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Loans And Allowance For Credit Losses
 6 Months Ended
Jun. 30, 2023
Receivables [Abstract]  
Financing Receivables Loans and Allowance for Credit Losses
Major classifications within the Company’s held for investment loan portfolio at June 30, 2023 and December 31, 2022 are as follows:

(In thousands)
June 30, 2023December 31, 2022
Commercial:
Business$5,906,493 $5,661,725 
Real estate – construction and land1,451,783 1,361,095 
Real estate – business3,621,222 3,406,981 
Personal Banking:
Real estate – personal2,980,599 2,918,078 
Consumer2,110,605 2,059,088 
Revolving home equity303,845 297,207 
Consumer credit card574,755 584,000 
Overdrafts7,237 14,957 
Total loans$16,956,539 $16,303,131 

Accrued interest receivable totaled $63.9 million and $55.5 million at June 30, 2023 and December 31, 2022, respectively, and was included within other assets on the consolidated balance sheets. For the three months ended June 30, 2023, the Company wrote-off accrued interest by reversing interest income of $43 thousand and $1.1 million in the Commercial and Personal Banking portfolios, respectively. Similarly, for the six months ended June 30, 2023, the Company wrote-off accrued interest of $77 thousand and $2.2 million in the Commercial and Personal Banking portfolios, respectively. For the three months ended June 30, 2022, the Company reversed interest income of $26 thousand and $762 thousand in the Commercial and Personal Banking portfolios, respectively, and in the six months ended June 30, 2022, reversed $55 thousand and $1.7 million in the Commercial and Personal Banking portfolios.

At June 30, 2023, loans of $3.3 billion were pledged at the Federal Home Loan Bank as collateral for borrowings and letters of credit obtained to secure public deposits. Additional loans of $3.1 billion were pledged at the Federal Reserve Bank as collateral for discount window borrowings.

Allowance for credit losses
The allowance for credit losses is measured using an average historical loss model which incorporates relevant information about past events (including historical credit loss experience on loans with similar risk characteristics), current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the loans. The allowance for credit losses is measured on a collective (pool) basis. Loans are aggregated into pools based on similar risk characteristics including borrower type, collateral type and expected credit loss patterns. Loans that do not share similar risk characteristics, primarily large loans on non-accrual status, are evaluated on an individual basis.

For loans evaluated for credit losses on a collective basis, average historical loss rates are calculated for each pool using the Company’s historical net charge-offs (combined charge-offs and recoveries by observable historical reporting period) and outstanding loan balances during a lookback period. Lookback periods can be different based on the individual pool and represent management’s credit expectations for the pool of loans over the remaining contractual life. In certain loan pools, if the Company’s own historical loss rate is not reflective of the loss expectations, the historical loss rate is augmented by industry and peer data. The calculated average net charge-off rate is then adjusted for current conditions and reasonable and supportable forecasts. These adjustments increase or decrease the average historical loss rate to reflect expectations of future losses given a single path economic forecast of key macroeconomic variables including GDP, disposable income, various interest rates, unemployment rate, consumer price index (CPI) inflation rate, housing price index (HPI), commercial real estate price index (CREPI) and market volatility. The adjustments are based on results from various regression models projecting the impact of the macroeconomic variables to loss rates. The forecast is used for a reasonable and supportable period before reverting back to historical averages using a straight-line method. The forecast adjusted loss rate is applied to the amortized cost of loans over the remaining contractual lives, adjusted for expected prepayments. The contractual term excludes expected extensions (except for contractual extensions at the option of the customer), renewals and modifications unless there is a reasonable expectation
that a troubled debt restructuring will be executed. Credit cards and certain similar consumer lines of credit do not have stated maturities and therefore, for these loan classes, remaining contractual lives are determined by estimating future cash flows expected to be received from customers until payments have been fully allocated to outstanding balances. Additionally, the allowance for credit losses considers other qualitative factors not included in historical loss rates or macroeconomic forecast such as changes in portfolio composition, underwriting practices, or significant unique events or conditions.

Key assumptions in the Company’s allowance for credit loss model include the economic forecast, the reasonable and supportable period, forecasted macro-economic variables, prepayment assumptions and qualitative factors applied for portfolio composition changes, underwriting practices, or significant unique events or conditions. The assumptions utilized in estimating the Company’s allowance for credit losses at June 30, 2023 and March 31, 2023 are discussed below.

