Loans and Leases | Loans and Leases The loan and lease portfolio consists of loans and leases originated by the Corporation, as well as loans acquired in prior acquisitions. Certain tables in this footnote are presented with a breakdown between originated and acquired loans and leases. A. The following table details the amortized cost of loans and leases as of the dates indicated: Loans and Leases March 31, 2021 December 31, 2020 (dollars in thousands) Originated Acquired Total Loans and Leases Originated Acquired Total Loans and Leases Loans held for sale $ 3,210 $ — $ 3,210 $ 6,000 $ — $ 6,000 Real estate loans: Commercial real estate (CRE) - nonowner-occupied 1,309,797 98,443 1,408,240 1,330,947 104,628 1,435,575 Commercial real estate (CRE) - owner-occupied 550,451 28,296 578,747 544,782 33,727 578,509 Home equity lines of credit 146,287 11,131 157,418 157,385 11,952 169,337 Residential mortgage - 1st liens 527,948 74,636 602,584 540,307 81,062 621,369 Residential mortgage - junior liens 26,220 1,180 27,400 22,375 1,420 23,795 Construction 178,411 9,061 187,472 153,131 8,177 161,308 Total real estate loans 2,739,114 222,747 2,961,861 2,748,927 240,966 2,989,893 Commercial & Industrial 483,265 3,559 486,824 442,283 4,155 446,438 Consumer 39,195 31 39,226 39,603 80 39,683 Leases 143,554 1,770 145,324 149,914 2,483 152,397 Total portfolio loans and leases 3,405,128 228,107 3,633,235 3,380,727 247,684 3,628,411 Total loans and leases $ 3,408,338 $ 228,107 $ 3,636,445 $ 3,386,727 $ 247,684 $ 3,634,411 Loans with fixed rates $ 1,161,527 $ 123,199 $ 1,284,726 $ 1,198,908 $ 134,084 $ 1,332,992 Loans with adjustable or floating rates 2,246,811 104,908 2,351,719 2,187,819 113,600 2,301,419 Total loans and leases $ 3,408,338 $ 228,107 $ 3,636,445 $ 3,386,727 $ 247,684 $ 3,634,411 Net deferred loan origination fees (costs) included in the above loan table $ 836 $ — $ 836 $ 673 $ — $ 673 B. The following table details the components of net investment in leases: Components of Net Investment in Leases March 31, 2021 December 31, 2020 (dollars in thousands) Originated Acquired Total Leases Originated Acquired Total Leases Minimum lease payments receivable $ 157,245 $ 1,834 $ 159,079 $ 164,556 $ 2,583 $ 167,139 Unearned lease income (19,664) (91) (19,755) (20,746) (138) (20,884) Initial direct costs and deferred fees 5,973 27 6,000 6,104 38 6,142 Total Leases $ 143,554 $ 1,770 $ 145,324 $ 149,914 $ 2,483 $ 152,397 C. The following table details the amortized cost of nonperforming loans and leases as of the dates indicated: Nonperforming Loans and Leases March 31, 2021 December 31, 2020 (dollars in thousands) Originated Acquired Total Loans and Leases Originated Acquired Total Loans and Leases CRE - nonowner-occupied $ 56 $ — $ 56 $ 57 $ — $ 57 CRE - owner-occupied 610 745 1,355 823 836 1,659 Home equity lines of credit 420 112 532 515 214 729 Residential mortgage - 1st liens 573 72 645 26 73 99 Residential mortgage - junior liens 151 33 184 50 35 85 Commercial & Industrial 1,490 — 1,490 1,657 118 1,775 Consumer 40 — 40 30 — 30 Leases 777 118 895 791 81 872 Total non-performing loans and leases $ 4,117 $ 1,080 $ 5,197 $ 3,949 $ 1,357 $ 5,306 D. Age Analysis of Past Due Loans and Leases The following tables present an aging of all portfolio loans and leases as of the dates indicated: Payment Status of All Portfolio Loans and Leases Accruing Loans and Leases As of March 31, 2021 30 – 59 60 – 89 Over 89 Total Past Current Total Accruing Nonaccrual Total (dollars in thousands) CRE - nonowner-occupied $ 653 $ — $ — $ 653 $ 1,407,531 $ 1,408,184 $ 56 $ 1,408,240 CRE - owner-occupied 249 — — 249 577,143 577,392 1,355 578,747 Home equity lines of credit 17 — — 17 156,869 156,886 532 157,418 Residential mortgage - 1st liens 2,595 295 — 2,890 599,049 601,939 645 602,584 Residential mortgage - junior liens 163 — — 163 27,053 27,216 184 27,400 