Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Impaired Loans

The tables below show the aging of the Company’s loan portfolio at September 30, 2017, December 31, 2016 and September 30, 2016:



As of September 30, 2017			90+ days and still accruing		60-89 days past due		30-59 days past due
(Dollars in thousands)	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Loan Balances:
Commercial
Commercial, industrial and other	$	12,281	$	—	$	3,161	$	13,710	$	4,091,381	$	4,120,533
Franchise	—		—		—		16,719		836,997		853,716
Mortgage warehouse lines of credit	—		—		—		312		194,058		194,370
Asset-based lending	1,141		—		1,533		4,515		889,147		896,336
Leases	509		—		281		1,194		379,410		381,394
PCI - commercial ⁽¹⁾	—		1,489		61		—		8,135		9,685
Total commercial	13,931		1,489		5,036		36,450		6,399,128		6,456,034
Commercial real estate:
Construction	1,607		—		366		2,064		669,940		673,977
Land	196		—		—		—		102,557		102,753
Office	5,148		—		—		1,220		874,583		880,951
Industrial	1,848		—		137		438		834,062		836,485
Retail	2,200		—		3,030		3,674		925,335		934,239
Multi-family	569		—		68		3,058		861,290		864,985
Mixed use and other	3,310		—		843		3,561		1,966,601		1,974,315
PCI - commercial real estate ⁽¹⁾	—		8,443		1,394		2,940		120,299		133,076
Total commercial real estate	14,878		8,443		5,838		16,955		6,354,667		6,400,781
Home equity	7,581		—		446		2,590		662,352		672,969
Residential real estate, including PCI	14,743		1,120		2,055		165		771,416		789,499
Premium finance receivables
Commercial insurance loans	9,827		9,584		7,421		9,966		2,628,114		2,664,912
Life insurance loans	—		6,740		946		6,937		3,571,388		3,586,011
PCI - life insurance loans ⁽¹⁾	—		—		—		—		209,463		209,463
Consumer and other, including PCI	540		221		242		685		131,424		133,112
Total loans, net of unearned income, excluding covered loans	$	61,500	$	27,597	$	21,984	$	73,748	$	20,727,952	$	20,912,781
Covered loans	1,936		2,233		1,074		45		41,313		46,601
Total loans, net of unearned income	$	63,436	$	29,830	$	23,058	$	73,793	$	20,769,265	$	20,959,382


(1)	PCI loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.



As of December 31, 2016			90+ days and still accruing		60-89 days past due		30-59 days past due
(Dollars in thousands)	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Loan Balances:
Commercial
Commercial, industrial and other	$	13,441	$	174	$	2,341	$	11,779	$	3,716,977	$	3,744,712
Franchise	—		—		—		493		869,228		869,721
Mortgage warehouse lines of credit	—		—		—		—		204,225		204,225
Asset-based lending	1,924		—		135		1,609		871,402		875,070
Leases	510		—		—		1,331		293,073		294,914
PCI - commercial ⁽¹⁾	—		1,689		100		2,428		12,563		16,780
Total commercial	15,875		1,863		2,576		17,640		5,967,468		6,005,422
Commercial real estate
Construction	2,408		—		—		1,824		606,007		610,239
Land	394		—		188		—		104,219		104,801
Office	4,337		—		4,506		1,232		857,599		867,674
Industrial	7,047		—		4,516		2,436		756,602		770,601
Retail	597		—		760		3,364		907,872		912,593
Multi-family	643		—		322		1,347		805,312		807,624
Mixed use and other	6,498		—		1,186		12,632		1,931,859		1,952,175
PCI - commercial real estate ⁽¹⁾	—		16,188		3,775		8,888		141,529		170,380
Total commercial real estate	21,924		16,188		15,253		31,723		6,110,999		6,196,087
Home equity	9,761		—		1,630		6,515		707,887		725,793
Residential real estate, including PCI	12,749		1,309		936		8,271		681,956		705,221
Premium finance receivables
Commercial insurance loans	14,709		7,962		5,646		14,580		2,435,684		2,478,581
Life insurance loans	—		3,717		17,514		16,204		3,182,935		3,220,370
PCI - life insurance loans ⁽¹⁾	—		—		—		—		249,657		249,657
Consumer and other, including PCI	439		207		100		887		120,408		122,041
Total loans, net of unearned income, excluding covered loans	$	75,457	$	31,246	$	43,655	$	95,820	$	19,456,994	$	19,703,172
Covered loans	2,121		2,492		225		1,553		51,754		58,145
Total loans, net of unearned income	$	77,578	$	33,738	$	43,880	$	97,373	$	19,508,748	$	19,761,317



