Allowance for Credit Losses

9 Months Ended

Sep. 30, 2020

Allowance for Credit Losses

Allowance for Credit Losses

4. Allowance for Credit Losses

The Company maintains an ACL that is deducted from the amortized cost basis of loans and leases to present the net carrying value of loans and leases expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount of loans and leases.

The Company also maintains an estimated reserve for unfunded commitments on the unaudited interim consolidated balance sheets. The reserve for unfunded commitments is reduced in the period in which the OBS financial instruments expire, loan funding occurs, or is otherwise settled.

In response to the COVID-19 pandemic, on March 27, 2020, the CARES Act was signed into law. The CARES Act creates a forbearance program for federally backed mortgage loans, protects borrowers from negative credit reporting due to loan accommodations related to the National Emergency, and provides financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19. Financial institutions accounting for eligible loans under the CARES Act are not required to report such loans as TDRs in accordance with GAAP. In addition, Interagency Statements were issued on March 22, 2020 and April 7, 2020 to encourage financial institutions to work prudently with borrowers and to describe the agencies’ interpretation of how current accounting rules under GAAP apply to certain COVID-19 related modifications. The agencies confirmed with the FASB that short-term modifications (e.g., six months or less) for payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant and made on a good faith basis in response to borrowers impacted by COVID-19 who were current prior to any relief are not TDRs under GAAP. The agencies also confirmed that these short-term modifications should not be reported as being on nonaccrual status and should not be considered past due during the period of the deferral. The Company has adopted the provisions of both the CARES Act and Interagency Statements. The Company is first applying the CARES Act guidance in determining if certain loan modifications are not required to be reported as TDRs. If the loan modification does not qualify under the CARES Act, then the Interagency Statement guidance is applied. The interim consolidated financial information below reflects the application of this guidance.

Rollforward of the Allowance for Credit Losses

The following presents the activity in the ACL by class of loans and leases for the three and nine months ended September 30, 2020:

	Three Months Ended September 30, 2020
	Commercial Lending								Residential Lending
	Commercial		Commercial								Home
	and		Real				Lease		Residential		Equity
(dollars in thousands)	Industrial		Estate		Construction		Financing		Mortgage		Line		Consumer		Total
Allowance for credit losses:
Balance at beginning of period	$	21,299	$	53,122	$	5,276	$	3,837	$	33,874	$	7,635	$	67,077	$	192,120
Charge-offs		(598)		—		—		—		—		—		(4,238)		(4,836)
Recoveries		1,699		—		30		—		27		16		3,148		4,920
Increase (decrease) in Provision		(1,129)		(1,389)		(372)		214		8,316		(50)		(1,918)		3,672
Balance at end of period	$	21,271	$	51,733	$	4,934	$	4,051	$	42,217	$	7,601	$	64,069	$	195,876

	Nine Months Ended September 30, 2020
	Commercial Lending								Residential Lending
	Commercial		Commercial								Home
	and		Real				Lease		Residential		Equity
(dollars in thousands)	Industrial		Estate		Construction		Financing		Mortgage		Line		Consumer		Unallocated		Total
Allowance for credit losses:
Balance at beginning of period	$	28,975	$	22,325	$	4,844	$	424	$	29,303	$	9,876	$	34,644	$	139	$	130,530
Adoption of ASU No. 2016-13		(16,105)		10,559		(1,803)		207		(2,793)		(4,731)		15,575		(139)		770
Charge-offs		(14,773)		(2,723)		(379)		—		(14)		(8)		(21,742)		—		(39,639)
Recoveries		2,019		—		170		—		179		146		7,687		—		10,201
Increase in Provision		21,155		21,572		2,102		3,420		15,542		2,318		27,905		—		94,014
Balance at end of period	$	21,271	$	51,733	$	4,934	$	4,051	$	42,217	$	7,601	$	64,069	$	—	$	195,876

The following presents the activity in the ACL by class of loans and leases for the three and nine months ended September 30, 2019, presented in accordance with Topic 310, Receivables:

	Three Months Ended September 30, 2019
	Commercial Lending
	Commercial		Commercial
	and		Real				Lease
(dollars in thousands)	Industrial		Estate		Construction		Financing		Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Balance at beginning of period	$	31,688	$	22,204	$	5,014	$	446	$	43,420	$	33,638	$	2,125	$	138,535
Charge-offs		(514)		—		—		—		(7)		(8,015)		—		(8,536)
Recoveries		241		30		—		—		425		2,269		—		2,965
Increase (decrease) in Provision		(4,098)		(358)		(361)		(54)		241		5,838		(1,208)		—
Balance at end of period	$	27,317	$	21,876	$	4,653	$	392	$	44,079	$	33,730	$	917	$	132,964

	Nine Months Ended September 30, 2019
	Commercial Lending
	Commercial		Commercial
	and		Real				Lease
(dollars in thousands)	Industrial		Estate		Construction		Financing		Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Balance at beginning of period	$	34,501	$	19,725	$	5,813	$	432	$	44,906	$	35,813	$	528	$	141,718
Charge-offs		(2,514)		—		—		(24)		(7)		(24,118)		—		(26,663)
Recoveries		303		93		—		—		860		7,103		—		8,359
Increase (decrease) in Provision		(4,973)		2,058		(1,160)		(16)		(1,680)		14,932		389		9,550
Balance at end of period	$	27,317	$	21,876	$	4,653	$	392	$	44,079	$	33,730	$	917	$	132,964

The disaggregation of the ACL and recorded investment in loans by impairment methodology as of December 31, 2019, presented in accordance with Topic 310, Receivables, was as follows:

	December 31, 2019
	Commercial Lending
	Commercial		Commercial
	and		Real				Lease
(dollars in thousands)	Industrial		Estate		Construction		Financing		Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Individually evaluated for impairment	$	46	$	27	$	—	$	—	$	130	$	—	$	—	$	203
Collectively evaluated for impairment		28,929		22,298		4,844		424		39,049		34,644		139		130,327
Balance at end of period	$	28,975	$	22,325	$	4,844	$	424	$	39,179	$	34,644	$	139	$	130,530
Loans and leases:
Individually evaluated for impairment	$	4,951	$	723	$	—	$	—	$	14,964	$	—	$	—	$	20,638
Collectively evaluated for impairment		2,738,291		3,463,230		519,241		202,483		4,647,211		1,620,556		—		13,191,012
Balance at end of period	$	2,743,242	$	3,463,953	$	519,241	$	202,483	$	4,662,175	$	1,620,556	$	—	$	13,211,650

Rollforward of the Reserve for Unfunded Commitments

The following presents the activity in the Reserve for Unfunded Commitments for the three and nine months ended September 30, 2020:

	Three Months Ended September 30, 2020
	Commercial Lending								Residential Lending
	Commercial		Commercial								Home
	and		Real				Lease		Residential		Equity
(dollars in thousands)	Industrial		Estate		Construction		Financing		Mortgage		Line		Consumer		Total
Reserve for unfunded commitments:
Balance at beginning of period	$	8,181	$	1,168	$	5,908	$	—	$	3	$	7,890	$	54	$	23,204
Increase (decrease) in Provision		1,212		(57)		(749)		—		1		996		(3)		1,400
Balance at end of period	$	9,393	$	1,111	$	5,159	$	—	$	4	$	8,886	$	51	$	24,604

	Nine Months Ended September 30, 2020
	Commercial Lending								Residential Lending
	Commercial		Commercial								Home
	and		Real				Lease		Residential		Equity
(dollars in thousands)	Industrial		Estate		Construction		Financing		Mortgage		Line		Consumer		Total
Reserve for unfunded commitments:
Balance at beginning of period	$	—	$	—	$	—	$	—	$	—	$	—	$	600	$	600
Adoption of ASU No. 2016-13		5,390		778		4,119		—		7		6,587		(581)		16,300
Increase (decrease) in Provision		4,003		333		1,040		—		(3)		2,299		32		7,704
Balance at end of period	$	9,393	$	1,111	$	5,159	$	—	$	4	$	8,886	$	51	$	24,604

Credit Quality Information

The Company performs an internal loan review and grading or scoring procedures on an ongoing basis. The review provides management with periodic information as to the quality of the loan portfolio and effectiveness of the Company’s lending policies and procedures. The objective of the loan review and grading or scoring procedures is to identify, in a timely manner, existing or emerging credit quality issues so that appropriate steps can be initiated to avoid or minimize future losses.

