Loans and the Allowance for Credit Losses (Tables)

12 Months Ended

Dec. 31, 2020

Schedule of Recorded Investment in Loans by Category

The recorded investment in loans is presented in the Consolidated Balance Sheets net of deferred loan fees and costs, and discounts on purchased loans. Net deferred loan income (costs) were $6.2 million and ($4.8) million at December 31, 2020 and 2019, respectively. The December 31, 2020 balance included $13.8 million of net deferred income from PPP loans. The un-accreted discount on purchased loans from acquisitions was $39.4 million at December 31, 2020, including $2.4 million related to FTSB, $9.8 million related to FFKT and $22.1 million related to OLBK. The unaccreted discount was $51.9 million at December 31, 2019.

	December 31,		December 31,
(in thousands)	2020		2019
Commercial real estate:
Land and construction	$	668,277	$	777,151
Improved property		5,037,115		4,947,857
Total commercial real estate		5,705,392		5,725,008
Commercial and industrial		1,681,182		1,644,699
Commercial and industrial - PPP		726,256		—
Residential real estate		1,720,961		1,873,647
Home equity		646,387		649,678
Consumer		309,055		374,953
Total portfolio loans		10,789,233		10,267,985
Loans held for sale		168,378		43,013
Total loans	$	10,957,611	$	10,310,998

Summary of Changes in Allowance for Credit Losses

The following tables summarize changes in the allowance for credit losses applicable to each category of the loan portfolio:

	For the Year Ended December 31, 2020
(in thousands)	Commercial Real Estate- Land and Construction			Commercial Real Estate- Improved Property			Commercial & Industrial			Residential Real Estate			Home Equity			Consumer			Deposit Overdraft			Total
Balance at beginning of year:
Allowance for credit losses - loans	$	4,949		$	20,293		$	14,116		$	4,311		$	4,422		$	2,951		$	1,387		$	52,429
Allowance for credit losses - loan commitments		235			22			311			15			250			41			—			874
Total beginning allowance for credit losses - loans and loan commitments		5,184			20,315			14,427			4,326			4,672			2,992			1,387			53,303
Impact of adopting ASC 326		1,524			13,078			22,357			5,630			(3,936	)		2,576			213			41,442
Provision for credit losses:
Provision for loan losses		6,929			78,210			3,918			9,065			1,234			2,980			(376	)		101,960
Provision for loan commitments		3,671			712			693			560			30			19			—			5,685
Total provision for credit losses - loans and loan commitments		10,600			78,922			4,611			9,625			1,264			2,999			(376	)		107,645
Charge-offs		(51	)		(1,747	)		(3,727	)		(1,415	)		(969	)		(3,615	)		(1,011	)		(12,535	)
Recoveries		92			796			1,457			640			501			1,574			426			5,486
Net recoveries (charge-offs)		41			(951	)		(2,270	)		(775	)		(468	)		(2,041	)		(585	)		(7,049	)
Balance at end of period:
Allowance for credit losses - loans		10,841			110,652			37,850			17,851			1,487			6,507			639			185,827
Allowance for credit losses - loan commitments		6,508			712			1,275			955			45			19			—			9,514
Total ending allowance for credit losses - loans and loan commitments	$	17,349		$	111,364		$	39,125		$	18,806		$	1,532		$	6,526		$	639		$	195,341