As of September 30, 2016			90+ days and still accruing		60-89 days past due		30-59 days past due
(Dollars in thousands)	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Loan Balances:
Commercial
Commercial, industrial and other	$	15,809	$	—	$	7,324	$	8,987	$	3,573,396	$	3,605,516
Franchise	—		—		458		1,626		872,661		874,745
Mortgage warehouse lines of credit	—		—		—		—		309,632		309,632
Asset-based lending	234		—		3,772		3,741		837,972		845,719
Leases	375		—		239		—		299,339		299,953
PCI - commercial ⁽¹⁾	—		1,783		—		1,036		13,160		15,979
Total commercial	16,418		1,783		11,793		15,390		5,906,160		5,951,544
Commercial real estate:
Construction	400		—		—		3,775		447,302		451,477
Land	1,208		—		787		300		105,406		107,701
Office	3,609		—		6,457		8,062		865,954		884,082
Industrial	9,967		—		940		2,961		753,636		767,504
Retail	909		—		1,340		8,723		884,369		895,341
Multi-family	90		—		3,051		2,169		789,645		794,955
Mixed use and other	6,442		—		2,157		5,184		1,837,724		1,851,507
PCI - commercial real estate ⁽¹⁾	—		21,433		1,509		4,066		129,109		156,117
Total commercial real estate	22,625		21,433		16,241		35,240		5,813,145		5,908,684
Home equity	9,309		—		1,728		3,842		727,989		742,868
Residential real estate, including PCI	12,205		1,496		2,232		1,088		646,577		663,598
Premium finance receivables
Commercial insurance loans	14,214		7,754		6,968		10,291		2,391,006		2,430,233
Life insurance loans	—		—		9,960		3,717		3,006,795		3,020,472
PCI - life insurance loans ⁽¹⁾	—		—		—		—		262,887		262,887
Consumer and other, including PCI	543		124		204		871		119,233		120,975
Total loans, net of unearned income, excluding covered loans	$	75,314	$	32,590	$	49,126	$	70,439	$	18,873,792	$	19,101,261
Covered loans	2,331		4,806		1,545		2,456		84,802		95,940
Total loans, net of unearned income	$	77,645	$	37,396	$	50,671	$	72,895	$	18,958,594	$	19,197,201


(1)	PCI loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.

The Company's ability to manage credit risk depends in large part on our ability to properly identify and manage problem loans. To do so, the Company operates a credit risk rating system under which our credit management personnel assign a credit risk rating (1 to 10 rating) to each loan at the time of origination and review loans on a regular basis.

Each loan officer is responsible for monitoring his or her loan portfolio, recommending a credit risk rating for each loan in his or her portfolio and ensuring the credit risk ratings are appropriate. These credit risk ratings are then ratified by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors including: a borrower’s financial strength, cash flow coverage, collateral protection and guarantees.

The Company’s Problem Loan Reporting system automatically includes all loans with credit risk ratings of 6 through 9. This system is designed to provide an on-going detailed tracking mechanism for each problem loan. Once management determines that a loan has deteriorated to a point where it has a credit risk rating of 6 or worse, the Company’s Managed Asset Division performs an overall credit and collateral review. As part of this review, all underlying collateral is identified and the valuation methodology is analyzed and tracked. As a result of this initial review by the Company’s Managed Asset Division, the credit risk rating is reviewed and a portion of the outstanding loan balance may be deemed uncollectible or an impairment reserve may be established. The Company’s impairment analysis utilizes an independent re-appraisal of the collateral (unless such a third-party evaluation is not possible due to the unique nature of the collateral, such as a closely-held business or thinly traded securities). In the case of commercial real estate collateral, an independent third party appraisal is ordered by the Company’s Real Estate Services Group to determine if there has been any change in the underlying collateral value. These independent appraisals are reviewed by the Real Estate Services Group and sometimes by independent third party valuation experts and may be adjusted depending upon market conditions.

Through the credit risk rating process, loans are reviewed to determine if they are performing in accordance with the original contractual terms. If the borrower has failed to comply with the original contractual terms, further action may be required by the Company, including a downgrade in the credit risk rating, movement to non-accrual status, a charge-off or the establishment of a specific impairment reserve. If a loan amount, or portion thereof, is determined to be uncollectible, the loan’s credit risk rating is immediately downgraded to an 8 or 9 and the uncollectible amount is charged-off. Any loan that has a partial charge-off continues to be assigned a credit risk rating of an 8 or 9 for the duration of time that a balance remains outstanding. The Company undertakes a thorough and ongoing analysis to determine if additional impairment and/or charge-offs are appropriate and to begin a workout plan for the credit to minimize actual losses.

