Loans and the Allowance for Credit Losses | NOTE 4. LOANS AND THE ALLOWANCE FOR CREDIT LOSSES The recorded investment in loans is presented in the Consolidated Balance Sheets net of deferred loan fees and costs, and discounts on purchased loans. Net deferred loan costs were $ 11.3 million and $ 9.6 million at September 30, 2023 and December 31, 2022 , respectively. The unaccreted discount on purchased loans from acquisitions was $ 14.5 million at September 30, 2023 and $ 18.0 million at December 31, 2022. September 30, December 31, (unaudited, in thousands) 2023 2022 Commercial real estate: Land and construction $ 870,066 $ 943,887 Improved property 5,517,117 5,117,457 Total commercial real estate 6,387,183 6,061,344 Commercial and industrial 1,587,611 1,579,395 Residential real estate 2,392,531 2,140,584 Home equity 715,186 695,065 Consumer 233,362 226,340 Total portfolio loans 11,315,873 10,702,728 Loans held for sale 17,677 8,249 Total loans $ 11,333,550 $ 10,710,977 Allowance for Credit Losses The allowance for credit losses under the current expected credit losses methodology ("CECL") is calculated utilizing the probability of default ("PD")/ loss given default ("LGD"), which is then discounted to net present value. PD is the probability the asset will default within a given time frame and LGD is the percentage of the asset not expected to be collected due to default. The primary macroeconomic drivers of the quantitative model include forecasts of national unemployment and interest rates, as well as modeling adjustments for changes in prepayment speeds, loan risk grades, portfolio mix, concentrations and loan growth. At September 30, 2023, the primary drivers of the allowance model calculation were loan growth, macroeconomic variables, prepayment speeds, qualitative factors for distressed industries, the current rate environment and changes in risk grading. The forecast was based upon a probability weighted approach which is designed to incorporate loss projections from a baseline, upside and downside economy. Due to the nonlinearity of credit losses to the economy, the asymmetry is best captured by evaluating multiple economic scenarios through a probability weighted approach. At quarter-end, national unemployment was projected to be 4.3 %, and subsequently increase to an average of 4.7 % over the remainder of the forecast period. Accrued interest receivable for loans was $ 57.7 million and $ 51.8 million at September 30, 2023 and December 31, 2022 , respectively. Wesbanco made an accounting policy election to exclude accrued interest from the measurement of the allowance for credit losses because the Company has a policy in place to reverse or write-off accrued interest when loans are placed on non-accrual. However, Wesbanco does have a $ 0.1 million reserve on the accrued interest related to loan modifications allowed under the Coronavirus Aid, Relief and Economic Security ("CARES") Act due to the timing and nature of these modifications. Accrued interest related to COVID-19 loan modifications as permitted under the CARES Act was $ 15.8 million and $ 17.0 million at September 30, 2023 and December 31, 2022, respectively. The following tables summarize changes in the allowance for credit losses applicable to each category of the loan portfolio: Allowance for Credit Losses By Category For the Nine Months Ended September 30, 2023 and 2022 (unaudited, in thousands) Commercial Commercial Commercial Residential Home Consumer Deposit Total Balance at December 31, 2022 Allowance for credit $ 6,737 $ 52,659 $ 31,540 $ 18,208 $ 4,234 $ 3,127 $ 1,285 $ 117,790 Allowance for credit 6,025 — — 2,215 128 — — 8,368 Total beginning allowance for credit 12,762 52,659 31,540 20,423 4,362 3,127 1,285 126,158 Provision for credit losses: Provision for loan losses ( 614 ) 7,595 3,678 1,582 ( 2,901 ) 1,315 957 11,612 Provision for loan commitments 1,247 — 1,087 ( 863 ) ( 110 ) — — 1,361 Total provision for credit 633 7,595 4,765 719 ( 3,011 ) 1,315 957 12,973 Charge-offs ( 222 ) ( 1,450 ) ( 1,498 ) ( 278 ) ( 670 ) ( 2,604 ) ( 1,262 ) ( 7,984 ) Recoveries 207 821 996 929 331 1,604 309 5,197 Net (charge-offs) recoveries ( 15 ) ( 629 ) ( 502 ) 651 ( 339 ) ( 1,000 ) ( 953 ) ( 2,787 ) Balance at September 30, 2023 Allowance for credit 6,108 59,625 34,716 20,441 994 3,442 1,289 126,615 Allowance for credit 7,272 — 1,087 1,352 18 — — 9,729 Total ending allowance for credit $ 13,380 $ 59,625 $ 35,803 $ 21,793 $ 1,012 $ 3,442 $ 1,289 $ 136,344 Balance at December 31, 2021 Allowance for credit $ 7,310 $ 65,355 $ 26,875 $ 15,401 $ 724 $ 3,737 $ 2,220 $ 121,622 Allowance for credit 4,180 201 1,497 1,576 49 272 — 7,775 Total beginning allowance for credit 11,490 65,556 28,372 16,977 773 4,009 2,220 129,397 Provision for credit losses: Provision for loan losses 1,369 ( 12,082 ) 2,160 1,133 37 1,216 260 ( 5,907 ) Provision for loan commitments 1,618 ( 201 ) ( 1,214 ) 788 7 165 — 1,163 Total provision for credit 2,987 ( 12,283 ) 946 1,921 44 1,381 260 ( 4,744 ) Charge-offs ( 73 ) ( 642 ) ( 983 ) ( 282 ) ( 266 ) ( 2,511 ) ( 1,215 ) ( 5,972 ) Recoveries 25 899 871 483 293 1,992 278 4,841 Net (charge-offs) recoveries ( 48 ) 257 ( 112 ) 201 27 ( 519 ) ( 937 ) ( 1,131 ) Balance at September 30, 2022 Allowance for credit 8,631 53,530 28,923 16,735 788 4,434 1,543 114,584 Allowance for credit 5,798 — 283 2,364 56 437 — 8,938 Total ending allowance for credit $ 14,429 $ 53,530 $ 29,206 $ 19,099 $ 844 $ 4,871 $ 1,543 $ 123,522 (1) Deposit overdrafts of $ 4.5 million and $ 3.7 million are included in total portfolio loans for the periods ending September 30, 2023 and September 30, 2022, respectively. (2) The total provision for credit losses - loans and loan commitments is reported in the consolidated statements of income in the provision for credit losses line item, which also includes the provision for credit losses on held-to-maturity securities. For more information on the provision relating to held-to-maturity securities, please see Note 3, "Securities." The following tables present the allowance for credit losses and recorded investments in loans by category, as of each period-end: Allowance for Credit Losses and Recorded Investment in Loans (unaudited, in thousands) Commercial Commercial Commercial Residential Home Consumer Deposit Total September 30, 2023 Allowance for credit losses: Loans individually-evaluated $ — $ 4,963 $ — $ — $ — $ — $ — $ 4,963 Loans collectively-evaluated 6,108 54,662 34,716 20,441 994 3,442 1,289 121,652 Loan commitments (2) 7,272 — 1,087 1,352 18 — — 9,729 Total allowance for credit $ 13,380 $ 59,625 $ 35,803 $ 21,793 $ 1,012 $ 3,442 $ 1,289 $ 136,344 Portfolio loans: Individually-evaluated for credit $ — $ 26,924 $ 181 $ — $ — $ — $ — $ 27,105 Collectively-evaluated for credit 870,066 5,490,193 1,587,430 2,392,531 715,186 233,362 — 11,288,768 Total portfolio loans $ 870,066 $ 5,517,117 $ 1,587,611 $ 2,392,531 $ 715,186 $ 233,362 $ — $ 11,315,873 December 31, 2022 Allowance for credit losses: Loans individually-evaluated $ — $ 2,988 $ 130 $ — $ — $ — $ — $ 3,118 Loans collectively-evaluated 6,737 49,671 31,410 18,208 4,234 3,127 1,285 114,672 Loan commitments (2) 6,025 — — 2,215 128 — — 8,368 Total allowance for credit $ 12,762 $ 52,659 $ 31,540 $ 20,423 $ 4,362 $ 3,127 $ 1,285 $ 126,158 Portfolio loans: Individually-evaluated for credit $ 24,629 $ 25,369 $ 401 $ — $ — $ — $ — $ 50,399 Collectively-evaluated for credit 919,258 5,092,088 1,578,994 2,140,584 695,065 226,340 — 10,652,329 Total portfolio loans $ 943,887 $ 5,117,457 $ 1,579,395 $ 