Loans and leases subject to grading primarily include: commercial and industrial loans, commercial real estate loans, construction loans and lease financing. Other loans subject to grading include installment loans to businesses or individuals for business and commercial purposes, overdraft lines of credit, commercial credit cards, and other credits as may be determined. Credit quality indicators for internally graded loans and leases are generally updated on an annual basis or on a quarterly basis for those loans  and leases deemed to be of potentially higher risk.

An internal credit risk rating system is used to determine loan grade and is based on borrower credit risk and transactional risk. The loan grading process is a mechanism used to determine the risk of a particular borrower and is based on the following factors of a borrower: character, earnings and operating cash flow, asset and liability structure, debt capacity, management and controls, borrowing entity, and industry and operating environment.

Pass – “Pass” (uncriticized) loans and leases, are not considered to carry greater than normal risk. The borrower has the apparent ability to satisfy obligations to the Company, and therefore no loss in ultimate collection is anticipated.

Special Mention – Loans and leases that have potential weaknesses deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for assets or in the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard – Loans and leases that are inadequately protected by the current financial condition and paying capacity of the obligor or by any collateral pledged. Loans and leases so classified must have a well-defined weakness or weaknesses that jeopardize the collection of the debt. They are characterized by the distinct possibility that the bank may sustain some loss if the deficiencies are not corrected.

Doubtful – Loans and leases that have weaknesses found in substandard borrowers with the added provision that the weaknesses make collection of debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss – Loans and leases classified as loss are considered uncollectible and of such little value that their continuance as an asset is not warranted. This classification does not mean that the loan or lease has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future.

Loans that are primarily monitored for credit quality using FICO scores include: residential mortgage loans, home equity lines and consumer loans. FICO scores are calculated primarily based on a consideration of payment history, the current amount of debt, the length of credit history available, a recent history of new sources of credit and the mix of credit type. FICO scores are updated on a monthly, quarterly or bi-annual basis, depending on the product type.

The amortized cost basis by year of origination and credit quality indicator of the Company's loans and leases as of September 30, 2020 was as follows:

															Revolving
															Loans
															Converted
	Term Loans												Revolving		to Term
	Amortized Cost Basis by Origination Year												Loans		Loans
													Amortized		Amortized
(dollars in thousands)	2020		2019		2018		2017		2016		Prior		Cost Basis		Cost Basis		Total
Commercial Lending
Commercial and Industrial
Risk rating:
Pass	$	999,763	$	330,209	$	202,595	$	76,154	$	52,391	$	92,446	$	1,033,278	$	26,148	$	2,812,984
Special Mention		25,677		7,786		33,794		2,354		306		791		105,339		452		176,499
Substandard		23,836		2,172		2,611		1,395		4,265		9,375		37,883		283		81,820
Doubtful		—		—		—		—		—		195		—		—		195
Other (1)		12,084		15,053		10,998		6,439		2,454		492		51,244		—		98,764
Total Commercial and Industrial		1,061,360		355,220		249,998		86,342		59,416		103,299		1,227,744		26,883		3,170,262
Commercial Real Estate
Risk rating:
Pass		289,941		625,894		544,367		447,473		305,557		880,689		36,258		2		3,130,181
Special Mention		1,487		94,217		30,760		39,438		31,211		58,911		2,999		—		259,023
Substandard		—		10,882		14,594		6,972		10,685		19,240		9,006		—		71,379
Other (1)		—		—		—		—		—		502		—		—		502
Total Commercial Real Estate		291,428		730,993		589,721		493,883		347,453		959,342		48,263		2		3,461,085
Construction
Risk rating:
Pass		32,810		182,503		187,257		91,415		24,053		42,269		26,133		—		586,440
Special Mention		—		515		1,647		4,749		—		9,172		—		—		16,083
Substandard		—		—		538		1,840		525		1,043		—		—		3,946
Other (1)		13,349		23,382		8,804		4,264		1,796		4,222		585		—		56,402
Total Construction		46,159		206,400		198,246		102,268		26,374		56,706		26,718		—		662,871
Lease Financing
Risk rating:
Pass		68,770		66,472		15,044		18,063		4,110		63,537		—		—		235,996
Special Mention		—		940		158		1,376		424		643		—		—		3,541
Substandard		2,703		1,680		359		1,174		—		524		—		—		6,440
Total Lease Financing		71,473		69,092		15,561		20,613		4,534		64,704		—		—		245,977
Total Commercial Lending	$	1,470,420	$	1,361,705	$	1,053,526	$	703,106	$	437,777	$	1,184,051	$	1,302,725	$	26,885	$	7,540,195

