CREDIT QUALITY ASSESSMENT

6 Months Ended

Jun. 30, 2020

Credit Quality Assessment [Abstract]

Credit Quality Assessment

Note 5 – CREDIT QUALITY ASSESSMENT

The Company completed implementation of the CECL standard during the first quarter of 2020. The new guidance requires additional disclosures and introduces certain changes to definitions previously used under allowance for loan losses guidance. Accordingly, the following sections present separate disclosures compliant with the new and the legacy disclosure requirements.

Allowance for Credit Losses

Summary information on the allowance for credit loss activity for the period indicated is provided in the following table:

			Six Months Ended June 30,
(In thousands)			2020		2019
Balance at beginning of period			$	56,132	$	53,486
	Initial allowance on PCD loans at adoption of ASC 326			2,762		-
	Transition impact of adopting ASC 326			2,983		-
	Initial allowance on acquired Revere PCD loans			18,628		-
	Provision for credit losses			83,155		1,505
	Loan charge-offs			(1,039)		(1,197)
	Loan recoveries			860		230
		Net charge-offs		(179)		(967)
Balance at period end			$	163,481	$	54,024

The following table provides summary information regarding collateral dependent loans individually evaluated for credit loss at the dates indicated:

(In thousands)		June 30, 2020		December 31, 2019
Collateral dependent loans individually evaluated for credit loss with an allowance		$	28,461	$	15,333
Collateral dependent loans individually evaluated for credit loss without an allowance			32,067		9,440
	Total individually evaluated collateral dependent loans	$	60,528	$	24,773
Allowance for credit losses related to loans evaluated individually		$	8,827	$	5,501
Allowance for credit losses related to loans evaluated collectively			154,654		50,631
	Total allowance for credit losses	$	163,481	$	56,132

The below section presents allowance for credit losses disclosures in line with the new CECL disclosure requirements.

The following table provides information on the activity in the allowance for credit losses by the respective loan portfolio segment for the period indicated:

		For the Six Months Ended June 30, 2020
				Commercial Real Estate								Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner-				Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Balance at beginning of period		$	11,395	$	7,590	$	18,407	$	6,884	$	2,086	$	8,803	$	967	$	56,132
Initial allowance on PCD loans at adoption of ASC 326			1,549		-		1,114		-		99		-		-		2,762
Transition impact of adopting ASC 326			2,988		2,576		(3,125)		387		820		(388)		(275)		2,983
Initial allowance on acquired Revere PCD loans			6,289		1,248		7,973		2,782		87		243		6		18,628
Provision for credit losses			36,060		7,604		22,567		8,627		3,460		4,166		671		83,155
Charge-offs			(339)		-		-		-		(286)		(414)		-		(1,039)
Recoveries			694		-		4		-		93		66		3		860
	Net recoveries (charge-offs)		355		-		4		-		(193)		(348)		3		(179)
Balance at end of period		$	58,636	$	19,018	$	46,940	$	18,680	$	6,359	$	12,476	$	1,372	$	163,481
Total loans		$	2,222,810	$	997,423	$	3,581,778	$	1,601,803	$	558,434	$	1,211,745	$	169,050	$	10,343,043
Allowance for credit losses to total loans ratio			2.64%		1.91%		1.31%		1.17%		1.14%		1.03%		0.81%		1.58%
Balance of loans individually evaluated for credit loss		$	20,953	$	2,957	$	27,257	$	6,729	$	1,282	$	1,350	$	-	$	60,528
Allowance related to loans evaluated individually		$	5,488	$	635	$	2,573	$	32	$	99	$	-	$	-	$	8,827
Individual allowance to loans evaluated individually ratio			26.19%		21.47%		9.44%		0.48%		7.72%		-		-		14.58%
Balance of loans collectively evaluated for credit loss		$	2,201,857	$	994,466	$	3,554,521	$	1,595,074	$	557,152	$	1,210,395	$	169,050	$	10,282,515
Allowance related to loans evaluated collectively		$	53,148	$	18,383	$	44,367	$	18,648	$	6,260	$	12,476	$	1,372	$	154,654
Collective allowance to loans evaluated collectively ratio			2.41%		1.85%		1.25%		1.17%		1.12%		1.03%		0.81%		1.50%

The following table presents collateral dependent loans individually evaluated for credit loss with the associated allowances for credit losses by the applicable portfolio segment:

			June 30, 2020
					Commercial Real Estate								Residential Real Estate
									Commercial
					Commercial		Commercial		Owner-				Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Loans individually evaluated for credit loss with an allowance:
		Non-accruing	$	7,851	$	2,957	$	14,291	$	746	$	99	$	-	$	-	$	25,944
		Restructured accruing		570		-		-		-		-		-		-		570
		Restructured non-accruing		1,096		-		735		116		-		-		-		1,947
	Balance		$	9,517	$	2,957	$	15,026	$	862	$	99	$	-	$	-	$	28,461
	Allowance		$	5,488	$	635	$	2,573	$	32	$	99	$	-	$	-	$	8,827
Loans individually evaluated for credit loss without an allowance:
		Non-accruing	$	10,266	$	-	$	11,456	$	4,529	$	819	$	6	$	-	$	27,076
		Restructured accruing		137		-		775		-		-		1,071		-		1,983
		Restructured non-accruing		1,033		-		-		1,338		364		273		-		3,008
	Balance		$	11,436	$	-	$	12,231	$	5,867	$	1,183	$	1,350	$	-	$	32,067
Total individually evaluated loans:
		Non-accruing	$	18,117	$	2,957	$	25,747	$	5,275	$	918	$	6	$	-	$	53,020
		Restructured accruing		707		-		775		-		-		1,071		-		2,553
		Restructured non-accruing		2,129		-		735		1,454		364		273		-		4,955
	Balance		$	20,953	$	2,957	$	27,257	$	6,729	$	1,282	$	1,350	$	-	$	60,528
Total unpaid contractual principal balance
			$	24,131	$	2,957	$	33,150	$	10,337	$	1,554	$	2,743	$	-	$	74,872

The following table presents average principal balance of total non-accrual loans, contractual interest due and interest income recognized on a cash basis on non-accrual loans for the periods indicated below:

	June 30, 2020
			Commercial Real Estate								Residential Real Estate
							Commercial
			Commercial		Commercial		Owner-					Residential		Residential
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Consumer			Mortgage		Construction		Total
Average non-accrual loans for the period	$	14,023	$	1,538	$	20,744	$	4,984	$	6,165		$	12,221	$	-	$	59,675
Contractual interest income due on non-accrual loans during the period	$	570	$	37	$	984	$	238	$	214		$	348	$	-	$	2,391
Interest income on non-accrual loans recognized on a cash basis	$	75	$	-	$	279	$	82	$	83		$	163	$	-	$	682

Loans designated as non-accrual have all previously accrued but unpaid interest reversed from interest income. During the six months ended June 30, 2020 new loans placed on non-accrual status totaled $29.7 million and the related amount of reversed uncollected accrued interest was $0.3 million.

The below section presents historical allowance for loan losses disclosures in line with the legacy disclosure requirements.

The following table provides information on the activity in the allowance for loan losses by the respective loan portfolio segment for the period indicated:

		For the Year Ended December 31, 2019
				Commercial Real Estate								Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner-				Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Balance at beginning of period		$	11,377	$	5,944	$	17,603	$	6,307	$	2,113	$	8,881	$	1,261	$	53,486
Provision (credit)			1,164		1,418		788		577		565		474		(302)		4,684
Charge-offs			(1,195)		-		-		-		(783)		(690)		-		(2,668)
Recoveries			49		228		16		-		191		138		8		630
	Net recoveries (charge-offs)		(1,146)		228		16		-		(592)		(552)		8		(2,038)
Balance at end of period		$	11,395	$	7,590	$	18,407	$	6,884	$	2,086	$	8,803	$	967	$	56,132
Total loans		$	801,019	$	684,010	$	2,169,156	$	1,288,677	$	466,764	$	1,149,327	$	146,279	$	6,705,232
Allowance for loan losses to total loans ratio			1.42%		1.11%		0.85%		0.53%		0.45%		0.77%		0.66%		0.84%
Balance of loans specifically evaluated for impairment		$	8,867	$	829	$	9,212	$	4,148		na.	$	1,717	$	-	$	24,773
Allowance for loans specifically evaluated for impairment		$	3,817	$	132	$	1,529	$	23		na.	$	-	$	-	$	5,501
Specific allowance to specific loans ratio			43.05%		15.92%		16.60%		0.55%		na.		-		-		22.21%
Balance of loans collectively evaluated		$	789,613	$	683,181	$	2,150,400	$	1,284,529	$	465,771	$	1,147,602	$	146,279	$	6,667,375
Allowance for loans collectively evaluated		$	7,578	$	7,458	$	16,878	$	6,861	$	2,086	$	8,803	$	967	$	50,631
Collective allowance to collective loans ratio			0.96%		1.09%		0.78%		0.53%		0.45%		0.77%		0.66%		0.76%
Balance of loans acquired with deteriorated credit quality		$	2,539	$	-	$	9,544	$	-	$	993	$	8	$	-	$	13,084
Allowance for loans acquired with deteriorated credit quality		$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Allowance to loan acquired with deteriorated credit quality ratio			-		-		-		-		-		-		-		-

