| Loans and Allowance for Loan Losses | Loans and Allowance for Loan Losses Loans The following table provides a summary of the Company’s loan portfolio as of the dates indicated: At September 30, At December 31, 2020 2019 (In thousands) Commercial and industrial $ 2,177,216 $ 1,642,184 Commercial real estate 3,652,312 3,535,441 Commercial construction 297,508 273,774 Business banking 1,251,573 771,498 Residential real estate 1,373,237 1,428,630 Consumer home equity 890,771 933,088 Other consumer 301,624 402,431 Gross loans before unamortized premiums, unearned discounts and deferred fees 9,944,241 8,987,046 Allowance for credit losses (115,432) (82,297) Unamortized premiums, net of unearned discounts and deferred fees (32,747) (5,565) Loans after the allowance for credit losses, unamortized premiums, unearned discounts and deferred fees $ 9,796,062 $ 8,899,184 There are no other loan categories that exceed 10% of total loans not already reflected in the preceding table. The Company’s lending activities are conducted principally in the New England area with the exception of its Shared National Credit Program (“SNC Program”) portfolio. The Company participates in the SNC Program in an effort to improve its industry and geographical diversification. The SNC Program portfolio is included in the Company’s commercial and industrial, commercial real estate and commercial construction portfolios. The SNC Program portfolio is defined as loan syndications with exposure over $100 million and with three or more lenders participating. Most loans originated by the Company are either collateralized by real estate or other assets or guaranteed by federal and local governmental authorities. The ability and willingness of the single-family residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of overall economic activity within the borrowers’ geographic areas and real estate values. The ability and willingness of commercial real estate, commercial and industrial, and construction loan borrowers to honor their repayment commitments is generally dependent on the health of the real estate economy in the borrowers’ geographic areas and the general economy. Loans Pledged as Collateral The carrying value of loans pledged to secure advances from the Federal Home Loan Bank ("FHLB") of Boston ("FHLBB") were $2.4 billion and $1.5 billion at September 30, 2020 and December 31, 2019, respectively. The balance of funds borrowed from the FHLB were $14.8 million and $19.0 million at September 30, 2020 and December 31, 2019, respectively. The carrying value of loans pledged to secure advances from the Federal Reserve Bank ("FRB") were $0.9 billion and $1.0 billion at September 30, 2020 and December 31, 2019, respectively. There were no funds borrowed from the FRB outstanding at September 30, 2020 and December 31, 2019. Serviced Loans At September 30, 2020 and December 31, 2019, mortgage loans partially or wholly-owned by others and serviced by the Company amounted to approximately $14.4 million and $15.6 million, respectively. Allowance for Loan Losses The allowance for loan losses is established to provide for probable losses incurred in the Company’s loan portfolio at the balance sheet date and is established through a provision for loan losses charged to net income. Charge-offs, net of recoveries, are charged directly to the allowance. Commercial and residential loans are charged-off in the period in which they are deemed uncollectible. Delinquent loans in these product types are subject to ongoing review and analysis to determine if a charge-off in the current period is appropriate. For consumer loans, policies and procedures exist that require charge-off consideration upon a certain triggering event depending on the product type. The following table summarizes the changes in the allowance for loan losses for the periods indicated: For the Three Months Ended For the Nine Months Ended 2020 2019 2020 2019 (In thousands) Balance at the beginning of period $ 116,636 $ 82,662 $ 82,297 $ 80,655 Loans charged off (2,418) (2,241) (6,025) (6,559) Recoveries 514 2,601 1,260 4,426 Provision charged to expense 700 — 37,900 4,500 Balance at end of period $ 115,432 $ 83,022 $ 115,432 $ 83,022 The following tables summarize changes in the allowance for loan losses by loan category and bifurcates the amount of allowance allocated to each loan category based on collective impairment analysis and loans evaluated individually for impairment: For the Three Months Ended September 30, 2020 Commercial Commercial Commercial Business Residential Consumer Other Other