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Loans Receivable, Net (Tables)
 6 Months Ended
Jun. 30, 2020
Receivables [Abstract]  
Components of Loans Receivable, Net
Loans receivable, net at June 30, 2020 and December 31, 2019 consisted of the following (in thousands):
 
June 30, 2020
 
December 31, 2019
Commercial:
 
 
 
Commercial and industrial
$
910,762

 
$
396,434

Commercial real estate – owner occupied
1,199,742

 
792,653

Commercial real estate – investor
3,449,160

 
2,296,410

Total commercial
5,559,664

 
3,485,497

Consumer:
 
 
 
Residential real estate
2,426,277

 
2,321,157

Home equity loans and lines
320,627

 
318,576

Other consumer
71,721

 
89,422

Total consumer
2,818,625

 
2,729,155

Total loans
8,378,289

 
6,214,652

Deferred origination (fees) costs, net
(4,300
)
 
9,880

Allowance for credit losses
(38,509
)
 
(16,852
)
Total loans, net
$
8,335,480

 
$
6,207,680
Risk Category of Loans by Loan Portfolio Segment Excluding PCI Loans
The following table summarizes total loans by year of origination and internally assigned credit grades and risk characteristics (in thousands):
 
 
2020
 
2019
 
2018
 
2017
 
2016
 
2015 and prior
 
Revolving lines of credit
 
Total
June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pass
 
$
494,385

 
$
42,054

 
$
34,477

 
$
67,037

 
$
46,039

 
$
68,244

 
$
133,133

 
$
885,369

Special Mention
 
—

 
458

 
847

 
1,765

 
870

 
1,184

 
86

 
5,210

Substandard
 
226

 
3,600

 
1,790

 
1,073

 
62

 
4,512

 
8,920

 
20,183

Total commercial and industrial
 
494,611

 
46,112

 
37,114

 
69,875

 
46,971

 
73,940

 
142,139

 
910,762

Commercial real estate - owner occupied
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pass
 
62,342

 
157,535

 
144,739

 
142,470

 
130,281

 
496,150

 
21,296

 
1,154,813

Special Mention
 
—

 
191

 
—

 
1,389

 
88

 
5,510

 
388

 
7,566

Substandard
 
—

 
2,122

 
2,817

 
2,921

 
3,740

 
25,670

 
93

 
37,363

Total commercial real estate - owner occupied
 
62,342

 
159,848

 
147,556

 
146,780

 
134,109

 
527,330

 
21,777

 
1,199,742

Commercial real estate - investor
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pass
 
338,589

 
679,959

 
387,875

 
462,567

 
335,427

 
957,182

 
199,816

 
3,361,415

Special Mention
 
—

 
27

 
—

 
11,003

 
6,033

 
22,661

 
9,178

 
48,902

Substandard
 
—

 
178

 
1,553

 
460

 
5,487

 
25,031

 
6,134

 
38,843

Total commercial real estate - investor
 
338,589

 
680,164

 
389,428

 
474,030

 
346,947

 
1,004,874

 
215,128

 
3,449,160

Residential real estate (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pass
 
316,112

 
522,831

 
312,066

 
202,088

 
172,264

 
891,044

 
—

 
2,416,405

Special Mention
 
—

 
—

 
325

 
—

 
—

 
4,102

 
—

 
4,427

Substandard
 
—

 
—

 
—

 
221

 
—

 
5,224

 
—

 
5,445

Total residential real estate
 
316,112

 
522,831

 
312,391

 
202,309

 
172,264

 
900,370

 
—

 
2,426,277

Consumer (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pass
 
12,116

 
33,276

 
105,211

 
31,029

 
19,788

 
178,537

 
7,545

 
387,502

Special Mention
 
—

 
79

 
—

 
—

 
—

 
257

 
—

 
336

Substandard
 
—

 
—

 
—

 
—

 
—

 
4,510

 
—

 
4,510

Total consumer
 
12,116

 
33,355

 
105,211

 
31,029

 
19,788

 
183,304

 
7,545

 
392,348

Total loans
 
$
1,223,770

 
$
1,442,310

 
$
991,700

 
$
924,023

 
$
720,079

 
$
2,689,818

 
$
386,589

 
$
8,378,289


(1)
For residential and consumer loans, the Company evaluates credit quality based on the aging status of the loan and by payment activity.
Analysis of Allowance for Loan Losses
An analysis of the allowance for credit losses on loans for the three and six months ended June 30, 2020 and 2019 is as follows (in thousands):
 
 
Commercial
and 
Industrial
 
Commercial
Real Estate –
Owner
Occupied
 
Commercial
Real Estate –
Investor
 
Residential
Real Estate
 
Consumer
 
Unallocated
 
Total
For the three months ended
June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses on loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
 
