| Financing Receivables | Loans and Allowance for Credit Losses Major classifications within the Company’s held for investment loan portfolio at September 30, 2023 and December 31, 2022 are as follows: (In thousands) September 30, 2023 December 31, 2022 Commercial: Business $ 5,908,330 $ 5,661,725 Real estate – construction and land 1,539,566 1,361,095 Real estate – business 3,647,168 3,406,981 Personal Banking: Real estate – personal 3,024,639 2,918,078 Consumer 2,125,804 2,059,088 Revolving home equity 305,237 297,207 Consumer credit card 574,829 584,000 Overdrafts 3,753 14,957 Total loans $ 17,129,326 $ 16,303,131 Accrued interest receivable totaled $72.5 million and $55.5 million at September 30, 2023 and December 31, 2022, respectively, and was included within other assets on the consolidated balance sheets. For the three months ended September 30, 2023, the Company wrote-off accrued interest by reversing interest income of $237 thousand and $1.2 million in the Commercial and Personal Banking portfolios, respectively. Similarly, for the nine months ended September 30, 2023, the Company wrote-off accrued interest of $313 thousand and $3.4 million in the Commercial and Personal Banking portfolios, respectively. For the three months ended September 30, 2022, the Company reversed interest income of $48 thousand and $699 thousand in the Commercial and Personal Banking portfolios, respectively, and in the nine months ended September 30, 2022, reversed $103 thousand and $2.4 million in the Commercial and Personal Banking portfolios. At September 30, 2023, loans of $3.5 billion were pledged at the Federal Home Loan Bank as collateral for borrowings and letters of credit obtained to secure public deposits. Additional loans of $3.1 billion were pledged at the Federal Reserve Bank as collateral for discount window borrowings. Allowance for credit losses The allowance for credit losses is measured using an average historical loss model which incorporates relevant information about past events (including historical credit loss experience on loans with similar risk characteristics), current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the loans. The allowance for credit losses is measured on a collective (pool) basis. Loans are aggregated into pools based on similar risk characteristics including borrower type, collateral type and expected credit loss patterns. Loans that do not share similar risk characteristics, primarily large loans on non-accrual status, are evaluated on an individual basis. For loans evaluated for credit losses on a collective basis, average historical loss rates are calculated for each pool using the Company’s historical net charge-offs (combined charge-offs and recoveries by observable historical reporting period) and outstanding loan balances during a lookback period. Lookback periods can be different based on the individual pool and represent management’s credit expectations for the pool of loans over the remaining contractual life. In certain loan pools, if the Company’s own historical loss rate is not reflective of the loss expectations, the historical loss rate is augmented by industry and peer data. The calculated average net charge-off rate is then adjusted for current conditions and reasonable and supportable forecasts. These adjustments increase or decrease the average historical loss rate to reflect expectations of future losses given a single path economic forecast of key macroeconomic variables including GDP, disposable income, various interest rates, unemployment rate, consumer price index (CPI) inflation rate, housing price index (HPI), commercial real estate price index (CREPI) and market volatility. The adjustments are based on results from various regression models projecting the impact of the macroeconomic variables to loss rates. The forecast is used for a reasonable and supportable period before reverting back to historical averages using a straight-line method. The forecast adjusted loss rate is applied to the amortized cost of loans over the