Total (In Thousands) Allowance for Loan Losses: Beginning balance $ 33,229 $ 54,228 $ 4,816 $ 9,805 $ 6,569 $ 3,875 $ 3,762 $ 352 $ 116,636 Charge-offs (140) — — (1,179) — (22) (1,077) — (2,418) Recoveries 306 4 — 91 43 31 39 — 514 Provision (benefit) (3,281) 1,350 (540) 2,711 (261) (76) 834 (37) 700 Ending balance $ 30,114 $ 55,582 $ 4,276 $ 11,428 $ 6,351 $ 3,808 $ 3,558 $ 315 $ 115,432 For the Three Months Ended September 30, 2019 Commercial Commercial Commercial Business Residential Consumer Other Other Total (In Thousands) Allowance for Loan Losses: Beginning balance $ 20,829 $ 33,586 $ 4,762 $ 8,054 $ 6,800 $ 4,097 $ 4,324 $ 210 $ 82,662 Charge-offs — — — (1,630) (3) (67) (541) — (2,241) Recoveries 2,170 175 — 172 17 16 51 — 2,601 Provision (benefit) (2,730) 1,698 (1,526) 1,725 (164) 18 438 541 — Ending balance $ 20,269 $ 35,459 $ 3,236 $ 8,321 $ 6,650 $ 4,064 $ 4,272 $ 751 $ 83,022 For the Nine Months Ended September 30, 2020 Commercial Commercial Commercial Business Residential Consumer Other Other Total (In thousands) Allowance for loan losses: Beginning balance $ 20,919 $ 34,730 $ 3,424 $ 8,260 $ 6,380 $ 4,027 $ 4,173 $ 384 $ 82,297 Charge-offs (167) (24) — (3,714) — (495) (1,625) — (6,025) Recoveries 686 10 — 245 116 53 150 — 1,260 Provision (benefit) 8,676 20,866 852 6,637 (145) 223 860 (69) 37,900 Ending balance $ 30,114 $ 55,582 $ 4,276 $ 11,428 $ 6,351 $ 3,808 $ 3,558 $ 315 $ 115,432 Ending balance: individually evaluated for impairment $ 3,687 $ 397 $ — $ 1,018 $ 1,507 $ 263 $ — $ — $ 6,872 Ending balance: acquired with deteriorated credit quality $ 1,732 $ 1,066 $ — $ — $ 293 $ — $ — $ — $ 3,091 Ending balance: collectively evaluated for impairment $ 24,695 $ 54,119 $ 4,276 $ 10,410 $ 4,551 $ 3,545 $ 3,558 $ 315 $ 105,469 Loans ending balance: Individually evaluated for impairment $ 16,390 $ 6,456 $ 280 $ 19,123 $ 26,958 $ 4,552 $ 54 $ — $ 73,813 Acquired with deteriorated credit quality 3,569 4,420 — — 3,432 — — — 11,421 Collectively evaluated for impairment 2,157,257 3,641,436 297,228 1,232,450 1,342,847 886,219 301,570 — 9,859,007 Total loans by group $ 2,177,216 $ 3,652,312 $ 297,508 $ 1,251,573 $ 1,373,237 $ 890,771 $ 301,624 $ — $ 9,944,241 For the Nine Months Ended September 30, 2019 Commercial Commercial Commercial Business Residential Consumer Other Other Total (In thousands) Allowance for loan losses: Beginning balance $ 19,321 $ 32,400 $ 4,606 $ 8,167 $ 7,059 $ 4,113 $ 4,600 $ 389 $ 80,655 Charge-offs (272) — — (4,440) (66) (191) (1,590) — (6,559) Recoveries 3,538 10 — 492 88 44 254 — 4,426 Provision (benefit) (2,318) 3,049 (1,370) 4,102 (431) 98 1,008 362 4,500 Ending balance $ 20,269 $ 35,459 $ 3,236 $ 8,321 $ 6,650 $ 4,064 $ 4,272 $ 751 $ 83,022 Ending balance: individually evaluated for impairment $ 2,827 $ 40 $ — $ 630 $ 1,532 $ 266 $ — $ — $ 5,295 Ending balance: acquired with deteriorated credit quality $ 227 $ 85 $ — $ — $ 213 $ — $ — $ — $ 525 Ending balance: collectively evaluated for impairment $ 17,215 $ 35,334 $ 3,236 $ 7,691 $ 4,905 $ 3,798 $ 4,272 $ 751 $ 77,202 Loans ending balance: Individually evaluated for impairment $ 33,827 $ 9,095 $ — $ 11,836 $ 26,891 $ 4,458 $ — $ — $ 86,107 Acquired with deteriorated credit quality 3,596 7,298 — — 3,397 — — — 14,291 Collectively evaluated for impairment 1,621,701 3,471,390 256,053 739,771 1,408,372 949,971 436,217 — 8,883,475 Total loans by group $ 1,659,124 $ 3,487,783 $ 256,053 $ 751,607 $ 1,438,660 $ 954,429 $ 436,217 $ — $ 8,983,873 Management uses a methodology to systematically estimate the amount of loss incurred in the portfolio. Commercial real estate, commercial and industrial, commercial construction and business banking loans are evaluated using a loan rating system, historical losses and other factors which form the basis for estimating incurred losses. Portfolios of more homogeneous populations of loans, including residential mortgages and consumer loans, are analyzed as groups taking into account delinquency ratios, historical loss experience and charge-offs. For the purpose of estimating the allowance for loan losses, management segregates the loan portfolio into the categories noted in the above tables. Each of these loan categories possesses unique risk characteristics such as the purpose of the loan, repayment source, and collateral. These characteristics are considered when determining the appropriate level of the allowance for each category. Some examples of these risk characteristics unique to each loan category include: Commercial Lending Commercial and industrial : The primary risk associated with commercial and