(continued)

															Revolving
															Loans
															Converted
	Term Loans												Revolving		to Term
	Amortized Cost Basis by Origination Year												Loans		Loans
(continued)													Amortized		Amortized
(dollars in thousands)	2020		2019		2018		2017		2016		Prior		Cost Basis		Cost Basis		Total
Residential Lending
Residential Mortgage
FICO:
740 and greater	$	457,209	$	410,369	$	319,988	$	390,552	$	341,709	$	919,509	$	—	$	—	$	2,839,336
680 - 739		71,240		54,497		55,179		59,237		44,911		162,726		—		—		447,790
620 - 679		12,653		11,595		9,753		8,559		8,942		48,554		—		—		100,056
550 - 619		1,946		2,316		3,923		5,423		4,506		13,256		—		—		31,370
Less than 550		—		—		534		2,153		953		3,480		—		—		7,120
No Score (3)		14,827		19,364		22,222		22,616		14,954		49,251		—		—		143,234
Other (2)		16,598		17,402		17,874		22,807		11,060		13,653		579		172		100,145
Total Residential Mortgage		574,473		515,543		429,473		511,347		427,035		1,210,429		579		172		3,669,051
Home Equity Line
FICO:
740 and greater		—		—		—		—		—		—		617,973		5,600		623,573
680 - 739		—		—		—		—		—		—		163,305		3,799		167,104
620 - 679		—		—		—		—		—		—		47,448		1,295		48,743
550 - 619		—		—		—		—		—		—		13,210		1,464		14,674
Less than 550		—		—		—		—		—		—		4,750		613		5,363
No Score (3)		—		—		—		—		—		—		5,332		—		5,332
Total Home Equity Line		—		—		—		—		—		—		852,018		12,771		864,789
Total Residential Lending		574,473		515,543		429,473		511,347		427,035		1,210,429		852,597		12,943		4,533,840
Consumer Lending
FICO:
740 and greater		102,091		127,590		106,359		61,204		28,613		8,443		105,905		—		540,205
680 - 739		67,228		100,723		77,874		42,470		20,280		7,302		77,445		—		393,322
620 - 679		29,733		60,484		39,213		27,825		13,701		5,148		39,748		—		215,852
550 - 619		5,927		24,376		21,050		18,784		9,388		4,134		16,484		—		100,143
Less than 550		1,558		11,200		11,967		9,579		4,671		1,969		6,590		—		47,534
No Score (3)		3,998		120		105		115		23		—		33,654		—		38,015
Other (2)		886		9,144		89		2,219		47		6,787		71,691		—		90,863
Total Consumer Lending		211,421		333,637		256,657		162,196		76,723		33,783		351,517		—		1,425,934
Total Loans and Leases	$	2,256,314	$	2,210,885	$	1,739,656	$	1,376,649	$	941,535	$	2,428,263	$	2,506,839	$	39,828	$	13,499,969

(1) Other credit quality indicators used for monitoring purposes are primarily FICO scores. The majority of the loans in this population were originated to borrowers with a prime FICO score.

(2) Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. The majority of the loans in this population were graded with a “Pass” rating.

(3) No FICO scores are primarily related to loans and leases extended to non-residents.  Loans and leases of this nature are primarily secured by collateral and/or are closely monitored for performance.

There were no loans and leases graded as Loss as of September 30, 2020.