remaining contractual lives, adjusted for expected prepayments. The contractual term excludes expected extensions (except for contractual extensions at the option of the customer), renewals and modifications. Credit cards and certain similar consumer lines of credit do not have stated maturities and therefore, for these loan classes, remaining contractual lives are determined by estimating future cash flows expected to be received from customers until payments have been fully allocated to outstanding balances. Additionally, the allowance for credit losses considers other qualitative factors not included in historical loss rates or macroeconomic forecast such as changes in portfolio composition, underwriting practices, or significant unique events or conditions. Key assumptions in the Company’s allowance for credit loss model include the economic forecast, the reasonable and supportable period, forecasted macro-economic variables, prepayment assumptions and qualitative factors applied for portfolio composition changes, underwriting practices, or significant unique events or conditions. The assumptions utilized in estimating the Company’s allowance for credit losses at September 30, 2023 and June 30, 2023 are discussed below. Key Assumption September 30, 2023 June 30, 2023 Overall economic forecast • Mild recession starting in the fourth quarter of 2023 • Risks remain tilted toward another rate hike if progress on inflation and labor markets reverse course • Consumer spending is expected to be short lived, and growth is expected to fall • Mild recession in the second half of 2023 • Assume the Federal Reserve will pause increasing interest rates through year end • Mild recession is expected to weaken employment Reasonable and supportable period and related reversion period • Reasonable and supportable period of one year • Reversion to historical average loss within two quarters using straight-line method • Reasonable and supportable period of one year • Reversion to historical average loss within two quarters using straight-line method Forecasted macro-economic variables • Unemployment rate ranges from 3.9% to 5.0% during the supportable forecast period • Real GDP growth ranges from (.29)% to 1.5% • BBB corporate yield from 4.8% to 5.8% • Housing Price Index from 291.0 to 296.1 • Unemployment rate ranges from 3.9% to 5.3% during the supportable forecast period • Real GDP growth ranges from (.27)% to 1.2% • BBB corporate yield from 4.9% to 5.5% • Housing Price Index from 282.1 to 284.5 Prepayment assumptions Commercial loans • 5% for most loan pools Personal banking loans • Ranging from 8.0% to 22.8% for most loan pools • Consumer credit cards 67.3% Commercial loans • 5% for most loan pools Personal banking loans • Ranging from 7.93% to 22.9% for most loan pools • Consumer credit cards 67.6% Qualitative factors Added qualitative factors related to: • Changes in the composition of the loan portfolios • Certain stressed industries within the portfolio • Certain portfolios sensitive to unusually high rate of inflation and supply chain issues • Loans downgraded to special mention, substandard, or non-accrual status Added qualitative factors related to: • Changes in the composition of the loan portfolios • Certain stressed industries within the portfolio • Certain portfolios sensitive to unusually high rate of inflation and supply chain issues • Loans downgraded to special mention, substandard, or non-accrual status The liability for unfunded lending commitments utilizes the same model as the allowance for credit losses on loans, however, the liability for unfunded lending commitments incorporates an assumption for the portion of unfunded commitments that are expected to be funded. Sensitivity in the Allowance for Credit Loss model The allowance for credit losses is an estimate that requires significant judgment including projections of the macro-economic environment. The forecasted macro-economic environment continuously changes which can cause fluctuations in estimated expected credit