industrial loans is the ability of borrowers to achieve business results consistent with those projected at origination. Collateral frequently consists of a first lien position on business assets including, but not limited to accounts receivable, inventory, airplanes and equipment. The primary repayment source is operating cash flow and, secondarily, the liquidation of assets. The Company often obtains personal guarantees from individuals holding material ownership in the borrowing entity. Commercial real estate : Collateral values are established by independent third-party appraisals and evaluations. Primary repayment sources include operating income generated by the real estate, permanent debt refinancing, sale of the real estate and, secondarily, by liquidation of the collateral. The Company often obtains personal guarantees from individuals holding material ownership in the borrowing entity. Commercial construction : These loans are generally considered to present a higher degree of risk than other real estate loans and may be affected by a variety of factors, such as adverse changes in interest rates and the borrower’s ability to control costs and adhere to time schedules. Construction loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with the completed project. Construction loan repayment is substantially dependent on the ability of the borrower to complete the project and obtain permanent financing. Business banking : These loans are typically secured by all business assets or commercial real estate. Business banking originations include traditionally underwritten loans as well as partially automated scored loans. Business banking scored loans are determined by utilizing the Company’s proprietary decision matrix that has a number of quantitative factors including, but not limited to, a guarantor’s credit score, industry risk, and time in business. The Company also engages in Small Business Association (“SBA”) lending, both in the business banking and commercial banking divisions. The SBA guarantees reduce the Company’s loss due to default and are considered a credit enhancement to the loan structure. Residential Lending Residential real estate : These loans are made to borrowers who demonstrate the ability to repay principal and interest on a monthly basis. Underwriting considerations include, among others, income sources and their reliability, willingness to repay as evidenced by credit repayment history, financial resources (including cash reserves) and the value of the collateral. The Company maintains policy standards for minimum credit score and cash reserves and maximum loan to value consistent with a “prime” portfolio. Collateral consists of mortgage liens on 1-4 family residential dwellings. The Company does not originate or purchase sub-prime or other high-risk loans. Residential loans are originated either for sale to investors or retained in the Company’s loan portfolio. Decisions about whether to sell or retain residential loans are made based on the interest rate characteristics, pricing for loans in the secondary mortgage market, competitive factors and the Company’s capital needs. Consumer Lending Consumer home equity : Home equity lines of credit are granted for ten years with monthly interest-only repayment requirements. Full principal repayment is required at the end of the ten-year draw period. Home equity loans are term loans that require the monthly payment of principal and interest such that the loan will be fully amortized at maturity. Underwriting considerations are materially consistent with those utilized in residential real estate. Collateral consists of a senior or subordinate lien on owner-occupied residential property. Other consumer : The Company’s policy and underwriting in this category, which is comprised primarily of airplane and automobile loans, include the following factors, among others: income sources and reliability, credit histories, term of repayment, and collateral value, as applicable. These are typically granted on an unsecured basis, with the exception of airplane and automobile loans. Credit Quality Commercial Lending Credit Quality The Company monitors credit quality indicators and utilizes portfolio scorecards to assess the risk of its commercial portfolio. Specifically, the Company utilizes a 12-point credit risk-rating system to manage risk and identify potential problem loans. Risk-rating assignments are based upon a number of quantitative and qualitative factors that are under continual review. Factors include cash flow, collateral coverage, liquidity, leverage, position