Loans | Loans The period end loan composition was as follows: ($ in Thousands) Sep 30, 2021 Dec 31, 2020 PPP $ 182,121 $ 767,757 Commercial and industrial 7,927,459 7,701,422 Commercial real estate — owner occupied 879,554 900,912 Commercial and business lending 8,989,133 9,370,091 Commercial real estate — investor 4,296,489 4,342,584 Real estate construction 1,834,871 1,840,417 Commercial real estate lending 6,131,360 6,183,001 Total commercial 15,120,493 15,553,091 Residential mortgage 7,590,895 7,878,324 Home equity 608,566 707,255 Other consumer 294,979 301,876 Auto 6,739 11,177 Total consumer 8,501,180 8,898,632 Total loans $ 23,621,673 $ 24,451,724 Accrued interest receivable on loans totaled $57 million at September 30, 2021, and $66 million at December 31, 2020, and is included in interest receivable on the consolidated balance sheets. Interest accrued but not received for loans placed on nonaccrual is reversed against interest income. The amount of accrued interest reversed totaled approximately $91,000 and $329,000 for the three and nine months ended September 30, 2021, respectively, and $1 million and $2 million for the three and nine months ended September 30, 2020, respectively. The following table presents commercial and consumer loans by credit quality indicator by vintage year at September 30, 2021: Term Loans Amortized Cost Basis by Origination Year (a) ($ in Thousands) Rev Loans Converted to Term (a) Rev Loans Amortized Cost Basis YTD 2021 2020 2019 2018 2017 Prior Total PPP: (b) Risk rating: Pass $ — $ — $ 147,568 $ 29,900 $ — $ — $ — $ — $ 177,467 Special Mention — — 212 281 — — — — 493 Potential Problem — — 4,160 — — — — — 4,160 PPP $ — $ — $ 151,940 $ 30,180 $ — $ — $ — $ — $ 182,121 Commercial and industrial: Risk rating: Pass $ 2,085 $ 2,278,181 $ 1,664,130 $ 1,046,760 $ 1,092,662 $ 802,214 $ 249,129 $ 621,500 $ 7,754,575 Special Mention — 1,396 5,900 193 28,918 — — 2,990 39,397 Potential Problem 2,825 27,948 1,933 5,555 46,997 21,286 20,111 1,160 124,990 Nonaccrual — — 17 166 108 7,248 — 959 8,497 Commercial and industrial $ 4,910 $ 2,307,525 $ 1,671,979 $ 1,052,674 $ 1,168,685 $ 830,748 $ 269,240 $ 626,609 $ 7,927,459 Commercial real estate - owner occupied: Risk rating: Pass $ 11,667 $ 22,430 $ 143,911 $ 173,396 $ 193,463 $ 114,618 $ 61,713 $ 133,641 $ 843,173 Special Mention — 211 — 3,303 11,368 — — 250 15,132 Potential Problem — 487 6,182 5,969 686 748 2,640 4,529 21,241 Nonaccrual — — — — — — — 7 7 Commercial real estate - owner occupied $ 11,667 $ 23,127 $ 150,094 $ 182,668 $ 205,518 $ 115,366 $ 64,353 $ 138,427 $ 879,554 Commercial and business lending: Risk rating: Pass $ 13,752 $ 2,300,611 $ 1,955,609 $ 1,250,056 $ 1,286,125 $ 916,832 $ 310,842 $ 755,141 $ 8,775,216 Special Mention — 1,606 6,112 3,777 40,287 — — 3,240 55,022 Potential Problem 2,825 28,435 12,275 11,524 47,683 22,034 22,751 5,688 150,391 Nonaccrual — — 17 166 108 7,248 — 966 8,504 Commercial and business lending $ 16,577 $ 2,330,652 $ 1,974,013 $ 1,265,523 $ 1,374,203 $ 946,114 $ 333,593 $ 765,036 $ 8,989,133 Commercial real estate - investor: Risk rating: Pass $ 38,041 $ 85,353 $ 878,373 $ 957,478 $ 1,034,119 $ 474,770 $ 178,270 $ 335,168 $ 3,943,532 Special Mention — — 57,100 67,285 74,040 5,973 1,259 6,836 212,491 Potential Problem — — 5,474 25,720 4,074 24,259 4,730 14,705 78,962 Nonaccrual — — 23,973 8,412 9,690 19,222 — 207 61,504 Commercial real estate - investor $ 38,041 $ 85,353 $ 964,920 $ 1,058,894 $ 1,121,923 $ 524,225 $ 184,259 $ 356,916 $ 4,296,489 Real estate construction: Risk rating: Pass $ — $ 26,560 $ 581,257 $ 731,505 $ 328,020 $ 93,893 $ 21,154 $ 13,227 $ 1,795,616 Special Mention — — — — 3,894 15,885 41 — 19,820 Potential Problem — — 8 124 18,968 — — 87 19,187 Nonaccrual — — — 5 — — — 242 247 Real estate construction $ — $ 26,560 $ 581,265 $ 731,634 $ 350,881 $ 109,778 $ 