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Loans Receivable, Net
 12 Months Ended
Dec. 31, 2020
Receivables [Abstract]  
Loans Receivable, Net Loans Receivable, Net
Loans receivable, net, at December 31, 2020 and 2019 consisted of the following (in thousands):
 December 31,
 20202019
Commercial:
Commercial and industrial (1)
$470,656 $396,434 
Commercial real estate - owner occupied1,145,065 792,653 
Commercial real estate - investor3,491,464 2,296,410 
Total commercial5,107,185 3,485,497 
Consumer:
Residential real estate2,309,459 2,321,157 
Home equity loans and lines285,016 318,576 
Other consumer54,446 89,422 
Total consumer2,648,921 2,729,155 
Total loans receivable7,756,106 6,214,652 
Deferred origination costs, net of fees9,486 9,880 
Allowance for credit losses(60,735)(16,852)
Total loans receivable, net$7,704,857 $6,207,680 
(1)The commercial and industrial loans balance at December 31, 2020 includes Paycheck Protection Program (“PPP”) loans of $95.4 million.
The Company categorizes all loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, and current economic trends, among other factors. Generally, risk ratings for loans on forbearance pursuant to the CARES Act are not re-evaluated until the initial 90-day forbearance period ends. At that time, risk ratings are updated with an emphasis on industries that were heavily impacted by the pandemic, as well as individual borrower liquidity, and other measures of resiliency as described below. The Company evaluates risk ratings on an ongoing basis and as such, adversely rated loans will be re-evaluated as government restrictions end and businesses resume normal operations. The Company uses the following definitions for risk ratings:
    Pass: Loans classified as Pass are well protected by the paying capacity and net worth of the borrower.
    Special Mention: Loans classified as Special Mention have a potential weakness that deserves management’s close attention. This includes borrowers that have been negatively affected by the pandemic but demonstrate some degree of liquidity. This liquidity may or may not be adequate to resume operations. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank’s credit position at some future date.
    Substandard: Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. This includes borrowers whose operations were negatively affected by the pandemic and whom, in the Bank’s assessment, do not have adequate liquidity available to resume operations at levels sufficient to service their current debt levels. They are characterized by the distinct possibility that the Company 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 summarizes total loans by year of origination, internally assigned credit grades and risk characteristics (in thousands):
202020192018201720162015 and priorRevolving lines of creditTotal
December 31, 2020
Commercial and industrial
Pass$137,262 $40,737 $27,967 $18,845 $33,568 $59,339 $134,140 $451,858 
Special Mention150 583 826 1,422 907 118 1,429 5,435 
Substandard581 1,284 1,243 809 439 1,706 7,301 13,363 
Total commercial and industrial137,993 42,604 30,036 21,076 34,914 61,163 142,870 470,656 
Commercial real estate - owner occupied
Pass96,888 114,506 122,962 124,050 104,264 428,423 18,932 1,010,025 
Special Mention— 3,512 8,240 1,023 17,115 17,811 439 48,140 
Substandard— 34,670 9,001 3,404 3,677 35,509 639 86,900 
Total commercial real estate - owner occupied96,888 152,688 140,203 128,477 125,056 481,743 20,010 1,145,065 
Commercial real estate - investor
Pass$635,930 $628,435 $317,104 $426,268 $281,876 $812,062 $194,913 $3,296,588 
Special Mention— 15,979 17,113 15,225 4,234 55,872 149 108,572 
Substandard4,311 9,217 1,931 17,222 11,474 36,326 5,823 86,304 
Total commercial real estate - investor640,241 653,631 336,148 458,715 297,584 904,260 200,885 3,491,464 
Consumer:
Residential real estate (1)
Pass$595,982 $437,593 $226,435 $166,773 $146,237 $729,037 $— $2,302,057 
Special Mention— 532 — — 446 2,186 — 3,164 
Substandard570 — 1,489 221 — 1,958 — 4,238 
Total residential real estate596,552 438,125 227,924 166,994 146,683 733,181 — 2,309,459 
Consumer (1)
Pass24,954 26,659 83,296 25,469 16,565 156,276 2,145 335,364 
Special Mention— — — — 150 382 — 532 
Substandard— — — — — 3,566 — 3,566 
Total consumer24,954 26,659 83,296 25,469 16,715 160,224 2,145 339,462 
Total loans receivable$1,496,628 $1,313,707 $817,607 $800,731 $620,952 $2,340,571 $365,910 $7,756,106 
(1)For residential real estate and consumer loans, the Company evaluates credit quality based on the aging status of the loan and by payment activity.