losses. The current forecast projects a mild recession starting in the fourth quarter of 2023 as the economy continues to face high inflation, higher interest rates and a weaker job market. The impacts of the market's response to unusual events or trends including high inflation, supply chain stresses, trends in health conditions and changes in the geopolitical environment could significantly modify economic projections used in the estimation of the allowance for credit losses. A summary of the activity in the allowance for credit losses on loans and the liability for unfunded lending commitments during the three and nine months ended September 30, 2023 and 2022, respectively, follows: For the Three Months Ended September 30, 2023 For the Nine Months Ended September 30, 2023 (In thousands) Commercial Personal Banking Total Commercial Personal Banking Total ALLOWANCE FOR CREDIT LOSSES ON LOANS Balance at beginning of period $ 108,024 $ 50,661 $ 158,685 $ 103,293 $ 46,843 $ 150,136 Provision for credit losses on loans 5,201 8,142 13,343 10,203 24,952 35,155 Deductions: Loans charged off 2,664 9,262 11,926 3,263 26,549 29,812 Less recoveries on loans 66 2,076 2,142 394 6,371 6,765 Net loan charge-offs (recoveries) 2,598 7,186 9,784 2,869 20,178 23,047 Balance September 30, 2023 $ 110,627 $ 51,617 $ 162,244 $ 110,627 $ 51,617 $ 162,244 LIABILITY FOR UNFUNDED LENDING COMMITMENTS Balance at beginning of period $ 27,842 $ 1,393 $ 29,235 $ 31,743 $ 1,377 $ 33,120 Provision for credit losses on unfunded lending commitments (1,724) 26 (1,698) (5,625) 42 (5,583) Balance September 30, 2023 $ 26,118 $ 1,419 $ 27,537 $ 26,118 $ 1,419 $ 27,537 ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS $ 136,745 $ 53,036 $ 189,781 $ 136,745 $ 53,036 $ 189,781 For the Three Months Ended September 30, 2022 For the Nine Months Ended September 30, 2022 (In thousands) Commercial Personal Banking Total Commercial Personal Banking Total ALLOWANCE FOR CREDIT LOSSES ON LOANS Balance at beginning of period $ 99,525 $ 38,514 $ 138,039 $ 97,776 $ 52,268 $ 150,044 Provision for credit losses on loans 4,014 6,136 10,150 5,851 900 6,751 Deductions: Loans charged off 509 6,721 7,230 893 20,539 21,432 Less recoveries on loans 56 2,362 2,418 352 7,662 8,014 Net loan charge-offs (recoveries) 453 4,359 4,812 541 12,877 13,418 Balance September 30, 2022 $ 103,086 $ 40,291 $ 143,377 $ 103,086 $ 40,291 $ 143,377 LIABILITY FOR UNFUNDED LENDING COMMITMENTS Balance at beginning of period $ 23,617 $ 1,290 $ 24,907 $ 23,271 $ 933 $ 24,204 Provision for credit losses on unfunded lending commitments 5,182 (42) 5,140 5,528 315 5,843 Balance September 30, 2022 $ 28,799 $ 1,248 $ 30,047 $ 28,799 $ 1,248 $ 30,047 ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS $ 131,885 $ 41,539 $ 173,424 $ 131,885 $ 41,539 $ 173,424 Delinquent and non-accrual loans The Company considers loans past due on the day following the contractual repayment date, if the contractual repayment was not received by the Company as of the end of the business day. The following table provides aging information on the Company’s past due and accruing loans, in addition to the balances of loans on non-accrual status, at September 30, 2023 and December 31, 2022. (In thousands) Current or Less Than 30 Days Past Due 30 – 89 Days Past Due 90 Days Past Due and Still Accruing Non-accrual Total September 30, 2023 Commercial: Business $ 5,899,303 $ 1,726 $ 699 $ 6,602 $ 5,908,330 Real estate – construction and land 1,539,345 221 — — 1,539,566 Real estate – business 3,646,573 519 — 76 3,647,168 Personal Banking: Real estate – personal 3,003,094 13,578 6,436 1,531 3,024,639 Consumer 2,095,230 28,509 2,065 — 2,125,804 Revolving home equity 300,018 2,539 2,680 — 305,237 Consumer credit card 561,534 6,595 6,700 — 574,829 Overdrafts 3,395 358 — — 3,753 Total $ 17,048,492 $ 54,045 $ 18,580 $ 8,209 $ 17,129,326 December 31, 2022 Commercial: Business $ 5,652,710 $ 1,759 $ 505 $ 6,751 $ 5,661,725 Real estate – construction and land 1,361,095 — — — 1,361,095 Real estate – business 3,406,207 