21,195 $ 13,556 $ 1,834,871 Commercial real estate lending: Risk rating: Pass $ 38,041 $ 111,913 $ 1,459,630 $ 1,688,983 $ 1,362,139 $ 568,663 $ 199,424 $ 348,395 $ 5,739,148 Special Mention — — 57,100 67,285 77,934 21,858 1,300 6,836 232,312 Potential Problem — — 5,483 25,844 23,041 24,259 4,730 14,792 98,150 Nonaccrual — — 23,973 8,417 9,690 19,222 — 448 61,751 Commercial real estate lending $ 38,041 $ 111,913 $ 1,546,185 $ 1,790,529 $ 1,472,804 $ 634,002 $ 205,454 $ 370,472 $ 6,131,360 Term Loans Amortized Cost Basis by Origination Year (a) ($ in Thousands) Rev Loans Converted to Term (a) Rev Loans Amortized Cost Basis YTD 2021 2020 2019 2018 2017 Prior Total Total commercial: Risk rating: Pass $ 51,793 $ 2,412,524 $ 3,415,239 $ 2,939,040 $ 2,648,264 $ 1,485,495 $ 510,266 $ 1,103,537 $ 14,514,363 Special Mention — 1,606 63,212 71,061 118,220 21,858 1,300 10,076 287,333 Potential Problem 2,825 28,435 17,758 37,367 70,725 46,294 27,481 20,481 248,541 Nonaccrual — — 23,989 8,584 9,798 26,470 — 1,415 70,256 Total commercial $ 54,618 $ 2,442,565 $ 3,520,198 $ 3,056,052 $ 2,847,007 $ 1,580,116 $ 539,047 $ 1,135,508 $ 15,120,493 Residential mortgage: Risk rating: Pass $ — $ — $ 1,404,558 $ 2,040,914 $ 1,048,656 $ 460,120 $ 722,589 $ 1,854,629 $ 7,531,466 Special Mention — — — — — — — 377 377 Potential Problem — — 538 340 409 326 82 679 2,374 Nonaccrual — — 1,721 2,032 4,483 4,979 7,304 36,160 56,678 Residential mortgage $ — $ — $ 1,406,816 $ 2,043,286 $ 1,053,548 $ 465,425 $ 729,974 $ 1,891,844 $ 7,590,895 Home equity: Risk rating: Pass $ 4,992 $ 504,747 $ 773 $ 1,617 $ 8,850 $ 9,952 $ 8,538 $ 65,577 $ 600,053 Special Mention 74 17 — — 1 110 — 375 503 Potential Problem 10 — 10 — — 15 — 146 171 Nonaccrual 582 4 56 25 227 288 303 6,936 7,838 Home equity $ 5,658 $ 504,767 $ 839 $ 1,643 $ 9,078 $ 10,364 $ 8,841 $ 73,034 $ 608,566 Other consumer: Risk rating: Pass $ 402 $ 168,534 $ 7,455 $ 6,730 $ 6,232 $ 1,940 $ 815 $ 109,253 $ 300,959 Special Mention 64 387 — — 13 66 — 4 470 Nonaccrual 4 164 — 12 56 20 20 18 290 Other consumer $ 471 $ 169,084 $ 7,455 $ 6,743 $ 6,300 $ 2,026 $ 835 $ 109,275 $ 301,718 Total consumer: Risk rating: Pass $ 5,394 $ 673,281 $ 1,412,786 $ 2,049,262 $ 1,063,738 $ 472,012 $ 731,942 $ 2,029,458 $ 8,432,478 Special Mention 138 403 — — 14 176 — 756 1,350 Potential Problem 10 — 548 340 409 341 82 825 2,546 Nonaccrual 586 167 1,776 2,070 4,765 5,287 7,627 43,114 64,806 Total consumer $ 6,128 $ 673,852 $ 1,415,110 $ 2,051,672 $ 1,068,927 $ 477,816 $ 739,650 $ 2,074,153 $ 8,501,180 Total loans: Risk rating: Pass (c) $ 57,187 $ 3,085,805 $ 4,828,025 $ 4,988,301 $ 3,712,002 $ 1,957,507 $ 1,242,208 $ 3,132,995 $ 22,946,842 Special Mention 138 2,010 63,212 71,061 118,234 22,034 1,300 10,832 288,683 Potential Problem 2,836 28,435 18,306 37,707 71,134 46,635 27,563 21,305 251,087 Nonaccrual 586 167 25,766 10,653 14,563 31,756 7,627 44,529 135,062 Total loans $ 60,747 $ 3,116,417 $ 4,935,308 $ 5,107,723 $ 3,915,934 $ 2,057,932 $ 1,278,698 $ 3,209,661 $ 23,621,673 (a) Revolving loans converted to term loans are also reported in their year of origination. (b) The Corporation’s policy is to assign risk ratings at the borrower level. PPP loans are 100% guaranteed by the SBA and therefore the Corporation considers these loans to have a risk profile similar to pass rated loans. (c) Accruing TDRs are included in pass unless otherwise rated as special mention. The following table presents commercial and consumer loans by credit quality indicator by vintage year at December 31, 2020: Term Loans Amortized Cost Basis by Origination Year (a) ($ in Thousands) Rev Loans Converted to Term (a) Rev Loans Amortized Cost Basis 2020 2019 2018 2017 2016 Prior Total PPP: (b) Risk rating: Pass $ — $ — $ 745,767 $ — $ — $ — $ — $ — $ 745,767 Special Mention — — 3,988 — — — — — 3,988 Potential Problem — — 18,002 — — — — — 