2,140,584 $ 695,065 $ 226,340 $ — $ 10,702,728 (1) Deposit overdrafts of $ 4.5 million and $ 4.4 million are included in total portfolio loans for the periods ending September 30, 2023 and December 31, 2022, respectively. (2) For additional detail relating to loan commitments, see Note 10, "Commitments and Contingent Liabilities." Commercial Loan Risk Grades Commercial loan risk grades are determined based on an evaluation of the relevant characteristics of each loan, assigned at inception and adjusted thereafter at any time to reflect changes in the risk profile throughout the life of each loan. The primary factors used to determine the risk grade are the sufficiency, reliability and sustainability of the primary source of repayment and overall financial strength of the borrower. The rating system more heavily weights the debt service coverage, leverage and loan to value factors to derive the risk grade. Other factors that are considered at a lesser weighting include management, industry or property type risks, payment history, collateral or guarantees. Commercial real estate – land and construction consists of loans to finance investments in vacant land, land development, construction of residential housing, and construction of commercial buildings. Commercial real estate – improved property consists of loans for the purchase or refinance of all types of improved owner-occupied and investment properties. Factors that are considered in assigning the risk grade vary depending on the type of property financed. The risk grade assigned to construction and development loans is based on the overall viability of the project, the experience and financial capacity of the developer or builder to successfully complete the project, project specific and market absorption rates and comparable property values, and the amount of pre-sales for residential housing construction or pre-leases for commercial investment property. The risk grade assigned to commercial investment property loans is based primarily on the adequacy of the net operating income generated by the property to service the debt (“debt service coverage”), the loan to appraised value, the type, quality, industry and mix of tenants, and the terms of leases. The risk grade assigned to owner-occupied commercial real estate is based primarily on global debt service coverage and the leverage of the business, but may also consider the industry in which the business operates, the business’ specific competitive advantages or disadvantages, collateral margins and the quality and experience of management. Commercial and industrial (“C&I”) loans consist of revolving lines of credit to finance accounts receivable, inventory and other general business purposes; term loans to finance fixed assets other than real estate, and letters of credit to support trade, insurance or governmental requirements for a variety of businesses. Most C&I borrowers are privately-held companies with annual sales up to $ 100 million. Primary factors that are considered in risk rating C&I loans include debt service coverage and leverage. Other factors including operating trends, collateral coverage along with management experience are also considered. Pass loans are those that exhibit a history of positive financial results that are at least comparable to the average for their industry or type of real estate. The primary source of repayment is acceptable and these loans are expected to perform satisfactorily during most economic cycles. Pass loans typically have no significant external factors that are expected to adversely affect these borrowers more than others in the same industry or property type. Any minor unfavorable characteristics of these loans are outweighed or mitigated by other positive factors including