Construction — — — — 187,472 187,472 — 187,472 Commercial & Industrial 157 8 — 165 485,169 485,334 1,490 486,824 Consumer 23 24 — 47 39,139 39,186 40 39,226 Leases 863 348 — 1,211 143,218 144,429 895 145,324 Total portfolio loans and leases $ 4,720 $ 675 $ — $ 5,395 $ 3,622,643 $ 3,628,038 $ 5,197 $ 3,633,235 Payment Status of All Portfolio Loans and Leases Accruing Loans and Leases As of December 31, 2020 30 – 59 60 – 89 Over 89 Total Past Current Total Accruing Nonaccrual Total (dollars in thousands) CRE - nonowner-occupied $ — $ — $ — $ — $ 1,435,518 $ 1,435,518 $ 57 $ 1,435,575 CRE - owner-occupied 1,907 416 — 2,323 574,527 576,850 1,659 578,509 Home equity lines of credit 87 — — 87 168,521 168,608 729 169,337 Residential mortgage - 1st liens 6,020 217 — 6,237 615,033 621,270 99 621,369 Residential mortgage - junior liens 88 58 — 146 23,564 23,710 85 23,795 Construction — — — — 161,308 161,308 — 161,308 Commercial & Industrial — — — — 444,663 444,663 1,775 446,438 Consumer 32 16 — 48 39,605 39,653 30 39,683 Leases 1,196 810 — 2,006 149,519 151,525 872 152,397 Total portfolio loans and leases $ 9,330 $ 1,517 $ — $ 10,847 $ 3,612,258 $ 3,623,105 $ 5,306 $ 3,628,411 The following tables present an aging of originated portfolio loans and leases as of the dates indicated: Payment Status of Originated Portfolio Loans and Leases Accruing Loans and Leases As of March 31, 2021 30 – 59 60 – 89 Over 89 Total Past Current Total Accruing Nonaccrual Total (dollars in thousands) CRE - nonowner-occupied $ 653 $ — $ — $ 653 $ 1,309,088 $ 1,309,741 $ 56 $ 1,309,797 CRE - owner-occupied 249 — — 249 549,592 549,841 610 550,451 Home equity lines of credit 17 — — 17 145,850 145,867 420 146,287 Residential mortgage - 1st liens 1,317 244 — 1,561 525,814 527,375 573 527,948 Residential mortgage - junior liens 141 — — 141 25,928 26,069 151 26,220 Construction — — — — 178,411 178,411 — 178,411 Commercial & Industrial 157 8 — 165 481,610 481,775 1,490 483,265 Consumer 22 24 — 46 39,109 39,155 40 39,195 Leases 774 331 — 1,105 141,672 142,777 777 143,554 Total portfolio loans and leases $ 3,330 $ 607 $ — $ 3,937 $ 3,397,074 $ 3,401,011 $ 4,117 $ 3,405,128 Payment Status of Originated Portfolio Loans and Leases Accruing Loans and Leases As of December 31, 2020 30 – 59 60 – 89 Over 89 Total Past Current Total Accruing Nonaccrual Total (dollars in thousands) CRE - nonowner-occupied $ — $ — $ — $ — $ 1,330,890 $ 1,330,890 $ 57 $ 1,330,947 CRE - owner-occupied 1,907 416 — 2,323 541,636 543,959 823 544,782 Home equity lines of credit 87 — — 87 156,783 156,870 515 157,385 Residential mortgage - 1st liens 4,109 217 — 4,326 535,955 540,281 26 540,307 Residential mortgage - junior liens 84 56 — 140 22,185 22,325 50 22,375 Construction — — — — 153,131 153,131 — 153,131 Commercial & Industrial — — — — 440,626 440,626 1,657 442,283 Consumer 32 16 — 48 39,525 39,573 30 39,603 Leases 1,196 735 — 1,931 147,192 149,123 791 149,914 Total portfolio loans and leases $ 7,415 $ 1,440 $ — $ 8,855 $ 3,367,923 $ 3,376,778 $ 3,949 $ 3,380,727 The following tables present an aging of acquired portfolio loans and leases as of the dates indicated: Payment Status of Acquired Portfolio Loans and Leases Accruing Loans and Leases As of March 31, 2021 30 – 59 60 – 89 Over 89 Total Past Current Total Accruing Nonaccrual Total (dollars in thousands) CRE - nonowner-occupied $ — $ — $ — $ — $ 98,443 $ 98,443 $ — $ 98,443 CRE - owner-occupied — — — — 27,551 27,551 745 28,296 Home equity lines of credit — — — — 11,019 11,019 112 11,131 Residential mortgage - 1st liens 1,278 51 — 1,329 73,235 74,564 72 74,636 Residential mortgage - junior liens 22 — — 22 1,125 1,147 33 1,180 Construction — — — — 9,061 9,061 — 9,061 Commercial & Industrial — — — — 3,559 3,559 — 3,559 Consumer 1 — — 1 30 31 — 31 Leases 89 17 — 106 1,546 1,652 118 1,770 Total portfolio loans and leases $ 1,390 $ 68 $ — $ 1,458 $ 