18,002 PPP $ — $ — $ 767,757 $ — $ — $ — $ — $ — $ 767,757 Commercial and industrial: Risk rating: Pass $ 4,628 $ 2,177,138 $ 1,389,260 $ 1,435,519 $ 1,182,302 $ 483,957 $ 305,998 $ 453,734 $ 7,427,908 Special Mention — 10,159 2,719 39,854 37,042 113 215 67 90,169 Potential Problem 2,565 7,237 19,331 28,413 56,580 2,269 6,477 1,179 121,487 Nonaccrual 16,852 — 6,238 5,789 17,014 16,623 8,781 7,414 61,859 Commercial and industrial $ 24,045 $ 2,194,534 $ 1,417,548 $ 1,509,575 $ 1,292,938 $ 502,962 $ 321,471 $ 462,394 $ 7,701,422 Commercial real estate - owner occupied: Risk rating: Pass $ 1,150 $ 18,022 $ 185,861 $ 209,069 $ 128,360 $ 99,546 $ 147,366 $ 79,111 $ 867,335 Special Mention — 113 1,882 3,122 300 658 264 — 6,339 Potential Problem — 3,486 4,104 8,916 — 1,490 4,437 3,747 26,179 Nonaccrual — — — — — 318 — 740 1,058 Commercial real estate - owner occupied $ 1,150 $ 21,621 $ 191,847 $ 221,107 $ 128,660 $ 102,012 $ 152,067 $ 83,598 $ 900,912 Commercial and business lending: Risk rating: Pass $ 5,778 $ 2,195,160 $ 2,320,888 $ 1,644,588 $ 1,310,662 $ 583,503 $ 453,364 $ 532,845 $ 9,041,009 Special Mention — 10,272 8,589 42,976 37,342 771 479 67 100,496 Potential Problem 2,565 10,723 41,437 37,329 56,580 3,759 10,915 4,926 165,668 Nonaccrual 16,852 — 6,238 5,789 17,014 16,941 8,781 8,154 62,917 Commercial and business lending $ 25,195 $ 2,216,154 $ 2,377,152 $ 1,730,682 $ 1,421,598 $ 604,974 $ 473,539 $ 545,992 $ 9,370,091 Commercial real estate - investor: Risk rating: Pass $ 10,971 $ 171,497 $ 1,249,644 $ 976,332 $ 720,237 $ 271,987 $ 341,658 $ 211,360 $ 3,942,714 Special Mention — — 90,235 97,333 12,339 — 21,882 8,465 230,254 Potential Problem — 838 16,343 13,575 30,911 2,279 239 27,209 91,396 Nonaccrual 19,803 — 10,141 53,056 446 14,267 — 309 78,220 Commercial real estate - investor $ 30,774 $ 172,335 $ 1,366,364 $ 1,140,297 $ 763,933 $ 288,533 $ 363,779 $ 247,343 $ 4,342,584 Real estate construction: Risk rating: Pass $ 776 $ 47,880 $ 645,925 $ 738,561 $ 294,910 $ 25,219 $ 2,420 $ 16,768 $ 1,771,682 Special Mention — — 487 494 48,283 42 — 30 49,336 Potential Problem — — 135 — 18,803 — 93 15 19,046 Nonaccrual — — — — — 16 — 338 353 Real estate construction $ 776 $ 47,880 $ 646,547 $ 739,055 $ 361,996 $ 25,277 $ 2,513 $ 17,150 $ 1,840,417 Commercial real estate lending: Risk rating: Pass $ 11,746 $ 219,377 $ 1,895,569 $ 1,714,893 $ 1,015,146 $ 297,205 $ 344,078 $ 228,127 $ 5,714,396 Special Mention — — 90,722 97,827 60,622 42 21,882 8,494 279,590 Potential Problem — 838 16,479 13,575 49,714 2,279 332 27,224 110,442 Nonaccrual 19,803 — 10,141 53,056 446 14,283 — 647 78,573 Commercial real estate lending $ 31,549 $ 220,215 $ 2,012,911 $ 1,879,352 $ 1,125,929 $ 313,810 $ 366,292 $ 264,493 $ 6,183,001 Term Loans Amortized Cost Basis by Origination Year (a) ($ in Thousands) Rev Loans Converted to Term (a) Rev Loans Amortized Cost Basis 2020 2019 2018 2017 2016 Prior Total Total commercial: Risk rating: Pass $ 17,524 $ 2,414,537 $ 4,216,457 $ 3,359,482 $ 2,325,808 $ 880,708 $ 797,441 $ 760,973 $ 14,755,405 Special Mention — 10,272 99,311 140,803 97,964 813 22,361 8,562 380,086 Potential Problem 2,565 11,561 57,916 50,905 106,295 6,038 11,247 32,150 276,111 Nonaccrual 36,655 — 16,379 58,845 17,460 31,224 8,781 8,801 141,490 Total commercial $ 56,745 $ 2,436,370 $ 4,390,063 $ 3,610,033 $ 2,547,526 $ 918,783 $ 839,831 $ 810,485 $ 15,553,091 Residential mortgage: Risk rating: Pass $ — $ — $ 2,185,240 $ 1,490,589 $ 615,118 $ 998,072 $ 911,797 $ 1,612,971 $ 7,813,788 Special Mention — — — 355 330 102 126 537 1,450 Potential Problem — — 1,200 689 652 — 179 1,028 3,749 Nonaccrual — — 1,478 2,271 5,882 7,116 11,003 31,587 59,337 Residential mortgage $ — $ — $ 2,187,918 $ 1,493,903 $ 621,983 $ 1,005,290 $ 923,105 $ 1,646,124 $ 7,878,324 Home equity: Risk rating: Pass $ 10,224 $ 569,389 $ 2,057 $ 12,968 $ 