Key AssumptionJune 30, 2023March 31, 2023
Overall economic forecast
•Mild recession in the second half of 2023
•Assume the Federal Reserve will pause increasing interest rates through year end
•Mild recession is expected to weaken employment
•Mild recession to start 3rd quarter of 2023
•Assume the Federal Reserve will continue raising interest rates
•Mild recession is expected to weaken employment
Reasonable and supportable period and related reversion period
•Reasonable and supportable period of one year
•Reversion to historical average loss within two quarters using straight-line method
•Reasonable and supportable period of one year
•Reversion to historical average loss within two quarters using straight-line method
Forecasted macro-economic variables
•Unemployment rate ranges from 3.9% to 5.3% during the supportable forecast period
•Real GDP growth ranges from (.27)% to 1.2%
•BBB corporate yield from 4.9% to 5.5%
•Housing Price Index from 282.1 to 284.5
•Unemployment rate ranges from 3.7% to 5.3% during the supportable forecast period
•Real GDP growth ranges from (.48)% to 2.0%
•BBB corporate yield from 5.3% to 5.8%
•Housing Price Index from 280.2 to 282.0
Prepayment assumptions
Commercial loans
•5% for most loan pools
Personal banking loans
•Ranging from 7.93% to 22.9% for most loan pools
•Consumer credit cards 67.6%
Commercial loans
•5% for most loan pools
Personal banking loans
•Ranging from 6.45% to 22.4% for most loan pools
•Consumer credit cards 67.5%
Qualitative factors
Added qualitative factors related to:
•Changes in the composition of the loan portfolios
•Certain stressed industries within the portfolio
•Certain portfolios sensitive to unusually high rate of inflation and supply chain issues
•Loans downgraded to special mention, substandard, or non-accrual status
Added qualitative factors related to:
•Changes in the composition of the loan portfolios
•Certain portfolios sensitive to pandemic economic uncertainties
•Certain portfolios sensitive to unusually high rate of inflation and supply chain issues
•Loans downgraded to special mention, substandard, or non-accrual status

The liability for unfunded lending commitments utilizes the same model as the allowance for credit losses on loans, however, the liability for unfunded lending commitments incorporates an assumption for the portion of unfunded commitments that are expected to be funded.

Sensitivity in the Allowance for Credit Loss model
The allowance for credit losses is an estimate that requires significant judgment including projections of the macro-economic environment. The forecasted macro-economic environment continuously changes which can cause fluctuations in estimated expected credit losses.

The current forecast projects a mild recession in the second half of 2023 as the economy continues to face high inflation, higher interest rates and a weaker job market. The impacts of the market's response to unusual events or trends including high inflation, supply chain stresses, trends in health conditions and changes in the geopolitical environment could significantly modify economic projections used in the estimation of the allowance for credit losses.
A summary of the activity in the allowance for credit losses on loans and the liability for unfunded lending commitments during the three and six months ended June 30, 2023 and 2022, respectively, follows:

For the Three Months Ended June 30, 2023
For the Six Months Ended June 30, 2023
(In thousands)CommercialPersonal Banking

Total
CommercialPersonal Banking

Total
ALLOWANCE FOR CREDIT LOSSES ON LOANS
Balance at beginning of period$108,615 $50,702 $159,317 $103,293 $46,843 $150,136 
Provision for credit losses on loans(546)6,410 5,864 5,002 16,810 21,812 
Deductions:
   Loans charged off307 8,531 8,838 599 17,287 17,886 
   Less recoveries on loans262 2,080 2,342 328 4,295 4,623 
Net loan charge-offs (recoveries)45 6,451 6,496 271 12,992 13,263 
Balance June 30, 2023$108,024 $50,661 $158,685 $108,024 $50,661 $158,685 
LIABILITY FOR UNFUNDED LENDING COMMITMENTS
Balance at beginning of period$27,105 $1,523 $28,628 $31,743 $1,377 $33,120 
Provision for credit losses on unfunded lending commitments737 (130)607 (3,901)16 (3,885)
Balance June 30, 2023$27,842 $1,393 $29,235 $27,842 $1,393 $29,235 
ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS$135,866 $52,054 $187,920 $135,866 $52,054 $187,920 

For the Three Months Ended June 30, 2022
For the Six Months Ended June 30, 2022
(In thousands)CommercialPersonal Banking

Total
CommercialPersonal Banking

Total
ALLOWANCE FOR CREDIT LOSSES ON LOANS
Balance at beginning of period$94,827 $39,883 $134,710 $97,776 $52,268 $150,044 
Provision for credit losses on loans4,716 2,571 7,287 1,837 (5,236)(3,399)
Deductions:
   Loans charged off207 6,533 6,740 384 13,818 14,202 
   Less recoveries on loans189 2,593 2,782 296 5,300 5,596 
Net loan charge-offs (recoveries)18 3,940 3,958 88 8,518 8,606 
Balance June 30, 2022$99,525 $38,514 $138,039 $99,525 $38,514 $138,039 
LIABILITY FOR UNFUNDED LENDING COMMITMENTS
Balance at beginning of period$23,780 $1,252 $25,032 $23,271 $933 $24,204 
Provision for credit losses on unfunded lending commitments(163)38 (125)346 357 703 
Balance June 30, 2022$23,617 $1,290 $24,907 $23,617 $1,290 $24,907 
ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS$123,142 $39,804 $162,946 $123,142 $39,804 $162,946 
Delinquent and non-accrual loans
The Company considers loans past due on the day following the contractual repayment date, if the contractual repayment was not received by the Company as of the end of the business day. The following table provides aging information on the Company’s past due and accruing loans, in addition to the balances of loans on non-accrual status, at June 30, 2023 and December 31, 2022.