but not limited to adequate secondary or tertiary sources of repayment, including guarantees. Criticized loans, considered as compromised, have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the bank's credit position at some future date. Criticized loans are not adversely classified by the banking regulators and do not expose the bank to sufficient risk to warrant adverse classification. Classified loans, considered as substandard and doubtful, are equivalent to the classifications used by banking regulators. Substandard loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the bank will sustain some loss if the deficiencies are not corrected. These loans may or may not be reported as non-accrual. Doubtful loans have all the weaknesses inherent in those classified substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable. These loans are reported as non-accrual. The following tables summarize commercial loans by their assigned risk grade: Commercial Loans by Internally Assigned Risk Grade (unaudited, in thousands) Commercial Commercial Commercial Total As of September 30, 2023 Pass $ 867,656 $ 5,326,634 $ 1,529,371 $ 7,723,661 Criticized - compromised 2,400 125,863 51,873 180,136 Classified - substandard 10 64,620 6,367 70,997 Classified - doubtful — — — — Total $ 870,066 $ 5,517,117 $ 1,587,611 $ 7,974,794 As of December 31, 2022 Pass $ 911,804 $ 4,940,135 $ 1,538,300 $ 7,390,239 Criticized - compromised 1,329 121,393 25,223 147,945 Classified - substandard 30,754 55,929 15,872 102,555 Classified - doubtful — — — — Total $ 943,887 $ 5,117,457 $ 1,579,395 $ 7,640,739 Residential real estate, home equity and consumer loans are not assigned internal risk grades other than as required by regulatory guidelines that are based primarily on the age of past due loans. Wesbanco primarily evaluates the credit quality of residential real estate, home equity and consumer loans based on repayment performance and historical loss rates. The aggregate amount of residential real estate, home equity and consumer loans classified as substandard in accordance with regulatory guidelines was $ 20.6 million at September 30, 2023 and $ 24.8 million at December 31, 2022 , of which $ 4.2 million and $ 5.9 million were accruing, for each period, respectively. These loans are not included in the tables above. In addition, $ 13.8 million and $ 25.0 million of unfunded commercial loan commitments are also not included in the tables above at September 30, 2023 and December 31, 2022, respectively. Past Due and Nonperforming Loans The following tables summarize the age analysis of all categories of loans: Age Analysis of Loans (unaudited, in thousands) Current 30-59 60-89 90 Days Total Total 90 Days Due and As of September 30, 2023 Commercial real estate: Land and construction $ 870,066 $ — $ — $ — $ — $ 870,066 $ — Improved property 5,499,069 2,161 1,279 14,608 18,048 5,517,117 4,131 Total commercial real estate 6,369,135 2,161 1,279 14,608 18,048 6,387,183 4,131 Commercial and industrial 1,584,822 566 438 1,785 2,789 1,587,611 292 Residential real estate 2,383,834 1,134 2,955 4,608 8,697 2,392,531 1,991 Home equity 705,435 3,599 1,209 4,943 9,751 715,186 1,475 Consumer 228,391 3,152 1,035 784 4,971 233,362 717 Total portfolio loans 11,271,617 10,612 6,916 26,728 44,256 11,315,873 8,606 Loans held for sale 17,677 — — — — 17,677 — Total loans $ 11,289,294 $ 10,612 $ 6,916 $ 26,728 $ 44,256 $ 11,333,550 $ 8,606 Nonperforming loans included above are as follows: Non-accrual loans $ 10,258 $ 626 $ 872 $ 18,122 $ 19,620 $ 29,878 As of December 31, 2022 Commercial real estate: Land and construction $ 942,236 $ — $ 910 $ 741 $ 1,651 $ 943,887 $ 629 Improved property 5,099,342 2,147 331 15,637 18,115 5,117,457 84 Total commercial real estate 