15,792 $ 11,594 $ 5,803 $ 76,165 $ 693,767 Special Mention 596 631 — 39 14 39 4 804 1,532 Potential Problem — 1,922 — — — — — 146 2,068 Nonaccrual 1,600 100 965 134 410 319 711 7,249 9,888 Home equity $ 12,421 $ 572,041 $ 3,022 $ 13,141 $ 16,216 $ 11,952 $ 6,518 $ 84,364 $ 707,255 Other consumer: Risk rating: Pass $ 70 $ 165,114 $ 9,525 $ 10,309 $ 3,987 $ 1,872 $ 1,185 $ 120,425 $ 312,416 Special Mention 5 438 13 16 11 4 7 8 498 Nonaccrual 5 33 9 49 21 10 — 18 140 Other consumer $ 81 $ 165,585 $ 9,547 $ 10,374 $ 4,019 $ 1,886 $ 1,192 $ 120,451 $ 313,054 Total consumer: Risk rating: Pass $ 10,294 $ 734,502 $ 2,196,822 $ 1,513,865 $ 634,897 $ 1,011,539 $ 918,785 $ 1,809,561 $ 8,819,971 Special Mention 602 1,069 13 410 356 145 137 1,349 3,480 Potential Problem — 1,922 1,200 689 652 — 179 1,174 5,817 Nonaccrual 1,605 133 2,452 2,454 6,313 7,445 11,714 38,854 69,364 Total consumer $ 12,501 $ 737,626 $ 2,200,487 $ 1,517,417 $ 642,218 $ 1,019,128 $ 930,816 $ 1,850,939 $ 8,898,632 Total loans: Risk rating: Pass (c) $ 27,819 $ 3,149,039 $ 6,413,278 $ 4,873,347 $ 2,960,705 $ 1,892,247 $ 1,716,226 $ 2,570,534 $ 23,575,376 Special Mention 602 11,341 99,324 141,213 98,320 958 22,498 9,911 383,566 Potential Problem 2,565 13,483 59,116 51,593 106,947 6,038 11,426 33,324 281,928 Nonaccrual 38,260 133 18,831 61,298 23,773 38,669 20,496 47,655 210,854 Total loans $ 69,246 $ 3,173,996 $ 6,590,550 $ 5,127,451 $ 3,189,745 $ 1,937,912 $ 1,770,647 $ 2,661,424 $ 24,451,724 (a) Revolving loans converted to term loans are also reported in their year of origination. (b) The Corporation’s policy is to assign risk ratings at the borrower level. PPP loans are 100% guaranteed by the SBA and therefore the Corporation considers these loans to have a risk profile similar to pass rated loans. (c) Accruing TDRs are included in pass unless otherwise rated as special mention. Factors that are important to managing overall credit quality are sound loan underwriting and administration, systematic monitoring of existing loans and commitments, effective loan review on an ongoing basis, early identification of potential problems, and appropriate policies for allowance for loan losses, allowance for unfunded commitments, nonaccrual loans, and charge offs. For commercial loans, management has determined the pass credit quality indicator to include credits exhibiting acceptable financial statements, cash flow, and leverage. If any risk exists, it is mitigated by the loan structure, collateral, monitoring, or control. For consumer loans, performing loans include credits performing in accordance with the original contractual terms. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Special mention credits have potential weaknesses that warrant specific attention from management. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the credit. Potential problem loans are considered inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged. These loans generally have a well-defined weakness, or weaknesses, which may jeopardize liquidation of the debt, and are characterized by the distinct possibility the Corporation will sustain some loss if the deficiencies are not corrected. Management has determined commercial loan relationships in nonaccrual status, and commercial and consumer loan relationships with their terms restructured in a TDR, meet the criteria to be individually evaluated. Commercial loans classified as special mention, potential problem, and nonaccrual are reviewed at a minimum on a quarterly basis, while pass credits, which are performing rated credits, are generally reviewed on an annual basis or more frequently if the loan renewal is less than one year or if otherwise warranted. The following table presents loans by past due status at September 30, 2021: Accruing ($ in Thousands) Current (a) 30-59 Days 60-89 Days 90+ Days