An analysis of the allowance for credit losses on loans for the years ended December 31, 2020 and 2019 is as follows (in thousands):
Commercial
and
Industrial		Commercial Real Estate - Owner OccupiedCommercial Real Estate - InvestorResidential
Real Estate		ConsumerUnallocatedTotal
For the Year Ended December 31, 2020
Allowance for credit losses on loans
Balance at beginning of year$1,458 $2,893 $9,883 $2,002 $591 $25 $16,852 
Impact of CECL adoption2,416 (1,109)(5,395)3,833 2,981 (25)2,701 
Initial allowance for credit losses on PCD loans1,221 26 260 109 1,023 — 2,639 
Credit loss expense (benefit) (1)
1,039 15,007 34,935 8,191 (1,770)— 57,402 
Charge-offs (1)
(890)(1,769)(13,081)(3,200)(1,244)— (20,184)
Recoveries146 6 101 883 189 — 1,325 
Balance at end of year$5,390 $15,054 $26,703 $11,818 $1,770 $— $60,735 
For the Year Ended December 31, 2019
Allowance for credit losses on loans
Balance at beginning of year$1,609 $2,277 $8,770 $2,413 $486 $1,022 $16,577 
Credit loss (benefit) expense(311)947 638 792 567 (997)1,636 
Charge-offs— (663)(236)(1,299)(606)— (2,804)
Recoveries160 332 711 96 144 — 1,443 
Balance at end of year$1,458 $2,893 $9,883 $2,002 $591 $25 $16,852 
(1) The year ended December 31, 2020 was impacted by the shift in current and forward-looking economic conditions, credit migration and borrower vulnerability related to COVID-19. The Company recorded $14.6 million of charge-offs related to the sale of higher-risk commercial loans and $3.3 million of charge-offs related to the sale of under-performing residential and consumer loans.
A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. At December 31, 2020, the Company had collateral dependent loans with an amortized cost balance as follows: commercial and industrial of $1.9 million, commercial real estate - owner occupied of $13.8 million, and commercial real estate - investor of $18.3 million. In addition, the Company had residential and consumer loans collateralized by residential real estate, which are in the process of foreclosure, with an amortized cost balance of $1.4 million and $1.8 million at December 31, 2020 and December 31, 2019, respectively. The amount of foreclosed residential real estate property held by the Company was $106,000 and $51,000 at December 31, 2020 and December 31, 2019, respectively.
In accordance with ASC 310, prior to the adoption of ASU 2016-13, the following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2019, excluding PCI loans (in thousands):
Commercial
and
Industrial		Commercial Real Estate - Owner OccupiedCommercial Real Estate - InvestorResidential Real EstateConsumerUnallocatedTotal
At December 31, 2019
Allowance for loan losses:
Ending allowance balance attributed to loans:
Individually evaluated for impairment$— $474 $— $— $2 $— $476 
Collectively evaluated for impairment1,458 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 impairment395,848 785,778 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 
As of December 31, 2019, the Company defined an impaired loan as non-accrual commercial real estate, multi-family, land, construction and commercial loans in excess of $250,000. Impaired loans also included all loans modified as troubled debt restructurings. At December 31, 2019, the impaired loan portfolio totaled $26.5 million for which there was a $476,000 specific allocation in the allowance for loan losses. The average balance of impaired loans for the year ended December 31, 2019 was $29.4 million. If interest income on non-accrual loans and impaired loans had been current in accordance with their original terms, approximately $372,000 and $419,000 of interest income for the years ended December 31, 2019 and 2018, respectively, would have been recorded.