The amortized cost basis of revolving loans that were converted to term loans during the three and nine months ended September 30, 2020 was as follows:

	Three Months Ended
(dollars in thousands)	September 30, 2020
Commercial and industrial	$	5
Home equity line		8,843
Total Revolving Loans Converted to Term Loans During the Period	$	8,848

	Nine Months Ended
(dollars in thousands)	September 30, 2020
Commercial and industrial	$	28,527
Residential mortgage		296
Home equity line		12,771
Total Revolving Loans Converted to Term Loans During the Period	$	41,594

The credit risk profiles by internally assigned grade for loans and leases as of December 31, 2019, presented in accordance with Topic 310, Receivables, were as follows:

	December 31, 2019
	Commercial		Commercial
	and		Real				Lease
(dollars in thousands)	Industrial		Estate		Construction		Financing		Total
Grade:
Pass	$	2,585,908	$	3,327,659	$	515,993	$	201,461	$	6,631,021
Special mention		91,365		106,331		127		1,022		198,845
Substandard		65,969		29,963		3,121		—		99,053
Total	$	2,743,242	$	3,463,953	$	519,241	$	202,483	$	6,928,919

There were no loans and leases graded as Loss as of December 31, 2019.

The credit risk profiles based on payment activity for loans and leases that were not subject to loan grading as of December 31, 2019 presented in accordance with Topic 310, Receivables, were as follows:

	December 31, 2019
(dollars in thousands)	Residential Mortgage		Home Equity Line		Consumer		Consumer - Auto		Credit Cards		Total
Performing	$	3,759,799	$	886,879	$	219,046	$	1,016,142	$	347,264	$	6,229,130
Non-performing and delinquent		9,137		6,360		7,258		24,326		6,520		53,601
Total	$	3,768,936	$	893,239	$	226,304	$	1,040,468	$	353,784	$	6,282,731

Past-Due Status

The Company continually updates its aging analysis for loans and leases to monitor the migration of loans and leases into past due categories. The Company considers loans and leases that are delinquent for 30 days or more to be past due. As of September 30, 2020, the aging analysis of the amortized cost basis of the Company’s past due loans and leases was as follows:

	September 30, 2020
	Past Due												Loans and
					Greater								Leases Past
					Than or								Due 90 Days
	30-59		60-89		Equal to								or More and
	Days		Days		90 Days		Total				Total Loans		Still Accruing
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		and Leases		Interest
Commercial and industrial	$	1,233	$	2,619	$	2,255	$	6,107	$	3,164,155	$	3,170,262	$	1,938
Commercial real estate		149		1,142		1,387		2,678		3,458,407		3,461,085		1,307
Construction		—		—		2,143		2,143		660,728		662,871		100
Lease financing		—		—		—		—		245,977		245,977		—
Residential mortgage		921		568		3,914		5,403		3,663,648		3,669,051		—
Home equity line		2,837		2,537		4,503		9,877		854,912		864,789		4,503
Consumer		17,709		5,940		2,897		26,546		1,399,388		1,425,934		2,897
Total	$	22,849	$	12,806	$	17,099	$	52,754	$	13,447,215	$	13,499,969	$	10,745

As of December 31, 2019, the aging analysis of the Company’s past due loans and leases, presented in accordance with Topic 310, Receivables, was as follows:

	December 31, 2019
	Accruing Loans and Leases
					Greater								Total Non
					Than or						Total		Accruing
	30-59		60-89		Equal to		Total				Accruing		Loans
	Days		Days		90 Days		Past				Loans and		and		Total
(dollars in thousands)	Past Due		Past Due		Past Due		Due		Current		Leases		Leases		Outstanding
Commercial and industrial	$	1,525	$	808	$	1,429	$	3,762	$	2,739,448	$	2,743,210	$	32	$	2,743,242
Commercial real estate		1,664		1,125		1,013		3,802		3,460,121		3,463,923		30		3,463,953
Construction		—		—		2,367		2,367		516,874		519,241		—		519,241
Lease financing		—		—		—		—		202,483		202,483		—		202,483
Residential mortgage		3,258		399		74		3,731		3,759,799		3,763,530		5,406		3,768,936
Home equity line		2,971		394		2,995		6,360		886,879		893,239		—		893,239
Consumer		26,810		7,022		4,272		38,104		1,582,452		1,620,556		—		1,620,556
Total	$	36,228	$	9,748	$	12,150	$	58,126	$	13,148,056	$	13,206,182	$	5,468	$	13,211,650

Nonaccrual Loans and Leases

The Company generally places a loan or lease on nonaccrual status when management believes that collection of principal or interest has become doubtful or when a loan or lease becomes 90 days past due as to principal or interest, unless it is well secured and in the process of collection. The Company charges off a loan or lease when facts indicate that the loan or lease is considered uncollectible.