(In thousands)
Current or Less Than 30 Days Past Due

30 – 89
Days Past Due
90 Days Past Due and Still AccruingNon-accrual



Total
June 30, 2023
Commercial:
Business$5,896,412 $4,847 $502 $4,732 $5,906,493 
Real estate – construction and land1,451,314 469 — — 1,451,783 
Real estate – business3,619,936 1,133 — 153 3,621,222 
Personal Banking:
Real estate – personal 2,962,174 10,921 6,228 1,276 2,980,599 
Consumer2,087,542 21,199 1,864 — 2,110,605 
Revolving home equity300,329 2,676 840 — 303,845 
Consumer credit card562,657 6,181 5,917 — 574,755 
Overdrafts6,932 305 — — 7,237 
Total $16,887,296 $47,731 $15,351 $6,161 $16,956,539 
December 31, 2022
Commercial:
Business$5,652,710 $1,759 $505 $6,751 $5,661,725 
Real estate – construction and land1,361,095 — — — 1,361,095 
Real estate – business3,406,207 585 — 189 3,406,981 
Personal Banking:
Real estate – personal 2,895,742 14,289 6,681 1,366 2,918,078 
Consumer2,031,827 25,089 2,172 — 2,059,088 
Revolving home equity295,303 1,201 703 — 297,207 
Consumer credit card572,213 6,238 5,549 — 584,000 
Overdrafts14,090 647 220 — 14,957 
Total $16,229,187 $49,808 $15,830 $8,306 $16,303,131 

At June 30, 2023, the Company had $2.9 million in non-accrual business loans that had no allowance for credit loss, compared to $3.8 million in non-accrual business loans that had no allowance for credit loss at December 31, 2022. The Company did not record any interest income on non-accrual loans during the six months ended June 30, 2023 and 2022, respectively.

Credit quality indicators
The following table provides information about the credit quality of the Commercial loan portfolio. The Company utilizes an internal risk rating system comprised of a series of grades to categorize loans according to perceived risk associated with the expectation of debt repayment based on borrower specific information including, but not limited to, current financial information, historical payment experience, industry information, collateral levels and collateral types. The “pass” category consists of a range of loan grades that reflect increasing, though still acceptable, risk. A loan is assigned the risk rating at origination and then monitored throughout the contractual term for possible risk rating changes. Movement of risk through the various grade levels in the “pass” category is monitored for early identification of credit deterioration. The “special mention” rating is applied to loans where the borrower exhibits negative financial trends due to borrower specific or systemic conditions that, if left uncorrected, threaten its capacity to meet its debt obligations. The borrower is believed to have sufficient financial flexibility to react to and resolve its negative financial situation. It is a transitional grade that is closely monitored for improvement or deterioration. The “substandard” rating is applied to loans where the borrower exhibits well-defined weaknesses that jeopardize its continued performance and are of a severity that the distinct possibility of default exists. Loans are placed on “non-accrual” when management does not expect to collect payments consistent with acceptable and agreed upon terms of repayment.

All loans are analyzed for risk rating updates annually. For larger loans, rating assessments may be more frequent if relevant information is obtained earlier through debt covenant monitoring or overall relationship management. Smaller loans
are monitored as identified by the loan officer based on the risk profile of the individual borrower or if the loan becomes past due related to credit issues. Loans rated Special Mention, Substandard or Non-accrual are subject to quarterly review and monitoring processes. In addition to the regular monitoring performed by the lending personnel and credit committees, loans are subject to review by a credit review department which verifies the appropriateness of the risk ratings for the loans chosen as part of its risk-based review plan.

The risk category of loans in the Commercial portfolio as of June 30, 2023 and December 31, 2022 are as follows:

Term Loans Amortized Cost Basis by Origination Year
(In thousands)20232022202120202019PriorRevolving Loans Amortized Cost BasisTotal
June 30, 2023
Business
    Risk Rating:
       Pass$1,136,860 $1,058,237 $631,119 $325,640 $303,589 $315,781 $2,001,024 $5,772,250 
       Special mention22,690 4,981 21,536 7,692 456 4,067 5,994 67,416 
       Substandard71 11,828 9,759 15,748 484 10,320 13,885 62,095 
       Non-accrual— 58 1,705 33 — 2,936 — 4,732 
   Total Business:$1,159,621 $1,075,104 $664,119 $349,113 $304,529 $333,104 $2,020,903 $5,906,493 
Gross write-offs for the six months ended June 30, 2023
$— $— $— $41 $— $— $558 $599 
Real estate-construction
    Risk Rating:
       Pass$221,343 $590,385 $497,885 $66,877 $27,103 $3,102 $33,532 $1,440,227 
       Special mention7,221 269 — — — — — 7,490 
       Substandard— 4,066 — — — — — 4,066 
    Total Real estate-construction:$228,564 $594,720 $497,885 $66,877 $27,103 $3,102 $33,532 $1,451,783 
Gross write-offs for the six months ended June 30, 2023
$— $— $— $— $— $— $— $— 
Real estate-business
    Risk Rating:
       Pass$483,249 $1,142,014 $527,586 $481,254 $355,089 $365,850 $83,463 $3,438,505 
       Special mention— 7,157 915 1,128 9,492 1,323 400 20,415 
       Substandard— 14,487 30,845 16,857 11,885 88,054 21 162,149 
       Non-accrual— 14 45 — — 94 — 153 
   Total Real estate-business:$483,249 $1,163,672 $559,391 $499,239 $376,466 $455,321 $83,884 $3,621,222 
Gross write-offs for the six months ended June 30, 2023
$— $— $— $— $— $— $— $— 
Commercial loans
    Risk Rating:
       Pass$1,841,452 $2,790,636 $1,656,590 $873,771 $685,781 $684,733 $2,118,019 $10,650,982 
       Special mention29,911 12,407 22,451 8,820 9,948 5,390 6,394 95,321 
       Substandard71 30,381 40,604 32,605 12,369 98,374 13,906 228,310 
       Non-accrual— 72 1,750 33 — 3,030 — 4,885 
   Total Commercial loans:$1,871,434 $2,833,496 $1,721,395 $915,229 $708,098 $791,527 $2,138,319 $10,979,498 
Gross write-offs for the six months ended June 30, 2023
$— $— $— $41 $— $— $558 $599 
Term Loans Amortized Cost Basis by Origination Year
(In thousands)20222021202020192018PriorRevolving Loans Amortized Cost BasisTotal
December 31, 2022
Business
    Risk Rating:
       Pass$1,456,476 $782,409 $464,201 $360,844 $180,375 $219,053 $2,146,380 $5,609,738 
       Special mention3,113 2,548 7,757 1,063 67 — 1,319 15,867 
       Substandard5,752 10,004 685 37 810 10,342 1,739 29,369 
       Non-accrual195 1,987 — 1 792 3,776 — 6,751 
   Total Business:$1,465,536 $796,948 $472,643 $361,945 $182,044 $233,171 $2,149,438 $5,661,725 
Real estate-construction
    Risk Rating:
       Pass$538,022 $596,465 $129,632 $27,331 $1,305 $2,029 $18,559 $1,313,343 
       Special mention352 — — — — — — 352 
       Substandard— 19,494 — — 14,766 13,140 — 47,400 
    Total Real estate-construction:$538,374 $615,959 $129,632 $27,331 $16,071 $15,169 $18,559 $1,361,095 
Real estate- business
    Risk Rating:
       Pass$1,085,379 $616,516 $555,648 $424,641 $163,628 $271,579 $90,799 $3,208,190 
       Special mention4,608 — 618 9,737 976 279 — 16,218 
       Substandard2,795 30,944 61,141 10,490 30,782 46,232 — 182,384 
       Non-accrual14 45 — — 124 6 — 189 
   Total Real-estate business:$1,092,796 $647,505 $617,407 $444,868 $195,510 $318,096 $90,799 $3,406,981 
Commercial loans
    Risk Rating:
       Pass$3,079,877 $1,995,390 $1,149,481 $812,816 $345,308 $492,661 $2,255,738 $10,131,271 
       Special mention8,073 2,548 8,375 10,800 1,043 279 1,319 32,437 
       Substandard8,547 60,442 61,826 10,527 46,358 69,714 1,739 259,153 
       Non-accrual209 2,032 — 1 916 3,782 — 6,940 
   Total Commercial loans:$3,096,706 $2,060,412 $1,219,682 $834,144 $393,625 $566,436 $2,258,796 $10,429,801 
The credit quality of Personal Banking loans is monitored primarily on the basis of aging/delinquency, and this information is provided as of June 30, 2023 and December 31, 2022 below.