$
6,649

 
$
3,096

 
$
7,159

 
$
8,417

 
$
4,314

 
$
—

 
$
29,635

Credit loss (benefit) expense
 
(1,697
)
 
(334
)
 
1,701

 
9,056

 
(84
)
 
—

 
8,642

Charge-offs
 
—

 
—

 
(26
)
 
(71
)
 
(72
)
 
—

 
(169
)
Recoveries
 
27

 
3

 
26

 
283

 
62

 
—

 
401

Balance at end of period
 
$
4,979

 
$
2,765

 
$
8,860

 
$
17,685

 
$
4,220

 
$
—

 
$
38,509

For the three months ended
June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses on loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
 
$
1,647

 
$
3,438

 
$
8,242

 
$
1,965

 
$
367

 
$
1,046

 
$
16,705

Credit loss (benefit) expense
 
(34
)
 
(439
)
 
117

 
729

 
285

 
(302
)
 
356

Charge-offs
 
—

 
(132
)
 
(65
)
 
(768
)
 
(173
)
 
—

 
(1,138
)
Recoveries
 
26

 
1

 
112

 
40

 
33

 
—

 
212

Balance at end of period
 
$
1,639

 
$
2,868

 
$
8,406

 
$
1,966

 
$
512

 
$
744

 
$
16,135

For the six months ended
June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses on loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
 
$
1,458

 
$
2,893

 
$
9,883

 
$
2,002

 
$
591

 
$
25

 
$
16,852

Impact of CECL adoption
 
2,416

 
(1,109
)
 
(5,395
)
 
3,833

 
2,981

 
(25
)
 
2,701

Credit loss expense
 
(168
)
 
952

 
4,078

 
12,641

 
(264
)
 
—

 
17,239

Initial allowance for credit losses on PCD loans
 
1,221

 
26

 
260

 
109

 
1,023

 
—

 
2,639

Charge-offs
 
—

 
—

 
(26
)
 
(1,346
)
 
(181
)
 
—

 
(1,553
)
Recoveries
 
52

 
3

 
60

 
446

 
70

 
—

 
631

Balance at end of period
 
$
4,979

 
$
2,765

 
$
8,860

 
$
17,685

 
$
4,220

 
$
—

 
$
38,509

For the six months ended
June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses on loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
 
$
1,609

 
$
2,277

 
$
8,770

 
$
2,413

 
$
486

 
$
1,022

 
$
16,577

Credit loss (benefit) expense
 
(53
)
 
1,112

 
(685
)
 
705

 
175

 
(278
)
 
976

Charge-offs
 
—

 
(522
)
 
(86
)
 
(1,193
)
 
(205
)
 
—

 
(2,006
)
Recoveries
 
83

 
1

 
407

 
41

 
56

 
—

 
588

Balance at end of period
 
$
1,639

 
$
2,868

 
$
8,406

 
$
1,966

 
$
512

 
$
744

 
$
16,135
Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment and Based on Impairment Method Excluding PCI Loans
In accordance with ASC 310, prior to the adoption of ASU 2016-13, the following table presents the balance in the allowance for credit losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2019, excluding PCD loans (in thousands):
 
Commercial
and 
Industrial
 
Commercial
Real Estate –
Owner
Occupied
 
Commercial
Real Estate –
Investor
 
Residential
Real Estate
 
Consumer
 
Unallocated
 
Total
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending allowance balance attributed to loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
—

 
$
474

 
$
—

 
$
—

 
$
2

 
$
—

 
$
476

Collectively evaluated for impairment
1,458

 
2,419

 
9,883

 
2,002

 
589

 
25

 
16,376

Total ending allowance balance
$
1,458

 
$
2,893

 
$
9,883

 
$
2,002

 
$
591

 
$
25

 
$
16,852

Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans individually evaluated for impairment
$
243

 
$
6,163

 
$
5,584

 
$
11,009

 
$
3,511

 
$
—

 
$
26,510

Loans collectively evaluated for impairment
395,848

 
785,778

 
2,279,114

 
2,309,812

 
404,325

 
—

 
6,174,877

Total ending loan balance
$
396,091

 
$
791,941

 
$
2,284,698

 
$
2,320,821

 
$
407,836

 
$
—

 
$
6,201,387
Summary of Impaired Loans Excluding PCI Loans
In accordance with ASC 310, prior to the adoption of ASU 2016-13, the following table presents the balance in the allowance for credit losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2019, excluding PCD loans (in thousands):
 