585 — 189 3,406,981 Personal Banking: Real estate – personal 2,895,742 14,289 6,681 1,366 2,918,078 Consumer 2,031,827 25,089 2,172 — 2,059,088 Revolving home equity 295,303 1,201 703 — 297,207 Consumer credit card 572,213 6,238 5,549 — 584,000 Overdrafts 14,090 647 220 — 14,957 Total $ 16,229,187 $ 49,808 $ 15,830 $ 8,306 $ 16,303,131 At September 30, 2023, the Company had $2.6 million in non-accrual business loans that had no allowance for credit loss, compared to $3.8 million in non-accrual business loans that had no allowance for credit loss at December 31, 2022. The Company did not record any interest income on non-accrual loans during the nine months ended September 30, 2023 and 2022, respectively. Credit quality indicators The following table provides information about the credit quality of the Commercial loan portfolio. The Company utilizes an internal risk rating system comprised of a series of grades to categorize loans according to perceived risk associated with the expectation of debt repayment based on borrower specific information including, but not limited to, current financial information, historical payment experience, industry information, collateral levels and collateral types. The “pass” category consists of a range of loan grades that reflect increasing, though still acceptable, risk. A loan is assigned the risk rating at origination and then monitored throughout the contractual term for possible risk rating changes. Movement of risk through the various grade levels in the “pass” category is monitored for early identification of credit deterioration. The “special mention” rating is applied to loans where the borrower exhibits negative financial trends due to borrower specific or systemic conditions that, if left uncorrected, threaten its capacity to meet its debt obligations. The borrower is believed to have sufficient financial flexibility to react to and resolve its negative financial situation. It is a transitional grade that is closely monitored for improvement or deterioration. The “substandard” rating is applied to loans where the borrower exhibits well-defined weaknesses that jeopardize its continued performance and are of a severity that the distinct possibility of default exists. Loans are placed on “non-accrual” when management does not expect to collect payments consistent with acceptable and agreed upon terms of repayment. All loans are analyzed for risk rating updates annually. For larger loans, rating assessments may be more frequent if relevant information is obtained earlier through debt covenant monitoring or overall relationship management. Smaller loans are monitored as identified by the loan officer based on the risk profile of the individual borrower or if the loan becomes past due related to credit issues. Loans rated Special Mention, Substandard or Non-accrual are subject to quarterly review and monitoring processes. In addition to the regular monitoring performed by the lending personnel and credit committees, loans are subject to review by a credit review department which verifies the appropriateness of the risk ratings for the loans chosen as part of its risk-based review plan. The risk category of loans in the Commercial portfolio as of September 30, 2023 and December 31, 2022 are as follows: Term Loans Amortized Cost Basis by Origination Year (In thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total September 30, 2023 Business Risk Rating: Pass $ 1,277,612 $ 944,231 $ 585,620 $ 302,672 $ 281,949 $ 281,170 $ 2,101,284 $ 5,774,538 Special mention 22,310 4,513 20,926 7,223 282 2,530 16,783 74,567 Substandard 68 5,675 9,511 14,799 465 10,726 11,379 52,623 Non-accrual — 2,524 1,462 — — 2,616 — 6,602 Total Business: $ 1,299,990 $ 956,943 $ 617,519 $ 324,694 $ 282,696 $ 297,042 $ 2,129,446 $ 5,908,330 Gross write-offs for the nine months ended September 30, 2023 $ — $ 2,241 $ 56 $ 41 $ — $ — $ 924 $ 3,262 Real estate-construction Risk Rating: Pass $ 344,977 $ 638,963 $ 467,912 $ 46,827 $ 469 $ 2,984 $ 29,907 $ 1,532,039 Special