If, based on current information and events, it is probable that the Company will be unable to collect all amounts due to it according to the contractual terms of the loan agreement, a specific impairment reserve is established. In determining the appropriate charge-off for collateral-dependent loans, the Company considers the results of appraisals for the associated collateral.

Non-performing loans include all non-accrual loans (8 and 9 risk ratings) as well as loans 90 days past due and still accruing interest, excluding PCI and covered loans. The remainder of the portfolio is considered performing under the contractual terms of the loan agreement. The following table presents the recorded investment based on performance of loans by class, excluding covered loans, per the most recent analysis at September 30, 2017, December 31, 2016 and September 30, 2016:



	Performing						Non-performing						Total
(Dollars in thousands)	September 30, 2017		December 31, 2016		September 30, 2016		September 30, 2017		December 31, 2016		September 30, 2016		September 30, 2017		December 31, 2016		September 30, 2016
Loan Balances:
Commercial
Commercial, industrial and other	$	4,108,252	$	3,731,097	$	3,589,707	$	12,281	$	13,615	$	15,809	$	4,120,533	$	3,744,712	$	3,605,516
Franchise	853,716		869,721		874,745		—		—		—		853,716		869,721		874,745
Mortgage warehouse lines of credit	194,370		204,225		309,632		—		—		—		194,370		204,225		309,632
Asset-based lending	895,195		873,146		845,485		1,141		1,924		234		896,336		875,070		845,719
Leases	380,885		294,404		299,578		509		510		375		381,394		294,914		299,953
PCI - commercial ⁽¹⁾	9,685		16,780		15,979		—		—		—		9,685		16,780		15,979
Total commercial	6,442,103		5,989,373		5,935,126		13,931		16,049		16,418		6,456,034		6,005,422		5,951,544
Commercial real estate
Construction	672,370		607,831		451,077		1,607		2,408		400		673,977		610,239		451,477
Land	102,557		104,407		106,493		196		394		1,208		102,753		104,801		107,701
Office	875,803		863,337		880,473		5,148		4,337		3,609		880,951		867,674		884,082
Industrial	834,637		763,554		757,537		1,848		7,047		9,967		836,485		770,601		767,504
Retail	932,039		911,996		894,432		2,200		597		909		934,239		912,593		895,341
Multi-family	864,416		806,981		794,865		569		643		90		864,985		807,624		794,955
Mixed use and other	1,971,005		1,945,677		1,845,065		3,310		6,498		6,442		1,974,315		1,952,175		1,851,507
PCI - commercial real estate⁽¹⁾	133,076		170,380		156,117		—		—		—		133,076		170,380		156,117
Total commercial real estate	6,385,903		6,174,163		5,886,059		14,878		21,924		22,625		6,400,781		6,196,087		5,908,684
Home equity	665,388		716,032		733,559		7,581		9,761		9,309		672,969		725,793		742,868
Residential real estate, including PCI	774,756		692,472		651,393		14,743		12,749		12,205		789,499		705,221		663,598
Premium finance receivables
Commercial insurance loans	2,645,501		2,455,910		2,408,265		19,411		22,671		21,968		2,664,912		2,478,581		2,430,233
Life insurance loans	3,579,271		3,216,653		3,020,472		6,740		3,717		—		3,586,011		3,220,370		3,020,472
PCI - life insurance loans ⁽¹⁾	209,463		249,657		262,887		—		—		—		209,463		249,657		262,887
Consumer and other, including PCI	132,413		121,458		120,372		699		583		603		133,112		122,041		120,975
Total loans, net of unearned income, excluding covered loans	$	20,834,798	$	19,615,718	$	19,018,133	$	77,983	$	87,454	$	83,128	$	20,912,781	$	19,703,172	$	19,101,261


(1)	PCI loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. See Note 6 - Loans for further discussion of these purchased loans.

A summary of activity in the allowance for credit losses by loan portfolio (excluding covered loans) for the three and nine months ended September 30, 2017 and 2016 is as follows:



Three months ended September 30, 2017				Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivables			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivables			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	52,358		$	52,339		$	11,134		$	6,143		$	6,352		$	1,265		$	129,591
Other adjustments	(2		)	(38		)	—			(31		)	32			—			(39		)
Reclassification from allowance for unfunded lending-related commitments	500			(406		)	—			—			—			—			94
Charge-offs	(2,265		)	(989		)	(968		)	(267		)	(1,716		)	(213		)	(6,418		)
Recoveries	801			323			178			55			499			93			1,949
Provision for credit losses	4,343			811			212			757			1,386			433			7,942
Allowance for loan losses at period end	$	55,735		$	52,040		$	10,556		$	6,657		$	6,553		$	1,578		$	133,119
Allowance for unfunded lending-related commitments at period end	$	—		$	1,276		$	—		$	—		$	—		$	—		$	1,276
Allowance for credit losses at period end	$	55,735		$	53,316		$	10,556		$	6,657		$	6,553		$	1,578		$	134,395
Individually evaluated for impairment	$	4,568		$	1,184		$	691		$	758		$	—		$	34		$	7,235
Collectively evaluated for impairment	50,623			52,048			9,865			5,813			6,553			1,544			126,446
Loans acquired with deteriorated credit quality	544			84			—			86			—			—			714
Loans at period end
Individually evaluated for impairment	$	18,086		$	31,698		$	7,729		$	21,263		$	—		$	544		$	79,320
Collectively evaluated for impairment	6,428,263			6,236,007			665,240			735,185			6,250,923			131,581			20,447,199
Loans acquired with deteriorated credit quality	9,685			133,076			—			3,637			209,463			987			356,848
Loans held at fair value	—			—			—			29,414			—			—			29,414



Three months ended September 30, 2016	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivables			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivables			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	41,654		$	46,824		$	11,383		$	5,405		$	7,814		$	1,276		$	114,356
Other adjustments	(35		)	(57		)	—			(10		)	(10		)	—			(112		)
Reclassification from allowance for unfunded lending-related commitments	(500		)	(79		)	—			—			—			—			(579		)
Charge-offs	(3,469		)	(382		)	(574		)	(134		)	(1,959		)	(389		)	(6,907		)
Recoveries	176			364			65			61			456			72			1,194
Provision for credit losses	5,212			1,678			810			781			974			286			9,741
Allowance for loan losses at period end	$	43,038		$	48,348		$	11,684		$	6,103		$	7,275		$	1,245		$	117,693
Allowance for unfunded lending-related commitments at period end	$	500		$	1,148		$	—		$	—		$	—		$	—		$	1,648
Allowance for credit losses at period end	$	43,538		$	49,496		$	11,684		$	6,103		$	7,275		$	1,245		$	119,341
Individually evaluated for impairment	$	2,554		$	2,491		$	964		$	1,166		$	—		$	192		$	7,367
Collectively evaluated for impairment	40,252			46,983			10,720			4,867			7,275			1,053			111,150
Loans acquired with deteriorated credit quality	732			22			—			70			—			—			824
Loans at period end
Individually evaluated for impairment	$	19,133		$	45,290		$	9,309		$	17,040		$	—		$	602		$	91,374
Collectively evaluated for impairment	5,916,432			5,707,277			733,559			625,030			5,450,705			119,162			18,552,165
Loans acquired with deteriorated credit quality	15,979			156,117			—			3,925			262,887			1,211			440,119
Loans held at fair value	—			—			—			17,603			—			—			17,603



Nine months ended September 30, 2017				Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	44,493		$	51,422		$	11,774		$	5,714		$	7,625		$	1,263		$	122,291
Other adjustments	(23		)	(121		)	—			(38		)	57			—			(125		)
Reclassification from allowance for unfunded lending-related commitments	500			(438		)	—			—			—			—			62
Charge-offs	(3,819		)	(3,235		)	(3,224		)	(742		)	(5,021		)	(522		)	(16,563		)
Recoveries	1,635			1,153			387			287			1,515			267			5,244
Provision for credit losses	12,949			3,259			1,619			1,436			2,377			570			22,210
Allowance for loan losses at period end	$	55,735		$	52,040		$	10,556		$	6,657		$	6,553		$	1,578		$	133,119
Allowance for unfunded lending-related commitments at period end	$	—		$	1,276		$	—		$	—		$	—		$	—		$	1,276
Allowance for credit losses at period end	$	55,735		$	53,316		$	10,556		$	6,657		$	6,553		$	1,578		$	134,395



Nine months ended September 30, 2016				Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	36,135		$	43,758		$	12,012		$	4,734		$	7,233		$	1,528		$	105,400
Other adjustments	(103		)	(203		)	—			(49		)	31			—			(324		)
Reclassification from allowance for unfunded lending-related commitments	(500		)	(200		)	—			—			—			—			(700		)
Charge-offs	(4,861		)	(1,555		)	(3,672		)	(1,320		)	(6,350		)	(720		)	(18,478		)
Recoveries	926			1,029			184			204			1,876			143			4,362
Provision for credit losses	11,441			5,519			3,160			2,534			4,485			294			27,433
Allowance for loan losses at period end	$	43,038		$	48,348		$	11,684		$	6,103		$	7,275		$	1,245		$	117,693
Allowance for unfunded lending-related commitments at period end	$	500		$	1,148		$	—		$	—		$	—		$	—		$	1,648
Allowance for credit losses at period end	$	43,538		$	49,496		$	11,684		$	6,103		$	7,275		$	1,245		$	119,341

