuer. If available, the Company obtains a credit rating for issuers from a Nationally Recognized Statistical Rating Organization (“NRSRO”) for consideration. If no such rating is available for an issuer, the Company performs an internal rating based on the scale utilized within the loan portfolio as discussed above. For purposes of the table below, the Company has converted any issuer rating from an NRSRO into the Company’s internal ratings based on Investment Policy and review by the Company’s management. As of June 30, 2023 Year of Origination Total (In thousands) 2023 2022 2021 2020 2019 Prior Balance Amortized Cost Balances: U.S. government agencies 1-4 internal grade $ — $ 160,000 $ 147,806 $ 25,000 $ 4,000 $ 2,798 $ 339,604 5-7 internal grade — 8-10 internal grade — Total U.S. government agencies $ — $ 160,000 $ 147,806 $ 25,000 $ 4,000 $ 2,798 $ 339,604 Municipal 1-4 internal grade $ 1,996 $ 1,041 $ 6,955 $ 264 $ 616 $ 165,256 $ 176,128 5-7 internal grade — — — — — — — 8-10 internal grade — — — — — — — Total municipal $ 1,996 $ 1,041 $ 6,955 $ 264 $ 616 $ 165,256 $ 176,128 Mortgage-backed securities 1-4 internal grade $ 5,065 $ 595,015 $ 2,391,178 $ — $ — $ — $ 2,991,258 5-7 internal grade — — — — — — — 8-10 internal grade — — — — — — — Total mortgage-backed securities $ 5,065 $ 595,015 $ 2,391,178 $ — $ — $ — $ 2,991,258 Corporate notes 1-4 internal grade $ — $ 14,964 $ — $ 6,008 $ 7,269 $ 29,648 $ 57,889 5-7 internal grade — — — — — — — 8-10 internal grade — — — — — — — Total corporate notes $ — $ 14,964 $ — $ 6,008 $ 7,269 $ 29,648 $ 57,889 Total held-to-maturity securities $ 3,564,879 Less: Allowance for credit losses (406) Held-to-maturity securities, net of allowance for credit losses $ 3,564,473 Measurement of Allowance for Credit Losses The Company's allowance for credit losses consists of the allowance for loan losses, the allowance for unfunded commitment losses and the allowance for held-to-maturity debt security losses. In accordance with ASC 326, the Company measures the allowance for credit losses at the time of origination or purchase of a financial asset, representing an estimate of lifetime expected credit losses on the related asset. When developing its estimate, the Company considers available information relevant to assessing the collectability of cash flows, from both internal and external sources. Historical credit loss experience is one input in the estimation process as well as inputs relevant to current conditions and reasonable and supportable forecasts. In considering past events, the Company considers the relevance, or lack thereof, of historical information due to changes in such things as financial asset underwriting or collection practices, and changes in portfolio mix due to changing business plans and strategies. In considering current conditions and forecasts, the Company considers both the current economic environment and the forecasted direction of the economic environment with emphasis on those factors deemed relevant to or driving changes in expected credit losses. As significant judgment is required, the review of the appropriateness of the allowance for credit losses is performed quarterly by various committees with participation by the Company's executive management. June 30, December 31, June 30, (In thousands) 2023 2022 2022 Allowance for loan losses $ 302,499 $ 270,173 $ 251,769 Allowance for unfunded lending-related commitments losses 84,881 87,275 60,340 Allowance for loan losses and unfunded lending-related commitments losses 387,380 357,448 312,109 Allowance for held-to-maturity securities losses 406 488 83 Allowance for credit losses $ 387,786 $ 357,936 $ 312,192 The allowance for credit losses is measured on a collective or pooled basis when similar risk characteristics exist, based upon the segmentation discussed above. The Company utilizes modeling methodologies that estimate lifetime credit loss rates on each pool, including methodologies estimating the probability of default and loss given default on specific segments. Historical credit loss history is adjusted for reasonable and supportable forecasts developed by the Company on a quantitative or qualitative basis and incorporates third party economic forecasts. Reasonable and supportable forecasts consider the macroeconomic factors that are most relevant to evaluating and predicting expected credit losses in the Company's financial assets. Currently, the Company utilizes an eight quarter forecast period using a single macroeconomic scenario provided by a third party and reviewed within the Company's governance structure. For periods beyond the ability to develop reasonable and supportable forecasts, the Company reverts to historical loss rates at an input level, straight-line