6,041,578 2,147 1,241 16,378 19,766 6,061,344 713 Commercial and industrial 1,574,311 1,427 519 3,138 5,084 1,579,395 1,586 Residential real estate 2,129,095 853 3,536 7,100 11,489 2,140,584 1,551 Home equity 686,762 3,885 621 3,797 8,303 695,065 1,063 Consumer 222,153 2,910 704 573 4,187 226,340 530 Total portfolio loans 10,653,899 11,222 6,621 30,986 48,829 10,702,728 5,443 Loans held for sale 8,249 — — — — 8,249 — Total loans $ 10,662,148 $ 11,222 $ 6,621 $ 30,986 $ 48,829 $ 10,710,977 $ 5,443 Nonperforming loans included above are as follows: Non-accrual loans $ 10,337 $ 1,495 $ 870 $ 25,483 $ 27,848 $ 38,185 TDRs accruing interest 3,131 7 32 60 99 3,230 Total nonperforming loans $ 13,468 $ 1,502 $ 902 $ 25,543 $ 27,947 $ 41,415 (1) For the table presented as of December 31, 2022 , loans 90 days or more past due and accruing interest exclude TDRs 90 days or more past due and accruing interest. The following tables summarize nonperforming loans: Nonperforming Loans September 30, 2023 December 31, 2022 Unpaid Unpaid Principal Recorded Related Principal Recorded Related (unaudited, in thousands) Balance (1) Investment Allowance Balance (1) Investment Allowance With no related specific allowance recorded: Commercial real estate: Land and construction $ — $ — $ — $ 112 $ 112 $ — Improved property 13,092 11,289 — 18,367 16,601 — Commercial and industrial 2,743 2,138 — 4,102 3,112 — Residential real estate 15,692 11,013 — 21,084 16,057 — Home equity 7,115 5,322 — 6,970 5,374 — Consumer 190 116 — 316 159 — Total nonperforming loans without a specific allowance 38,832 29,878 — 50,951 41,415 — Total nonperforming loans with a specific allowance — — — — — — Total nonperforming loans $ 38,832 $ 29,878 $ — $ 50,951 $ 41,415 $ — (1) The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off and fair market value adjustments on acquired nonperforming loans. Nonperforming Loans For the Three Months Ended For the Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Average Interest Average Interest Average Interest Average Interest Recorded Income Recorded Income Recorded Income Recorded Income (unaudited, in thousands) Investment Recognized Investment Recognized Investment Recognized Investment Recognized With no related specific allowance recorded: Commercial real estate: Land and construction $ — $ — $ 27 $ ( 2 ) $ 28 $ — $ 70 $ — Improved property 11,243 — 7,086 57 14,322 — 7,505 71 Commercial and industrial 2,244 — 4,010 5 2,702 — 4,514 8 Residential real estate 11,832 — 17,467 24 13,139 — 18,327 96 Home equity 5,292 — 5,046 14 5,205 — 5,279 20 Consumer 107 — 396 1 121 — 468 3 Total nonperforming loans without a specific allowance 30,717 — 34,030 99 35,517 — 36,163 198 With a specific allowance recorded: Commercial real estate: Land and construction — — — — — — — — Improved property — — — — — — — — Total nonperforming loans with a specific allowance — — — — — — — — Total nonperforming loans $ 30,717 $ — $ 34,030 $ 99 $ 35,517 $ — $ 36,163 $ 198 The following table presents the recorded investment in non-accrual loans: Non-accrual Loans (1) September 30, December 31, (unaudited, in thousands) 2023 2022 Commercial real estate: Land and construction $ — $ 112 Improved property 11,289 16,254 Total commercial real estate 11,289 16,366 Commercial and industrial 2,138 2,946 Residential real estate 11,013 13,695 Home equity 5,322 5,044 Consumer 116 134 Total $ 29,878 $ 38,185 (1) At September 30, 2023 , there were three borrowers with a loan balance greater than $ 1.0 million, which totaled $ 8.3 million, as compared to three borrowers with a loan balance greater than $ 1.0 million totaling $ 11.8 million at December 31, 2022 . Total non-accrual loans include loans that are also restructured for borrowers experiencing financial difficulty or