225,569 $ 227,027 $ 1,080 $ 228,107 Payment Status of Acquired Portfolio Loans and Leases Accruing Loans and Leases As of December 31, 2020 30 – 59 60 – 89 Over 89 Total Past Current Total Accruing Nonaccrual Total (dollars in thousands) CRE - nonowner-occupied $ — $ — $ — $ — $ 104,628 $ 104,628 $ — $ 104,628 CRE - owner-occupied — — — — 32,891 32,891 836 33,727 Home equity lines of credit — — — — 11,738 11,738 214 11,952 Residential mortgage - 1st liens 1,911 — — 1,911 79,078 80,989 73 81,062 Residential mortgage - junior liens 4 2 — 6 1,379 1,385 35 1,420 Construction — — — — 8,177 8,177 — 8,177 Commercial & Industrial — — — — 4,037 4,037 118 4,155 Consumer — — — — 80 80 — 80 Leases — 75 — 75 2,327 2,402 81 2,483 Total portfolio loans and leases $ 1,915 $ 77 $ — $ 1,992 $ 244,335 $ 246,327 $ 1,357 $ 247,684 E. Allowance for Credit Losses (“ACL”) on Loans and Leases The ACL on loans and leases represents management’s estimate of all expected credit losses over the expected contractual life of our existing portfolio loans and leases. Determining the appropriateness of the ACL on loans and leases is complex and requires judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolio, in light of the factors then prevailing, may result in significant changes in the ACL on loans and leases in those future periods. The expense for credit loss recorded through earnings is the amount necessary to maintain the ACL on loans and leases at the amount of expected credit losses inherent within the loans and leases portfolio. The amount of expense and the corresponding level of ACL on loans and leases are based on management’s evaluation of the collectability of the loan and lease portfolio based on historical loss experience, reasonable and supportable forecasts, and other significant qualitative and quantitative factors. The ACL on loans and leases, as reported in our Consolidated Statements of Financial Condition, is adjusted by an expense for credit losses, which is recognized in earnings, and reduced by the charge-off of loan and lease amounts, net of recoveries. Management employs a disciplined process and methodology to establish the ACL on loans and leases that has two basic components: first, an asset-specific component involving individual loans and leases that do not share risk characteristics with other loans and leases and the measurement of expected credit losses for such individual loans; and second, a collective (pooled) component for estimated expected credit losses for pools of loans and leases that share similar risk characteristics. Based upon this methodology, management establishes an asset-specific ACL on loans and leases that do not share risk characteristics with other loans and leases based on the amount of expected credit losses calculated on those loans and leases and charges off amounts determined to be uncollectible. Factors we consider in measuring the extent of expected credit loss include payment status, collateral value, borrower financial condition, guarantor support and the probability of collecting scheduled principal and interest payments when due. When a loan or lease does not share risk characteristics with other loans or leases, management measures expected credit loss as the difference between the amortized cost basis in the loan and the present value of expected future cash flows discounted at the loan’s effective interest rate except that, for collateral dependent loans, credit loss is measured as the difference between the amortized cost basis in the loan and the fair value of the underlying collateral. The fair value of the collateral is adjusted for the estimated cost to sell if repayment or satisfaction of a loan is dependent on the sale (rather than only on the operation) of the collateral. If the calculated expected credit loss is determined to be permanent, fixed or nonrecoverable, the