	For the Year Ended December 31, 2019
(in thousands)	Commercial Real Estate- Land and Construction			Commercial Real Estate- Improved Property			Commercial & Industrial			Residential Real Estate			Home Equity			Consumer			Deposit Overdraft			Total
Balance at beginning of year:
Allowance for loan losses	$	4,039		$	20,848		$	12,114		$	3,822		$	4,356		$	2,797		$	972		$	48,948
Allowance for loan commitments		169			33			262			12			226			39			—			741
Total beginning allowance for credit losses		4,208			20,881			12,376			3,834			4,582			2,836			972			49,689
Provision for credit losses:
Provision for loan losses		746			2,560			2,714			1,400			851			1,130			1,664			11,065
Provision for loan commitments		66			(11	)		49			3			24			2			—			133
Total provision for credit losses		812			2,549			2,763			1,403			875			1,132			1,664			11,198
Charge-offs		(107	)		(3,867	)		(1,816	)		(1,276	)		(1,213	)		(2,719	)		(1,659	)		(12,657	)
Recoveries		271			752			1,104			365			428			1,743			410			5,073
Net recoveries (charge-offs)		164			(3,115	)		(712	)		(911	)		(785	)		(976	)		(1,249	)		(7,584	)
Balance at end of period:
Allowance for loan losses		4,949			20,293			14,116			4,311			4,422			2,951			1,387			52,429
Allowance for loan commitments		235			22			311			15			250			41			—			874
Total ending allowance for credit losses	$	5,184		$	20,315		$	14,427		$	4,326		$	4,672		$	2,992		$	1,387		$	53,303

	For the Year Ended December 31, 2018
(in thousands)	Commercial Real Estate- Land and Construction			Commercial Real Estate- Improved Property			Commercial & Industrial			Residential Real Estate			Home Equity			Consumer			Deposit Overdraft			Total
Balance at beginning of year:
Allowance for loan losses	$	3,117		$	21,166		$	9,414		$	3,206		$	4,497		$	3,063		$	821		$	45,284
Allowance for loan commitments		119			26			173			7			212			37			—			574
Total beginning allowance for credit losses		3,236			21,192			9,587			3,213			4,709			3,100			821			45,858
Provision for credit losses:
Provision for loan losses		650			(521	)		3,430			1,612			138			1,142			1,146			7,597
Provision for loan commitments		50			7			89			5			14			2			—			167
Total provision for credit losses		700			(514	)		3,519			1,617			152			1,144			1,146			7,764
Charge-offs		(137	)		(1,090	)		(1,830	)		(1,435	)		(1,193	)		(3,508	)		(1,374	)		(10,567	)
Recoveries		409			1,293			1,100			439			914			2,100			379			6,634
Net recoveries (charge-offs)		272			203			(730	)		(996	)		(279	)		(1,408	)		(995	)		(3,933	)
Balance at end of period:
Allowance for loan losses		4,039			20,848			12,114			3,822			4,356			2,797			972			48,948
Allowance for loan commitments		169			33			262			12			226			39			—			741
Total ending allowance for credit losses	$	4,208		$	20,881		$	12,376		$	3,834		$	4,582		$	2,836		$	972		$	49,689

Allowance for Credit Losses and Recorded Investments in Loans

The following tables present the allowance for credit losses and recorded investments in loans by category, as of each period-end:

	Allowance for Credit Losses and Recorded Investment in Loans
(in thousands)	Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial and Industrial		Residential Real Estate		Home Equity		Consumer		Deposit Overdrafts		Total
December 31, 2020
Allowance for credit losses:
Loans individually-evaluated	$	602	$	4,196	$	1,484	$	—	$	—	$	—	$	—	$	6,282
Loans collectively-evaluated		10,239		106,456		36,366		17,851		1,487		6,507		639		179,545
Loan commitments		6,508		712		1,275		955		45		19		—		9,514
Total allowance for credit losses - loans and commitments	$	17,349	$	111,364	$	39,125	$	18,806	$	1,532	$	6,526	$	639	$	195,341

Portfolio loans:
Individually-evaluated for credit losses⁽¹⁾	$	1,455	$	40,372	$	2,863	$	—	$	—	$	—	$	—	$	44,690
Collectively-evaluated for credit losses		666,822		4,996,743		2,404,575		1,720,961		646,387		309,055		—		10,744,543
Total portfolio loans	$	668,277	$	5,037,115	$	2,407,438	$	1,720,961	$	646,387	$	309,055	$	—	$	10,789,233

December 31, 2019
Allowance for credit losses:
Allowance for loans individually evaluated for impairment	$	—	$	93	$	10	$	14	$	6	$	1	$	—	$	124
Allowance for loans collectively evaluated for impairment		4,949		20,200		14,106		4,297		4,416		2,950		1,387		52,305
Allowance for loan commitments		235		22		311		15		250		41		-		874
Total allowance for credit losses	$	5,184	$	20,315	$	14,427	$	4,326	$	4,672	$	2,992	$	1,387	$	53,303