were previously designated as non-accrual TDRs prior to the adoption of ASU 2022-02. Such loans are also set forth in the following tables. Modifications for Borrowers Experiencing Financial Difficulty (following the adoption of ASU 2022-02) Tables in the following section exclude the financial effects of modifications for loans that were paid off or are otherwise no longer in the loan portfolio as of period end. The following table displays the details of portfolio loans that were modified during the three and nine months ended September 30, 2023 presented by loan category: For the Three Months Ended September 30, 2023 (unaudited, in thousands) Term Payment Total % of Commercial real estate - land and construction $ — $ — $ — — Commercial real estate - improved property 159 — 159 0.0 Commercial and industrial 136 43 179 0.0 Residential real estate — 126 126 0.0 Home equity — 258 258 0.0 Consumer — 244 244 0.1 Total $ 295 $ 671 $ 966 0.0 For the Nine Months Ended September 30, 2023 (unaudited, in thousands) Term Payment Total % of Commercial real estate - land and construction $ 173 $ — $ 173 0.0 Commercial real estate - improved property 7,014 276 7,290 0.1 Commercial and industrial 9,276 43 9,319 0.6 Residential real estate — 226 226 0.0 Home equity 8 936 944 0.1 Consumer — 505 505 0.2 Total $ 16,471 $ 1,986 $ 18,457 0.2 Unfunded loan commitments on modifications for borrowers experiencing financial difficulty ("MBEFDs") totaled $ 3.2 million at September 30, 2023 . These commitments are not included in the table above. The following table summarizes the financial impacts of loan modifications and payment deferrals made to portfolio loans during the three and nine months ended September 30, 2023, presented by loan category: For the Three Months Ended September 30, 2023 (unaudited, in thousands) Weighted-Average Commercial real estate - land and construction — Commercial real estate - improved property 3 Commercial and industrial 3 Residential real estate — Home equity — Consumer — For the Nine Months Ended September 30, 2023 (unaudited, in thousands) Weighted-Average Commercial real estate - land and construction 12 Commercial real estate - improved property 22 Commercial and industrial 9 Residential real estate — Home equity 120 Consumer — There have been no MBEFDs which defaulted (defined as 90 days past due) after the loan was modified during the three and nine months ended September 30, 2023. The following table presents an aging analysis of portfolio loans that were modified on or after January 1, 2023, the date that Wesbanco adopted ASU 2022-02, by loan category, as of September 30, 2023: September 30, 2023 (unaudited, in thousands) 30-59 Days 60-89 Days 90 Days Total Current Total Commercial real estate - land and construction $ — $ — $ — $ — $ 173 $ 173 Commercial real estate - improved property — 33 276 309 6,981 7,290 Commercial and industrial — 43 — 43 9,276 9,319 Residential real estate 67 — — 67 159 226 Home equity 46 24 101 171 773 944 Consumer 6 68 62 136 369 505 Total modified loans (1) $ 119 $ 168 $ 439 $ 726 $ 17,731 $ 18,457 (1) Represents balance at period end. Troubled Debt Restructuring Disclosures (prior to the adoption of ASU 2022-02) The following table presents details related to loans identified as TDRs during the three and nine months ended September 30, 2022: New TDRs (1) For the Three Months Ended September 30, 2022 Pre- Post- Modification Modification Outstanding Outstanding Number of Recorded Recorded (unaudited, dollars in thousands) Modifications Investment Investment Commercial real estate: Land and construction — $ — $ — Improved property 1 1,097 1,075 Total commercial real estate 1 1,097 1,075 Commercial and industrial — — — Residential real estate — — — Home equity — — — Consumer — — — Total 1 $ 1,097 $ 1,075 New TDRs (1) For the Nine Months Ended September 30, 2022 Pre- Post- Modification Modification Outstanding Outstanding Number of Recorded Recorded (unaudited, dollars in thousands) Modifications Investment Investment Commercial real estate: Land and construction 1 $ 84 $ — Improved property 2 1,286 1,075 Total commercial real estate 3 1,370 1,075 Commercial and industrial — — — Residential real estate — — — Home equity — — — Consumer — — — Total 3 $ 1,370 $ 1,075 (1) Excludes loans that were either paid off or charged-off by period end. The pre-modification balance represents the balance outstanding at the beginning of the period. The post-modification balance represents the outstanding balance at period end. There were no TDRs which defaulted (defined as past due 90 days) during the three months ended September 30, 2022 that were restructured within the last twelve months prior to September 30, 2022. The following tables summarize amortized cost basis loan balances by year of origination and credit quality indicator: Loans As of September 30, 2023 Amortized Cost Basis by Origination Year (unaudited, in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total Commercial real estate: land and construction Risk rating: Pass $ 163,921 $ 291,411 $ 140,411 $ 53,071 $ 49,688 $ 36,474 $ 89,731 $ 42,949 $ 867,656 Criticized - compromised — — — — — 20 — 2,380 2,400 Classified - substandard — — — — — 10 — — 10 Classified - doubtful — — — — — — — — — Total $ 163,921 $ 291,411 $ 140,411 $ 53,071 $ 49,688 $ 36,504 $ 89,731 $ 45,329 $ 870,066 Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ 222 $ 222 Commercial real estate: improved property Risk rating: Pass $ 401,664 $ 1,090,574 $ 623,153 $ 610,828 $ 512,609 $ 1,754,251 $ 93,421 $ 240,134 $ 5,326,634 Criticized - compromised — 10,300 3,938 2,855 3,964 81,658 1,986 21,162 125,863 Classified - substandard — 514 469 2,764 35,744 25,076 19 34 64,620 Classified - doubtful — — — — — — — — — Total $ 401,664 $ 1,101,388 $ 627,560 $ 616,447 $ 552,317 $ 1,860,985 $ 95,426 $ 261,330 $ 5,517,117 Current-period gross charge-offs $ — $ — $ — $ — $ — $ 1,450 $ — $ — $ 1,450 Commercial and industrial Risk rating: Pass $ 168,627 $ 255,050 $ 147,484 $ 92,590 $ 47,358 $ 279,259 $ 504,659 $ 34,344 $ 1,529,371 Criticized - compromised 959 512 4,020 359 6,786 17,317 14,509 7,411 51,873 Classified - substandard — 135 59 607 841 2,075 1,148 1,502 6,367 Classified - doubtful — — — — — — — — — Total $ 169,586 $ 255,697 $ 151,563 $ 93,556 $ 54,985 $ 298,651 $ 520,316 $ 43,257 $ 1,587,611 Current-period gross charge-offs $ 98 $ 143 $ 563 $ 43 $ 20 $ 387 $ — $ 244 $ 1,498 Residential real estate Loan delinquency: Current $ 212,958 $ 481,377 $ 464,248 $ 188,572 $ 88,126 $ 475,232 $ — $ 473,321 $ 2,383,834 30-59 days past due — — — — — 1,134 — — 1,134 60-89 days past due 196 127 34 — 52 2,004 — 542 2,955 90 days or more past due — — 187 — 215 4,174 — 32 4,608 Total $ 213,154 $ 481,504 $ 464,469 $ 188,572 $ 88,393 $ 482,544 $ — $ 473,895 $ 2,392,531 Current-period gross charge-offs $ — $ — $ — $ — $ 5 $ 273 $ — $ — $ 278 Home equity Loan delinquency: Current $ 11,528 $ 947 $ 1,581 $ 1,709 $ 1,912 $ 23,294 $ 663,347 $ 1,117 $ 705,435 30-59 days past due — 230 67 169 50 953 2,121 9 3,599 60-89 days past due — 175 161 326 109 438 — — 1,209 90 days or more past due — 184 55 539 283 3,463 — 419 4,943 Total $ 11,528 $ 1,536 $ 1,864 $ 2,743 $ 2,354 $ 28,148 $ 665,468 $ 1,545 $ 715,186 Current-period gross charge-offs $ — $ 139 $ 54 $ 1 $ 29 $ 441 $ 6 $ — $ 670 Consumer Loan delinquency: Current $ 72,886 $ 63,086 $ 24,744 $ 15,868 $ 13,851 $ 13,989 $ 23,967 $ — $ 228,391 30-59 days past due 570 1,384 657 231 62 147 101 — 3,152 60-89 days past due 42 556 329 49 13 46 — — 1,035 90 days or more