credit loss portion of the loan will be charged off against the ACL on loans and leases. Loans and leases designated as having significantly increased credit risk are generally placed on nonaccrual and remain in that status until all principal and interest payments are current and the prospects for future payments in accordance with the loan agreement are reasonably assured, at which point the loan is returned to accrual status. In estimating the component of the ACL on loans and leases that share common risk characteristics, loans and leases are segregated into portfolio segments based on federal call report codes which classify loans and leases based on the primary collateral supporting the loan or lease. Methods utilized by management to estimate expected credit losses include a DCF methodology that discounts instrument-level contractual cash flows, adjusted for prepayments and curtailments, incorporating loss expectations, and a WARM methodology which contemplates expected losses at a pool-level, utilizing historic loss information. Under both methodologies, management estimates the ACL on loans and leases using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. After the end of the reasonable and supportable forecast period, the loss rates revert to the long-term mean loss rate, or in the case of an input-driven predictive method, the long-term mean of the input, using a reversion period where applicable. Historical credit loss experience, including examination of loss experience at representative peer institutions when the Corporation’s first-party loss history does not result in estimations that are meaningful to users of the Corporation’s Consolidated Financial Statements, provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are considered for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors. The DCF methodology uses inputs of current and forecasted macroeconomic indicators to predict future loss rates. The current macroeconomic indicator utilized by the bank is the Pennsylvania unemployment rate. In building the Current Expected Credit Loss (“CECL”) model utilized in the DCF methodology, a correlation between this indicator and historic loss levels was developed, enabling a prediction of future loss rates related to future Pennsylvania unemployment rates. The portfolio segments utilizing the DCF methodology as of March 31, 2021 included: CRE - owner-occupied and nonowner-occupied loans, home equity lines of credit, residential mortgages (first and junior liens), construction loans and consumer loans. The WARM methodology uses combined historic loss rates for the Bank and peer institutions, if necessary, gathered from Call Report filings. The selected period for which historic loss rates are used is dependent on management's evaluation of current conditions and expectations of future loss conditions. The portfolio segments utilizing the WARM methodology as of March 31, 2021 included commercial and industrial loans and leases. For the three months ended March 31, 2021, there was a favorable change in the economic outlook impacting the ACL on loans and leases. Our CECL model, which had included a sharp deterioration in the Pennsylvania unemployment rate during the first and second quarters of 2020, began forecasting a declining rate of Pennsylvania unemployment as of the third quarter of 2020 and as of March 31, 2021, is forecasting a continued decrease in the rate through the first quarter of 2022, followed by a reversion to the long-term 15-year average. In addition to these assumptions, management applied additional qualitative factors related to the continued stress, brought on by the COVID-19 pandemic, on certain segments of the loan portfolio. In particular, the retail and hospitality sectors of the nonowner-occupied CRE segment were directly impacted by the many shutdowns and curtailments of consumer