The following tables present the recorded investment with respect to impaired loans, the associated allowance by the applicable portfolio segment and the unpaid contractual principal balance of the impaired loans:

			December 31, 2019
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner-		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance:
		Non-accruing	$	5,608	$	829	$	5,448	$	767	$	-	$	12,652
		Restructured accruing		266		-		-		-		-		266
		Restructured non-accruing		1,856		-		437		122		-		2,415
	Balance		$	7,730	$	829	$	5,885	$	889	$	-	$	15,333
	Allowance		$	3,817	$	132	$	1,529	$	23	$	-	$	5,501
Impaired loans without a specific allowance:
		Non-accruing	$	114	$	-	$	2,552	$	1,522	$	-	$	4,188
		Restructured accruing		151		-		775		-		1,444		2,370
		Restructured non-accruing		872		-		-		1,737		273		2,882
	Balance		$	1,137	$	-	$	3,327	$	3,259	$	1,717	$	9,440
Total impaired loans:
		Non-accruing	$	5,722	$	829	$	8,000	$	2,289	$	-	$	16,840
		Restructured accruing		417		-		775		-		1,444		2,636
		Restructured non-accruing		2,728		-		437		1,859		273		5,297
	Balance		$	8,867	$	829	$	9,212	$	4,148	$	1,717	$	24,773
Unpaid principal balance in total impaired loans			$	11,296	$	829	$	13,805	$	6,072	$	2,618	$	34,620

	December 31, 2019
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner-		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	7,781	$	2,052	$	7,565	$	4,390	$	1,577	$	23,365
Contractual interest income due on impaired loans during the period	$	648	$	127	$	786	$	258	$	128	$	1,947
Interest income on impaired loans recognized on a cash basis	$	221	$	-	$	49	$	187	$	8	$	465
Interest income on impaired loans recognized on an accrual basis	$	62	$	-	$	39	$	-	$	68	$	169

Credit Quality

The following section provides information on the credit quality of the loan portfolio under the new CECL disclosure requirements:

		June 30, 2020
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner-				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Analysis of non-accrual loan activity:
	Balance at beginning of period	$	8,450	$	829	$	8,437	$	4,148	$	4,107	$	12,661	$	-	$	38,632
	PCD loans designated as non-accrual (1)		2,539		-		9,544		-		993		8		-		13,084
	Loans placed on non-accrual		10,988		2,128		8,974		3,426		3,248		894		-		29,658
	Non-accrual balances transferred to OREO		-		-		-		-		-		-		-		-
	Non-accrual balances charged-off		(335)		-		-		-		(56)		(346)		-		(737)
	Net payments or draws		(1,396)		-		(473)		(845)		(392)		(635)		-		(3,741)
	Non-accrual loans brought current		-		-		-		-		(100)		(858)		-		(958)
Balance at end of period		$	20,246	$	2,957	$	26,482	$	6,729	$	7,800	$	11,724	$	-	$	75,938
(1) Upon the adoption of the CECL standard, the Company transitioned from closed pool level accounting for PCI loans during the first quarter of 2020. Non-accrual loans are determined based on
the individual loan level and aggregated for reporting.

		June 30, 2020
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner-				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Performing loans:
	Current	$	2,199,853	$	993,831	$	3,545,235	$	1,591,953	$	544,808	$	1,186,122	$	166,727	$	10,228,529
	30-59 days		1,871		635		5,040		2,606		4,354		11,361		1,295		27,162
	60-89 days		133		-		3,471		-		1,472		1,329		1,028		7,433
	Total performing loans		2,201,857		994,466		3,553,746		1,594,559		550,634		1,198,812		169,050		10,263,124
Non-performing loans:
	Non-accrual loans		20,246		2,957		26,482		6,729		7,800		11,724		-		75,938
	Loans greater than 90 days past due		-		-		775		515		-		138		-		1,428
	Restructured loans		707		-		775		-		-		1,071		-		2,553
	Total non-performing loans		20,953		2,957		28,032		7,244		7,800		12,933		-		79,919
	Total loans	$	2,222,810	$	997,423	$	3,581,778	$	1,601,803	$	558,434	$	1,211,745	$	169,050	$	10,343,043