past due 83 451 106 74 16 54 — — 784 Total $ 73,581 $ 65,477 $ 25,836 $ 16,222 $ 13,942 $ 14,236 $ 24,068 $ — $ 233,362 Current-period gross charge-offs $ 73 $ 1,305 $ 681 $ 240 $ 79 $ 223 $ 3 $ — $ 2,604 Loans As of December 31, 2022 Amortized Cost Basis by Origination Year (unaudited, in thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total Commercial real estate: land and construction Risk rating: Pass $ 159,769 $ 136,131 $ 138,171 $ 155,141 $ 61,823 $ 51,381 $ 117,237 $ 92,151 $ 911,804 Criticized - compromised 559 265 — — 24 31 — 450 1,329 Classified - substandard — — 6,001 — — 124 — 24,629 30,754 Classified - doubtful — — — — — — — — — Total $ 160,328 $ 136,396 $ 144,172 $ 155,141 $ 61,847 $ 51,536 $ 117,237 $ 117,230 $ 943,887 Current-period gross charge-offs $ — $ — $ — $ — $ 73 $ — $ — $ — $ 73 Commercial real estate: improved property Risk rating: Pass $ 1,082,984 $ 620,205 $ 613,663 $ 528,004 $ 371,880 $ 1,551,478 $ 72,327 $ 99,594 $ 4,940,135 Criticized - compromised 10,554 354 2,877 7,659 13,551 85,332 1,066 — 121,393 Classified - substandard — 658 275 15,489 9,761 29,712 34 — 55,929 Classified - doubtful — — — — — — — — — Total $ 1,093,538 $ 621,217 $ 616,815 $ 551,152 $ 395,192 $ 1,666,522 $ 73,427 $ 99,594 $ 5,117,457 Current-period gross charge-offs $ — $ — $ 128 $ 100 $ 3 $ 564 $ — $ — $ 795 Commercial and industrial Risk rating: Pass $ 280,510 $ 184,805 $ 116,890 $ 72,142 $ 103,660 $ 232,062 $ 526,025 $ 22,206 $ 1,538,300 Criticized - compromised 917 1,192 270 8,278 264 2,524 7,654 4,124 25,223 Classified - substandard 93 3,209 976 2,157 97 2,854 1,066 5,420 15,872 Classified - doubtful — — — — — — — — — Total $ 281,520 $ 189,206 $ 118,136 $ 82,577 $ 104,021 $ 237,440 $ 534,745 $ 31,750 $ 1,579,395 Current-period gross charge-offs $ — $ 16 $ 234 $ 275 $ 70 $ 182 $ — $ 291 $ 1,068 Residential real estate Loan delinquency: Current $ 541,659 $ 556,928 $ 211,496 $ 97,160 $ 52,135 $ 478,977 $ — $ 190,740 $ 2,129,095 30-59 days past due — — — — — 853 — — 853 60-89 days past due — 442 349 65 — 2,680 — — 3,536 90 days or more past due — — — 285 119 6,654 — 42 7,100 Total $ 541,659 $ 557,370 $ 211,845 $ 97,510 $ 52,254 $ 489,164 $ — $ 190,782 $ 2,140,584 Current-period gross charge-offs $ — $ — $ — $ — $ 6 $ 494 $ — $ — $ 500 Home equity Loan delinquency: Current $ 10,718 $ 1,459 $ 1,133 $ 1,774 $ 1,088 $ 25,203 $ 644,430 $ 957 $ 686,762 30-59 days past due 80 61 180 67 34 1,165 2,260 38 3,885 60-89 days past due — 15 — 50 88 458 — 10 621 90 days or more past due — — 572 93 257 2,425 16 434 3,797 Total $ 10,798 $ 1,535 $ 1,885 $ 1,984 $ 1,467 $ 29,251 $ 646,706 $ 1,439 $ 695,065 Current-period gross charge-offs $ — $ — $ — $ — $ — $ 310 $ — $ 48 $ 358 Consumer Loan delinquency: Current $ 84,817 $ 36,123 $ 25,071 $ 25,535 $ 8,488 $ 16,337 $ 25,755 $ 27 $ 222,153 30-59 days past due 980 937 488 159 98 217 31 — 2,910 60-89 days past due 184 293 94 47 29 57 — — 704 90 days or more past due 183 208 69 32 2 79 — — 573 Total $ 86,164 $ 37,561 $ 25,722 $ 25,773 $ 8,617 $ 16,690 $ 25,786 $ 27 $ 226,340 Current-period gross charge-offs $ 769 $ 1,237 $ 624 $ 333 $ 186 $ 326 $ — $ 1 $ 3,476 The following table summarizes other real estate owned and repossessed assets included in other assets: September 30, December 31, (unaudited, in thousands) 2023 2022 Other real estate owned $ 1,231 $ 1,397 Repossessed assets 102 89 Total other real estate owned and repossessed assets $ 1,333 $ 1,486 Residential real estate included in other real estate owned was $ 0.1 million and $ 0 million at September 30, 2023 and December 31, 2022, respectively. At September 30, 2023 and December 31, 2022 , formal foreclosure proceedings were in process on residential real estate loans totaling $ 4.4 million and $ 4.9 million, respectively. |