within the industry, internal controls and management, financial reporting, and other considerations. The risk-rating categories are defined as follows: 0 Risk Rating - Unrated Certain segments of the portfolios are not rated. These segments include airplane loans, business banking scored loan products, and other commercial loans managed by exception. Loans within this unrated loan segment are monitored by delinquency status; and for lines of credit greater than $100,000 in exposure, an annual review is conducted. The Company supplements performance data with current credit scores for the business banking portfolio on a quarterly basis. Unrated loans managed outside of airplane loans and business banking loans are generally restricted to commercial exposure less than $1 million. Loans included in this category have qualification requirements that include risk rating of 6W or better at time of recommendation for unrated status, acceptable management of deposit accounts, and no known negative changes in management, operations or financial performance. Restricted from this category are lines of credit managed with borrowing base requirements. For purposes of estimating the allowance for loan losses, unrated loans are considered in the same manner as pass rated loans. 1-6W Risk Rating – Pass Loans with a risk-rating of 1-6W are classified as “Pass” and are comprised of loans that range from “substantially risk free” which indicates borrowers of unquestioned credit standing, well-established national companies with a very strong financial condition, and loans fully secured by cash, through “acceptable risk” which indicates acceptable rated loans that may be experiencing weak cash flow, impending lease rollover or minor liquidity concerns. The top end of the risk-rating category (6W) includes loans that, although containing the same risk-rating as those with a rating of 6, are being more closely monitored to determine if a downgrade is necessary. 7 Risk Rating – Special Mention (Potential Weakness) Loans to borrowers in this category exhibit potential weaknesses or downward trends deserving management’s close attention. While potentially weak, no loss of principal or interest is envisioned. Included in this category are borrowers who are performing as agreed, are weak when compared to industry standards, may be experiencing an interim loss and may be in declining industries. An element of asset quality, financial flexibility or management is below average. Management and owners may have limited depth, particularly when operating under strained circumstances. The Company does not consider borrowers within this category as new business prospects. Borrowers rated special mention may find it difficult to obtain alternative financing from traditional bank sources. 8 Risk Rating – Substandard (Well-Defined Weakness) Loans with a risk-rating of 8 exhibit well-defined weaknesses that, if not corrected, may jeopardize the repayment of the debt. A loan is classified as substandard if it is inadequately protected by the repayment capacity of the obligor or by the collateral pledged. Specifically, repayment under market rates and terms, or by the requirements under the existing loan documents, is in jeopardy, but no loss of principal or interest is envisioned. There is a possibility that a partial loss of principal and/or interest will occur in the future if the deficiencies are not corrected. Loss potential, while existing in the aggregate portfolio of substandard assets, does not have to exist in individual assets classified as substandard. Credits in this category often may have reported a loss in the most recent fiscal year end and are likely to continue to report losses in the interim period, or interim losses are expected to result in a fiscal year-end loss. Nonaccrual is possible, but not mandatory, in this class. 9 Risk Rating – Doubtful (Loss Probable) Loans classified as doubtful have comparable weaknesses as found in the loans classified as substandard with the added provision that such weaknesses make collection of the debt in full (based on currently existing facts, conditions and values) highly questionable and improbable. Serious problems exist such that partial loss of principal is likely. The probability of loss exceeds 50%, however, because of reasonably specific pending factors that may work to strengthen the credit, estimated losses are deferred until a more exact status can be determined. Pending factors may include the sale of the company, a merger, capital injection, new profitable purchase orders, and refinancing plans. Specific reserves will be the amount identified after specific review. Nonaccrual is mandatory in this class. 