Commercial
and 
Industrial
 
Commercial
Real Estate –
Owner
Occupied
 
Commercial
Real Estate –
Investor
 
Residential
Real Estate
 
Consumer
 
Unallocated
 
Total
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending allowance balance attributed to loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
—

 
$
474

 
$
—

 
$
—

 
$
2

 
$
—

 
$
476

Collectively evaluated for impairment
1,458

 
2,419

 
9,883

 
2,002

 
589

 
25

 
16,376

Total ending allowance balance
$
1,458

 
$
2,893

 
$
9,883

 
$
2,002

 
$
591

 
$
25

 
$
16,852

Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans individually evaluated for impairment
$
243

 
$
6,163

 
$
5,584

 
$
11,009

 
$
3,511

 
$
—

 
$
26,510

Loans collectively evaluated for impairment
395,848

 
785,778

 
2,279,114

 
2,309,812

 
404,325

 
—

 
6,174,877

Total ending loan balance
$
396,091

 
$
791,941

 
$
2,284,698

 
$
2,320,821

 
$
407,836

 
$
—

 
$
6,201,387
Summary of Loans Individually Evaluated for Impairment by Loan Portfolio Segment Excluding PCI Loans
In accordance with ASC 310, prior to the adoption of ASU 2016-13, the summary of loans individually evaluated for impairment by loan portfolio segment as of December 31, 2019 and for the three and six months ended June 30, 2019, is as follows, excluding PCI loans (in thousands):
 
Unpaid
Principal
Balance
 
Recorded
Investment
 
Allowance
for Credit
Losses
Allocated
As of December 31, 2019
 
 
 
 
 
With no related allowance recorded:
 
 
 
 
 
Commercial and industrial
$
265

 
$
243

 
$
—

Commercial real estate – owner occupied
4,062

 
3,968

 
—

Commercial real estate – investor
6,665

 
5,584

 
—

Residential real estate
11,009

 
11,009

 
—

Consumer
3,734

 
3,509

 
—

 
$
25,735

 
$
24,313

 
$
—

With an allowance recorded:
 
 
 
 
 
Commercial and industrial
$
—

 
$
—

 
$
—

Commercial real estate – owner occupied
2,376

 
2,195

 
474

Commercial real estate – investor
—

 
—

 
—

Residential real estate
—

 
—

 
—

Consumer
2

 
2

 
2

 
$
2,378

 
$
2,197

 
$
476


 
Three Months Ended June 30, 2019
 
Six months ended June 30, 2019
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
With no related allowance recorded:
 
 
 
 
 
 
 
Commercial and industrial
$
249

 
$
1

 
$
708

 
$
4

Commercial real estate – owner occupied
3,808

 
80

 
4,337

 
122

Commercial real estate – investor
10,882

 
22

 
10,501

 
158

Residential real estate
10,104

 
140

 
10,090

 
271

Consumer
3,270

 
48

 
3,171

 
94

 
$
28,313

 
$
291

 
$
28,807

 
$
649

With an allowance recorded:
 
 
 
 
 
 
 
Commercial and industrial
$
—

 
$
—

 
$
—

 
$
—

Commercial real estate – owner occupied
3,197

 
—

 
—

 
—

Commercial real estate – investor
—

 
—

 
2,131

 
36

Residential real estate
—

 
—

 
—

 
—

Consumer
—

 
—

 
—

 
—

 
$
3,197

 
$
—

 
$
2,131

 
$
36
Recorded Investment in Non-Accrual Loans by Loan Portfolio Segment Excluding PCI Loans
The following table presents the recorded investment in non-accrual loans by loan portfolio segment as of June 30, 2020 and December 31, 2019 (in thousands). The June 30, 2020 balances include PCD loans while the December 31, 2019 balances exclude PCI loans (in accordance with ASC 310, prior to the adoption of ASU 2016-13 on January 1, 2020).
 
June 30, 2020
 
December 31, 2019
Commercial and industrial
$
8,211

 
$
207

Commercial real estate – owner occupied
5,629

 
4,811

Commercial real estate – investor
17,922

 
2,917

Residential real estate
7,676

 
7,181

Consumer
3,119

 
2,733

 
$
42,557

 
$
17,849
Aging of Recorded Investment in Past Due Loans Excluding PCI Loans
The following table presents the aging of the recorded investment in past due loans as of June 30, 2020 and December 31, 2019 by loan portfolio segment (in thousands). The June 30, 2020 balances include PCD loans while the December 31, 2019 balances exclude PCI loans (in accordance with ASC 310, prior to the adoption of ASU 2016-13 on January 1, 2020).
 