A summary of activity in the allowance for covered loan losses for the three and nine months ended September 30, 2017 and 2016 is as follows:



	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
(Dollars in thousands)	2017			2016			2017			2016
Balance at beginning of period	$	1,074		$	2,412		$	1,322		$	3,026
Provision for covered loan losses before benefit attributable to FDIC loss share agreements	(225		)	(847		)	(1,063		)	(3,495		)
Benefit attributable to FDIC loss share agreements	180			677			850			2,796
Net provision for covered loan losses	(45		)	(170		)	(213		)	(699		)
Increase in FDIC indemnification liability	(180		)	(677		)	(850		)	(2,796		)
Loans charged-off	(155		)	(918		)	(491		)	(1,291		)
Recoveries of loans charged-off	64			775			990			3,182
Net (charge-offs) recoveries	(91		)	(143		)	499			1,891
Balance at end of period	$	758		$	1,422		$	758		$	1,422

In conjunction with FDIC-assisted transactions, the Company entered into loss share agreements with the FDIC. Additional expected losses, to the extent such expected losses result in the recognition of an allowance for loan losses, will increase the FDIC loss share asset or reduce any FDIC loss share liability. The allowance for loan losses for loans acquired in FDIC-assisted transactions is determined without giving consideration to the amounts recoverable through loss share agreements (since the loss share agreements are separately accounted for and thus presented “gross” on the balance sheet). On the Consolidated Statements of Income, the provision for credit losses is reported net of changes in the amount recoverable under the loss share agreements during the period subject to loss share agreement. Reductions to expected losses, to the extent such reductions to expected losses are the result of an improvement to the actual or expected cash flows from the covered assets, will reduce the FDIC loss share asset or increase any FDIC loss share liability. Additions to expected losses will require an increase to the allowance for covered loan losses, and a corresponding increase to the FDIC loss share asset or reduction to any FDIC loss share liability. See “FDIC-Assisted Transactions” within Note 3 – Business Combinations for more detail.

On October 16, 2017, the Company entered into agreements with the FDIC that terminate all existing loss share agreements with the FDIC. As a result, the allowance for covered loan losses previously measured will be included within the allowance for credit losses, excluding covered loans, presented above for subsequent periods. See Note 17 - Subsequent Events for further discussion of the termination of FDIC loss share agreements.

Impaired Loans

A summary of impaired loans, including troubled debt restructurings ("TDRs"), is as follows:



	September 30,		December 31,		September 30,
(Dollars in thousands)	2017		2016		2016
Impaired loans (included in non-performing and TDRs):
Impaired loans with an allowance for loan loss required ⁽¹⁾	$	30,864	$	33,146	$	39,022
Impaired loans with no allowance for loan loss required	47,730		57,370		51,518
Total impaired loans ⁽²⁾	$	78,594	$	90,516	$	90,540
Allowance for loan losses related to impaired loans	$	7,218	$	6,377	$	6,836
TDRs	$	33,183	$	41,708	$	44,276


(1)	These impaired loans require an allowance for loan losses because the estimated fair value of the loans or related collateral is less than the recorded investment in the loans.


(2)	Impaired loans are considered by the Company to be non-accrual loans, TDRs or loans with principal and/or interest at risk, even if the loan is current with all payments of principal and interest.

The following tables present impaired loans by loan class, excluding covered loans, for the periods ended as follows:



							For the Nine Months Ended
	As of September 30, 2017						September 30, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	7,312	$	8,458	$	4,191	$	8,390	$	407
Asset-based lending	588		589		161		588		21
Leases	2,440		2,444		215		2,539		91
Commercial real estate
Construction	1,607		2,408		94		2,319		93
Land	—		—		—		—		—
Office	2,225		2,291		570		2,280		94
Industrial	408		408		75		415		19
Retail	5,932		6,072		158		5,998		191
Multi-family	1,239		1,239		8		1,250		33
Mixed use and other	1,537		1,695		263		1,580		60
Home equity	1,511		1,721		691		1,528		53
Residential real estate	5,842		6,154		758		5,842		177
Consumer and other	223		224		34		225		10
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	5,995	$	7,260	$	—	$	6,662	$	294
Asset-based lending	553		553		—		728		31
Leases	817		817		—		862		38
Commercial real estate
Construction	1,504		1,504		—		1,524		49
Land	3,968		4,217		—		4,110		136
Office	3,400		3,585		—		3,565		147
Industrial	1,440		2,729		—		2,885		183
Retail	1,978		1,988		—		2,008		103
Multi-family	569		653		—		571		23
Mixed use and other	5,546		6,267		—		5,745		241
Home equity	6,218		9,523		—		7,231		339
Residential real estate	15,421		17,859		—		15,726		575
Consumer and other	321		433		—		334		16
Total impaired loans, net of unearned income	$	78,594	$	91,091	$	7,218	$	84,905	$	3,424