10 Risk Rating – Loss Loans to borrowers in this category are deemed incapable of repayment. Loans to such borrowers are considered uncollectable and of such little value that continuance as active assets of the Company is not warranted. This classification does not mean that the loans have no recovery or salvage value, but rather, it is not practical or desirable to defer writing off these assets even though partial recovery may occur in the future. Loans in this category have a recorded investment of $0 at the time of the downgrade. The credit quality of the commercial loan portfolio is actively monitored and supported by a comprehensive credit approval process; and all large dollar transactions are sent for approval to a committee of seasoned business line and credit professionals. Risk ratings are periodically reviewed and the Company maintains an independent credit risk review function that reports directly to the Risk Management Committee of the Board of Directors. Credits that demonstrate significant deterioration in credit quality are transferred to a specialized group of seasoned workout officers for individual attention. The following tables detail the internal risk-rating categories for the Company’s commercial and industrial, commercial real estate, commercial construction and business banking portfolios: As of September 30, 2020 Category Risk Commercial and Commercial Commercial Business Total (In thousands) Unrated — $ 751,703 $ 43,126 $ 332 $ 904,292 $ 1,699,453 Pass 1-6W 1,233,803 3,279,252 275,172 280,997 5,069,224 Special mention 7 115,579 294,176 18,114 49,348 477,217 Substandard 8 62,382 32,928 3,890 16,126 115,326 Doubtful 9 13,749 2,830 — 810 17,389 Loss 10 — — — — — Total $ 2,177,216 $ 3,652,312 $ 297,508 $ 1,251,573 $ 7,378,609 As of December 31, 2019 Category Risk Commercial and Commercial Commercial Business Total (In thousands) Unrated — $ 150,226 $ 48,266 $ 331 $ 445,201 $ 644,024 Pass 1-6W 1,405,902 3,436,267 260,615 315,194 5,417,978 Special mention 7 24,171 28,606 9,438 2,006 64,221 Substandard 8 42,894 21,635 3,390 8,207 76,126 Doubtful 9 18,991 667 — 890 20,548 Loss 10 — — — — — Total $ 1,642,184 $ 3,535,441 $ 273,774 $ 771,498 $ 6,222,897 Paycheck Protection Program (“PPP”) loans are included within the unrated category of the commercial and industrial and business banking portfolios in the table above. Commercial and industrial PPP and business banking PPP loans amounted to $637.6 million and $485.9 million, respectively, at September 30, 2020. The Company does not have an allowance for loan losses for PPP loans as they are 100% guaranteed by the SBA. Residential and Consumer Lending Credit Quality For the Company’s residential and consumer portfolios, the quality of the loan is best indicated by the repayment performance of an individual borrower. Updated appraisals, broker opinions of value and other collateral valuation methods are employed in the residential and consumer portfolios, typically for credits that are deteriorating. Delinquency status is determined using payment performance, while accrual status may be determined using a combination of payment performance, expected borrower viability and collateral value. Delinquent consumer loans are handled by a team of seasoned collection specialists. Asset Quality The Company manages its loan portfolio with careful monitoring. As a general rule, loans more than 90 days past due with respect to principal and interest are classified as nonaccrual loans. Exceptions may be made if management believes that collateral held by the Company is clearly sufficient and in full satisfaction of both principal and interest, or the loan is accounted for as a PCI loan. Therefore, as permitted by banking regulations, certain consumer loans past due 90 days or more may continue to accrue interest. The Company may also use discretion regarding other loans over 90 days delinquent if the loan is well secured and in the process of collection. Nonaccrual loans and loans that are more than 90 days past due but still accruing interest are considered nonperforming loans. Nonaccrual loans may be returned to an accrual status when principal and interest payments are no longer delinquent, and the risk characteristics of the loan have improved to the extent that there no longer exists a concern as to the collectability of principal and interest. Loans are considered past due based upon the number of days delinquent according to their