mention 3,532 — — — — — — 3,532 Substandard — 3,995 — — — — — 3,995 Total Real estate-construction: $ 348,509 $ 642,958 $ 467,912 $ 46,827 $ 469 $ 2,984 $ 29,907 $ 1,539,566 Gross write-offs for the nine months ended September 30, 2023 $ — $ — $ — $ — $ — $ — $ — $ — Real estate-business Risk Rating: Pass $ 610,274 $ 1,120,900 $ 515,022 $ 457,778 $ 331,537 $ 344,130 $ 71,627 $ 3,451,268 Special mention 4,107 15,582 3,032 895 9,373 886 — 33,875 Substandard — 20,299 25,477 17,318 11,807 86,784 264 161,949 Non-accrual — — — — — 76 — 76 Total Real estate-business: $ 614,381 $ 1,156,781 $ 543,531 $ 475,991 $ 352,717 $ 431,876 $ 71,891 $ 3,647,168 Gross write-offs for the nine months ended September 30, 2023 $ — $ — $ — $ — $ — $ 1 $ — $ 1 Commercial loans Risk Rating: Pass $ 2,232,863 $ 2,704,094 $ 1,568,554 $ 807,277 $ 613,955 $ 628,284 $ 2,202,818 $ 10,757,845 Special mention 29,949 20,095 23,958 8,118 9,655 3,416 16,783 111,974 Substandard 68 29,969 34,988 32,117 12,272 97,510 11,643 218,567 Non-accrual — 2,524 1,462 — — 2,692 — 6,678 Total Commercial loans: $ 2,262,880 $ 2,756,682 $ 1,628,962 $ 847,512 $ 635,882 $ 731,902 $ 2,231,244 $ 11,095,064 Gross write-offs for the nine months ended September 30, 2023 $ — $ 2,241 $ 56 $ 41 $ — $ 1 $ 924 $ 3,263 Term Loans Amortized Cost Basis by Origination Year (In thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total December 31, 2022 Business Risk Rating: Pass $ 1,456,476 $ 782,409 $ 464,201 $ 360,844 $ 180,375 $ 219,053 $ 2,146,380 $ 5,609,738 Special mention 3,113 2,548 7,757 1,063 67 — 1,319 15,867 Substandard 5,752 10,004 685 37 810 10,342 1,739 29,369 Non-accrual 195 1,987 — 1 792 3,776 — 6,751 Total Business: $ 1,465,536 $ 796,948 $ 472,643 $ 361,945 $ 182,044 $ 233,171 $ 2,149,438 $ 5,661,725 Real estate-construction Risk Rating: Pass $ 538,022 $ 596,465 $ 129,632 $ 27,331 $ 1,305 $ 2,029 $ 18,559 $ 1,313,343 Special mention 352 — — — — — — 352 Substandard — 19,494 — — 14,766 13,140 — 47,400 Total Real estate-construction: $ 538,374 $ 615,959 $ 129,632 $ 27,331 $ 16,071 $ 15,169 $ 18,559 $ 1,361,095 Real estate- business Risk Rating: Pass $ 1,085,379 $ 616,516 $ 555,648 $ 424,641 $ 163,628 $ 271,579 $ 90,799 $ 3,208,190 Special mention 4,608 — 618 9,737 976 279 — 16,218 Substandard 2,795 30,944 61,141 10,490 30,782 46,232 — 182,384 Non-accrual 14 45 — — 124 6 — 189 Total Real-estate business: $ 1,092,796 $ 647,505 $ 617,407 $ 444,868 $ 195,510 $ 318,096 $ 90,799 $ 3,406,981 Commercial loans Risk Rating: Pass $ 3,079,877 $ 1,995,390 $ 1,149,481 $ 812,816 $ 345,308 $ 492,661 $ 2,255,738 $ 10,131,271 Special mention 8,073 2,548 8,375 10,800 1,043 279 1,319 32,437 Substandard 8,547 60,442 61,826 10,527 46,358 69,714 1,739 259,153 Non-accrual 209 2,032 — 1 916 3,782 — 6,940 Total Commercial loans: $ 3,096,706 $ 2,060,412 $ 1,219,682 $ 834,144 $ 393,625 $ 566,436 $ 2,258,796 $ 10,429,801 The credit quality of Personal Banking loans is monitored primarily on the basis of aging/delinquency, and this information is provided as of September 30, 2023 and December 31, 2022 below. Term Loans Amortized Cost Basis by Origination Year (In thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total September 30, 2023 Real estate-personal Current to 90 days past due $ 384,542 $ 462,127 $ 546,460 $ 728,286 $ 266,678 $ 619,916 $ 8,663 $ 3,016,672 Over 90 days past due 49 1,299 1,499 1,071 — 2,518 — 6,436 Non-accrual — 161 — — 160 1,210 — 1,531 Total Real estate-personal: $ 384,591 $ 463,587 $ 547,959 $ 729,357 $ 266,838 $ 623,644 $ 8,663 $ 3,024,639 Gross write-offs for the nine months ended September 30, 2023 $ — $ 18 $ — $ — $ — $ 23 $ — $ 41 Consumer Current to 90 days past due $ 452,731 $ 368,897 $ 279,652 $ 143,995 $ 66,217 $ 59,466 $ 752,781 $ 2,123,739 Over 90 days past due 293 392 200 28 66 378 708 2,065 Total Consumer: $ 453,024 $ 369,289 $ 279,852 $ 144,023 $ 66,283 $ 59,844 $ 753,489 $ 2,125,804 Gross write-offs for the nine months ended September 30, 2023 $ 392 $ 1,968 $ 1,541 $ 658 $ 310 $ 297 $ 788 $ 5,954 Revolving home equity Current