							For the Twelve Months Ended
	As of December 31, 2016						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	2,601	$	2,617	$	1,079	$	2,649	$	134
Asset-based lending	233		235		26		235		10
Leases	2,441		2,443		107		2,561		128
Commercial real estate
Construction	5,302		5,302		86		5,368		164
Land	1,283		1,283		1		1,303		47
Office	2,687		2,697		324		2,797		137
Industrial	5,207		5,843		1,810		7,804		421
Retail	1,750		1,834		170		2,039		101
Multi-family	—		—		—		—		—
Mixed use and other	3,812		4,010		592		4,038		195
Home equity	1,961		1,873		1,233		1,969		75
Residential real estate	5,752		6,327		849		5,816		261
Consumer and other	117		121		100		131		7
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	12,534	$	14,704	$	—	$	14,944	$	948
Asset-based lending	1,691		2,550		—		8,467		377
Leases	873		873		—		939		56
Commercial real estate
Construction	4,003		4,003		—		4,161		81
Land	3,034		3,503		—		3,371		142
Office	3,994		5,921		—		4,002		323
Industrial	2,129		2,436		—		2,828		274
Retail	—		—		—		—		—
Multi-family	1,903		1,987		—		1,825		84
Mixed use and other	6,815		7,388		—		6,912		397
Home equity	8,033		10,483		—		8,830		475
Residential real estate	11,983		14,124		—		12,041		622
Consumer and other	378		489		—		393		26
Total impaired loans, net of unearned income	$	90,516	$	103,046	$	6,377	$	105,423	$	5,485



							For the Nine Months Ended
	As of September 30, 2016						September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	5,426	$	5,434	$	1,887	$	5,487	$	212
Asset-based lending	234		235		44		235		7
Leases	375		375		116		388		14
Commercial real estate
Construction	—		—		—		—		—
Land	2,620		2,620		44		2,670		80
Office	1,697		2,361		182		1,722		79
Industrial	6,855		7,338		1,388		7,069		284
Retail	6,605		6,623		240		6,668		160
Multi-family	1,266		1,266		8		1,134		29
Mixed use and other	5,437		5,511		605		5,452		198
Home equity	2,373		2,457		964		2,404		63
Residential real estate	5,942		6,428		1,166		5,807		190
Consumer and other	192		192		192		194		8
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	12,669	$	16,261	$	—	$	14,745	$	717
Asset-based lending	—		—		—		—		—
Leases	—		—		—		—		—
Commercial real estate
Construction	1,995		1,995		—		2,273		94
Land	3,864		8,088		—		4,316		408
Office	4,980		6,243		—		4,978		260
Industrial	3,508		3,827		—		3,574		200
Retail	805		913		—		936		36
Multi-family	89		174		—		109		5
Mixed use and other	5,164		5,712		—		5,300		236
Home equity	6,936		9,108		—		7,736		320
Residential real estate	11,098		13,077		—		11,125		445
Consumer and other	410		520		—		428		21
Total impaired loans, net of unearned income	$	90,540	$	106,758	$	6,836	$	94,750	$	4,066

TDRs

At September 30, 2017, the Company had $33.2 million in loans modified in TDRs. The $33.2 million in TDRs represents 78 credits in which economic concessions were granted to certain borrowers to better align the terms of their loans with their current ability to pay.

The Company’s approach to restructuring loans, excluding PCI loans, is built on its credit risk rating system which requires credit management personnel to assign a credit risk rating to each loan. In each case, the loan officer is responsible for recommending a credit risk rating for each loan and ensuring the credit risk ratings are appropriate. These credit risk ratings are then reviewed and approved by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors including a borrower’s financial strength, cash flow coverage, collateral protection and guarantees. The Company’s credit risk rating scale is one through ten with higher scores indicating higher risk. In the case of loans rated six or worse following modification, the Company’s Managed Assets Division evaluates the loan and the credit risk rating and determines that the loan has been restructured to be reasonably assured of repayment and of performance according to the modified terms and is supported by a current, well-documented credit assessment of the borrower’s financial condition and prospects for repayment under the revised terms.