activity during most of 2020. The following tables present the activity in the ACL on loans and leases, by portfolio segment, for the three months ended March 31, 2021 and 2020: Roll-Forward of ACL on Loans and Leases (dollars in thousands) CRE - nonowner-occupied CRE - Home equity lines of credit Residential mortgage - 1st liens Residential mortgage - junior liens Construction Commercial & Industrial Consumer Leases Total Balance, December 31, 2020 $ 19,382 $ 6,982 $ 1,406 $ 7,782 $ 382 $ 2,707 $ 8,087 $ 325 $ 6,656 $ 53,709 Loans and leases charged-off — (189) — (1) — — (128) (122) (649) (1,089) Recoveries collected — — — — — 1 182 15 249 447 PCL on loans and leases (3,605) (948) (126) (2,143) 57 416 470 163 211 (5,505) Balance, March 31, 2021 $ 15,777 $ 5,845 $ 1,280 $ 5,638 $ 439 $ 3,124 $ 8,611 $ 381 $ 6,467 $ 47,562 Roll-Forward of ACL on Loans and Leases (dollars in thousands) CRE - nonowner-occupied CRE - Home equity lines of credit Residential mortgage - 1st liens Residential mortgage - junior liens Construction Commercial & Industrial Consumer Leases Total Balance, December 31, 2019 Prior to Adoption of ASC 326 $ 7,960 $ 2,825 $ 1,114 $ 2,501 $ 338 $ 1,230 $ 3,835 $ 438 $ 2,361 $ 22,602 Impact of Adopting ASC 326 (467) 16 (46) 2,408 79 (359) (159) 140 1,594 3,206 Loans and leases charged-off — — (114) (728) — — (627) (294) (2,626) (4,389) Recoveries collected 2 — — 1 — 1 15 33 264 316 PCL on loans and leases 5,834 1,351 1,794 4,134 100 6,112 5,670 24 7,316 32,335 Balance, March 31, 2020 $ 13,329 $ 4,192 $ 2,748 $ 8,316 $ 517 $ 6,984 $ 8,734 $ 341 $ 8,909 $ 54,070 As part of the process of determining the ACL for the different segments of the loan and lease portfolio, management considers certain credit quality indicators. Periodic reviews of loans are conducted by both in-house staff as well as external loan reviewers. The result of these reviews is reflected in the risk grade assigned to each loan. These internally assigned grades are as follows: • Pass – Loans considered satisfactory with no indications of deterioration. • Pass-Watch – Loans that are performing, but which may have a potential deficiency which the borrower appears to be managing or a possible deficiency in the future. • Special mention – Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. • Substandard – Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. • Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The following table details the amortized cost of portfolio loans and leases, by year of origination (for term loans) and by risk grade within each portfolio segment as of March 31, 2021: Term Loans Revolving Loans Amortized Cost Basis by Origination Year (1) Amortized Cost Basis (dollars in thousands) Risk Rating 2021 2020 2019 2018 2017 2016 and Prior Revolving Lines of Credit Revolving Lines of Credit Converted to Term Loans Total CRE - nonowner-occupied Pass $ 28,765 $ 312,096 $ 400,014 $ 150,184 $ 104,760 $ 177,812 $ 42,377 $ — $ 1,216,008 Pass-Watch — 5,992 31,370 17,225 4,207 18,738 — — 77,532 Special Mention — — — 8,889 4,971 26,044 — — 39,904 Substandard 56 7,878 29,370 11,812 1,417 24,263 — — 74,796 Total $ 28,821 $ 325,966 $ 460,754 $ 188,110 $ 115,355 $ 246,857 $ 42,377 $ — $ 1,408,240 CRE - owner-occupied Pass $ 27,001 $ 124,814 $ 114,717 $ 103,666 $ 63,359 $ 73,387 $ 9,987 $ — $ 516,931 Pass-Watch — 10,169 2,335 4,746 7,122 4,529 — — 28,901 Special Mention — 4,685 270 3,886 — 833 50 — 9,724 Substandard — 3,702 6,190 6,601 666 5,933 99 — 23,191 Total $ 27,001 $ 143,370 $ 123,512 $ 118,899 $ 71,147 $ 84,682 $ 10,136 $ — $ 578,747 Home equity lines of credit Pass $ 897 $ 580 $ 844 $ — $ 73 $ 2,057 $ 151,143 $ 800 $ 156,394 Special Mention — — — — — — 491 — 491 Substandard — — 59 25 99 348 2 — 533 Total $ 897 $ 580 $ 903 $ 25 $ 172 $ 2,405 $ 151,636 $ 800 $ 157,418 Residential mortgage - 1st liens Pass $ 24,617 $ 113,345 $ 