The amortized cost basis of loans and leases on nonaccrual status as of September 30, 2020 and January 1, 2020 and the amortized cost basis of loans and leases on nonaccrual status with no allowance for credit losses as of September 30, 2020 were as follows:

	September 30, 2020				January 1, 2020
	Nonaccrual
	Loans
	and Leases
	With No		Nonaccrual		Nonaccrual
	Allowance		Loans		Loans
(dollars in thousands)	for Credit Losses		and Leases		and Leases
Commercial and industrial	$	—	$	725	$	32
Commercial real estate		6,986		7,067		30
Construction		1,840		2,043		—
Residential mortgage		2,650		7,798		5,406
Total Nonaccrual Loans and Leases	$	11,476	$	17,633	$	5,468

For the three and nine months ended September 30, 2020, the Company recognized interest income of $0.1 million and $0.2 million, respectively, on nonaccrual loans and leases. Furthermore, for the three and nine months ended September 30, 2020, the amount of accrued interest receivables written off by reversing interest income was $0.2 million and $1.1 million, respectively.

Collateral-Dependent Loans and Leases

Collateral-dependent loans and leases are those for which repayment (on the basis of the Company’s assessment as of the reporting date) is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. As of September 30, 2020, the amortized cost basis of collateral-dependent loans was $33.3 million. These loans were primarily collateralized by commercial and residential real estate property and borrower assets. As of September 30, 2020, the fair value of collateral on substantially all collateral-dependent loans were significantly in excess of their amortized cost basis.

Impaired Loans

The total carrying amounts and the total unpaid principal balances of impaired loans and leases as of December 31, 2019, presented in accordance with Topic 310, Receivables, were as follows:

	December 31, 2019
			Unpaid
	Recorded		Principal		Related
(dollars in thousands)	Investment		Balance		Allowance
Impaired loans with no related allowance recorded:
Commercial and industrial	$	3,825	$	3,841	$	—
Commercial real estate		30		30		—
Residential mortgage		10,425		10,718		—
Total	$	14,280	$	14,589	$	—
Impaired loans with a related allowance recorded:
Commercial and industrial	$	1,126	$	1,126	$	46
Commercial real estate		693		693		27
Residential mortgage		4,539		4,819		130
Total	$	6,358	$	6,638	$	203
Total impaired loans:
Commercial and industrial	$	4,951	$	4,967	$	46
Commercial real estate		723		723		27
Residential mortgage		14,964		15,537		130
Total	$	20,638	$	21,227	$	203

The following table provides information with respect to the Company’s average balances, and of interest income recognized from, impaired loans for the three and nine months ended September 30, 2019, presented in accordance with Topic 310, Receivables:

	Three Months Ended				Nine Months Ended
	September 30, 2019				September 30, 2019
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(dollars in thousands)	Investment		Recognized		Investment		Recognized
Impaired loans with no related allowance recorded:
Commercial and industrial	$	3,888	$	38	$	3,653	$	123
Commercial real estate		2,946		38		3,524		250
Residential mortgage		8,065		88		8,365		280
Consumer		100		—		50		—
Total	$	14,999	$	164	$	15,592	$	653
Impaired loans with a related allowance recorded:
Commercial and industrial	$	4,673	$	94	$	5,325	$	301
Commercial real estate		706		10		714		30
Residential mortgage		6,608		98		6,882		297
Total	$	11,987	$	202	$	12,921	$	628
Total impaired loans:
Commercial and industrial	$	8,561	$	132	$	8,978	$	424
Commercial real estate		3,652		48		4,238		280
Residential mortgage		14,673		186		15,247		577
Consumer		100		—		50		—
Total	$	26,986	$	366	$	28,513	$	1,281

Modifications

Commercial and industrial loans modified in a TDR may involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Modifications of commercial real estate and construction loans in a TDR may involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Modifications of construction loans in a TDR may also involve extending the interest-only payment period. Interest continues to accrue on the missed payments and as a result, the effective yield on the loan remains unchanged. As the forbearance period usually involves an insignificant payment delay, lease financing modifications typically do not meet the reporting criteria for a TDR. Residential real estate loans modified in a TDR may be comprised of loans where monthly payments are lowered to accommodate the borrowers' financial needs for a period of time, normally two years. Generally, consumer loans are not classified as a TDR as they are normally charged off upon reaching a predetermined delinquency status that ranges from 120 to 180 days and varies by product type.