The following table provides information about credit quality indicators by the year of origination:

		June 30, 2020
		Term Loans by Origination Year												Revolving
(In thousands)		2020		2019		2018		2017		2016		Prior		Loans		Total
	Commercial:
	Pass	$	1,153,740	$	209,016	$	161,601	$	105,160	$	48,788	$	96,078	$	411,354	$	2,185,737
	Special Mention		-		3,486		1,448		995		1,669		1,316		4,004		12,918
	Substandard		803		1,078		3,074		1,171		2,157		3,182		3,148		14,613
	Doubtful		120		1,107		1,075		128		1,387		2,144		3,581		9,542
	Total	$	1,154,663	$	214,687	$	167,198	$	107,454	$	54,001	$	102,720	$	422,087	$	2,222,810
	Commercial AD&C:
	Pass	$	299,178	$	298,554	$	203,852	$	96,783	$	14,003	$	4,711	$	74,572	$	991,653
	Special Mention		-		-		1,074		636		-		-		-		1,710
	Substandard		-		2,128		730		100		-		1,102		-		4,060
	Doubtful		-		-		-		-		-		-		-		-
	Total	$	299,178	$	300,682	$	205,656	$	97,519	$	14,003	$	5,813	$	74,572	$	997,423
	Commercial Investor R/E:
	Pass	$	463,624	$	806,877	$	485,477	$	517,520	$	522,261	$	720,158	$	17,957	$	3,533,874
	Special Mention		3,819		775		14,421		952		-		1,295		-		21,262
	Substandard		347		3,031		-		6,839		697		15,728		-		26,642
	Doubtful		-		-		-		-		-		-		-		-
	Total	$	467,790	$	810,683	$	499,898	$	525,311	$	522,958	$	737,181	$	17,957	$	3,581,778
	Commercial Owner-Occupied R/E:
	Pass	$	142,813	$	373,413	$	233,852	$	203,929	$	211,171	$	408,793	$	1,630	$	1,575,601
	Special Mention		1,140		2,124		2,823		3,854		1,321		5,971		-		17,233
	Substandard		-		978		601		465		397		6,239		-		8,680
	Doubtful		-		-		-		-		-		289		-		289
	Total	$	143,953	$	376,515	$	237,276	$	208,248	$	212,889	$	421,292	$	1,630	$	1,601,803
	Consumer:
	Beacon score:
	660-850	$	1,566	$	6,449	$	6,584	$	2,822	$	3,394	$	32,412	$	438,778	$	492,005
	600-659		320		519		171		167		981		7,594		20,773		30,525
	540-599		3		518		232		226		667		3,734		6,472		11,852
	less than 540		133		851		323		1,007		918		3,430		17,390		24,052
	Total	$	2,022	$	8,337	$	7,310	$	4,222	$	5,960	$	47,170	$	483,413	$	558,434
	Residential Mortgage:
	Beacon score:
	660-850	$	93,464	$	64,690	$	191,410	$	231,236	$	169,283	$	317,589	$	-	$	1,067,672
	600-659		1,619		12,324		12,827		13,561		10,103		25,926		-		76,360
	540-599		835		2,249		6,669		4,376		4,032		14,405		-		32,566
	less than 540		7,114		1,856		5,448		2,104		2,540		16,085		-		35,147
	Total	$	103,032	$	81,119	$	216,354	$	251,277	$	185,958	$	374,005	$	-	$	1,211,745
	Residential Construction:
	Beacon score:
	660-850	$	49,670	$	82,559	$	24,294	$	4,135	$	1,630	$	-	$	-	$	162,288
	600-659		798		536		-		-		-		-		-		1,334
	540-599		-		2,122		-		-		369		-		-		2,491
	less than 540		2,937		-		-		-		-		-		-		2,937
	Total	$	53,405	$	85,217	$	24,294	$	4,135	$	1,999	$	-	$	-	$	169,050
	Total loans	$	2,224,043	$	1,877,240	$	1,357,986	$	1,198,166	$	997,768	$	1,688,181	$	999,659	$	10,343,043

The following section provides historical information on the credit quality of the loan portfolio under the legacy disclosure requirements:

		December 31, 2019
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner-				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans	$	8,450	$	829	$	8,437	$	4,148	$	4,107	$	12,661	$	-	$	38,632
	Loans 90 days past due		-		-		-		-		-		-		-		-
	Restructured loans		417		-		775		-		364		1,080		-		2,636
Total non-performing loans			8,867		829		9,212		4,148		4,471		13,741		-		41,268
	Other real estate owned		39		665		409		-		64		305		-		1,482
Total non-performing assets		$	8,906	$	1,494	$	9,621	$	4,148	$	4,535	$	14,046	$	-	$	42,750

			December 31, 2019
					Commercial Real Estate								Residential Real Estate
									Commercial
					Commercial		Commercial		Owner-				Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Past due loans:
	30-59 days		$	908	$	-	$	932	$	316	$	2,697	$	14,853	$	280	$	19,986
	60-89 days			370		-		-		-		1,517		4,541		1,334		7,762
	> 90 days			-		-		-		-		-		-		-		-
		Total past due		1,278		-		932		316		4,214		19,394		1,614		27,748
	Non-accrual loans			8,450		829		8,437		4,148		4,107		12,661		-		38,632
	Loans acquired with deteriorated credit quality			2,539		-		9,544		-		993		8		-		13,084
	Current loans			788,752		683,181		2,150,243		1,284,213		457,450		1,117,264		144,665		6,625,768
		Total loans	$	801,019	$	684,010	$	2,169,156	$	1,288,677	$	466,764	$	1,149,327	$	146,279	$	6,705,232

		December 31, 2019
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner-
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	783,909	$	683,181	$	2,146,971	$	1,278,337	$	4,892,398
	Special Mention		2,487		-		3,189		2,284		7,960
	Substandard		14,623		829		18,996		8,056		42,504
	Doubtful		-		-		-		-		-
Total		$	801,019	$	684,010	$	2,169,156	$	1,288,677	$	4,942,862

			December 31, 2019
					Residential Real Estate
					Residential		Residential
(In thousands)			Consumer		Mortgage		Construction		Total
	Performing		$	462,293	$	1,135,586	$	146,279	$	1,744,158
	Non-performing:
		90 days past due		-		-		-		-
		Non-accruing		4,107		12,661		-		16,768
		Restructured loans		364		1,080		-		1,444
Total			$	466,764	$	1,149,327	$	146,279	$	1,762,370

The following table provides the amounts of the restructured loans at the date of restructuring for specific segments of the loan portfolio during the period indicated:

		For the Six Months Ended June 30, 2020
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner-		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings:
	Restructured accruing	$	322	$	-	$	-	$	-	$	-	$	322
	Restructured non-accruing		-		-		347		760		-		1,107
Balance		$	322	$	-	$	347	$	760	$	-	$	1,429
Specific allowance		$	80	$	-	$	60	$	40	$	-	$	180
Restructured and subsequently defaulted		$	-	$	-	$	-	$	-	$	-	$	-

		For the Year Ended December 31, 2019
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner-		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings:
	Restructured accruing	$	170	$	-	$	775	$	-	$	364	$	1,309
	Restructured non-accruing		261		-		789		-		-		1,050
Balance		$	431	$	-	$	1,564	$	-	$	364	$	2,359
Specific allowance		$	196	$	-	$	205	$	-	$	-	$	401
Restructured and subsequently defaulted		$	-	$	-	$	-	$	-	$	-	$	-

During the six months ended June 30, 2020, the Company restructured $1.4 million in loans that were designated as TDRs. TDRs are subject to periodic credit reviews to determine the necessity and adequacy of an individual loan loss allowance based on the collectability of the recorded investment in the restructured loan. Loans restructured as TDRs during the six months ended June 30, 2020 had individual reserves of $0.2 million. For the year ended December 31, 2019, the Company restructured $2.4 million in loans. Loans restructured as TDRs during 2019 had individual reserves of $0.4 million at December 31, 2019. During both the six months ended June 30, 2020 and for the year ended December 31, 2019 TDR modifications consisted principally of interest rate concessions, and did not result in the reduction of the recorded investment in the associated loan balances. The commitments to lend additional funds on loans that have been restructured at June 30, 2020 and December 31, 2019 were not significant.

Other Real Estate Owned

Other real estate owned totaled $1.4 million and $1.5 million at June 30, 2020 and December 31, 2019, respectively. There were noconsumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of June 30, 2020.