to 90 days past due $ — $ — $ — $ — $ — $ — $ 302,557 $ 302,557 Over 90 days past due — — — — — — 2,680 2,680 Total Revolving home equity: $ — $ — $ — $ — $ — $ — $ 305,237 $ 305,237 Gross write-offs for the nine months ended September 30, 2023 $ — $ — $ — $ — $ — $ — $ 11 $ 11 Consumer credit card Current to 90 days past due $ — $ — $ — $ — $ — $ — $ 568,129 $ 568,129 Over 90 days past due — — — — — — 6,700 6,700 Total Consumer credit card: $ — $ — $ — $ — $ — $ — $ 574,829 $ 574,829 Gross write-offs for the nine months ended September 30, 2023 $ — $ — $ — $ — $ — $ — $ 17,602 $ 17,602 Overdrafts Current to 90 days past due $ 3,753 $ — $ — $ — $ — $ — $ — $ 3,753 Total Overdrafts: $ 3,753 $ — $ — $ — $ — $ — $ — $ 3,753 Gross write-offs for the nine months ended September 30, 2023 $ 2,941 $ — $ — $ — $ — $ — $ — $ 2,941 Personal banking loans Current to 90 days past due $ 841,026 $ 831,024 $ 826,112 $ 872,281 $ 332,895 $ 679,382 $ 1,632,130 $ 6,014,850 Over 90 days past due 342 1,691 1,699 1,099 66 2,896 10,088 17,881 Non-accrual — 161 — — 160 1,210 — 1,531 Total Personal banking loans: $ 841,368 $ 832,876 $ 827,811 $ 873,380 $ 333,121 $ 683,488 $ 1,642,218 $ 6,034,262 Gross write-offs for the nine months ended September 30, 2023 $ 3,333 $ 1,986 $ 1,541 $ 658 $ 310 $ 320 $ 18,401 $ 26,549 Term Loans Amortized Cost Basis by Origination Year (In thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total December 31, 2022 Real estate-personal Current to 90 days past due $ 535,283 $ 589,658 $ 783,651 $ 290,580 $ 132,305 $ 568,380 $ 10,174 $ 2,910,031 Over 90 days past due 514 967 1,338 81 1,388 2,393 — 6,681 Non-accrual — — 52 169 102 1,043 — 1,366 Total Real estate-personal: $ 535,797 $ 590,625 $ 785,041 $ 290,830 $ 133,795 $ 571,816 $ 10,174 $ 2,918,078 Consumer Current to 90 days past due $ 536,429 $ 378,118 $ 205,849 $ 106,733 $ 36,096 $ 62,255 $ 731,436 $ 2,056,916 Over 90 days past due 326 251 203 58 267 228 839 2,172 Total Consumer: $ 536,755 $ 378,369 $ 206,052 $ 106,791 $ 36,363 $ 62,483 $ 732,275 $ 2,059,088 Revolving home equity Current to 90 days past due $ — $ — $ — $ — $ — $ — $ 296,504 $ 296,504 Over 90 days past due — — — — — — 703 703 Total Revolving home equity: $ — $ — $ — $ — $ — $ — $ 297,207 $ 297,207 Consumer credit card Current to 90 days past due $ — $ — $ — $ — $ — $ — $ 578,451 $ 578,451 Over 90 days past due — — — — — — 5,549 5,549 Total Consumer credit card: $ — $ — $ — $ — $ — $ — $ 584,000 $ 584,000 Overdrafts Current to 90 days past due $ 14,737 $ — $ — $ — $ — $ — $ — $ 14,737 Over 90 days past due 220 — — — — — — 220 Total Overdrafts: $ 14,957 $ — $ — $ — $ — $ — $ — $ 14,957 Personal banking loans Current to 90 days past due $ 1,086,449 $ 967,776 $ 989,500 $ 397,313 $ 168,401 $ 630,635 $ 1,616,565 $ 5,856,639 Over 90 days past due 1,060 1,218 1,541 139 1,655 2,621 7,091 15,325 Non-accrual — — 52 169 102 1,043 — 1,366 Total Personal banking loans: $ 1,087,509 $ 968,994 $ 991,093 $ 397,621 $ 170,158 $ 634,299 $ 1,623,656 $ 5,873,330 Collateral-dependent loans The Company's collateral-dependent loans are comprised of large loans on non-accrual status. The Company requires that collateral-dependent loans are either over-collateralized or carry collateral equal to the amortized cost of the loan. The following table presents the amortized cost basis of collateral-dependent loans as of September 30, 2023 and December 31, 2022. (In thousands) Business Assets Oil & Gas Assets Total September 30, 2023 Commercial: Business $ 3,792 $ 1,345 $ 5,137 Total $ 3,792 $ 1,345 $ 5,137 December 31, 2022 Commercial: Business $ 2,778 $ 1,824 $ 4,602 Total $ 2,778 $ 1,824 $ 4,602 Other Personal Banking loan information As noted above, the credit quality of Personal Banking loans is monitored primarily on the basis of aging/delinquency, and this information is provided in the table in the above section on "Credit quality indicators." In addition, FICO scores are obtained and updated on a quarterly basis for most of the loans in the Personal Banking portfolio. This is a