Portfolio loans:
Individually evaluated for impairment (1)	$	—	$	3,907	$	11,961	$	4,392	$	704	$	53	$	—	$	21,017
Collectively evaluated for impairment		777,033		4,935,383		1,631,855		1,865,151		648,221		374,812		—		10,232,455
Acquired with deteriorated credit quality		118		8,567		883		4,104		753		88		—		14,513
Total portfolio loans	$	777,151	$	4,947,857	$	1,644,699	$	1,873,647	$	649,678	$	374,953	$	—	$	10,267,985

(1)	Commercial loans greater than $1 million that are reported as non-accrual or as a TDR are individually evaluated due to differences in risk factors.

Summary of Commercial Loans by Risk Grade

The following tables summarize commercial loans by their assigned risk grade:

	Commercial Loans by Internally Assigned Risk Grade
(in thousands)	Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial & Industrial		Total Commercial Loans
As of December 31, 2020
Pass	$	657,435	$	4,609,726	$	2,350,724	$	7,617,885
Criticized—compromised		7,397		320,301		34,597		362,295
Classified—substandard		3,445		107,088		22,117		132,650
Classified—doubtful		—		—		—		—
Total	$	668,277	$	5,037,115	$	2,407,438	$	8,112,830

As of December 31, 2019
Pass	$	769,537	$	4,807,003	$	1,570,689	$	7,147,229
Criticized—compromised		4,338		65,612		49,009		118,959
Classified—substandard		3,276		75,242		13,231		91,749
Classified—doubtful		—		—		11,770		11,770
Total	$	777,151	$	4,947,857	$	1,644,699	$	7,369,707

Summary of Age Analysis of Loan Categories

The following tables summarize the age analysis of all categories of loans.

	Age Analysis of Loans
(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Total Loans		90 Days or More Past Due and Accruing (1)
As of December 31, 2020
Commercial real estate:
Land and construction	$	664,990	$	582	$	2,276	$	429	$	3,287	$	668,277	$	288
Improved property		5,016,812		4,876		4,118		11,309		20,303		5,037,115		2,713
Total commercial real estate		5,681,802		5,458		6,394		11,738		23,590		5,705,392		3,001
Commercial and industrial		2,395,844		4,372		2,197		5,025		11,594		2,407,438		1,899
Residential real estate		1,698,636		2,614		5,654		14,057		22,325		1,720,961		2,863
Home equity		639,319		2,414		775		3,879		7,068		646,387		706
Consumer		305,483		1,998		1,031		543		3,572		309,055		377
Total portfolio loans		10,721,084		16,856		16,051		35,242		68,149		10,789,233		8,846
Loans held for sale		168,378		—		—		—		—		168,378		—
Total loans	$	10,889,462	$	16,856	$	16,051	$	35,242	$	68,149	$	10,957,611	$	8,846

Nonperforming loans included above are as follows:
Non-accrual loans	$	9,560	$	630	$	466	$	26,224		27,320	$	36,880
TDRs accruing interest (1)		3,540		63		152		172		387		3,927
Total non-performing	$	13,100	$	693	$	618	$	26,396	$	27,707	$	40,807

As of December 31, 2019
Commercial real estate:
Land and construction	$	776,153	$	529	$	121	$	348	$	998	$	777,151	$	26
Improved property		4,921,721		10,207		5,639		10,290		26,136		4,947,857		4,709
Total commercial real estate		5,697,874		10,736		5,760		10,638		27,134		5,725,008		4,735
Commercial and industrial		1,635,232		2,519		2,813		4,135		9,467		1,644,699		1,793
Residential real estate		1,850,806		4,421		5,372		13,048		22,841		1,873,647		3,643
Home equity		641,026		3,323		621		4,708		8,652		649,678		985
Consumer		370,934		2,537		965		517		4,019		374,953		457
Total portfolio loans		10,195,872		23,536		15,531		33,046		72,113		10,267,985		11,613
Loans held for sale		43,013		—		—		—		—		43,013		—
Total loans	$	10,238,885	$	23,536	$	15,531	$	33,046	$	72,113	$	10,310,998	$	11,613