Nonaccrual (b)(c) Total PPP $ 181,552 $ 485 $ 83 $ — $ — $ 182,121 Commercial and industrial 7,917,635 1,121 108 98 8,497 7,927,459 Commercial real estate - owner occupied 879,516 30 — — 7 879,554 Commercial and business lending 8,978,704 1,636 191 98 8,504 8,989,133 Commercial real estate - investor 4,217,965 17,021 — — 61,504 4,296,489 Real estate construction 1,834,623 — — — 247 1,834,871 Commercial real estate lending 6,052,588 17,021 — — 61,751 6,131,360 Total commercial 15,031,292 18,657 191 98 70,256 15,120,493 Residential mortgage 7,526,996 6,996 99 126 56,678 7,590,895 Home equity 597,776 2,428 503 21 7,838 608,566 Other consumer 292,700 724 549 785 222 294,979 Auto 6,662 10 — — 67 6,739 Total consumer 8,424,134 10,158 1,150 932 64,806 8,501,180 Total loans $ 23,455,426 $ 28,815 $ 1,341 $ 1,029 $ 135,062 $ 23,621,673 (a) Any loans deferred in connection with the COVID-19 pandemic are considered current in accordance with Section 4013 of the CARES Act. (b) Of the total nonaccrual loans, $83 million, or 62%, were current with respect to payment at September 30, 2021. (c) No interest income was recognized on nonaccrual loans for the three and nine months ended September 30, 2021. In addition, there were $11 million of nonaccrual loans for which there was no related ACLL at September 30, 2021. The following table presents loans by past due status at December 31, 2020: Accruing ($ in Thousands) Current (a) 30-59 Days 60-89 Days 90+ Days Nonaccrual (b)(c) Total PPP $ 767,757 $ — $ — $ — $ — $ 767,757 Commercial and industrial 7,633,269 2,819 3,300 175 61,859 7,701,422 Commercial real estate - owner occupied 899,480 158 215 — 1,058 900,912 Commercial and business lending 9,300,506 2,977 3,516 175 62,917 9,370,091 Commercial real estate - investor 4,251,571 1,024 11,769 — 78,220 4,342,584 Real estate construction 1,839,073 991 — — 353 1,840,417 Commercial real estate lending 6,090,644 2,015 11,769 — 78,573 6,183,001 Total commercial 15,391,150 4,992 15,284 175 141,490 15,553,091 Residential mortgage 7,808,294 8,975 1,410 308 59,337 7,878,324 Home equity 692,565 3,071 1,731 — 9,888 707,255 Other consumer 299,128 998 545 1,115 91 301,876 Auto 11,072 41 15 — 49 11,177 Total consumer 8,811,060 13,085 3,701 1,423 69,364 8,898,632 Total loans $ 24,202,209 $ 18,077 $ 18,985 $ 1,598 $ 210,854 $ 24,451,724 (a) Any loans deferred in connection with the COVID-19 pandemic are considered current in accordance with Section 4013 of the CARES Act. (b) Of the total nonaccrual loans, $128 million, or 61%, were current with respect to payment at December 31, 2020. (c) No interest income was recognized on nonaccrual loans for the year ended December 31, 2020. In addition, there were $28 million of nonaccrual loans for which there was no related ACLL at December 31, 2020. Troubled Debt Restructurings Loans are considered restructured loans if concessions have been granted to borrowers that are experiencing financial difficulty. The following table presents nonaccrual and performing restructured loans by loan portfolio: Sep 30, 2021 Dec 31, 2020 ($ in Thousands) Performing Nonaccrual Restructured Loans (a) Performing Nonaccrual Restructured Loans (a) Commercial and industrial $ 11,067 $ 959 $ 12,713 $ 6,967 Commercial real estate — owner occupied 1,031 — 1,711 — Commercial real estate — investor 13,236 207 26,435 225 Real estate construction 248 107 260 111 Residential mortgage 15,253 13,235 7,825 11,509 Home equity 2,787 718 1,957 1,379 Other consumer 877 — 1,191 — Total restructured loans (b) $ 44,499 $ 15,226 $ 52,092 $ 20,190 (a) Nonaccrual restructured loans have been included within nonaccrual loans. The Corporation had a recorded investment of $14 million in loans modified as TDRs during the nine months ended September 30, 2021, of which $7 million were in accrual status, included in pass or special mention based