published credit score designed to measure the risk of default by taking into account various factors from a borrower's financial history and is considered supplementary information utilized by the Company, as management does not consider this information in evaluating the allowance for credit losses on loans. The Bank normally obtains a FICO score at the loan's origination and renewal dates, and updates are obtained on a quarterly basis. Excluded from the table below are certain personal real estate loans for which FICO scores are not obtained because the loans generally pertain to commercial customer activities and are often underwritten with other collateral considerations. These loans totaled $170.2 million at September 30, 2023 and $179.2 million at December 31, 2022. The table also excludes consumer loans related to the Company's patient healthcare loan program, which totaled $210.0 million at September 30, 2023 and $197.5 million at December 31, 2022. As the healthcare loans are guaranteed by the hospital, customer FICO scores are not obtained for these loans. The personal real estate loans and consumer loans excluded below totaled less than 7% of the Personal Banking portfolio. For the remainder of loans in the Personal Banking portfolio, the table below shows the percentage of balances outstanding at September 30, 2023 and December 31, 2022 by FICO score. Personal Banking Loans % of Loan Category Real Estate - Personal Consumer Revolving Home Equity Consumer Credit Card September 30, 2023 FICO score: Under 600 1.8 % 2.8 % 1.8 % 4.4 % 600 - 659 2.3 4.6 3.3 12.1 660 - 719 8.3 13.1 9.7 29.5 720 - 779 22.2 26.2 23.2 27.6 780 and over 65.4 53.3 62.0 26.4 Total 100.0 % 100.0 % 100.0 % 100.0 % December 31, 2022 FICO score: Under 600 1.4 % 2.2 % 1.5 % 3.4 % 600 - 659 2.2 4.2 2.8 11.4 660 - 719 8.1 14.5 9.7 30.8 720 - 779 23.7 26.7 21.4 27.1 780 and over 64.6 52.4 64.6 27.3 Total 100.0 % 100.0 % 100.0 % 100.0 % Modifications for borrowers experiencing financial difficulty When borrowers are experiencing financial difficulty, the Company may agree to modify the contractual terms of a loan to a borrower in order to assist the borrower in repaying principal and interest owed to the Company. The Company's modifications of loans to borrowers experiencing financial difficulty are generally in the form of term extensions, repayment plans, payment deferrals, forbearance agreements, interest rate reductions, forgiveness of interest and/or fees, or any combination thereof. Commercial loans modified to borrowers experiencing financial difficulty are primarily loans that are substandard or non-accrual, where the maturity date was extended. Modifications on personal real estate loans are primarily those placed on forbearance plans, repayment plans, or deferral plans where monthly payments are suspended for a period of time or past due amounts are paid off over a certain period of time in the future or set up as a balloon payment at maturity. Modifications to certain credit card and other small consumer loans are often modified under debt counseling programs that can reduce the contractual rate or, in certain instances, forgive certain fees and interest charges. Other consumer loans modified to borrowers experiencing financial difficulty consist of various other workout arrangements with consumer customers. The following tables present the amortized cost at September 30, 2023 of loans that were modified during the three and nine months ended September 30, 2023. For the Three Months Ended September 30, 2023 (Dollars in thousands) Term Extension Payment Delay Interest Rate Reduction Interest/Fees Forgiven Other Total % of Total Loan Category September 30, 2023 Commercial: Business $ 3,792 $ — $ — $ — $ — $ 3,792 0.1 % Real estate – business 56,552 — — — — 56,552 1.6 Personal Banking: Real estate – personal 45 773 — — — 818 — Consumer — — 49 — 31 80 — Consumer credit card — — 935 72 — 1,007 0.2 Total $ 60,389 $ 773 $ 984 $ 72 $ 31 $ 62,249 0.4 % For the Nine Months Ended September 30, 2023 (Dollars in