contractual terms. Specifically, nonaccrual residential loans that have been restructured must perform for a period of six months before being considered for accrual status. A loan is expected to remain on nonaccrual status until it becomes current with respect to principal and interest, the loan is liquidated, or the loan is determined to be uncollectible and is charged-off against the allowance for loan losses. The following is a summary pertaining to the breakdown of the Company’s nonaccrual loans: As of September 30, As of December 31, 2020 2019 (In Thousands) Commercial and industrial $ 10,719 $ 21,471 Commercial real estate 2,936 4,120 Commercial construction 280 — Business banking 15,033 8,502 Residential real estate 7,419 5,598 Consumer home equity 3,693 2,137 Other consumer 1,034 623 Total non-accrual loans $ 41,114 $ 42,451 The following tables show the age analysis of past due loans as of the dates indicated: As of September 30, 2020 30-59 60-89 90 or More Total Past Current Total Recorded (In thousands) Commercial and industrial $ 129 $ — $ 1,990 $ 2,119 $ 2,175,097 $ 2,177,216 $ 1,048 Commercial real estate 199 — 4,443 4,642 3,647,670 3,652,312 2,336 Commercial construction — — 280 280 297,228 297,508 — Business banking 3,583 1,646 9,480 14,709 1,236,864 1,251,573 — Residential real estate 9,223 1,822 5,484 16,529 1,356,708 1,373,237 326 Consumer home equity 1,273 910 3,170 5,353 885,418 890,771 9 Other consumer 1,980 467 1,034 3,481 298,143 301,624 — Total $ 16,387 $ 4,845 $ 25,881 $ 47,113 $ 9,897,128 $ 9,944,241 $ 3,719 As of December 31, 2019 30-59 60-89 90 or More Total Past Current Total Recorded (In thousands) Commercial and industrial $ 1,407 $ — $ 963 $ 2,370 $ 1,639,814 $ 1,642,184 $ — Commercial real estate 1,290 100 1,856 3,246 3,532,195 3,535,441 1,315 Commercial Construction — — — — 273,774 273,774 — Business banking 3,031 763 6,095 9,889 761,609 771,498 — Residential real estate 14,030 2,563 3,030 19,623 1,409,007 1,428,630 — Consumer home equity 2,497 430 1,636 4,563 928,525 933,088 9 Other consumer 3,451 514 579 4,544 397,887 402,431 — Total $ 25,706 $ 4,370 $ 14,159 $ 44,235 $ 8,942,811 $ 8,987,046 $ 1,324 In the normal course of business, the Company may become aware of possible credit problems in which borrowers exhibit potential for the inability to comply with the contractual terms of their loans, but which currently do not yet meet the criteria for classification as nonperforming loans. However, based upon the Company’s past experiences, some of these loans with potential weaknesses will ultimately be restructured or placed in non-accrual status. Troubled Debt Restructurings (“TDR”) In cases where a borrower experiences financial difficulty and the Company makes certain concessionary modifications to contractual terms, the loan is classified as a troubled debt restructured loan. The objective is to aid in the resolution of nonperforming loans by modifying the contractual obligation to avoid the possibility of foreclosure. All TDR loans are considered impaired and therefore are subject to a specific review for impairment loss. The amount of impairment loss, if any, is recorded as a specific loss allocation to each individual loan in the allowance for loan losses. Commercial loans and residential loans that have been classified as TDRs and which subsequently default are reviewed to determine if the loan should be deemed collateral dependent. In such an instance, any shortfall between the value of the collateral and the book value of the loan is determined by measuring the recorded investment in the loan against the fair value of the collateral less costs to sell. The Company’s policy is to have any TDR loans which are on nonaccrual status prior to being modified remain on nonaccrual status for approximately six months subsequent to being modified before management considers its return to accrual status. If the TDR loan is on accrual status prior to being modified, it is reviewed to determine if the modified loan should remain on accrual status. The following table shows the TDR loans on accrual and nonaccrual status as of the dates indicated: As of September 30, 2020 TDRs on Accrual Status TDRs on Nonaccrual Status Total TDRs Number of Loans Balance of Number of Balance of Number of Balance of (Dollars in thousands) Commercial and industrial 2 $ 5,671 8 $ 6,986 10 $ 12,657 Commercial real estate 1 3,520 2 696 3 4,216 Business banking 5 4,090 2 223 7 4,313 Residential real estate 146 22,803 26 3,765 172 26,568 Consumer home equity 85 3,766 12 786 97 4,552 Other consumer 3 31 1 23 4 54 