At December 31, 2019, impaired loans include TDR loans of $24.6 million, of which $18.0 million were performing in accordance with their restructured terms for a minimum of six months and were accruing interest.
The summary of loans individually evaluated for impairment by loan portfolio segment as of December 31, 2019 was as follows, excluding PCI loans (in thousands):
Unpaid
Principal
Balance		Recorded
Investment		Allowance for
Loan Losses
Allocated
At December 31, 2019
With no related allowance recorded:
Commercial and industrial$265 $243 $— 
Commercial real estate – owner occupied4,062 3,968 — 
Commercial real estate – investor6,665 5,584 — 
Residential real estate11,009 11,009 — 
Consumer3,734 3,509 — 
Total with no related allowance recorded$25,735 $24,313 $— 
With an allowance recorded:
Commercial and industrial$— $— $— 
Commercial real estate – owner occupied2,376 2,195 474 
Commercial real estate – investor— — — 
Residential real estate— — — 
Consumer2 2 2 
Total with an allowance recorded$2,378 $2,197 $476 

 For the Year Ended December 31, 2019
 Average
Recorded
Investment		Interest
Income
Recognized
With no related allowance recorded:
Commercial and industrial$523 $5 
Commercial real estate – owner occupied4,171 179 
Commercial real estate – investor9,012 222 
Residential real estate10,275 548 
Consumer3,275 178 
Total with no related allowance recorded$27,256 $1,132 
With an allowance recorded:
Commercial and industrial$— $— 
Commercial real estate – owner occupied2,173 138 
Commercial real estate – investor— — 
Residential real estate— — 
Consumer— — 
Total with an allowance recorded$2,173 $138 
The following table presents the recorded investment in non-accrual loans by loan portfolio segment as of December 31, 2020 and 2019 (in thousands). The December 31, 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).
 December 31,
 20202019
Commercial and industrial$1,908 $207 
Commercial real estate – owner occupied13,751 4,811 
Commercial real estate – investor18,287 2,917 
Residential real estate8,671 7,181 
Consumer4,246 2,733 
Total non-accrual loans$46,863 $17,849 
At December 31, 2020, the non-accrual loans were included in the allowance for credit loss calculation and the Company did not recognize or accrue interest income on these loans. At December 31, 2020 and December 31, 2019, there were no loans that were 90 days or greater past due and still accruing interest.
The following table presents the aging of the recorded investment in past due loans as of December 31, 2020 and 2019 by loan portfolio segment (in thousands). The December 31, 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		90 Days or Greater
Past Due		Total
Past Due		Loans Not
Past Due		Total
December 31, 2020
Commercial and industrial$3,050 $628 $327 $4,005 $466,651 $470,656 
Commercial real estate – owner occupied1,015 — 7,871 8,886 1,136,179 1,145,065 
Commercial real estate – investor8,897 3,233 11,122 23,252 3,468,212 3,491,464 
Residential real estate15,156 3,164 4,238 22,558 2,286,901 2,309,459 
Consumer978 533 3,568 5,079 334,383 339,462 
Total loans receivable$29,096 $7,558 $27,126 $63,780 $7,692,326 $7,756,106 
December 31, 2019
Commercial and industrial$100 $— $207 $307 $395,784 $396,091 
Commercial real estate – owner occupied1,541 1,203 1,040 3,784 788,157 791,941 
Commercial real estate – investor381 938 2,792 4,111 2,280,587 2,284,698 
Residential real estate8,161 3,487 2,859 14,507 2,306,314 2,320,821 
Consumer1,048 491 2,388 3,927 403,909 407,836 
Total loans receivable$11,231 $6,119 $9,286 $26,636 $6,174,751 $6,201,387 