A modification of a loan, excluding PCI loans, with an existing credit risk rating of 6 or worse or a modification of any other credit, which will result in a restructured credit risk rating of six or worse, must be reviewed for possible TDR classification. In that event, our Managed Assets Division conducts an overall credit and collateral review. A modification of these loans is considered to be a TDR if both (1) the borrower is experiencing financial difficulty and (2) for economic or legal reasons, the bank grants a concession to a borrower that it would not otherwise consider. The modification of a loan, excluding PCI loans, where the credit risk rating is 5 or better both before and after such modification is not considered to be a TDR. Based on the Company’s credit risk rating system, it considers that borrowers whose credit risk rating is 5 or better are not experiencing financial difficulties and therefore, are not considered TDRs.

All credits determined to be a TDR will continue to be classified as a TDR in all subsequent periods, unless the borrower has been in compliance with the loan’s modified terms for a period of six months (including over a calendar year-end) and the current interest rate represents a market rate at the time of restructuring. The Managed Assets Division, in consultation with the respective loan officer, determines whether the modified interest rate represented a current market rate at the time of restructuring. Using knowledge of current market conditions and rates, competitive pricing on recent loan originations, and an assessment of various characteristics of the modified loan (including collateral position and payment history), an appropriate market rate for a new borrower with similar risk is determined. If the modified interest rate meets or exceeds this market rate for a new borrower with similar risk, the modified interest rate represents a market rate at the time of restructuring. Additionally, before removing a loan from TDR classification, a review of the current or previously measured impairment on the loan and any concerns related to future performance by the borrower is conducted. If concerns exist about the future ability of the borrower to meet its obligations under the loans based on a credit review by the Managed Assets Division, the TDR classification is not removed from the loan.

TDRs are reviewed at the time of the modification and on a quarterly basis to determine if a specific reserve is necessary. The carrying amount of the loan is compared to the expected payments to be received, discounted at the loan's original rate, or for collateral dependent loans, to the fair value of the collateral. Any shortfall is recorded as a specific reserve. The Company, in accordance with ASC 310-10, continues to individually measure impairment of these loans after the TDR classification is removed.

Each TDR was reviewed for impairment at September 30, 2017 and approximately $1.2 million of impairment was present and appropriately reserved for through the Company’s normal reserving methodology in the Company’s allowance for loan losses. For TDRs in which impairment is calculated by the present value of future cash flows, the Company records interest income representing the decrease in impairment resulting from the passage of time during the respective period, which differs from interest income from contractually required interest on these specific loans. During the three months ended September 30, 2017 and 2016, the Company recorded $68,000 and $98,000, respectively, of interest income, which was reflected as a decrease in impairment. For the nine months ended September 30, 2017 and 2016, the Company recorded $172,000 and $323,000, respectively, of interest income, which was reflected as a decrease in impairment.

TDRs may arise in which, due to financial difficulties experienced by the borrower, the Company obtains through physical possession one or more collateral assets in satisfaction of all or part of an existing credit. Once possession is obtained, the Company reclassifies the appropriate portion of the remaining balance of the credit from loans to OREO, which is included within other assets in the Consolidated Statements of Condition. For any residential real estate property collateralizing a consumer mortgage loan, the Company is considered to possess the related collateral only if legal title is obtained upon completion of foreclosure, or the borrower conveys all interest in the residential real estate property to the Company through completion of a deed in lieu of foreclosure or similar legal agreement. Excluding covered OREO, at September 30, 2017, the Company had $7.9 million of foreclosed residential real estate properties included within OREO. Furthermore, the recorded investment in residential mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process totaled $12.1 million at September 30, 2017.

The tables below present a summary of the post-modification balance of loans restructured during the three and nine months ended September 30, 2017 and 2016, respectively, which represent TDRs:



Three months ended September 30, 2017 (Dollars in thousands)	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt⁽²⁾
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	3	$	1,408	—	$	—	—	$	—	3	$	1,408	—	$	—
Commercial real estate
Office	—	—		—	—		—	—		—	—		—	—
Industrial	—	—		—	—		—	—		—	—		—	—
Mixed use and other	—	—		—	—		—	—		—	—		—	—
Residential real estate and other	2	255		1	186		2	255		—	—		1	69
Total loans	5	$	1,663	1	$	186	2	$	255	3	$	1,408	1	$	69



Three months ended September 30, 2016 (Dollars in thousands)	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt⁽²⁾
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	1	$	28	1	$	28	—	$	—	—	$	—	—	$	—
Commercial real estate
Office	—	—		—	—		—	—		—	—		—	—
Industrial	—	—		—	—		—	—		—	—		—	—
Mixed use and other	—	—		—	—		—	—		—	—		—	—
Residential real estate and other	1	43		1	43		1	43		—	—		—	—
Total loans	2	$	71	2	$	71	1	$	43	—	$	—	—	$	—


(1)	TDRs may have more than one modification representing a concession. As such, TDRs during the period may be represented in more than one of the categories noted above.