Total 242 $ 39,881 51 $ 12,479 293 $ 52,360 As of December 31, 2019 TDRs on Accrual Status TDRs on Nonaccrual Status Total TDRs Number of Loans Balance of Number of Loans Balance of Loans Balance of (Dollars in thousands) Commercial and industrial 4 $ 10,899 14 $ 19,781 18 $ 30,680 Commercial real estate 1 3,520 3 3,338 4 6,858 Business banking 2 3,156 1 204 3 3,360 Residential real estate 152 25,093 27 3,977 179 29,070 Consumer home equity 89 5,955 5 600 94 6,555 Total 248 $ 48,623 50 $ 27,900 298 $ 76,523 The amount of specific reserve associated with the TDRs was $3.8 million and $3.2 million at September 30, 2020 and December 31, 2019, respectively. During the nine months ended September 30, 2020 and the year ended December 31, 2019, $2.2 million and $0.3 million, respectively, in TDRs moved from nonaccrual to accrual. The amount of additional commitments to lend to borrowers who have been a party to a TDR was $0 and $2.5 million at September 30, 2020 and December 31, 2019, respectively. The following tables show the modifications which occurred during the periods and the change in the recorded investment subsequent to the modifications occurring: For the Three Months Ended September 30, 2020 For the Nine Months Ended September 30, 2020 Number Pre- Post- Number Pre-Modification Post- (Dollars in thousands) Commercial and industrial — $ — $ — 1 $ 140 $ 140 Commercial real estate — — — 2 632 632 Business banking — — — 3 1,040 1,040 Residential real estate — — — 3 399 399 Consumer home equity — — — 12 527 531 Other consumer 3 35 35 4 58 58 Total 3 $ 35 $ 35 25 $ 2,796 $ 2,800 For the Three Months Ended September 30, 2019 For the Nine Months Ended September 30, 2019 Number Pre- Post- Number Pre-Modification Post- (Dollars in thousands) Commercial and industrial 7 $ 11,032 $ 11,032 14 $ 18,494 $ 18,794 Commercial real estate — — — 2 3,277 3,277 Business banking 2 3,184 3,184 2 3,184 3,184 Residential real estate 2 741 756 5 1,174 1,201 Consumer home equity 1 47 47 4 201 204 Total 12 $ 15,004 $ 15,019 27 $ 26,330 $ 26,660 (1) The post-modification balances represent the balance of the loan on the date of modification. These amounts may show an increase when modification includes capitalization of interest. At September 30, 2020 and December 31, 2019, the outstanding recorded investment of loans that were new to TDR during the period was $2.5 million and $36.2 million, respectively. The following table shows the Company’s post-modification balance of TDRs listed by type of modification during the periods indicated: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 (In Thousands) Adjusted interest rate and extended maturity $ — $ 138 $ — $ 806 Adjusted interest rate and principal deferred — — — 40 Adjusted interest rate — 3,184 — 3,184 Interest only/principal deferred — — 1,305 40 Extended maturity — — 35 — Extended maturity and interest only/principal deferred — 47 427 47 Additional underwriting - increased exposure — — — 10,572 Court-ordered concession 35 — 1,033 321 Subordination — 11,032 — 11,032 Other — 618 — 618 Total $ 35 $ 15,019 $ 2,800 $ 26,660 The following table shows the loans that have been modified during the prior 12 months which have subsequently defaulted during the periods indicated. The Company considers a loan to have defaulted when it reaches 90 days past due or is transferred to nonaccrual: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 Number of Recorded Number of Recorded Number of Recorded Number of Recorded (Dollars in thousands) Troubled debt restructurings that subsequently defaulted (1): Commercial and industrial — $ — 7 $ 16,741 — $ — 11 $ 22,283 Commercial real estate — — — — — — 1 330 Residential real estate — — 2 478 — — 3 584 Consumer Home Equity 1 40 1 81 1 40 1 81 Total 1 $ 40 10 $ 17,300 1 $ 40 16 $ 23,278 (1) This table does not reflect any TDRs which were fully charged off, paid off, or otherwise settled during the period. During the three and nine months ended September 30, 2020 the amounts charged-off on TDRs modified in the prior 12 months were $0.2 million and $0.6 million, respectively. During both the three and nine months ended September 30, 2019 there were no charge-offs on TDR loans modified in the prior 12 months. Impaired Loans Impaired loans consist of all loans for which management has determined it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreements. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. The Company measures impairment of loans using a discounted cash flow method, the loan’s observable market price, or the fair value of the collateral |