over a four quarter reversion period. Expected credit losses are measured over the contractual term of the financial asset with consideration of expected prepayments. Expected extensions, renewals or modifications of the financial asset are considered when the expected extension, renewal or modification is contained within the existing agreement and is not unconditionally cancelable. The methodologies discussed above are applied to both current asset balances on the Company's Consolidated Statements of Condition and off-balance sheet commitments (i.e. unfunded lending-related commitments). Assets that do not share similar risk characteristics with a pool are assessed for the allowance for credit losses on an individual basis. These typically include assets experiencing financial difficulties, including assets rated as substandard nonaccrual and doubtful. If foreclosure is probable or the asset is considered collateral-dependent, expected credit losses are measured based upon the fair value of the underlying collateral adjusted for selling costs, if appropriate. Underlying collateral across the Company's segments consist primarily of real estate, land and construction assets as well as general business assets of the borrower. As of June 30, 2023, excluding loans carried at fair value, substandard nonaccrual loans totaling $23.5 million in carrying balance had no related allowance for credit losses. The Company does not measure an allowance for credit losses on accrued interest receivable balances because these balances are written off in a timely manner as a reduction to interest income when assets are placed on nonaccrual status. Loan portfolios A summary of activity in the allowance for credit losses, specifically for the loan portfolio (i.e. allowance for loan losses and allowance for unfunded commitment losses), for the three and six months ended June 30, 2023 and 2022 is as follows. Three months ended June 30, 2023 Commercial Real Estate Home Equity Residential Real Estate Premium Finance Receivables Consumer and Other Total Loans (In thousands) Commercial Allowance for credit losses at beginning of period $ 149,501 $ 194,780 $ 7,728 $ 11,434 $ 11,955 $ 400 $ 375,798 Other adjustments — — — — 41 — 41 Charge-offs (5,629) (8,124) — — (4,653) (110) (18,516) Recoveries 505 25 37 6 890 23 1,486 Provision for credit losses (1,235) 29,015 (798) 812 813 (36) 28,571 Allowance for credit losses at period end $ 143,142 $ 215,696 $ 6,967 $ 12,252 $ 9,046 $ 277 $ 387,380 By measurement method: Individually measured $ 7,205 $ 5,819 $ — $ 106 $ — $ — $ 13,130 Collectively measured 135,937 209,877 6,967 12,146 9,046 277 374,250 Loans at period end Individually measured $ 40,460 $ 18,483 $ 1,361 $ 13,496 $ — $ 4 $ 73,804 Collectively measured 12,560,011 10,590,328 335,613 2,429,297 14,801,971 31,937 40,749,157 Loans held at fair value — — — 200,447 — — 200,447 Three months ended June 30, 2022 Commercial Commercial Real Estate Home Equity Residential Real Estate Premium Finance Receivables Consumer and Other Total Loans (In thousands) Allowance for credit losses at beginning of period $ 120,911 $ 144,906 $ 10,566 $ 9,429 $ 14,722 $ 634 $ 301,168 Other adjustments — — — — (56) — (56) Charge-offs (8,928) (40) (192) — (2,903) (253) (12,316) Recoveries 996 553 123 6 1,119 23 2,820 Provision for credit losses 29,940 (1,687) (3,507) 1,044 (5,380) 83 20,493 Allowance for credit losses at period end $ 142,919 $ 143,732 $ 6,990 $ 10,479 $ 7,502 $ 487 $ 312,109 By measurement method: Individually measured $ 5,674 $ 99 $ 105 $ 790 $ — $ — $ 6,668 Collectively measured 137,245 143,633 6,885 9,689 7,502 487 305,441 Loans at period end Individually measured $ 34,892 $ 20,377 $ 11,876 $ 18,333 $ — $ 79 $ 85,557 Collectively measured 12,012,213 9,386,828 313,950 1,937,817 13,149,880 44,101 36,844,789 Loans held at fair value — — — 122,757 — — 122,757 Six months ended June 30, 2023 Commercial Real Estate Home Equity Residential Real Estate Premium Finance Receivables Consumer and Other Total Loans (In thousands) Commercial Allowance for credit losses at beginning of period $ 142,769 $ 184,352 $ 7,573 $ 11,585 $ 10,671 $ 498 $ 357,448 Cumulative effect adjustment from the adoption of ASU 2016-13 111 1,356 (33) (692) — (1) 741 Other adjustments — — — — 45 — 45 Charge-offs (8,172) (8,129) — — (9,303) (263) (25,867) Recoveries 897 125 72 10 2,213 55 3,372 Provision for credit losses 7,537 37,992 (645) 1,349 5,420 (12) 51,641 Allowance for credit losses at period end $ 143,142 $ 215,696 $ 6,967 $ 12,252 $ 9,046 $ 277 $ 387,380 Six months ended June 30, 2022 Commercial Real Estate Home Equity Residential Real Estate Premium Finance Receivables Consumer and Other Total Loans (In thousands) Commercial Allowance for credit