Impaired loans included above are as follows:
Non-accrual loans	$	21,061	$	897	$	1,559	$	21,396		23,852	$	44,913
TDRs accruing interest (1)		5,113		151		130		37		318		5,431
Total impaired	$	26,174	$	1,048	$	1,689	$	21,433	$	24,170	$	50,344

(1)	Loans 90 days or more past due and accruing interest exclude TDRs 90 days or more past due and accruing interest.

Summary of Nonperforming Loans

The following tables summarize nonperforming loans:

	Nonperforming Loans
	December 31, 2020						December 31, 2019
(in thousands)	Unpaid Principal Balance (1)		Recorded Investment		Related Allowance		Unpaid Principal Balance (1)		Recorded Investment		Related Allowance
With no related specific allowance recorded:
Commercial real estate:
Land and construction	$	469	$	469	$	—	$	616	$	580	$	—
Improved property		9,597		8,055	—			5,097		4,229	—
Commercial and industrial		4,401		3,413	—			15,182		14,313	—
Residential real estate		23,055		20,704	—			17,753		15,952	—
Home equity		6,635		5,708	—			6,523		5,610	—
Consumer		602		364	—			546		413	—
Total nonperforming loans without a specific allowance		44,759		38,713		—		45,717		41,097	—
With a specific allowance recorded:
Commercial real estate:
Land and construction	—		—		—		—		—		—
Improved property		2,094		2,094		136		4,207		3,907		93
Commercial and industrial	—		—		—			193		191		10
Residential real estate	—		—		—			4,772		4,392		14
Home equity	—		—		—			724		704		6
Consumer	—		—		—			104		53		1
Total nonperforming loans with a specific allowance		2,094		2,094		136		10,000		9,247		124
Total nonperforming loans	$	46,853	$	40,807	$	136	$	55,717	$	50,344	$	124

(1)	The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off and fair market value adjustments on acquired nonperforming loans.

	Nonperforming Loans
	For the Year Ended December 31, 2020				For the Year Ended December 31, 2019				For the Year Ended December 31, 2018
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related specific allowance recorded:
Commercial real estate:
Land and construction	$	571	$	—	$	343	$	—	$	208	$	—
Improved property		7,193		61		7,216		84		10,658		381
Commercial and industrial		5,256		7		5,207		15		3,076		12
Residential real estate		19,651		168		14,192		211		19,026		240
Home equity		5,806		22		4,930		28		5,005		25
Consumer		377		2		423		3		808		7
Total nonperforming loans without a specific allowance		38,854		260		32,311		341		38,781		665
With a specific allowance recorded:
Commercial real estate:
Land and construction		—		—		—		—		—		—
Improved property		2,672		—		3,317		—		842		—
Commercial and industrial		38		—		175		—		—		—
Residential real estate		878		—		3,811		—		—		—
Home equity		141		—		634		—		—		—
Consumer		11		—		58		—		—		—
Total nonperforming loans with a specific allowance		3,740		—		7,995		—		842		—
Total nonperforming loans	$	42,594	$	260	$	40,306	$	341	$	39,623	$	665

Recorded Investment in Non-Accrual Loans and TDRs

The following tables present the recorded investment in non-accrual loans and TDRs:

	Non-accrual Loans (1)
(in thousands)	December 31, 2020		December 31, 2019
Commercial real estate:
Land and construction	$	469	$	580
Improved property		9,494		6,815
Total commercial real estate		9,963		7,395
Commercial and industrial		3,302		14,313
Residential real estate		17,925		16,867
Home equity		5,345		5,903
Consumer		345		435
Total	$	36,880	$	44,913

(1)

At December 31, 2020, there was one borrower with a loan balance greater than $1.0 million totaling $2.1 million, as compared to two borrowers with a loan balance greater than $1.0 million totaling $14.2 million at December 31, 2019. Total non-accrual loans include loans that are also restructured. Such loans are also set forth in the following table as non-accrual TDRs.