The Company classifies certain loans as TDRs when credit terms to a borrower in financial difficulty are modified. The modifications may include a reduction in rate, an extension in term, the capitalization of past due amounts and/or the restructuring of scheduled principal payments. Residential real estate and consumer loans where the borrower’s debt is discharged in a bankruptcy filing are also considered TDRs. For these loans, the Bank retains its security interest in the real estate collateral. At December 31, 2020 and 2019, TDR loans totaled $17.5 million and $24.6 million, respectively. Included in the non-accrual loan total at December 31, 2020 and 2019 were $5.5 million and $6.6 million, respectively, of TDRs. At December 31, 2020 and 2019, the Company had $0 and $476,000, respectively, of specific reserves allocated to loans that are classified as TDRs. Non-accrual loans which become TDRs are generally returned to accrual status after six months of performance. In addition to the TDRs included in non-accrual loans, the Company also has loans classified as accruing TDRs at December 31, 2020 and 2019 which totaled $12.0 million and $18.0 million, respectively.
The following table presents information about TDRs which occurred during the years ended December 31, 2020 and 2019, and TDRs modified within the previous year and which defaulted during the years ended December 31, 2020 and 2019 (dollars in thousands):
Number
of Loans		Pre-modification
Recorded Investment		Post-modification
Recorded Investment
For the Year Ended December 31, 2020
Troubled debt restructurings:
Commercial real estate – owner occupied1$1,112 $1,143 
Commercial real estate – investor21,035 1,116 
Residential real estate61,018 1,065 
Consumer61,035 668 
 Number of LoansRecorded Investment
Troubled debt restructurings
Which subsequently defaulted:NoneNone
 Number
of Loans		Pre-modification
Recorded Investment		Post-modification
Recorded Investment
For the Year Ended December 31, 2019
Troubled debt restructurings:
Commercial real estate – owner occupied1$154 $198 
Commercial real estate – investor1272 393 
Residential real estate61,036 1,091 
Consumer7663 683 
 Number of LoansRecorded Investment
Troubled debt restructurings
Which subsequently defaulted:
Consumer1$115 
In response to the COVID-19 pandemic and its economic impact on customers, short-term modification programs that comply with the CARES Act were implemented to provide temporary payment relief to those borrowers directly impacted by COVID-19. The Commercial Borrower Relief Program allowed for the deferral of principal and interest or principal only. For principal and interest deferrals as well as principal only deferrals, all payments received are first applied to all accrued and unpaid interest and the balance, if any, on account of unpaid principal, is then applied to fees, expenses and other amounts due to the Bank. Monthly payments will continue until the maturity date when all then unpaid principal, interest, fees, and all other charges are due and payable to the Bank. The Consumer Borrower Relief Program allowed for the deferral of principal and interest. The deferred payments along with interest accrued during the deferral period are due and payable on the maturity date. Provided these loans were current as of either year end or the date of the modification, these loans were not considered TDR loans at December 31, 2020 and will not be reported as past due during the deferral period.
As part of the Two River and Country Bank acquisitions, the Company purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The carrying amount of the PCD loans is as follows (in thousands):
Two RiverCountry Bank
 January 1, 2020January 1, 2020
Purchase price of loans at acquisition$26,354 $24,667 
Allowance for credit losses at acquisition1,343 1,296 
Non-credit discount at acquisition3,589 5,334 
Par value of acquired loans at acquisition$31,286 $31,297 
The following table summarizes the changes in accretable yield for PCI loans during the year ended December 31, 2019 (in thousands):
For the Year Ended December 31,
 2019
Beginning balance$3,630 
Acquisition691 
Accretion(2,613)
Reclassification from non-accretable difference1,317 
Ending balance$3,025