Term Loans Amortized Cost Basis by Origination Year
(In thousands)20232022202120202019PriorRevolving Loans Amortized Cost BasisTotal
June 30, 2023
Real estate-personal
       Current to 90 days past due$256,814 $479,786 $558,080 $746,091 $277,351 $644,588 $10,385 $2,973,095 
       Over 90 days past due— 722 1,275 1,346 — 2,885 — 6,228 
       Non-accrual— 49 — — 167 1,060 — 1,276 
   Total Real estate-personal:$256,814 $480,557 $559,355 $747,437 $277,518 $648,533 $10,385 $2,980,599 
Gross write-offs for the six months ended June 30, 2023
$— $18 $— $— $— $18 $— $36 
Consumer
       Current to 90 days past due$317,512 $392,842 $307,047 $162,859 $77,928 $69,972 $780,581 $2,108,741 
       Over 90 days past due116 323 140 112 50 446 677 1,864 
    Total Consumer:$317,628 $393,165 $307,187 $162,971 $77,978 $70,418 $781,258 $2,110,605 
Gross write-offs for the six months ended June 30, 2023
$61 $1,265 $996 $492 $173 $238 $505 $3,730 
Revolving home equity
       Current to 90 days past due$— $— $— $— $— $— $303,005 $303,005 
       Over 90 days past due— — — — — — 840 840 
   Total Revolving home equity:$— $— $— $— $— $— $303,845 $303,845 
Gross write-offs for the six months ended June 30, 2023
$— $— $— $— $— $— $— $— 
Consumer credit card
       Current to 90 days past due$— $— $— $— $— $— $568,838 $568,838 
       Over 90 days past due— — — — — — 5,917 5,917 
   Total Consumer credit card:$— $— $— $— $— $— $574,755 $574,755 
Gross write-offs for the six months ended June 30, 2023
$— $— $— $— $— $— $11,637 $11,637 
Overdrafts
       Current to 90 days past due$7,237 $— $— $— $— $— $— $7,237 
    Total Overdrafts:$7,237 $— $— $— $— $— $— $7,237 
Gross write-offs for the six months ended June 30, 2023
$1,884 $— $— $— $— $— $— $1,884 
Personal banking loans
       Current to 90 days past due$581,563 $872,628 $865,127 $908,950 $355,279 $714,560 $1,662,809 $5,960,916 
       Over 90 days past due116 1,045 1,415 1,458 50 3,331 7,434 14,849 
       Non-accrual— 49 — — 167 1,060 — 1,276 
   Total Personal banking loans:$581,679 $873,722 $866,542 $910,408 $355,496 $718,951 $1,670,243 $5,977,041 
Gross write-offs for the six months ended June 30, 2023
$1,945 $1,283 $996 $492 $173 $256 $12,142 $17,287 
Term Loans Amortized Cost Basis by Origination Year
(In thousands)20222021202020192018PriorRevolving Loans Amortized Cost BasisTotal
December 31, 2022
Real estate-personal
       Current to 90 days past due$535,283 $589,658 $783,651 $290,580 $132,305 $568,380 $10,174 $2,910,031 
       Over 90 days past due514 967 1,338 81 1,388 2,393 — 6,681 
       Non-accrual— — 52 169 102 1,043 — 1,366 
   Total Real estate-personal:$535,797 $590,625 $785,041 $290,830 $133,795 $571,816 $10,174 $2,918,078 
Consumer
       Current to 90 days past due$536,429 $378,118 $205,849 $106,733 $36,096 $62,255 $731,436 $2,056,916 
       Over 90 days past due326 251 203 58 267 228 839 2,172 
    Total Consumer:$536,755 $378,369 $206,052 $106,791 $36,363 $62,483 $732,275 $2,059,088 
Revolving home equity
       Current to 90 days past due$— $— $— $— $— $— $296,504 $296,504 
       Over 90 days past due— — — — — — 703 703 
   Total Revolving home equity:$— $— $— $— $— $— $297,207 $297,207 
Consumer credit card
       Current to 90 days past due$— $— $— $— $— $— $578,451 $578,451 
       Over 90 days past due— — — — — — 5,549 5,549 
   Total Consumer credit card:$— $— $— $— $— $— $584,000 $584,000 
Overdrafts
       Current to 90 days past due$14,737 $— $— $— $— $— $— $14,737 
       Over 90 days past due220 — — — — — — 220 
    Total Overdrafts:$14,957 $— $— $— $— $— $— $14,957 
Personal banking loans
       Current to 90 days past due$1,086,449 $967,776 $989,500 $397,313 $168,401 $630,635 $1,616,565 $5,856,639 
       Over 90 days past due1,060 1,218 1,541 139 1,655 2,621 7,091 15,325 
       Non-accrual— — 52 169 102 1,043 — 1,366 
   Total Personal banking loans:$1,087,509 $968,994 $991,093 $397,621 $170,158 $634,299 $1,623,656 $5,873,330 

Collateral-dependent loans
The Company's collateral-dependent loans are comprised of large loans on non-accrual status. The Company requires that collateral-dependent loans are either over-collateralized or carry collateral equal to the amortized cost of the loan. The following table presents the amortized cost basis of collateral-dependent loans as of June 30, 2023 and December 31, 2022.

(In thousands)Business AssetsOil & Gas AssetsTotal
June 30, 2023
Commercial:
  Business$1,598 $1,508 $3,106 
Total$1,598 $1,508 $3,106 
December 31, 2022
Commercial:
Business$2,778 $1,824 $4,602 
Total$2,778 $1,824 $4,602 

Other Personal Banking loan information
As noted above, the credit quality of Personal Banking loans is monitored primarily on the basis of aging/delinquency, and this information is provided in the table in the above section on "Credit quality indicators." In addition, FICO scores are obtained and updated on a quarterly basis for most of the loans in the Personal Banking portfolio. This is a published credit score designed to measure the risk of default by taking into account various factors from a borrower's financial history and is considered supplementary information utilized by the Company, as management does not consider this information in evaluating the allowance for credit losses on loans. The Bank normally obtains a FICO score at the loan's origination and renewal dates, and updates are obtained on a quarterly basis. Excluded from the table below are certain personal real estate
loans for which FICO scores are not obtained because the loans generally pertain to commercial customer activities and are often underwritten with other collateral considerations. These loans totaled $173.0 million at June 30, 2023 and $179.2 million at December 31, 2022. The table also excludes consumer loans related to the Company's patient healthcare loan program, which totaled $198.7 million at June 30, 2023 and $197.5 million at December 31, 2022. As the healthcare loans are guaranteed by the hospital, customer FICO scores are not obtained for these loans. The personal real estate loans and consumer loans excluded below totaled less than 7% of the Personal Banking portfolio. For the remainder of loans in the Personal Banking portfolio, the table below shows the percentage of balances outstanding at June 30, 2023 and December 31, 2022 by FICO score.