	TDRs
	December 31, 2020						December 31, 2019
(in thousands)	Accruing		Non-Accrual		Total		Accruing		Non-Accrual		Total
Commercial real estate:
Land and construction	$	—	$	—	$	—	$	—	$	—	$	—
Improved property		655		165		820		1,321		191		1,512
Total commercial real estate		655		165		820		1,321		191		1,512
Commercial and industrial		111		—		111		191		—		191
Residential real estate		2,779		1,354		4,133		3,477		909		4,386
Home equity		363		300		663		411		293		704
Consumer		19		9		28		31		29		60
Total	$	3,927	$	1,828	$	5,755	$	5,431	$	1,422	$	6,853

Loans Identified as TDRs

The following table presents details related to loans identified as TDRs during the years ended December 31, 2020 and 2019:

	New TDRs (1) For the Year Ended December 31, 2020						New TDRs (1) For the Year Ended December 31, 2019
(dollars in thousands)	Number of Modifications		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Modifications		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial real estate:
Land and construction		—	$	—	$	—		—	$	—	$	—
Improved property		—		—		—		1		610		603
Total commercial real estate		—		—		—		1		610		603
Commercial and industrial		—		—		—		2		57		48
Residential real estate		3		360		350		4		194		177
Home equity		4		93		86		2		187		181
Consumer		1		7		7		2		45		28
Total		8	$	460	$	443		11	$	1,093	$	1,037

(1)	Excludes loans that were either paid off or charged-off by period end. The pre-modification balance represents the balance outstanding at the beginning of the period. The post-modification balance represents the outstanding balance at period end.

The following table summarizes TDRs which defaulted (defined as past due 90 days) during the years ended December 31, 2020 and 2019 that were restructured within the last twelve months prior to December 31, 2020 and 2019:

	Defaulted TDRs (1) For the Year Ended December 31, 2020				Defaulted TDRs (1) For the Year Ended December 31, 2019
(dollars in thousands)	Number of Defaults		Recorded Investment		Number of Defaults		Recorded Investment
Commercial real estate:
Land and construction		—	$	—		—	$	—
Improved property		—		—		—		—
Total commercial real estate		—		—		—		—
Commercial and industrial		—		—		—		—
Residential real estate		1		155		1		95
Home equity		—		—		1		97
Consumer		—		—		1		12
Total		1	$	155		3	$	204

(1)	Excludes loans that were either charged-off or cured by period end. The recorded investment is as of December 31, 2020 and 2019.

Recognition of Interest Income on Nonperforming Loans

The following table summarizes the recognition of interest income on nonperforming loans:

	For the years ended December 31,
(in thousands)	2020		2019		2018
Average nonperforming loans	$	42,594	$	40,306	$	39,623
Amount of contractual interest income on nonperforming loans		2,827		3,047		2,631
Amount of interest income recognized on nonperforming loans		260		341		665

Summary of Amortized Cost Basis Loan Balances by Year of Origination and Credit Quality Indicator

The following table summarizes amortized cost basis loan balances by year of origination and credit quality indicator.

	Loans As of December 31, 2020
	Amortized Cost Basis by Origination Year
(unaudited, in thousands)	2020			2019			2018			2017			2016			Prior			Revolving Loans Amortized Cost Basis			Revolving Loans Converted to Term			Total
Commercial real estate: land and construction
Risk rating:
Pass	$	133,720		$	314,614		$	109,232		$	27,483		$	16,404		$	29,685		$	26,297		$	—		$	657,435
Criticized - compromised		459			—			1,532			233			79			3,778			1,316			—			7,397
Classified - substandard		—			—			403			58			291			2,693			—			—			3,445
Classified - doubtful		—			—			—			—			—			—			—			—			—
Total commercial real estate: land and construction	$	134,179		$	314,614		$	111,167		$	27,774		$	16,774		$	36,156		$	27,613		$	—		$	668,277