104,791 $ 61,416 $ 70,906 $ 208,048 $ 1,062 $ — $ 584,185 Pass-Watch — — 12,714 2,117 — 627 — — 15,458 Special Mention — — — 341 — — — — 341 Substandard — 877 338 69 249 1,067 — — 2,600 Total $ 24,617 $ 114,222 $ 117,843 $ 63,943 $ 71,155 $ 209,742 $ 1,062 $ — $ 602,584 Residential mortgage - junior liens Pass $ 5,945 $ 2,804 $ 4,126 $ 3,152 $ 2,896 $ 8,078 $ 177 $ — $ 27,178 Special Mention — — — 37 — — — — 37 Substandard 103 — — — — 82 — — 185 Total $ 6,048 $ 2,804 $ 4,126 $ 3,189 $ 2,896 $ 8,160 $ 177 $ — $ 27,400 Construction Pass $ 31,459 $ 75,001 $ 44,426 $ 3,225 $ 824 $ 5,792 $ 12,916 $ — $ 173,643 Pass-Watch — 7,921 — 2,394 — — — — 10,315 Substandard 1,000 2,182 332 — — — — — 3,514 Total $ 32,459 $ 85,104 $ 44,758 $ 5,619 $ 824 $ 5,792 $ 12,916 $ — $ 187,472 Commercial & Industrial Pass $ 49,793 $ 111,966 $ 32,051 $ 59,606 $ 8,993 $ 33,876 $ 102,563 $ — $ 398,848 Pass-Watch — 18,142 4,979 2,279 4,494 305 10,719 — 40,918 Special Mention 1,147 11,380 7,561 — 206 — 4,296 — 24,590 Substandard 449 2,611 5,570 8,075 1,355 1,505 2,903 — 22,468 Total $ 51,389 $ 144,099 $ 50,161 $ 69,960 $ 15,048 $ 35,686 $ 120,481 $ — $ 486,824 Consumer Pass $ 316 $ 1,137 $ 2,998 $ 1,305 $ 164 $ 151 $ 32,216 $ — $ 38,287 Substandard — 903 21 15 — — — — 939 Total $ 316 $ 2,040 $ 3,019 $ 1,320 $ 164 $ 151 $ 32,216 $ — $ 39,226 Leases Pass $ 10,679 $ 47,412 $ 50,707 $ 29,030 $ 6,012 $ 589 $ — $ — $ 144,429 Substandard — 147 361 230 148 9 — — 895 Total $ 10,679 $ 47,559 $ 51,068 $ 29,260 $ 6,160 $ 598 $ — $ — $ 145,324 Total portfolio loans and leases $ 182,227 $ 865,744 $ 856,144 $ 480,325 $ 282,921 $ 594,073 $ 371,001 $ 800 $ 3,633,235 (1) Year originated or renewed, whichever is more recent. The following tables present the amortized cost basis of loans and leases on nonaccrual status and loans and leases past due over 89 days still accruing as of the dates indicated: As of March 31, 2021 (dollars in thousands) Nonaccrual with No ACL Nonaccrual with ACL Loans Past Due Over 89 Days Still Accruing CRE - nonowner-occupied $ 56 $ — $ — CRE - owner-occupied 1,335 — — Home equity lines of credit 532 — — Residential mortgage - 1st liens 645 — — Residential mortgage - junior liens 184 — — Construction — — — Commercial & Industrial 1,490 — — Consumer — 40 — Leases — 895 — Total non-performing loans and leases $ 4,242 $ 935 $ — As of December 31, 2020 (dollars in thousands) Nonaccrual with No ACL Nonaccrual with ACL Loans Past Due Over 89 Days Still Accruing CRE - nonowner-occupied $ 57 $ — $ — CRE - owner-occupied 1,659 — — Home equity lines of credit 729 — — Residential mortgage - 1st liens 99 — — Residential mortgage - junior liens 85 — — Construction — — — Commercial & Industrial 1,775 — — Consumer — 30 — Leases — 872 — Total non-performing loans and leases $ 4,404 $ 902 $ — For the three ended March 31, 2021, no interest income was recognized on nonaccrual loans and leases. Collateral-dependent loans and leases for which the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale of the collateral are, in general, individually evaluated for credit losses. Identified shortfalls between the amortized cost of the individually evaluated loan or lease and the value, less selling costs, of the underlying collateral are charged against the ACL. In certain cases, when the loan or lease is serviced by a third-party, and management is unable to process a timely charge-down of the loan or lease, it will assess a specific ACL to the individual loan or lease. This ACL represents the shortfall between the amortized cost and realizable value of the collateral. The following tables present the amortized cost basis of collateral-dependent loans and leases, indicating the type of collateral and the ACL determined through individual evaluation for credit loss, as of the dates indicated: As of March 31, 2021 (dollars in thousands) Real Estate Collateral Non-Real Estate