30-59
Days
Past Due
 
60-89
Days
Past Due
 
Greater
than
90 Days
Past Due
 
Total
Past Due
 
Loans Not
Past Due
 
Total
June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
307

 
$
—

 
$
2,246

 
$
2,553

 
$
908,209

 
$
910,762

Commercial real estate – owner occupied
793

 
143

 
2,392

 
3,328

 
1,196,414

 
1,199,742

Commercial real estate – investor
1,857

 
2,000

 
10,299

 
14,156

 
3,435,004

 
3,449,160

Residential real estate
943

 
7,119

 
4,032

 
12,094

 
2,414,183

 
2,426,277

Consumer
1,528

 
336

 
4,510

 
6,374

 
385,974

 
392,348

 
$
5,428

 
$
9,598

 
$
23,479

 
$
38,505

 
$
8,339,784

 
$
8,378,289

December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
100

 
$
—

 
$
207

 
$
307

 
$
395,784

 
$
396,091

Commercial real estate – owner occupied
1,541

 
1,203

 
1,040

 
3,784

 
788,157

 
791,941

Commercial real estate – investor
381

 
938

 
2,792

 
4,111

 
2,280,587

 
2,284,698

Residential real estate
8,161

 
3,487

 
2,859

 
14,507

 
2,306,314

 
2,320,821

Consumer
1,048

 
491

 
2,388

 
3,927

 
403,909

 
407,836

 
$
11,231

 
$
6,119

 
$
9,286

 
$
26,636

 
$
6,174,751

 
$
6,201,387
Troubled Debt Restructurings
The following table presents information about troubled debt restructurings which occurred during the three and six months ended June 30, 2020 and 2019, and troubled debt restructurings modified within the previous year and which defaulted during the three and six months ended June 30, 2020 and 2019 (dollars in thousands):
 
Number of Loans
 
Pre-modification
Recorded Investment
 
Post-modification
Recorded Investment
Three months ended June 30, 2020
 
 
 
 
 
Troubled Debt Restructurings:
 
 
 
 
 
Commercial real estate – owner occupied
1

 
1,112

 
1,143

Residential real estate
2

 
205

 
213

 
Number of Loans
  
Recorded Investment
Troubled Debt Restructurings
 
 
 
Which Subsequently Defaulted:
None

 
None

 
Number of Loans
 
Pre-modification
Recorded Investment
 
Post-modification
Recorded Investment
 
 
 
 
 
 
Six months ended June 30, 2020
 
 
 
 
 
Troubled Debt Restructurings:
 
 
 
 
 
Consumer
4

 
$
159

 
$
177

Commercial real estate – owner occupied
1

 
1,112

 
1,143

Residential real estate
4

 
431

 
447

 
Number of Loans
  
Recorded Investment
Troubled Debt Restructurings
 
 
 
Which Subsequently Defaulted:
None

 
None

 
Number of Loans
 
Pre-modification
Recorded Investment
 
Post-modification
Recorded Investment
Three Months Ended June 30, 2019
 
 
 
 
 
Troubled Debt Restructurings:
 
 
 
 
 
Consumer
4

 
$
442

 
$
462

Residential real estate
2

 
332

 
351


 
Number of Loans
  
Recorded Investment
Troubled Debt Restructurings
 
 
 
Which Subsequently Defaulted
None

 
None


 
Number of Loans
 
Pre-modification
Recorded Investment
 
Post-modification
Recorded Investment
Six months ended June 30, 2019
 
 
 
 
 
Troubled Debt Restructurings:
 
 
 
 
 
Consumer
4

 
$
442

 
$
462

Residential real estate
5

 
921

 
972

 
Number of Loans
  
Recorded Investment
Troubled Debt Restructurings
 
  
 
Which Subsequently Defaulted:
None

 
None
Financing Receivable, Purchased With Credit Deterioration The carrying amount of those loans is as follows (in thousands):
 
 
Two River
January 1, 2020
 
Country Bank January 1, 2020
Purchase price of loans at acquisition
 
$
26,354

 
$
24,667

Allowance for credit losses at acquisition
 
1,343

 
1,296

Non-credit discount at acquisition
 
3,589

 
5,334

Par value of acquired loans at acquisition
 
$
31,286

 
$
31,297
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period
In accordance with ASC 310, prior to the adoption of ASU 2016-13,the following table summarizes the changes in accretable yield for PCI loans during the three and six months ended June 30, 2019 (in thousands):
 
Three Months Ended
June 30,
Six Months Ended
June 30,
 
2019
 
2019
Beginning balance
$
4,193

 
$
3,630

Acquisition
—

 
691

Accretion
(531
)
 
(1,184
)
Reclassification from non-accretable difference
(479
)
 
46

Ending balance
$
3,183

 
$
3,183