   Personal Banking Loans
% of Loan Category
Real Estate - PersonalConsumerRevolving Home EquityConsumer Credit Card
June 30, 2023
FICO score:
Under 6001.7 %2.5 %1.6 %4.2 %
600 - 6592.2 3.9 3.0 11.6 
660 - 7198.1 13.4 9.6 29.3 
720 - 77922.6 24.3 22.6 27.5 
780 and over65.4 55.9 63.2 27.4 
Total100.0 %100.0 %100.0 %100.0 %
December 31, 2022
FICO score:
Under 6001.4 %2.2 %1.5 %3.4 %
600 - 6592.2 4.2 2.8 11.4 
660 - 7198.1 14.5 9.7 30.8 
720 - 77923.7 26.7 21.4 27.1 
780 and over64.6 52.4 64.6 27.3 
Total100.0 %100.0 %100.0 %100.0 %

Modifications for borrowers experiencing financial difficulty
When borrowers are experiencing financial difficulty, the Company may agree to modify the contractual terms of a loan to a borrower in order to assist the borrower in repaying principal and interest owed to the Company.

The Company's modifications of loans to borrowers experiencing financial difficulty are generally in the form of term extensions, repayment plans, payment deferrals, forbearance agreements, interest rate reductions, forgiveness of interest and/or fees, or any combination thereof. Commercial loans modified to borrowers experiencing financial difficulty are primarily loans that are substandard or non-accrual, where the maturity date was extended. Modifications on personal real estate loans are primarily those placed on forbearance plans, repayment plans, or deferral plans where monthly payments are suspended for a period of time or past due amounts are paid off over a certain period of time in the future or set up as a balloon payment at maturity. Modifications to certain credit card and other small consumer loans are often modified under debt counseling programs that can reduce the contractual rate or, in certain instances, forgive certain fees and interest charges. Other consumer loans modified to borrowers experiencing financial difficulty consist of various other workout arrangements with consumer customers.
The following tables present the amortized cost at June 30, 2023 of loans that were modified during the three and six months ended June 30, 2023.

For the Three Months Ended June 30, 2023



(Dollars in thousands)
Term ExtensionPayment DelayInterest Rate ReductionInterest/Fees Forgiven
Other
Total% of Total Loan Category
June 30, 2023
Commercial:
Business$17,097 $— $— $— $— $17,097 0.3 %
Real estate – business33,966 — — — — 33,966 0.9 
Personal Banking:
Real estate – personal 246 1,223 — — — 1,469 — 
Consumer31 18 8 — — 57 — 
Consumer credit card— — 731 224 — 955 0.2 
Total $51,340 $1,241 $739 $224 $— $53,544 0.3 %

For the Six Months Ended June 30, 2023



(Dollars in thousands)
Term ExtensionPayment DelayInterest Rate ReductionInterest/Fees Forgiven
Other
Total% of Total Loan Category
June 30, 2023
Commercial:
Business$18,193 $— $— $— $— $18,193 0.3 %
Real estate – business49,548 — — — — 49,548 1.4 
Personal Banking:
Real estate – personal 246 2,777 — — — 3,023 0.1 
Consumer31 75 21 — 55 182 — 
Consumer credit card— — 1,299 487 — 1,786 0.3 
Total $68,018 $2,852 $1,320 $487 $55 $72,732 0.4 %

The estimate of lifetime expected losses utilized in the allowance for credit losses model is developed using average historical experience on loans with similar risk characteristics, which includes losses from modifications of loans to borrowers experiencing financial difficulty. As a result, a change to the allowance for credit losses is generally not recorded upon modification. For modifications to loans made to borrowers experiencing financial difficulty that are placed on non-accrual status, the Company determines the allowance for credit losses on an individual evaluation, using the same process that it utilizes for other loans on non-accrual status. Modifications made to commercial loans which are not on non-accrual status for borrowers experiencing financial difficulty are collectively evaluated based on internal risk rating, loan type, delinquency, historical experience, and current economic factors. Modifications made to borrowers experiencing financial difficulty for personal banking loans which are not on non-accrual status are collectively evaluated based on loan type, delinquency, historical experience, and current economic factors.

If a loan to a borrower experiencing financial difficulty is modified and subsequently deemed uncollectible, the allowance for credit losses continues to be based on individual evaluation, if that loan is already on non-accrual status. For those loans, the allowance for credit losses is estimated using discounted expected cash flows or the fair value of collateral. If an accruing loan made to a borrower experiencing financial difficulty is modified and subsequently deemed uncollectible, the loan's risk rating is downgraded to non-accrual status and the loan's related allowance for credit losses is determined based on individual evaluation, or if necessary, the loan is charged off and collection efforts begin.
The following tables summarize the financial impact of loan modifications and payment deferrals during the three and six months ended June 30, 2023. The qualitative impact of forbearance and repayment plans is the deferral of payments for 3 months up to 30 years, and therefore, those modifications are excluded from the tables below.