losses at beginning of period $ 119,307 $ 144,583 $ 10,699 $ 8,782 $ 15,859 $ 423 $ 299,653 Other adjustments — — — — (34) — (34) Charge-offs (10,342) (817) (389) (466) (4,581) (446) (17,041) Recoveries 1,534 585 216 11 2,595 72 5,013 Provision for credit losses 32,420 (619) (3,536) 2,152 (6,337) 438 24,518 Allowance for credit losses at period end $ 142,919 $ 143,732 $ 6,990 $ 10,479 $ 7,502 $ 487 $ 312,109 For the three and six months ended June 30, 2023, the Company recognized approximately $28.6 million and $51.6 million of provision for credit losses, respectively, related to loans and lending agreements. The provision for each period was primarily the result of loan growth as well as the Company’s macroeconomic forecasts of key model inputs, most notably, Baa corporate credit spreads and the Commercial Real Estate Pricing Index (“CREPI”). Uncertainties remain regarding expected economic performance and macroeconomic forecasts utilized in the measurement of the allowance for credit losses as of June 30, 2023. Other key drivers of provision for credit losses in these portfolios include, but are not limited to, stable loan risk rating migration. Net charge-offs in the three and six month periods ending June 30, 2023, totaled $17.0 million and $22.5 million, respectively. Held-to-maturity debt securities The allowance for credit losses on the Company’s held-to-maturity debt securities is presented as a reduction to the amortized cost basis of held-to-maturity securities on the Company's Consolidated Statements of Condition. For the three and six month period ended June 30, 2023, the Company recognized approximately $(57,000) and $(82,000), respectively, of provision for credit losses related to held-to-maturity securities. At June 30, 2023, the Company did not identify any losses within its portfolio that it would deem a credit loss and require additional measurement of an allowance for credit losses. Loan Modifications to Borrowers Experiencing Financial Difficulties The Company’s approach to restructuring or modifying loans is built on its credit risk rating system, which requires credit management personnel to assign a credit risk rating to each loan. In each case, the loan officer is responsible for recommending a credit risk rating for each loan and ensuring the credit risk ratings are appropriate. These credit risk ratings are then reviewed and approved by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors, including a borrower’s financial strength, cash flow coverage, collateral protection and guarantees. The Company’s credit risk rating scale is one through ten with higher scores indicating higher risk. In the case of loans rated six or worse following modification, the Company’s Managed Assets Division evaluates the loan and the credit risk rating and determines that the loan has been restructured to be reasonably assured of repayment and of performance according to the modified terms and is supported by a current, well-documented credit assessment of the borrower’s financial condition and prospects for repayment under the revised terms. Based on the Company’s credit risk rating system, it considers that borrowers whose credit risk rating is 5 or better are not experiencing financial difficulties. Restructurings may arise when, due to financial difficulties experienced by the borrower, the Company obtains through physical possession one or more collateral assets in satisfaction of all or part of an existing credit. Once possession is obtained, the Company reclassifies the appropriate portion of the remaining balance of the credit from loans to other real estate owned The table below presents a summary of the balance immediately following the modification of loans to borrowers experiencing financial difficulties during the three months and six months ended June 30, 2023: Three months ended June 30, 2023 (Dollars in thousands) Total (1) Percentage of Total Class of Loan Extension of Term (1) Reduction of Interest Rate (1) Delay in Contractual Payments (1) Extension of Term and Reduction of Interest Rate (1) Commercial Commercial, industrial and other $ 423 0.0 % $ — $ — $ — $ 423 Commercial real estate Non-construction 4,376 0.0 — — — 4,376 Home equity — — — — — — Residential real estate 264 0.0 143 — — 121 Premium finance receivables Property and casualty insurance loans — — — — — — Total loans $ 5,063 0.0 % $ 143 $ — $ — $ 4,920 Weighted average magnitude of modifications: Duration of extension of term 43 months Reduction of interest rate 207 bps Six months ended June 30, 2023 (Dollars in thousands) Total (1) Percentage of Total Class of Loan Extension of Term (1) Reduction of Interest Rate (1) Delay in Contractual Payments (1) Extension of Term and Reduction of Interest