on their risk rating within the credit quality tables, and $7 million were in nonaccrual within the credit quality tables, pending a sustained period of repayment. Short-term loan modifications made in good faith to help ease the adverse effects of the COVID-19 pandemic are not categorized as TDRs in accordance with the CARES Act. The following table provides the number of loans modified in a TDR by loan portfolio, the recorded investment, and unpaid principal balance for the nine months ended September 30, 2021 and 2020: Nine months ended Sep 30, 2021 Nine months ended Sep 30, 2020 ($ in Thousands) Number Recorded Investment (a) Unpaid Principal Balance (b) Number Recorded Investment (a) Unpaid Principal Balance (b) Commercial and industrial 4 $ 638 $ 638 3 $ 1,250 $ 1,324 Commercial real estate — owner occupied — — — 2 453 751 Commercial real estate — investor 4 1,682 1,682 1 530 530 Real estate construction — — — 1 102 102 Residential mortgage 55 10,434 10,460 32 5,789 5,870 Home equity 7 916 963 18 676 702 Total loans modified 70 $ 13,670 $ 13,744 57 $ 8,800 $ 9,280 (a) Represents post-modification outstanding recorded investment. Restructured loan modifications may include payment schedule modifications, interest rate concessions, maturity date extensions, modification of note structure (A/B Note), non-reaffirmed Chapter 7 bankruptcies, principal reduction, or some combination of these concessions. During the nine months ended September 30, 2021, restructured loan modifications of commercial loans primarily included maturity date extensions and payment schedule modifications. Restructured loan modifications of consumer loans primarily included maturity date extensions, interest rate concessions, non-reaffirmed Chapter 7 bankruptcies, or a combination of these concessions for the nine months ended September 30, 2021. The following table provides the number of loans modified in a TDR during the previous twelve months which subsequently defaulted during the nine months ended September 30, 2021 and 2020, and the recorded investment in these restructured loans as of September 30, 2021 and 2020: Nine months ended Sep 30, 2021 Nine months ended Sep 30, 2020 ($ in Thousands) Number of Recorded Number of Recorded Residential mortgage 2 $ 200 5 $ 1,036 Home equity — — 4 208 Total loans modified 2 $ 200 9 $ 1,244 All loans modified in a TDR are individually evaluated for impairment. The nature and extent of the impairment of restructured loans, including those which have experienced a subsequent payment default, are considered in the determination of an appropriate level of the ACLL. The Corporation analyzes loans for classification as a probable TDR. This analysis includes identifying customers that are showing possible liquidity issues in the near term without reasonable access to alternative sources of capital. At September 30, 2021, the Corporation had $17 million in loans meeting this classification compared to $68 million at December 31, 2020. Of the loans classified as probable TDRs at September 30, 2021, the entire $17 million was related to the oil and gas portfolio. Allowance for Credit Losses on Loans The ACLL is comprised of the allowance for loan losses and the allowance for unfunded commitments. The level of the ACLL represents management’s estimate of an amount appropriate to provide for expected lifetime credit losses in the loan portfolio at the balance sheet date. The expected lifetime credit losses are the product of multiplying the Corporation's estimates of probability of default, loss given default, and the individual loan level exposure at default on an undiscounted basis. A main factor in the determination of the ACLL is the economic forecast. The Corporation utilized Moody's baseline forecast, updated during September 2021, in the allowance model. The forecast is applied