Term Extension
Three Months Ended June 30, 2023Six Months Ended June 30, 2023
Commercial:
Business
Added a weighted average of 9 months to the life of loans.
Added a weighted average of 9 months to the life of loans.
Real estate – business
Added a weighted average of 12 months to the life of loans.
Added a weighted average of 14 months to the life of loans.
Personal Banking:
Real estate – personal
Added a weighted average of 7 months to the life of loans.
Added a weighted average of 7 months to the life of loans.
Consumer
Added 10 years to the life of loans.
Added 10 years to the life of loans.


Payment Delay
Three Months Ended June 30, 2023Six Months Ended June 30, 2023
Personal Banking:
Real estate – personal
Deferred certain payments by a weighted average of 28 years.
Deferred certain payments by a weighted average of 20 years.
Consumer
Deferred certain payments by a weighted average of 6 months.
Deferred certain payments by a weighted average of 71 months.


Interest Rate Reduction
Three Months Ended June 30, 2023Six Months Ended June 30, 2023
Personal Banking:
ConsumerReduced contractual interest from weighted average 21% to 6%.Reduced contractual interest from weighted average 21% to 6%.
Consumer credit cardReduced contractual interest from weighted average 21% to 6%.Reduced contractual interest from weighted average 21% to 6%.


Forgiveness of Interest/Fees
Three Months Ended June 30, 2023Six Months Ended June 30, 2023
Personal Banking:
Consumer credit cardApproximately $13 thousand of interest and fees forgiven.Approximately $27 thousand of interest and fees forgiven.

The Company had commitments of $6.3 million at June 30, 2023 to lend additional funds to borrowers experiencing financial difficulty and for whom the Company has modified the terms of loans in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension during the current reporting period.

The following table provides the amortized cost basis of loans to borrowers experiencing financial difficulty that had a payment default during the three and six months ended June 30, 2023 and were modified on or after January 1, 2023 (the date we adopted ASU 2022-02) through June 30, 2023. For purposes of this disclosure, the Company considers "default" to mean 90 days or more past due as to interest or principal. In addition to the loans below, the Company charged off $78 thousand of consumer credit card loans during the six months ended June 30, 2023 that were modified during the period.
For the Three Months Ended June 30, 2023For the Six Months Ended June 30, 2023


(Dollars in thousands)
Payment DelayInterest Rate ReductionInterest/Fees ForgivenTotalPayment DelayInterest Rate ReductionInterest/Fees ForgivenTotal
June 30, 2023
Personal Banking:
Real estate – personal $779 $— $— $779 $779 $— $— $779 
Consumer— 6 — 6 — 11 — 11 
Consumer credit card— 67 78 145 — 111 78 189 
Total $779 $73 $78 $930 $779 $122 $78 $979 

The following table presents the amortized cost basis at June 30, 2023 of loans that have been modified on or after January 1, 2023 (the date we adopted ASU 2022-02) through June 30, 2023.



(In thousands)
Current
30-89 Days Past Due
90 Days Past DueTotal
June 30, 2023
Commercial:
Business$18,193 $— $— $18,193 
Real estate – business49,548 — — 49,548 
Personal Banking:
Real estate – personal 2,027 217 779 3,023 
Consumer169 7 6 182 
Consumer credit card1,205 436 145 1,786 
Total $71,142 $660 $930 $72,732 

Troubled debt restructuring disclosures prior to the Company's adoption of ASU 2022-02
Restructured loans are those extended to borrowers who are experiencing financial difficulty and who have been granted a concession. Restructured loans are placed on non-accrual status if the Company does not believe it probable that amounts due under the contractual terms will be collected. Commercial performing restructured loans are primarily comprised of certain business, construction and business real estate loans classified as substandard but renewed at rates judged to be non-market. These loans are performing in accordance with their modified terms, and because the Company believes it probable that all amounts due under the modified terms of the agreements will be collected, interest on these loans is being recognized on an accrual basis. Troubled debt restructurings also include certain credit card and other small consumer loans under various debt management and assistance programs. Modifications to these loans generally involve removing the available line of credit, placing loans on amortizing status, and lowering the contractual interest rate. Certain personal real estate, revolving home equity, and consumer loans were classified as consumer bankruptcy troubled debt restructurings because they were not reaffirmed by the borrower in bankruptcy proceedings. Interest on these loans is being recognized on an accrual basis, as the borrowers are continuing to make payments. Other consumer loans classified as troubled debt restructurings consist of various other workout arrangements with consumer customers.