Current-period net charge-offs	$	—		$	—		$	—		$	61		$	(50	)	$	30		$	—		$	—		$	41

Commercial real estate: improved property
Risk rating:
Pass	$	809,516		$	670,554		$	646,629		$	474,622		$	572,733		$	1,346,552		$	89,120		$	—		$	4,609,726
Criticized - compromised		2,693			67,261			16,793			59,251			42,284			130,247			1,772			—			320,301
Classified - substandard		102			16,366			4,946			11,647			18,460			55,567			—			—			107,088
Classified - doubtful		—			—			—			—			—			—			—			—			—
Total commercial real estate: improved property	$	812,311		$	754,181		$	668,368		$	545,520		$	633,477		$	1,532,366		$	90,892		$	—		$	5,037,115

Current-period net charge-offs	$	—		$	—		$	(38	)	$	13		$	(1,617	)	$	691		$	—		$	—		$	(951	)

Commercial and industrial
Risk rating:
Pass	$	977,085		$	240,262		$	193,712		$	160,924		$	85,379		$	265,890		$	427,336		$	136		$	2,350,724
Criticized - compromised		453			2,726			4,206			2,795			324			11,640			12,453			—			34,597
Classified - substandard		—			3,817			1,947			3,771			1,603			5,073			5,906			—			22,117
Classified - doubtful		—			—			—			—			—			—			—			—			—
Total commercial and industrial	$	977,538		$	246,805		$	199,865		$	167,490		$	87,306		$	282,603		$	445,695		$	136		$	2,407,438

Current-period net charge-offs	$	—		$	(50	)	$	(1,843	)	$	(272	)	$	(108	)	$	303		$	(300	)	$	—		$	(2,270	)

Residential real estate
Loan delinquency:
Current	$	385,541		$	242,770		$	149,603		$	108,090		$	170,967		$	641,665		$	—		$	—		$	1,698,636
30-59 days past due		—			—			320			533			—			1,761			—			—			2,614
60-89 days past due		—			—			823			—			185			4,646			—			—			5,654
90 days or more past due		—			483			166			761			819			11,828			—			—			14,057
Total residential real estate	$	385,541		$	243,253		$	150,912		$	109,384		$	171,971		$	659,900		$	—		$	—		$	1,720,961

Current-period net charge-offs	$	—		$	(24	)	$	(8	)	$	(11	)	$	(110	)	$	(622	)	$	—		$	—		$	(775	)

Home equity
Loan delinquency:
Current	$	18,191		$	3,611		$	3,334		$	975		$	1,110		$	16,477		$	583,486		$	12,135		$	639,319
30-59 days past due		124			—			34			—			—			882			1,247			127			2,414
60-89 days past due		—			—			—			—			—			14			749			12			775
90 days or more past due		—			—			8			156			88			1,786			1,075			766			3,879
Total home equity	$	18,315		$	3,611		$	3,376		$	1,131		$	1,198		$	19,159		$	586,557		$	13,040		$	646,387

Current-period net charge-offs	$	—		$	—		$	(10	)	$	(2	)	$	(1	)	$	(92	)	$	(356	)	$	(7	)	$	(468	)

Consumer
Loan delinquency:
Current	$	72,847		$	89,637		$	39,584		$	22,118		$	13,144		$	45,735		$	22,253		$	165		$	305,483
30-59 days past due		481			408			210			311			194			379			15			—			1,998
60-89 days past due		273			147			84			100			163			253			11			—			1,031
90 days or more past due		113			72			73			31			12			242			—			—			543
Total consumer	$	73,714		$	90,264		$	39,951		$	22,560		$	13,513		$	46,609		$	22,279		$	165		$	309,055

Current-period net charge-offs	$	(273	)	$	(731	)	$	(589	)	$	(486	)	$	(59	)	$	97		$	—		$	—		$	(2,041	)

Summary of Other Real Estate Owned and Repossessed Assets

The following table summarizes other real estate owned and repossessed assets included in other assets:

	December 31,
(in thousands)	2020		2019
Other real estate owned	$	504	$	4,062
Repossessed assets		45		116
Total other real estate owned and repossessed assets	$	549	$	4,178