Rate (1) Commercial Commercial, industrial and other $ 37,897 0.3 % $ 1,938 $ 221 $ 35,265 $ 473 Commercial real estate Non-construction 5,709 0.1 467 827 39 4,376 Home equity 203 0.1 203 — — — Residential real estate 1,972 0.1 1,396 271 — 305 Premium finance receivables Property and casualty insurance loans 11 — 3 — — 8 Total loans $ 45,792 0.1 % $ 4,007 $ 1,319 $ 35,304 $ 5,162 Weighted average magnitude of modifications: Duration of extension of term 36 months Reduction of interest rate 223 bps Duration of delayed contractual payment terms 17 months (1) Balances represent the recorded investment in the loan at the time of the restructuring. The following table presents a summary of all loans for borrowers experiencing financial difficulties modified during the six months ended June 30, 2023, and such loans that were in payment default under the restructured terms during the respective periods below: (Dollars in thousands) As of June 30, 2023 Three Months Ended June 30, 2023 Six Months Ended Total (2) Payments in Default (1)(2) Payments in Default (1)(2) Commercial Commercial, industrial and other $ 37,897 $ 18,729 $ 18,729 Commercial real estate Non-construction 5,709 923 923 Home equity 203 203 203 Residential real estate 1,972 541 541 Premium finance receivables Property and casualty insurance loans 11 11 11 Total loans $ 45,792 $ 20,407 $ 20,407 (1) Modified loans considered to be in payment default are over 30 days past due subsequent to the restructuring. (2) Balances represent the recorded investment in the loan at the time of the restructuring. TDRs Reporting periods prior to the adoption of ASU 2022-02 as of January 1, 2023 present information on loan modifications representing TDRs under the prior accounting standards and related disclosure requirements. The table below presents a summary of the balance immediately following the modification of loans restructured during the three months ended June 30, 2022 which represent TDRs: Three months ended June 30, 2022 (Dollars in thousands) Total (1)(2) Extension at Below Market Terms (2) Reduction of Interest Rate (2) Modification to Interest-only Payments (2) Forgiveness of Debt (2) Count Balance Count Balance Count Balance Count Balance Count Balance Commercial Commercial, industrial and other 2 $ 186 2 $ 185 — $ — — $ — — $ — Commercial real estate Non-construction — — — — — — — — — — Residential real estate and other 14 2,235 14 2,235 10 1,805 — — — — Total loans 16 $ 2,421 16 $ 2,420 10 $ 1,805 — $ — — $ — Six months ended June 30, 2022 (Dollars in thousands) Total (1)(2) Extension at Below Market Terms (2) Reduction of Interest Rate (2) Modification to Interest-only Payments (2) Forgiveness of Debt (2) Count Balance Count Balance Count Balance Count Balance Count Balance Commercial Commercial, industrial and other 5 $ 468 4 $ 305 1 $ 85 2 $ 247 — $ — Commercial real estate Non-construction 2 1,907 1 1,178 1 1,178 2 1,907 — — Residential real estate and other 22 3,143 22 3,143 17 2,567 — — — — Total loans 29 $ 5,518 27 $ 4,626 19 $ 3,830 4 $ 2,154 — $ — (1) TDRs may have more than one modification representing a concession. As such, TDRs during the period may be represented in more than one of the categories noted above. (2) Balances represent the recorded investment in the loan at the time of the restructuring. During the three months ended June 30, 2022, 16 loans totaling $2.4 million were determined to be TDRs. Of these loans extended at below market terms, the weighted average extension had a term of 63 months for the quarter ended June 30, 2022. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately 96 basis points during the three months ended June 30, 2022. Additionally, no principal balances were forgiven during the quarter ended June 30, 2022. The following table presents a summary of all loans restructured in TDRs during the twelve months ended June 30, 2022 and such loans that were in payment default under the restructured terms during the respective periods below: (Dollars in thousands) As of June 30, 2022 Three Months Ended June 30, 2022 Six months ended June 30, 2022 Total (1)(3) Payments in Default (2)(3) Payments in Default (2)(3) Count Balance Count Balance Count Balance Commercial Commercial, industrial and other 16 $ 4,995 10 $ 4,469 11 $ 4,711 Commercial real estate Non-construction 2 1,907 — — — — Residential real estate and other 39 6,159 2 345 2 345 Total loans 57 $ 13,061 12 $ 4,814 13 $ 5,056 (1) Total TDRs represent all loans restructured om TDRs during the previous twelve months from the date indicated. (2) TDRs considered to be in payment default are over 30 days past due subsequent to the restructuring. (3) Balances represent the recorded investment in the loan at the time of the restructuring. |