thousands) Term Extension Payment Delay Interest Rate Reduction Interest/Fees Forgiven Other Total % of Total Loan Category September 30, 2023 Commercial: Business $ 16,705 $ — $ — $ — $ — $ 16,705 0.3 % Real estate – business 106,034 — — — — 106,034 2.9 Personal Banking: Real estate – personal 289 3,313 — — — 3,602 0.1 Consumer 30 70 69 — 86 255 — Consumer credit card — — 1,967 485 — 2,452 0.4 Total $ 123,058 $ 3,383 $ 2,036 $ 485 $ 86 $ 129,048 0.8 % The estimate of lifetime expected losses utilized in the allowance for credit losses model is developed using average historical experience on loans with similar risk characteristics, which includes losses from modifications of loans to borrowers experiencing financial difficulty. As a result, a change to the allowance for credit losses is generally not recorded upon modification. For modifications to loans made to borrowers experiencing financial difficulty that are placed on non-accrual status, the Company determines the allowance for credit losses on an individual evaluation, using the same process that it utilizes for other loans on non-accrual status. Modifications made to commercial loans which are not on non-accrual status for borrowers experiencing financial difficulty are collectively evaluated based on internal risk rating, loan type, delinquency, historical experience, and current economic factors. Modifications made to borrowers experiencing financial difficulty for personal banking loans which are not on non-accrual status are collectively evaluated based on loan type, delinquency, historical experience, and current economic factors. If a loan to a borrower experiencing financial difficulty is modified and subsequently deemed uncollectible, the allowance for credit losses continues to be based on individual evaluation, if that loan is already on non-accrual status. For those loans, the allowance for credit losses is estimated using discounted expected cash flows or the fair value of collateral. If an accruing loan made to a borrower experiencing financial difficulty is modified and subsequently deemed uncollectible, the loan's risk rating is downgraded to non-accrual status and the loan's related allowance for credit losses is determined based on individual evaluation, or if necessary, the loan is charged off and collection efforts begin. The following tables summarize the financial impact of loan modifications and payment deferrals during the three and nine months ended September 30, 2023. Term Extension Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 Commercial: Business Extended maturity by a weighted average of 3 months. Extended maturity by a weighted average of 8 months. Real estate – business Extended maturity by a weighted average of 12 months. Extended maturity by a weighted average of 13 months. Personal Banking: Real estate – personal Extended maturity by a weighted average of 6 months. Extended maturity by a weighted average of 7 months. Consumer Extended maturity by 10 years. Payment Delay Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 Personal Banking: Real estate – personal Deferred certain payments by a weighted average of 22 years. Deferred certain payments by a weighted average of 20 years. Consumer Deferred certain payments by a weighted average of 71 months. Interest Rate Reduction Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 Personal Banking: Consumer Reduced contractual interest from weighted average 21% to 6%. Reduced contractual interest from weighted average 21% to 6%. Consumer credit card Reduced contractual interest from weighted average 21% to 6%. Reduced contractual interest from weighted average 21% to 6%. Forgiveness of Interest/Fees Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 Personal Banking: Consumer credit card Approximately $5 thousand of interest and fees forgiven. Approximately $33 thousand of interest and fees forgiven. The Company had commitments of $9.1 million at September 30, 2023 to lend additional funds to borrowers experiencing financial difficulty a |