Collateral Individually Evaluated ACL CRE - nonowner-occupied $ 56 $ — $ — CRE - owner-occupied 1,335 — — Home equity lines of credit 532 — — Residential mortgage - 1st liens 645 — — Residential mortgage - junior liens 184 — — Construction — — — Commercial & Industrial — 1,490 — Consumer — 40 40 Leases — 895 733 Total collateral-dependent loans and leases $ 2,752 $ 2,425 $ 773 As of December 31, 2020 (dollars in thousands) Real Estate Collateral Non-Real Estate Collateral Individually Evaluated ACL CRE - nonowner-occupied $ 57 $ — $ — CRE - owner-occupied 1,659 — — Home equity lines of credit 729 — — Residential mortgage - 1st liens 99 — — Residential mortgage - junior liens 85 — — Construction — — — Commercial & Industrial — 1,775 — Consumer — 30 30 Leases — 872 814 Total collateral-dependent loans and leases $ 2,629 $ 2,677 $ 844 F. Troubled Debt Restructurings (“TDRs”) The restructuring of a loan is considered a “troubled debt restructuring” if both of the following conditions are met: (i) the borrower is experiencing financial difficulties, and (ii) the creditor has granted a concession. The most common concessions granted include one or more modifications to the terms of the debt, such as (a) a reduction in the interest rate for the remaining life of the debt, (b) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk, (c) a temporary period of interest-only payments, (d) a reduction in the contractual payment amount for either a short period or remaining term of the loan, and (e) for leases, a reduced lease payment. A less common concession granted is the forgiveness of a portion of the principal. The determination of whether a borrower is experiencing financial difficulties takes into account not only the current financial condition of the borrower, but also the potential financial condition of the borrower, were a concession not granted. Similarly, the determination of whether a concession has been granted is very subjective in nature. For example, simply extending the term of a loan at its original interest rate or even at a higher interest rate could be interpreted as a concession unless the borrower could readily obtain similar credit terms from a different lender. The Corporation has implemented various consumer and commercial loan modification programs to provide its borrowers relief from the economic impacts of COVID-19. In accordance with the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), loans to borrowers experiencing financial difficulty related to the COVID-19 pandemic which were granted short-term modifications after March 1, 2020 and which were not more than 30 days past due as of December 31, 2019 are exempt from TDR classification. In addition, for loans modified in response to the COVID-19 pandemic that do not meet the above delinquency criteria (e.g., not more than 30 days past due as of December 31, 2019), the Corporation applies the guidance included in an interagency statement issued by the bank regulatory agencies. This guidance states that loan modifications performed in light of the COVID-19 pandemic, including loan payment deferrals that are up to six months in duration, that were granted to borrowers who were less than 30 days past due as of the implementation date of a loan modification program or modifications granted under government mandated modification programs, are also exempt from TDR classification. For loan modifications that include a payment deferral and are not TDRs, the borrower’s past due and nonaccrual status will not be impacted during the deferral period. Interest income will continue to be recognized over the contractual life of the loan. As of March 31, 2021, 31 consumer loans and leases in the amount of $4.5 million and 42 commercial loans in the amount of $61.5 million are within a deferral period under the Bank's modification programs, the total comprising 1.8% of