(2)	Balances represent the recorded investment in the loan at the time of the restructuring.

During the three months ended September 30, 2017, five loans totaling $1.7 million were determined to be TDRs, compared to two loans totaling $71,000 during the three months ended September 30, 2016. Of these loans extended at below market terms, the weighted average extension had a term of approximately 36 months during the quarter ended September 30, 2017 compared to 22 months for the quarter ended September 30, 2016. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately 225 basis points and 150 basis points during the three months ended September 30, 2017 and 2016, respectively. Interest-only payments terms were approximately two months during the three months ended September 30, 2017. Additionally, $73,000 of principal balance was forgiven in the third quarter of 2017 compared to no principal balances in the third quarter of 2016.



Nine months ended September 30, 2017 (Dollars in thousands)	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt⁽²⁾
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	4	$	1,503	1	$	95	—	$	—	3	$	1,408	—	$	—
Commercial real estate
Office	—	—		—	—		—	—		—	—		—	—
Industrial	—	—		—	—		—	—		—	—		—	—
Mixed use and other	1	1,245		1	1,245		—	—		—	—		—	—
Residential real estate and other	8	2,638		7	2,569		7	2,589		—	—		1	69
Total loans	13	$	5,386	9	$	3,909	7	$	2,589	3	$	1,408	1	$	69


(1)	TDRs may have more than one modification representing a concession. As such, TDRs during the period may be represented in more than one of the categories noted above.


(2)	Balances represent the recorded investment in the loan at the time of the restructuring.



Nine months ended September 30, 2016 (Dollars in thousands)	Total⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt⁽²⁾
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	3	$	345	3	$	345	—	$	—	—	$	—	1	$	275
Commercial real estate
Office	1	450		1	450		—	—		—	—		—	—
Industrial	6	7,921		6	7,921		3	7,196		—	—		—	—
Mixed use and other	2	150		2	150		—	—		—	—		—	—
Residential real estate and other	3	583		2	423		3	583		1	380		—	—
Total loans	15	$	9,449	14	$	9,289	6	$	7,779	1	$	380	1	$	275


(1)	TDRs may have more than one modification representing a concession. As such, TDRs during the period may be represented in more than one of the categories noted above.


(2)	Balances represent the recorded investment in the loan at the time of the restructuring.

During the nine months ended September 30, 2017, 13 loans totaling $5.4 million were determined to be TDRs, compared to 15 loans totaling $9.4 million in the same period of 2016. Of these loans extended at below market terms, the weighted average extension had a term of approximately 36 months during the nine months ended September 30, 2017 compared to six months for the nine months ended September 30, 2016. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately 188 basis points and 30 basis points for the year-to-date periods September 30, 2017 and 2016, respectively. Interest-only payment terms were approximately two months during the nine months ended September 30, 2017 compared to six months during the same period of 2016. Additionally, $73,000 of principal balance was forgiven in the first nine months of 2017 compared to $300,000 of principal balance forgiven during the same period of 2016.

The following table presents a summary of all loans restructured in TDRs during the twelve months ended September 30, 2017 and 2016, and such loans which were in payment default under the restructured terms during the respective periods below:



(Dollars in thousands)	As of September 30, 2017			Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
	Total ⁽¹⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾
	Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	4	$	1,503	—	$	—	—	$	—
Leases	2	2,949		—	—		—	—
Commercial real estate
Office	—	—		—	—		—	—
Industrial	—	—		—	—		—	—
Mixed use and other	1	1,245		1	1,245		1	1,245
Residential real estate and other	12	3,137		1	52		2	284
Total loans	19	$	8,834	2	$	1,297	3	$	1,529



(Dollars in thousands)	As of September 30, 2016			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016
	Total ⁽¹⁾⁽³⁾			Payments in Default ⁽²⁾⁽³⁾			Payments in Default ⁽²⁾⁽³⁾
	Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	3	$	345	—	$	—	—	$	—
Leases	—	—		—	—		—	—
Commercial real estate
Office	1	450		1	450		1	450
Industrial	6	7,921		3	725		3	725
Mixed use and other	4	351		1	16		3	217
Residential real estate and other	3	583		—	—		—	—
Total loans	17	$	9,650	5	$	1,191	7	$	1,392


(1)	Total TDRs represent all loans restructured in TDRs during the previous twelve months from the date indicated.


(2)	TDRs considered to be in payment default are over 30 days past-due subsequent to the restructuring.


(3)	Balances represent the recorded investment in the loan at the time of the restructuring.