over a 2 year reasonable and supportable period with straight-line reversion to the historical losses over the second year of the period. The allowance for unfunded commitments is maintained at a level believed by management to be sufficient to absorb expected lifetime losses related to unfunded credit facilities (including unfunded loan commitments and letters of credit). See Note 12 for additional information on the change in the allowance for unfunded commitments. The following table presents a summary of the changes in the ACLL by portfolio segment for the nine months ended September 30, 2021: ($ in Thousands) Dec 31, 2020 Charge offs Recoveries Net Charge offs Provision for credit losses Sep 30, 2021 ACLL / Loans Allowance for loan losses PPP $ 531 $ — $ — $ — $ (406) $ 125 Commercial and industrial 142,793 (13,773) 7,415 (6,358) (47,324) 89,111 Commercial real estate — owner occupied 11,274 — 115 115 634 12,022 Commercial and business lending 154,598 (13,773) 7,530 (6,242) (47,096) 101,259 Commercial real estate — investor 93,435 (14,340) 3,046 (11,293) (680) 81,461 Real estate construction 59,193 (5) 74 69 (18,298) 40,965 Commercial real estate lending 152,629 (14,344) 3,120 (11,224) (18,978) 122,426 Total commercial 307,226 (28,117) 10,650 (17,467) (66,074) 223,685 Residential mortgage 42,996 (732) 700 (32) (1,344) 41,620 Home equity 18,849 (600) 2,240 1,640 (6,172) 14,317 Other consumer 14,456 (2,331) 965 (1,366) (1,836) 11,253 Auto 174 (4) 24 20 (74) 120 Total consumer 76,475 (3,667) 3,928 262 (9,426) 67,311 Total loans $ 383,702 $ (31,784) $ 14,579 $ (17,205) $ (75,500) $ 290,997 Allowance for unfunded commitments Commercial and industrial $ 22,311 $ — $ — $ — $ (2,910) $ 19,402 Commercial real estate — owner occupied 266 — — — 43 309 Commercial and business lending 22,577 — — — (2,867) 19,711 Commercial real estate — investor 636 — — — 85 721 Real estate construction 18,887 — — — (3,411) 15,476 Commercial real estate lending 19,523 — — — (3,326) 16,197 Total commercial 42,101 — — — (6,193) 35,908 Home equity 3,118 — — — (87) 3,031 Other consumer 2,557 — — — (220) 2,337 Total consumer 5,675 — — — (307) 5,368 Total loans $ 47,776 $ — $ — $ — $ (6,500) $ 41,276 Allowance for credit losses on loans PPP $ 531 $ — $ — $ — $ (406) $ 125 0.07 % Commercial and industrial 165,105 (13,773) 7,415 (6,358) (50,233) 108,513 1.37 % Commercial real estate — owner occupied 11,539 — 115 115 677 12,331 1.40 % Commercial and business lending 177,175 (13,773) 7,530 (6,242) (49,963) 120,970 1.35 % Commercial real estate — investor 94,071 (14,340) 3,046 (11,293) (595) 82,182 1.91 % Real estate construction 78,080 (5) 74 69 (21,709) 56,441 3.08 % Commercial real estate lending 172,152 (14,344) 3,120 (11,224) (22,304) 138,623 2.26 % Total commercial 349,327 (28,117) 10,650 (17,467) (72,267) 259,593 1.72 % Residential mortgage 42,996 (732) 700 (32) (1,344) 41,620 0.55 % Home equity 21,967 (600) 2,240 1,640 (6,259) 17,348 2.85 % Other consumer 17,013 (2,331) 965 (1,366) (2,056) 13,591 4.61 % Auto 174 (4) 24 20 (74) 120 1.79 % Total consumer 82,150 (3,667) 3,928 262 (9,733) 72,679 0.85 % Total loans $ 431,478 $ (31,784) $ 14,579 $ (17,205) $ (82,000) $ 332,273 1.41 % The following table presents a summary of the changes in the ACLL by portfolio segment for the year ended December 31, 2020: ($ in Thousands) Dec 31, 2019 Cumulative effect of ASU 2016-13 adoption (CECL) Jan 1, 2020 Charge offs Recoveries Net Charge offs Gross up of allowance for PCD loans at acquisition Provision recorded at acquisition Provision for credit losses Dec 31, 2020 ACLL / Loans Allowance for loan losses PPP $ — $ — $ — $ — $ — $ — $ — $ — $ 531 $ 531 Commercial and industrial 91,133 52,919 144,052 (80,320) 7,004 (73,316) 293 408 71,355 142,793 Commercial real estate — owner occupied 10,284 (1,851) 8,433 (419) 147 (272) 890 255 1,967 11,274 