the Bank’s portfolio loans and leases. As of December 31, 2020, 66 consumer loans and leases in the amount of $7.3 million and 37 commercial loans in the amount of $67.7 million are within a deferral period under the Bank's COVID-19 modification programs, the total comprising 2.1% of the Bank’s portfolio loans and leases. The following table presents the balance of TDRs as of the indicated dates: Troubled Debt Restructurings (dollars in thousands) March 31, December 31, TDRs included in nonperforming loans and leases $ 1,480 $ 1,737 TDRs in compliance with modified terms 6,967 7,046 Total TDRs $ 8,447 $ 8,783 The following tables present information regarding loan and lease modifications categorized as TDRs for the three months ended March 31, 2021: Troubled Debt Restructurings For the Three Months Ended March 31, 2021 (dollars in thousands) Number of Contracts Pre-Modification Outstanding Post-Modification Outstanding Residential mortgage - 1st liens 1 103 103 Leases 7 361 361 Total 8 $ 464 $ 464 The following table presents information regarding the types of loan and lease modifications made for the three months ended March 31, 2021: Troubled Debt Restructurings Number of Contracts for the Three Months Ended March 31, 2021 Loan Term Extension Interest Rate Change and Term Extension Interest Rate Change and/or Interest-Only Period Contractual Temporary Payment Deferral Residential mortgage - 1st liens — 1 — — — Leases — — — 7 — Total — 1 — 7 — For the three months ended March 31, 2021, two commercial & industrial loans, in the aggregate amount of $128 thousand, one lease in the amount of $27 thousand and two owner-occupied commercial real estate loans in the aggregate amount of $194 thousand, that were modified as TDRs during the past 12 months defaulted and were charged off. G. ACL on Off-Balance Sheet ("OBS") Credit Exposures Management estimates expected credit losses over the contractual period in which the Corporation is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Corporation. The ACL on OBS credit exposure, included within Other Liabilities on the Consolidated Balance Sheet, is adjusted as a provision for credit loss expense included within Provision for Credit Losses on the Consolidated Statement of Income. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. Management estimates the amount of expected losses by calculating a commitment usage factor over the contractual period for exposures that are not unconditionally cancellable by the bank and applying the loss factors used in the ACL on loans and leases methodology to the results of the usage calculation to estimate the liability for credit losses related to unfunded commitments for each loan type. No credit loss estimate is reported for OBS credit exposures that are unconditionally cancellable by the Bank. The ACL on OBS credit exposure as of March 31, 2021 and December 31, 2020 was $3.2 million and $2.9 million, respectively. The Corporation recorded a provision for credit losses on OBS credit exposures of $259 thousand and $3.0 million for the three months ended March 31, 2021 and 2020 respectively. H. ACL on Accrued Interest Receivable Accrued interest receivable on loans and leases, which is reported in Accrued interest receivable on the Consolidated Balance Sheet, totaled $11.2 million and $12.1 million as of March 31, 2021 and December 31, 2020, respectively, and is excluded from the estimate of credit losses due to our charge-off policy to reverse accrued interest in a timely manner on loans and leases that are 90-days past due and deemed nonperforming. However, the Corporation continued to accrue interest on loans and leases for which payment deferrals have been extended to borrowers affected by the COVID-19 pandemic. Deferrals under the Corporation's modification program may be for durations which exceed the Corporation’s 90-day write-of |