Loans modified in a TDR may already be on nonaccrual status and in some cases, partial charge-offs may have already been taken against the outstanding loan balance. Loans modified in a TDR are evaluated for impairment. As a result, this may have a financial effect of increasing the specific ACL associated with the loan. An ACL for impaired commercial loans, including commercial real estate and construction loans, that have been modified in a TDR is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or if the loan is collateral-dependent, the estimated fair value of the collateral, less any selling costs. An ACL for impaired residential real estate loans that have been modified in a TDR is measured based on the estimated fair value of the collateral, less any selling costs. Management exercises significant judgment in developing these estimates.

The following presents, by class, information related to loans modified in a TDR during the three and nine months ended September 30, 2020 and 2019:

	Three Months Ended					Nine Months Ended
	September 30, 2020					September 30, 2020
	Number of	Recorded		Related		Number of	Recorded		Related
(dollars in thousands)	Contracts	Investment(1)		Allowance		Contracts	Investment(1)		Allowance
Commercial and industrial	—	$	—	$	—	1	$	500	$	30
Total	—	$	—	$	—	1	$	500	$	30

(1) The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period.

	Three Months Ended					Nine Months Ended
	September 30, 2019					September 30, 2019
	Number of	Recorded		Related		Number of	Recorded		Related
(dollars in thousands)	Contracts	Investment(1)		Allowance		Contracts	Investment(1)		Allowance
Commercial and industrial	—	$	—	$	—	4	$	588	$	26
Residential mortgage	1		609		—	2		957		13
Total	1	$	609	$	—	6	$	1,545	$	39

(1) The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period.

The above loans were modified in a TDR through an extension of maturity dates, temporary interest-only payments, reduced payments, or below-market interest rates.

The Company had commitments to extend credit, standby letters of credit, and commercial letters of credit totaling $6.2 billion and $6.1 billion as of September 30, 2020 and December 31, 2019, respectively. Of the $6.2 billion at September 30, 2020, there were no commitments related to borrowers who had loan terms modified in a TDR. Of the $6.1 billion at December 31, 2019, there were commitments of $4.5 million related to borrowers who had loan terms modified in a TDR.

The following table presents, by class, loans modified in TDRs that have defaulted in the current period within 12 months of their permanent modification date for the periods indicated. The Company is reporting these defaulted TDRs based on a payment default definition of 30 days past due:

	Three Months Ended			Nine Months Ended			Three Months Ended			Nine Months Ended
	September 30, 2020			September 30, 2020			September 30, 2019			September 30, 2019
	Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded
(dollars in thousands)	Contracts	Investment(1)		Contracts	Investment(1)		Contracts	Investment(1)		Contracts	Investment(1)
Commercial and industrial(2)	1	$	500	1	$	500	2	$	588	4	$	588
Residential mortgage(3)	—		—	—		—	—		—	1		348
Total	1	$	500	1	$	500	2	$	588	5	$	936

(1) The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period.

(2) For the three and nine months ended September 30, 2020, the maturity date for the commercial and industrial loan that subsequently defaulted was extended. For the three and nine months ended September 30, 2019, the commercial and industrial loans that subsequently defaulted were temporarily modified to interest-only payments.

(3) For the nine months ended September 30, 2019, the maturity date for the residential mortgage loan that subsequently defaulted was extended.

Foreclosure Proceedings

As of September 30, 2020, there were no residential mortgage loans collateralized by real estate property that was modified in a TDR that was in process of foreclosure. As of December 31, 2019, there was one residential mortgage loan collateralized by real estate property of $0.3 million that was modified in a TDR that was in process of foreclosure.

Foreclosed Property

As of September 30, 2020, there were no residential real estate properties held from foreclosed residential real estate loans. As of December 31, 2019, residential real estate properties from two foreclosed residential real estate loans were held and included in other real estate owned and repossessed personal property with a carrying value of $0.3 million on the unaudited interim consolidated balance sheets.