(In thousands)December 31, 2022
Accruing restructured loans:
Commercial
$184,388 
Assistance programs
5,156 
Other consumer
4,049 
Non-accrual loans
5,078 
Total troubled debt restructurings
$198,671 
Section 4013 of the CARES Act was signed into law on March 27, 2020, and included a provision that short-term modifications are not troubled debt restructurings, if made on a good-faith basis in response to COVID-19 to borrowers who were current prior to December 31, 2019. The Company elected such option under the CARES Act when determining if a customer’s modification is subject to troubled debt restructuring classification. The initial guidance issued under the CARES Act was due to expire on December 31, 2020. During January 2021, the Consolidated Appropriations Act, 2021 was enacted and extended through the end of 2021 the relief offered under the CARES Act related to the accounting and disclosure requirements for troubled debt restructurings as a result of COVID-19. The Company elected to extend its application of this guidance through December 31, 2021. During the period covered by the CARES Act, if it was deemed that the loan
modification was not short-term, not COVID-19 related or the customer does not meet the criteria under the guidance to be scoped out of troubled debt restructuring classification, the Company evaluated the loan modifications under its existing framework and accounted for the modification as a troubled debt restructuring.

The table below shows the balance of troubled debt restructurings by loan classification at December 31, 2022, in addition to the outstanding balances of these restructured loans which the Company considers to have been in default at any time during the past twelve months. For purposes of this disclosure, the Company considers "default" to mean 90 days or more past due as to interest or principal.

(In thousands)December 31, 2022Balance at December 31, 2022 that was 90 days past due at any time during previous 12 months
Commercial:
Business$12,311 $— 
Real estate - construction and land57,547 — 
Real estate - business118,654 — 
Personal Banking:
Real estate - personal2,809 419 
Consumer2,250 268 
Revolving home equity17 — 
Consumer credit card5,083 452 
Total troubled debt restructurings$198,671 $1,139 

For those loans on non-accrual status also classified as restructured, the modification did not create any further financial effect on the Company as those loans were already recorded at net realizable value. For those performing commercial loans classified as restructured, there were no concessions involving forgiveness of principal or interest and, therefore, there was no financial impact to the Company as a result of modification to these loans. However, the effects of modifications to loans under various debt management and assistance programs at December 31, 2022 were estimated to decrease interest income by approximately $661 thousand on an annual, pre-tax basis, compared to amounts contractually owed. Other modifications to consumer loans mainly involve extensions and other small modifications that did not include the forgiveness of principal or interest.

The allowance for credit losses related to troubled debt restructurings on non-accrual status is determined by individual evaluation, including collateral adequacy, using the same process as loans on non-accrual status which are not classified as troubled debt restructurings. Those performing loans classified as troubled debt restructurings are accruing loans which management expects to collect under contractual terms. Performing commercial loans having no other concessions granted other than being renewed at non-market interest rates are judged to have similar risk characteristics as non-troubled debt commercial loans and are collectively evaluated based on internal risk rating, loan type, delinquency, historical experience and current economic factors. Performing personal banking loans classified as troubled debt restructurings resulted from the borrower not reaffirming the debt during bankruptcy and have had no other concession granted, other than the Bank's future limitations on collecting payment deficiencies or in pursuing foreclosure actions. As such, they have similar risk characteristics as non-troubled debt personal banking loans and are evaluated collectively based on loan type, delinquency, historical experience and current economic factors.

If a troubled debt restructuring defaults and is already on non-accrual status, the allowance for credit losses continues to be based on individual evaluation, using discounted expected cash flows or the fair value of collateral. If an accruing troubled debt restructuring defaults, the loan's risk rating is downgraded to non-accrual status and the loan's related allowance for credit losses is determined based on individual evaluation, or if necessary, the loan is charged off and collection efforts begin.

The Company had commitments of $12.6 million at December 31, 2022 to lend additional funds to borrowers with restructured loans.

Loans held for sale
The Company designates certain long-term fixed rate personal real estate loans as held for sale, and the Company has elected the fair value option for these loans. The election of the fair value option aligns the accounting for these loans with the related economic hedges discussed in Note 11. The loans are primarily sold to Federal Home Loan Mortgage Corporation (FHLMC) and Federal National Mortgage Association (FNMA). At June 30, 2023, the fair value of these loans was $1.6 million, and the unpaid principal balance was $1.6 million.
The Company also designates certain student loan originations as held for sale. The borrowers are credit-worthy students who are attending colleges and universities. The loans are intended to be sold in the secondary market, and the Company maintains contracts with Sallie Mae to sell the loans within 210 days after the last disbursement to the student. These loans are carried at lower of cost or fair value, which at June 30, 2023 totaled $4.9 million.

At June 30, 2023, none of the loans held for sale were on non-accrual status or 90 days past due and still accruing interest.
Foreclosed real estate/repossessed assets
The Company’s holdings of foreclosed real estate totaled $94 thousand and $96 thousand at June 30, 2023 and December 31, 2022, respectively, and included in those amounts were $94 thousand and $96 thousand at June 30, 2023 and December 31, 2022, respectively, of foreclosed residential real estate properties held as a result of obtaining physical possession. Personal property acquired in repossession, generally autos, totaled $1.9 million and $1.6 million at June 30, 2023 and December 31, 2022, respectively. Upon acquisition, these assets are recorded at fair value less estimated selling costs at the date of foreclosure, establishing a new cost basis. They are subsequently carried at the lower of this cost basis or fair value less estimated selling costs.