Commercial and business lending 101,417 51,068 152,485 (80,739) 7,151 (73,588) 1,183 663 73,853 154,598 Commercial real estate — investor 40,514 2,041 42,555 (22,920) 643 (22,277) 753 472 71,933 93,435 Real estate construction 24,915 7,467 32,382 (19) 49 31 435 492 25,854 59,193 Commercial real estate lending 65,428 9,508 74,937 (22,938) 692 (22,246) 1,188 964 97,787 152,629 Total commercial 166,846 60,576 227,422 (103,677) 7,844 (95,834) 2,371 1,627 171,641 307,226 Residential mortgage 16,960 33,215 50,175 (1,867) 500 (1,367) 651 403 (6,864) 42,996 Home equity 10,926 11,649 22,575 (1,719) 1,978 259 422 374 (4,781) 18,849 Other consumer (a) 6,639 7,016 13,655 (4,790) 1,101 (3,689) 61 140 4,462 14,630 Total consumer 34,525 51,880 86,405 (8,376) 3,579 (4,797) 1,134 917 (7,183) 76,475 Total loans $ 201,371 $ 112,457 $ 313,828 $ (112,053) $ 11,422 $ (100,631) $ 3,504 $ 2,543 $ 164,457 $ 383,702 Allowance for unfunded commitments Commercial and industrial $ 12,276 $ (3,998) $ 8,278 $ — $ — $ — $ — $ 61 $ 13,972 $ 22,311 Commercial real estate — owner occupied 127 — 127 — — — — 4 135 266 Commercial and business lending 12,403 (3,998) 8,405 — — — — 65 14,108 22,577 Commercial real estate — investor 530 246 776 — — — — 2 (141) 636 Real estate construction 7,532 18,347 25,879 — — — — 45 (7,038) 18,887 Commercial real estate lending 8,062 18,593 26,655 — — — — 47 (7,179) 19,523 Total commercial 20,465 14,595 35,060 — — — — 112 6,929 42,101 Home equity 1,038 2,591 3,629 — — — — 66 (577) 3,118 Other consumer 405 1,504 1,909 — — — — — 649 2,557 Total consumer 1,443 4,095 5,538 — — — — 66 72 5,675 Total loans $ 21,907 $ 18,690 $ 40,597 $ — $ — $ — $ — $ 179 $ 7,000 $ 47,776 Allowance for credit losses on loans PPP $ — $ — $ — $ — $ — $ — $ — $ — $ 531 $ 531 0.07 % Commercial and industrial 103,409 48,921 152,330 (80,320) 7,004 (73,316) 293 469 85,327 165,105 2.14 % Commercial real estate — owner occupied 10,411 (1,851) 8,560 (419) 147 (272) 890 259 2,102 11,539 1.28 % Commercial and business lending 113,820 47,070 160,890 (80,739) 7,151 (73,588) 1,183 728 87,961 177,175 1.89 % Commercial real estate — investor 41,044 2,287 43,331 (22,920) 643 (22,277) 753 474 71,792 94,071 2.17 % Real estate construction 32,447 25,814 58,261 (19) 49 31 435 537 18,816 78,080 4.24 % Commercial real estate lending 73,490 28,101 101,591 (22,938) 692 (22,246) 1,188 1,011 90,608 172,152 2.78 % Total commercial 187,311 75,171 262,482 (103,677) 7,844 (95,834) 2,371 1,739 178,569 349,327 2.25 % Residential mortgage 16,960 33,215 50,175 (1,867) 500 (1,367) 651 403 (6,864) 42,996 0.55 % Home equity 11,964 14,240 26,204 (1,719) 1,978 259 422 440 (5,358) 21,967 3.11 % Other consumer (a) 7,044 8,520 15,564 (4,790) 1,101 (3,689) 61 140 5,111 17,187 5.49 % Total consumer 35,968 55,975 91,943 (8,376) 3,579 (4,797) 1,134 983 (7,112) 82,150 0.92 % Total loans $ 223,278 $ 131,147 $ 354,425 $ (112,053) $ 11,422 $ (100,631) $ 3,504 $ 2,722 $ 171,457 $ 431,478 1.76 % (a) Includes auto Loans Acquired in Acquisitions Loans acquired in a business combination after January 1, 2020 are recorded in accordance with ASC Topic 326. See Note 2 for more information on loans acquired in a business combination. After January 1, 2020, acquired loans were segregated into two types: • Non-PCD loans are accounted for in accordance with ASC Topic 310-20 "Nonrefundable Fees and Other Costs" as these loans do not show evidence of credit deterioration since origination. The allowance for loan losses on these loans is recorded through provision for credit losses on the consolidated statements of income at acquisition. • PCD loans are loans demonstrating more than insignificant credit deterioration and are accounted for in accordance with ASC Topic 326-30. Under this guidance, the credit mark on acquired assets grosses up the ACLL and the amortized cost of the loan. |